V.K. Gupta, C.J.
1. Hatia Shramik Sangh, a registered Union of Employees affiliated to the Central Organisation, namely, Bhartiya Majdoor Sangh (its Members being the workers of Heavy Engineering Corporation Ltd.) (HEC, for short) has filed this Public Interest Litigation (PIL), writ application under Article 226 of the Constitution of India for issuance of an appropriate writ, direction or order for quashing the entire tendering process subsequent to the opening of the price bid in favour of the Bharat Earth Movers Ltd. (BEML, for short) respondent No. 4 in the writ application and for other ancillary, consequential and additional reliefs as emanating from and/or based upon the opening of aforesaid price bid of BEML. It may be actually worthwhile to reproduce verbatim the reliefs claimed in the writ application. These reads thus :–
“That in the instant writ application the petitioner prays for issuance of an appropriate writ, order or direction or a writ in the nature of certiorari quashing the entire tender process subsequent to opening of the price bid as per the Tender No. CIL/C2D/10 M3 Elec. Rope shovel/2001-02/17 whereby and whereunder the tender has been made one party tender and the work order is going to be awarded to M/s. Bharat Earth Movers Limited, which is against the public interest and is a fraud on the public exchequer; and/or
For the issuance of an appropriate writ (s)/order(s)/direction(s) directing the Central Bureau of Investigation (CBI) or the Chief Vigilance Commissioner, New Delhi to institute an enquiry into the entire tender process as aforesaid and to take penal actions against the erring officers; and/or
For the issuance of an appropriate writ directing the Central Bureau of Investigation (CBI) or the Chief Vigilance Commissioner, New Delhi to institute an enquiry into the conduct of the Coal India Limited, a Public Sector Undertaking whereby although being a Government Enterprise, it is issuing work orders worth crores of rupees to petty dealers without issuing any tender notice and by merely entering into by-partite agreement through to winds all norms of public propriety, openness as prescribed for the Government Agencies; and/or
Pass any such other order(s)/ writ(s)/direction(s) as Your Lordships may deem fit and proper in the interest of natural justice.”
2. Coal India Ltd. (CIL, for short) respondent No. 1 in this petition, issued a Notice Inviting Tenders (NIT, for short) for supply of twelve number of 10 M3 Electric Rope Shovels through Tender No. CIL/C2D/10M3 Elec. Rope Shovel/2001-02/17. Due date and time for submission of the tender was up to 6.11.2001, 1 p.m., and the due date and time for opening of the tenders was the same date but at 3 p.m. What is of utmost relevance for our purposes is the very opening part of the NIT which reads thus :
“Sealed bids are invited in Duplicate only from the Proven Indigenous Manufacturers (Proven means such manufacturers who have successfully supplied, erected and commissioned machines of equal or higher capacity which are giving satisfactory performance in any colliery/coal mine/industry in India for a period of not less than one year from the date of successful commissioning) for supply of 12 (twelve). Nos. 10 M3 Electric Rope Shovel to various subsidiaries of CIL as per detailed specifications enclosed.”
3. It shall be also relevant to go back a little in period of time before the date of issuance of the NIT in question. On 26.12.2000, CIL had issued a Global Tender Enquiry by way of an earlier Notice Inviting Tenders for the procurement of the same Machinery, that is, 10M3 Electric Rope Shovels. The last date for receipt of the tenders in the said earlier NIT was 5.3.2001. The opening part of that NIT dated 26.12.2000 read as under :–
“Sealed Bids are invited in Duplicate only from the Proven Indian and Foreign Manufacturers (Proven Means such manufacturers who have successfully supplied, erected, commissioned machines of equal or higher capacity which are giving satisfactory performance in any colliery/coal mine/industry in India for a period of not less than one year from the date of successful commission) and/or their authorised Indian Agents for supply of following equipment.”
4. It is the undisputed case of the parties that after successive extensions in the due date for receipt of the tender and its opening, the aforesaid Global NIT ultimately came to be superseded by the NIT in-question. The distinction between the Global NFT and the NIT in-question was that whereas in the Global NIF sealed Bids were invited from proven Indian and Foreign Manufacturers, in the NIT in-question, sealed Bids were invited from the proven Indigenous Manufacturers. The word “indigenous”, therefore, as the subsequent details would testify, indeed became very
relevant and gave rise to contentious issues as far as this litigation is concerned.
5. As per the NIT in question, the offers were to be submitted in two parts; Part A being ‘Techno-commercial offer” containing the detailed technical and commercial terms of the offer but not containing the Price and B being the “Price Bid” containing the price offer. Part A (techno-commercial offer) was to be opened on 6.11.2001 at 3 p.m. in presence of the representatives of the Bidders. Part B (Price Bid) was to be opened only after Part A had been found technically and commercially suitable. The two conditions in the NIT with respect to the aforesaid two stipulations are reproduced as hereinbelow :–
“Part ‘A’ (Techno Commercial Offer) will be opened on 6.11.2001 at 3 p.m. in presence of representative of the bidders who choose to attend and Part ‘B’ (Price Bid), after evaluation of ‘A’.
