Delhi High Court
M/S Paharpur Cooling Towers Ltd. vs M/S Ntpc Ltd. & Ors. on 14 July, 2011
Author: Sanjay Kishan Kaul
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 14.07.2011
+ WP(C) No. 532/2011
M/S PAHARPUR COOLING TOWERS LTD. ...PETITIONER
Through: Mr.Rakesh Munjal, Sr.Adv. with
Mr.Amit Prasad and Ms.Ruchika
Pathak, Advocates.
Versus
M/S NTPC LTD. & ORS. ...RESPONDENTS
Through: Mr.Vikas Singh, Sr.Adv. with
Mr.Bharat Sangal, Ms.Vernika
tomar, Ms.Amrita and Ms.Srijana
Lama, Advocates for R-1/NTPC.
Mr.Ravinder Agarwal, CGSC with
Nitish Gupta, Advocate for R-
2/BRBCL.
Mr.Jayant Bhushan, Sr.Adv. with
Mr.Deepak Khurana and
Mr.Shobhit Chandra, Advs. for R-
3/Lanco Infratech Ltd.
CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MR. JUSTICE RAJIV SHAKDHER
_____________________________________________________________________________________
WPC No.532/2011 Page 1 of 38
1. Whether the Reporters of local papers
may be allowed to see the judgment?
2. To be referred to Reporter or not?
3. Whether the judgment should be
reported in the Digest?
SANJAY KISHAN KAUL, J. (ORAL)
1. In the process of setting up the Nabinagar Thermal
Power Project at Stage-1, respondent no.1 issued an
invitation for bids (ITB) dated 20.08.2008 for an
induced draft cooling tower package (in short, IDCT)
required for the said turnkey project. It is the say of
the petitioner that from 20.08.2008 till 27.10.2009
various clarifications were issued and amendments
made and it is only on 27.10.2009 that the bids
submitted in pursuance to the instructions to bidders
(in short, ITB) were opened. The petitioner was
declared second lowest bidder ( in short, L-2) while
respondent no.3 as lowest bidder ( in short, L-1).
2. The grievance of the petitioner in the present writ
petition under Article 226 of the Constitution of India is
that R-3 was declared as a successful bidder although
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it did not possess the necessary and mandatory
qualifying requirements, as contemplated under Clause
8.3(c)(i) of the ITB read with clause 6.1 of the Invitation
for Bids (in short, IFB). The petitioner sent various
representation to respondent no.1 pointing out what
they perceived to be the lack of qualification of
respondent no.3, but to no avail.
3. In order to appreciate the controversy before us, it is
necessary to reproduce the relevant clauses of both
the ITB and IFB.
" 8. Documents Comprising the Bid
.......
8.3 Each Bidder shall submit with its bid the
following documents:
...
c) Attachment 3: Bidders‟ Qualifications
.......
The Bidder shall provide satisfactory evidence
that he and/or, where applicable, his
collaboration/associate/partner(s) of Joint
Venture:
i) is a manufacturer, who regularly
manufactures equipment of the type specified
and/or undertakes the type of work specified
and has adequate technical knowledge and
relevant experience for the works covered in
the bidding documents."
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"6.0 Qualifying Requirements
6.1 In addition to the satisfactory fulfillment of
the requirements stipulated under section ITI
((Instruction to Bidders), the following shall
also apply:
6.1.1 The bidder should have designed,
constructed and commissioned at least one
(1) number Induce Draught Cooling Tower in
RCC Construction with splash type fill, of
capacity not less than 1300 M3/hr which is in
successful operation for at least one (1) year
as on date of bid opening.
The reference cooling towers should be of the
same type i.e. cross flow splash type Cooling
tower or counter flow splash type cooling
tower as is being offered by the Bidder.
6.1.2 Bidders who do not fulfill the
requirement in clause 6.1.1 above can also
participate provided the bidder has designed,
constructed and commissioned at lease on (1)
number Induced Draught/Force
Draught/Natural Draught RCC Cooling Tower
having film/splash type fill, of capacity not
less than 13000 M3/hr and
associates/collaborates with a party fully
meeting the requirements of clause 6.1.1
above.
In such a case, the bidder shall furnish an
undertaking jointly executed by him and his
associate/collaborator as per the format
enclosed in the bid document for the
satisfactory performance of the Cooling
towers. This joint deed of undertaking shall be
submitted along with the bid, failing which the
bidder shall be disqualified and his bid shall
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be rejected. Further, in case of an award, the
Bidder‟s associate/collaborator will be
required to furnish demand bank guarantee
for 1% (one percent) of the total contract
price in addition to the contract performance
security to be provided by the bidder."
4. The question thus before us is that: whether
respondent no.3 does not meet the qualifying
requirements as per clause 6.0.
5. It is the say of respondents before us that case of
respondent no.3 falls in clause 6.1.2 and it is that
clause which will determine the eligibility of respondent
no.3.
