Rds Projects Ltd. vs Ratangiri Gas And Power Pvt. Ltd. & ...
2011 Latest Caselaw 5099 Del

*                    THE HIGH COURT OF DELHI AT NEW DELHI

                                             Judgment reserved on: 23.09.2011
%                                            Judgment delivered on: 17.10.2011

+                                   WP(C) 534/2011

RDS PROJECTS LTD.                                                ...... PETITIONER

                                           Vs

RATANGIRI GAS AND POWER PVT. LTD. & ORS.                         ..... RESPONDENTS

Advocates who appeared in this case:
For the Petitioner:  Mr Jagdeep Dhankar, Sr. Advocate with Ms Asha Jain Madan & Mr
                     Mukesh Jain, Advocates.
For the Respondents: Mr A.S. Chandhiok, ASG with Mr S.K. Taneja, Sr. Advocate with Mr
                     Puneet Taneja & Mr Anant Kumar Sinha, Advocates for Respondent No.
                     1/RGPPL.
                     Mr Gourab Banerji, ASG with Mr Ajit Pudussery and Mr Dinesh
                     Khurana, Advocates for Respondent No. 2/GAIL.
                     Ms Indira Jai Singh, ASG with Mr Ashok Mathur & Ms Sonam Anand,
                     Advocates for Respondent No. 3/EIL.
                     Mr Neeraj Chaudhari, CGSC with Mr Mohit Auluck and Mr Khalid
                     Arshad, Advocates for Respondent No. 4/UOI.

CORAM :-
HON'BLE MR JUSTICE SANJAY KISHAN KAUL
HON'BLE MR JUSTICE RAJIV SHAKDHER
1.     Whether the Reporters of local papers may
       be allowed to see the judgment ?                   Yes
2.     To be referred to Reporters or not ?               Yes
3.     Whether the judgment should be reported            Yes
       in the Digest ?

RAJIV SHAKDHER, J
1.   This writ petition would bear testimony to the adage that truth is a

conundrum wrapped in mystery surrounded by a multitude of lies. The petitioner

is in court, the second time round, much harried and exasperated. In the first

round the petitioner, i.e., RDS Projects Ltd. (hereinafter referred to as „RDS‟) by

WP(C) 534-2011                                                          Page 1 of 50
 way of a writ petition bearing no. 8252/2010, sought to challenge the decision of

respondent no. 1, i.e., Ratnagiri Gas & Power Pvt. Ltd. (hereinafter referred to as

„RGPPL‟) dated 04.10.2010, conveyed to it on 06.10.2010, seeking to scrap/

cancel the tender bearing no. 6724/T-138/08-09/SPL/24 (hereinafter referred to as

the "1st Tender") after it had been declared the lowest tenderer, i.e., L-1. RDS

withdrew the said writ petition alongwith an application for grant of interim relief

in view of the stand of RGPPL that it had exercised its rights as an owner under

Article 28.1 of the 1st tender. Since the petitioner apprehended his exclusion by

the respondents in the subsequent round, it sought leave and liberty of this court to

take recourse to a legal remedy in accordance with the law. A Division Bench of

this court of which one of us (i.e., Sanjay Kishan Kaul, J) was a party, granted

such liberty to the petitioner vide order dated 14.12.2010.

2.     True to form, RGPPL through aegis of Respondent No. 2, i.e., Gas

Authority of India Ltd. (hereinafter referred to as „GAIL‟), and respondent no. 3,

i.e., Engineering India Ltd. (hereinafter referred to as „EIL‟), floated a fresh tender

bearing no. 6724/T-183/10-11/SKG/28 (hereinafter referred to as               the „2nd

Tender‟); albeit with a change/amendment. The change/amendment with which

the petitioner is aggrieved pertains to clause 8.1.1.1. It is pertinent to mention here

that clause 8.1.1.1 deals with past experience of the bidder in executing a similar

work. We would be referring to the requisites set out in clause 8.1.1.1 with

respect to qualifying work, and as one goes along, the change in specifications

brought about by amendment made in clause 8.1.1.1 in the 2nd tender. We would
WP(C) 534-2011                                                          Page 2 of 50
 come back to the amendment in the said clause made in the 2nd tender, but before

that, why the change has taken place is pertinent, as the petitioner has pleaded

malice, apart from the usual grounds of arbitrariness and unreasonableness and the

lack of fairness on the part of the respondents in bringing about the said change.

We may note at the outset that the change is brought about in clause 8.1.1.1, which

found a mention in the 1st tender as compared to those which have been

incorporated in the very same clause, in the 2nd tender; even though subtle, are

significant from the point of view of the petitioner. Therefore, the reason for

narrating the background in which the respondents issued the 2nd tender.

BACKGROUND

3. The Maharashtra State Government, it appears, wanted to resuscitate the

Dabhol Power Project (in short „DPP‟) which had run into troubled waters; a story

which has been widely recorded. The job of resuscitation was entrusted to

National Thermal Power Corporation (in short „NTPC‟) and GAIL. The DPP,

inter alia, included a gas based component, that is, a cycle power project alongwith

an integrated LNG terminal with associated infrastructure facilities; situate in the

district of Ratnagiri, in the State of Maharashtra. Thus, insofar as DPP was

concerned, both components required revival. The first one being a power block

and the second being, the LNG block. In order to execute the task entrusted to

NTPC and GAIL, a joint venture company was incorporated which, resulted in the

birth of RGPPL. The co-owners of RGPPL were appointed as the owners‟

engineers to revive the power block as well as the LNG block. The LNG terminal

required protection and hence, what in technical terms is referred to as

„breakwater‟ had to be constructed in the sea on shores of which, evidently, the

LNG terminal block was situated. Since the job entailed specialized technical and

engineering experience, knowledge and skill accompanied with marine facilities as

its core competence, GAIL in turn engaged the services of EIL. The EIL was thus

appointed as the primary project management consultant. The EIL in turn sought

and obtained approval of GAIL to involve one U.K. based entity, namely, Scott

Wilson as their back-up consultant for marine works. RGPPL thus had the luxury

of having at its disposal not one, not two, but three experts.

4. The extent of the role played by the experts is demonstrable from the

averments made by RGPPL in its pleadings before us wherein it is averred and

therefore candidly admitted, that the board of directors in their deliberations held

on 04.10.2010 had come to a conclusion that in respect of aspects pertaining to:

revival/completion of the power blocks as well as LNG block which would pertain

to strategies for "packaging", "tendering mode", and "award recommendations"

including "price negotiations" wherever required; it would have to rely on the

owners engineers, i.e., NTPC and GAIL. Thus, RGPPL‟s formalization of award

of various contracts, including the contract in issue, was to be based on the

recommendation of the owner‟s engineers.

5. GAIL, in turn, in its pleadings before us, has taken the stand that as per the

arrangement arrived at between the parties, (which inter alia includes RGPPL),

EIL was to prepare the tender, float tender enquiries, evaluate offers received and

finally recommend the award of contract to GAIL in respect of LNG terminal

project. GAIL was thus required to examine and approve the recommendations of

the various stages of the tendering process which included approving the tender,

bidders evaluation criteria, approving price bids, and finally giving its

recommendation for award of the contract. GAIL thus, in the pleadings, has taken

the stand that in the exercise undertaken by it, of examination and evaluation of

bids till the stage of forwarding the award recommendation to RGPPL - it

followed its own contract in procurement procedures. It is in this background that

it became relevant for us to refer from hereon the events which led the EIL to float

the 1st tender; the queries raised by RGPPL; the reiteration of EIL of its

evaluation, the consequent declaration of the petitioner as L-1, and finally the

curious turn-around of EIL and GAIL (though sub-silentio) in declaring that the

petitioner had been wrongly declared as L-1; a recommendation dated 01.09.2010

which apparently formed the basis of RGPPL decision of 04.10.2010 to cancel the

1st tender.

6. The 1st tender was floated by EIL on 26.06.2009. Against the said tender,

bids were received from five (5) bidders, i.e., the petitioner before us i.e. RDS,

M/s ESSAR Construction Ltd., M/s Afcons Infrastructure Ltd., Joint Venture of

M/s Hojgaard Punj Lloyd Ltd. and lastly the Joint Venture of M/s Hung-Hua &

Ranjit Buildcon Ltd. The bids of the aforesaid five (5) bidders were evaluated by

EIL alongwith their back-up consultant, Scott Wilson, U.K. Upon evaluation, it

was found that Hung-Hua & Ranjit Buildcon Ltd. were not technically qualified,

resultantly, the said bidder was disqualified. This resulted in four (4) bidders

being left in the field. Consequently, EIL recommended to GAIL that the price

bids of the said four bidders be opened. It would be pertinent to note at this stage

that under the terms of the 1st tender, which are no different, we are told in the 2nd

tender, the price bids could only be opened qua bids which were found to have

qualified in the techno-commercial round, i.e., their bids were found technically

and commercially suitable. (See clauses 24 and 25 of the instructions to bids).