Part ‘B’ of the offer will be opened only after Part ‘A’ has been found technically and commercially suitable.”
6. Three parties responded to the aforesaid NIT. They were :–
1. Heavy Engineering Corporation (H.E.C.);
2. Voltas
3. Bharat Earth Movers Ltd. (B.E.M.L.)
7. The Techno Commercial Bids of the first two bidders were rejected and the Techno Commercial Bid of the third bidder, namely, BEML having been accepted, the Tender Committee in its meeting held on 6.12.2001 decided to open the Price Bid of BEML only. The Price Bid of BEML was accordingly opened on 6.12.2001. The respondent’s case is that after completion of the technical scrutiny of the Techno Commercial Bid, the Tender Committee in its meeting held on 21st, 22nd and 29th November, 2001 after deliberations found that the performance of the shovels supplied by H.E.C. in 1991 was not satisfactory and that the machines earlier supplied by BEML had performed satisfactorily. Insofar as the rating of the performance of the shovels supplied by H.E.C. in 1991 or before that year was concerned, the main reason which led the Tender Committee to reject the H.E.C.’s Techno Commercial Bid
appeared to be that the Electricals (A.C. Drive and Control Systems) of Simens as offered by H.E.C. not having been proven in India and the offer to fit electricals indigenously made not being acceptable because of the past performance, the H.E.C.’s Techno Commercial Bid was not suitable. It may be mentioned here that H.E.C. in the Shovels earlier supplied prior to 1991 had got the Electricals fitted, manufactured by BHEL, a leading Indian Company and in the Tender submitted by H.E.C. in response to the NIT in question, it had offered to fit the Electricals either indigenously made or imported (as made by Simens). Actually H.E.C. was ready and willing to supply the Electricals even manufactured by G.E.
8. The question which, therefore, arises for consideration in this case is as to whether the rejection of the Techno Commercial Bid of H.E.C. was done in accordance with the well established principles of law and whether respondent No. 1 being an ‘authority’ covered by Article 12 of the Constitution of India acted fairly, objectively and with due diligence in rejecting the Techno Commercial Bid of H.E.C. Even though Voltas is not a party before us in these proceedings and Voltas has also not challenged the rejection of its Techno Commercial Bid, an argument was made during the course of hearing by the learned counsel for the parties that even the rejection of Voltas Techno Commercial Bid was actuated with the intention of eliminating both the parties, that is, the H.E.C. and Voltas, leaving BEML alone in the field.
9. It may also be worthwhile to mention here that even though BEML and HEC are both wholly owned Central Government Public Sector Undertakings, both being controlled and administered by Ministry of Heavy Industries, the Shovels which HEC had offered to supply were to be manufactured by HEC itself; whereas the shovels which BEML had offered to supply were to be manufactured by BEML in collaboration with a Foreign Manufacturer, namely, BUCYRUS. It is in this context that the supersession of the earlier Global NIT by a Domestic NIT becomes relevant because the expression ‘indigenous’ assumes significance as we shall see later, in as much as what we might find is that whereas the
shovels offered to be supplied by HEC indeed would be considered as ‘indigenously manufactured’ and the shovels offered to be supplied by BEML, perhaps, may not fit in the same category.
10. Even though Voltas is not a party in these proceedings and the Voltas did not choose to challenge its exclusion from the consideration process with respect to its Techno Commercial Bid and, therefore, we are not called upon to examine the legality or validity of the rejection of Voltas Techno Commercial Bid, the learned counsel for the petitioner Mr. Anindya Mitra, learned Senior Advocate and the learned counsel for the HEC. Mr. S.K. Kapoor, learned Sr. Advocate, have both submitted that holding Voltas to be ineligible along with the H.E.C. was an attempt by CIL to eliminate all other tenders from consideration Zone except BEML. Actually with respect to Voltas’ Bid also the record of proceedings produced before us does show that two conflicting views have been expressed by the Two Committees with respect to the eligibility of Voltas and that in its offer, Voltas had clearly stated that they have entered into a Technical and Component Supply arrangement with a foreign Collaborator, namely, “P&H/KOBE” and that the Electrical Rope Shovels would be manufactured at the facilities available in India by Voltas. This might be indicative of a parallel between the manufacturing process of Voltas and BEML, as distinct from the manufacturing process of HEC.
11. But before we proceed to consider the main aspects of the case, we must first deal with and dispose of the two preliminary objections raised by Mr. Mukul Rohtagi, learned Additional Solicitor of India appearing on behalf of respondent No. 1 with respect to the maintainability of this petition and the jurisdiction of this Court.