6. If we analyze the aforesaid clauses, we find that as per
clause 6.1.1, the bidder is required to have designed,
constructed and commissioned at least one IDCT in
RCC Construction with splash type fill, of capacity not
less than 13000 M3/hr (cubic metres per hour). We may
note that the cooling tower required by respondent
no.1 is a draught cooling tower with a splash type fill.
Thus, the alternative criteria which is deemed sufficient
to make a bidder eligible is that he may have designed,
constructed and commissioned a draught cooling tower
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of a splash type fill or may have designed, constructed
and commissioned a "forced draught" or "natural
draught" cooling tower either of film or splash type. In
terms of the affidavits filed by respondent no.1 and
respondent no.3, respondent no.3 fulfils this
requirement.
7. Learned counsel for the petitioner has contended
before us that it was incumbent upon the bidder to
have designed, constructed and commissioned the
cooling tower and it is his say (which has also been set
out in the writ petition) that the reliance placed on the
cooling tower stated to have been designed,
constructed and commissioned by respondent no.3 was
actually never designed by respondent no.3.
Respondent no.3 based its experience (which also a
condition of eligibility) on, the setting up of the
Kondapalli-I (in short, K-1) Project. With regard to K-1
project, it is not disputed that the original order qua
the project vis-à-vis the cooling tower(s) was placed on
M/s Lanco Power Limited, which in turn, placed an EPC
on M/s Korea Heavy Industries and Construction Co.Ltd
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(Hanjung). Hanjung thereupon awarded the contract to
Encon Services Ltd (ESL). ESL was subsequently
amalgamated with Lanco Infratech Ltd.
8. It is thus the say of the petitioner that respondent no.3
has effectively purchased the alleged qualification
requirements.
9. Learned counsel for the respondents on the other hand
stated that the bid of respondent no.3 as submitted is,
in collaboration and/or association of Ms/ Hammon
Thermal Europe, being part of route-II, which regularly
undertakes execution of cooling tower projects. A
joint undertaking has been submitted both by
respondent no.3 and M/s Hammon Thermal Europe that
they are jointly and severally responsible to respondent
no.1 for the satisfactory performance of the cooling
tower, which includes obligations qua technical
guarantees.
10. Learned counsel for the petitioner submitted that
the design part of the work of K-1 Project was carried
out by Shriram Tower Tech Limited, as would be
apparent as per the work order issued by ESL to
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Shriram Tower Tech Limited dated 28.12.1998. In this
behalf, learned counsel invited our attention to clause
2.1.0 under the heading „scope of work‟ to emphasize
that the complete designing work in respect of the
cooling tower was to be carried out by Shriram Tower
Tech Limited. The said clause reads as under:
"2.0.0 SCOPE OF WORK
2.1.0 Design, engineering, manufacture,
procurement, stage inspection during
manufacture, assembly, inspection at works,
performance testing at manufacturers works,
dispatching all material required for 1 no.RCC
Counter flow Cooling Tower of capacity 26000
m3/hr in 13 cells (12 working + 1 standby),
including cold water basin and channel as per the
Tender specification and subsequent changes
agreed by. The scope shall include Mechanical,
Electrical, C&I and Miscellaneous items,
consumables, hardware, materials, commissioning
spares, and any other items related to the above
defined scope and all applicable taxes and duties.
The scope of work shall also include and be
guided by specifications, drawings, BOQ,
amendment/s as applicable."
11. It is the say of the learned counsel for the
petitioner that merely because the legal liability
remained with ESL, does not imply that ESL can be
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stated to have carried out designing work by
implication. Thus, the plea that ESL was involved at
each stage of the project and thus ESL was part of the
designing process is sought to be negated.
12. Learned counsel also sought to draw our
attention amongst others to the Minutes of Meeting (in
short, M.O.M) dated 10.04.1999. It is stated that
Shriram Tower Tech Limited was not even a party to
this M.O.M. A common document referred to by
learned counsel for the petitioner and respondents is a
letter issued by respondent no.1 to respondent no.3
dated 16.12.2009. This arose out of the bid submitted
by respondent no.3 and the clarification sought by
respondent no.1. We consider it appropriate to
reproduce the letter as it is :
"Ref No.01/CS-0270-135-2-PRA
M/s Lanco Infratech Limited
Plot No.6, Software Units Layout,
Hyderabad - 500081
India
Attn: Mr.B.Manohar, Director (Operations)
Sub: Induced Draft Cooling Tower Package for Nabinagar
Thermal Power Project (4x250 MW). Bidding Doc. No.CS-
0270-135-2.
Ref: 1. Your bid proposal dated 27.10.2009.
