C C Engineers Private Limited And ... vs Union Of India And Ors
2017 Latest Caselaw 4103 Del

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*        IN THE HIGH COURT OF DELHI AT NEW DELHI
                         DECIDED ON 11th AUGUST, 2017
+       W.P.(C) 7341/2016 & CM APPL. 30192/2016

        C C ENGINEERS PRIVATE LIMITED AND ANR .....
                                                      Petitioners
                 Through: Mr. Rahul Chitnis with Mr. Ashish
                             Rana, Advocate
                      versus
        UNION OF INDIA AND ORS                ..... Respondents

Through: Dr. Sarabjit Sharma, Advocate for R-1 and 2.

Mr. Siddharth Kaushik, Mr. Raghvendra Pratap Singh, Advocate for R-3.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE S.P.GARG S. RAVINDRA BHAT, J. (OPEN COURT)

1. The petitioners' grievance is that by a tender issued on 31.03.2016 published on the second respondent's (hereinafter referred to as COFMOW), website, offers were invited to have the comprehensive Annual Maintenance Contract (AMC) for next 8 years for 12 number SIMIR Simulators, in terms of the specifications. The petitioner relies upon the said NIT published on 31.03.2016 with complaints that the COFMOW 's decision to award the contract to the third respondent (hereinafter referred to as CORYS), is arbitrary.

2. The petitioner no. 1 claims to be registered as an (MSE (Micro & Small Enterprise) and thereby entitled to bid for orders, issued by a public authority such as COFMOW.

3. Petitioner No.1 has been providing training solutions (including simulators) to the Indian Railways and Metros for the past several years. Apparently, Indian Railways has 12 SIMIR Simulators with 6 DOF (Degrees of Freedom) motion systems in Loco Pilots Training Centres/Schools of different Zonal Railways.

4. The CORYS apparently developed these simulators during the period 2005-2006 at different Loco Pilots Training Centres/Schools. These were continuously used and have been maintained by CORYS under an annual maintenance contract (AMC).

5. It is stated that the tender in question was published on 31.03.2016 and uploaded on the website after 20.04.2016. The bid indicated COFMOW's standard bid documents-Part-I for open tenders. The petitioner had filed the relevant particulars with respect to the tender. Its complaint is that when it received the NIT, it was informed that the tender was not an open tender but was evaluated as a single tender/nomination after receipt of relevant response.

6. According to the petitioner, COFMOW would be paying an exorbitant amount i.e. over 15 times and twice the price of the brand new simulator, merely for the AMC, annually if it awarded the contract to CORYS.

7. In the course of the hearing, learned counsel for petitioner No.1 submitted that in order to justify a single tender/nomination, the decision ought to have been done after receipt of relevant documentation.

8. The petitioner argues that to justify the single tender/nomination for procurement of public goods and services, the Proprietary Article

Certificate (PAC) is essential and that this was not forthcoming in the present case.

9. It is submitted that this requirement is essential on account of instructions applicable to COFMOW as well as CVC guidelines which means that the procurement ought to be on an open tender basis and recourse to single tender or negotiated procurement, should be confined to rare and exceptional circumstances.

10. In response to the Court's notice, both COFMOW and CORYS have filed their affidavits. The COFMOW relies upon the Proprietary Article Certificate (PAC) issued to CORYS on 09.12.2015. The said certificate reads as follows :

"CERTIFICATE FOR PURCHASE OF PROPRIETY ARTICLES (REF.RLY.BOARD'S L/NO.88/RS(G)/779/14 Pt. DT.12.03.15)

1. Description of Articles (PL No.) : Refurbishment/ upgradation & AMC of 12 no. of Loco Simulators

2. Quantity : 12 No's of Locomotive Simulators in GOCISR,SBI/ JMP/ER, SGUJ/NFR, BSL/CR, GD, NER, UBLISWR, AVDISR, BSPI, BRC/WR, BZAICR, ASNIER.

