AI Drafter 
TaxTMI 
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TaxTMI 
2016 (7) TMI 976
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....RITES') where under RITES was appointed as the project management consultant of CIL. Subsequently the said MOU was modified and a communication was issued by CIL to all its subsidiaries including South Eastern Coal Field Limited ( in short 'SECL') with the instruction that in respect of engineering and project management consultancy and approval of tenders, the subsidiary of CIL would be the final authority. (3) On 17 July, 2015 RITES issued a tender notice on behalf of SECL inviting bids from interested parties in connection with construction of Railway infrastructure for Kusmunda Railway Siding. Estimated cost of the project was approximately Rs. 116.42 crores. By a corrigendum, the total value of the tender was reduced to Rs. 107.05 crores and the last date of submission of bids was extended till 17 August, 2015. (4) Ten bidders participated in the tender process including the appellant no. 1. The technical bids submitted by the parties were opened on 17 August, 2015 and six bidders including the appellant no. 1 were found to be technically qualified. Jhajharia Nirman being the respondent No. 4 above named and three other bidders were found not to be technically qualified.....
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....dingly by a communication dated 30 January, 2016, with a request to open their financial bids. The learned Counsel for the writ petitioners/appellants contended before the learned Judge that Jhajharia and T&T could not have been declared to be technically qualified and that the learned Judge should direct RITES to proceed with the tender process without opening the financial bids of Jhajharia and T&T. The learned Judge held that it would not be proper to give any such direction in view of the limited scope of relief claimed in the writ petition. The operative portion of the impugned judgment and order is as follows:- "The decision of South Eastern Coal Fields Limited declaring Track & Tower Infratech (P) Ltd. and Jhajharia Nirman Limited as qualified is not under challenge. The only direction that ought to be made and is made is that RITES shall be entitled to consider the financial bids of all the 8(eight) bidders who have been found to be qualified either at the instance of RITES or at the instance of South Eastern Coalfields Limited. If at all the petitioners are aggrieved by the decision of South Eastern Coalfields Ltd. to declare Track & Tower Infratech (P) Ltd. and J....
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.... part of the qualifying criteria is of a general nature, distinct from a pre-qualification criterion. Had it been of a general nature, provision of the same could have been deviated from. Mr. Mitra then referred to Clause 6(b) of the NIT which provides that if the bidder is a wholly owned subsidiary of a Company, the experience and resources of the owner/parent Company or its other subsidiaries will not be taken into account. However, if the bidder is a Company, the experience and resources of its subsidiaries will be taken into consideration. Thus, According to Mr. Mitra, the holding Company and the subsidiary Company are to be treated as separate entities save and except only where the holding Company itself is a bidder. (13) Learned Counsel then submitted that Clauses 6.4, 7.1, 7.2 read with Clause 5.1 of the NIT required any modification of the tender terms to be uploaded on website by publishing addendum/ corrigendum. This procedure has not been followed in the instance case. Relaxation of the qualifying criterion i.e., Clause 2(a), if known to all concerned, would have ensured maximum participation and best price. Mr. Mitra then submitted that there is a mala fide nexus be....
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....game has started. SECL and RITES in connivance with Jhajharia has flouted these principles of law relaxing the eligibility criteria after the intending parties submitted their bids. The Courts would not countenance such action. In this connection Mr. Mitra relied on a decision of the Hon'ble Supreme Court in the case of Sorath Builders Vs. Shreejikrupa Buildcon Limited & Another reported in (2009)11 SCC 9. Learned Counsel relied on paragraphs 25 and 26 of the said judgment which are set out hereunder:- "25. The prime consideration on which the High Court set aside the award of contract in favour of the appellant is that if the bid of Respondent 1 was considered in the tender process there would have been saving of public money. However, that would not in any manner justify in going through once again the same tender process, which is always time consuming. Any delay in awarding the contract would only mean increase in the cost of expenditure for cost of construction would go up with the passage of time. 26. In W.B. SEB v. Patel Engg. Co. Ltd. this Court while considering the issue with regard to the process of tender held: (SCC p. 467, para 24) 24.........
