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IN THE HIGH COURT OF CALCUTTA
Rajasekhar Mantha, J.
Praxair India Private Limited - Appellant
Versus
Central Vigilance Commissioner And Others - Respondent
W.P.A. No. 21351 of 2021
Decided On : 15-03-2022
Tender Allocation - Cryogenic Oxygen Manufacturing Facility - [RELAXATION OF ELIGIBILITY CRITERIA] - [Ramana Dayaram Shetty Vs. The International Airport Authority of India and Ors. reported in [1979] 3 SCC 489, Sterling Computer Ltd. vs. M & N Publications Ltd. reported in (1993) 1 SCC 445, Tata Cellular vs. Union of India reported in aIR 1996 SC 11, Jagdish Mandal vs. State of Orissa reported in (2007) 14 SCC 517, Maa Binda Express Carrier vs. North-East Frontier Railway reported in (2014) 3 SCC 760, Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) reported in (2016) 8 SCC 622, Raunaq International Ltd. vs. I.V.R. Construction Ltd. & Ors., reported in (1999) 1 SCC 492, Shobikaa Impex (P) Ltd. v. Central Medical Services Society reported in (2016) 16 SCC 233] - The court discussed the relaxation of eligibility criteria and its impact on the tender process, citing various legal precedents and concluded that the relaxation was lawful and permissible in the given context. The court highlighted the need to allow the employer due leverage in the distribution of state largess and emphasized that the relaxation did not prejudice any potential bidders. The court also noted that the petitioner's conduct in the bidding process and the delay in challenging the tender process had a prejudicial impact on the commercial interests of the DSP.
Fact of the Case:
The petitioner challenged a tender allocation process for setting up a Cryogenic Oxygen manufacturing facility at Durgapur Steel Plant (DSP) on a Build-Own-Operate (BOO) basis. The petitioner and other bidders engaged in negotiations with the respondent, demanding alterations to the tender terms. Despite multiple extensions, the petitioner and another bidder did not submit any bids, leading to delays in the project. The contract was eventually awarded to the 7th respondent.
Finding of the Court:
The court found that the relaxation of eligibility criteria by the respondent was lawful and permissible, and the petitioner's conduct in the bidding process had a prejudicial impact on the commercial interests of the DSP. The court dismissed the speculative and harassive writ petition, imposing costs on the petitioner.
Issues: The court considered whether the relaxation of eligibility criteria after the tender consideration process had begun was lawful and whether a person who had not submitted a bid in the tender process had the locus standi to challenge the tender process.
Ratio Decidendi: The court held that the relaxation of eligibility criteria was lawful and permissible, citing various legal precedents. The court also emphasized that the petitioner's conduct in the bidding process had a prejudicial impact on the commercial interests of the DSP. The court further concluded that a person who had not submitted a bid in the tender process did not have the locus standi to challenge the tender process.
Final Decision: The court dismissed the speculative and harassive writ petition, imposing costs on the petitioner.
JUDGMENT
Rajasekhar Mantha, J. - FaCTS:
1. The petitioner challenges a tender allocation process for setting up of a Cryogenic Oxygen manufacturing facility at Durgapur Steel Plant (DSP) with a capacity of 1250 TPD on a Build-Own-Operate (BOO) basis.
2. The brief facts of the case are that in or about December 2020, a Notice inviting 'Expression of Interest' (EOI) was published by the Respondent No. 2, M/s Steel authority of India Limited (SaIL). about five bidders, namely, Praxair India Private Limited (the writ petitioner), Ellenbarrie Industrial Gases Ltd., M/s. Nova air, M/s. air Liquide India Limited, M/s. Inox air Products Pvt. Ltd, showed interest.
3. The existing Cryogenic Oxygen Plants of the SaIL at DSP and Bhilai Steel Plant (BSP), functioning on BOO basis, are already being operated by the writ petitioner and the said M/s Inox respectively. M/s. Inox was also operating an Oxygen Plant on a BOO basis at the steel plant at Bokaro (BSL) while M/s. Linde aG was operating such Oxygen plant at Rourkela Steel Plant (RSP) of the SaIL. Negotiations went on between SaIL and the said persons and in or about 17th June 2021, Notice Inviting Tenders (NIT) was published.
4. Corrigenda were issued by SaIL to the NIT from time to time, beginning from 6th July, 2021 until 26th October, 2021, extending the last date for submission of tenders and postponing of the tender opening. By a corrigendum dated 30th September, 2021, the eligibility/bid qualification criteria was diluted and relaxed and the time for submission of bid extended until 8th October, 2021.
5. after the NIT was published, on this 5th of July 2021, geotechnical investigation and survey report was uploaded and the Tender Opening Date (TOD) was extended to 16th July, 2021. M/s. Ellenbarrie; M/s. Nova air did not meet the eligibility criteria and M/s. air Liquide India Limited, withdrew from the race. Detailed bid discussions were continuing with the petitioner and one M/s. Inox air Products Pvt. Ltd. The writ petitioner and Inox demanded several alterations and/or deletions in the Clauses of the NIT which had Techno-commercial and legal implications for SaIL/DSP. In the meantime, one M/s. air Water India Pvt. Ltd. (the 7th Respondent) entered into the fray and submitted the bid on 19th august, 2021. Neither the writ petitioner nor the said M/s Inox submitted any bids. On the contrary, they started to demand more favourable terms and prayed for extension of time to submit bids.
6. at the request of the petitioner and the said Inox, the due date for bidding was extended to 27th august, 2021. With a view to further accommodate the petitioner and the said Inox and at their instance, a technical team for DSP visited the steel plant at Bokaro (BSL), where a similar 2000 TPD Cryogenic Oxygen Plant was being set up. a large number of changes were incorporated to the NIT to facilitate bid submission by the writ petitioner and the said Inox. The petitioner still did not agree with some clauses of the NIT, namely, security deposit, Supplementary Price, power cost, water cost, extension of the force majeure clauses and termination. Such clauses were similar to those in the BSL Tender.
7. Despite extension of the bid submission date up to 27th September, 2021 (4th extension), the petitioner and the said Inox remained adamant about the changes demanded and did not submit any bids. Such obstinacy was unduly delaying the project and the tendering process. The respondent no. 2 felt that the terms demanded by the petitioner and Inox significantly diluted M/s SaIL's interests, and any further dilution would be detrimental to the interest of the DSP. The only bidder in the fray, who actually submitted a bid on 19th august, 2021, sought clarification on the tender terms and the eligibility criteria.
8. after detailed discussions, SaIL modified the eligibility criteria making it broad-based and more inclusive and extended the last date for submission of bids to 8th October, 2021 (5th Extension). as on
AI
The employer must be allowed due leverage in the distribution of state largess, and the relaxation of eligibility criteria can be lawful and permissible if it does not prejudice potential bidders. Ad....
Judicial review in public procurement is limited; courts refrain from interference unless clear evidence of arbitrariness or bad faith is established.
The court upheld the authority's discretion in setting eligibility criteria for tenders, emphasizing that judicial review is limited to cases of arbitrariness or unreasonableness.
Point of Law : An order which has not been brought on record in a writ petition cannot be set aside by this Court in exercise of its power of judicial review.
The main legal point established in the judgment is the limitation of judicial review in tender matters, the need for commercial prudence in evaluating tenders, and the importance of fairness and non....
Judicial review of tenders limited to arbitrariness or malafide; eligibility conditions upheld if public interest served with multiple qualified bidders; bid time reduction valid with approval; ineli....
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