3. Approximate cost (If any) : 98.31 crores

4. Maker's Name and Address M/s.CORYS 74, rue des Martyrs 38027 Grenabli Cedex 1- France

5. Local Address : Flat no. 902, 9th floor, New Delhi House Barakhamba Road, New Delhi-110001

6. I approve the above purchase and certify that :

a) No other Make/ Brand will be suitable.

b) This is the only firm who is manufacturing/stocking this item.

c) A similar article is not manufactured or sold by any other firm which could be used, in lieu.

NOTE : Delete (a) or (c) whichever is not necessary."

11. As far as the justification goes, COFMOW relies upon the following noting made some time in March, 2016.

"All the eligible tenderers who had participated in the last tender (G-620) have been consulted and technical discussions were also held with them for their undertaking refurbishment of these simulators and entering into AMC thereafter, Only two firms M/s. Sydac Australia, (who have been awarded the last tender for 12 nos. Of simulators) and M/s. VIZ Experts Delhi have responded. Budgetary quotations have been received from M/s. Sydac and M/s. VIZ Experts (placed at C-127 and C-225/1 of the linked file no. G-135/Upgradation of simulator. As per budgetary offer of M/s. Sydac, the cost of refurbishment is about Rs. 1.94 crores per simulator i.e. Rs. 23.28 crores for 12 simulators. The AMC cost is about Rs. 43.92 lacs per simulator per annum. M/s. VIZ Expert has given refurbishment cost at Rs. 3,80,82508.43 with one year warranty while AMC for next seven years for additional period of seven years will cost Rs. 3,95,97649.39. M/s. Sydac has also given a number of assumptions and exclusions, which may be seen at C-125 of the linked file. Under these assumptions mainly they have compared the scope of work of the present tender with the earlier tender no. G-620 awarded to them in 2014. Another assumption they have indicated that annual maintenance contract for both the contracts viz. G-620 and the present tender for upgradation and AMC of 12 simulators will commence roughly and the same time. M/s. Sydac have framed the proposal based on visit of their team to Bhusaval. They have also asked for conducting detailed site surveys at the remaining 11 sites as part of their price proposal. They have also stated that the AMC of the simulators will commence once the refurbishment of the simulator has been completed. In response to this office letter 02.03.2016 regarding the expected time frame for development of softwares and immediate support to the existing simulator in the event

of break down, a reply has been submitted by the firm vide their letter dated 4.3.16. It has been clarified that it would take 14 months time to upgrade the first simulator site and total period of three years for all 12 sites. M/s. Sydac will also not be able to immediately support existing software in the event of system break down on 'as is where basis'. In absence of any active interest shown by any of firms from whom the budgetary offers were called for and keeping in view the time frame given by those firms (who have given their budgetary offers) and the contracts/assumptions stated by M/s Sydac, it will be in the interest of Railways to go for this type of work only by OEM. Moreover, the existing service provider i.e. OEM will stop undertaking AMC after expiry of respective AMC contracts in case we decide to go for open tender.

Simulators being a costly asset of Indian Railways on which safety related training of loco pilots is being imparted in the various training schools of different zones. Keeping these' simulators without service support/AMC will hamper the ongoing training activities of loco pilots and other running staff as training on simulators is vital component of their refresher training courses which are imparted periodically to them for ascertaining their fitness to handle locomotives, Further delay in finalization of AMC contract will involve serious safety related issues as the training on simulators is part of the refresher courses being undertaken by the loco pilots/ assistant pilots periodically and hence the availability of trained crew will be affected causing serious repercussions to the train operations. The crew without mandatory training on simulators during their refresher course cannot be permitted to work the trains as it involves passenger safety. In case of any accident caused due to negligence or otherwise on part of crew who has been continued to work the train without being nominated for mandatory refresher course has been taken very seriously during tire inquiries by the serving

officers at the time of accident or in case of RS inquires. Therefore, entering into AMC with an OEM who has the capabilities and expertise to maintain these simulators is a must. By now 9 out of 12 consignees are already facing problems due to expiry of their ongoing AMC contract as the support /service by the OEM on these locations has already been withdrawn and the concerned supervisors / inspectors in the training school have neither the requisite expertise to maintain these simulators nor the availability of spare parts has been met with in absence of AMC contracts. Recently, two simulators viz. Siliguri shed and Sabarmati Shed were under break down because of malfunctioning of some electronic items, spares parts for these were not available in the stores. Regarding the price summary proposals of two firms the detailed comments have already been given in para 7 of N-14.