7. It is in this background that EIL on 24.12.2009 recommended the name of

the remaining four (4) bidders for appropriate approval of GAIL in respect of their

price bids. It appears that GAIL, while evaluating EIL‟s recommendation

observed that the foreign consultant, i.e., Scott Wilson, U.K., had not accepted the

adoption of "sling" methodology used by RDS for transporting, loading and

placement of rock armour for construction of breakwater, in the contract evidently

earlier executed by RDS. Therefore, by a communication dated 30.12.2009, GAIL

sought reconfirmation from EIL, whether it ought to accept the sling methodology

adopted by RDS. EIL by a return letter 31.12.2009, confirmed that RDS would

not use the sling methodology while loading out and placing rock armour and that

instead, it would use what is known as "hydraulic grab" technology. GAIL,

however, by a communication dated 25.01.2010 called upon EIL to seek the

opinion of Scott Wilson, U.K. in that regard. EIL evidently discussed the matter

with Scott Wilson, U.K, and thereupon, vide letter dated 01.02.2010 forwarded the

Scott Wilson, the U.K. addendum to their earlier technical evaluation report dated

29.01.2010. By virtue of this addendum, Scott Wilson, U.K. evidently confirmed

the inclusion of RDS in the list of those bidders whose price bids had been

recommended for being opened for appropriate evaluation. GAIL, thereupon

reviewed EIL‟s price bid opening recommendation, and after appropriate review

conveyed its approval for price bid opening of the very same bidders, who EIL

had recommended in the letter dated 24.12.2009. Once again RDS was included

in the list of recommended bidders.

8. Consequently, on 11.02.2010 in the presence of the said recommended

bidders, the price bids were opened. It was found that RDS, i.e., the petitioner,

was the lowest bidder at (approximately) Rs 390 crores, while the next lower

bidder was Afcons Infrastructure Ltd., whose price was higher by about Rs 160

crores in comparison to RDS, (having bid at Rs 550 crores). On 26.2.2010, EIL

forwarded their recommendation to GAIL. It is pertinent to note that the

justification cost (i.e., the estimated cost of the project) at the lower end of the

spectrum, was nearly Rs 662 crores (approximately).

9. On receipt of requisite recommendation and the back-up material, GAIL

upon appropriate examination and approval of the competent authority forwarded

its recommendation to RGPPL vide communication dated 08.03.2010. In this

communication, GAIL advised that while, executing the contract, RDS should

ensure that: it would inter alia provide suitably experienced staff with sufficient

equipment to ensure quality and adherence to time schedule; demonstrate and

implement appropriate planning and co-ordination of resources, undertake design

technical reviews to international standards; and lastly, provide site supervision

staff experienced in breakwater construction; once again, to ensure quality of

construction and compliance with specifications. To be noted, the communication

ended by explicitly stating therein that the recommendation had the approval of

competent authority, and is generally in line with GAIL‟s procedure and system.

10. From the point of view of the RDS, one would have imagined that the

execution of the formal contract hereon would be a given. This was, however, not

so as RGPPL by a letter dated 26.03.2010 sought various clarifications including

in respect of aspects mentioned in GAIL‟s letter dated 08.03.2010 issued to RDS,

to which we have made a reference hereinabove. The interesting part is that in

respect of query no. 5 raised in the aforementioned letter, RGPPL brought to

attention of GAIL that the estimated cost of the project was Rs 662.80 crores plus

minus 25%, whereas bid of RDS, which was declared as L-1, was lower than the

estimated cost by approximately 41.17%. RGPPL went on to state that if the bid,

is abnormally low, then it ought to give the owner sufficient cause to reject the bid

unless after due scrutiny and analysis of the rates, it is convinced about the

reasonableness of the bid. RGPPL thus sought GAIL‟s response to this query

amongst others. It would not be out of place to mention that RGPPL also raised a

doubt about RDS‟s ability to complete the breakwater project at hand in the given

time frame of thirty three (33) months when, on its own showing, it had taken

three (3) years for it to complete a breakwater project at Mus Car Nicobar, of 500

m; which incidently was shown as its qualifying work in the bid documents. In

this background, since the bid was valid till 30.04.2010, a request was made by

RGPPL to seek the extension of validity of the bid till 15.05.2010. RGPPL also

sought a copy of the recommendation of Scott Wilson, U.K. on the aspect of the

confirmation received from RDS that it would use hydraulic garb technology as

against the sling method for load out and placing of rock armour. GAIL, by its

letter dated 07.04.2010 gave a detailed point wise response to all eight queries, to

which we have made a mention hereinabove, including queries raised pertaining to

the difference between estimated cost and the bid price of RDS, and the capability

of RDS to execute the project within the stipulated thirty three (33) months, given

its experience in executing such like projects. The relevant part of the response on

this aspect reads as follows:

"......A.5 Accuracy of Cost Estimate:

The price quote of L1 bidder is reasonable as compared to lower bound cost estimate. The reasons for the same are as per Annexure

-1 attached with the letter.

A.6 Project Execution time and Bidders Capability: Based on the critical review of M/s RDS Projects offer, their replies to various technical queries and detailed presentation on execution/ construction methodology for the tendered work indicates that M/s RDS Projects is capable of executing the subject tender works in the stipulated time schedule.

Further, project execution time for any breakwater project is dependent on resources mobilization, availability of query at nearby location and marine environmental conditions at site etc. and

therefore project completion time periods may differ even though project physical parameters (size and shape) may be comparable...."

10.1 The communication ended with the GAIL appending the addendum to its

technical recommendation dated 29.01.2010, pertaining to the issue of the

technology which, RDS proposed to use for execution of the work at hand. It is

pertinent to note at this stage that both the recommendation of GAIL dated

08.03.2010 whereby, RDS was recommended for award of the work and, the

response dated 07.04.2010 pursuant to the first stage of queries raised by RGPPL,

vide its letter dated 22.03.2010 were sent under the hand of the same officer, i.e.,

Mr M.B. Gohil, General Manager (Project), GAIL.

10.2 Interestingly, in the interregnum as if by co-incidence, a writ petition was

filed in this court by Ranjit Buildcon Ltd., that is, the unsuccessful bidder, inter

alia, seeking a direction that RDS be declared as being „technically non-qualified‟

for undertaking the DPP and appropriate direction to quash any letter/LOI issued

by RGPPL in favour of RDS in respect of the said project. The affidavit appended

to the said writ petition is dated 22.03.2010. This writ petition, which was

numbered as WPC(C) No. 2142/2010 bears the date 23.03.2010. As indicated

above, the first set of queries of RGPPL to GAIL, is also a communication, dated

22.03.2010.

11. It appears that by a letter dated 25.03.2010, RGPPL formally informed

GAIL as regards institution of the writ petition by Ranjit Buildcon Ltd. This

communication was based evidently on a notice dated 23.01.2010 received from

the solicitors of Ranjit Buildcon Ltd. A copy of the writ petition was enclosed to

the said communication of RGPPL. A detailed reply was sought by RGPPL for its

purposes. GAIL in turn forwarded a copy of the writ petition to EIL vide its

communication dated 29.03.2010, while recording therein that discussions with

regard to the institution of the writ petition had been held in the office of

Managing Director of RGPPL on 26.03.2010. This letter was also issued under

the hand of M.B. Gohil. On 09.04.2010, EIL dispatched a point wise reply in

respect of the averments and allegations made in the writ petition filed by Ranjit

Buildcon Ltd. Apparently in respect of the qualification of RDS, the response

prepared by EIL was as follows:

"RDS Not Qualified (Reply to point nos. 25, 26, 28, 29, 30, 31, 32, 33 & 34) Requirement of Bidder‟s Qualification Criteria (in case of single bidder) as set out in the IFB are as follows:

The bidder shall have experience of having successfully completed, as a single bidder, or as a leader of a consortium/ joint venture, at least one project of a breakwater in an offshore location (offshore location is defined as the area submerged in the ocean sea) of minimum length of 400m during the last 20 (twenty) years to be reckoned from the last date of submission of bids. Documentary evidence submitted along with the bid offer conclusively established that:

 Breakwater at MUS in Car Nicobar Island is located at an offshore location

(Refer Annexure - 1: Completion certificate issued by Ministry of Shipping, Road Transport and Highways - Department of Shipping, Little Andaman which mentions that "The entire work has been executed in sea (beyond low water line) by M/s RDS Projects Ltd., and they have successfully completed during June 2003".

 M/s RDS has completed the entire works pertaining to breakwater at MUS in Car Nicobar island as a single entity on behalf of M/s Ellen Hinengo Ltd. (Refer Annexure -1: Completion certificate issued by Ministry of Shipping, Road Transport and Highways - Department of Shipping, Little Andaman). Hence, meeting the BQC requirement of qualifying project."

12. GAIL by a letter of even date, i.e., 09.04.2010, forwarded the same to

RGPPL. RGPPL wasted no time in responding to GAIL‟s communication and

thus, by a return communication of even date, i.e., 09.04.2010, sought the

following from GAIL:

(a) The letter of award containing detailed scope of work, contract value, payment

terms, completion schedule and other contractual stipulations, and

(b) the veracity of the completion certification submitted by RDS projects ltd.,

duly verified by GAIL/EIL.