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.... The aforesaid principle applied with full force to the facts of the case and the only course possible for the Council was to go for fresh tender after altering the terms of the tender in its meeting on 16.05.2013. It has also been argued vehemently that the purported points of consideration noted on 16.05.2013 is a manufactured document. Reliance has been placed on the note dated 28.05.2013 of the Secretary of the Council wherein he claimed he was not present at the meeting and had signed the document without enough scrutiny. It has also been argued that other contemporaneous documents do not reflect the points of consideration." CONTENTION OF RITES:- (14) Learned Counsel for RITES submitted that under the MOU executed by and between CIL and RITES, the latter was to provide Project Management Consultancy Services for all Rail Infrastructures and allied civil works to CIL and its subsidiaries. Such services including preparation of tender documents, notification of NIT, issuance of tenders on behalf of the CIL and its subsidiaries, evaluating the same and taking all follow up steps up to final acceptance of the recommendation. In respect of the present proceeding, RITES ....
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....m, the date was rescheduled to 18 December, 2015 and later on was postponed till further advise. (17) By a letter dated 1 January, 2016 SECL called upon RITES to take a final logical decision in the matter and send all the files to SECL. Under cover of letter dated 1 January, 2016, RITES sent all the files to SECL. (18) Thereafter, by a letter dated 30 January, 2016, SECL directed RITES to consider the bids of 8 bidders including Jhajharia. RITES is bound to abide by such direction and had proceeded on that basis subject to orders which have been passed by this Court. CONTENTION OF SECL:- (19) Appearing on behalf of SECL Mr. Bose, learned Senior Counsel, submitted that in the notice inviting tender, SECL has been mentioned as the Employer. The bids were to be opened by SECL as the Employer. It was SECL who was to scrutinize the bids. Clause 16 of the NIT states that the right to accept or reject the tender is that of SECL. The Contract has also to be entered into with SECL. The role of RITES is that of an agent. The MOU that was entered into by and between CIL and RITES clearly states that acceptance/approval of tender evaluation statement and placement of letter of int....
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.... (22) Learned Senior Counsel then submitted that apart from the appeal being not maintainable, the challenge with regard to the technical qualification of Jhajharia at the instance of the appellants is not justiciable and not maintainable for the following reasons:- (A) The appellant Company which was allowed to participate in the bidding process does not have any locus standi to challenge the qualification of Jhajharia. (B) It is not the case of the writ petitioners/appellants that they were disqualified on the same ground at the technical stage. No prejudice has been caused to the writ petitioners at the technical stage. (C) It does not lie in the mouth of the writ petitioners to allege that the course adopted by SECL may have caused prejudice to the other parties. Such other parties have not applied before this Court. This is only an attempt on the part of the writ petitioners to gain immunity from competition. Further, whether or not Jhajharia is technically qualified is for SECL to Judge and consider and it is not in the domain of the Court to decide the same in exercise of writ jurisdiction. In this Connection, learned Counsel relied on a decision ....
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....hether the course adopted by the K.P.C. has caused any real prejudice to the appellant and other parties who had already supplied all the documents in time and sought no extension at all? It is true that the relaxations of the time schedule in the case of one party does affect even such a person in the sense that he would otherwise have had one competitor less. But, we are inclined to agree with the respondent's contention that while the rule in Ramana's case (supra) will be readily applied by Courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before Court is only to gain immunity from competition. Assuming for purposes of argument that there has been a slight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, M.C.C. is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration....
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....en filed in the Bilashpur High Court and in the decision of SECL, reference has been made to the order passed by Bilashpur High Court. It is Bilashpur High Court which is the natural forum, if not the only forum for adjudication of any dispute which may arise in respect of processing of the tender. (24) It was finally submitted by learned Counsel for SECL that the stand of the writ petitioners/appellants is also not bona fide. At the technical stage, it was not possible for the writ petitioners to know the details of bids submitted by other bidders. The writ petition was filed before opening of the financial bids. From the financial bids, it would appear that Jhajharia is L-1 bidder and the writ petitioner Company is the L-2 bidder. The bid of Jhajharia is about Rs. 7 crores less than that of the writ petitioner company. The writ petitioner Company has not offered to match the bid of Jhajharia before this Court to show its bona fide. In any case, even if such offer had been made it would not have been open to SECL to accept such offer since the same would be contrary to the terms and conditions of NIT. Under the tender, SECL can only accept the bid of the L-1 bidder. But the ver....
