TaxTMI 
TaxTMI 
2015 (10) TMI 2717
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.... This petition pertains to the public notice dated 26.09.2013 issued by PNGRB inviting bids for development of City Gas Distribution networks in, inter alia, Ernakulam District (Kerala) in terms of Regulation 5(5) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 (hereinafter referred to as "the 2008 Regulations"). 3. In brief, the case of SSL is that IOAGPL, after being given the LOI dated 20.01.2015 for grant of authorization, did not furnish the requisite performance bank guarantee of Rs. 4248 crores within the period of 15 days of the said LOI and, therefore, the said LOI is liable to be quashed. It is also the case of SSL that the extension of time given to IOAGPL by PNGRB for submitting the Performance Bank Guarantee beyond the period of 15 days stipulated in the said LOI was contrary to the tender conditions and the 2008 Regulations. The Performance Bank Guarantee was submitted on 17.06.2015. The petitioner (SSL) also contends that non-submission of the Performance Bank Guarantee within the stipulated time entailed not only the cancellation of the said....
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....xtension or (2) set the entire process back in time. The first alternative was adopted as it was in larger public interest. This was so because it was in public interest that an entity submitting a substantially larger performance bank guarantee (Rs 4248 crores by IOAGPL to Rs. 52 crores that would have been required of SSL had SSL succeeded) be retained and it was also in public interest that the gas network gets set up in time. Consequently, it was submitted that writ petition be dismissed and PNGRB be permitted to issue the Grant of Authorization in favour of IOAGPL so that the gas network gets established at an early date. Facts: 6. As mentioned above, PNGRB issued a public notice on 26.09.2013 inviting bids for development of City Gas Distribution networks in, inter alia, Ernakulam District (Kerala) in terms of Regulation 5(5) of the 2008 Regulations. The closing time and date of the submission of bids was to be 12 noon on 11.02.2014. However, that was extended from time to time and finally to 12 noon on 11.08.2014. Thereafter, inter alia, SSL and IOAGPL crossed the stage of technical qualifications. 7. At this point, it would be of benefit to refer to the relevant pr....
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....ntioned subject and subsequent opening of the price bid on 4th December 2014, it is to inform that the Highest Composite Scores have tied between M/s. Kerala GAIL Gas Limited, M/s. Indian Oil-Adani Gas (P) Limited and M/s. Synergy Steel Limited. Accordingly, in terms of Regulation 7(3) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008, these entities are required to submit additional Bid Bond Bank Guarantee (BBBG) for an amount to be decided by the respective entity and the entity that submits bid bond of higher amount shall be declared as successful bidder. If the entities are asked to submit additional bid bond straight away, the amount of additional bid bond, based on which the successful bidder will be decided, may not remain confidential since respective bankers of the entities would have to issue the BBBGs. Hence, in the interest of entities, it has been decided to seek the amount of additional bid bond that the M/s. Synergy Steel Limited would submit for determining the successful bidder for Ernakulam District (Kerala) GA. 2. Accordingly, you are advis....
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....12th January, 2015, you have been selected for Grant of Authorization for the GA of Ernakulam District (Kerala), as per the extent shown in the Annexure-I of the bid document. 2. Hence, you are requested to submit the Performance Bank Guarantee (PBG) for an amount of Rs. 4,248 Crores (Rupees Four Thousand Two Hundred and Forty Eight Crores Only) as per the format given in Annexure-7 of the Bid document and firm timeline for commencement of the activities of laying, building or operating CGD network, within 15 days from the date of this communication. 3. The Grant of Authorization shall be governed by the terms & conditions contained in the 'Application cum Bid Document', clarifications issued and Schedule D of the Petroleum and Natural Gas Regulatory Board (Authorizing) Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 and amendments thereto. 4. Kindly acknowledge this letter and arrange to furnish the PBG and other details within the due date. Yours faithfully, Sd/- 20/1/2015 (K. Rajeswara Rao) Officer on Special Duty (R) " 13. It would be appropriate to point out that after the iss....