12.1 These documents were sought ostensibly in order to enable RGPPL to

prepare its reply in response to the writ petition of Ranjit Buildcon Ltd. GAIL by

a return communication dated 12.04.2010, informed RGPPL that a work order for

the qualifying project (work) had already been submitted by RDS, though detailed

work order was not available with the bid documents filed by RDS. In so far as

the completion certificate is concerned, GAIL stated that RDS had furnished a

completion certificate issued by the Ministry of Shipping, Road Transport and

Highways Department of Shipping, Government of India and, therefore, they had

no reason to doubt the veracity of the document.

12.2 RGPPL reiterated its request for work order vide letter dated 28.04.2010.

EIL, on its part sent an email dated 24.05.2010 and 30.04.2010 seeking a copy of

the work order of its qualifying work. GAIL, by a letter dated 21.05.2010

informed RGPPL that though they had not received the work order from EIL, they

had been following up the issue.

12.3 Interestingly, RGPPL, it appeared, was looking for information which

perhaps, it already had in its possession by virtue of the Comptroller and Auditor

General (in short „CAG‟) report number 2/2002 which seemed to suggest that the

qualifying work, i.e., the breakwater constructed at Mus Car Nicobar Island in the

Andaman Nikobar Island had been constructed in "phases". Therefore, while the

website of Andaman Lakshdeep Harbour Works observed that there was only one

breakwater at Mus Car Nicobar Island with a length of 490 m, it desperately

wanted the work order to establish the fact that RDS had executed the qualifying

work/project not at one go but in different phases by virtue of the separate

contracts. Therefore, by a letter dated 26.05.2010, RGPPL once again sought the

copy of the work order. It is in this letter that RGPPL for the first time, revealed

the information that it had in its possession by virtue of what was available on the

website of Andaman Lakshdeep Harbor Works, and that which it found contained

in the CAG‟s report. It may be noted that GAIL evidently referred to contents of

this letter to EIL vide email dated 27.05.2010. RGPPL, on the other hand, raised

pointed queries for the first time with respect to qualification criteria provided in

clause 8.1.1.1. In the context of the qualification criteria provided therein, it

sought to know from GAIL that the GAIL had declared RDS as qualified based on

a certificate dated 05.04.2008 issued by the Dy. Chief Engineer, Andaman

Harbour Works. It was put to GAIL that since the certificate referred to a tender

of 26.05.1999, the certificate did not state the scope of the qualifying work

involved construction of a breakwater of 500 m length. It went on to say that

viewed in the background of the CAG‟s report (which is a report of 2002), the

scope of the tender was limited to 290 metre, therefore, it questioned the

conclusion arrived at by GAIL that RDS had the requisite experience of

constructing 500 metre breakwater. The communication ended with RGPPL

invoking clause 9 of the instruction for bidder (in short „IFB‟) which empowered it

to seek further documents from the bidder. Based on this clause, RGPPL asserted

its rights to receive a copy of the work order. It appears that GAIL sent a

communication dated 09.06.2010 on the aspects on which queries had been raised

by RGPPL. RGPPL on its part seems to have sought and obtained clarifications

from the Dy. Chief Engineer-IV, Andaman Harbour Works. The said Dy. Chief

Engineer-IV vide its letter dated 05.06.2010 issued its clarification which were

forwarded for consideration of GAIL and EIL. The said communication being

crucial for the purposes of adjudication of matter in issue, for the sake of

convenience, the relevant portion is extracted hereinbelow:

"With reference to the above, it is to inform that the work in question, "Construction of Breakwater and Wharf at Mus in Car Nicobar Island" was executed under Deputy Chief Engineer-IV circle. Most of the office records which were maintained in Little Andaman & Car Nicobar Island were washed away during Tsunami waves on 26th December 2004. The following details were furnished based on the available information.

It is reiterated that the subject breakwater was completed in June 03 and has witnessed Tsunami in the Dec 04 wherein entire establishment at Nicobar was washed away thus no records are available due to old case and havoc created by Tsunami. Thus clarification as asked for cannot be given as per format attached. However, it will be my endeavour to give details at my best. Briefly it is submitted that this only offshore breakwater of 22-490 mtr. Length (Constructed length of 500 mtr.) at Mus Car Nicobar was constructed in two phases/ contracts both of which were awarded to M/s EHL a tribal society of Car Nicobar Island in continuation i.e., before the first work completed the second was awarded.

First contract bearing no. EEM/LA/DB/A-10/95-96 dated 5.6.1995 valuing 14.10 crores, was awarded to M/s EHL with all items of work connected with construction of breakwater i.e., mining and supply of boulders of various sizes, Tetrapod casting and placing mining/ crushing aggregates etc. Subsequently to augment further progress, another agency M/s Reacon International was introduced

against work order valuing 6.28 crores against supply of boulders only. EOT granted to M/s EHL as delay not attribute table to them. Therefore, finally the balance work including left over items of 1st contract was put to tender and awarded to M/s EHL vide DCE/LA/DB/T-2/99-2000 Vol. IV 3318 dated 3rd Nov. 2000 valuing 30.01 crores for final completion of the structure. No EOT involved. It is hereby certified that M/s RDS Project Ltd. was the sole construction agency for and on behalf of M/s EHL, for undertaking all activities under these contracts to which their performance had been exemplary." (emphasis is ours)

13. EIL on its part, examined the certificate dated 05.04.2010 issued by the

Deputy Chief Engineer-IV, Andaman Harbour Works, in the light of the queries

raised by RGPPL and the clarification issued on 05.06.2010 by the said Deputy

Chief Engineer. In this regard, the CAG report number 2/2002 was also noticed

wherein it had been stated that the work had been completed in "phases". After

reviewing the material placed before it, EIL vide its communication dated

10.06.2010 concluded that even though the qualifying work at Mus Car Nicobar

Island had been completed in two phases, its recommendation did not "necessitate

any revision in the award recommendation". It is pertinent to note that the said

communication of 10.06.2010, which reviewed the material placed before it by

RGPPL, inter alia, the CAG report and the clarification dated 05.06.2010 issued

by the Deputy Chief Engineer -IV, Andaman Harbour Works indicating that the

qualifying project at Mus Car Nicobar Island, had been executed by RDS in two

phases and by virtue of two separate contracts, was signed off under the hand and

signatures of Sh. R.K. Bhandari, General Manager (Projects), EIL. The reason

why we have referred to the signatories would become clear as we progress further

with our narrative.

14. The communication dated 10.06.2010 was not, it appears, to the liking of

RGPPL. Consequently, RGPPL vide another communication dated 15.06.2010,

returned GAIL‟s recommendation of 08.03.2010 on the ground that documentary

evidence substantiating that the RDS met the Bidder Qualification Criteria (in

short „BQC‟), had not been furnished. In this communication, RGPPL went on to

say that the GAIL‟s recommendation was conditional (these so called conditions

have already been referred by us hereinabove in the earlier part of our judgment).

It directed RGPPL to withdraw these conditions appended to their

recommendation. It also went on to note that the clarification issued by the

Deputy Chief Engineer - IV, Andaman Harbour Works vide letter dated

05.06.2010 was not backed by any institutional data. In the context of all this, it

sought documentary evidence to establish "beyond doubt" (i) whether the RDS

was a single bidder for the qualifying (work) project; (ii) whether the RDS had

successfully completed one project of breakwater of minimum length of 400

meter; and (iii) whether the qualifying project breakwater was in an offshore

location as per BQC.

15. The letter dated 15.06.2010 was followed by RGPPL‟s letter dated

22.06.2010. It now sought clarification regarding non-submission of audited

financial statements by RGPPL for the immediately preceding financial year, i.e.,

2008-09. The purpose being: evidently to analyze the financial credentials of

RDS. GAIL, as in the past, by a communication dated 23.06.2010 written under

the hand of Mr M.B. Gohil, General Manager (PD-GP), forwarded the same to

EIL. This time the communication was addressed to one Shri Ravi Saxena, Dy.

General Manager (Project). Earlier, communications were addressed to

Mr.R.K.Bhandari, General Manager (Projects). As is evident, RGPPL had again

changed the goal post as it now sought to inquire as to whether the net worth of

RDS was positive during the financial year 2008-09. EIL vide letter dated

1.07.2010 once again sent a comprehensive reply to the RGPPL‟s letter dated

26.06.2010. EIL confirmed that the RDS met the financial criteria, as stipulated in

the tender. As regards non-availability of the balance sheet for the financial year

2008-09 was concerned, EIL informed that since the unpriced bid was opened on

16.09.2010, the tenderers, whose financial year closed thereafter, were at liberty to

submit the audited financial statements of those three (3) years which preceded the

said date. Nevertheless, audited financial statements of RDS of 2008-09 were also

obtained and furnished to GAIL for onward transmission to RGPPL. In order to

put the matter "beyond doubt", GAIL on its part, sought in the interregnum, the

opinion of the Attorney General of India on 28.06.2010. Suffice it to say, that the

Attorney General vide his opinion dated 30.06.2010, opined that RDS qualified

the single bidder qualification criteria provided in the 1st tender. It is pertinent to

note at this stage that even though the documents pertaining to the execution of the

qualifying work at Mus Car Nicobar Island had been obtained including the report

of the CAG and the clarificatory letter dated 05.06.2010 of the Dy. Chief

Engineer-IV, Andaman Harbour Works - the query on which the opinion of the

learned Attorney General was sought by GAIL, was in the light of the fact that the

qualifying work having been awarded to Ellon Hinengo Ltd. (in short „EHL‟),

whether RDS could be considered as the person who had executed the contract. In

other words, in the context of the fact that the work had been awarded to EHL,

whether RDS would stand in the position of a sub-contractor.