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....hpur, Chattishgarh. (iii) The letters dated 9 December, 2015, 10 December, 2015 and 16 December, 2015 which were referred to in the writ petition were also issued to and received by the appellants at their office in Jamshedpur. (iv) No communication was issued to the appellants by RITES or any other respondent authority from the office of the appellants in West Bengal. The appellants had initially sought to make SECL a party to the writ petition as would appear from the contents of the writ petition and realizing that in such event, there would be an objection as to jurisdiction, the appellants made RITES, who have an office in Calcutta, and an officer of RITES parties to the writ petition, so that the jurisdiction of this Court could be attracted not on the basis of cause of action but on the basis that RITES has its office in Kolkata. This the appellants did in spite of being aware that the entire tender had been issued by RITES on behalf of SECL. The appellants have thus sought to mala fide invoke the jurisdiction of this Court knowing that RITES was an agent of SECL and it was only the actions of SECL that could be challenged. (27) The third preliminary ....
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....)The assets, liabilities and business of KSK Mahanadi Power Company Limited is treated by KSK Energy Ventures Limited as a part of its own assets, liabilities and business. iii) The holding Company carries on business through its subsidiaries. Therefore, the annual report of KSK Energy Ventures Limited refers to itself and its subsidiaries as a 'Group' i.e. single economic entity. iv) KSK Mahanadi Power Company Limited is the highest profit making subsidiary of KSK Energy Ventures Limited and therefore it contributes substantially to the assets and income of KSK Energy Ventures Limited. The turnover and profit of KSK Mahanadi Power Company Limited is far more than its holding Company KSK Energy Ventures Limited. v) Both KSK Mahanadi Power Company Limited and KSK Energy Ventures Limited have common directors. vi) All necessary statutory disclosures which are required to be made by a holding Company with respect to its subsidiaries, in terms of the relevant provisions of the Companies Act, 2013 have been made by KSK Energy Ventures Limited with respect to KSK Mahanadi Power Company Limited. (29) Learned Counsel submitted that the relationship be....
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....y limited. Unless it can be demonstrated that the decision making process is arbitrary or violative of Article 14 of the Constitution of India, the Courts should not exercises their writ jurisdiction to interfere with such decision. In this connection, learned Counsel relied on a decision of the Hon'ble Supreme Court in the case of TATA Cellular Vs. Union of India reported in (1994)6 SCC 651. Reliance was placed on paragraphs 94 and 137 of the Judgment which are set out hereunder:- "94. The principles deducible from the above are : (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. 688 Normally speaking, the decision to accept the....
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....d in a manner in which no authority reasonably instructed would have acted or that the interpretation given to the tender conditions by the respondent authorities is absolutely illegal. Such interpretation in fact finds support from the Supreme Court decision in the case of New Horizons Limited (supra). (34) Learned Counsel for Jhajharia finally submitted that there has been suppression of material facts on the part of the appellants. The technical bid of Jhajharia was also disqualified with regard to an issue as to submission of earnest money deposit. Subsequently, pursuant to an order dated 27 August, 2015 passed by the Bilashpur High Court such EMD was accepted by the respondent authorities. By a letter dated 3 September, 2015 RITES communicated to the appellants that the technical bid of Jhajharia was to be opened on 9 September, 2015. This letter was also forwarded to the other bidders including the writ petitioners. In the writ petition, the factum of this letter has been completely suppressed. The qualification of Jhajharia to participate in the tender process pursuant to the aforesaid letter has not been challenged in the writ petition but the writ petitioners have sough....
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....e been given as to why the affairs of a Company cannot include the affairs of a subsidiary Company and its holding company as if they were a part of one entity. A wholly owned subsidiary Company is distinct from its holding company even if all the shares of the subsidiary Company are held by the holding Company. In this connection, learned Counsel relied on a decision of the Hon'ble Supreme Court in the case of Electronics Corporate of India Limited Vs. Secretary Revenue Department, Government of Andhra Pradesh reported in (1999) 4 SCC 458. Reliance was also placed on a decision of the Supreme Court in the case of Vodafone International Holdings Vs. union of India reported in (2012) 6 SCC 613. Learned Counsel relied on paragraphs 258 to 260 of the said Judgment which are set out hereunder:- "258. Holding company, of course, if the subsidiary is a WOS, may appoint or remove any director if it so desires by a resolution in the General Body Meeting of the subsidiary. Holding companies and subsidiaries can be considered as single economic entity and consolidated balance sheet is the accounting relationship between the holding company and subsidiary company, which shows the sta....
