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TMI Blog2006 (10) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... MAHAGENCO. Estimated amount of contract as per MSPGCL was Rs. 4842.25 per M.T. The rates quoted by the respective parties are as under : "Sl.No. PARTICULARS ESTIMATED ORDER AMOUNT/PER YEAR % OF AMOUNT WITH RESPECT TO MSPGCL ESTIMATION 1. M/s BSN Joshi & Sons Ltd. Rs.1287.64 26.59% 2. M/s Nair Coal Services Ltd. Rs.6459.77 133.42% 3. M/s Karam Chand Thapar & Bros (CS) Ltd. Rs.6510.70 134.47% 4. M/s Nareshkumar & Co. Ltd. Rs.6544.96 135.17%" On the premise that Appellant herein failed to fulfill the essential qualifications as contained in Para 1.5(ii), 1.5(v) and 1.5(vii) of the notice inviting tender, a writ petition was filed by First Respondent before the Nagpur Bench of the Bombay High Court. The said writ petition has been allowed by a Division Bench of the High Court by reason of the impugned judgment quashing the order awarding contract in favour of Appellant. 4. Indisputably, the tender documents were in two parts : (a) technical bid; and (b) financial bid. Ordinarily, nine conditions mentioned therein were required to be fulfilled by the bidders before their respective financial bids could be opened. As indicated hereinbefore, according to Firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Railways for loading supervision shortage minimization & dispatch of good quality coal as per specification to Power Station of APGENCO Paloncha To KTPS Vth Stage Paloncha 23,22,337.48 3. Liaisoning work in respect of Quantity & Quality I/c Loading supervision and movement of coal to Satpura Thermal Power Station, Sarni. MPSEB 13,98,269.55 32,55,587.39 35,23,708.55 32,52,401.01 4. Liaisoning work in respect of Quality & Quantity aspects including loading supervision & movement of coal by rail to (SGTPS), Birsingpur Pali. MPSEB 7,36,553.00 38,96,023.00 35,21,527.00 41,87,553.00 GRAND TOTAL 81,40,714.86 1,91,80,192.84 81,82,949.02 74,39,934.01 66,53,864 5. It is not in dispute that whereas a contractor was required to handle 30 million metric tones of coal during last five years, Appellant had handled more than 49 million metric tones of coal. In relation to the contract, Appellant claimed that it had entered into a contract with Andhra Pradesh Power Generation Corporation Limited (APGENCO) and it was awarded a contract for one year with effect from 11.09.2003, It completed the said cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfy the criteria that it had engaged 100 workers, the question which arose was as to whether having regard to the fact that tender document issued on 03.03.2005, the requirement to engage minimum 100 persons in the previous year would mean financial year 2003-04 or 2004-05. 7. In this connection, reference has been made to a letter dated 10.03.2005 issued by Appellant herein to the Assistant Commissioner, Employees' Provident Fund, stating : "We will appreciate if you could arrange to inform us about your Accounting & Financial Year i.e. how do you take the Accounting & Financial Year. This information is needed for computing our accounts. Please do the needful at the earliest." In response thereto by a letter dated 16.03.2005 the Assistant Provident Fund Commissioner informed Appellant that : "After verifying our records we hereby confirm that M/s B.S.N. Joshi & Sons Ltd., has paid Provident Fund Contributions for more than 100 persons for the period from March, 2004 to February, 2005 and deposited Provident Fund amounts. The above letter is issued at the request of M/s B.S.N. Joshi & Sons Ltd." 8. In regard to the purported violation of Condition No.1.5(vii), it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent fund for a few persons, it later on furnished supplementary challans on 07.03.2005 so as to raise the number of employees to more than 100. The Board, according to learned counsel, overlooked this fact and purported to have relaxed the condition, which power it did not have. In regard to the finding of the High Court that Appellant was a declared defaulter, it was contended that the expression 'declared' would merely mean to make it known that a huge amount was payable to the Madhya Pradesh State Electricity Board, and furthermore the same was required to be considered having regard to the fact that when in relation to such a contract dated 17.04.2005 the case of Appellant was not considered, it filed a writ petition before the Madhya Pradesh High Court, which was dismissed, inter alia, on the ground that it was a defaulter. The Letters Patent Appeal filed thereagainst having also been dismissed by the Madhya Pradesh High Court, Appellant must be held to have been declared a defaulter by the High Court itself. 