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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1492 OF 2009
WITH
CHAMBER SUMMONS NO.296 OF 2009
IN
WRIT PETITION NO.1492 OF 2009
1. ACME Tele Power Limited
A Company incorporated and registered
under the Companies Act, 1956,
having its registered office at Plot No.2, Sector 34,
E.H.T.P.Gurgaon- 122 001 Haryana.
2. Mr.Yogesh Sanklecha,
A Citizen of India and
a Shareholder of ACME Tele Power Ltd.
Residing at Plot No.68, Jedhenagar,
Near Chntamani Hospital,
Divyawadi, Pune-32 .. Petitioners
V/s
1. Union of India
Through its Secretary
Department of Telecommunications,
Ministry of Communications and
Information Technology, having its office at
Sanchar Bhawan, Ashoka Road,
New Delhi - 110 001.
2. Bharat Sanchar Nigam Limited,
A Government of India Enterprise and
a company registered under
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the Companies Act, 1956
having its office of the Maharashtra Telecom
Circle at "D" Wing, 6th Floor,
BSNL Administrative Building,
Juhu Tara Road, Santacruz,
Mumbai 400 054.
3. KEC International Limited,
A company registered under
the Companies Act, 1956
having its registered office at
CEAT Mahal, 463, Dr.Annie Besant Road,
Worli, Mumbai 400 030.
4. GTL Limited,
A Company registered under
the Companies Act, 1956,
having its registered office at
Global Vision, E.S.II, T.T.C.Industrial Area
Mahape, Navi Mumbai 401708 .. Respondents
Mr.Rohit Kapadia with Mr.Jimmy Pochkhanwala, Mr.Jayesh Desai,
Mr.Sandeep Narain and Ms.Amrita Thakore i/by M/s.Singhi & Co.for the
Petitioners.
Mr.V.D.Shukla with Mr.S.D.Shukla i/by M/s.Shukla & Associates for
Respondent No.2.
Mr.V.R.Dhond with Mr.Ameya Gokhale i/by M/s.Khaitan & Co.for
Respondent No.3.
Mr.P.N.Mody with Ms.Najma Shaikh i/by M/s.Vigil Juris for Respondent
No.4.
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CORAM : A.M.KHANWILKAR &
R.G.KETKAR, JJ.
DATE : 16TH OCTOBER, 2009.
JUDGMENT: (Per R.G.Ketkar, J.)
1. Heard the learned counsel for the parties. Rule. Counsel for the
Respondents waive service. By consent rule is made returnable
forthwith and the matter is taken up for hearing and final disposal.
By this petition under Article 226 of the Constitution of India, the
petitioners pray for issuance of the writ of mandamus directing the
Respondent No.1 (Union of India) and the Respondent No.2-Bharat
Sanchar Nigam Limited (BSNL), to withdraw, recall and cancel the
evaluation of the bids carried out by them and revaluate the said bids
strictly in accordance with the terms of the tender dated May 1, 2008,
issued by the BSNL; for issuance of a writ, order or direction
prohibiting the BSNL from taking any steps or awarding any contract
to Respondent No.3-KES International Limited and Respondent No.4-
GTA Limited. The controversy arises in the following circumstances.
2. On behalf of the BSNL sealed tenders were invited on two stage
bidding system in four parts from the eligible bidders for planning,
engineering, supply, installation, testing and commissioning of
GSM/UMTS based cellular mobile and supply, installation, testing
and commissioning of infrastructure for network of capacity of 25
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million lines to be rolled out in three phases in the the licensed service
areas of the BSNL in West Zone covering Maharashtra, Gujrat,
Madhya Pradesh, Chatisgarh.
3. The tender is in four parts. Part-1 covers planning, engineering,
supply, installation, testing and commissioning of GSM based cellular
network together with 3GPP R4 Core, IMS, IN and VAS. Part-2 covers
planning, engineering of 3G network, VAS and MBMS. Part-3 covers
supply, installation, testing and commissioning of infrastructure and
associated items for radio sites. Part-4 covers OSS/BSS. Eligible
bidders can participate in one or more of the parts independently,
subject to the fulfillment of the specified eligibility criteria.
4. The tender is divided in XI Sections. Section-I is Notice Inviting Tender
(NIT). Clauses 3 to 4.8 lay down the eligibility criteria as per Section-
I. Clause 3 thereof provides for eligibility criteria common for all
parts. Clause 4.1 lays down eligibility criteria for part-1. Clause 4.2
lays down eligibility criteria for part-2, Clause 4.7 lays down eligibility
criteria for part-3 and finally clause 4.8 lays down eligibility criteria
for part-4.
5. The tender envisages planning, design, engineering, supply,
installation, testing, commissioning and Annual Maintenance Contract
(AMC) for 25 million lines of GSM/UMTS R6 equipment in four parts
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for BSNL Network, each part on turnkey basis in the service areas in
which the BSNL has been licensed to operate its mobile services in
West Zone. The project is proposed to be executed in four parts, out of
which parts I, II and III will be executed in three phases whereas part
IV will be executed in only two phases.
6. Clause 6 of Section-I (NIT) lays down that the bid security in the form
of Bank Guarantee is Rs.120 crores (Rupees One Hundred Twenty
Crores only) for part-1, Rs.15 crores (Rupees Fifteen Crores only) for
part-2, Rs. 30 crores (Rupees Thirty Crores only) for part-3 and Rs.15
crores (Rupees Fifteen Crores only) for part-4.
7. Clause 4.2 of Section-II deals with Instructions to Bidders (ITB).
Clause 4.2 provides that the bidder is expected to examine all
instructions, forms, terms and specifications in the tender document.
Failure to furnish all information required as per the tender document
or submission of the bid not substantively responsive to the tender
document in every respect will be at bidder’s risk and may result in
rejection of the bid. Clause 5.1 provides that a prospective bidder
requiring any clarification of tender shall notify the purchaser (BSNL)
of such queries in writing or by fax at the BSNL’s address indicated in
the invitation of the bid, among other things. Clause 5.2 provides that
any clarification issued by BSNL in response to the query raised by
prospective bidders shall form integral part of the tender document
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and would amount to amendment of relevant clauses of the tender.
8. Clause 9.1 lays down that a bidder shall give total composite price
inclusive of all levies and taxes viz.excise duty, customs duty, VAT,
sales tax, service tax, packing, forwarding, freight and insurance etc.,
but excluding octroi/entry tax which will be paid extra as per the
actual, wherever applicable as per the terms of payment specified in
Section-IV. The basic unit price and all other components of the price
need to be individually indicated against the goods and services it
proposes to supply under the contract as per the price schedule given
in Section-VII. Clause 9.2 lays down that the prices indicated in the
price schedule shall be entered in a particular manner. Clause 9.5
which is mandatory term of the tender lays down that the discount, if
any, offered by the bidders shall not be considered unless specifically
indicated in the price schedule among other things. Clause 10 which is
mandatory term of the tender provides for the documents
establishing bidder’s eligibility and qualification.
9. Clause 11.2 provides that the documentary evidences of the
conformity of the goods and services to the tender may be, in the form
of literature, drawings, data etc., and the bidder shall furnish among
other things the compliance of techno-commercial compliance of the
tender terms, conditions and technical specification as sought as per
the procedure more particularly set out therein. Clause 11.2 (c) (i) to
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(vi) is mandatory term of the tender setting out the procedure
through which techno-commercial compliance of the tender term or
condition and technical specification is sought. Clause 12.1 provides
for the amount and form of bid security, which is mandatory term of
the tender. Clause 12.3 thereof provides that the bid security shall be
in the form of a bank guarantee issued by a scheduled bank in favour
of the purchaser, valid for a period of 180 days from the date of bid
opening. The purchaser reserves the right to request the lowest
bidder during the period of bid evaluation to extend the bid security
for a further period of 120 days and the bidder shall extend the same
accordingly. Refusal to extend the bid security will result in forfeiture
of the bid security.
10.Clause 13.1 is a mandatory term of the tender and lays down that
bids shall remain valid for 150 days from the date of opening
prescribed by the purchaser pursuant to clause 19.1 and a bid valid
for a shorter period shall be rejected by the purchaser as non-
responsive. Clause 15.1 is also a mandatory term of the tender that
provides for submission of bid in two covers. The first cover shall
contain original and four copies of the bid duly marked “ORIGINAL”
and “COPY”. The second cover shall contain documents establishing
bidder’s eligibility as per clause 2 alongwith bid security as per clause
12. Both the covers should be sealed separately by the personal seal of
the bidder. Clause 20 provides for clarification of bids and lays down
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that to assist in the examination, evaluation and comparison of bids,
the purchaser (BSNL) may, at its discretion ask the bidder for the
clarification of its bid. The request for the clarification and the
response shall be in writing. However, no post bid clarification at the
initiative of the bidder shall be entertained.
