Pathak v. M/S NTPC LTD. & ORS

12. Learned counsel also sought to draw our attention amongst others to the Minutes of Meeting (in short, M.O.M) dated 10.04.1999. It is stated that Shriram Tower Tech Limited was not even a party to this M.O.M. A common document referred to by learned counsel for the petitioner and respondents is a letter issued by respondent no.1 to respondent no.3 dated 16.12.2009. This arose out of the bid submitted by respondent no.3 and the clarification sought by respondent no.1. We consider it appropriate to reproduce the letter as it is: “Ref No.01/CS-0270-135-2-PRA M/s Lanco Infratech Limited Plot No.6, Software Units Layout, Hyderabad – 500081 India Attn: Mr.B.Manohar, Director (Operations) Sub: Induced Draft Cooling Tower Package for Nabinagar Thermal Power Project (4x250 MW). Bidding Doc. No.CS- 0270-135-2. Ref: 1. Your bid proposal dated 27.10.2009.

2. NTPC letter ref no.01/CS-0270-135-2-PRA dated 12.11.2009 & 09.12.2009

3. Your letter ref LITL/11453x10/2009-10 dated 21.11.2009 & 11.12.2009 Dear Sir, This has reference to the documents/details furnished vides your letters dated 21.11.2009 & 11.12.2009 on the Qualifying Requirements. On review of these documents, it is observed that there is still need for further details/documents pertaining to the distribution of work between M/s Encon Services Pvt. Ltd (Encon) and M/s Sriram Tower Tech Limited (Sriram) as indicated below:

┌─────────────────────────────────────────────────────────────────────────────┐
│            Sl.        Area                      Clarifications Required     │
├─────────────────────────────────────────────────────────────────────────────┤
│                  1.   Design                    The        extent      of   │
│                                                 involvement of Encon        │
│                                                 in the design work for      │
│                                                 the execution of the        │
│                                                 reference work (i.e.        │
│                                                 Induced Draft Cooling       │
│                                                 Towers      (IDCT)    for   │
│                                                 Kondapalli       Thermal    │
│                                                 Power Project).             │
│                  2.   Civil                     From the documents          │
│                       Construction              furnished by you, it is     │
│                                                 not clear who has           │
│                                                 actually carried out the    │
│                                                 civil       construction    │
│                                                 works of the reference      │
│                                                 work.                       │
│                  3.   Commissioning             Who      actually    has    │
│                                                 carried       out    the    │
│                                                 Commissioning of the        │
│                                                 reference      works of     │
│                                                 IDCT.                       │
│                 You are required to furnish the necessary information       │
│            in terms of each of clarifications sought above duly             │
│            supported by the documentary evidence so as to reach             │
│            this office latest by 18.12.2009.                                │
│            Thanking you                                 Yours faithfully    │
└─────────────────────────────────────────────────────────────────────────────┘

17. It is the contention of learned counsel for the petitioner that this Sub QR envisages a situation where the designing of the reference cooling tower was carried out by a party other than the bidder then, in that eventuality, the bidder is obligated to employ a cooling tower designer/supplier who has independently designed and IDCT of the same type.

18. It Is thus submitted that if the say of the respondents was to be accepted that respondent no.3 could carry out the work of designing through the aegis of Shriram Tower Tech Limited, then the occasion to include the sub QR in subsequent tender would not have arisen. Therefore, the plea in substance is that because a sub QR has been issued, albeit in a subsequent tender, it ought to imply that the earlier tender (which is the tender in question) did not envisage that the job function of designing be sub contracted.

19. The other aspect emphasized by learned counsel for the petitioner is that the certificate submitted by respondent no.3, on a plain reading, did not refer to the fact designing work in K-1 project had been carried out by respondent no.3. There is no reference to the design contract obtaining between respondent no.3 and Shriram Tower Tech Limited; a reference to that design contract would show that it is Shriram Tower Tech Limited which had carried out complete designing work of the K-1 project even though the legal responsibility rested with ESL.

20. In a nutshell, learned counsel for the petitioner submits that the work of designing has to be carried out “of its own” resting with respondent no.3 and this work cannot be delegated to any third party including Shriram Tower Tech Limited, with mere supervision and legal responsibility resting with respondent no.3.