12. On the question of jurisdiction. Mr. Rohtagi says that no part of cause of action in so far as the petitioner is concerned has accrued in Jharkhand State because the NIT in-question was issued at Calcutta, the tenders were to be submitted by the prospective bidders in Calcutta and these were to be finalised in Calcutta and everything else was to be done in Calcutta only. He also submits that the NIT actually
contains a clause that all litigations are subject to Calcutta Court jurisdiction. In so far as the maintainability of the petition is concerned Mr. Rohtagi’s contention is that the petitioner has no locus standi to file and maintain this petition and that the aggrieved party if at all who could challenge the action of respondent No. 1 was HEC and HEC having not chosen to file any petition, the petition filed by the petitioner should be dismissed as being not maintainable.
13. Insofar as the question of jurisdiction of this Court is concerned, it is the undisputed case of the parties that even if the NIT was issued from Calcutta and the tenders were to be received at Calcutta and everything else associated in the tendering process was to be carried out at Calcutta, sufficient number of Electric Rope Shovels as were to be supplied in response to NIT were to be received in the territory of Jharkhand State by the three Subsidiaries of CIL, namely, BCCL, CCL and ECL (Bharat Coking Coal Ltd., Central Coalfields Ltd. and Eastern Coalfields Ltd.). Actually as the NIT itself clearly suggests that the Shovels were required to be installed in the areas operated by five subsidiaries of CIL and that out of these five subsidiaries, three subsidiaries, namely, BCCL, ECL and CCI are located within the territories of Jharkhand State. Undoubtedly, therefore, the supply of shovels to these three subsidiaries of CIL and the shovels operating in the territory of Jharkhand State is a part of cause of action and the cause of action being a bundle of facts, each fact linked to another inalienably, the end users of the shovels being located in Jharkhand State and the operation of the shovels also being ultimately meant for Jharkhand State, it can safely be said that part of cause of action did accrue to the petitioner in Jharkhand State. This apart, HEC being located in Jharkhand State and the manufacturing process of the Shovels (if HEC were given the order to manufacture and supply Shovels) being conducted in Ranchi, the petitioner would definitely claim to have a complete cause of action in maintaining this petition in this Court because the petitioner is the Union of the Employees of Workers working in HEC at Ranchi. It is this Court where the petitioner could legitimately approach for enforcement of the right as might form the basis of the petition, linked with the issues Involved in this case. It cannot, therefore, be said that this Court has no jurisdiction to entertain the petition or deal with the issues involved in the case. The clause in the NIT regarding the exclusive jurisdiction of Calcutta Courts has no relevance as far as the petitioner is concerned because that clause is meant to operate only vis-a-vis parties to NIT or contracting parties not the petitioner in this PIL matter.
14. On the question of locus standi of the petitioner and, therefore, the non-maintainability of the petition on its part, we may refer to the following averments in the writ application. These reads thus :–
“That it is stated that the petitioner is registered trade union affiliated to the Central Organisation, Bhartiya Mazdoor Sangh and all its members are the workers in HEC and many of its members have also since retired and residing at or around HEC area.
That it is stated that the petitioner and its members are totally dependent upon the financial conditions of HEC and the lack of work orders to a Public Sector concern has caused frustration in the area and causing total lack of all developmental activities in and around HEC.
That the members of petitioner union have suffered greatly and many of them have not been paid their retirement dues because of the ill health of M/s. HEC. The development in and around HEC area and the progress of a large section of the society is directly or indirectly linked with HEC whereas its faling and deteriorating financial conditions has caused large scale suffering and deprivation.”
Reference may also be made to the following averments in the writ application:–
“That it is stated that the petitioner begs to file this writ application in public interest being duly concerned with the arbitrary acts of misdemeanour on behalf of the respondents and shockingly against public and national interest.”
Also, the following averment in another part of the writ petition :–
“That it is stated that the management of M/s. HEC is sleeping and is not at all concerned with the developments and the chain of events which seeks to overcome it.”
15. Actually the arena of Public Interest Litigation having expanded so vastly in the recent times, what with the latest pronouncements of the Apex Court touching upon the rights of the public in informing the Court, such a type of petition where CIL is being accused of arbitrarily selecting a bidder with respect to a contract involving approximately Rs. 200 crores of public money even if it had been filed by any individual unconnected with the HEC or the Union of its Employees, would have been maintainable because examining from any point of view, the petition does raise important and vital questions of public policy. The argument that HEC not having chosen to file the petition cannot be a ground for shutting out everyone else, apart from a contracting party, from challenging an alleged arbitrary act of a Public Sector Undertaking greatly touching upon public interest. HEC may have its reasons, valid or otherwise, legitimate or otherwise, in not approaching this Court or in not challenging the rejection of its Techno Commercial Bid, but such reasons cannot in any manner influence this Court in not entertaining such a petition filed on behalf of someone else if this Court by looking at the petition does prima facie feel that an enquiry is called for in the matter where vital public interest was involved. Article 14 of the Constitution being very vast in its application and striking at arbitrariness at every level, the jurisdiction of this Court under Article 226 of the Constitution is wide open for everyone who may by showing public interest, inform this Court that a wrong has been committed touching upon public interest in its gravest form and that this Court should enquire into the matter and decide whether, in fact, a wrong has been committed or not. We, accordingly overruling the objections of Mr. Rohtagi, hold that this petition is maintainable in its present form, as filed by the petitioner and that this Court has the territorial jurisdiction to entertain this petition and decide the issues involved herein.