16. Given the response of EIL and the opinion of Attorney General received by

GAIL, GAIL by a communication dated 10.07.2010 forwarded the synopsized

response of EIL that; (i) the entire work of construction of breakwater at Mus in

Car Nicobar Island was executed by RDS on behalf of EHL; (ii) the contracted

length of the breakwater was 500 meters; (iii) the entire work was executed in

sea (beyond low water line) by RDS; (iv) the work was successfully completed in

June, 2003; (v) the qualifying work was executed by RDS as a single bidder

which met the BQC stipulated under the first tender; (vi) Even though the CAG

report no. 2/2002 and the clarificatory letter of the Deputy Chief Engineer - IV,

Andaman Harbour Works dated 05.06.2010 suggested that the work had been

completed in two phases/ contracts both of which were awarded to EHL; the

additional information did not necessitate any revision in the recommendation

for award of work to RDS; (viii) the completion certificate dated 05.04.2008 is

considered as adequate evidence of the qualifying work having been executed;

(vii) Learned Attorney General had opined that RDS having done the entire

work, was qualified under the expression „single bidder‟ in relation to the 500

meter breakwater project by RDS in Mus Car Nicobar Island; (ix) the conditions

thus far referred to in GAIL‟s letter dated 08.03.2010, were advisory in nature,

as indicated in GAIL‟s letter dated 09.04.2010; therefore, GAIL‟s

recommendation could not be construed as a conditional recommendation; (x)

RDS met the financial criteria, as was indicated in EIL‟s letter dated

01.07.2010; (xi) it specifically referred to item no. 6.2.3 in the agenda of the 6th

board of directors meeting of the RGPPL, wherein it had been in particular

observed that RGPPL would have to rely, inter alia, on the recommendations of

NTPC and GAIL qua the LNG block; and (xii) finally, after recording the

aforesaid, GAIL once again reiterated its recommendation of 08.03.2010 and

called upon RGPPL to re-consider the award of the said work to RDS.

16.1 The communication ended by noting that without the breakwater, capacity

utilization of LNG terminal would be limited to the extent of 20% and that

consequently the daily loss because of the failure to utilize the terminal to its full

capacity was working out to Rs 1.50 crores. The communication, however, ended

by putting the onus back on RGPPL by indicating therein that since RGPPL was

the owner, it would have a final view in the matter. This communication was once

again issued under the hand of Mr M.B. Gohil of GAIL. The letter contained

enclosures such as GAIL‟s recommendation dated 08.03.2010 (in original), copies

of EIL‟s letters dated 10.06.2010 & 01.07.2010 alongwith annexures and opinion

of Attorney General of India dated 30.06.2010.

17. It appears that in the meanwhile, RGPPL had preferred an application under

the Right to Information Act, 2005 (in short „RTI‟) with the Andaman Harbour

Works. Seeking information and documents vis-à-vis the qualifying work; this

included the work order dated 27.04.1995 awarded to EHL and the scope of work

of the qualifying tender. The documents obtained were forwarded to GAIL by

RGPPL vide its letter dated 26.07.2010. It would be important to note that a

perusal of the record submitted by RGPPL would show that just prior to issuance

of the letter dated 26.07.2010, its Board of Directors had convened a meeting on

20.07.2010. A perusal of the minutes would show that one of the Directors had

raised an objection as to why the Managing Director had initiated the agenda on

the LNG terminal while in respect of other LNG terminals meetings had been

initiated at the behest of the Dy. M.D. The Managing Director of RGPPL seems

to have suggested that the Board note had been prepared with the knowledge of

the Dy. M.D. and all versions of the draft notes had been shared with him. The

Dy. M.D., however, took the stand that since the Board note contravened the

opinion of the „GAIL Directors‟, he would not be amenable to appending his

signatures on the Board note. As a matter of fact, two Directors took the position

that since the owners‟ Engineers had opined that RDS fulfilled the BQC

requirements, the contract ought to be awarded to RDS. The Managing Director

took a contrary position. The events which followed hereafter would show that

this dissent for some curious reasons disappeared, even though there was no

material change in circumstances. Importantly, there is no reference to these

minutes in the affidavit filed by RGPPL. GAIL, on its part furnished, by a letter

of even date i.e., 26.07.2010, the said information to Mr R.K. Bhandari, General

Manager (Projects) of EIL. By this letter, GAIL called upon EIL to review its

recommendation based on the documents received through the RTI route,

particularly, in the context of its earlier evaluation of RDS as conforming to the

BQC under the 1st tender. This letter was sent under the hand of Mr M.B. Gohil,

General Manager, GAIL, and as indicated above, addressed to Mr R.K. Bhandari,

General Manager (Projects) in EIL. Since in the meanwhile, as noticed above,

Ravi Saxena had been given the task of evaluation on behalf of EIL, he did the

needful and communicated his assessment vide email dated 11.08.2010. After

"critically" reviewing the material at hand, which RGPPL had obtained through

the RTI route, EIL opined as follows:

"1. During the evaluation stage, M/s RDS offer was evaluated based on the documents furnished in their offer which include completion certificate no. DCE/LA/GI-20/928 dated 5.4.2008 issued by Dy. Chief Engineer - IV Andaman harbor Works Little Andaman. As the said completion certificate contained all the requisite information as per bid stipulations, M/s RDS was considered as qualified bidder.

2. Information which has now been made available to us additionally has been critically reviewed and it is found that contents of documents are not inconsistent with each other and therefore, we may not take cognizance of the said documents.

Moreover, though the work of breakwater at MUS has been carried out in two phases under two separate work orders, it may be considered as single project as Completion Certificate (No.

DCE/LA/GI-20/928 dated 5.4.2008) issued to M/s RDS is for the entire breakwater length. This fact is further corroborated by the letter No. DCE-IV/LA/ALHW/CAMP:PBF-35/764 dated 05/06/2010 issued by the office of Deputy Chief Engineer-IV which enumerates that M/s RDS was the sole construction agency for & on behalf of M/s EHL for undertaking all activities under these contracts to which their performance had been exemplary and also by the extract of CAG Report No. 2 of 2002 (Civil)." (emphasis is ours)

17.1 The communication included the opinion that no revision in the award

recommendation was necessitated at this stage.

18. Curiously, despite this emphatic stand, EIL took a complete u-turn on

01.09.2010 in response to GAIL‟s letter dated 26.07.2010 which had already been

replied by EIL vide its e-mail dated 11.08.2010. Based on the same material,

which as per the e-mail of 11.08.2010 had been critically reviewed, it came to an

entirely different conclusion and the person who came to this conclusion was the

very same gentleman, i.e., Ravi Saxena, who had issued the earlier

communication, i.e., e-mail dated 11.08.2010. In his communication of

01.09.2010 the officer opined as follows:

"Considering the facts as brought out from above mentioned documents, it is evident that Ministry has awarded project for construction of breakwater from chainage 22 to 200 meters and

project for construction of breakwater for chainage 200 to 330 meters subsequently extended to 490 meters as separate projects. In view of the documents made available and having perused all the documents in concurrence with each other, it emerges that since both the phases have been considered as separate projects by the Ministry, M/s RDS can not club the experience of having executed two separate projects to qualify the BQF which requires that the bidder should have experience of at least one project of a breakwater in an offshore location of minimum 400 m.

In light of above, it is concluded that experience submitted by M/s RDS can not be taken as execution in „single project‟ and therefore, M/s RDS does not meet the BQC requirement."

19. This aspect of the matter troubled us immensely. Therefore, in the hearing

held before us, we had put to the learned counsel for EIL, Mr Ashok Mathur as to

how on the very same material, the same person i.e., Ravi Saxena, Deputy General

Manager (Projects), EIL could have come to a diametrically converse conclusion.

Mr Mathur had no answers, till he was guided by an officer of EIL by drawing his

attention to a legal opinion on record of one Ms Smita Sehgal dated 26.08.2010.

We had put to Mr Mathur during the course of hearing, as to whether this aspect

had been disclosed in the counter affidavit filed by EIL in court. Mr Ashok

Mathur quite fairly conceded that this aspect had not been referred to in the

counter affidavit filed by EIL. In these circumstances we had put to Mr Mathur

whether at this point in time, when respondent no. 3/EIL had already concluded its

submissions in reply, would it be fair to refer to those documents or allow the said

legal opinion to be placed on record in the midst of the hearing when the petitioner

had no opportunity to deal with it in the rejoinder placed on record. EIL having

been caught on the wrong foot, however, persisted in its efforts. Consequently,

towards this end, an application was filed and moved before us on 12.09.2011

when, after recording our observations that there ought not to have been any need

to file the said additional affidavit (which was sought to be done by way of an

application) as EIL was aware of the case set up by the petitioner, and therefore,

our queries, could not have come as a surprise - the application was allowed and

EIL was permitted to place the documents filed on record even at that fag end of

the hearing, only to enable EIL to have its complete say; though the analysis of the

effect of the document was made subject to the final outcome of the case. The

application was allowed with cost of Rs 50,000/-. Liberty was granted to the

petitioner to meet this new development by way of an oral rejoinder at the hearing

to follow.

