TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 1476
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.... bid based upon its own capacity qua the minimum eligibility criteria for financial capability as the lead Consortium member having net tangible asset of Rs. 580 Crores. The petitioner's bid was rejected on the ground that it has failed to meet the minimum eligibility criteria, as the overdraft facility of Rs. 98.01 Crores availed would come under "short term borrowing" as per Schedule III of the Companies Act, 2013. This communication dated 8.1.2016 was preceded by numerous correspondence between the parties. 2. Challenging the RFQ itself and the consequential notice dated 22.12.2015, by which, the Consortium of JSW Jaigarh Port Limited (JSWJPL) and JSW Infrastructure Limited (JSWIL) was declared to be the eligible applicant as against the petitioner, followed by the communication dated 8.1.2016 sent by the 1st respondent indicating the basis for rejection, the present writ petition has been filed. The petitioner has also put into challenge Clause 7.4.1.2 of the RFQ condition prescribing Net Tangible Asset to not less than Rs. 580 Crores with a consequential prayer to declare the rejection of the petitioner's RFQ as arbitrary and unreasonable and thus resultantly the 1st ....
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....h No. 6. 7. Though the counsels appearing for the respondents raised a preliminary objection on the ground that the petitioner is seeking contrary prayers in seeking to quash the RFQ and the consequential proceedings as against the satisfaction of minimum eligibility criteria of the financial capability by taking into consideration of the members of the Consortium, this Court does not want to stand on technicalities and thus, intends to proceed on merits. For the reasons mentioned earlier, this writ petition is disposed of without going in to the grounds of challenge made in W.P. No. 2850 of 2016 and thus, restricting the present one to the validity and applicability of clause 7.4.1.2 of RFQ conditions, apart from the other proceedings, which are sought to be quashed. 8. Heard Mr. P.S. Raman, learned Senior Counsel appearing for the petitioner, Mr. G. Rajagopal and Mr. Ravindran, learned Senior Counsels appearing for the 1st respondent-Kamarajar Port Limited and Mr. AR.L. Sundaresan and Mr. Vijay Narayan, learned Senior Counsels appearing for the 2nd respondent - Sical Iron Ore Terminal Limited and perused the documents including the written submissions. Submissions of Petitione....
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....to take mutually contradictory and destructive stand. The petitioner is also estopped from contending to the contrary, after making it clear its liability as current and borrowings as short term. The records of the petitioner also show that the borrowings are loans on demands, which would clearly fall under paragraph 3(d) of the General Instructions for Preparation of Balance Sheet of Schedule III of the Companies Act, 2013. Therefore, the liability was correctly classified as current. After knowing the weakness of its case, the petitioner has curiously taken a different stand. It is not as if the 1st respondent has taken a hasty decision. The decision was preceded by numerous communications. There was a conscious application of mind with the sufficient input from the expert competent to deal with the issue. In support of the contentions, reliance has been made on the following decisions: 1. Siemens Aktiengeselischaft and Siemens Limited Vs. Delhi Metro Rail Corporation Limited and others, ((2014) 11 SCC 288); 2. Tafcon Projects (I) (P.) Ltd. Vs. Union of India and others, ((2004) 13 SCC 788); 3. Michigan Rubber (India) Limited Vs. State of Karnataka and others, ((2012) 8 SCC....
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....licable for the RFQ submitted by us." 14. According to the petitioner, it has satisfied the minimum eligibility criteria for financial capability in having the net tangible asset of Rs. 580 Crores. The records of the petitioner, as seen from the typed set of papers, would also indicate that the petitioner has shown the sum of Rs. 98.01 Crores as "current liabilities" and "short term borrowings". It also confirmed the query raised by the 1st respondent dated 27.11.2015 on the above said amount that the second audited accounts submitted by the petitioner was a overdraft facility for the sum of Rs. 98.01 Crores. The petitioner did not provide any authentication from the Bank to the contrary. The financial statements made by the petitioner for the year 2013-14 show "short term borrowing" under the caption "current liabilities", which is inclusive of overdraft amount. The records also show that the same amounts have been shown under the caption "loans repayable on demand from banks" for a sum of Rs. 1,26,88,28,403/-. This figure, as mentioned in the document produced by the 2nd respondent, tallies with the figure mentioned under the caption "current liability" in Item A - "short term b....
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.... entities with Jan to Dec. accounting year) would be considered. The Net Tangible Assets are defined as: Net Tangible Assets = Net 'Fixed Assets (excluding revaluation reserves, intangible assets such as goodwill, etc.) + Investments + Net Current Assets + Loans & Advances And 7.4.1.3. Bridge Financing Capability not less than Rs. 50 crores The bridge financing capability would be assessed from the cash reserves and liquidation of marketable securities. Net Cash Accruals averaged over the last three financial years i.e. years ending 31/03/2013, 31/03/2014 and 31/03/2015 (in case of entities with April to March accounting year) or years ending 31/12/2012, 31/12/2013 and 31/12/2014 (in case of entities with Jan to Dec accounting year). Amount of liquid assets such as inter corporate deposits held and the amount of marketable securities that could be liquidated as on 31/03/2015 (in case of entities with April to March accounting year) or 31/12/2014 (in case of entities with Jan to Dec. accounting year) would be considered. Net Cash Accruals = PAT + Depreciation + Other non-cash expenses." ...... For the purpose of Financial Eligibility, "Promoter" shall mean an entit....
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....satisfy the financial capabilities having more than 26 percentage. Thus, this Court took into consideration of the financial capability of the promoter therein. Accordingly, a direction was issued to consider the minimum eligibility criteria of the promoter of the Consortium by name Portia Management Services Limited, being a promoter of the Consortium. The said concern was admittedly having 32% stake in the Consortium. Unfortunately, in the case on hand, the other two Consortium members are having only 11% and therefore cannot take advantage of the above said decision of this Court. 19. Further the petitioner cannot take advantage of the decision of the Apex Court in New Horizons Limited Vs. Union of India, ((1995) 1 SCC 478), which deals with the case of joint venture from the point of view of experience of its various constituents as against the specific clause prescribed in Minimum Eligibility Criteria for financial capability before us. This position has also been clarified, if we peruse the order of the Division Bench, wherein, a specific query was raised on the interpretation of clause 7.4 from the point of view of the financial capability of any one of the promoters of a C....
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....98.01 Crores as "short term borrowings". It is also shown that the sum of Rs. 1,26,88,28,403, which is inclusive of Rs. 98.01 Crores, is "loans repayable on demand". Admittedly, there are number of correspondence between the parties and thereafter only, a decision was made by the 1st respondent after due consideration with its own expert. One thing is clear, even as per the records of the petitioner, the sum of Rs. 98.01 Crores was treated as "short term current liability" and "loan repayable on demand from banks". The petitioner has failed to throw any light from its bankers in this regard, though sufficient time was sought for and given. A perusal of the general instructions for preparation of balance sheet coming under Schedule III of the Companies Act, 2013, particularly, with specific emphasis of clause 3(d) would show that the petitioner's liability for a sum of Rs. 98.01 Crores is a current one. When it does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date, it is for the petitioner to satisfy the 1st respondent in the teeth of records produced by it. The petitioner has not demonstrated before the 1st resp....