16. First on the question of “indigenous manufacture”. Global NIT inviting tender offers from Indian and Foreign Manufacturers having been superseded by CIL and CIL having decided to initiate a domestic tendering process, the expression “indigenous” assumes importance. An insight to this development is found in the minutes of 198th meeting of CIL Board held on 30th August, 2001. The relevant extracts of these minutes read thus :–
“4.5 In this context, the Board was apprised of the unhappy experience of CIL during the last few years regarding non-performance of the equipment procured against earlier Global Tenders without any clause for proveness in India. There are several cases where equipment was procured on the basis of price only and even though these equipment were working in the foreign countries, they failed to perform satisfactorily in Indian Mining conditions. This caused considerable losses to CIL and its subsidiaries and basically this experience has resulted in putting a clause that the equipment proven in India will only be procured so that no equipment is accepted unless it has a track record of being proven in Indian condition.
4.6 The Board was also apprised that in its 192nd meeting held on 19th August, 2000, the Board endorsed that subject to availability of proven indigenous manufacturers of adequate capacity, procurement of indigenous equipment is always preferred because of the following reasons :–
(i) The after sale service and the availability of spare parts is much better in case of domestic manufacturers. This could be possible due to the network already developed by them in the coalfields, as they have been the traditional suppliers of equipment since quite some time.
(ii) Subject to getting quality product and competitive prices, limiting the sources of supply also helps in standardisation. Standardisation of equipment is encouraged for better inventory control and developing skills for better maintenance. Almost all the
domestic equipment manufacturers have set up their Depots in the coal belts to supply spare parts on ‘as and when required’ basis.
(iii) The proven domestic equipment manufacturers possess ISO Certification which ensures quality assurance for their manufactured products.
(iv) The, prices of imported equipment are generally exposed to exchange rate fluctuation.
4.7 In view of the above, the Board after detailed deliberation, decided to adopt the following as a policy decision for procurement of HEMM.
1. Procurement of bulk requirement of HEMM (Approx. 90% of the total requirement) will be made only from the proven domestic manufacturers.
2. For approximately 10% of the total requirement, open domestic tender will be floated for development of new sources subject to the condition that only such new indigenous manufacturers as well as the foreign manufacturers who have gone for collaboration in India for domestic manufacture and developed infrastructure for providing adequate, after sale services and spare parts support will be entitled to quote.
DCGM/MM, OIL is requested to take necessary action on the subject.”
17. It is the undisputed case of the parties, also of CIL that HEC being an ‘indigenous manufacturer’ was to manufacture the Shovels indigenously at its Plant in Ranchi. Compare this with the offer of BEML. It is undisputed case of the parties also that BEML had entered into an agreement with BUCYRUS, a foreign company, for manufacture of its Shovels in India. A question which, thus, might arise for consideration is how much percentage of ‘indigenous’ component was to go into the manufacture of Shovels by BEML. Actually the facts staring at us might indicate that there might be either ‘0’ percentage or insignificant percentage of ‘indigenous’ content in the Shovels manufactured by BEML because, perhaps, as the facts staring at us suggest, BEML might import from BUCYRUS all the components what may ultimately be assembled as Shovels in India. We are not
expressing any final opinion on this nor are
we offering any definite views, but only
referring to the detailed break up submit
ting by BEML itself with respect to the
percentage of indigenous components of
the shovel. This break up as given in
original is reproduced hereinbelow :–
10 Cu.m. ROPE SHOVEL
Sl. No.
Particulars
CIL PRESENT TENDER
Â
Â
NCD
RCD
1.
Ex-works Price
1,751.36
1,372.00
2.
CIF Value of Imports
$1,593,,142.00
$1,593,,142.00
3.
CIF Value in Rs. lacs (@ $ 1 = Rs. 48.50)
772.67
772.67
4.
Customs Duty on 101% of CIF (NCD 30.80%, PCD 5%)
237.98
38.62
5.
C & F Charges etc.
7.73
7.73
6.
Imported material cost (3+4+5)
1,018.39
619.04
7.
Indigenous content including material, labour and overheads
552.97
552.97
8.