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....r till the achievement of Minimum Work Programme, whichever is earlier. (4) The entity intending to renunciate the authorization in favour of another entity after the end of the three years period shall submit a proposal to the Board at least thirty days in advance and shall provide all information as may be called for by the Board. (5) The Board after satisfying itself that the proposal will not adversely affect the existing or proposed activities of laying, building, operating or expansion of the CGD network shall either accept the proposal in full or with such modifications as it may deem fit and in a case where the entity is permitted by the Board to take over the activities of laying, building, operating or expanding the CGD network such entity shall abide by the existing or modified terms and conditions of the authorization including compliance with the service obligations and adherence to the quality of service standards: Provided that the Board reserves the right to reject the proposal in public interest and in such a case the Board shall provide in writing the reasons for such rejection." Clauses 4.5, 4.6 and 4.7 of the Instructions to Bidders....
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....pecified time period, PNGRB reserves the right to cancel the proposed authorization without prejudice to various rights and remedies including forfeiting the Bid Bond of the entity and without being liable in any manner whatsoever to the entity. (underlining added) 14. On 28.01.2015, IOAGPL sent a letter to PNGRB requesting for extension of the target date of submission of the Performance Bank Guarantee to 31.03.2015. In response, by a letter dated 30.01.2015, PNGRB extended the date to 24.02.2015. On 20.02.2015, IOAGPL again requested for extending the target date for submission of the Performance Bank Guarantee to 31.03.2015 as originally requested. Apparently, SSL came to know of these events which occurred subsequent to the issuance of the said LOI and anticipating that PNGRB may grant the extension as requested by IOAGPL, it filed the present writ petition. 15. The writ petition came up for hearing on 03.03.2015, when we passed the following order:- "Issue notice. Notice is accepted by the learned counsel for respondent No. 1. The counter affidavit be filed within one week. Notice shall go to respondent No. 2, returnable on 16.03.2015. In the meanwhile, th....
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.... In Reliance Energy Ltd. (supra) the Supreme Court, inter alia, held as under:- "36. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of "non-discrimination". However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". It includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nine Judges in I.R. Coelho v. State of T.N. [MANU/SC/0595/2007MANU/SC/0595/2007 : (2007) 2 SCC 1], Articles 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of life. "Level playing field" is an important concept while construing Article 19(1) (g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1) (g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may c....
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....be given a go-by by branding it as a pedantic approach, otherwise it will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the rule of law and our constitutional values. The very purpose of issuing rules/instructions is to ensure their enforcement lest the rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under the ITB, by the State or its agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest." (underlining added) 20. In Jagdish Mandal v. St....
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.... State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted; (d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim a fundamental right to carry on business with the Government." 21. In Maa Binda (supra), the Supreme Court emphasized that:- 8. ....All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor-made....
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....nce of the LOI, there were three entities in the field. But, after the issuance of the LOI, only IOAGPL was left in the arena. The next stage was the issuance of the grant of authorization. That was predicated on the furnishing of a performance bank guarantee of an amount equal to 4 times the bid bond amount (original plus additional). IOAGPL was required to furnish a performance bank guarantee for Rs. 4248 crores within 15 days of the LOI. IOAGPL sought extension of time for furnishing this performance bank guarantee for Rs. 4248 crores. Extension was granted by PNGRB and then there was a status quo order by this court which was subsequently modified. Ultimately, the performance bank guarantee of Rs. 4248 crores was furnished on 17.06.2015. It must be noted that this performance bank guarantee was different from the earlier bid bond bank guarantee of Rs. 1059 crores which IOAGPL had furnished in time on 12.01.2015 and whereupon the LOI was issued. 24. The grievance of the petitioner is that PNGRB ought not to have granted the extension of time for furnishing the performance bank guarantee and ought to have disqualified IOAGPL and awarded the LOI to the petitioner. The argument ....