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2017 Supreme(UK) 156

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
K.M. Joseph, V.K. Bist, JJ.
M/s SPX Dry Cooling Technologies Belgium - Appellant
Versus
Bharat Heavy Electricals Limited & Another - Respondents
Special Appeal No. 321 of 2016
Decided On : 07-04-2017

Advocate Appeared:
For the Appellant :Mr. Anurag Khanna and Mr. Sharad Sharma, Senior Advocates, assisted by Mrs. Indu Sharma and Ms. Gunjan Jadwani, Advocates
For the Respondent:Mr. Rakesh Thaplyal and Mr. I.P. Kohli, Advocates

The lowest tenderer is not entitled to compel the employer to award the contract, and the court will not interfere unless public interest is affected or the action is malafide or arbitrary.

Headnote:

Tender - Contract Dispute - V-2B, V-3 Process - [FACT OF THE CASE] The appellant, a bidder for an EPC contract, challenged the impugned orders quashing the publication and issuance of the contract. The appellant claimed that the contract was bagged by the respondent from NTPC based on negotiation with the appellant. The appellant alleged that the respondent's conduct was arbitrary and malafide. [FINDING OF THE COURT] The court held that the appellant did not acquire a legal right to be awarded the contract and that the absence of a written order before the issuance of the latest tender was insufficient for the court to interfere. The court also found that the respondent's actions were not against public interest. [ISSUES] The issues involved the appellant's claim to be awarded the contract, the alleged malafides and arbitrariness of the respondent, and the reduction in the lowest tenderer's bid through the V-3 process. [RATIO DECIDENDI] The court emphasized that the lowest tenderer is not entitled to compel the employer to award the contract and that the employer has the freedom to go for a fresh tender. The court also highlighted that unless public interest is affected or the action is malafide or arbitrary, the court would not interfere. [FINAL DECISION] The appeal was dismissed with no order as to costs.

JUDGMENT :

K.M. Joseph, J.

1. Appellant is the writ petitioner. The writ petition was filed seeking the following reliefs:

“(I) Issue a writ, order or direction, in the nature of certiorari quashing the impugned orders publication dated 1.9.2016 as well as the impugned order dated 26.9.2016 issued by respondent no. 2 annexed as Annexure Nos. 10 & 14 to the writ petition.

(II) Issue a writ, order or direction, in the nature of mandamus commanding the respondents to execute the contract as concluded in favor of the petitioner by its placement as L-1.”

2. Briefly, put the case of the writ petitioner before the learned Single Judge is as follows:

The respondent BHEL sought Expression of Interest for a technical collaboration agreement for “Air Cooled Condenser” on 27.04.2013. BHEL had multiple rounds of discussions with various prospective technology suppliers including the appellant. BHEL was one of the bidders for an EPC contract for 3 X 660 MW North Karanpura Power Project of NTPC. Document inviting bids was done on 29.10.2013 on its website. The approximate tender value was assessed to be Rs.1000 crores. This V-1 enquiry did not contemplate a technical collaboration agreement for licensing the Air Cooled Condenser Technology. V-1 tender enquiry was withdrawn on 02.07.2014 citing “unavoidable circumstances”. Information of the appellant was that three bidders were short-listed including the appellant. Thereafter, in December, 2014, a new tender was called. Appellant submitted its tender and this was known as V-2 enquiry and it included Technical Collaboration+Supply of Air Cooled Condensers for North Karanpura Project. The sealed bids were never opened in respect of V-2 and, thereafter, on 29.07.2015, a final revised enquiry was issued to the short-listed biddeRs.Appellant was placed at L-1. There is reference to negotiation and, later on, the impugned notification was issued on 01.09.2016, whereby it is alleged that the BHEL, by implication, has turned down assessment, which was V-2. Pleadings were exchanged. The learned Single Judge took the view that the appellant’s claim was based on its being L-1 and that it did not acquire any right to be awarded the contract as such.

3. We heard Mr. Anurag Khanna & Mr. Sharad Sharma, learned Senior Counsel appearing for the appellant and also Mr. Rakesh Thapliyal, learned counsel appearing for the BHEL

4. It is submitted on behalf of the appellant that this is a case, where actually the process started sometime in the year 1999. It was only, however, in 2014 that the matter was taken up, from where it was left for a long period of time. It is pointed out that, actually, BHEL is only a contractor. The work is to be done for the NTPC. BHEL did not have necessary technical expertise. BHEL actually entered into a fixed rate contract with NTPC (assessed Rs.1000 crores, according to the appellant, for installation of Air Cooled Condenser). There is a case projected by the learned Senior Counsel for the appellant that the contract was, in fact, bagged by the BHEL from the NTPC on the basis of the negotiation with the appellant. (We may at once notice that there is no such pleading in the writ petition). Thereafter, as BHEL did not have the technical expertise, it invited Expression of Interest from the parties and, thereafter, initially the V-1 was issued on 20.06.2014, where the estimated value was Rs.1000 crores. The scope of the work was supply of hardware, erection and commissioning. It was cancelled on 02.07.2014 and, on 08.12.2014, a fresh tender was floated, which was designated as V-2A. The scope of the work under V-2A included technical collaboration, hardware, supply, construction, installation and erection (according to Mr. Rakesh Thapliyal, learned counsel for the respondents, it is only erection and commissioning). He would submit that, however, even V-2A was not followed up to its logical culmination; instead V-2B was issued and tender was floated on 29.07.2015. There were three playeRs.T




















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