TMI Blog2006 (10) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... t precede a decision. The expression declared is wider than the words found or made . Declared defaulter should be an actual defaulter and not an alleged defaulter. In this case, Appellant had made a counter claim. It had raised a bona fide dispute. It may be true that when the tender document was not furnished to Appellant by the Madhya Pradesh State Electricity Board, on the premise that he is a defaulter, it filed a writ petition. A learned Single Judge of the Madhya Pradesh High Court while passing an order recorded a finding that it was a defaulter in respect of the said demand. We, however, at the cost of repetition would place on record that the other three bidders had clearly stated that they would not be able to match the rates of Appellant. It is also relevant to note here the categorical stand taken by MAHAGENCO before the High Court in its counter affidavit was that the contract had been awarded in favour of Appellant in its own interest. In regard to the order passed by the Madhya Pradesh High Court, it stuck to its stand that a clear finding was arrived at therein that the observations which were incidentally made in the judgment should not come in the way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. What relief can be granted - 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, intend to give another opportunity to MAHAGENCO. It shall consider the offer of Appellant upon consideration of the matter afresh, as to whether it even now fulfils the essential tender conditions. If it satisfies the terms of the tender conditions, the contract may be awarded in its favour for a period of one year; but such contract shall take effect after one month from the date of the said agreement so as to enable the private Respondents herein to wind up their business. This order is being passed in the interest of MAHAGENCO as also the private Respondents herein. Private Respondents, however, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 First Respondent, Appellant did not fulfill the essential conditions laid down in the technical bid and, thus, was ineligible for being considered for awarding the said contract. The relevant provisions of the notice inviting tender are as under : (ii) The Bidder should have executed the work of total minimum quantity of 5 (Five) Million Metric Tons per year for preceding 5 years. Besides this bidder should have executed the work of total quantity of 10 (ten) Million MT s in any of the preceding 5 (Five) years. Above execution of work should be on behalf of State Electricity Board and/or NTPC and/or other State or Central Undertaking and/or the private Power Generating Companies as their liaison agent/coal agent, with regard to receipt and supply of the coal including supervision on dispatch, loading, movement of the coal upto destination by Railway only. (v) The bidder should have professionally competent staff, and offices a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contract successfully. The contract came to an end on 10.09.2004. It is also not in dispute that whereas in terms of the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 was submitted that Appellant had never been declared to be a defaulter. Only because certain disputes were pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 fresh tenders had been invited and by an order dated 27.03.2006 this Court directed : Learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove 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 explanation as stated above shall clarify the position on the points raised in your abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... true that the Corporation must be held to be aware as to what was the true intent and purport of the said term. 14. A special committee was constituted to scrutinize the tender document submitted by all the four bidders. A comparative statement was prepared wherein the discrepancies vis- -vis the conditions of tender were recorded. Clarifications were sought for from the bidders. The Scrutiny Committee made its observations on such clarifications. It recorded that Appellant substantially complied with all the essential conditions. It also 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates in the range of ₹ 10 to ₹ 75/- 15. It is also of some significance to note that the Chief Engineer in his note dated 19.08.2005, by which date the writ petition had already been filed by the First Respondent in the High Court, upon consideration of the recommendations made by a Committee appointed for the said purpose and upon inviting all the four bidders for negotiation of rates and matching of rates with the lowest bidder by the other three parties, stated : Since above three bidders are not ready to mach the rates with lowest bidder, we do not have 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 ₹ 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 ₹ 15 crores in wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have formed a cartel. The rates quoted by these firms are nearly 51 crs. to 52 crs. More than quoted by LI. As a goodwill gesture the above parties were called for negotiations. However, they have refused to match the LI rates. In view of the above, it is in public interest and in the interest of MAHAGENCO a Govt. owned, public utility that the work is allocated to the lowest qualified bidder namely M/s B.S.N. Joshi Co. Deviation, if any, therefore, was made by the competent authority of MAHAGENCO keeping in view the peculiar facts and circumstances of the case. It is significant to note 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 : T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractor is black-listed by a department, he is debarred from obtaining a contract, but in terms of the notice inviting tender when a tenderer is declared to be a defaulter, he may not get any contract at all. It may have to wind up its business. The same would, thus, have a disastrous effect on him. Whether a person defaults in making payment or not would depend upon the context in which the allegations are made as also the relevant statute operating in the field. When a demand is made, if the person concerned raises a bona fide dispute in regard to the claim; so long as the dispute is not resolved, he may not be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the word admittedly and substituted the same by the term apparently . It was clearly observed : 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 . 22. Mr. Tankha was, therefore, not correct in submitting that the High Court declared Appellant to be a defaulter, Nor could it do so. By reason of the impugned judgment, the High Court while noticing that the term defaulter would mean a formal statement, proclamation or announcement, wrongly opined : We cannot close our eyes to the fact that the bidder, who is a defaulter, merely because the 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 Elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the categorical stand taken by MAHAGENCO before the High Court in its counter affidavit was that the contract had been awarded in favour of Appellant in its own interest. In regard to the order passed by the Madhya Pradesh High Court, it stuck to its stand that a clear finding was arrived at therein that the observations which were incidentally made in the judgment should not come in the way of Appellant in securing other contracts. 24. In its counter affidavit it was contended by MAHAGENCO before the High Court : It is denied that there was any question of reasonable expectation to oust the respondent no.3 from the tender process on the ground that the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urts should not step beyond their institutional capacity (Jowell, 2000). Acceptance of this approach is reflected in the judgments of Laws, L.J. in International Transport Roth GmbH v. Secy. of State for the Home Deptt.12 and of Lord Nimmo Smith in Adams v. Lord Advocate13 in which a distinction was drawn between areas where the subject-matter lies within the expertise of the courts (for instance, criminal justice, including sentencing and detention of individuals) and those which were more appropriate for decision by democratically elected and accountable bodies. If the courts step outside the area of their institutional competence, the Government may react by getting Parliament to legislate 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 cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty comes to court saying that the KPC should be stopped from doing so, the court will decline relief. The second consequence, indicated by this Court in earlier decisions, is not that the KPC cannot deviate from these guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. For example, in this very case, the KPC made some changes in the time frame originally prescribed. These changes affected all intending applicants alike 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, it would be undesirable to accept the tender, the power of judicial review should not be exercised in absence of any mala fides or irrationality. In State of NCT of Delhi and Another v. Sanjeev alias Bittoo [(2005) 5 SCC 181], the Court reiterated the principles of judicial review. We are not oblivious of the expansive role of the superior courts on judicial review. 32. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarized as under : i) If there are essential conditions, the same must be adhered to; ii) If there is no power of general 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 allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that a huge public money is involved, a public sector undertaking in view of the principles of good corporate governance may accept such tenders which is economically beneficial to it. It may be true that essential terms of the contract were required to be fulfilled. If a party failed and/or neglected to comply with the requisite conditions which were essential for consideration of its case by the employer, it cannot supply the details at a latter stage or quote a lower rate upon ascertaining the rate quoted by others. Whether an employer has power of relaxation must be found out not only from the terms of the notice inviting tender but also the general practice prevailing in India. For the said purpose, the court may consider 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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