11.Clause 21 provides for technical and commercial evaluation. Clause
21.2 thereof is one of the important clauses of the tender and
provides that the purchaser (BSNL) shall determine the substantive
responsiveness of each of the technical and commercial bids to the
requirements of the tender document. A substantively responsive bid
is one which conforms to all technical specifications and commercial
terms and conditions of the tender document without material
deviation/exceptions. The BSNL’s determination of bid’s
responsiveness shall be based on the contents of the bid itself without
recourse to extrinsic evidence. Clause 21.3 provides that during the
evaluation, BSNL at its discretion may call upon the bidder to give a
techno-commercial presentation of its offer, to explain the products
offered, its capability to undertake the project and to respond to any
question from BSNL. Clause 21.4 lays down that a bid, determined
as substantively non-responsive will be rejected by the purchaser and
shall not subsequent to the bid opening be made responsive by the
bidder by correction of the non-conformity. Clause 21.5 which is one
of the important clauses, provides that the BSNL may waive any minor
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infirmity or non-conformity or irregularity in a bid which does not
constitute a material deviation, provided such waiver does not
prejudice the establishment of techno-commercial parity among the
bids. Clause 21.6 is also important term of the tender and lays down
that the financial bids of only those technical and commercial bids
that are determined as substantively responsive shall be opened. The
financial bids of those technical and commercial bids that are
determined as substantively non-responsive shall be returned to the
respective bidders unopened.
12.Clause 22.1 is also important clause of the tender and provides that
the BSNL shall evaluate and compare the financial bids in detail of
those technical and commercial bids previously determined to be
substantively responsive pursuant to clause-21. Clause 22.2 (a) lays
down that the evaluation and comparison of responsive bids shall be
done on the basis of net cost to BSNL on the prices of the goods
offered inclusive of duties and taxes (but excluding CENVAT-able
duties & taxes), sales tax, packing, forwarding, freight and insurance
charges etc., as indicated in col.17 of the price schedule in the Section
VII, Part-II of the tender document, and as stipulated in clause 9.1 the
octroi/entry taxes are not to be included in the composite price and
hence the same will not be considered for the purpose of evaluation
and comparison of responsive bids.
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13.Section IV lays down special conditions of contract. Clause 46 therein
provides for Evaluation. Clauses 46.2(i) and 2(vii)(a) are quoted
hereinbelow for ready reference;
46.2 “Further, the tender shall be evaluated as a package quoted by
the bidders for various equipments/materials/services as per the
criterion given below:
(i) The price of various components forming part of the package
detailed in the SoR at Section-V shall be evaluated. It shall also
include all those items which respective bidders consider
essential for commissioning purposes. The sanctity of the price
of individual items shall be maintained by the bidders within the
package even though the evaluation is package based.”
“46.2(vii) : In order to establish techno-commercial parity among
the bids, the financial bids shall be loaded as below:
(a) Cases in which bidder has not quoted the price of the item
mentioned in the SoR of the tender document and has not given
any comments/justifications for not quoting the same, the price
bid will be loaded with the maximum price quoted for that item
by any other bidder for the purpose of evaluation.”
14.The tender seeks a comprehensive and complete requirement of
infrastructure items for the successful installation and commissioning
of the IMPCS network. Clause 54 of the tender deals with Annual
Maintenance Contract (AMC) and lays down that the bidder shall
quote cost of AMC for a period of seven years (AMC for 6th & 7th year
is optional) from the date of completion of each of the three phases of
the project and on the expiry of warranty as mentioned in clause 53.
Annexure-II deals with AMC. Clause 2.4 thereof provides that the
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supplier shall submit list of spares required alongwith the bid and cost
of the same is to be quoted in price schedule. The price shall be same
as that quoted in the bill of material against the concerned item in the
Schedule Of Requirement (SOR).
15.In the present case BSNL invited bids by a tender dated May 1, 2008.
The technical & commercial bids were opened on September 10,
2008 and the following bidders had participated :
i. M/s.GTL Ltd. (Respondent No.4)
ii. M/s.Spanco Pvt.Ltd.
iii.M/s.Aster Teleservices Pvt.Ltd.
iv. M/s.ACME Tele-Power Ltd. (Petitioner)
v. M/s.ICOMM Tele Ltd.
vi. M/s.Teracom Pvt.Ltd.,
vii.M/s.KEC International Ltd. (Respondent No.3)
On the scrutiny of technical and commercial bids, the bids of
following bidders were found to be eligible for opening of financial
bids.
1. M/s.GTL (Respondent No.4)
2. M/s.Spanco
3. M/s.KEC (Respondent No.3)
4. M/s.ACME
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5. M/s.ICOMM
16.By letter dated February 24, 2009 BSNL intimated the eligible bidders
that the financial bids will be opened on February 28, 009 so that the
bidders can depute their representatives to attend the same. In the
first stage of evaluation of the bids, the Technical and Evaluation
Committee (TEC) was required to evaluate the technical and
commercial bids in accordance with clause 21 of Section -II. The
financial bids of the bidders whose technical and commercial bids
were found by TEC to be substantively responsive were to be
evaluated further in the second stage of financial evaluation by the
Financial Evaluation Committee as per clause 22 of Section-II of the
tender document. Upon evaluation of the financial bids, the Financial
Evaluation Committee would determine ranking of the bidder as
lowest (L-1), second lowest (L-2), third lowest (L-3) and so on. The
tender stipulate that the lowest bidder would be awarded 50% of the
contract in the inverse ratio of the bid amounts. The lowest bidder
could also be invited for further reduction in their prices by Price
Negotiation Committee (PNC) and the second & third lowest bidders
were also obliged to execute the contract at such reduced prices of the
lowest bidder. After completing this formalities, the purchase orders
for the respective quantities are to be placed on lowest, second lowest
and third lowest bidders.
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17.It is the case of the petitioners that the
Financial Evaluation Committee carried out financial evaluation
between March 1, 2009 and April 30, 2009 and submitted its final
report before April 30, 2009. During this evaluation the ranking of the
parties as SPANCO as lowest (L-1), GTL-4th Respondent as second
lowest (L-2), KEC-3rd Respondent as third lowest (L-3), and the
petitioner as L-4. It is the further case of the petitioners that the PNC
invited lowest bidder SPANCO Limited for negotiation for further
reduction in the price sometime in the first week of May, 2009. The
prices were lowered by SPANCO and even the PNC recommended
issuance of purchase orders to L-1, L-2 & L-3 in July, 2009 in respect
of Western Zone on such reduced and negotiated prices.
18.The petitioners challenge the techno-commercial evaluation as well as
financial evaluation in respect of the item spares which is the major
line item of supply as required by BSNL. The said item is at serial No.
19 of Section-V dealing with SOR (part III). It is the case of the
petitioners that the list of spares was mandatorily required to be
furnished in the techno-commercial bid, as per clause 11.2 of Section-
II of the tender read with clause 9.1 of Section-III dealing with
General (Commercial) Conditions of Contract. The third Respondent
has also not quoted the price of such spares in its financial bid. In so
far as 4th Respondent is concerned, the grievance of the petitioner is
that in col.5 & 6 of the financial bid, it was necessary for the bidder to
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quote excise duty. Both the respondents viz.3rd and 4th Respondent
did not quote the amount of excise duty in col.5 & 6 in the financial
bids. This being the mandatory term of the tender, the BSNL ought to
have declared their bids as substantively non-responsive bids. It is the
submission of the petitioners that since the mandatory terms of the
tender document were not fulfilled by Respondent Nos.3 & 4, as per
the terms of tender, the BSNL ought to have declared the bids of
Respondent Nos.3 & 4 as substantively non-responsive bids and ought
to have rejected the same. If that was done by the BSNL, there was
no question of opening the financial bids of Respondent Nos.3 & 4,
and should have been returned to the respective bidders unopened in
terms of clause 21.6. In support of this submission, the petitioners rely
upon-
(i) Clause 11.2 (b) of Section II
(ii) Clause 9 of Section III
(iii) Query No.65 and Reply
(iv) Clause 54.4 of Section IV
(v) Clauses 2.4, 2.5 and 2.6 of Annexure II of Section IV.
