Delhi High Court

M/S Bharat Power Control System vs Union Of India & Anr on 3 December, 2014

Author: Badar Durrez Ahmed

29
         IN THE HIGH COURT OF DELHI AT NEW DELHI

                                             Judgment delivered on: 03.12.2014

W.P.(C) 8462/2014



M/S BHARAT POWER CONTROL SYSTEM                                  ..... Petitioner

                            versus



UNION OF INDIA & ANR                                            ..... Respondents
Advocates who appeared in this case:
For the Petitioner  : Mr Tanuj Khurana and Mr Gaurav Malik, Advocates
For the Respondents : Mr Vivek Goyal, CGSC with Dr. Kumar Jwala, Advocates for R-1 &
                      R-2

CORAM:
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SIDDHARTH MRIDUL

                                JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

CM No.19590/2014 (Exemption)

The exemption is allowed subject to all just exceptions.

W.P.(C) 8462/2014 & CM No.19589/2014 (Stay)

1. The petitioner is aggrieved by the impugned communication dated

30.10.2014 issued by the Executive Engineer, Central Public Works

Department, Parliament House Annexe Project Electrical Division. By

virtue of the impugned letter dated 30.10.2014, the petitioner‟s bid pursuant

to the respondents NIT for extension of Parliament House Annexe,

Parliament House Complex, New Delhi (SH-UPS, Solar Power & Solar

Water Heating) was rejected on the ground that the petitioner does not fulfill

the eligibility requirement for turnover and profit & loss stipulated in the bid

document. The respondents while scrutinizing the documents with regard to

the eligibility of the petitioner found that the document in respect of the

turnover and profit & loss pertained to M/s Labotek and did not pertain to

the petitioner.

2. It is the petitioner‟s case before us that the petitioner was a partner in

the firm M/s Labotek and had 50% share in the profits of the said firm. The

petitioner referred to and relied upon Section 15.2.5 of the CPWD Works

Manual, 2014 (hereinafter referred to as the „said Manual‟). The said

Section 15.2.5 of the said Manual pertains to past experience of works

executed and is in respect of a non-CPWD contractor. The petitioner is a

non-CPWD contractor and, therefore, claims that Section 15.2.5 of the said

Manual ought to be reckoned for construing the past experience of the works

executed. Section 15.2.5 of the said Manual reads as under:-

"15.2.5 Past experience of work executed: A non-CPWD Contractor shall be eligible to tender

for works based on the past experience gained from the works executed by the earlier firm (partnership firm) in the same proportion of share of the applicant in that partnership firm where the applicant was a partner earlier. (Modified vide OM DG/MAN/282 dt. 08.07.2013)."

3. It is the submission of the learned counsel for the petitioner that since

the petitioner is a non-CPWD contractor, he was eligible to tender for the

subject work based on the past experience gained from the works executed

by the earlier firm (partnership firm) (M/s Labotek) in the same proportion

of share of the petitioner in that partnership firm.

4. As pointed out above, the petitioner was a partner in M/s Labotek and

had a 50% share therein. The said partnership was, however, dissolved by

virtue of a dissolution deed dated 31.05.2013. The relevant clauses of the

Dissolution Deed are as under:-

"3. All the profits and losses of the firm for the months of April and May, 2013 shall be vested in the Party of the Second Part. The party of the First Part was not actively working for the business of the partnership firm. Therefore, remuneration is also not being paid to him for this period. Neither, party of the First Part is claiming any interest on his capital from the firm. That is all the profits or losses shall accrue to the party of the Second Part.

4. The business of the Firm shall be continued

to be carried on by the Party of the Second Part (alone and as the sole proprietor thereof) as from the said date and the Party of the First Part withdraws from the partnership and shall have no claim thereto except to the extent hereinafter mentioned.

xxxx xxxx xxxx xxxx xxxx xxxx

8. The party of the First Part herewith also foregoes his share in the goodwill, which is valued approximately at Rs.12,15,00,000/- (Rupees Twelve Crore Fifteen Lacs Only) of the firm, to the Party of the Second Part. However, he shall have the right of claim of his work experience in the firm which he has naturally earned by virtue of his being a working partner in the said firm."

5. Along with the bid submitted by the petitioner, a Chartered

Accountant‟s Certificate regarding the turnover and profit & loss during the

last three assessment years was given. The certificate from the Chartered

Accountant is reproduced below:-

                  "K. SIKRI & CO           6/79, W.E.A. Gurudwara Road,
                  CHARTERED ACCOUNTS       Karol Bagh, New Delhi-110005
                                           Ph: 28757152, 65458111

                       TO WHOM SO EVER IT MAY CONCERN

We have examined the books of accounts and other related documents including Audited report and Balance Sheet and Profit & Loss Account of M/s Labotek, 1/6, Kirti House, Kirti Nagar Industrial Area, New Delhi -

