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2008 Supreme(Mad) 2734
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S. NAGAMUTHU
M/s.MSPL Gases Limited, Represented by its Senior Manger (Sales)
Versus
M/s. Steel Authority of India Limited Through its Executive Director (Operations) & Others
W.P.Nos.6425 & 6426 of 2008 & M.P.Nos.2 to 5 of 2008
Decided on: 31-07-2008
For the Petitioner:A.L. Somayaji, Senior Counsel, Mrs. Uma Vijayakumar, Advocate.
For the Respondents:R. Krishnamoorthi, Senior Counsel, Jagdeep Dhankar, Senior Counsel, R1 to R3, A. Ilango, R4, K.Harishankar, Habibullah Badsha, Senior Counsel, R5, C.Mani Shankar, Advocate.
The decision of a public authority to cancel a tender process and issue a fresh tender notice will not be interfered with by the Court unless it is shown to be arbitrary, discriminatory, or mala fide.
Headnote:
The High Court of Madras in this case dealt with the cancellation of a tender process and the issuance of a fresh tender notice by the Steel Authority of India Limited (SAIL). The petitioner, MSPL Gases Limited, challenged the decision of SAIL to cancel the second tender process and issue a third tender notice, alleging that it was arbitrary, discriminatory, and mala fide. The petitioner also sought a writ of mandamus directing SAIL to issue a letter of acceptance to it as the successful bidder in the second tender.
Fact of the Case:
SAIL issued a tender notice inviting bids for the establishment of a new cryogenic air separation plant on a "Build, Own, and Operate" (BOO) basis. The petitioner and three other companies submitted bids. After evaluating the bids, SAIL determined that the petitioner was the lowest bidder (L1). However, SAIL subsequently decided to cancel the second tender process and issue a fresh tender notice. The petitioner challenged this decision, arguing that it was arbitrary, discriminatory, and mala fide.
Finding of the Court:
The High Court found that the decision of SAIL to cancel the second tender process and issue a fresh tender notice was not arbitrary, discriminatory, or mala fide. The Court noted that there was a lack of clarity in the evaluation mechanism prescribed in the tender document, which led to different interpretations by the bidders. The Court also found that SAIL had considered the representations of the bidders and had taken the decision to cancel the tender process in the interest of SAIL. The Court further found that the evaluation criteria in the third tender notice were clear and precise, and that there was no evidence of malice or unreasonableness on the part of SAIL.
Issues: 1. Whether the decision of SAIL to cancel the second tender process and issue a fresh tender notice was arbitrary, discriminatory, or mala fide. 2. Whether the evaluation criteria in the third tender notice were clear and precise.
Ratio Decidendi: The Court held that the decision of SAIL to cancel the second tender process and issue a fresh tender notice was not arbitrary, discriminatory, or mala fide. The Court noted that there was a lack of clarity in the evaluation mechanism prescribed in the tender document, which led to different interpretations by the bidders. The Court also found that SAIL had considered the representations of the bidders and had taken the decision to cancel the tender process in the interest of SAIL. The Court further found that the evaluation criteria in the third tender notice were clear and precise, and that there was no evidence of malice or unreasonableness on the part of SAIL.
Final Decision: The Court dismissed the writ petitions filed by the petitioner, holding that the decision of SAIL to cancel the second tender process and issue a fresh tender notice was not arbitrary, discriminatory, or mala fide.
1. By consent, writ petitions are disposed of.
"M/s. Steel Authority of India Limited "(in short SAIL)" is a public sector company and is an integrated iron and steel producer in India. The second respondent "Salem Steel Plant" (in short SSP) is a plant of the first respondent SAIL which manufactures steel and allied products. The third respondent is the Deputy General Manager in charge of Materials Management of SSP. The fourth respondent "INOX" Air Products Ltd. is a Company registered under the Indian Companies Act and is a manufacturer of industrial gases such as oxygen, nitrogen, helium, argon, carbon dioxide, hydrogen etc., The 5th respondent "M.N. Dastur and Company (P) Ltd" is a consulting company of the respondents 1 and 2 that provides engineering consultancy services for projects in the metallurgical and allied industries.
.2. The petitioner is also a registered Company under the Indian Companies Act and claims to be one of the largest producers of Industrial gases and medical oxygen in India. It is further claimed by the petitioner that, the petitioner Company is the first of its kind to set up an air separation plant on "Build Own and Operate" (in short BOO) basis for respondent No.1 SAIL.
3. M/s. Salem Steel Plant evolved an expansion project to set up steel melting and casting facilities to produce stainless steel slabs of about 189,350 tonnes per year and the same was approved by the SAIL Board directors. To achieve the said project, Salem Steel Plant proposed to install in the steel melt shop, an electric arc furnace, ladle furnace, argon oxygen decarburizing (AOD), slab caster and slab grinder among other equipments. According to the petitioner, the estimated requirement of industrial gases for this project was 3500 Nm3/hour of Gaseous oxygen, 1200 Nm3/hour of gaseous nitrogen and 20 tonnes per day (in short TPD) of gaseous argon which was to be out sourced and supplied for the project.
.4. It is further stated that in order to meet the above requirement, the respondent Salem Steel Plant proposed that a "New Cryogenic Air Separation Plant" be set up on or near its premises on a "Build, Own and Operate" (BOO) basis for which the respondent Salem Steel Plant issued an invitation for tenders by Tender Document No.PU-E 782801 dated 13. 2007 (hereinafter referred as the 1st tender). In the tender conditions, it was mentioned that while the requirements of oxygen and nitrogen could be met from the air separation plant, but the requirement of argon would exceed the capability of the air separation plant. Therefore, it was proposed that the balance quantity of argon about 18 TPD should be procured by the bidder from an external source and supplied to the respondent Salem Steel Plant. The last date for receiving tenders was 24.04.2007. According to the tender documents, there were three stages to the bid viz (1) Earnest Money Deposit (EMD); (2) Techno-Commercial bid and (3) Price bid. According to the tender document, after opening of the EMD, the tenderers would be evaluated on the eligibility criteria set out in the tender documents. The technical bids of bidders who were found eligible would be further evaluated and the respondent Salem Steel Plant would hold techno-commercial discussions to bring all the tenderers on common comparison on techno-commercial grounds and freeze the same before the price bids were to be opened. After evaluating the techno-commercial criteria, the price bids of techno-commercially qualified bidders would be opened and the respondent Salem Steel plant would award the contract to the L1 bidder. The bidders were to offer fixed facility charges and a variable cost was to be quoted by the bidders for oxygen, nitrogen and argon. The tender document also specified that any discussions/negotiations, post price bids, would be only with the L1 bidder.
5. In pursuance of the said tender invitation dated 13. 2007, there were four tenderers namely, the petitioner, the respondent "INOX