19.In so far as excise duty is concerned, the excise duty leviable on all
items of SOR was also mandatorily required to be filled in percentage
as well as in amount in the financial bids, which were to be filled in as
per the price schedule as set out in Section VII of the tender. In
support of this submission, the petitioners rely upon –
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(i) Clause 9.1 of Section II,
(ii) Clause 9.2 of Section II,
(iii)Query No.458 and its Reply.
20.The petitioners rely upon the judgment of the Apex Court in West
Bengal State Electricity Board V/s.Patel Engineering Co.Ltd., (2001) 2
SCC 451.
21. The respondents have filed affidavits in opposition to the petition.
On behalf of the BSNL, Devid S.A., working as AD (MM-I) has sworn
affidavit on August 20, 2009. It is contended that the evaluation
process is still under process and no cause of action has arisen. It is
contended that the petition is pre-mature and same is based upon
assumption/anticipation for the purpose of trying to delay the tender
process. On behalf of 3rd Respondent, Surinder Bir has sworn
affidavit on August 25, 2009 contending interalia that the petition is
pre-mature. It is submitted that the financial bids were opened on
February 28, 2009 and the present petition is instituted on August 3,
2009 which suffers from delay and latches. It is further submitted
that the evaluation of bids is under process and the BSNL has not yet
issued purchase orders. On merits, it is submitted that the contentions
raised by the petitioners that the 3rd Respondent has not complied
with the mandatory terms of the tender and in that the technical bid
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did not contain the list of spares, as also the financial bid was not in
compliance with the terms and conditions of the tender and the bid is
liable to be rejected, are wholly misconceived. In substance, the
argument of the 3rd Respondent is that these are not the mandatory
terms of the tender. As far as excise duty is concerned, under the
provisions of the Central Excise Act and Rules, every person who
produces or manufactures any excisable goods has to pay duty
leviable on such goods. The 3rd Respondent is neither the producer
nor the manufacturer of any of the goods. Reliance is placed upon
clause 22.2 of Section-II read with Section-VII, Part-2 dealing with the
Price Schedule for indigenous equipments (including partly imported)
and service costs and price schedule for imported equipments.
22.On behalf of 4th Respondent, Arunkumar Sinha, the constituted
attorney has sworn affidavit on August 18, 2009. It is submitted that
the petitioners are not entitled to any reliefs as the petition is barred
by gross and unexplained delay and latches. The petitioners acquired
knowledge on February 28, 2009 when the financial bids were opened
and the petition is instituted on August 3, 2009. At any rate, techno-
commercial bids were opened as far back as on September 10, 2008
and if the petitioners contention is valid, the BSNL ought to have
declared the bids of 3rd and 4th Respondents as substantively non-
responsive and consequently there was no question of BSNL opening
their financial bids. Since the BSNL did not declare the bids of 3rd
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and 4th Respondents as substantively non-responsive bids after
opening of these bids on September 10, 2008 and proceeded further
for evaluating the financial bids, the cause of action accrued to the
petitioners then and there itself. The petitioners allowed the BSNL to
open financial bids of 3rd & 4th Respondents on February 28, 2009.
In view of this, the petitioners are precluded from challenging the
techno commercial evaluation of the 3rd & 4th Respondents. In so far
as financial evaluation is concerned, it is submitted that the financial
bids were opened on February 28, 2009 and the present petition is
instituted on August 3, 2009. The petition therefore suffers from
gross delay and latches.
23.Mr.Rohit Kapadia, learned senior counsel for the petitioners submitted
that the spares are important component of the goods that are
required to be supplied under the tender as they would be required
for replacement, upkeep and maintenance and regular functioning of
mobile telephone services by BSNL immediately upon expiry of one
year warranty period after commissioning of the infrastructure for
such mobile telephones. The spares are required to be supplied under
the tender itself and are to be kept in adequate quantities at all sites
so that they can be immediately replaced as and when required.
24.In the instant case, the 3rd Respondent did not furnish list of spares
and also has not quoted price of such spares in its financial bids. If at
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all the detailed list of spares was not provided for any reason, a
deviation/exception statement justifying for not providing such list
was required to be furnished as per clause 11.2 (b)(ii) of Section II of
the tender. As per clause 31 (iv) of Section II of the tender if the
compliance, deviation/exception statement as prescribed are not
given, a bid is to be rejected at the stage of techno-commercial
evaluation. The 3rd Respondent has also not furnished any
deviation/exception statement. In view of this, the BSNL ought to
have rejected the bid of the 3rd Responent at the stage of techno-
commercial evaluation. The fact that the 3rd Respondent did not
furnish list of spares is established from the Evalution Chart (pre-
clarification) annexed by BSNL to its affidavit. In view of this, it is
submitted that the techno-commercial bid of the 3rd Respondent was
liable for outright rejection under clause 31 (iv) of Section II. In this
connection, it is further submitted that under clause 9.2 (ii) of
Section II, the bidders were to quote as per the price schedule given in
Section VII of the tender for “all” the items given in the SOR. The
bidder was to quote the price of such spares in its financial bid. If the
prices were not filled in as required in the price schedule, the financial
bid was liable for outright rejection in terms of clause 31 (v) of
Section-II. Admittedly, the 3rd Respondent has not filled-in the price
schedule for all the items of SOR and has left the entire row of prices
of spares in their financial bids as blank. In view of this the financial
bid of the 3rd Respondent was liable for outright rejection under
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clause 31(v) of Section II, ITB.
25.It is further contended that the 4th Respondent has not filled-in the
price schedule for all the items of SOR and has left col.5 & 6 of their
financial bid as blank for all the items and thus their financial bid is
liable for outright rejection under clause 31(v) of Section II, ITB. A
reliance is placed upon the judgment of the Apex Court in the case of
W.B.State Electricity Board (supra) and in particular paragraph No.24
to contend that in a big and high value tender, the degree of care
required is greater than in local bids for small works. The Apex Court
has held that it is essential to maintain the sanctity and integrity of
the process of tender/bid which should be filled in and the terms
complied with scrupulously, and that adherence to instructions under
ITB (Section II in the instant case), cannot be given a go-bye by
branding it as a pedantic approach, otherwise it will encourage and
provide scope for discrimination, arbitrariness and favouritism which
are totally opposed to rule of law and constitutional values. It has
been further held therein that relaxation of such rules in favour of one
or the other bidder would impair the rule of transparency and fairness
and provide a room for manipulation in picking and choosing a bidder
which is not permissible in law for State Authorities.
26.Dealing with the contentions raised by BSNL in its affidavit to the
effect that in the given case taking into consideration the quantum,
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nature, costs, technicalities involved, if the special conditions of the
contract were strictly implied all the bids of the eligible bidders would
have been bound to be rejected and the entire bid process would have
had to be renegotiated, which would have been time consuming at the
cost of substantial public money and delay in process of
implementation of tender work, and to overcome that the remedy of
obtaining unconditional undertaking was obtained from all the
eligible bidders to comply with the tender conditions, it is submitted
that the entire approach of the BSNL was unsustainable. In the first
place, the BSNL has failed to point out any fatal deficiency in the bids
of either the petitioners or the other bidders excepting the
Respondent Nos.3 & 4. Secondly, such undertakings could not have
been obtained after opening of the bids in terms of clause 21.4 of
Section II of the tender. Such undertakings would also disturb techno-
commercial parity interse the bidders, they could not have been called
for by the BSNL in view of clause 21.5 of Section-II of the tender.
27.Mr.Dhond, learned counsel on behalf of 3rd Respondent submitted
that the contentions of the petitioners that failure to provide a list of
spares and or excise duty on all items in the SOR should result in
rejection of the bids, is wholly mis-conceived and contrary to plain
terms of the tender. Under the tender, bidders were required to
furnish their bids in accordance with SOR (Part-III) which is set out in
Section V of the tender. Perusal of Section V indicates that as many as
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173 items are set out therein. One of the items is entitled “spares”.
The spares form a very small part or component of the SOR which is
required to be submitted in response to the tender. The spares are
relevant only in the context of upkeep and maintenance of the
equipment which is supplied by the respective bidders. The spares are
needed when an individual component either breaks down or is
consumed or requires replacement. As per the tender, the bidders have
to quote costs of AMC for a period of seven years (AMC for 6th & 7th
year is optional), from the date of completion of each of three phases
of the project and on expiry of warranty as mentioned in clause 53. It
is common ground between the parties that the warranty period was
one year from the date of commissioning of the equipment.
