THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 29.04.2011
+ W.P.(C) No.2603/2011
MEP-IDEAL TOLL CONSORTIUM ..... Petitioner
versus
MCD & ORS. ..... Respondents
Advocates who appeared in this case:-
For the Petitioner : Dr Abhishek M. Singhvi, Sr Adv.,
Mr Neeraj K. Kaul, Sr Adv.,
Mr Sandeep Sethi, Sr Adv. with
Mr Rudreshwar Singh, Mr Deepak Chitnis,
Ms Nidhiram Ram and
Mr Mohit Choudhry
For the Respondents : Mr Rajiv Nayar, Sr Adv., Mr Sudhir
Nandrajog, Sr Adv with Mr Gaurang Kanth
and Mr Rahul Kumar, Advs. for
respondent/MCD
CORAM:-
HON’BLE MR. JUSTICE BADAR DURREZ AHMED
HON’BLE MS. JUSTICE VEENA BIRBAL
1. Whether reporters of local papers may be allowed
to see the judgment? yes
2. To be referred to the Reporter or not? yes
3. Whether the judgment should be reported in the Digest? yes
BADAR DURREZ AHMED, J (ORAL)
1. By way of this writ petition, the petitioner has sought a writ of Certiorari
or any other writ, order or direction calling for the records of the instant tender
matter from the respondents and for setting aside the decision of the respondent
W.P.(C) No.2603/2011 Page 1 of 6
no. 1 conveyed to the petitioner by a letter dated 23.04.2011 whereby the
Technical Evaluation Committee of the respondent no. 1 has declared the
petitioner no. 1 consortium as having failed in the technical evaluation. A writ
of Mandamus has also been sought directing the respondents to consider the
Financial Bid submitted by the petitioner in relation to the Request For
Proposal Document dated 01.03.2001 calling for bids for „Engagement of the
Contractor‟ by the MCD for Toll Collection at border points from specified
commercial vehicles entering Delhi.
2. The impugned letter dated 23.04.2011 reads as under:-
“MUNICIPAL CORPORATION OF DELHI
TOLL TAX DEPARTMENT
th
14 Floor, „E‟ Block, Dr. S.P.M. Civic Centre, New Delhi-
110002
(Tel:011-23226422)No: AC(TT)/HQ/2011/41 Dated : 23.4.2011
To
M/s MEP-IDEAL TOLL CONSORTIUM
410, Boomerang, Near Chandivli Studio,
Chandivli Farm Road, Andheri (East),
MUMBAI- 400 072.
(Emai : feedback@meptollroad.com)
Sub: ENGAGEMENT OF A CONTRACTOR BY MCD
FOR TOLL COLLECTION AT BORDER POINTS FROM
SPECIFIED COMMERCIAL VEHICLES ENTERING
DELHI.
Sir,
The Technical Evaluation Committee after examining
the Technical Bid submitted by your consortium declares you
as “FAIL”.
The reason for your disqualification briefly is due to
the applicability of Clause 1.5(a) and 1.5(d) of Section -2-B,
(page-21) of Volume-I of RFP document, which pertains toW.P.(C) No.2603/2011 Page 2 of 6
the „Conflict of Interest‟ and opinion of the Solicitor General
of India on the subject.
Yours faithfully,
( Vinay Kumar )
Asstt. Commissioner
(Toll Tax)”
3. It is apparent that the reason for disqualification has been briefly stated
to be due to the applicability of Clauses 1.5(a) and 1.5(b) of Section 2-B of
Volume-I of the RFP document which pertains to „Conflict of Interest‟. Of
course, another reason for disqualification has also been mentioned and that is
the opinion of the Solicitor General on the subject.
4. The relevant portion of clause 1.5 of Section 2-B of Volume-I of the
RFP Document reads as under:-
“1.5 Any Applicant/Bidder shall not have a conflict of
interest (the “Conflict of Interest”) that affects the bidding
process. Any Applicant/Bidder found to have a Conflict of
Interest shall be disqualified. An Applicant shall be deemed
to have a Conflict of Interest affecting the bidding process, if:
(a) the Applicant/Bidder, its member or associate (or any
constituent thereof) and any other Applicant, its Member or
any Associate thereof (or any constituent thereof) have
common controlling shareholders or other ownership interest;
provided that this disqualification shall not apply in cases
where the direct or indirect shareholding of an Applicant, its
Member or an Associate thereof (or any shareholder thereof
having a shareholding of more than 5 per cent of the paid up
and subscribed share capital of such Applicant, Member or
Associate, as the case may be) in the other Applicant, its
Member or Associate is less than 5 per cent of the subscribed
and paid up equity share capital thereof; provided further that
this disqualification shall not apply to any ownership by a
bank, insurance company, pension fund or a public financial
institution referred to in section 4A of the Companies Act,
1956.