21. Learned counsel submits that wherever respondent no.1 is of the view that such work could be carried out through another party, the phraseology used is „designed, constructed and commissioned or designed or got constructed or got commissioned” as was the case in WPC No.296/2011 M/s Ansaldo Caldaie Boilers India Pvt. Ltd. v. Union of India & Anr.; decided on 01.03.2011; where the expression used was “designed, engineered, manufactured/got manufactured, erected or supervised erection, commission or supervised commission”.

22. Learned counsel for the respondents has emphasized that the restrictive interpretation sought to be given to clause 6.1.[2] is not sustainable as in all such projects, no single entity carries out the complete work; but assistance is taken from other experts in the field. The ultimate responsibility rests with a party to which the tender is awarded and it cannot escape the liability or responsibility by putting the burden on such other party from whom it may have got some part of the work completed. Learned counsel for respondent no.1 also emphasized that in the tender in question an important clause 6.[3] was inserted which reads as under: “Notwithstanding anything stated above, the Employer reserves the right to assess the capabilities and capacity of the Bidder/his collaborators/associates/subsidiaries/group companies to perform the contract, should the circumstances warrant such assessment in the overall interest of the Employer.”

23. It has been thus submitted that respondent no.1 as an employer had reserved the right to assess the capabilities and capacity of the bidder/collaborators/associates/subsidiaries/group companies to perform the contract should the circumstances warrant such assessment in the overall interest of the employer.

24. In the present case, it has been emphasized that pursuant to the petitioner casting a doubt on the eligibility of respondent no.3, a Tender Evaluation Committee (in short, TEC) having technical members actually went into all the aspects including the matter in issue and came to a conclusion in favour of respondent no.3. It is thus submitted that an inspection has also been carried out to the satisfaction of respondent no.1 and respondent no.2 about the past experience and ability of respondent no.3 to carry out the task assigned to it; and thus, it is submitted that this Court while exercising the jurisdiction under Article 226 of the Constitution of India cannot be expected to sit as a court of appeal over the decision of TEC which, comprised of technical members as well.

25. Learned counsel has also drawn our attention to clause 8.3(e) of the ITB under the heading “Attachment 5: Subcontractors Proposed by the Bidder” which deals with subcontractors proposed by the bidder, to emphasize that such an delegation of work is envisaged in the bid itself.

26. The last aspect emphasized by learned counsel for respondent no.1 is that the petitioner, in any case, is dis-entitled to any indulgence arising from the delay in approaching this Court for redressal of its grievances. In this behalf, it is stated that it was as far back as on 27.10.2009 that the technical commercial bids were opened as also the price bids when L-1 was found to be more competitive, petitioner having quoted a price of Rs.94,18,00,000/- and respondent no.3 having quoted a price of Rs.90,74,35,000/-. Thus, the difference in price is about Rs.3.[5] crores i.e. about 4%. The petitioner made a representation challenging the ability of respondent no.3 on 07.01.2010 followed up by a number of similar representations. Respondent no.1 appointed TEC to look into the eligibility issue, which submitted its report on 02.03.2010. The petitioner, it was contended, was obviously aware of the same as it made a further representation on 09.04.2010 seeking a reconsideration. The final approval was given by a higher management of respondent no.1 on 30.08.2008 treating the respondent no.3 as technically qualified, and thereafter, last representation was made by the petitioner on 24.11.2010. The work was awarded on 25.01.2011 and the present writ petition was filed a couple of days thereafter.

27. It is thus submitted that the petitioner should have approached this Court at least soon after April, 2010 rather than keep making representations for reconsideration, especially, bearing in mind the prayers made in the writ petition. Learned counsel for respondent no.3 has argued more or less on the same basis as the submissions advanced on behalf of respondent no.1. Learned counsel emphasized that the principle of ultimate responsibility and submitted that it is in view thereof that the sub-contracting of work was envisaged. Had respondent no.1 required the designing, construction and commissioning of working to be strictly carried out by the contracting entity itself, it would have possibly used the phraseologies like “by itself”. In any case, it is submitted that the interpretation put forth by the party making the contract must be given due weightage. It was also pointed out that (as averred by the said respondent, in para 19 of the counter affidavit) even the petitioner has been sub contracting in the past different job functions of the works awarded to it including that part of the work which involves designing.