20. It would be, therefore, important to deal with this aspect of the matter

which evidently brought about change of heart and mind in the EIL‟s officer led

by Ravi Saxena. The affidavit accompanying the appeal adverts to the fact that

pursuant to email dated 11.08.2010 issued by Ravi Saxena of EIL, the then Dy.

General Manager (Projects) an internal meeting was held to ascertain the view,

(we assume of the legal department), in the light of additional material made

available to EIL. A decision was taken at this meeting evidently to refer the

matter to the legal department for their opinion. To be noted, the date of this

internal meeting is not adverted to in the additional affidavit dated 06.09.2011

filed by Ms Smita Sehgal. The affiant, however, adverts to an inter-office

memorandum dated 20.08.2010, whereby the material was forwarded to the legal

department seeking its opinion. It is in that background that legal department on

26.08.2010 opined that RDS did not meet the BQC requirement of the 1st tender.

We may only notice that the opinion concludes by stating that since the Ministry

had awarded the project for construction of breakwater (qualifying project) from

chainage 22 to 200 meters, and the project for construction of breakwater from

chainage 200 to 300 meters (subsequently extended 490 meters), RDS had

experienced not of a "single project" but of "two projects", and hence did not

qualify the BQC requirement of the 1st tender which required the bidder to have

experience of at least one project of a breakwater in an offshore location of

minimum length of 400 meters. The author of the opinion is also the affiant to the

additional affidavit. Ms Sehgal pivots this view on the strict construction of the

language of the document in issue and goes on to say that however "harsh"

"absurd" or even contrary to common perception the conclusion may be, that is

the only conclusion she could draw on the construction of the document. What is

even more interesting is that this very legal opinion bears the endorsement dated

27.08.2010 of Mr.Grover Director (Projects) - calling upon Mr R.K. Bhandari,

General Manager (Projects) to follow the opinion of the legal department. It is

important to remind ourselves at this juncture that till 10.06.2010, it was the same

R.K. Bhandari, who opined based on the very same additional information, (which

formed the edifice of Ms Smita Sehgal‟s opinion) that material forwarded did not

necessitate revision in award recommendation. There is no averment in the

affidavit as to whether Mr.Grover called a meeting of Mr.R.K.Bhandari and

Mr.Ravi Saxena to discuss the opinion of the legal department. Mr Grover‟s

endorsement suggests quite clearly that he left no scope for debate or discussion.

21. On receipt of EIL‟s revised recommendation of 01.09.2010, GAIL vide

communication dated 18.09.2010 simply forwarded the opinion of EIL to RGPPL.

In its communication, GAIL made it clear that since RGPPL was the owner under

the contract, it should take appropriate action at their end. The RGPPL was, at

this stage, not happy with the communiqué of GAIL whereby, the onus for the

final decision was put on it, therefore by a letter dated 20.09.2010 it called upon

GAIL to forward its recommendation based on the communication of EIL dated

01.09.2010. This letter of RGPPL dated 20.09.2010 is not on our record, though it

finds mention in paragraph 37 of the affidavit filed by Mr.M.B. Gohil. GAIL,

however, did not oblige as is evident from its letter dated 22.09.2010. GAIL after

giving reference to its earlier recommendation dated 08.03.2010, and also letters

dated 09.04.2010, 21.04.2010, 09.06.2010 and 10.07.2010, put the onus back on

RGPPL to take a decision in the matter being the owner of the project as it had in

its wisdom, all the relevant information, on the subject, available with it. The

author of letters dated 18.09.2010 and 22.09.2010 is one Sh. S.C. Khetan, Dy.

General Manager (PD), in GAIL, who appears to have taken over from M.G.

Gohil. It appears that given the stance of GAIL, RGPPL proceeded to take a

stance in the matter. Consequently, by email dated 07.10.2010, RGPPL informed

GAIL that they had taken a decision at their Board of Directors meeting held on

04.10.2010 to annul the 1st tender. It also indicated in the said communication

that by a letter dated 06.10.2010, this decision had also been conveyed to RDS.

Since RDS had been disqualified, their EMD was also sought to be returned.

GAIL, by this very communication had been asked to re-float a fresh tender. The

email of 07.10.2010 was followed by a letter dated 13.10.2010 of RGPPL to GAIL

broadly conveying the same information. Consequent thereto, GAIL informed

EIL vide letter dated 19.10.2010 to initiate a fresh tender process for construction

of breakwater works at the LNG terminal. On 31.12.2010, EIL forwarded the NIT

alongwith international competitive bidding (in short „ICB‟) and the BQC for

fresh tender (i.e., the 2nd tender) to GAIL for approval. The tender committee,

comprising of the executive director, approved the issuance of the said documents

with the amended clause 8.1.1.1. This document was further approved by the

competent authority, i.e, the Director (Marketing). The approval was obtained on

06.01.2011. Based on the above, EIL floated the 2nd tender inquiry on an ICB

basis on 12.01.2011. It is this 2nd tender which contains the amended clause

8.1.1.1 which is the cause of grievance in the present writ petition.

SUBMISSION OF COUNSELS

22. In the background of the aforesaid facts and circumstances, submissions

were made by counsels for parties. The arguments have been addressed before us

on behalf of petitioner/RDS by Mr Jagdeep Dhankar, senior advocate; on behalf of

RGPPL by Mr A.S. Chandhiok, Addl. Solicitor General (ASG); on behalf of

GAIL by Mr Gourab Banerji, ASG; and on behalf of EIL by Mr Ashok Mathur,

Advocate. Ms Indira Jai Singh, learned ASG made submissions on behalf of EIL

in support of the application filed, to bring on record the legal opinion, which has

been referred to above by us. Mr Neeraj Choudhari, CGSC made submissions on

behalf of UOI.

23. Mr Dhankar in his submissions has taken us minutely through those very

documents which we have referred hereinabove to show how the owners

engineers, GAIL as well as EIL till 11.08.2010 consistently adhered to the stand

that their recommendation to award the contract to RDS did not require any

revision. He submitted that the change which was brought about on 01.09.2010

was made with a malafide intention only to oust the petitioner. The decision in

respect of the said change was recommended by Ravi Saxena on behalf of the EIL,

who was also the author of the earlier communication dated 11.08.2010, wherein

he had conveyed to GAIL and through GAIL to RGPPL that notwithstanding the

qualifying work having been executed by the petitioner in "two phases" under two

contracts, the petitioner was eligible and its recommendations for award of

contract to RDS did not require a revision. Mr Dhankar submitted that the action

of the respondent was fraught with malice, arbitrariness and lacked complete

fairness, in as much as, the only intent of RGPPL was somehow to get the EIL and

GAIL to change their opinion so that RDS was ousted from the work in issue.

Having achieved in its design, RGPPL presented this court with fate accompli

when the petitioner/RDS filed a writ petition bearing no. 8252/2010 to challenge

RGPPL‟s decision of 04.10.2010 by cancelling the 1st tender altogether. The

petitioner/RDS was thus left with no option but to withdraw the petition and take

its chance in a fresh round if and when the work were to be awarded. The RDS‟s

apprehension, which is recorded in the court‟s order dated 14.12.2010, came true,

when in the fresh (2nd) tender floated by the respondents, the eligibility criteria

contained in clause 8.1.1.1. in the 1st tender, was significantly changed to ensure

its complete exclusion from the race, so to speak. Given the facts and

circumstances of the case in this matter, the court could come to no other

conclusion but that the respondents‟ action were malicious, unfair and contrary to

justice and equity. We may only note here that at the request of Mr Dhankar, Mr

Chandhiok, learned ASG had accorded an opportunity to the petitioner to inspect

briefly, RGPPL‟s record in court; based on which Mr Dhankar brought to our

notice, a significant fact, which is that on 17.09.2010, RGPPL had received a copy

of the completion report dated 09.08.2005 from the concerned authorities i.e.,

Deputy Chief Engineer-IV, which clearly indicated that the breakwater work (i.e.,

the qualifying work) at Mus Car Nicobar Island had been constructed and

completed. Mr Dhankar submitted that RGPPL, while issuing its communication

on 20.09.2010 to GAIL, called upon it to submit its recommendation (and not

simply forward that which EIL had given vide its communication dated

01.09.2010) - which ordinarily would have meant that it wanted its independent

input on the issue at hand; and therefore, in order to ascertain its view, it ought to

give every material it had at hand, including the completion report dated

17.09.2010, if its action were not motivated. Mr Dhankar submitted that otherwise,

all this while, RGPPL had been furnishing documents to GAIL to opine on the

matter, however, this crucial document had been withheld by RGPPL because by

this time, it had already received an opinion which it was so desperately seeking,

which was the ouster of RDS.

