Back
2023 Supreme(Del) 2968
IN THE HIGH COURT OF DELHI AT NEW DELHI
Satish Chandra Sharma, Sanjeev Narula, JJ.
Fpel Tjtc Consortium – Appellant
Versus
Engineers India Limited & Anr. – Respondents
W.P.(C) 3870 of 2023 and C.M. Nos. 22822 of 2023, 27640 of 2023, 27679 of 2023 & CM Appl. 27685 of 2023
Decided On : 26-07-2023
Mr. Jayant K. Mehta, Senior Advocate with Ms. Anushree Kapadia, Ms.Ruchi Krishna Chauhan and Ms.Ayushi Kumar, Advocates, for the Petitioner.
Mr. Sanjay Jain, Senior Advocate with Mr. Yuvraj Sharma, Mr.Nishank Tripathi and Ms. Shruti Agarwal, Advocates, for the Respondent-1.
Mr. Rajshekhar Rao, Senior Advocate with Mr. T. Sundar Ramanathan, Mr.Vivek Pandey, Ms. Sukanya Viswanathan, Ms. Aastha Sardana and Ms. Manasa Dammalapati, Advocates, for the Respondent-2.
Mr. Atul T.N., Ms. Pragya Narayan, Mr. Vishal Choubey, Ms. Laavanya Regunathan Fischer, Advocates, for the Proposed Respondent No. 3.
Headnote:
Tender Rejection - Net Worth Criteria - Clause 5.4.2 of the IFB, Form O - The court discussed the relevant clauses from the Bidding Document that set out the requisite criteria for 'Net Worth' which need to be satisfied by the bidder. The court highlighted the formula for calculating net worth as per 'Form O' and noted that the financial net worth of the bidder and the second member of the consortium as per audited financial results of the immediate preceding financial year shall be positive. The court emphasized that the calculation of net worth has to be done after giving effect to the impact of audit qualification given in the auditor's report. The court also discussed the Petitioner's failure to comply with the Bidding Qualification Criteria (BQC) as it failed to take into account the impact of the qualified opinion of the Auditor in calculating its net worth, even after repeated requests by Respondent No. 1 to do so. The court concluded that the Petitioner's bid was liable to be rejected as it failed to meet the Financial Criteria (Net Worth) as specified in the Bidding Document.
Fact of the Case:
The Petitioner's bid for a tender was rejected by the Respondents on the ground that it failed to meet the Financial Criteria (Net Worth) as specified in the Bidding Document. The Petitioner argued that its net worth was positive and met all the criteria specified in the BQC. The Respondents contended that the Petitioner failed to comply with the BQC as it failed to take into account the impact of the qualified opinion of the Auditor in calculating its net worth, even after repeated requests to do so.
Finding of the Court:
The court found that the Petitioner failed to comply with the BQC as it failed to take into account the impact of the qualified opinion of the Auditor in calculating its net worth, even after repeated requests by Respondent No. 1 to do so. The court concluded that the Petitioner's bid was liable to be rejected as it failed to meet the Financial Criteria (Net Worth) as specified in the Bidding Document.
Issues: The main issue was whether the rejection of the Petitioner's bid by the Respondents was arbitrary, unreasonable, discriminatory, bad in law and in violation of Articles 14 and 19 of the Constitution of India.
Ratio Decidendi: The court held that the Petitioner's failure to comply with the BQC, specifically in calculating its net worth as per the requirements of the Bidding Document, justified the rejection of its bid. The court emphasized that the tendering authority is the best interpreter of the tender document and the manner in which the net worth of a bidder should be calculated for a specific tender project should be left with the tendering authority.
Final Decision: The court dismissed the petition, along with pending application(s), as it did not find any merit in the Petitioner's arguments and concluded that the rejection of the Petitioner's bid was not arbitrary, unreasonable, mala fide or perverse.
JUDGMENT
Satish Chandra Sharma, C.J. Aggrieved by the rejection of its commercial bid with respect to the Bidding Document No. AS/B224-323-MA-T-6007/3020 issued ("Bidding Document" or "Subject Tender") by the Respondents for development of Double Wall Storage Tanks including all Associated Supply & Works (Package-7A) for Pachpadra Tehsil, Barmer District, Rajasthan, India (the Project) vide communication dated 23.03.2023 (Impugned Communication), the Petitioner has filed the instant writ petition challenging the said communication.
2. The facts in brief leading to the filing of the instant petition are as under:
a. On 10.11.2022, a Tender Notice/Invitation for Bids (IFB) was issued by Engineers India Limited (EIL)/Respondent No. 1 in respect of the Project of HPCL Rajasthan Refinery Limited (HRRL)/Respondent No. 2. It is stated that the subject tender had undergone 1 Commercial Amendment, 2 Technical Amendments and 1 Corrigendum. The last date for submission of commercial bids in respect of the Subject Tender was 30.11.2022, which was extended to 15.12.2022.
b. The Petitioner herein is a Consortium of Fabtech Projects & Engineers Limited (FPEL), a Company registered in India under the Companies Act, 1956, and Tehran Jonoob Technical and Construction Co. PJS, Iran (TJTC), a Company registered in Iran. The Petitioner participated in the subject tender by submitting its bid and paying an Earnest Money Deposit (EMD) of Rs.4.125 Crores.
c. Pursuant to the submission of bids, Respondent No. 1 raised two (2) Technical Questionnaires (TQs) which pertained to past experiences and legal agreements entered into by the Petitioner, both of which were responded to by the Petitioner to the satisfaction of the Respondent No. 1 and no subsequent TQs were raised thereafter.
d. The Respondent No. 1 raised a total of six (6) Commercial Questionnaires (CQs). Commercial Questionnaire 1 (CQ-1) was raised by Respondent No. 1 on 28.12.2022 and the Petitioner submitted its response to the same on 03.01.2023. Thereafter, Commercial Questionnaire 2 (CQ-2) was raised by Respondent No. 1, and the Petitioner submitted its response to the same on 04.01.2023.
e. On 06.01.2023, Respondent No. 1 raised Commercial Questionnaire 3 (CQ-3), whereby Respondent No. 1 stated that the Financial Statement of TJTC for the year ending on 20.03.2022, as submitted by the Petitioner as part of its bid, provides for the qualified opinion of the auditor. Respondent No. 1, thus made a request to the Petitioner to submit the impact of qualified opinion of the auditor on the net worth of TJTC. The qualifications raised by the Auditor in the aforesaid Financial Statement read as under:
"Basis for Qualified Audit Report
4) There has been no confirming reply on 8 items of trade receivables and other receivables and prepayments amounting to IRR 1,360 billion totally, and 6 items of trade payables and other payables and advanced collections amounting to IRR 1,940 billion totally, and from EN Bank, Afrigha Branch, until the date of this report; and we could not determine their possible effects of these restrictions on the financial statements being reported.
5) The amount of IRR 868 billion from the balance of Trade Receivables and other Receivables and Prepayments (under Notes 13 and 14) is forwarded from previous years and without any turnover. In addition, the heading of Trade Receivables and other Receivables consisting of IRR 791 billion is provisional account between the headquarters and workshops in previous years which have not been settled. Considering the performed examinations, it is necessary to consider a reserve of at least IRR 300 billion for such cases; however, in the absence of sufficient evidence, it is not possible for this Firm to determine the exact amount.
6) The heading of Trade Payables and Other Payables, including IRR 652 billion, and the heading of Customer Advances, including IRR 144 billion are related to stagnant and annual items that there has been no action to s
