TMI Blog2016 (6) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... ember or any one of the promoters of the bidding company or a lead Consortium Member, as the case may be. Now, in the case on hand, it is not concerned with the Lead Promoter of the petitioner. Here, the petitioner claims to be the Lead Consortium Member. This Court also does not find any ground to declare clause 7.4.1.2 as unconstitutional. The petitioner has not demonstrated any arbitrariness or illegality involved. The said clause has been introduced to satisfy with the capability of a bidder. The methodology adopted in fixation of net tangible asset by deducting the current liability from the current asset cannot be found fault with. As per the communication of the petitioner itself, it is agreed to undertake and abide by all the terms and conditions of the RFQ. This Court does not find anything wrong in the definition clause 7.4.1.2 - The petitioner, after having failed to satisfy the minimum eligibility criteria for financial capability, made a belated attempt. Thus, the challenge made on the validity of clause 7.4.1.2 of RFQ is rejected. The petitioner has shown the sum of Rs. 98.01 Crores as short term borrowings under the caption current liabilities . The records al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of existing Iron Ore Terminal on as is where is basis and to handle Common-User Coal at Kamarajar Port Limited on DBFOT basis. The petitioner was one of the bidders by forming a Consortium along with Chettinad International Coal Terminal Private Limited and Marg Limited. The petitioner made the bid based upon its own capacity qua the minimum eligibility criteria for financial capability as the lead Consortium member having net tangible asset of Rs. 580 Crores. The petitioner's bid was rejected on the ground that it has failed to meet the minimum eligibility criteria, as the overdraft facility of Rs. 98.01 Crores availed would come under short term borrowing as per Schedule III of the Companies Act, 2013. This communication dated 8.1.2016 was preceded by numerous correspondence between the parties. 2. Challenging the RFQ itself and the consequential notice dated 22.12.2015, by which, the Consortium of JSW Jaigarh Port Limited (JSWJPL) and JSW Infrastructure Limited (JSWIL) was declared to be the eligible applicant as against the petitioner, followed by the communication dated 8.1.2016 sent by the 1st respondent indicating the basis for rejection, the present writ peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per party. 6. All the counsels agreed that it would be appropriate to decide W.P. No. 1757 of 2016 qua the petitioner's satisfaction of eligibility criteria for the RFQ with particular reference to the Financial Capability. The same is reiterated in the written arguments given by the petitioner in paragraph No. 6. 7. Though the counsels appearing for the respondents raised a preliminary objection on the ground that the petitioner is seeking contrary prayers in seeking to quash the RFQ and the consequential proceedings as against the satisfaction of minimum eligibility criteria of the financial capability by taking into consideration of the members of the Consortium, this Court does not want to stand on technicalities and thus, intends to proceed on merits. For the reasons mentioned earlier, this writ petition is disposed of without going in to the grounds of challenge made in W.P. No. 2850 of 2016 and thus, restricting the present one to the validity and applicability of clause 7.4.1.2 of RFQ conditions, apart from the other proceedings, which are sought to be quashed. 8. Heard Mr. P.S. Raman, learned Senior Counsel appearing for the petitioner, Mr. G. Rajagopal and Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner, who all along, reiterated through various correspondence to the 1st respondent that it stands on its own financial capabilities. Though an averment has been raised in paragraph No. 6 of the affidavit, it cannot stand to reason in view of the prayer sought for in this writ petition. The petitioner cannot be allowed to take mutually contradictory and destructive stand. The petitioner is also estopped from contending to the contrary, after making it clear its liability as current and borrowings as short term. The records of the petitioner also show that the borrowings are loans on demands, which would clearly fall under paragraph 3(d) of the General Instructions for Preparation of Balance Sheet of Schedule III of the Companies Act, 2013. Therefore, the liability was correctly classified as current. After knowing the weakness of its case, the petitioner has curiously taken a different stand. It is not as if the 1st respondent has taken a hasty decision. The decision was preceded by numerous communications. There was a conscious application of mind with the sufficient input from the expert competent to deal with the issue. In support of the contentions, reliance has