TOTAL (SL NO. 6+7)
1,571.36
1,372.01
9.
Indigenous content as a percentage of Ex-works price excluding customs duty
41.47%
41.47%
18. As is evident from a look at the aforesaid statement, item No. 7 of the statement being with respect to the indigenous component contains three factors, namely, ‘material’, ‘labour’ and ‘over-heads’. In this statement, ‘NCD’ means Normal Customs Duty; ‘PCD’ means Project Customs Duty. If we take the pricing in the ‘NCD’ column, we find that CIF value per Shovel (‘CIF’ meaning Cost, Insurance and Freight) is Rs. 772.67 lacs and on addition of Customs Duty and C & F Charges thereupon, the imported material cost per Shovel comes to Rs. 1018.39 lacs. Column 7, therefore, being relevant, thus, states that the indigenous content would be to the tune of Rs. 552.97 lacs. The total price, therefore, the “imported material cost” and the “indigenous content” (Rs. 1018.9 lacs + 552.97 lacs) as is sown is stated at Rs. 1571.36 lacs. Our query was out of Rs. 552.97 lacs being claimed as
the indigenous content, how much of it went towards “material cost” because the stated indigenous content contained three factors, namely, ‘material’, ‘labour’ and ‘over- heads’. No answer was given to us. Neither did CIL nor did BEML answer our said query. The pleadings also are silent on this question. We actually made an observation that in the absence of any answer, could we not legitimately be entitled to draw an inference that out of Rs. 552.97 lacs, the indigenous content can be either ‘0’, negligible or insignificant because this entire amount could be accounted for the ‘labour’ and ‘over-heads’. Not only this, in column 9 of the aforesaid statement, the respondent No. 4 has attempted to project as if the indigenous content of the Shovels was 41.47% of the Ex-works price. There is a catch in this also. Col. 9 even though talks of indigenous content as a percentage of Ex-works price, it excludes the component of customs duty which is very substantial (being Rs. 237.98 lacs) on the CIF value of Rs. 772.67 lacs. If component of customs duty is included, the percentage of indigenous component would definitely come down drastically from 41.47%, as claimed, to less than 30% and, at the risk of reiteration and repetition, indigenous content being the combination of’material’, ‘labour’ and ‘over- heads’ would be what is being shown by respondent No. 4 and not what actually has been established by it. This by itself would clearly suggest that respondent No. 4 could not be categorised as an ‘indigenous manufacturer’. As against this, it is the undisputed case of the parties that the Shovels to be supplied by HEC are indeed, without any doubt, to be manufactured indigenously at its Plant at Ranchi.
19. Coupled with the aforesaid was the fluctuation in the Price Bid offered by respondent No. 4. The NIT and other stipulations clearly bound the tenderer to offer a Firm Price Bid. It is the admitted case of the parties that respondent No. 4 had not offered a Firm Price Bid, but had offered a Fluctuating Price Bid and the acceptance of the Fluctuating Price Bid (linked with the value of US Dollar at Rs. 52/- per US Dollar) was a clear violation of the specific, mandatory and binding terms of the NIT and the stipulations of CIL and this by itself was sufficient to vitiate the selection of respondent No. 4, as a successful bidder. Respondent No. 4, therefore, neither being an “indigenous manufacturer” in the sense in which it was meant to be, nor having offered a Finn Price Bid, the acceptance of its Techno-commercial-Offer itself was not proper and, therefore, the offering and acceptance of its Price Bid was vitiated by irregularity and illegality. This coupled with a very important aspect relating to a very big difference in the pricing structure as offered by HEC. It is the undisputed case of the parties that as against almost Rs. 15 crores being quoted by BEML as the price per Shovel, the price quoted by HEC was lower in the range of 25- 35% per Shovel.
20. Now corning to the question of the rejection of the Techno-Commercial Bid of HEC, we first and foremost find that the HEC was never communicated any order rejecting its Techno-Commercial Bid. Before the rejection of the Techno-Commercial Bid, HEC was not afforded any opportunity of explaining as to why its Techno-Commercial Bid was being rejected nor were any reasons assigned in doing so. Mr. Rohtagi did argue that it was not any requirement of law nor did any stipulation in the NIT suggest that the CIL was under any obligation, legal, constitutional or contractual to communicate the rejection of the Techno Commercial Bid to a tenderer or to disclose the reasons for such rejection. Even though we need not go into this pure constitutional question because for the reasons (on the basis of the facts) which we shall see hereafter, we find that this does assume significance and importance in the context of how and why the Techno-Commercial Bid of HEC was rejected.