11. Mr. A.S. Bhasme, learned counsel appearing on behalf of MAHAGENCO drew our attention to the fact that the pursuant to the order of the High Court dated 03.05.2005 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby average figure of quantity handled per year is 9.47 million tones which is far above the desired figure of 5 million tones as per tender requirement. Further, the quantity of coal handled by us in the year 2002-03 has been shown as 10,30,829.84 tones in the tender which is in fact 32,52401.01 tones as confirmed vide S.E. Services-II, MPSEB. Sarni's letter no.905/1800/2097 dated 29.03.2005. A copy of the letter has already been submitted as annexure 'O' of our confidential letter no.BSNJ/NGP/MSEB/04-05 dated 16.04.2005 addressed to the Dy. Chief Engineer (GEN. TIS &C MSPGC, Nagpur. Thus, the quantity handled by us during the preceding five years is in fact 4,95,97,663 tonnes i.e. 49.60 million tones as per figures confirmed and certified by the respective power station authorities. Even after excluding the figure 3.164 million tones, which is part of the quantity handed by us at APGENCO under the aforesaid L.O.I.s, at para no.1, during the contract period of one year ending in Sept. 04, the average yearly quantity handled by us for the preceding five years is 9.29 million tones per year as against the required figure of five million tones per years. We hope that our expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that Appellant had enclosed three copies of the PF Challans for the year 2003-04 showing that Provident Fund for more than 100 employees has been deposited. In regard to the contention that Appellant was a declared defaulter, it took into consideration the opinion of the Law Officer, which was as under : "In this regard, I would like to state that M/s BSN Joshi & Sons Ltd. filed application for deleting observations in para 8 of the order by filing MCC No. 644 of 2004. In the said application M/s BSN Joshi & Sons Ltd. contended before the High Court that they never admitted as 'defaulter and therefore, the word "admittedly" used in para 8 of the judgment is not appropriate. It was contended that the word "admittedly" in the order was coming in their way in securing other contracts and also that it may affect other pending litigations. The Hon'ble Division Bench deleted the word "admittedly" and replaced it by word "apparently". The Hon'ble Bench further observed that in view of such observation there can be no basis for apprehension that the said order will come in the way of any other litigation. Thus, the High Court has clarified that the observation will not come in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve any other option but to award whole contracts to M/s BSN Joshi & Sons and accordingly we may intimate the bidder M/s Nair Coal Services Ltd. as per the court directives. It is therefore requested to accord the approval for above so as to enable coal office to communicate our decision to the Petitioner as well as Hon. High Court The estimated order value of this tender is about Rs. 13 crores. As per B.R.No.277 dated 11.10.2004 (copy enclosed as Annexure-C) the M.D. MAHAGENCO in consultation with Director (Operation) and & Director (Finance) is empowered to place the order upto Rs. 15 crores in works contract." The said note received the approval of the Director (Operation). The Director (Finance) in his note dated 19.08.2005 opined : "All the four tenderers were called for negotiations on 17th August, 2005. M/s Nair Coal Services Ltd., Nagpur, M/s Nareshkumar & Co. Ltd., Nagpur and M/s Karamchand Thapar & Brs. Ltd., Mumbai have submitted in writing that they are not in a position to match their rates with LI. All the parties have also raised the issue of LI not satisfying the qualifying requirement. In this connection, it is noted that as per the tender conditions the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a finding was arrived at that the private respondents herein formed a cartel. What is a cartel has been stated in Advanced Law Lexicon, 3rd edition by P. Ramanatha Aiyar at page 693 in the following terms : "Cartel" includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale of price of, or, trade in goods or provision of services." 16. In Union of India v. Hindustan Development Corporation [AIR 1994 SC 988, 1008], this Court held : "The 'cartel' is an association of producers who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular industry or commodity. It amounts to an unfair trade practice which is not in the public interest." A similar interpretation was made by the appropriate authority of MAHAGENCO in relation to compliance of Condition No.1.5(v) of the tender document. 17. Before we embark upon the respective contentions made before us on the said issue, we may notice that although the point was urged during hearing before the High Court, the First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared to be defaulter. 20. In M/s Erusian Equipment & Chemicals Ltd. etc. v. State of West Bengal and Another [(1975) 1 SCC 70], this Court stated the law thus : "20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist." Yet again in Raghunath Thakur v. State of Bihar and Others [(1989) 1 SCC 229], it was opined : "4. Indisputably, no notice had been given to Appellant of the proposal of blacklisting Appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Electricity Board for some reasons, fails to declare such bidder a defaulter, however, in absence of such declaration, the bidder, in our view does not cease to be a defaulter" The observations were made out of context. The Madhya Pradesh High Court did not declare Appellant to be a defaulter. So was the Madhya Pradesh State Electricity Board. They could not have declared Appellant to be a defaulter. It had no jurisdiction to do so. In the said writ petition filed by Appellant before the Madhya Pradesh High Court, the Madhya Pradesh State Electricity Board took a categorical stand in its counter affidavit that it had not declared Appellant to be a defaulter, stating : "So far as the performance of the petitioner is concerned, it was found satisfactory he has supplied the coal to the destination