Consequently, for a period of 8 (7+1) years from the date of
commissioning, bidder would be responsible for ensuring that the
equipment was kept fully operational and/or functional, and it would
be his responsibility to keep the equipment operational, and the BSNL
would not be required to bear any expenditure towards the spares.
28.It is further submitted that clause 31 of Section II of the ITB
particularises those conditions which are essential and mandatory
and whose non-compliance would result in outright rejection of the
bid. In so far as grievance of the petitioners about non-compliance of
clause 31 (v) of Section-II is concerned, the grievance is wholly mis-
conceived, inasmuch as clause 31(v) of Section-II lays down rejection
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of the bid on account of prices not filled-in as prescribed in the price
schedule. It is submitted that clause 31(v) of Section II has no
application whatsoever to the present case as the bid of the 3rd
Respondent has been filled in the manner prescribed in the price
schedule in Section VII. Under clause 31(iv) of Section-II of the
tender, non-compliance of clause 11.2.(c) of Section-II being
mandatory is fatal. Clause 11.2 (b) of Section-II deals with the list
giving full particulars including available sources and current prices of
all spare parts, tools etc. necessary for proper and continuous
functioning of the goods for a period of eight years following
commencement of use of the goods by the BSNL, which is required to
be furnished by the bidder. However, clause 11.2 (b) that deals with
furnishing list of all spare parts as detailed therein is not included in
clause 31 of Section II. In view of this, it is submitted that the
grievances of the petitioners on the ground of spares is wholly
unsustainable.
29.At any rate it is submitted, that clause 46.2 (vii) (a) of Section IV lays
down that in order to establish techno commercial parity among the
bids, the financial bids shall be loaded as under:-
Cases in which bidder has not quoted the price of the item
mentioned in SOR of the tender document and has not given any
comments/justifications for not quoting the same, the price bid will
be loaded with the maximum price quoted for that item by any
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other bidder for the purpose of evaluation.
In view of this it is submitted that where price of the item has not
been mentioned, the BSNL is not remedyless and can invoke clause
46.2 (vii) (a) of Section IV of the tender.
30.Mr.Modi, learned counsel for the 4th Respondent submitted that the
4th Respondent does not manufacture any of the items listed in the
tender. If the tender is awarded to the 4th Respondent it will be
merely purchasing the said items from other manufacturers/suppliers.
Under the provisions of Central Excise Act and Rules, it is the
respective producer or manufacturer who has to pay the excise duty
to the Excise Authorities and not the 4th Respondent. There is
therefore no question of 4th Respondent failing or neglecting to fill in
col.5 & 6 of Section VII (Part-II) dealing with the price schedule for
indigenous equipment (including partly imported) and service costs
and the price schedule for imported equipments. It is explained in the
affidavit made on behalf of the 4th Respondent that ex-factory price
(basic unit price exclusive of all levies and charges) in col.4, and the
excise duty in col.5 & 6 of the prescribed format would have to be
detailed up alongwith other costs to arrive at the unit price in col.12,
which in turn would get directly reflected in col.17 and the format as
the total discounted price excluding cenvatable duties and taxes.
Cenvatable duties & tax amounts were shown in col.13 of the said
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format wherever available. It is also submitted that as per clause 22.2
of Section-II of the tender (ITB), the evaluation and comparison of the
bids is to be made on the basis of net costs to BSNL of the goods
offered inclusive of duties and taxes but excluding cenvatable duties
and taxes as indicated in col.17. Col.17 of the said format would be
effective net costs to the BSNL after getting credit/benefit for the said
cenvatable duties and taxes. In view of this, it was denied that the bid
of the 4th Respondent was misleading or manipulating as falsely
alleged. It was also submitted that the tenders are yet to be evaluated
and in fact as per clause 21.3 of Section II of the tender (ITB), it is
provided that while evaluating the said bid the BSNL would be
entitled to call upon to furnish clarifications. On these among other
grounds, the 4th Respondent has prayed for dismissal of the petition.
31.On behalf of the BSNL Mr.Shukla, learned counsel reiterated that the
evaluation process is still under process and no cause of action has
arisen. Having regard to the magnitude and scope of the work, it must
have freedom of contract, in other words, fairplay in the joints is
necessary concomitant for administrative body functioning in an
administrative sphere or quasi administrative sphere. He submitted
that though at pre-clarification stage the 3rd and 4th Respondents did
not submit spares list, at the stage of post-clarification stage the 3rd
and 4th Respondents did supply spares list. At any rate, both at pre-
clarification and post-clarification stages, the 3rd and 4th Respondents
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had given NIL deviation statement. He also contended that the
petition is prematured as the purchase orders are not issued as the
evaluation process is still under process.
32.On behalf of the petitioners Chamber Summons No.296 of 2009 was
taken out seeking a permission to amend the writ petition as per the
schedule annexed thereto. With the consent of the parties, we
proceeded to hear the main petition alongwith the chamber summons
finally at the stage of admission itself. The chamber summons is taken
out mainly to counter the submissions made by the Respondents that
the petition is premature. On the basis of annexures to the chamber
summons it is submitted that the financial evaluation is over and in
fact the PNC has negotiated with the lowest bidder M/s.Spanco. It
therefore cannot be said that the petition is premature. If the
petitioners were to institute the petition after issue of purchase orders
in favour of successful bidders, either it would have been met with
fate accompli or it would have been contended on behalf of the
successful bidders that now the rights have been created in their
favour and in that case, the petitioners would be left with no effective
remedy.
33.While explaining the procurement of report of the Committee for
Evaluation of Tender in respect of financial bid and the copy of the
report of the Price Negotiation Committee, it is asserted that the
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matter was heard on Friday-September 5, 2009 and was stood over to
Monday-September 7, 2009. To the surprise of the petitioners on
Monday-September 7, 2009 a packet was left at the petitioners office
addressed to the Petitioner No.1. On opening of the same, the
petitioners were surprised to see the contents thereof which were the
copy of the report of the Committee for Evaluation of Tender in
respect of the financial bids and the copy of the report of the Price
Negotiation Committee. Under the circumstances, the petitioners are
not aware of the identity of the person who left the packet at the
office of the Petitioner No.1. These assertions were strongly refuted by
the Respondents by filing affidavits in opposition.
34.Mr.Kapadia relied upon the following judgments:
(i) Magraj Patodia V/s.R.K.Birla, AIR 1971 SC 1295, and in
particular paragraph No.20 thereof. The relevant portion thereof reads
as under:
“The fact that a document was procured by improper or even illegal
means, will not be a bar to its admissibility if it is relevant and its
genuineness is proved.
(ii) Bombay Chemical Limited V/s.Union of India, 2007 (8) S.T.R.
417 (Bom) and in particular Paragraph No.7 thereof. In paragraph
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No.7 the Court observed that as the authenticity of xerox copy of the
order dated March 22, 1995 passed by the then Assistant Collector
produced by the petitioner was challenged by the Respondent, the
Court directed the department to produce the original record. After
careful perusal of the record, the court found that the copy produced
before the court was in fact true xerox copy of the original order
which was in the office record. In that context, the Division Bench
observed as under:-
“…..Hence, the source from which the petitioners got the copy, is
immaterial”.
35.Mr.Kapadia invited our attention to the affidavit made on behalf of
BSNL in opposition to the chamber summons wherein the BSNL did
not deny existence of the documents, but mere authenticity of the
documents referred by the petitioners. He therefore submitted that the
court should call upon the BSNL to produce the original file
containing the copy of the report of the Committee for Evaluation of
the Tender in respect of the financial bids and the copy of the report
of the Price Negotiation Committee (PNC).
36.Mr.Kapadia further submitted that the BSNL has determined the
ranking of the bids as lowest (L-1), second lowest (L-2) and third
lowest (L-3). He invited our attention to the affidavit made on behalf
of the BSNL by David S.A., working as A.D.(MM-I). In paragraph No,
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9 of the said affidavit it is set out that the tender process is divided
into following parts:
(i) preparation of bid
(ii)invitation and opening of bid\
(iii)Pre-clarification techno-commercial evaluation
(iv)evaluation of financial bid
(v)awarding of tender.
37.It has been thereafter set out that on the basis of financial bid
submitted, L-1, L-2 and L-3 have been determined. In Paragraph No.