24. On behalf of GAIL, Mr Gaurab Banerji took us through a series of

documents and correspondence which had been exchanged amongst the parties on

the aspect pertaining to the qualifying work and its impact on the eligibility of

RDS. Mr Banerji laid special emphasis on the fact that the RDS had made a

misrepresentation, in as much as, in its bid document filed in respect of the 1st

tender against query no. 6, it had stated that it had executed a breakwater of total

length of 500 metres at Mus Car Nicobar Island; the milestone dates being:- date

of award - November, 2000; commencement of work - November, 2000; the

scheduled date of completion - June, 2003; and lastly, the actual date of

completion - June, 2003. According to the learned ASG, the said information

given in the aforementioned document by RDS had been confirmed against query

no.10 raised in the very same document. Mr Banerji submitted that by way of

evidence, the only proof that RDS provided to establish the veracity of the said

information concerning qualifying work, was the certificate of the Government of

India, Ministry of Shipping, Roadways and Highways dated 05.04.2008. Since the

material collected by RGPPL demonstrated that the qualifying work had in fact

commenced in 1995, and that it got concluded in 2003, demonstrated that RDS

had misrepresented facts which led both GAIL and EIL into believing that the

RDS was eligible. Mr Banerji laid stress on the fact that the contract in issue, i.e,

the 2nd tender envisaged execution of the work in three (3) years. He submitted

that if petitioner had taken eight (8) years to complete a breakwater of 500 metre

length then both the experts, i.e., GAIL and EIL including the owner had the right

to review their decision and cancel the contract as under the 2nd tender, a

successful bidder would be required to construct a breakwater of 1800 m length in

thirty three (33) months. Mr Banerji submitted that, the given the facts and

circumstances of the case and the documents on record, it could not be said that

respondents have taken a decision with the malicious intent or, that it was unfair

and arbitrary.

25. Mr Mathur, in his brief submissions, dittoed the arguments of Mr Banerji.

As indicated above, Mr Mathur had very little to say on the change of opinion of

EIL between 11.08.2010 and 01.09.2010. The reason for the opinion; which is

also noticed by us above, was the opinion obtained from the legal department of

EIL.

26. Mr Chandhiok, learned ASG appearing for the RGPPL argued that under

clause 28.1 of the IFB read with clause 19, RGPPL as the owner was entitled to

cancel the 1st tender. Mr Chandhiok submitted that under clause 9 of the ITB the

owner was entitled to seek additional information from the bidders. It was his

case that this information was sought from time to time from RDS through the

aegis of owners‟ engineers, who in turn prevailed upon EIL to seek this

information. Despite, several communications beginning from March, 2010, the

said information was not made available by RDS. RGPPL had to obtain the

information from various sources, including the RTI route. It was the information

which RGPPL had gathered, i.e., the CAG Report, and the information available

on the website of Andaman Harbour Works, which gave a clue to the fact that

RDS had neither constructed entire 500 metres of the qualifying work, purportedly

executed at Mus Car Nicobar Island, nor had it been executed under one single

contract in a single phase, as was the requirement of clause 8.1.1.1 of the 1st

tender. It was Mr Chandhiok‟s submission that, given this misrepresentation,

RGPPL as the owner, in public interest, was entitled to cancel the 1st tender. Mr

Chandhiok raised certain issues on the "maintainability" of the reliefs sought in

the writ petition. In this regard, Mr Chandhiok drew our attention to the reliefs

claimed by RDS whereby it sought a direction from this court to quash the

decision taken by RGPPL‟s board of directors on 04.10.2010, cancelling the 1st

tender. Learned ASG submitted that this relief could not be sought by RDS, in

the present writ petition, in view of the fact that RDS had withdrawn its earlier

writ petition, i.e., WP(C) No. 8252/2010 without seeking liberty to file a fresh writ

petition to challenge the very same decision. In order to buttress this submission,

Mr Chandhiok submitted that, at best, RDS could seek to challenge the 2nd tender

by way of the present writ petition, wherein allegation made is that the petitioner

was wrongfully excluded. It was the ASG‟s submission that liberty sought and

granted by this court by its order dated 14.12.2010 was of a limited nature. In

order to buttress his submission, learned ASG referred to an application bearing

no. 13791/2010 dated 07.10.2010, filed by RGPPL, in the writ petition filed by

Ranjit Buildcon Ltd. [WP(C) No. 2142/2010]. Learned ASG referred to

paragraphs 3, 5, 6, 7 & 10 of the said application. Based on the assertion made

therein, wherein broadly, it has been stated that RDS had been declared ineligible

for failure to meet the qualifying criteria - Mr Chandhiok submitted that a

Division Bench (which included one of us i.e., Sanjay Kishan Kaul, J) of this

Court had by an order dated 30.11.2010 dismissed the writ petition as withdrawn.

Mr Chandhiok submitted that even though the application contained allegations

against RDS, (which was impleaded as respondent no. 2 in the said writ petition),

no caveats were entered by RDS when it came up for hearing. For all these

reasons, it was Mr Chandhiok‟s submission that RDS is neither entitled to assail

the decision of RGPPL dated 04.10.2010 nor could it seek a writ of mandamus

calling upon RGPPL to award the contract in its favour.

27. On behalf of UOI, Mr Neeraj Choudhary adverted to only the averments

made in the counter affidavit filed by the UOI.

REASONS

28. Having heard the learned counsel for the parties and facts noticed

hereinabove, it is quite clear that after RDS was declared as L-1, a concerted

attempt was made to oust the RDS. Under the terms of the 1st tender, the job of

evaluating the eligibility of the bidders was that of EIL. EIL made its

recommendations, as regards techno-commercial qualification of RDS and that of

three (3) other bidders, as far back as, 24.12.2009. GAIL, after evaluating EIL‟s

recommendation sought its opinion on the technology that RDS would use for

loading out and placement of rock armour. GAIL insisted, that EIL should get the

back-up consultant, i.e., Scott Wilson, U.K to opine on the matter. EIL did the

needful and forwarded an addendum in that regard generated by Scott Wilson,

U.K. to its report on 29.01.2010. This cleared the way for opening the price bid.

It is not disputed, as it cannot be, that the price bid under the tender conditions

(i.e., the 1st tender) could only been opened in respect of those bidders who were

considered to be techno-commercially qualified. On 10.02.2010, GAIL gave its

approval to EIL to open the price bid of the four (4) bidders who had qualified the

techno-commercial round. Ranjit Buildcon Ltd., which had been disqualified in

the techno commercial round, stood aggrieved in the meanwhile. On 11.02.2010,

when price bids were opened, it was undisputedly found that RDS was the lowest

bidder at Rs 390 crores (approximately). It is also not in dispute that the

difference between the next lowest bidder, which was Afcons Infrastructure, is a

sum of Rs 160 crores (approximately). The EIL conveyed its award

recommendation to GAIL vide its letter dated 26.02.2010. GAIL in turn

forwarded its award recommendation, (after due examination of the award

recommendation of EIL) on 08.03.2010. Mr M.B. Gohil, on behalf of GAIL

communicated that recommendation. RGPPL, it appears was not happy with this

state of affairs. RGPPL raised various queries by its letter dated 22.03.2010; to

which we have already made a reference. This was followed by a series of letter

dated 09.04.2010, 26.05.2010 and 26.07.2010. In between, RGPPL had obtained a

CAG report no. 2/2002. A perusal of RGPPL‟s record would show that on

14.05.2010 it had written to CAG that it had downloaded its audit report no.2/2002

with respect to construction of breakwater at Mus Car Nicobar Island and that it be

given a certified copy of the same alongwith any additional record with regard to

the same. The CAG obliged evidently vide its letter dated 17.05.2010 by

forwarding a copy of its report no.2/2002. What is not known is when did RGPPL

for the first time download a copy of the report from the website despite the fact

that the matter had been hanging fire since 08.03.2010. More pertinently, these

letters are not referred to in the affidavit filed by RGPPL. It evidently, also

became wise to the information available on the website of the Andaman Harbour

Works, which indicated that the qualifying work at Mus Car Nicobar Island, which

the RDS claimed as its experience in executing the instant work, was only of a

length ad-measuring 490 metres. GAIL, at the insistence of RGPPL, conveyed

this information to EIL. It is pertinent to note that, keeping in mind the

information that RGPPL had, it called upon GAIL to obtain the work order issued

in respect of breakwater evidently constructed by RDS at Mus Car Nicobar Island.

Other queries were also raised (to which we have made a reference above) by

RGPPL, in its letter dated 08.06.2010. In the interregnum, RGPPL had also

received a letter from the Deputy Chief Engineer - IV, Andaman Harbour Works

dated 05.06.2010. This letter of Deputy Chief Engineer - IV Andaman Harbour

Works was also forwarded for consideration of the EIL. Sh.R.K.Bhandari, on

behalf of EIL, in his letter dated 10.06.2010 remained firm on his stand that the

material placed before him, which included CAG‟s report number 2/2002 as also

the letter of the Deputy Chief Engineer -IV, Andaman Harbour Works dated

05.06.2010, did not require a revision in EIL‟s award recommendation qua RDS.