28. Learned counsel referred to the judgment of the Supreme Court in Himachal Pradesh Housing and Urban Development Authority v. Universal Estates and Anr.; JT 2010(13) SC 57 to emphasize that the scope of judicial review in such matters is limited and the court would exercise its discretion only when it is satisfied that the action of the public authorities is detrimental to public interest. Furthermore, even if some defects are found in the decision making process, the court in exercise of powers under Article 226 of the Constitution of India would interfere only in furtherance of public interest and not merely to make out a legal point.

29. We have noticed and examined the aforesaid contentions though it is our view that the matter is in a very narrow compass. The short point is whether in terms of the clause 6.1.[2] the work of designing can be said to not have been carried out by respondent no.3 in K-1 Project so as to disqualify respondent no.3, as the substantive part of the design work was executed by Shriram Tower Tech Limited under the supervision and overall responsibility of respondent no.3

30. We may note at the threshold that this is a case where respondent no.3 is L-1. The difference in bid price between that submitted by the petitioner and respondent no.3 is approximately Rs.3.[5] Crores, which in percentage terms is nearly 4 percent. The bid of respondent no.3 is thus undoubtedly commercially more competitive.

31. The petitioner having lost out in the bid process now seeks to take recourse to the present proceedings so as to disqualify respondent no.3 on the aforesaid plea.

32. Learned counsel for the petitioner, inter alia, pleaded that the petitioner was willing to execute the contract at the price quoted by respondent no.3, but that, in our considered view, would be no answer to the fact that the petitioner in its wisdom decided to possibly keep an additional sum of Rs.3.[5] crores as profit at the time of making the bid even while respondent no.3 submitted a more competitive bid.

33. Insofar as the aspect of technical qualification is concerned, no doubt the terms of the tender must be adhered to, but where there is an element of ambiguity or even a grey area in ascertaining the intent of parties weightage will have to be given on how men of commerce operating in the same field of activity understand the terms used in a contract. The word „design‟ used in clause 6.1.[2] by itself, in our view does not exclude the possibility of a bidder employing a collaborator. The clarification issued by respondent no.3 vide its letter dated 17.12.2009 quoted by us above, would show that basic design of IDCT in K-1 project which involved civil and thermal work was with respondent no.3 while Shriram was off loaded a part of the job function comprising „detailed engineering‟; though decidedly the overall supervision and responsibility was of respondent no.3. This vexed issue could perhaps be answered by employing the test of substantiality. Whether the off loaded portion of design work resulted in a situation of disentitling respondent no.3 from bidding in respect of the instant tender is call which the experts had to take. The experts having decided otherwise. They have come to a view that respondent no.3 in substantially compliant. The court cannot supplant that view. It is then open for the petitioner to contend that the collaboration route was per se a no-go area. In our view, it cannot be so contended. As long as the bidder and the collaborator, are operating broadly in the same line of business, such a submission is untenable. In today‟s fast moving era of technology and super specialization, it would be well nigh impossible for one entity to claim expertise in any one domain qua projects which are acutely capital intensive. Segmented parts of a project, such as design, construction and commissioning would often require involvement of multiple agencies and/or entities. It is precisely for this reason, in order to protect the interest of the employer, that legal instruments, such as, joint undertaking(s) have come into existence. In our view, the submission that because a part of the design work in K-1 project had been executed by Shriram Tower Tech Limited, respondent no.3 was ineligible to bid for the instant tender is misconceived. We thus emphatically reject this submission. This apart, what cannot be lost sight of is, assuming all things are equal that a court would be loathe to supplant its opinion with that of the experts in the field.

34. In the facts of the present case and the clauses referred to aforesaid, respondent no.1 and respondent no.2 were well within their rights to have scrutinized the capacity and capabilities of the bidders to satisfy themselves as per clause 6.3. Such an endeavour possibly would have been made even otherwise in view of the terms of the contract, but especially taking into