21. H.E.C.’s Techno-Commercial Bid was rejected only on the ground that the Shovels supplied by it prior to 1991 had not performed well. This, coupled with the assertion of CIL that the electricals fitted with these Shovels also did not either perform well or did not conform to the specifications. In our considered view, both these accusations as grounds of rejection were untenable. First of all the Charts shown to us indicating the performance levels and the figures supplied clearly suggested that the performance levels of the Shovels of HEC and BEML, perhaps, were in the same region and it could not be said
that the performance level of HEC’s shovels compared unfavourably with those of BEML Shovels. In this respect, we may point out that various performance reports against HEC as filed by CIL in this Court were prepared after this writ application was entertained on 4th March, 2002. Actually, when we looked at these reports, we found that it was a clumsy attempt on the part of the CIL to produce before this Court material against a party which was brought intp existence after the writ application had been entertained by this Court and notices was issued to the opposite parties. This apart, even otherwise comparing 1991 or pre-1991 performance levels with the manufacturing prospects exactly a decade later, with, the advancement of technology and the improvement in technical know-how, was an unreasonable ground of rejection of Techno-Commercial Bid of HEC. Actually, between BEML and HEC, HEC was the only “indigenous manufacturer” in the real sense. On the question of electricals, if in 1991 or pre-1991, the electricals fitted on HEC Shovels did not function well, this also could not be a ground of rejection because even with respect to electricals in these 10 years, science and technology has advanced by leaps and bounds and BHEL being a leading electrical manufacturer of the Country (a Public Sector Undertaking being wholly owned Government of India), it was expected that improvements in the electricals would also be there. Otherwise also, HEC had offered to supply electricals manufactured by a foreign manufacturer, namely, Simens and it is an undisputed fact that Simens is a leader in the manufacture of electricals in the World. Not only that, HEC had also agreed to fit the electricals manufactured by G.E., the same Company which had to fit the electricals in the Shovels to be supplied by BEML. On both these grounds, therefore, the rejection of Techno-Commercial Bid of HEC was patently vitiated and was made on untenable grounds.
22. In para 23 of the affidavit filed by Shri Joyprakash Dasgupta, General Manager on behalf of CIL, it has been averred that based on the report of the High Level Technical Committee, the Tender Committee came to the conclusion that based upon the unsatisfactory past performance of HEC, its
offer was not found acceptable and as such its Price Bid was not opened. We reproduce para 23 of this affidavit which reads thus :–
‘That I further state that based on the aforesaid report of the High Level Technical Committee, the Tender Committee came to the conclusion that based upon the unsatisfactory past performance of the supplies made by M/s. Heavy Engineering Corporation for similar type of shovels, their offers were not found acceptable and as such their price bid was not opened.”
23. Let us examine this statement made on behalf of CIL in its affidavit vis-a-vis the record as produced by CIL before us which actually is the minutes of various meetings of the Committees of CIL. What we found is that the Tender Committee meetings were held on 21st, 22nd and 29th November, 2001. The record note of these three meetings suggests that whereas on the one hand the Tender Committee observed that HEC’s offer cannot be considered technically suitable for the three reasons that the performance of the Shovels supplied earlier was much below the desired Availability Percentage, the offer with imported electricals was unproven and that the last order was placed about 10 years back, on the other hand it was of the opinion that if HEC is willing to supply Shovels with imported GE Electricals, consideration can be given to try some of the requirements of Shovels from HEC fitted with GE Electricals. This apart, the observation/recommendation of the Tender Committee being of vital importance, as picked up from its minutes, is reproduced hereinbelow. It reads thus :–
“The Tender Committee observed that 10M3 Shovels in our Coalfields are operating satisfactorily with imported GE make electricals only. The Operators and Maintenance Personnel are also trained to operate these equipment with imported GE electricals. The performance of indigenous electricals proposed to be supplied by HEC is not satisfactory and cannot be accepted as stated earlier in the note. The Tender Committee, however, is of the opinion that if HEC is willing to supply Shovels with imported GE electricals, a consideration can be given to try some of the requirements of Shovels from HEC fitted with GE electricals. The Tender Committee recommends that this aspect should be brought to the notice of the Management for a decision. If agreed, HEC will be asked to submit fresh offer for supply of Shovels with imported GE electricals only as the present offer of HEC is not with GE electricals.”