and there was no default on his part. On he has delayed in making payment to the Railway authorities on which 15% surcharge was imposed and virtually recovered from the Board but now the Respondent no.3 has undertaken to pay said amount. So far as the award of Labour Court is concerned the Board has no knowledge about it because Board was not party in the Labour Court." It was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent No. 3 did not satisfy the basic qualifying criteria, as alleged. The petitioner has referred to several communications annexed to the Petition at Annexures-N to X. The contents of all these communications are taken into consideration by the Respondents while taking the ultimate decision in the matter." A contention has also been raised that the rates quoted by Appellant were unrealistic. MAHAGENCO denied or disputed the said stand, stating : "It is denied that the rates quoted by the Respondent No. 3 are unrealistic according to estimates of the Respondent No.1, as alleged. The Petitioner has not placed on record any material to substantiate the contention. As a matter of fact, it is submitted that presently, the petitioner is carrying out the work in question at the rate of Rs. 6.50 as against the rate of Rs. 12.5 which he has quoted in the tender document. As a matter of fact, the rates quoted by the Respondent No. 3 are even lower than the rates at which the petitioner is presently working. Presently, the work is being carried out by the Petitioner and the Respondents Nos. 4 and 5 at the very same rate i.e. Rs. 6.50. Thus, it is apparent that the Petitioner and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slate to oust the jurisdiction of the courts altogether. Such a step would undermine the rule of law. The Government and public opinion may come to question the legitimacy of the judges exercising judicial review against Ministers and thus undermine the authority of the courts and the rule of law." [See also State of U.P. and Another v. Johri Mal \026 (2004) 4 SCC 714] 26. In Jagdish Swarup's Constitution of India, 2nd Edition, page 286, it is stated: "It is equally true that even in contractual matters, a public authority does not have an unfettered decision to ignore the norms recognized by the Courts, but at the same time if a decision has been taken by a public authority in a bona fide manner, although not strictly following the norms laid down by the Courts, such decision is upheld on the principle that the Courts, while judging the constitutional validity of executing decisions, must grant a certain measure of freedom of "play in the joints" to the executive." 27. Recently, in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd and Another [(2005) 6 SCC 138,], upon noticing a large number of decisions, this Court stated "15. The law relating to award of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and were not objectionable. In the same way, changes or relaxations in other directions would be unobjectionable unless the benefit of those changes or relaxations were extended to some but denied to others. The fact that a document was belatedly entertained from one of the applicants will cause substantial prejudice to another party who wanted, likewise, an extension of time for filing a similar certificate or document but was declined the benefit. It may perhaps be said to cause prejudice also to a party which can show that it had refrained from applying for the tender documents only because it thought it would not be able to produce the document by the time stipulated but would have applied had it known that the rule was likely to be relaxed" No such case of prejudice was made out by Respondent before the High Court or before us. 29. Law on the similar term has been laid down in Poddar Steel Corporation v. Ganesh Engineering Works and Others [(1991) 3 SCC 273] in the following terms : "6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank clause 6 of the tender notice was not obeyed literally, but the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully; iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction.. v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sider the practice prevailing in the past. Keeping in view a particular object, if in effect and substance it is found that the offer made by one of the bidders substantially satisfies the requirements of the conditions of notice inviting tender, the employer may be said to have a general power of relaxation in that behalf. Once such a power is exercised, one of the questions which would arise for consideration by the superior courts would be as to whether exercise of such power was fair, reasonable and bona fide. If the answer thereto is not in the negative, save and except for sufficient and cogent reasons, the writ courts would be well advised to refrain themselves in exercise of their discretionary jurisdiction. 34. The question which arises for consideration is as to what relief can be granted in the instant case. The private respondents who had formed a cartel have successfully obtained the contract after the judgment of the High Court. Award of such contract although was subject to the decision of this appeal, this Court cannot ignore the fact that if Appellant is permitted to take over forthwith, supply of coal to the Thermal Power Station may be affected. We, therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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