110015 (PAN: AABFL6009R), and certify that the said firm has not incurred any losses during the last three assessment years and its turnover and profit therese three years was as follows:

                  Assessment year    Turnover           Profit

                  2011-12            Rs.23,36,69,850/- Rs.78,00,182/-
                  2012-13            Rs.9,30,59,554/- Rs.1,25,02,810/-
                  2013-14            Rs.21,15,69,327/- Rs.1,93,17,583/-

                  For K. SIKRI & CO
                  Chartered Accountant


                  (CA KRISHAN SIKRI)
                  M. No.085481"

6. According to the learned counsel for the petitioner, since the petitioner

was a 50% partner in the firm M/s Labotek, he is entitled to claim 50% of the

turnover and profit of M/s Labotek for the above mentioned three years. He

submitted that if that were to be so, then the petitioner would be eligible

inasmuch as 50% of the turnover for each of the years referred to above

would be more than Rs.191 lakhs, which was the requirement as per the NIT.

Consequently, he submitted that the rejection of the petitioner‟s bid on the

ground of non-fulfillment of the eligibility conditions was bad.

7. The learned counsel appearing on behalf of the respondents submitted

that first of all the subject tender was not for „normal works‟ but was a

tender for „specialized works‟. He submitted that Section 15 of the said

Manual and in particular Section 15.2.5 on which the petitioner was placing

reliance was applicable only for „normal works‟. There is no such similar

condition in the tender for specialized works, which are specifically dealt

with under Section 16 of the said Manual. Therefore, the petitioner cannot

take the benefit of Section 15.2.5 of the said Manual. Secondly, the learned

counsel for the respondents submitted that even if it was assumed without

admitting that Section 15.2.5 of the said Manual was applicable to the

subject tender, the petitioner still does not fulfill the eligibility criteria. The

learned counsel for the respondents drew our attention to the clauses of the

Dissolution Deed which we have already extracted above and submitted that

the firm M/s Labotek was dissolved on 31.05.2013 and that in the months of

April and May, 2013 the Dissolution Deed specifically records that the

petitioner (who was referred to as „the party to the first part‟ in the

Dissolution Deed) did not even participate actively in the activities of the

firm. Therefore, no part of the turnover of M/s Labotek for the financial year

ending 31.03.2014 can be attributed to or be taken credit of by the petitioner.

8. In other words, according to the learned counsel for the respondents,

the turnover of the petitioner on the basis of the documents submitted by him

for the financial year ending 31.03.2014 would be nil. Therefore, even if it

was assumed without admitting that Section 15.2.5 of the said Manual was to

apply to the subject tender, the petitioner would, in any event, not be eligible.

For these reasons, the learned counsel for the respondents submitted that the

writ petition ought to be dismissed.

9. Upon considering the rival conditions of the parties, we are of the

view that we need not examine the issue as to whether it was a tender for

„normal works‟ or for „specialized works‟. In other words, we need not give

a definite answer as to whether Section 15 would apply or Section 16 would

apply. This is so because even if we assume that Section 15 of the said

Manual was to apply and that the present tender was one for „normal works‟,

the petitioner still does not qualify. There are several reasons for this

conclusion. First of all, the firm M/s Labotek was dissolved on 31.05.2013

and, by virtue of Clause 3 of the Dissolution Deed it was evident that the

petitioner had played no part at all in the months of April and May, 2013.

As such no part of the turnover of the firm M/s Labotek could be attributed

to the petitioner for the period after 31.03.2013. In other words, the

petitioner could not claim any turnover of M/s Labotek as attributable to him

for the financial year ending 31.03.2014. That being the position, the

financial turnover insofar as the petitioner is concerned, for the year ending

31.03.2014 would be nil as no other evidence of turnover has been submitted

by the petitioner for that financial year. This would be in clear violation of

paragraph 1(b) of the „Information and Instructions for Contractor for

e-tendering forming part of the NIT‟. The said clause 1(b) reads as under:-

"The firm/contractor who fulfills the following requirements shall eligible to apply. Joint ventures are not accepted.

                  (a) xxxx     xxxx         xxxx
                      xxxx     xxxx         xxxx

(b) should have annual financial turnover of Rs.191 lakhs during last three years ending 31st March 2014. (Scanned copy of the certificate from CA to be uploaded).

xxxx xxxx xxxx"

10. The above clause 1(b) makes it clear that the bidder must have an

annual financial turnover of Rs.191 lakhs during the three years ending

31.03.2014. We have already indicated that in the financial year ending

31.03.2014, the petitioner has not produced any evidence to indicate that it

had any turnover independent of M/s Labotek. Insofar as the turnover of

M/s Labotek for the financial year ending 31.03.2014 is concerned, we have

already held that the petitioner can claim no part of it.

11. The second reason as to why the petitioner would not be eligible is

that the Chartered Accountant‟s Certificate which we have extracted above,

refers not to financial years but to assessment years. The assessment year

2013-14 would mean the financial year ending on 31.03.2013. In other