13 of the said affidavit, it has been set out that the CET has submitted
its recommendations and L-1, L-2 and L-3 have only been determined,
but further process is still pending as still the price negotiations with
L-1 are yet to take place. On the basis of assertions made in the
affidavit of the BSNL, Mr.Kapadia submitted that the financial
evaluation is over and in fact BSNL has determined the ranking of the
bids as L-1, L-2 and L-3. He therefore submitted that the contentions
raised by the respondents that the petition is pre-mature is contrary to
the record and factually incorrect.
38.Opposing the Chamber summons BSNL has made affidavit of David
S.A. He has submitted that though the BSNL has determined the
ranking of bids as L-1, L-2 and L3, nonetheless there is substantial
process left before finally evaluating L-1, L-2 and L-3 as successful
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bidders. Though the PNC has negotiated with L-1, the
recommendations of the PNC are yet to be approved by the tendering
authority. If the tendering authority approves the recommendations
of the Committee as regards L-1, as also rates, the tender work would
be allotted to L-1, which would be final subject to L-1 furnishing
unconditional acceptance and performance security in conformity
with Section IX of the tender. If L-1 fails to comply with the requisite
conditions, the entire bid would be terminated and recalled.
39. On behalf of Respondent No.4, Mr.Arun Kumar Sinha, constituted
attorney has made an affidavit opposing the Chamber Summons. It is
submitted that it is patently absurd and dishonest attempt on the part
of the petitioner to explain away as to how they obtained copies of the
confidential documents. When the court directed the petitioners to
disclose the source thereof, they came out with an explanation that
the copies of the said documents were left in a packet at the
petitioner’s office addressed on September 7, 2009 by some unknown
person. The said story is ex-facie false and perjurious and impossible
to accept. The said attempt is intended only to obfuscate and cover up
the mischief and corrupt practices of the petitioners. It is contended
that the petitioners have not come to this Court with clean hands. It is
reiterated that the contentions raised earlier by 4th Respondent about
the petition being pre-mature is based on the fact that no contract or
purchase order or LOI was issued by the BSNL and that the tender
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evaluation process is incomplete.
40.On behalf of 3rd Respondent, Mr.Surinder Bir has made an affidavit
opposing the chamber summons. It is submitted that the explanation
given by the petitioners as to how they got hold of the documents is
totally unsatisfactory and insufficient. At the highest the said
documents would be relevant for considering whether the petition is
pre-mature or otherwise.
41.After hearing the learned counsel appearing for the parties and also
considering the material on record, it is abundantly clear that the
BSNL has completed the financial evaluation and determined the
ranking of the bids as lowest (L-1), second lowest (L-2) and third
lowest (L-3). It is only after completion of the financial evaluation
the ranking of the bids could be determined. From perusal of the
affidavit made in opposition on behalf of the BSNL to the chamber
summons, it is abundantly clear that after evaluating the financial
bids, the BSNL has determined the ranking of the bids. It may be the
recommendations of the PNC as regard its negotiations with L-1 are
yet to be approved by the tendering authority. But nonetheless the
negotiations could be carried out by PNC only after evaluation of the
financial bids. In our considered opinion, therefore, the petition
cannot be said to be pre-mature. Undoubtedly the petitioners have not
explained as to how they got hold of these documents. For, the
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explanation offered by the petitioners in paragraph 21 C of the
affidavit in support of the Chamber Summons is unacceptable. BSNL,
however, admits existence of these documents and denies mere
authenticity thereof. The best course for the BSNL, being a public
body, was to produce the original record for perusal of this Court. At
any rate, the least that was expected from the BSNL was to produce
the authentic copy of the document alongwith the affidavit in
opposition to the Chamber Summons. To observe sobriety we leave
the matter at that.
42.Be that as it may, now turning to the merits of the case, the
petitioners main grievance is two fold against the Respondents. Firstly,
not furnishing the list of spares by Respondent Nos.3 & 4, and
secondly, not filling in the amount of excise duty in col.5 & 6 in the
financial bids by Respondent Nos.3 & 4. Before proceeding to
ascertain answers to the above questions it will be useful to bear in
mind the principles governing the exercise of power of judicial review
by this Court. After exhaustive consideration of long line of
authorities, the Apex Court in the case of Tata Cellular V/s. Union of
India (1994) 6 SCC 651, succinctly summarised the position and laid
down the following principles:-
“(1)The modern trend points to judicial restraint in administrative
action.
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(2) The Court does not sit as a court of appeal but merely reviews
the manner in which the decision was made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative decision ispermitted it will be substituting its own decision, without the
necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial
scrutiny because the invitation to tender is in the realm of contract.
Normally speaking, the decision to accept the tender or award the
contract is reached by process of negotiations through several tiers.
More often than not, such decisions are made qualitatively by
experts.
(5) The Government must have freedom of contract. In other
words, a fair play in the joints is a necessary concomitant for anadministrative body functioning in an administrative sphere or
quasi-administrative sphere. However, the decision must not only
be tested by the application of Wednesbury principle ofreasonableness (including its other facts pointed out above) but
must be free from arbitrariness not affected by bias or actuated bymala fides.
(6) Quashing decisions may impose heavy administrative burden
on the administration and lead to increased and unbudgeted
expenditure.”
In the light of these principles we shall determine the questions raised
in the present petition.
43.In so far as not furnishing of list of spares, giving full particulars
including available source and current prices of all spare parts,
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specially tools etc. (clause 11.2(b)), the petitioners contend that as
per clause 31 of Section II, non-furnishing of such list alongwith the
techno commercial bid is fatal. The BSNL ought to have declared bids
of the 3rd and 4th Respondents as substantively non-responsive bids
and returned the financial bids unopened to the 3rd & 4th
Respondents.
44.With regard to issue of spares the petitioners rely upon following
clauses in the tender: –
Clause 11.2(b) of Section-II,
Clause 9 of Section-III,
Clause 54.4 of Section-IV,
Clauses 2.4, 2.5 and 2.6 of Annexure II of Section-IV.
Aforesaid clauses read as under:-
Clause 11.2(b) of Section-II: A list, giving full particulars including
available sources and current prices of all spares parts, sp0ecial tools,
etc., necessary for the proper and continuous functioning of the goods
for a period of eight years following commencement of use of the
goods by the purchaser.”
Clause 9 of Section-III – Spares.
Clause 54.4 of Section-IV – The bidder shall, at the time of submitting
the bid submit the proposal specifying the fault control centre
locations together with the resources to be deployed including the
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number of personnel and how the bidder proposes to carry out repair
under AMC. He shall also indicate the list of spares together with the
quantity that will be kept in different locations. The infrastructure
planned to be created by the bidder to fulfil his obligations under
AMC and his action plan to deal with the various situations arising out
of hardware and software faults shall be clearly indicated.
Clauses 2.4, 2.5 and 2.6 of Annexure II of Section-IV:
2.4 – The supplier shall submit a list of spares required alongwith the
bid and cost of the same is to be quoted in the price schedule. The
price shall be same as that quoted in the bill of material against the
concerned item in the SOR. The spares are to be kept at each core
network elements locations and at each BSC/RNC locations in the
custody of BSNL. BSNL shall arrange space for the same. The
minimum number of the spares to be supplied are as per the chart.
2.5 – BSNL staff will replace the faulty units from the stock available
wherever possible and attend to the fault. However, should there be a
problem vendor shall arrange telephonic support in diagnostic of the
fault and also in replacing the card. In any case such fault could not
be attended to, the support team of the vendor shall be responsible to
arrange rectification of the fault at site within stipulated time frame.
2.6 – The spares thus ordered are to be supplied within 6 months of
placing the purchase orders. The date of expiry of warranty shall be
extended by the no.of days there is delay in supplying of such spares
at all these sites.
45.The petitioners have also relied upon Query No.65 and the reply
given to the same, which read as under:-
Query 65 – List of following material and notification pertaining to
spare parts not provided. Please provide the same. Since the spares
will be covered under warranty as well as AMC what is the purpose of
providing spare parts under pricing. Since this clause demand the
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quantities also whether the price of the spares will become part of the
evaluation.
Reply – Please refer to sub clause of this clause. Further prices are
being asked so that BSNL can decide to procure spare parts after AMC
period. Prices are also required for evaluation.
46.On the other hand the Respondents 3 and 4 submit that Clause 31 of
Section II lays down the mandatory clauses of the tender, failure
whereof would result in outright rejection of the bid. The said clause
31 reads as under:-
While all the conditions specified in the tender document are critical
and are to be complied, special attention of bidder is invited to the
following clauses of the bid documents, non-compliance of any one of
which shall result in out right rejection of the bid:
(i)Clause 15.1 of Section-II: The bids will be recorded/returned
unopened if covers are not properly sealed with ‘PERSONAL SEAL’ of
the bidder.