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2. NTPC letter ref no.01/CS-0270-135-2-PRA dated
12.11.2009 & 09.12.2009
3. Your letter ref LITL/11453x10/2009-10 dated
21.11.2009 & 11.12.2009
Dear Sir,
This has reference to the documents/details
furnished vides your letters dated 21.11.2009 &
11.12.2009 on the Qualifying Requirements. On review
of these documents, it is observed that there is still need
for further details/documents pertaining to the
distribution of work between M/s Encon Services Pvt. Ltd
(Encon) and M/s Sriram Tower Tech Limited (Sriram) as
indicated below:
Sl. Area Clarifications Required
1. Design The extent of
involvement of Encon
in the design work for
the execution of the
reference work (i.e.
Induced Draft Cooling
Towers (IDCT) for
Kondapalli Thermal
Power Project).
2. Civil From the documents
Construction furnished by you, it is
not clear who has
actually carried out the
civil construction
works of the reference
work.
3. Commissioning Who actually has
carried out the
Commissioning of the
reference works of
IDCT.
You are required to furnish the necessary information
in terms of each of clarifications sought above duly
supported by the documentary evidence so as to reach
this office latest by 18.12.2009.
Thanking you Yours faithfully
_____________________________________________________________________________________
(A.Saha)
DGM (CS-II)"
13. Insofar as the issue of designing is concerned,
respondent no.1 sought from respondent no.3 a
clarification about the extent of involvement of
respondent no.3 in the design work for execution of the
K-1 Project, and as to who had carried out the design
work. Respondent no.3 responded to this letter vide
communication dated 17.12.2009. It would suffice to
re-produce the relevant portion of this letter dealing
with the issue of design; the same is extracted
hereinafter :
No Area Clarification required by Ref.No. Clarifications by LITL Remarks
. NTPC
1) Design Extend of involvement 1 Involvement of ENCON Ref. to the
of Encon in the design SERVICES LTD in design scope of work
of IDCT for Kondapalli of IDCT for Kondapalli in the
Power Plant Power Plant is total. Agreement
b/w ESL &
Hanjung
already
submitted to
NTPC.
Who actually carried Basic design in respect of
out the design of IDCT Thermal & Civil was
i.e. Thermal design, carried out by ESL and
Civil, Structural design Detailed Engineering
scope was off loaded to
the sub contractor M/s
Shriram Tower Tech
Limited who in turn
taken the help of sub
vendors (approved by
ENCON / client) like M/s
ABB, M/s GREAVES, M/s
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PARAG, M/s P &M
Construction Co.Pvt. Ltd.
M/s DANCAL, M/s PETHE
Brake Motors Pvt. Ltd.,
M/s Safetrack, M/s
Speed-O-Controls Pvt.
Ltd., M/s KGEN/KGEC,
M/s Crompton Greaves,
M/s SRCAST, M/s
VANKOS, M/s BRITOOL
etc.
14. It was clarified vide this letter that the basic
design in respect of thermal and civil work was carried
out by ESL while detailed engineering out of the scope
of work envisaged under the said project was, off
loaded to the sub contractor i.e., Shriram Tower Tech
Limited, which in turn, took the help of various sub
vendors.
15. The aforesaid position is naturally sought to be
disputed by the petitioner by relying upon the
document dealing with division of responsibility
between Hanjung and ESL qua the project of
respondent no.1 with Bihar State Electricity Board,
which is also incidently conceived at Nabinagar
through latter in point of time.
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16. It is the submission of learned counsel for the
petitioner that Clause 7.1 and 7.2 of this document is
identical to clause 6.1.1 and 6.1.2 of the tender in
question. In respect of this other contract, a Sub
Qualification requirement (in short, QR) was issued in
the following terms:
"Sub QR to be included in the Technical
Specification
In case the reference cooling tower was
designed by a party other than the bidder
himself, the bidder shall employ a cooling
tower designer/supplier who has
independently designed an Induced
Draught Cooling Tower of the same type as
being offered of capacity not less than
13,000 cum/hr. In RCC Construction with
splash type fill which is in successful
operation for at least one (1) as on date of
bid opening."
17. It is the contention of learned counsel for the
petitioner that this Sub QR envisages a situation where
the designing of the reference cooling tower was
carried out by a party other than the bidder then, in
that eventuality, the bidder is obligated to employ a
cooling tower designer/supplier who has independently
designed and IDCT of the same type.
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18. It Is thus submitted that if the say of the
respondents was to be accepted that respondent no.3
could carry out the work of designing through the aegis
of Shriram Tower Tech Limited, then the occasion to
include the sub QR in subsequent tender would not
have arisen. Therefore, the plea in substance is that
because a sub QR has been issued, albeit in a
subsequent tender, it ought to imply that the earlier
tender (which is the tender in question) did not
envisage that the job function of designing be sub
contracted.
