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SUPREME COURT OF INDIA
Dipak Misra And Prafulla C. Pant, JJ.
Elektron Lighting Systems Pvt. Ltd. and Anr. – Appellants
Versus
Shah Investments Financial Developments and Consultants Pvt. Ltd and Ors. Etc. – Respondents
CIVIL APPEAL NOS. 9151-9152 OF 2015 (Arising out of S.L.P. (Civil) Nos. 34129-34130 of 2014)
Decided On : 20-11-2015
(1994) 6 SCC 651; (2000) 2 SCC 617; (2007) 14 SCC 517 – Relied upon
(b) Government contract – LED Street Lighting – Work order awarded to appellant – Appellant making a suggestion to Corporation for advertising rights on street light poles offering reduced cost – Suggestion unconditional – A separate matter – Corporation ought not have accepted appellant’s offer without inviting tenders for the same as the work was not covered under the tender issued – Indian Contract Act, 1872 – Section 57 – Doctrine of severability. (Para 23, 24)
(1997) 10 SCC 488; (2006) 2 SCC 628 – Relied upon
Facts of the case:
On 01.08.2014 respondent no. 3 -Aurangabad Municipal Corporation invited tenders for replacement of existing street lights by Light Emitting Diodes (LED) fittings with refurbishment of street light infrastructure on Build, Operate and Transfer (BOT) basis. The contractor was required to complete the project within one year and recover the payment from the municipal corporation through Ninety six Equated Monthly Installments (EMIs) over a period of eight years.
The present appellants and respondent No.1/writ petitioners submitted their bids but technical bids of the latter were rejected. The price bid of appellants was negotiated by the respondent - municipal corporation, and the work order was issued in favour of the appellants.
The two disqualified bidders filed the Writ Petitions before the High Court. The High Court held that though disqualification of writ petitioners was correct but extraordinary favour was shown to appellants who were awarded work order, as such, the same was quashed.
Finding of the Court:
There is no infirmity in award of LED street-lighting contract to the appellant. However, award of advertising rights on the poles cannot be sustained.
Result: Appeals disposed of.
JUDGMENT :
Prafulla C. Pant, J.
These appeals are directed against judgment and order dated 14.10.2014 passed by High Court of Judicature at Bombay, whereby Writ Petition Nos. 7843 of 2014 and 8211 of 2014, are allowed, and the work order dated 03.09.2014, and consequential agreement between the appellants and respondent No. 3, are quashed.
2. Succinctly stated the facts of the case are that on 01.08.2014 respondent no. 3 -Aurangabad Municipal Corporation (for short “municipal corporation”) invited tenders for replacement of existing street lights by Light Emitting Diodes (LED) fittings with refurbishment of street light infrastructure on Build, Operate and Transfer (BOT) basis. The contractor was required to complete the project within one year and recover the payment from the municipal corporation through Ninety six Equated Monthly Installments (EMIs) over a period of eight years. Response to E-tender notice was required to be made in two separate parts, namely, technical bid and price bid. As per the tender notice, the tender forms were made available from 01.08.2014 to 20.08.2014. The period of submission of bids was extended up to 28.08.2014.
3. The Tender Notice contained inter alia following conditions :
“(i) Manufactures of LED Lights OR registered Clause A Electrical Contractors and are eligible to participate in the Tender.
(ii) The Class A Electrical Contractors (Lead Partner) may only participate by having a Joint Venture agreement with the Manufacturer of LED Light Fittings.
(iii) The Manufacturer of LED Light fittings (Lead Partner) may form a Joint Venture with Class A Electrical Contractor.
(iv) The Manufacturer of LED Lights (Lead Partner) may form a Joint Venture with another Manufacturer of Electrical items, provided that the Lead Partner has entered into a MOU with a Class A Electrical Contractor towards execution of the tendered BOT project.
(v) The Bidder should have achieved a minimum turnover of Rs. 25 crores in each of the three preceding financial years, total 75 crores in three years.
(vi) Attested true copies of Sale Tax/VAT registration, Manufacturing certificate & DD for EMD to be submitted along with tender papers.
xxx xxx xxx
(xiv) Bidder may be Joint Venture of maximum two companies/firms to jointly meet the commercial and technical conditions.”
xxx xxx xxx
4. The present appellants and respondent No.1/writ petitioners submitted their bids but technical bids of the latter were rejected as they did not fulfill the terms as per the tender notice. The price bid of appellants was negotiated by the respondent - municipal corporation, and proposal was sent to the standing committee of the corporation. Whereafter, as per the resolution, the work order was issued in favour of the appellants.
5. The two disqualified bidders filed the Writ Petitions (W.P. Nos. 7843 of 2014 and 8211 of 2014) before the High Court of Judicature of Bombay, Aurangabad Bench, challenging their disqualification, and acceptance of the appellants’ bid. The High Court vide impugned order held that though disqualification of writ petitioners was correct but extraordinary favour was shown to appellants who were awarded work order, as such, the same was quashed. Hence these appeals.
6. It is relevant to mention here that the writ petitioners have not challenged the order of the High Court, whereby their disqualification by the municipal corporation has been upheld. The disqualification and rejection of technical bid of the writ petitioners was mainly based on following three reasons:-
(i) Neither the writ petitioner nor its joint venture partner was a registered Class-A contractor, nor any one of them was stated to be manufacturer of LED lights.
(ii) None of the writ petitioners had achieved a minimum turnover of Rs. 25 crores in the three preceding financial years.
(iii) The writ petitioners failed to submit minimum thirty pieces of different types of samples for the purposes of testing.
7. As such, so far as the disqualification of the
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