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....ce of RITES at Kolkata (clauses 5.1 and 5.2 of NIT). (ii) For clarification of any term of the tender documents queries were addressed to RITES at Kolkata (clause 5.5 of NIT). (iii) The pre-bid meeting was held at the office of RITES at Kolkata (clause 6.0 of NIT). (iv) The receipt and opening of tender applications were to be made at the office of RITES at Kolkata (Clause 12.1 of NIT). (v) In fact, the tender bids were opened on 9 September, 2015 at the office of RITES at Kolkata. (vi) Notices dated 9 September, 2015 were issued by RITES for opening of the price bid at its office at Kolkata. (vii) SECL's letter dated 30 January, 2016 is addressed to RITES at its office at Kolkata. (39) Learned Counsel then submitted that in so far as a writ petition is concerned, forum selection Clause does not apply. In this connection, learned Counsel relied on a decision of this Court in the case of Ashok Kr. Saboo(HUF) Vs. Hindustan Paper corporation Limited reported in (2007) 3 CHN 533. Reliance was placed on paragraphs 12 and 21 of the Judgment which are set out hereunder:- "12. It is plain from the above clause that the resol....
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....the Contract Act is not sustainable in law as we have observed that the provision of Article 226 is a Constitutional provision and it cannot be contracted out by the act of the parties. The said Judgment is not a good law as far as contracting out the provision of Article 226 of the Constitution of India is concerned. It is now firmly settled that this provision is one part of basic structure of the Constitution and it is inviolable even by the Parliament, not to speak of private individual." (40) Learned Counsel finally submitted that in any event the jurisdiction clause contained in NIT is a term which was to be incorporated in the contract that would be entered into with the successful bidder. The jurisdiction clause would apply to future disputes that may arise in course of performance of the contract between the employer and the contractor. Such Clause cannot stand in the way of this Court entertaining the instant writ petition. Court's View:- (41) Although submissions have been made by Learned Counsel for the parties at length and we have thought it fit and proper to record the same, the point that falls for determination is a short one. The Learned Judge in the impu....
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....f of the SECL inviting bids from interested parties and in doing so, RITES was acting as an agent of SECL. Initially, out of the ten bidders, six were found to be technically qualified. Jhajharia was one of the bidders who was found not to be technically qualified for the reason that the credential certificate it had submitted was issued by a public limited company which was not listed in a Stock Exchange in India or abroad. (45) Subsequently, the committee constituted by SECL recommended that the bids of Jhajharia and T & T who had been technically disqualified earlier by RITES be also considered and the L-1 bid be chosen. The Competent Authority of SECL approved such decision of the committee and by a communication dated 30 January, 2016 RITES was instructed by SECL to open the bids and award the contract. In our opinion, RITES, which was acting as an agent of SECL was bound by the instruction of SECL. It is trite law that an agent is bound by the principal's mandates and cannot act beyond or contrary to such mandates. (46) The question then arises as to whether SECL was justified in instructing RITES to consider the financial bid of Jhajharia. Did SECL commit any illegalit....
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....Mahanadi by RITES. Being satisfied by the capability of Jhajharia, SECL directed RITES to consider Jhajharia's financial bid along with the financial bids of others including that of the appellants. We see absolutely nothing illegal or irregular with such action of SECL. (48) Learned Counsel for the appellants, relying on two decisions referred to above, urged that the decision of SECL to open the financial bid of Jhajharia even when the credential certificate was not issued by a listed public limited company, amounted to changing the rules of the game once the game has started, which is impermissible in law. We would have agreed with such contention of Learned Counsel if we were of the opinion that Note 5 to Clause 2(a) of the NIT constitutes an essential condition of the NIT. According to us, it was a non-essential condition and relaxation thereof or deviation therefrom even at the stage of consideration of financial bids did not amount to any irregularity. Further, the same did not prejudice the appellant company in any manner as its financial bid would be considered along with the financial bid of Jhajharia. In our view, the appellant company is not a party aggrieved and,....
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....or a public authority always has a right to reject even the lowest bid for cogent reasons provided such decision is not arbitrary. In the commercial field, the Government or a public authority surely has the freedom of contract and can even amend the terms of a Notice Inviting Tender provided no undue prejudice is caused to a party who has participated in the tender process. In the instant case, the appellant company has not been able to establish as to what prejudice it would suffer by reason of the decision of the respondents to consider the financial bid of Jhajharia. In our opinion, no injustice can be said to have been done to the appellant company by the decision of SECL to consider the tender of Jhajharia side by side with that of the appellant company. The comparative merits of the appellant company viz-a-viz Jhajharia is a matter for SECL to decide and not for the courts. This view of our finds support from the decision of the Hon'ble Apex Court in the case of G. J. Fernandez (supra). (52) Another reason as to why we decline to interfere is that the decision of SECL to consider the financial bid of Jhajharia and T & T has not been challenged by the writ petitioners. The....