19. The other aspect emphasized by learned counsel
for the petitioner is that the certificate submitted by
respondent no.3, on a plain reading, did not refer to
the fact designing work in K-1 project had been carried
out by respondent no.3. There is no reference to the
design contract obtaining between respondent no.3
and Shriram Tower Tech Limited; a reference to that
design contract would show that it is Shriram Tower
Tech Limited which had carried out complete designing
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work of the K-1 project even though the legal
responsibility rested with ESL.
20. In a nutshell, learned counsel for the petitioner
submits that the work of designing has to be carried
out "of its own" resting with respondent no.3 and this
work cannot be delegated to any third party including
Shriram Tower Tech Limited, with mere supervision
and legal responsibility resting with respondent no.3.
21. Learned counsel submits that wherever
respondent no.1 is of the view that such work could be
carried out through another party, the phraseology
used is „designed, constructed and commissioned or
designed or got constructed or got commissioned" as
was the case in WPC No.296/2011 M/s Ansaldo Caldaie
Boilers India Pvt. Ltd. v. Union of India & Anr.; decided
on 01.03.2011; where the expression used was
"designed, engineered, manufactured/got
manufactured, erected or supervised erection,
commission or supervised commission".
22. Learned counsel for the respondents has
emphasized that the restrictive interpretation sought to
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be given to clause 6.1.2 is not sustainable as in all such
projects, no single entity carries out the complete
work; but assistance is taken from other experts in the
field. The ultimate responsibility rests with a party to
which the tender is awarded and it cannot escape the
liability or responsibility by putting the burden on such
other party from whom it may have got some part of
the work completed. Learned counsel for respondent
no.1 also emphasized that in the tender in question an
important clause 6.3 was inserted which reads as
under:
"Notwithstanding anything stated above, the
Employer reserves the right to assess the
capabilities and capacity of the Bidder/his
collaborators/associates/subsidiaries/group
companies to perform the contract, should
the circumstances warrant such assessment
in the overall interest of the Employer."
23. It has been thus submitted that respondent no.1
as an employer had reserved the right to assess the
capabilities and capacity of the
bidder/collaborators/associates/subsidiaries/group
companies to perform the contract should the
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circumstances warrant such assessment in the overall
interest of the employer.
24. In the present case, it has been emphasized that
pursuant to the petitioner casting a doubt on the
eligibility of respondent no.3, a Tender Evaluation
Committee (in short, TEC) having technical members
actually went into all the aspects including the matter
in issue and came to a conclusion in favour of
respondent no.3. It is thus submitted that an
inspection has also been carried out to the satisfaction
of respondent no.1 and respondent no.2 about the past
experience and ability of respondent no.3 to carry out
the task assigned to it; and thus, it is submitted that
this Court while exercising the jurisdiction under Article
226 of the Constitution of India cannot be expected to
sit as a court of appeal over the decision of TEC which,
comprised of technical members as well.
25. Learned counsel has also drawn our attention to
clause 8.3(e) of the ITB under the heading "Attachment
5 : Subcontractors Proposed by the Bidder" which deals
with subcontractors proposed by the bidder, to
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emphasize that such an delegation of work is
envisaged in the bid itself.
26. The last aspect emphasized by learned counsel
for respondent no.1 is that the petitioner, in any case,
is dis-entitled to any indulgence arising from the delay
in approaching this Court for redressal of its
grievances. In this behalf, it is stated that it was as far
back as on 27.10.2009 that the technical commercial
bids were opened as also the price bids when L-1 was
found to be more competitive, petitioner having quoted
a price of Rs.94,18,00,000/- and respondent no.3
having quoted a price of Rs.90,74,35,000/-. Thus, the
difference in price is about Rs.3.5 crores i.e. about 4%.
The petitioner made a representation challenging the
ability of respondent no.3 on 07.01.2010 followed up
by a number of similar representations. Respondent
no.1 appointed TEC to look into the eligibility issue,
which submitted its report on 02.03.2010. The
petitioner, it was contended, was obviously aware of
the same as it made a further representation on
09.04.2010 seeking a reconsideration. The final
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approval was given by a higher management of
respondent no.1 on 30.08.2008 treating the
respondent no.3 as technically qualified, and
thereafter, last representation was made by the
petitioner on 24.11.2010. The work was awarded on
25.01.2011 and the present writ petition was filed a
couple of days thereafter.
27. It is thus submitted that the petitioner should
have approached this Court at least soon after April,
2010 rather than keep making representations for
reconsideration, especially, bearing in mind the prayers
made in the writ petition. Learned counsel for
respondent no.3 has argued more or less on the same
basis as the submissions advanced on behalf of
respondent no.1. Learned counsel emphasized that
the principle of ultimate responsibility and submitted
that it is in view thereof that the sub-contracting of
work was envisaged. Had respondent no.1 required
the designing, construction and commissioning of
working to be strictly carried out by the contracting
entity itself, it would have possibly used the
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phraseologies like "by itself". In any case, it is
submitted that the interpretation put forth by the party
making the contract must be given due weightage. It
was also pointed out that (as averred by the said
respondent, in para 19 of the counter affidavit) even
the petitioner has been sub contracting in the past
different job functions of the works awarded to it
including that part of the work which involves
designing.