Not being satisfied, RGPPL by a letter dated 15.06.2010 issued a missive to

GAIL, in which it inter alia observed therein for the first time [after nearly three

(3) months] that its initial recommendation of 08.03.2010 was conditional. GAIL,

in the meanwhile, also sought the opinion of the Attorney General on the issue

raised by RGPPL that since work at Mus Nicobar had been awarded to EHL could

it be said that RDS had executed the work as, it was only a sub-contractor, and

therefore did it come within the ambit of the expression "single bidder". The

Attorney General, however, to the misfortune of RGPPL as it would appear,

clearly opined that RDS was eligible and fell within the meaning of the expression

„single bidder‟. The rationale broadly given was that even though qualifying work

had been awarded to EHL, it did not have the necessary wherewithal, the work

having been executed by RDS, it could not be said that it was sub-contractor. It

may, however, be pertinent to emphasis the fact that the query put to the learned

Attorney General was restricted to whether RDS could be considered a sub-

contractor in view of the fact that the works had been awarded by the Government

of India to EHL.

28.1 The point to be taken note of is, that even though opinion of the learned

Attorney General was sought on 08.06.2010 when the CAG report of 2002/or at

least letter dated 05.06.2010 issued Deputy Chief Engineer-IV, Andaman Harbour

Works was available, no query was raised about the eligibility of RDS in the

context of the fact that the qualifying work had been executed at Mus Car Nicobar

Island in two (2) phases under two (2) contracts. The query to the learned AG was

confined to whether RDS fit the bill of a „single bidder‟.

29. RGPPL even at this stage did not let the matter lie. It evidently collected

material through the RTI route by making an application in that regard with the

Andaman Harbour Works. The information obtained was transmitted to GAIL,

under the cover of its letter dated 26.06.2010. EIL once again was called upon to

give its recommendation. EIL, by an email dated 11.08.2010, after a critical

review, came to the conclusion that, the mere fact that the qualifying work at Mus

Car Nicobar Island had been carried out in two (2) phases, it could not be said that

RDS was not a single bidder. EIL stuck to its decision that no revision in the

award recommendation was necessitated at this stage. Then of course, came the

internal meeting of EIL - as to when it was held is not disclosed in the additional

affidavit filed. The affidavit does not advert to the fact as to who all participated

in this internal meeting. At the internal meeting, the matter was evidently referred

to the legal department of EIL. The legal department gave an opinion on

26.08.2010, stating therein that principle of strict construction had to be applied to

the contract documents, and on application of the said principle it had to be

concluded that RDS had not fulfilled the BQC requirement stipulated in the

tender, (i.e. the 1st tender), however, "harsh" or "absurd" such conclusion may be.

It was submitted before us that this opinion became the edifice for the change of

view that the EIL took on 01.9.2010. We may note at the outset that the opinion is

completely converse to the stand taken by the EIL up to 11.08.2010. It is pertinent

to note (a fact we were told in the hearing) that the said legal opinion bears the

endorsement of Mr.Grover, Director (Projects) calling upon Mr.R.K.Bhandari,

General Manager (Project), EIL to simply comply with the view taken by the legal

department. As noticed here in above by us, Mr.R.K.Bhandari was the same

gentleman, who on 10.06.2010 had opined that no revision in the award

recommendation in favour of RDS was called for. The crucial question which

arises, is that, was Mr.R.K.Bhandari given a chance to express his view on the

opinion rendered by the legal department. This is a pertinent aspect of matter to

our minds since Mr.R.K.Bhandari, followed by Mr. Ravi Saxena, in EIL and,

Mr.M.B.Gohil in GAIL, were people who would have dealt with such like contract

on a number of occasions. Being experts in their respective fields, they would

know what was intended when terms like "single project" and "single bidder"

were put in Clause 8.1.1.1. Therefore, for the legal department of EIL to take a

contrary, though "absurd" and "harsh" view, required at least a modicum of

response from the expert, which was none other than Mr.R.K.Bhandari dealing

with the issue till 10.06.2010. Mr.Grover Director (Projects) did not deem it fit to

even ask for his comments. Therefore, the integrity of entire process is suspect to

say the least. In any event, in our view, the opinion is completely contrary to the

plain language of clause 8.1.1.1. At this juncture we may note the relevant

provisions of clause 8.1.1.1 as they obtained in the 1st tender:

"8.1.1.1 The bidder shall have experience of having successfully completed, as a single bidder or as a leader of a Consortium/Joint Venture, at least one project of a breakwater in an offshore location (as defined at clause No. 8.1.2.5 below) of minimum length of 400 m during the last 20 (twenty) years to be reckoned from the last date of submission of bids. The scope of work of the proposed qualifying project work should comprise of the design, engineering, project management and construction of the breakwater."

30. A perusal of the clause would show that a bidder, would have to have

experience of having successfully completed as a single bidder or as a leader of a

consortium at least one project of breakwater of a minimum length of 400 metre

located in an off shore location, during the last twenty (20) years to be reckoned

from the last date of submission of bids. Plain language of the said clause would

show that a project could be executed in different phases. The ordinary meaning

of the word „project‟ would be "planned undertaking or scheme" (See The

Conscise Oxford Dictionary Ninth Edition, 1995). Therefore, the fact that the

qualifying project at Mus Car Nicobar Island was executed by RDS in two (2)

phases could not have ousted it. In understanding the meaning of the words and

expression used in a contract, courts would ordinarily go by the meaning given to

the words by those who administer and operate the contract, unless that meaning is

completely at variance with the understanding of a common prudent person. Both

the experts, who dealt with the evaluation of the bids, i.e., GAIL and EIL, despite

receipt of material in the form of CAG report and the Deputy Chief Engineer-IV,

Andaman Harbour Works letter, which indicated that qualifying contract had been

executed in two (2) phases, came to the conclusion that RDS was eligible and,

therefore, the award recommendation did not require a review. We fail to

understand how the legal department could take a view, on this matter, contrary to

what the persons, who operate these contracts, understood the expression to mean.

In a construction of commercial contract (if one were to assume for a moment that

construction of contract was required to ascertain the intention of parties), the

accepted rule is that if semantic and syntactical construction is at variance with the

business common sense, then it must yield to business common sense. The

observations in Antaios Cia. Naviera S.A. v. Salen Rederierna A.B. (1985) A.C.

191 been apposite are extracted below:

"While deprecating the extension of the use of the expression „purposive construction‟ from the interpretation of statutes to the interpretation of private contracts, I agree with the passage I have cited from the arbitrators‟ award and I take this opportunity of restating that, if a detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense."

30.1 The purpose of construction has been described felicitously by Lloyd L.J.

in The Sounion (1987) 1 Lloyd‟s Re. 230 as follows: "Designed to separate the

purposive sheep from the literalist goats."

30.2 We may note at this stage that we had pointedly put to the ASG Ms.Indra

Jai Singh during the course of hearing, as to whether there was any doubt or

dispute that RDS had not executed the qualifying work at Mus Car Nicobar Island

equivalent to the contracted length of 500 metres. Ms.Indra Jai Singh, on

instructions, categorically informed us that this aspect of the matter was not in

issue. She, however, submitted that what was in issue, was the fact, that since it

had now emerged that RDS had completed the project in two (2) phases;

according to EIL, it was not eligible. With EIL having taken this stand, which was

not contradicted by GAIL at the hearing; it quite surprised us when, Mr.Chandhiok

appearing on behalf of RGPPL took the stand that RDS had not even constructed

the required minimum 400 metres length of the qualifying work. We may also

point out at this stage the stand of the UOI in its affidavit. UOI has categorically

supported its certificate dated 05.04.2008 and the clarification issued on

05.06.2010 by the Deputy Chief Engineer-IV, Andaman Harbour Works.

Therefore, this argument of RGPPL cannot be accepted.

31. The submission made on behalf of the respondents, in one form or the

other, that there had been a misrepresentation by RDS, in as much as, in the bid

document it had disclosed that the qualifying work had commenced in 2000 and

was completed in 2003, was put by us to Mr Dhankar. Mr Dhankar informed us

that the RDS somehow misconstrued the information sought in the bid document.

On being queried as to why RDS had withheld the work order, Mr Dhankar

submitted that since most of the records of the Andaman Harbour Works had got

swept in the tsunami of the December, 2004, it had become difficult to recoup the

work order. Mr Dhankar submitted that, nevertheless, the said information was

available with the respondents by July, 2010 and, therefore, they had every

opportunity to examine the effect of the same prior to issuance of recommendation

dated 11.08.2010.

32. Having examined the matter closely, we got a distinct impression that

RGPPL was somehow attempting to find a way around the recommendation

issued by GAIL and EIL. Even though the information given against the query no.

6 of the bid document filed by RDS was not completely accurate, it did appear to

us that RGPPL had with it the information that the qualifying work at Mus Car

Nicobar Island had commenced in 1995 and that it was awarded in two (2) phases,

under two (2) separate contracts. This distinct impression we get as the

information with regard to the fact that the qualifying work had been executed in

two (2) phases was available in the CAG report of 2/2002. Some part of the

information was also available on the website of the Andaman Harbour Works.