24. What, therefore, ultimately boils down is the story with respect to the electricals only and that the HEC was to be asked whether it was willing to supply Shovels fitted with imported GE electricals, and it is the undisputed case of the parties that the HEC indeed conveyed its total willingness to supply Shovels with imported GE fitted electricals. As against this, it would be seen from the record note of Tender Committee meetings held on 21st, 22nd and 29th November, that a decision was taken that the Price Bid of BEML be opened for negotiation. Record note of the Tender Committee Meetings held on 6th and 7th December, 2001 suggests that the Tender Committee in the meetings held on these two days noted that as per the recommendation of the earlier meetings held on 21st, 22nd and 29th November, 2001, the Price Bid of BEML was opened on 6th December, 2001. This runs counter to two important factors : (1) that in the record note of meetings held on 21st, 22nd and 29th November, 2001, the Tender Committee had taken a decision to ask the HEC whether it was willing to supply Shovels with imported GE electricals and despite this decision, without awaiting the response of HEC it decided to open the Price Bid of BEML. This run patently counter to the NIT conditions and stipulations of CIL itself. Secondly in the record note of the meetings held on 6th and 7th December, the Tender Committee after due deliberations was of the opinion that detailed technical evaluation with respect to the performance of Shovels of both HEC and BEML should once again be conducted including the electricals to be supplied by them to evaluate the actual merits of the Shovels supplied by BEML and HEC. Based on this deliberation and the formation of this opinion, the Tender Committee recommended that a Technical Committee should be formed with the afore-
said mandate. We are reproducing herein-below the relevant extracts of the record note of this meeting which reads thus :
“the Tender Committee deliberated on this aspect and was of the opinion that a detailed technical evaluation should be conducted with reference to performance of Shovels not only of HEC make but also of BEML make including electricals to evaluate the actual merits of the Shovels supplied by BEML and HEC.
In view of this, the Tender Committee recommends that a Technical Committee should be formed with Senior Excavation Engineers by Director (Technical), CIL to go into details of the performance of both BEML and HEC Shovels which are working at NCL and CCL, and submit a detailed report to Director (Technical), CIL within 10 days of formation of the Committee so that further deliberation can be made on this case.”
25. Based on the report of the Technical Committee, the Tender Committee again met on 22nd December, 2001 and once again reiterated that if HEC was willing to supply Shovels fitted with imported GE electricals, negotiations can be held with it for supply of a particular number of Shovels.
26. HEC was all along willing to supply Shovels fitted with imported GE electricals. It is the undisputed case of the parties that HEC’s price was much lower than that of BEML. It is undisputed case of the parties that HEC was to manufacture Shovels in India, in its factory at Ranchi and that BEML was to manufacture Shovels in collaboration with BUCYRUS. How much of the manufacturing process of BEML had to have the indigenous content has been commented upon by us in the earlier part of this judgment. It is the undisputed case of the parties that more than Rs. 100 crores was to be served if the Price Bid of HEC was accepted because the price of BEML was higher by about Rs. 100 crores as compared to the price offered by HEC and understandably so because whereas HEC was to manufacture the Shovels itself, indigenously in India. BEML was to do so in collaboration with BUCYRUS which in other words means that BUCYRUS had to bring into India a very high percentage, may be it could be cent percent, components for mere assembly in India.
27. Was the acceptance of the offer of BEML, a wholly owned Central Government Public Sector Undertaking not a camouflage to confer undue benefit and advantage to BUCYRUS and in the process was not the public interest made a casualty in as much as a wholly owned Central Government Public Sector Undertaking, offering to manufacture Shovels in India indigenously was ignored and its offer rejected on untenable and, perhaps, extraneous grounds and considerations. In the result public money to the tune of more than Rs. 100 crores was to become a casualty. Based upon our aforesaid discussions, we are firmly of the opinion that the respondent No. 1 has acted not only arbitrarily and unfairly but against public interest in rejecting the Techno-Commercial Bid of HEC and in accepting the Techno-Commercial Bid of “BEML and in deciding to award the contract to it. Actually the writing between the lines, perhaps, would be suggestive of the influencing role the extraneous considerations might have played in the entire transaction. BUCYRUS is not an Indian manufacturer. It is a foreign manufacturer. BEML had entered into a collaboration agreement with BUCYRUS. What could be pervading role of extraneous considerations, if at all, actually could not be discerned by us from the available records, to us or from the pleadings of the parties. We only refer to the following averments in the writ application. These reads thus :–
“That it is stated that the rope shovels of M/s. BEML has 80% imported content and, therefore, the Award of work order to M/s. BEML is, therefore, awarding the same to a foreign company of choice through the back door by excluding the other foreign manufacturers by cancelling the global tender inquiry.
That it is stated that the respondents Coal India Limited having so emboldened in its motive that without issuing any tender notice it has entered into bilateral agreement with one M/s. V.T. Industries Limited for supply of spare parts for the 10M3 Shovel Spares and Drag-line spares. It is pertinent to state here that the spare parts are being made to appear that it is being procured through M/s. V.T. Industries Limited but actually it is coming from M/s.
BUCYRUS International USA and for the same shovels which were originally supplied by the HEC. The value of these orders constitute approximately 15 crores per annum and because of this bilateral agreement even this channel is dried up than very survival of HEC would be at stake. HEC has been supplying these spare parts till last year and the very existence of HEC rests upon these orders.
That it is stated that the price difference of the spares supplied by HEC and BUCYRUS also called BE in short is shocking and the implied motive behind such dealings is very much apparent. The spares are being procured of the mother equipment supplied by HEC from an outside agency at more than double the price and for some items more than 15 times the price offered by HEC.