28. Learned counsel referred to the judgment of the
Supreme Court in Himachal Pradesh Housing and
Urban Development Authority v. Universal Estates and
Anr.; JT 2010(13) SC 57 to emphasize that the scope of
judicial review in such matters is limited and the court
would exercise its discretion only when it is satisfied
that the action of the public authorities is detrimental
to public interest. Furthermore, even if some defects
are found in the decision making process, the court in
exercise of powers under Article 226 of the Constitution
of India would interfere only in furtherance of public
interest and not merely to make out a legal point.
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29. We have noticed and examined the aforesaid
contentions though it is our view that the matter is in a
very narrow compass. The short point is whether in
terms of the clause 6.1.2 the work of designing can be
said to not have been carried out by respondent no.3 in
K-1 Project so as to disqualify respondent no.3, as the
substantive part of the design work was executed by
Shriram Tower Tech Limited under the supervision and
overall responsibility of respondent no.3
30. We may note at the threshold that this is a case
where respondent no.3 is L-1. The difference in bid
price between that submitted by the petitioner and
respondent no.3 is approximately Rs.3.5 Crores, which
in percentage terms is nearly 4 percent. The bid of
respondent no.3 is thus undoubtedly commercially
more competitive.
31. The petitioner having lost out in the bid process
now seeks to take recourse to the present proceedings
so as to disqualify respondent no.3 on the aforesaid
plea.
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32. Learned counsel for the petitioner, inter alia,
pleaded that the petitioner was willing to execute the
contract at the price quoted by respondent no.3, but
that, in our considered view, would be no answer to the
fact that the petitioner in its wisdom decided to
possibly keep an additional sum of Rs.3.5 crores as
profit at the time of making the bid even while
respondent no.3 submitted a more competitive bid.
33. Insofar as the aspect of technical qualification is
concerned, no doubt the terms of the tender must be
adhered to, but where there is an element of ambiguity
or even a grey area in ascertaining the intent of parties
weightage will have to be given on how men of
commerce operating in the same field of activity
understand the terms used in a contract. The word
„design‟ used in clause 6.1.2 by itself, in our view does
not exclude the possibility of a bidder employing a
collaborator. The clarification issued by respondent
no.3 vide its letter dated 17.12.2009 quoted by us
above, would show that basic design of IDCT in K-1
project which involved civil and thermal work was with
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respondent no.3 while Shriram was off loaded a part of
the job function comprising „detailed engineering‟;
though decidedly the overall supervision and
responsibility was of respondent no.3. This vexed issue
could perhaps be answered by employing the test of
substantiality. Whether the off loaded portion of
design work resulted in a situation of disentitling
respondent no.3 from bidding in respect of the instant
tender is call which the experts had to take. The
experts having decided otherwise. They have come to
a view that respondent no.3 in substantially compliant.
The court cannot supplant that view. It is then open
for the petitioner to contend that the collaboration
route was per se a no-go area. In our view, it cannot
be so contended. As long as the bidder and the
collaborator, are operating broadly in the same line of
business, such a submission is untenable. In today‟s
fast moving era of technology and super specialization,
it would be well nigh impossible for one entity to claim
expertise in any one domain qua projects which are
acutely capital intensive. Segmented parts of a
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project, such as design, construction and
commissioning would often require involvement of
multiple agencies and/or entities. It is precisely for this
reason, in order to protect the interest of the employer,
that legal instruments, such as, joint undertaking(s)
have come into existence. In our view, the submission
that because a part of the design work in K-1 project
had been executed by Shriram Tower Tech Limited,
respondent no.3 was ineligible to bid for the instant
tender is misconceived. We thus emphatically reject
this submission. This apart, what cannot be lost sight
of is, assuming all things are equal that a court would
be loathe to supplant its opinion with that of the
experts in the field.
34. In the facts of the present case and the clauses
referred to aforesaid, respondent no.1 and respondent
no.2 were well within their rights to have scrutinized
the capacity and capabilities of the bidders to satisfy
themselves as per clause 6.3. Such an endeavour
possibly would have been made even otherwise in view
of the terms of the contract, but especially taking into
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consideration the complaint of the petitioner, a TEC
comprising of technical members was constituted to
examine the matter including inspection of the cooling
towers manufactured, designed and installed by
respondent no.3 at an earlier point in time, and to
satisfy itself with regard to their due performance.