(ii)Clauses 12.1, 12.3 and 13.1 of Section-II: The bids will be rejected
at opening stage if Bid security is not submitted as per Clauses 12.1 &
12.3 and bid validity is less than the period prescribed in Clause 13.1
mentioned above.
(iii)Clause 2 and 10 of Section-II: If the eligibility condition as per
clause-2 of Section -II is not met and documents prescribed to
establish the eligibility as per Clause-10 of Section-II are not enclosed,
the bids will be rejected without further evaluation.
(iv)Clause 11.2(c) of Section II: If the compliance,
deviation/exception statement as prescribed are not given, the bid will
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be rejected at the stage of techno-commercial evaluation. In case of no
deviations, a statement to that effect must be given.
(v)Section-VII Price Schedule: Prices are not filled in as prescribed in
price schedule.
(vi)Section-II clause 9.5 on discount which is reproduced
below:”Discount, if any, offered by the bidder shall not be considered
unless specifically indicated in the price schedule. Bidders desiring to
offer discount shall therefore modify their offer suitably while quoting
and shall quote clearly net price taking all such factors like Discount,
free supply etc.into account”.
(vii)Section-Unpriced detailed bill of material with card level details
in the techno-commercial bid and the exactly same bill of materials
with card level prices in the financial bid.
47.The Respondents 3 & 4 contend they have not committed breach of
any of the requirements laid down in clause 31 of Section-II. In so far
as alleged non-compliance of clause 31(v) of Section-II is concerned,
the Respondents have filled in bid in the manner prescribed in the
price schedule in Section VII. Under clause 31(iv) of Section-II of the
tender clause 11.2(b) of Section-II is not included and non-
compliance of clause 11.2(c) of Section-II is fatal as it is mandatory.
Under clause 31(iv) non-compliance of clause 11.2(c) of Section II
would result in outright rejection of the bid. In view of this it is
strenuously submitted that in so far as the first grievance of the
petitioners as regards the spares is concerned, the same is wholly
unsustainable.
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48.We find considerable merit in the submissions advanced on behalf of
the 3rd and 4th Respondents. Perusal of clause 31 of Section-II lays
down the mandatory clauses of the tender and failure to comply these
clauses would result in outright rejection of the bid. There is no
breach of clause 31(iv) & (v) of Section-II committed by the 3rd &
4th Respondents. As observed earlier clause 31 (iv) of Section II
provides that non-compliance of clause 11.2(c) would result in
outright rejection of the bid. If the compliance of deviation/exception
statement as prescribed are not given, the bid will be rejected at the
stage of techno-commercial evaluation. In case of no deviation, the
statement to that effect has to be given. From the affidavit of BSNL
dated August 20, 2009 it is clear that the Respondent Nos.3 & 4
submitted spares list at the stage of post-clarification stage. Both at
pre-clarification and post-clarification stages, the Respondent Nos.3 &
4 had given NIL deviation statement. As far as clause 11.2(c) is
concerned, it lays down the procedure by which the compliance of
techno-commercial compliance of the tender terms, conditions and
technical specifications is to be submitted. The Respondent Nos.3 & 4
have not committed breach of clause 11.2(c) (i) to (vi) of Section II of
the tender. The petitioners are complaining about the non-compliance
of clause 11.2(b) of Section II of the tender. We are therefore of the
opinion that there is no substance in the submission advanced on
behalf of the petitioners that there is breach of clause 31 (iv) of
Section II. In so far as non-compliance of clause 31 (v) of Section II is
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concerned, it lays down the manner in which the prices are to be filled
-in in the price schedule in Section-VII. We are of the opinion that the
Respondent Nos.3 & 4 have filled in the prices in price schedule as
prescribed and there is no breach committed by them.
49.Apart from merit, it is further submitted by the Respondents that the
techno-commercial bid was opened by the BSNL on September 10,
2008 and the bids of 3rd & 4th Respondents were declared to be
substantively responsive bids. The cause of action accrued to the
petitioners after September 10, 2008 as the BSNL thereafter
proceeded further with the process of evaluation of bids of the 3rd
and 4th Respondents. The petitioners allowed the tender process to
proceed further and instituted the present petition as late as on
August 3, 2009. It is therefore submitted that in the first place, the
petition suffers from gross delay and latches. Secondly, the petitioners
are precluded from challenging the techno-commercial evaluation of
the 3rd and 4th Respondents.
50.In this behalf, clause 21 of Section II of tender dealing with techno
commercial evaluation is material and the same reads as under:-
“Technical and Commercial Evaluation:
21.1 In the first stage of evaluation, the purchaser shall evaluate the
bids to determine whether they are complete, whether required bid
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security has been furnished, whether the documents have been
properly signed and whether the bids are generally in order.
21.2 Purchaser shall determine the substantive responsiveness of
each of the technical and commercial bids to he requirements of the
tender document. A substantively responsive bid is one which
conforms to all technical specifications and commercial terms and
conditions of the tender document without material
deviation/exceptions. The purchaser’s determination of bid’s
responsiveness shall be based on the contents of the bid itself without
recourse to extrinsic evidence.
21.3 During the evaluation, BSNL at its discretion may call upon the
bidder to give a techno-commercial presentation of its offer, to explain
the products offered, its capability to undertake the project and to
respond to any question from BSNL.
21.4 A bid determined as substantively non-responsive will be rejected
by the purchaser and shall not subsequent to the bid opening be made
responsive by the bider by correction of the non-conformity.
21.5 The purchaser may waive any minor infirmity or non-conformity
or irregularity in a bid which doesn’t constitute a material deviation,
provided such waiver doesn’t prejudice the establishment of techno-
commercial parity among the bids.
21.6 The financial bids of only those technical and commercial bids
that are determined as substantively responsive shall be opened. The
financial bids of those technical and commercial bids that are
determined as substantively non-responsive shall be returned to the
respective bidders unopened.
51.In view of the above clause the challenge to the techno-commercial
evaluation bid of the 3rd & 4th Respondents suffers from gross delay
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and latches. The petitioners allowed the tender process to progress
further and even the financial evaluation was made by the BSNL and
the BSNL determined the ranking of the bidders. In view of this
position, the petitioners cannot be allowed to challenge techno-
commercial evaluation of the 3rd & 4th Respondents. If we permit the
challenges to be raised belatedly it would amount to petitioners taking
chance in the matter and permitting to grow grass under their feet
and thereafter turn around and challenge the same. We decline to
exercise our extra-ordinary jurisdiction in favour of the petitioners.
52.This takes us to the second ground of attack viz.failure to quote the
amount of excise duty in col.5 & 6 of Section-VII of the financial bid.
So far as this aspect is concerned, the petitioners rely upon clauses 9.1
and 9.2 of Section-II and Query No.458 and the reply given by the
BSNL. Clauses 9.1 & 9.2 of Section-II read as under:-
9.1. The bidder shall give the total composite price inclusive of all
levies and taxes viz.excise duties, custom duty, VAT, sales tax, service
tax, packing, forwarding, freight and insurance etc., but excluding
octroi/entry tax which will be paid extra as per actual, wherever
applicable as per the terms of payment specified in Section-IV. The
basic unit price and all other components of the price need to be
individually indicated against the goods and services it proposes to
supply under the contract as per the price schedule given in Section-
VII. Prices of incidental services should also be quoted. The offer shall
be firm in Indian Rupees. No foreign exchange will be made available
by the purchaser.
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9.2 Prices indicated in the Price Schedule shall be entered in the
following manner:
(i) The basic unit price (ex-factory price) of the goods, excise
duty/custom duty, VAT, sales tax, service tax, freight, forwarding,
packing, insurance and any other levies/charges already paid or
payable by the supplier shall be quoted separately item wise.
(ii) The supplier shall quote as per price schedule given in section-VII
for all the items given in the schedule of requirement. In case of
imported items, a new column (4C) indicating the assessable value for
calculation of customs duty may be inserted and the value entered in
that column shall be used for calculation of customs duty only.
Query No.458 and the Reply thereto reads as under:-
Query No.458: As stated in price schedule ex-factory price is unit
price excluding levies and charges. Will the ex-factory price include
sales tax paid, other costs, margins of supplier. Else where should such
components of cost and the margin be shown.
Reply: Basic unit price is exclusive of all levies and charges. Columns
have been provided for excise duty, sales tax and other levies and
charges.