been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs of any of the Consortium Member's Promoter(s), Affiliate(s) or Subsidiary(ies) for the purpose of evaluation. Since the strengths of the Promoter(s), Affiliate(s) or Subsidiary (ies) of any of the Significant Consortium Members are not considered for the RFQ, we feel that 'the Exhibit - 3: Letter of Commitment' is not applicable for the RFQ submitted by us. 14. According to the petitioner, it has satisfied the minimum eligibility criteria for financial capability in having the net tangible asset of Rs. 580 Crores. The records of the petitioner, as seen from the typed set of papers, would also indicate that the petitioner has shown the sum of Rs. 98.01 Crores as current liabilities and short term borrowings . It also confirmed the query raised by the 1st respondent dated 27.11.2015 on the above said amount that the second audited accounts submitted by the petitioner was a overdraft facility for the sum of Rs. 98.01 Crores. The petitioner did not provide any authentication from the Bank to the contrary. The financial statements made by the petitioner for the year 2013-14 show short term borrowing under the caption current liabilities , which is inclusive o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tangible Net Worth is defined as: Tangible Net Worth = (Equity Capital + Free Reserves and Surplus - Revaluation Reserve) - (Accumulated Losses + Intangible assets). And 7.4.1.2. Net Tangible Assets not less than Rs. 580 crores Net Tangible Assets as on 31/03/2015 (in case of entities with April to March accounting year) or 31/12/2014 (in case of entities with Jan to Dec. accounting year) would be considered. The Net Tangible Assets are defined as: Net Tangible Assets = Net 'Fixed Assets (excluding revaluation reserves, intangible assets such as goodwill, etc.) + Investments + Net Current Assets + Loans Advances And 7.4.1.3. Bridge Financing Capability not less than Rs. 50 crores The bridge financing capability would be assessed from the cash reserves and liquidation of marketable securities. Net Cash Accruals averaged over the last three financial years i.e. years ending 31/03/2013, 31/03/2014 and 31/03/2015 (in case of entities with April to March accounting year) or years ending 31/12/2012, 31/12/2013 and 31/12/2014 (in case of entities with Jan to Dec accounting year). Amount of liquid assets such as inter corporate deposits held and the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed, especially in the teeth of the margin note, which explains clause 7.4.1. 18. The learned Senior Counsel made substantial reliance on the judgment of this Court, in W.P. No. 23950 of 2004, as confirmed by the Division Bench in W.A. No. 2044 of 2005. The issue involved in the said writ petition is different. In that case, two other Companies were in a position to satisfy the financial capabilities having more than 26 percentage. Thus, this Court took into consideration of the financial capability of the promoter therein. Accordingly, a direction was issued to consider the minimum eligibility criteria of the promoter of the Consortium by name Portia Management Services Limited, being a promoter of the Consortium. The said concern was admittedly having 32% stake in the Consortium. Unfortunately, in the case on hand, the other two Consortium members are having only 11% and therefore cannot take advantage of the above said decision of this Court. 19. Further the petitioner cannot take advantage of the decision of the Apex Court in New Horizons Limited Vs. Union of India, ((1995) 1 SCC 478), which deals with the case of joint venture from the point of view of experience of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing based on the Certificate of his Chartered Accountant. This Court is afraid that as against the records produced by the petitioner itself, no sanctity can be given to the certification of the Chartered Accountant. As rightly submitted by the learned Senior Counsel appearing for respondent No. 2, the petitioner itself has shown its balance sheet the amount inclusive of Rs. 98.01 Crores as short term borrowings . It is also shown that the sum of Rs. 1,26,88,28,403, which is inclusive of Rs. 98.01 Crores, is loans repayable on demand . Admittedly, there are number of correspondence between the parties and thereafter only, a decision was made by the 1st respondent after due consideration with its own expert. One thing is clear, even as per the records of the petitioner, the sum of Rs. 98.01 Crores was treated as short term current liability and loan repayable on demand from banks . The petitioner has failed to throw any light from its bankers in this regard, though sufficient time was sought for and given. A perusal of the general instructions for preparation of balance sheet coming under Schedule III of the Companies Act, 2013, particularly, with specific emphasis of clause 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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