35. That the cooling towers have been working
satisfactorily for a period of 11 years is not seriously
disputed before us. The report of TEC comprising of
technical members has also been shown to us. In TEC‟s
report, the relevant aspects are discussed under the
heading "Capacity and Capability" in para 3.0, para
3.1.5 and 3.1.6. We consider it appropriate to
reproduce the same as under:
"3.1.5 During the discussions with NTPC team, it
was informed that Lanco Infratech Limited is an ISO
9001 - 2008 certified company and they are
engaged in the field of Engineering, Procurement
and Construction (EPC) contracts. The range of
projects undertaken by LANCO construction are
construction of BOP for thermal power projects,
Hydel projects, Power Transmission and Distribution.
It is also clarified that Encon Services Limited (ESL)
who executed the BOP works including IDCT on sub-
EPC basis from M/s. Hanjung for Kondapalli Power
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Corporation Limited Stage-1. It got amalgamated
with Lanco Infratech Limited upon the order dated
08th Oct. 2002 of High Court of Andhra Pradesh in
order to take up the construction of power plants
and other projects on a large scale. It was also
clarified that ESL had engaged M/s. Shriram Tower
Tech Limited as sub contractor for Design,
Engineering, Procurement and Commissioning of
IDCT as per the Technical Specifications issued by
Owner Company M/s. Kondapalli Power Corporation
Limited. LANCO also informed that they had given
all the input design data to M/s. Shriram and
ensured at various stages that the design was
carried out as per TS and got the designhj and
drawings approved by the EPC contractors
consultant M/s. FICHNER. LANCO also stated that
they constructed the civil work of substructure of
Cooling Tower and helped M/s. Shriram by issuing
the civil construction materials like concrete,
reinforcement, shuttering materials etc.
LANCO also clarified that they have taken the help of
M/s. Shriram for Erection and Commissioning of
IDCT and entire project management was done by
ESL.
3.1.6 It has been observed that Lanco does not
have full fledged engineering set up for carrying out
IDCT Package. Lanco informed that, thermal design
shall be done and guaranteed by their collaborator
M/s Hamon Thermal Belgium and Detailed Design &
Engineering shall be carried out by M/s. Hamon
Thermal. However, they will employ Consultant for
co-ordinating with Hammon and also with their site
of this proposed Package of IDCT at Nabinagar.
LANCO further clarified that they will carry out all
the civil construction, ordering and procurement of
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equipment, erection and commissioning since they
have all the resources like skilled manpower and
equipment for construction, material and equipment
procurement, erection and commission of IDCT."
36. A reading of the aforesaid shows that TEC
comprising of technical members fully analyzed the
capability of respondent no.3, and while noticing that it
did not have full-fledged engineering set up relied upon
the work already carried out in the K-1 Project as also
the experience of the collaborator, M/s Hammon
Thermal Europe.
37. We have already noticed that both respondent
no.3 and M/s. Hammon Thermal Europe have given
undertakings for due performance of the contract and
proper functioning of the equipment.
38. At this stage, we may notice with profit the
principles enunciated by the Supreme Court in the case
of Jagdish Mandal v. State of Orissa and Ors.; (2007) 14
SCC 517 in para 22 as under:
"22. Judicial review of administrative action
is intended to prevent arbitrariness,
irrationality, unreasonableness, bias and
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malafides. Its purpose is to check whether
choice or decision is made 'lawfully' and not
to check whether choice or decision is
'sound'. When the power of judicial review
is invoked in matters relating to tenders or
award of contracts, certain special features
should be borne in mind. A contract is a
commercial transaction. Evaluating tenders
and awarding contracts are essentially
commercial functions. Principles of equity
and natural justice stay at a distance. If the
decision relating to award of contract is
bona fide and is in public interest, courts
will not, in exercise of power of judicial
review, interfere even if a procedural
aberration or error in assessment or
prejudice to a tenderer, is made out. The
power of judicial review will not be
permitted to be invoked to protect private
interest at the cost of public interest, or to
decide contractual disputes. The tenderer
or contractor with a grievance can always
seek damages in a civil court. Attempts by
unsuccessful tenderers with imaginary
grievances, wounded pride and business
rivalry, to make mountains out of molehills
of some technical/procedural violation or
some prejudice to self, and persuade courts
to interfere by exercising power of judicial
review, should be resisted. Such
interferences, either interim or final, may
hold up public works for years, or delay
relief and succour to thousands and millions
and may increase the project cost manifold.
Therefore, a court before interfering in
tender or contractual matters in exercise of
power of judicial review, should pose to
itself the following questions :
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i) Whether the process adopted or decision
made by the authority is mala fide or
intended to favour someone.
OR
Whether the process adopted or decision
made is so arbitrary and irrational that the
court can say : 'the decision is such that no
responsible authority acting reasonably and
in accordance with relevant law could have
reached.'
ii) Whether public interest is affected.
If the answers are in the negative, there
should be no interference under Article 226.