Therefore, whether the information given against query no. 6 in the tender

documents actually misled RGPPL is, in the facts and circumstances obtaining in

the case, difficult to believe. Notwithstanding this, the said information lost its

materiality in view of the fact that, the said information was sought to be used by

RGPPL only to say that RDS was not eligible as the qualifying work had been

executed in two (2) phases. The aspect pertaining to the time taken in the

execution of the qualifying the work; was a factor which did not even figure in the

mind of the Evaluator i.e., EIL on 01.09.2010; though Mr.Banerjee true to his craft

had attempted to make this an issue. The fact remains, that despite this

information being available, on review and examination at length, both GAIL and

EIL came to the conclusion that their initial recommendation of 08.03.2010 did

not require a revision. Therefore, for the EIL to have turned turtle, so to say, on

01.09.2010, based on a legal opinion generated by its legal department, belies

credibility to say the least. What is interesting, is that, even though GAIL, up to a

point took the stand that in respect of all recommendations qua award of contract

for DPP; RGPPL would have to rely upon on it - it collapsed under the weight of

RGPPL or perhaps threw up its hands in complete frustration, as it appears after

11.08.2010. This is evident from the fact that after the EIL‟s u-turn on

01.09.2010, GAIL refused to give its own view in the matter, which it was

required to do under the terms and conditions of the tender. RGPPL sought its

recommendation by its letter dated 20.09.2010, despite which, GAIL refused to do

so, as is evident from its return communication dated 22.09.2010, wherein it called

upon RGPPL to take the decision in its capacity as the owner in view of the fact

that the entire material was available with it. We have no doubt in our minds that

in this background, the decision taken at the Board of Directors‟ meeting of

RGPPL on 04.10.2010 was pregnant with malice, and that it had been taken for

considerations other than those which are in accord with good conscious, equity

and fairness. The new clause (which is the amended version of clause 8.1.1.1

obtaining in the 1st tender) was undoubtedly introduced in the fresh tender, (i.e.,

the 2nd tender), to completely oust RDS. For the sake of convenience the amended

clause is extracted hereinbelow:

"8.1.1.1 The bidder must have completed in a single contract, as a single bidder or as a leader of a consortium, at least one breakwater (using marine spread - refer Note 1) of minimum length of 400 m located in sea during the last 20 (twenty) years to be reckoned from the last date of submission of bids. The scope of work of the above referred qualifying job should comprise of design, engineering, construction and project management of the breakwater. Land connected breakwater having a minimum length of 400m located in sea is also acceptable provided construction has been carried out using marine spread as mentioned above."

33. A bare perusal would show that the respondents have called for bids only

for those bidders who have completed in a single contract as a single bidder or as a

leader of a consortium/ joint venture one project of a breakwater, located in sea, of

minimum length of 400 metre during the last twenty (20) years to be reckoned

from the last date of submission of bids. At the end of this amended clause, there

is also the insertion of the following provision "...Land connected breakwater

having a minimum length of 400 metre located in sea is also acceptable provided

construction has been carried out using marine spread...".

33.1 The respondents know-fully well that RDS can never apply or be found

eligible in respect of the 2nd tender as: the qualifying work which RDS had

executed, is a subject matter of two (2) contracts and not a single contract; and that

project was an offshore project as against one located in sea. The additional

provision of a land connected breakwater which was not an option available in the

1st tender is, according to RDS, deliberately inserted to accommodate bidders who

missed the bus, so to speak, in the first round. Since there is no material in respect

of the last part, we are not impressed by the same but it is definitely apparent to us

that the words „single contract‟ as also that the „qualifying work should be

located in sea‟, have been introduced in the facts and circumstances of the case to

exclude RDS. This is a clear case of malice in law which occurs when a person

or an entity commits a wrongful act intentionally without just cause or reason.

The following observations of Viscount Haldane in Shearer vs Shield (1914) AC

808 have been cited with approval in West Bengal State Electricity Board vs

Dilip Kumar Ray (2007) 14 SCC 568, para 19 at page 582:

"... „A person who inflicts an injury upon another person in contravention of the law is not allowed to say that he did so with an innocent mind; he is taken to know the law, and he must act within the law. He may, therefore, be guilty of malice in law, although, so far the state of his mind is concerned, he acts ignorantly, and in that sense innocently.‟"

33.2 It is quite apparent that RGPPL exercised its power solely with the object

of achieving a pre-meditated object to the detriment of the aggrieved party, i.e.,

the RDS. The action of RGPPL was thus geared to achieve an "authorized

purpose" which in our view could be construed as malice in law [see R.S. Garg vs

State of U.P & Ors. (2006) 6 SCC 430, para 25 at page 448]. That malice in law

is an incident or "dimension" of fair play in action; is now well established [see

Mahabir Auto Stores & Ors. vs Indian Oil Corporation & Ors. (1990) 3 SCC

752, para 13 at page 761 ].

34. Mr Chandhiok‟s submission that RDS could not lay a challenge to the

decision of the Board of Directors of RGPPL dated 04.10.2010 based on a fact that

RDS had withdrawn its writ petition [WP(C) 8252/2010] without liberty to file a

fresh writ petition is, according to us, completely misconceived and untenable.

The reason for that is simply the fact that the court did not adjudicate upon the

issues raised in the said writ petition. It would be important to note that prior to

the said writ petition being filed by RDS, one Ranjit Buildcon Ltd. had filed a

writ petition no. 2142/2010, in which, RGPPL had filed an application, wherein

broadly, it had been averred that the RDS had been declared ineligible in respect

of the 1st tender for its failure to meet the qualifying criteria. The said writ petition

of Ranjit Buildcon Ltd. was dismissed as withdrawn. RDS was impleaded as a

respondent in this writ petition.

34.1 RDS could have said very little in the matter, the petition being of Ranjit

Buildcon Ltd.. It is for this reason perhaps, that RDS instituted a separate and

independent writ petition being no. 8252/2010 seeking to challenge essentially the

decision of the board of directors of RGPPL dated 04.10.2010. When it was put

to the learned counsel for RDS that nothing would survive since the tender by

itself had been cancelled by RGPPL in exercise of its powers under Article 28.1 of

the said tender, it withdrew the writ petition with the caveat that if a fresh tender is

floated by RGPPL, it ought to have liberty to have recourse to an appropriate legal

remedy, in accordance with law, to challenge such a tender if it sought to exclude

the RDS. Said liberty was granted by the court in the order dated 14.12.2010.

34.2 In view of these factors it could hardly be contended by RGPPL that while

seeking to challenge the amended clause 8.1.1.1 (now inserted in the 2nd tender)

that RDS could not demonstrate that the decision arrived at by RGPPL‟s board of

directors on 04.10.2010 is fraught with malice in law and was otherwise contrary

to the principles of fairness, equity and good conscience. The submissions of Mr

Chandhiok on this count, in our view, are also without merit.

35. Given the aforesaid, in our view, we have no hesitation in moulding prayer

(A) in the writ petition and declaring that the amended clause 8.1.1.1 (inserted in

the 2nd tender) in the given facts and circumstances of this case is bad in law.

Similarly, for the reasons given above, we quash the decision taken by the RGPPL

in its board of directors‟ meeting held on 04.10.2010, whereby the bid of RDS in

the 1st tender was rejected and the bidding process in the 1st tender was annulled.

This would really mean that RGPPL would have to revisit the issue in the light of

observations made by us hereinabove. It would, while doing so, bear in mind the

fact that the GAIL has not given its opinion in the matter - which it is required to

render, given the fact that it is the owner‟s engineer.

36. This brings us to the last relief sought in the writ petition seeking a

direction against RGPPL to formalize award of contract in favour of RDS in

respect of DPP. We are afraid that we cannot grant this relief for the reason that

over the years the courts have demarcated certain boundaries for itself which

includes not issuing directions to the States and its instrumentalities to award

contracts in favour of one or the other party, however, aggrieved that party may

be. It appears to us this may at times seem frustrating to a litigant. At the end of

day the litigant wants, and rightly so, the fruits of litigation. It is no relief to the

petitioner to get, in a manner of speaking, a certificate from the court that the

actions of the respondents are illegal or invalid in law, but then being told that an

appropriate direction to do justice in the matter would flow finally from the

respondent state. It appears to us the reason and the rationale for this is that the

State and its instrumentalities at the end of the day, it is believed have the interest

of the republic in mind. It is believed that having erred, once the State would

correct its course. The State or its instrumentalities cannot but act in the interest

of the republic. Whether they do so or not is ordinarily left to those who govern

them. We say no more but leave it to the conscious of the superior officers and the

members of the Board of Directors‟ of the respondents, i.e., RGPPL, GAIL and

EIL to take a decision in accordance with fairness, equity and justice keeping the

interest of the State in mind. While taking the said decision, it would be wise to

revisit the entire issue including the fact that the RDS has offered a price which is

Rs 160 crores less than that of Afcons Infrastructure (i.e., L-2); and that despite

queries being raised that this was below the estimated cost of Rs 662 crores, both

experts in the field had granted its approval to the bid of RDS.

37. Before we part, we may also observe that we had directed both parties to

file their respective bill of cost. The bill of costs filed on behalf of the RDS

suggests that they have incurred on counsels‟ fee a sum of Rs.33,22,000/-. Since

RDS has succeeded to a large extent, we direct payment of 3/4th of the costs in its

favour. The three respondents, i.e., RGPPL, GAIL and EIL shall pay a sum of

Rs.24,91,500/- to RDS by way of cost in equal proportion. With the aforesaid

observations the petition is disposed of.

RAJIV SHAKDHER, J

SANJAY KISHAN KAUL,J OCTOBER 17, 2011 kk/yg