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SUPREME COURT OF INDIA
S.B. Sinha & Dalveer Bhandari
Mr. B.S.N. Joshi & Sons Ltd.-PETITIONER
VERSUS
Nair Coal Services Ltd. & Ors. -RESPONDENT
Appeal (civil) 4613 of 2006
[Arising out of SLP (Civil) No.24879 of 2005]
DECIDED ON : 31/10/2006
TENDER - ESSENTIAL CONDITIONS - RELAXATION - POWER OF EMPLOYER - JUDICIAL REVIEW - PUBLIC INTEREST - CARTEL - BLACKLISTING - DECLARED DEFAULTER - MEANING AND SCOPE - JUDICIAL RESTRAINT - CONTRACT AWARD - PRINCIPLES.
Fact of the Case:
Appellant, a coal liaisoning company, submitted a tender for coal supply and quality supervision to MAHAGENCO. The tender was accepted, but a writ petition was filed by Respondent No. 1 challenging the award on the grounds that Appellant did not fulfill essential conditions as per the tender document. The High Court allowed the petition and quashed the order awarding the contract to Appellant.
Finding of the Court:
The Supreme Court held that the employer has the power to relax essential conditions in a tender document in appropriate cases, provided that such relaxation is not arbitrary or discriminatory. In this case, the relaxation of the condition regarding the quantity of coal handled by Appellant was justified as it was made in good faith and in the interest of MAHAGENCO. The Court also held that the High Court erred in finding that Appellant was a declared defaulter, as there was no evidence to support this finding. The Court further held that the private respondents, who had formed a cartel, were not entitled to the contract and that MAHAGENCO should consider Appellant's offer afresh and award the contract to it if it satisfies the essential tender conditions.
Issues: 1. Whether the employer has the power to relax essential conditions in a tender document? 2. Whether the High Court erred in finding that Appellant was a declared defaulter? 3. Whether the private respondents, who had formed a cartel, were entitled to the contract?
Ratio Decidendi: 1. The employer has the power to relax essential conditions in a tender document in appropriate cases, provided that such relaxation is not arbitrary or discriminatory. 2. The High Court erred in finding that Appellant was a declared defaulter, as there was no evidence to support this finding. 3. The private respondents, who had formed a cartel, were not entitled to the contract.
Final Decision: The appeal was allowed and the High Court's order was set aside. MAHAGENCO was directed to consider Appellant's offer afresh and award the contract to it if it satisfies the essential tender conditions.
JUDGMENT:
S.B. SINHA, J :
Leave granted.
A notice inviting tender was issued by the Maharashtra State Electricity Board, now known as Maharashtra State Power General Co. Ltd. (for short, MAHAGENCO), inter alia, for coal liaisoning, quality and quantity supervision for its Thermal Power Station on 03.03.2005. Indisputably, coal is used as a primary fuel for generation of electrical energy in the power stations belonging to MAHAGENCO wherefor coal is procured from various coal mines belonging to Government Companies including Western Coalfields Ltd., South Eastern Coalfields Ltd., Mahanadi Coal Ltd. and Singareni Collieries Ltd. Pursuant to and in furtherance of the said notice inviting tender, Appellant herein as also Respondent Nos. 1, 4 and 5 submitted their tenders. Tender of Appellant herein was accepted by MAHAGENCO. Estimated amount of contract as per MSPGCL was Rs.4842.25 per M.T. The rates quoted by the respective parties are as under :
"
Sl.PARTICULARS ESTIMATED ORDER% OF AMOUNT WITH
AMOUNT/PER YEARRESPECT TO MSPGCL
ESTIMATION
1. M/s BSN Joshi & Sons Ltd.Rs.1287.6426.59%
2. M/s Nair Coal Services Ltd.Rs.6459.77133.42%
3. M/s Karam Chand Thapar & Rs.6510.70134.47%
Bros (CS) Ltd.
4. M/s Nareshkumar & Co. Ltd.Rs.6544.96135.17%
On the premise that Appellant herein failed to fulfill the essential qualifications as contained in Para 1.5(ii), 1.5(v) and 1.5(vii) of the notice inviting tender, a writ petition was filed by First Respondent before the Nagpur Bench of the Bombay High Court.
The said writ petition has been allowed by a Division Bench of the High Court by reason of the impugned judgment quashing the order awarding contract in favour of Appellant.
Indisputably, the tender documents were in two parts : (a) technical bid; and (b) financial bid. Ordinarily, nine conditions mentioned therein were required to be fulfilled by the bidders before their respective financial bids could be opened.
As indicated hereinbefore, according to First Respondent, Appellant did not fulfill the essential conditions laid down in the technical bid and, thus, was ineligible for being considered for awarding the said contract.
The relevant provisions of the notice inviting tender are as under :
"(ii)The Bidder should have executed the work of total minimum quantity of 5 (Five) Million Metric Tons per year for preceding 5 years. Besides this bidder should have executed the work of total quantity of 10 (ten) Million MTs in any of the preceding 5 (Five) years. Above execution of work should be on behalf of State Electricity Board and/or NTPC and/or other State or Central Undertaking and/or the private Power Generating Companies as their liaison agent/coal agent, with regard to receipt and supply of the coal including supervision on dispatch, loading, movement of the coal upto destination by Railway only.
(v)The bidder should have professionally competent staff, and offices at the main centres of the coal companies such as at Nagpur, Bilaspur, Sambalpur and Secunderabad/Hyderabad and at Delhi and Kolkata or wherever linkage committee has allotted the linkages of the coal of MSEB. Bidder should be in a position to employ sufficient manpower required for liaison work. They should have on their own roll minimum manpower strength of 100. They should produce a valid proof of payment of Provident Fund Contribution of 100 personnel during the last financial year.
The bidder should submit the copies of the relevant documents to authenticate his claim towards experience.
(vii)The bidder should not be declared defaulter from any Electricity Board/Government/Semi Government/Public Power Utility Companies during last 3 (three) years."
Indisputably, handling of quantum of coal by Appellant herein for five years preceding invitation to treat was as under :
Sl. Name of workDept./UtilityYear-wise Details of Quantity in MTs.
1999-2000| 2000-01|2001-02|2002-03|2003-04
1. Loading APSEB/APGENCO60,05,892.3166,30,248.8911,37,713.4759,47,203
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