53.On behalf of the Respondents it is submitted that the 3rd & 4th
Respondents do not manufacture any of the items listed in the tender.
They are also not producers of these items. As per clause 22.2 of
Section-II of the tender (ITB), the evaluation and the comparison of
the bids is to be made on the basis of net costs to the BSNL of the
goods offered inclusive of duties and taxes, but cenvatable duties and
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taxes as indicated in col.17. Column 17 of the said format would be
effective net costs to the BSNL, after getting credit/benefit for the
said cenvatable duties and taxes. Clauses 22.2(a) of Section-II reads
as under:-
“The evaluation and comparison of responsive bids shall be done on
the basis of net cost to BSNL on the prices of the goods offered
inclusive of duties and taxes (but excluding CENVAT-able duties and
taxes), sales tax, packing, forwarding, freight and insurance charges
etc., as indicated in Col.17 of the price schedule in the Section-VII,
Part-II of the tender document. As stipulated in clause-9.1,
octroi/entry taxes are not to be included in the composite price and
hence the same will not be considered for the purpose of evaluation
and comparison of responsive bids. However, octroi/entry taxes will
be paid extra as per actual, wherever applicable, on production of
proof of payment/relevant invoices/documents”.
54.It is further submitted that under the provisions of the Central Excise
Act and Rules, it is the respective producer or the manufacturer who
has to pay excise duty to the excise authorities. There is therefore no
question of the Respondent Nos.3 & 4 failing or neglecting to fill in
col.5 & 6 of Section-VII (Part-II) dealing with the price schedule for
indigenous equipments (including partly imported) and service costs
and the price schedule for the imported equipments.
55.Having considered the rival submissions we are of the opinion that
there is no substance in the challenge put forth on behalf of the
petitioners that the bid of the 3rd & 4th Respondents are liable to be
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rejected on account of failure to quote the amount of excise duty.
Having regard to clause 22.2(a) of Section-II extracted hereinabove,
the evaluation and comparison of responsive bids is to be done on the
basis of net costs to BSNL on the prices of goods offered inclusive of
duties and taxes (but excluding cenvatable duties and taxes), sales
tax, packing, forwarding, freight and insurance charges etc., as
indicated in col.17 of the said format. We therefore reject the
submission made by the petitioners that the bid of the 3rd & 4th
Respondents was misleading or manipulative on this count.
56.The petitioners relied upon the judgment of the learned Single Judge
of Calcutta High Court in Writ Petition No.9770 (W) of 2009 in the
case of KEC International Limited & Another V/s.Union of India &
Ors., dated July 8, 2009. In that case the petitioners assailed the
evaluation of two of the bids received by the BSNL in respect of the
works viz. Planning, engineering, supply, installation, testing and
commissioning of infrastructure for 18 million lines of cellular mobile
expansion project phase-VI in East Zone. In that case clause 4.7.2
provided that the Engine Alternator supplied should be of ready to
use type (RTU), the BHP of engine may be suitably enhanced as per
site conditions in order to deliver the minimum required KVA at site.
The Engine Alternators shall be of air cooled type. By Addendum No.4
dated September 5, 2008 the tender dated May 1, 2008 and clause
4.7.2 of the DTR of the Part-II was modified. It provided that the
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water cooled Engine Alternators can also be supplied alongwith Air
cooled Engine Alternators in the ratio 30:70 respectively. Similar
functionalities as asked for Air Cooled Engine Alternators apply for the
water cooled Engine Alternators as well. By Addendum 4.2 dted
September 6, 2008 the revised consolidated SOR for Par-3 was given.
The petitioners therein contended that the Addendum dated
September 6, 2008 altogether altered the SOR and provided that the
equipment and quantities indicated in such revised SOR would be
what the bidders had to quote for. On the other hand the BSNL and
the contesting Respondents contended that nothing in the Addendum
dated September 6, 2008 detracted from the option given to the
bidders by the Addendum published on September 5, 2008. They
submitted that it was open to the bidders to either quote for the entire
complement of engine alternators as the air-cooled type or quote air-
cooled and water-cooled engine alternators in the ratio 70:30 as
indicated by Addendum of September 5, 2008.
After exhaustively considering several judgments of the Apex Court,
the learned Single Judge observed as under:-
“Clause 4.7.2 of the detailed technical requirement specified that
engine alternators “shall be of air cooled type”. The moment
addendum 4 was published, the “shall be” in the second sentence of
clause 4.7.2 had per force to be read as “may be”. The argument of
the fourth respondent that clause 4.7.2 was not subservient to
addendum 4.2 cannot be accepted since its mandate stood already
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diluted by addendum 4 issued on the previous day. There is an
element of vagueness about addendum 4. There is no doubt that it
gave a choice to bidders to offer to supply water-cooled alternators
alongwith air-cooled ones. Did it then require bidders to offer to
supply the full compliment in air-cooled alternators or a combination
of exactly 70:30 of air-cooled and water-cooled alternators or any
combination of the two as long as air-cooled alternators did not fall
below 70 percent and water-cooled alternators did not exceed 30
percent? If the air-cooled alternators are the more preferred, as both
BSNL and the fourth respondent suggest, it would irrational that a
bidder with an 80:20 mix of air-cooled alternators and water-cooled
alternators would stand disqualified though it would appear to be a
better offer than a 70:30 mix of air-cooled and water-cooled
alternators. But is is unnecessary to get into such issue save to
appreciate the nature of the queries that may have been raised
following the obvious option given by Addendum 4. The last sentence
above the table in addendum 4 referred to modifications in the SOR
and the SOR being revised “in relation to Engine Alternators”. As a
stand-alone sentence it would imply that the SOR in respect of engine
alternators stood modified to the extent indicated in the table. But
since such sentence followed the option offered earlier in the
addendum for water-cooled alternators to also be supplied alongwith
air-cooled alternators, it is reasonable to read the modified SOR
relating to engine alternators in addendum 4 to permit bidders to
offer to supply only air-cooled alternators as per the original SOR or a
mix of air-cooled and water-cooled alternators in accordance with the
modification provided in such addendum.”
The learned Single Judge also considered clause 31 (v) of ITB and
observed thus:-
“Clause 31(v) of the instructions to bidders in the tender papers
provided that the failure of a bidder to fill in the prices as prescribed
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in the price schedule would result in the rejection of the bid. Clause
46, 2(vii) of the special conditions of contract stipulated that in case a
bidder had not quoted the price of any item mentioned in the SOR
and had not justified for not quoting the same, the price bid was to be
loaded with the maximum price quoted for that item by any other
bidder for the purpose of evaluation. It is true that the tender
documents gave BSNL some elbow room to exercise discretion to not
reject a bid on a technical transgression. But as much as BSNL’s
reasonable stand in not rejecting the petitioner company’s bid for it
not quoting for spares in its annual maintenance contract has to be
applauded, its interpretation of addendum 4.2 cannot be appreciated.
It is possible that BSNL understood addendum 4.2 to be as it suggest,
but that is of no importance. What is of consequence is as to how a
reasonable bidder would understand addendum 4.2 to imply. For, the
document was intended for bidders and its interpretation lies in what
it conveyed rather than what it intended to convey. The expression “to
clear it all” and the firm finality in the publication of “the revised
consolidated SOR” would admit of no other construction but that it
was such modified SOR that bidders had to adhere to.”
57.The learned Single Judge came to the conclusion that the process of
evaluation was found to be faulty as the reasonable bidder would
have understood the table appended to addendum 4.2 to be the final,
and inviolable schedule of requirements. The learned Single Judge
eventually issued writ of mandamus cancelling the evaluation of bids
conducted by the BSNL with a direction to reassess the bids by
treating SOR published under addendum 4.2 as the applicable list of
materials and quantities thereof.
58.We however find that the said judgment in fact supports the
contentions raised by the 3rd and 4th Respondents as regards the
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issue of spares. The learned Single Judge appreciated the BSNL’s
reasonable stand in not rejecting the petitioner Company’s bid therein
for not quoting for spares in its AMC. The BSNL’s said stand was in
fact applauded although the learned Single Judge did not appreciate
interpretation of addendum 4.2.