Cases involving black-listing or imposition of
penal consequences on a
tendered/contractor or distribution of state
largesse (allotment of sites/shops, grant of
licences, dealerships and franchises) stand
on a different footing as they may require a
higher degree of fairness in action.
39. Having regard to the opinion of the Supreme
Court in the aforesaid case and the court in several
other discussions, we do not think that it is the function
of this court to sit in appeal over the view taken by an
expert body especially called upon to look into the
complaint of the petitioner. This is more so where the
body i.e., TEC comprised of technical experts who
satisfied themselves as to whether respondent no.3 fit
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the bill or not. One cannot but overemphasize as
indicated above that in a contract of this nature,
assistance of experts in the field is often taken to do a
part of the work while, the legal responsibility rests
with the contracting party. So long as the appropriate
experience and technology is available to a contracted
party and the party awarding the contract is satisfied
with the same, the third party cannot insist that the
contract should be read in a particular manner so as to
non-suit the party to whom the contract is to be
awarded. This is exactly what, the petitioner seeks to
do by insisting that respondent no.3 does not have the
experience as in the K-1 Project the designing work
was carried out by Shriram Tower Tech Limited, while
respondent no.3 had only the overall legal
responsibility qua the work in issue.
40. We thus also find force in the contention of
learned counsel of respondent no.3 that the word
„designing‟ used in the contract has to be understood
in the context that this work must be got done
satisfactorily by respondent no.3, and does not mean
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that respondent no.3 on a stand alone basis should
execute the work. This, in fact, is the very view we
have taken in the case of M/s Ansaldo Caldaie Boilers
India Pvt. Ltd. v. Union of India & Anr.‟s case (supra),
quite contrary to the submission made by learned
counsel for the petitioner herein. In this context, for
the sake of convenience, the relevant paragraphs
being paragraphs 15.4 to 15.9, are extracted
hereinafter :
"15.4 Therefore, the argument was that while as a
whole the reference Steam Generator i.e., TNP plant
had been designed, engineered and manufactured by a
consortium of which ACS was the leader, the fact that
certain parts of the evaporator had been
manufactured by BHK/HPE would not make ACS
ineligible as a QSGM.
15.5 As against this, Mr.Chandhiok argued to the
contrary. He stressed upon the fact that the
evaporator being a crucial part of the Steam
Generator, it was quite apparent on a plain reading of
the relevant clause of the bid documents that ACS
would be eligible as a QSGM only if it had also
designed, engineered and manufactured the
evaporator.
15.6 We may only note at this stage that the writ
petitioner's filling up of the bid documents in particular
the attachment 3A-4 was less than happy, but what
cannot be lost sight of is that there was no attempt on
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the part of writ petitioner to mislead NTPC as regards
the fact that it was offering an evaporator
manufactured by a third party in so far the current
tender was concerned. From the extracts which are
culled out by us hereinabove, it is quite clear that NTPC
was quite aware of the fact that the Siemens AG was
the technology owner/licensor of the evaporator
which was offered by the writ petitioner in its bid.
15.7 Therefore, this brings us to the question as to
whether interpretation placed by the writ petitioner
ought to be accepted or not? In our view it is trite law
that interpretation is required to be made; whether of
contract, document or a statute, only if, there is an
ambiguity as to the intent of the parties. Intent has to
be construed from the words used in the contract. It is
only when the language of a document is ambiguous,
should the tools of interpretation be brought into play
to gather the intent of the parties. In doing so one
should read the document as a whole and not in
fragmented parts.
15.8 The word "provide" used in clause 7.1.1 of the
IFB/clause I.I.I. of the BDS leaves us no wiser as to the
intent of parties. In plain English, the word "provide"
would mean supply or furnish (see Concise Oxford
Dictionary 9th Edition page 1102). Would it then mean
that ACS will stand disqualified as a QSGM if in the
reference plant (i.e., the TNP plant), the evaporator
was supplied by say BHK. In our view, this
interpretation cannot be laid on the said clause, given
the manner in which it is structured, especially when it
is read in conjunction with other similar clauses (read
routes) of the tender. To cite an example, under Route
5, a bidder can qualify as a QSGM if he had in the past
had experience of manufacturing a Steam Generator of
requisite specification with an evaporator of constant
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pressure provided it undertook to supply one with a
variable pressure, and in addition furnished a joint
deed of undertaking of the owner and/or licensor of
such technology. Therefore, on a comparison of QRs
for a QSGM (which are common to all five Routes) it
appears that in so far as the NTPC was concerned, it
was quite prepared to accept a bidder as a QSGM if the
evaporator supplied had the backing of the technology
owner and/or the licensor of the evaporator.