That the petitioner is perplexed as to why should the CIL pay 80-100 crores more for the rope shovels. It is also disturbing as to how the respondents are trying to exclude the HEC in order to kill it permanently. A huge amount of kick back is not ruled out. Drain of public money goes against the interest of the Nation.
That it is stated that the management of M/s. HEC is sleeping and is not at all concerned with the developments and the chain of events which seeks to overcome it.”
28. We have no hesitation in quashing and setting aside and also annulling the entire tendering process as being vitiated by illegalities and irregularities and as being arbitrarily done in violation of Article 14 of the Constitution of India. About that we have no doubt. What we, however, feel is that respondent No. 1 does, prima facie, appear to have acted against public interest and, perhaps, there might have also been some influencing element of extraneous considerations in the decision- making process in the entire transaction in-question. We are not expressing any final opinion on that; we are not giving any definite views on that. We are not at all returning any finding on this aspect; we are merely offering our observation because, at
the cost of reiteration, we feel that reading between the lines one may, perhaps be led to draw such a conclusion even though it may not be actually discernible from either the record or the pleadings of the parties, but there is a definite purpose in our saying so and that is that, we want that the re-tendering process and the process leading to fresh decision-making should be now conducted in such a manner and at a level where there is not the slightest possibility of any doubt about the total fairness of the process, the presence of all objectivity elements, the observance of all norms compatible to and in conformity with all public interest elements, and also consequently the total absence of any fear or suspicion about any pervading extraneous consideration in the said process. Once the needle of suspicion started hovering, once it became pendular, we thought public interest demands that we should err, if at all, in favour of caution, abundant caution, to protect the public interest. Public interest, to us, is of paramount importance. In the re-tendering process, we do not wish any arbitrariness or any irregularity creeping over once again. Therefore, being clear in our mind, without expressing any opinion, this way or the other, and without issuing any direction as such, we want to ensure the purity of the decision-making process. The decision-making process, in the light of the observations and directions as contained in the next paragraph would, thus, lie in the exclusive domain of the executive power and we have accordingly no intention in this case to tinker with or influence in any manner the course of that process or the exercise of that executive power. The purpose of our direction as contained in the succeeding paragraph Js, therefore, that the Cabinet Secretary shall accord his considerations with respect to the matters mentioned therein. How he does so, in what manner and with what result is entirely for him to decide. We are adopting this unusual course because, according to us, public interest being of paramount importance and some degree of doubt or suspicion having been introduced with respect to the fairness (vis-a-vis public loss or public gain) of the impugned action, we thought it prudent that an executive authority at the highest level should be entrusted with the task of
examining the past conduct and also to ensure that the fresh decision-making process is not vitiated. That is all to it; nothing more, nothing less. If the Cabinet Secretary, therefore, on due application of mind finds and thus decides that with respect to the past action, there is no warrant for initiating any administrative or disciplinary proceedings against any one, the matter may rest there. If he, also on due application of mind decides that in the fresh decision-making process, there is no need of changing or altering the structure as in existence heretobefore (meaning thereby disassociating any person or institution or associating any person or institution) he may accordingly take decision thereupon and the matter would thus stand concluded on the basis of such a decision. Thus, with the aforesaid in view, and on no other consideration, we propose to pass the following order. In referring the matter to the Cabinet Secretary we have been guided and influenced (perhaps on identical analogy) by a judgment of the Supreme Court in the case of Oil & Natural Gas Commission and Anr. v. Collector of Central Excise, reported in 1992 Supp (2) SCC 432.
29. We, accordingly, while allowing this writ application by issuance of a writ of certiorari quash and set aside the action of the respondent No. 1 in rejecting the Techno-Commercial Bid of HEC and accepting the Techno-Commercial Bid of BEML and opening its Price Bid also, direct that even while fresh tendering process all over again may be resorted to Union of India, through the Cabinet Secretary in the Central Government shall take a decision as to whether it would not be in the public interest to consider disassociating any person or Institution from the decision-making process, or for that matter associating any person or Institution in this process and whether it would also not be in the public interest to have the entire matter enquired into, though an Agency of the Central Government, such as CBI or CVC to find out as to why, and for what reasons, and on what considerations, if any, was HEC’s Techno-Commercial Bid rejected and, accordingly, thus, did any irrelevant or extraneous considerations play any role in the exclusion of other tenders and in picking
up BEML (in effect and substance picking up BUCYRUS) for the award of the contract, so that, if it is found that in this process public interest was jeopardised or it had tendered to be jeopardised, why should action be not initiated against persons found responsible for the same ? It shall be open to the Cabinet Secretary to associate with himself in this enquiry and decision-making process any other Officer or Officers of the Central Government.
No order as to costs.
Vishnudeo Narayan, J.
I agree.