59.The petitioners also strenuously relied upon the judgment of the
Apex Court in the case of West Bengal Electricity Board (supra) and in
particular paragraph No.24 thereof, for the purpose of contending
that in a bid and the high value tender as the present one, the degree
of care required is greater than in local bids for small works. The
Apex Court held that it is essential to maintain the sanctity and
integrity of the process of tender/bid which should be filled in and the
terms complied with scrupulously, and that adherence to instructions
under ITB cannot be given a go-bye by branding it as a pedantic
approach, otherwise it would encourage and provide the scope for
discrimination, arbitrariness and favouritism which are totally
opposed to the rule of law and constitutional values. It has been
further held therein that relaxation of such rules in favour of one or
the other bidder would impair the rule of transparency and fairness
and provide a room for manipulation in picking and choosing a
bidder, which is not permissible in law for state authorities. In that
case the Apex Court considered the clauses of the tender and in
particular clauses 14, 27 and 29 of the ITB as also the correspondence
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exchanged between the parties. Clause 24.3 of the ITB lays down that
no bid shall be modified by the bidder after the deadline for
submission of bids. Clause 27 of the ITB dealt with the clarification of
the bids. It provided that the request for clarification and the response
shall be in writing or by cable, but no change in the price or substance
of the bid after opening the price bid shall be sought, offered or
permitted except as required to confirm the correction of arithmetical
errors discovered by the employer’s authorised representative in the
evaluation of the bids in accordance with clause 29 of the ITB.
Clause 29 of the ITB provided the procedure for correction of errors.
The Court thereafter considered the nature of errors, corrections made
by the appellant and the relief sought by the Respondents 1 to 4 in
respect of 37 items in the bid documents and observed thus in
paragraph Nos.16 and 17:
“16. A perusal of the price bid statement ‘A’ shows that the unit
price filled in by the bidder in the first line against Item 02 – work
item – “Rock Excavation” is repeated in two lines – in the second
line of the same item and in the first line of Item 03 – work item —
“Impervious Core Embankment”. In the quantity column, ‘1000’ is
noted by the appellant. The unit rate for rock excavation is given by
Respondents 1 to 4 in the first line in Indian Rupee as Rs.148.08
both in figures as well as in words. In the amount column Rs.
148,077.97 is entered which is arrived at by multiplying quantity,
1000, by unit rate, Rs.148.08. It contains an arithmetical error;
instead of Rs.1,48.080.00, it is noted as Rs.1,48,077.97. It has
been noticed above that under clause 29.1(b) of the ITB, such an
error in the line total in the amount column is amenable for
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correction and not the unit rate noted by the bidder in the figure
column. In the second line, the same entry is repeated though that
line should contain unit rate in US Dollar which is rupee equivalent
of the unit rate mentioned in the first line. Respondents 1 to 4 seek
correction of ‘148.08’ in the second line as ‘3.38’ in the figure
column and also in words to conform to 3384.64 which is noted in
the amount column to wit as US Dollar equivalent of 1,48,077.97
Indian Rupee in the first line. This appears to be the import of their
letter of 17.12.1999.”
“17. Respondents 1 to 4 seek correction of the entries in the third
line also which is the first line against work item “Impervious Core
Embankment”. It is plain that against this work item the entires in
the first line are quite different. The quantity column is blank,
though ‘3900’ should have been noted therein. In that line also the
entires in the first line are repeated. There the correction sought is
that the figure column should read as 84.21 both in figure and
words. It is stated that in the second line the unit rate 1.92 both in
figures and words, represents US Dollar equivalent of 84.21 Indian
Rupee which is now sought to be inserted. The errors in the other
36 items are said to be similar. Had the errors been confined to
these aspects, it would not have resulted in material change in the
unit rate because the unit rate in one of the permissible currencies
is correctly given and there will be no discrepancy as envisaged in
sub-clause (b) of clause 29.1. It would not really be a case of
incorporating a new unit rate but a case of either recording US
Dollar equivalent of the unit rate already noted in Indian Rupee or
vice versa as given in statement ‘B’ above. In such a case, perhaps,
they would have been entitled to equitable relief of rectification of
mistake. But here, as would be shown presently, the position is
different.”
After considering the correspondence exchanged between the parties,
the Court observed that the corrections in the bid documents of
Respondent Nos.1 to 4 carried out by the appellant, evaluation of bid
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under clause 29.2 and the impugned communication of the appellant
dated December 18, 1999 were unsustainable and of no consequence
by observing in paragraph Nos.21 and 22 as under:-
“21. The appellant could not have ignored these letters. Had the
appellant taken note of these letters and the mistakes occurring due
to repetition of entries in 37 items in the bid documents, it would
not have proceeded with correction of such mistakes and
evaluation of their bid without first seeking clarification from
Respondents 1 to 4 under clause 27.1. We have already referred to
the gist of that clause. The only prohibition contained therein is
that no change in the price or substance of the bid after its
openings can be sought, offered or permitted. In that regard they
had made their position clear. The prohibition is, therefore, not
attracted. In these circumstances any reasonable person in the
position of the appellant would have sought clarification from
Respondents 1 to 4 under clause 27.1. Even assuming that after
the letter of 17.12.1999, no further clarification was required to be
sought by the appellant, we cannot but hold that correction of the
errors taking note of the unit rates which are mere repetition of the
unit rates quoted for a different work item, is mechanical and
without application of mind by the appellant. In our view such a
correction is far beyond the scope of clause 29. From the
description of the mistakes, noted above, and the correction and
evaluation made by the appellant, it is evident that except the error
in the first line against the work item “Rock excavation” and
Schedule ‘N’ day work, all other mistakes/errors are beyond the
scope of clause 29.1, so clasue 29.2 will not be attracted. It follows
that the corrections in the bid documents of Respondents 1 to 4
carried out by the appellant, evaluation of bid under clause 29.2
and the impugned communication of the appellant dated
18.12.1999 are unsustainable and of no consequence.”
“22. Now, reverting to the relief of correction of errors,
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Mr.Chidambaram has argued that in the two lines against each of
the work items, the first line denotes 50 percent of the quoted unit
rate in Indian Rupees and the second line represents the other 50
percent of the unit rate in US Dollars. According to him the actual
rate quoted for quantity 1000 is the sum total of the two lines i.e.
148.08 in Indian Rupees plus 3.38 in US Dollars. This is not noted
either in Statement ‘A’ or in Statement ‘B’. Be that as it may,
quoting the unit rate 50 percent in Indian Rupees and 50 percent in
US Dollars is not provided for in the ITB. Nothing is brought to our
notice to justify splitting of unit rate in that ratio. There is no
indication of this fact in the price bid documents submitted by the
said respondents to explain that the unit rate has been so quoted.
This is also not in conformity with clause 15 of the ITB which, as
noted above, requires a bidder to quote unit rates and prices in
Indian Rupees and either in US Dollars or Japanese Yen. The
learned Additional Solicitor General, in our view, is right in his
submission that till the representation was made by the said
respondents on 23.12.1999, after the interim direction of the High
Court, the appellant was unaware of the quoted unit rate being in
such proportion. A combined reading of the ITB and the annexure,
extracted above, makes it clear that the second line against each
work item is meant for writing US Dollar or Japanese Yen
equivalent of the “unit rate and line total in the amount column”
entered in the first line and not for writing bifurcated unit price in
different currencies in the ratio of 50:50. On these facts, the errors
cannot be termed as mere clerical or mechanical. Permitting
correction of such errors, if they can be so called, would result in
not only rewriting unit rates in 37 entries in which such errors are
said to have been committed but also appending an explanation
thereto regarding splitting of unit rates in terms of representation
dated 23.12.1999 of Respondents 1 to 4. Neither clause 27 and 29
nor any other clause in ITB permits such corrections.”
On facts the Apex Court considered that the errors committed by the
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Respondent Nos.1 to 4 cannot be termed as mere clerical or
mechanical. Permitting correction of such errors would result in not
only rewriting unit rates in 37 entries in which such errors are said to
have been committed, but also appending an explanation thereto
regarding splitting of unit rates in terms of representation dated
December 23, 1999 of Respondent Nos.1 to 4. Neither clauses 27 and
29 nor any other clause in ITB permitted such corrections.
60.In so far as the controversy in the present case is concerned, we have
already held that the Respondent Nos.3 & 4 have not committed
breach of any of the clauses stipulated in clause 31 of the tender. The
judgment of the Apex Court in the case of West Bengal Electricity
Board (supra) is not applicable to the controversy raised in the
present case.
61.In the result the petition fails. Rule is discharged with no order as to
costs. Since we have proceeded to hear the Chamber Summons
alongwith the main petition, no separate orders are necessary in the
Chamber Summons and the same stands disposed off.
(A.M.KHANWILKAR, J.)
(R.G.KETKAR, J.)
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