15.9 In the present case, a consortium appears to
have designed and manufactured the TNP Plant of
which ACS was the leader. The fact that certain parts of
the evaporator (we will assume that they are crucial)
were designed and manufactured by BHK would not, on
this account alone, disentitle ACS from being
categorized as a QSGM, because in our opinion, a
reading of the document does not reflect that such was
the intent of parties. If NTPC is prepared to accept a
joint deed of undertaking of a technology licensor for a
Steam Generator with a Variable Pressure evaporator
when the referential plant was designed with an
evaporator suitable for constant pressure - we see no
reason why the word "provide" used in clause 7.1.1 of
IFB/clause 1.1.1 of BDS cannot be interpreted to mean
that parties did not intend to exclude a person from
being categorized as a QSGM only because the
evaporator provided in the referential plant was
supplied by a third party."
41. We are thus of the considered view that there is
no merit in the challenge laid by the petitioner to the
qualification of Respondent no.3.
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42. The argument of the petitioner that since in the
subsequent tender (by insertion of a sub QR)
respondent no.1 had provided for involvement of a
cooling tower designer / supplier if the reference
cooling tower had been designed by a third party and
hence by implication excluded the possibility of parties
intending that the eligibility condition would stand
complied if a third party was involved in designing a
referential plant (IDCT); is misconceived for the
following reason. Firstly, it proceeds on the premise
that respondent no.3 had no role to play in design work
of K-1 project. Secondly, in our view, incorporation of
a clause in a subsequent tender cannot be used as an
interpretative tool to explain the intent of parties qua
an earlier tender.
43. Now coming to the plea of delay on the part of
the petitioner in approaching the Court, we are unable
to persuade ourselves to agree with the submission of
learned counsel for respondent no.1. The petitioner
showed promptness in making the complaint and this
was followed up by different reminders. There was no
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communication to the petitioner but the fact remains
that on 09.04.2010 the petitioner did seek a review of
the decision. Respondent no.1 and respondent no.2 in
their wisdom apparently kept on examining the matter
and withheld their hand till 30.08.2010 when
respondent no.3 was found technically qualified. The
petitioner made the last representation on 24.11.2010
and approached the Court in January, 2011 itself.
44. We are thus of the considered view that there
cannot be said to be any fatal delay on the part of the
petitioner in approaching the Court.
45. We may note in the end that learned counsel for
respondent no.1 prays by relying upon the judgment in
Raunaq International Ltd. v. I.V.R. Construction Ltd. and
Ors.; (1999) 1 SCC 492 that the petitioner having
enjoyed an interim order, respondent no.1 and
respondent no.2 are entitled to be compensated for the
cost escalation arising from the delay in proceeding
with the contract. We may notice that there are some
delays in the contract which have arisen otherwise
than on account of pendency of this petition. The
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extension of the bids was sought by respondent no.1
from time to time. Thus, the question arises whether
the continuation of interim order for a period of couple
of months in the present matter has caused any injury
and if so, the extent of it. The observations in para 25
of Raunaq International Ltd. v. I.V.R. Construction Ltd.
and Ors. Raunaq International Ltd. v. I.V.R.
Construction Ltd. and Ors.‟s case (supra) are as under:
"25. Therefore, when such a Stay order is
obtained at the instance of a private party
or even at the instance of a body litigating
in public interest, any interim order which
stops the project from proceeding further,
must provide for the reimbursement of
costs to the public in case ultimately the
litigation started by such an individual or
body fails. The public must be
compensated both for the delay in
implementation of the project and the cost
escalation resulting from such delay.
Unless an adequate provision is made for
this in the interim order, the interim order
may prove counter-productive."
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46. We are of the considered view that in case the
respondent no.1 so desires, it is for respondent no.1 to
establish in appropriate proceedings that there is
financial implication of the delay occasioned on
account of the interim orders operating for these
couple of months in order to succeed in any monetary
claim in this behalf against the petitioner. The present
dispute is really in the nature of a commercial dispute
between the petitioner and respondent no.3. We are of
the considered view that in such a matter (even though
Mr. Amit Prasad succinctly set out the controversy in
issue while endeavouring to persuade us to his point of
view), the succeeding party must get actual costs.
47. We had asked the parties to file their
respective bills of costs and fees by today. The bill of
costs filed by respondent no.3 for the hearings, senior
counsel‟s fee and drafting expenses are
quantified at Rs.9,13,000/- and that of respondent
no.1 at Rs.12,26,375/-. There has been neither any
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appearance on behalf of respondent no.2 nor has any
bill of costs been filed on behalf of the said respondent.
We thus allow the costs in favour of respondent no.1
and respondent no.3 and against the petitioner in the
aforesaid terms.
48. The writ petition is accordingly dismissed with
costs of Rs.12,26,375/- in favour of R-1 and
Rs.9,13,000/- in favour of R-3.
49. Interim orders dated 10.02.2011 stand vacated.
SANJAY KISHAN KAUL, J.
JULY 14, 2011 RAJIV SHAKDHER, J.
dm/yg
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