W.P.(C) No.2603/2011 Page 3 of 6
(b) XXXX XXXX XXXX XXXX
(c) XXXX XXXX XXXX XXXX
(d) such Applicant, or any Associate thereof has a
relationship with another Applicant/Bidder, or any Associate
thereof, directly or through common third party/parties, that
puts either or both of them in a position to have access to each
others‟ information about, or to influence the bidding of
either or each other; or
(e) XXXX XXXX XXXX XXXX”
5. Initially, the learned counsel for the petitioner had pointed out that the
disqualification was on the ground that one Mr Dattatray P. Mhaiskar owned
shares in the companies constituting two consortiums who have applied
separately. The two consortiums involved in the present petition are –
(1) MEP-Ideal Toll Consortium which is comprised of (a) MEP Toll Road Pvt
Ltd and (b) Ideal Toll and Infrastructure Pvt Ltd; and (2) IRB-MIPL
Consortium which, in turn, is comprised of (a) IRB Infrastructure Developers
Ltd and (b) Mhaiskar Infrastructure Pvt Ltd. The initial objection and
disqualification was with regard to the allegation that the said Mr Dattatray P.
Mhaiskar had shares in each of the four constituent companies of the two
consortiums and that insofar as IRB Infrastructure Developers Ltd is
concerned, he had a shareholding of 7.63 per cent which was in excess of the 5
per cent limit prescribed in Clause 1.5(a). However, this argument has been
given up by the respondents inasmuch as a plain reading of Clause 1.5(a) would
show that the disqualification qua Mr Dattatray P. Mhaiskar could only apply if
he held more than 5 per cent shares in a constituent of both the consortiums and
not just in one of the consortiums.
W.P.(C) No.2603/2011 Page 4 of 6
6. The other ground for disqualification under Clause 1.5(a), according to
the learned counsel for the respondent-MCD is that Ideal Toll and
Infrastructure Pvt Ltd which is a constituent of MEP-Ideal Toll Consortium
itself holds 7.63 per cent of the shares of IRB Infrastructure Developers Ltd
which is a constituent of IRB-MIPL Consortium and this, in itself, disqualifies
the petitioner consortium (MEP-Ideal Toll Consortium) on the ground of
„Conflict of Interest‟ as contemplated under Clause 1.5(a) which has been set
out above.
7. The learned counsel on behalf of the petitioner submitted that unless and
until there was a countervailing ownership interest of a constituent of the other
consortium in the petitioner consortium in excess of 5 per cent, the deeming
provision of „Conflict of Interest‟ would not get triggered.
8. We have heard the counsel for the parties on this aspect of the matter and
upon a plain reading of Clause 1.5(a) we feel that the only interpretation that
can be given to it is that when an applicant or its constituent, itself, has an
ownership interest in another applicant or its constituent and that ownership
interest is in excess of 5 per cent of the subscribed and paid up equity share
capital then it shall be deemed to have a „Conflict of Interest‟. Admittedly,
Ideal Toll and Infrastructure Pvt Ltd which is a constituent of MEP-Ideal Toll
Consortium has an ownership interest of 7.63% in IRB Infrastructure
Developers Ltd which is a constituent of the other consortium – IRB-MIPL
Consortium. Hence, the deemed conflict of interest is triggered. It is with
regard to this aspect of the matter that the MCD has ultimately disqualified the
petitioner consortium on the basis of „Conflict of Interest‟.
W.P.(C) No.2603/2011 Page 5 of 6
9. Insofar as the plea of the disqualification under Clause 1.5(d) is
concerned, we find that at this stage it would be very difficult to come to a
concrete conclusion as to whether the „Conflict of Interest‟ as stipulated therein
is made out or not because there is no material before us to ascertain as to
whether constituents of the consortiums had access to each others‟ information
or were in a position to influence the bidding of each other. Therefore, we are
not in agreement, prima facie, with the submissions made by the learned
counsel for the MCD on the applicability of Clause 1.5(d) of Section 2-B of the
RFP Document. However, on the basis of the view taken by us in respect of
Clause 1.5(a) we feel that the fact that Ideal Toll and Infrastructure Pvt Ltd
holds 7.63 per cent shares of IRB Infrastructure Developers Ltd and thereby
holds shares in excess of the 5 per cent shares stipulated in Clause 1.5(a), is
sufficient ground for disqualification of the petitioner consortium.
10. We may also point out that an identical provision (except that the
stipulation with regard to shareholding was 1% and not 5% as in the present
case) was considered in the case of Navinya Buildcon Private Limited v.
Union of India & Others, W.P.(C) No. 7181/2009, decided on 08.04.2009, by
a Division Bench of this court and a similar view was taken.
11. In view of the foregoing, the writ petition is dismissed and the interim
order stands vacated. Dasti.
BADAR DURREZ AHMED, J
VEENA BIRBAL, J
APRIL 29, 2011/kks
W.P.(C) No.2603/2011 Page 6 of 6