COFMOW is entering into AMC on behalf of the Railways who have submitted vetted indent to us and being revenue expenditure Railways would make necessary provision in their budget."

12. Learned counsel for the petitioner urged that while looking at the PAC, it would show that it was apparently a post-facto justification to somehow cover up the lack of the documentation given the nature of the contents of the justification itself, which was prepared in March, 2016.

13. On the other hand, COFMOW in its counter affidavit and also in the submissions made on its behalf by the counsel submits that the tender was always considered to be for a single bidder for nomination and placed reliance upon the invitation issued to CORYS on 31.03.2016 in this regard.

14. In the said tender notice to the third respondent-CORYS, attention has been drawn to the invitation issued, which reads as under :

"No.COFMOW/IR/S-4904/15/P-1/G-101450 Date: 31.03.2016 M/s.CORYS Training & Engineering Support Systems, 74, rue des Martyrs-38027, Grenoble cedex 1, FRANCE.

Sub : Invitation of offers against this office Tender No.G-101450 due on 29.04.2016 for Up-Gradation & AMC of Simulators.

Dear Sir, Controller of Stores/COFMOW has invited offers for Simulator (Simir) refurbishment and comprehensive annual maintenance contract as per specification no. COFMOW/IR/M-Simir/Ref/AMC/2015 given in section 5 enclosed herewith.

You are hereby requested to submit your offers latest by 29.04.2016 at 11.00 AM as prescribed in endorsed Bid Documents."

15. It is submitted that in the present case, CORYS had supplied both the simulators and was also maintaining them. Attempts at negotiations by COFMOW with other vendors/service providers, noticeably two of them, showed/indicated that such vendors/service providers would have delayed the process further in providing maintenance.

16. Learned counsel also points out that the justification clearly reveals that out of the 12 simulators, nine of the 12 consignees were also facing problems due to the expiry of ongoing AMC and support/services.

17. It was therefore stated that having regard to all these circumstances, the decision to have a single bidder/nomination was given effect to.

18. The narrow controversy which the Court is required to address is as to whether in the overall circumstances of the case, the recourse to a single bidder/nomination process by COFMOW, was justified. On perusing the contents and extracts of CVC guidelines it is clearly revealed that while ordinarily, the public agencies are expected to resort to a tender or to a general process involving competitive bidding by some transparent and known criteria, at the same time, in service exigencies or where the expertise is with respect to a particular area or where the procurement is with respect to a particular product, exceptions can be resorted to by way of nomination. This approach has the approval of law which is evident by the decision of the Supreme Court in Sachidanand Pandey Vs. State of West Bengal, 1987 (2) SCC 295 & WBSEB Vs. Patel Engg. Co. Ltd., 2001 (2) SCC 451.

19. Therefore, as far as the law goes, there is no violation of Article 14 if the State or an agency of the State resorts to the process of nomination or negotiations for procurement of certain goods or services required for the general public. In the present case, the petitioner's argument is unmerited. The petitioner's argument to debunk the COFMOW's justification is such that it is with regard to the sequence of facts rather than the process itself. Whilst, there might be some controversy and inconsistency with respect to the PAC itself, in the sense that it is dated 2015, that per se does not amount to arbitrary conduct on the part of the COFMOW because the record discloses that CORYS was the service provider all the while.

20. Therefore, in the course of the arguments, the COFMOW's attempt to rely on the PAC as a matter of course rather than examining

the possibilities of bidding at the stage when the documents were prepared in December, 2015 cannot be ruled out.

21. In these circumstances, that by itself in the opinion of the Court cannot result in declaring the entire process as arbitrary and therefore in violation of Article 14 of the Constitution.

22. The bid documents published by COFMOW and relied upon by the petitioner are dated 31.03.2016. It clearly invited CORYS to provide the PAC that COFMOW ultimately sought and contracted for.

23. Having regard to the forgoing reasons, the Court is of the opinion that there is no merit in the petition and therefore, the same is dismissed.

S. RAVINDRA BHAT (JUDGE)

S.P.GARG (JUDGE) AUGUST 11, 2017/P