{"id":156074,"date":"2000-02-07T00:00:00","date_gmt":"2000-02-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000"},"modified":"2019-01-03T10:50:38","modified_gmt":"2019-01-03T05:20:38","slug":"larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000","title":{"rendered":"Larsen And Toubro Limited vs Gujarat State Petroleum … on 7 February, 2000"},"content":{"rendered":"
Gujarat High Court<\/div>\n
Larsen And Toubro Limited vs Gujarat State Petroleum … on 7 February, 2000<\/div>\n
Equivalent citations: (2000) 2 GLR 1814<\/div>\n
Author: R Abichandani<\/div>\n
Bench: R Abichandani<\/div>\n<\/p>\n
<\/pre>\n
JUDGMENT<\/p>\n
 R.K. Abichandani, J. <\/p>\n
1. The petitioner company challenges the decision of the respondent No. 2 in
\nawarding Engineering, Procurement and Construction contract for natural gas
\nfired combined cycle power plant at Hazira to the respondent No. 3 company.
\nInitially when the petition was filed, the prayer was to quash the decision
\nselecting the respondent No. 3 as EPC contractor, but later when it came to
\nlight that resolutions were already passed by the Management Committee and the
\nBoard of Directors and the contracts were entered into on 13th December, 1999,
\npursuant thereto between the respondents Nos. 1, 2 and 3, the resolutions and
\nthe contracts were also challenged by way of an additional prayer.\n<\/p>\n
2. The petitioner No. 1 is a multi-dimensional Engineering and Construction
\ncompany in India’s private sector, as stated in the petition. Its power project
\ngroup caters to two major areas namely – (i) the large power plants,
\npredominantly connected with the grid as an independent power project and (ii) a
\ncaptive co-generation business which focuses on the development of projects to
\nserve the captive industrial consumer.\n<\/p>\n
2.1 The respondent No. 1 is a company promoted by the Government of Gujarat
\nand six other State sector Corporations, inter-alia engaged in the business of
\nexploration and exploitation of oil and gas in Gujarat. The said company, with a
\nview to use natural gas from the gas fields owned by it for generation of power,
\nproposed to establish a Power plant at Hazira in Gujarat under the name of the
\nrespondent No. 2, which is a company promoted by the respondent No. 1.\n<\/p>\n
2.2 The respondents Nos. 1 and 2 are wholly owned State Government
\nCorporations incorporated for exploration of oil and gas and generation of power
\nrespectively. For the purpose of selection of EPC contractor for 160 MW Natural
\nFired Combined Cycle Power Plant, Request for Qualification (for short “RFQ”)
\nwas issued in December, 1998. It was mentioned therein that the respondent No. 1
\nwas proposing to initially set-up a 160 MW Gas based combined cycle power plant
\nat Hazira and the plant capacity would be expanded as and when more gas can be
\ncommitted. It was mentioned that approval for the proposed power project scheme
\nfrom the Government was received in principle and that the Gujarat Electricity
\nBoard has also cleared the project in its Board meeting. The project was
\ndescribed in paragraph 3.4 of the RFQ and in context of `Physical Facilities of
\nthe Project’, it was stated that the nominal, net output of the base load,
\nNatural Gas fired, combined cycle power station should be 160 MW +_10% at mean
\nsite conditions. The respondent No. 1, in consultation with the Government, was
\nto select co-sponsors to develop the project on a Build-Own-Operate (BOO) basis,
\nwhich refers to an arrangement whereby the Project company undertakes to
\nfinance, insure, design, construct, own, operate and maintain an electric power
\ngenerating facility. The power generated was to be sold pursuant to Power
\nPurchase Agreement. The respondent No. 2 company was to finalise and sign all
\nagreements necessary to implement the project, including Power Purchase
\nAgreement, Fuel Supply Agreement and Water Supply Agreement etc. This project
\ncompany created by the respondent No. 1 was to be overall responsible for
\nselecting the equipment, technology, designing the plant, carrying out the
\nplant’s construction and commissioning, at its own risk. The financing of the
\nproject was solely a matter between the respondent No. 1 (including co-sponsor),
\nthe Project company and the funding institutions, as stated in the RFQ document
\nin paragraph 3.6. The evaluation criteria was to include financial strength of
\nthe bidder, resource raising capability and ability to execute the contract in
\nenvisaged time schedule, equity offered for the Project etc. as mentioned in
\nparagraph 4.4 of RFQ.\n<\/p>\n
2.3 Twelve pre-qualification bids were actually received against such
\ninvitation and seven parties were pre-qualified for issuing of Request For
\nProposal (for short “RFP”). This included the petitioner No. 1 and the
\nrespondent No. 3. Pursuant to the issuance of RFP document, only three proposals
\nwere received by the respondents Nos. 1 and 2 and these were the petitioner No.
\n1, the respondent No. 3 and one Bombay Suburban Electricity Supply Company
\nLimited led consortium. This RFP document was issued on 17th February, 1999, a
\ncopy whereof is at Annexure “A” to the petition (pages 25\/A to 190). A
\nclarification was issued on 3rd March, 1999 as per Annexure “B” to the petition,
\nenclosing evaluation criteria, which was to form an integral part of the RFP
\ndocument. This evaluation criteria referring to the RFP document for invitation
\nof EPC contract more particularly to item 1.5.0, by which weightage was to be
\ngiven totally upto 100% proceeded to give the method of computation of such
\nweightage. The different heads against which the weightage was to be given were
\n(1) Per MW (Gross Output) EPC cost determined based on parameters = 75 per cent;
\n(2) Financial package offered = 15 per cent; (3) Equity offered = 5 per cent and
\n(4) Quality of proposal and background\/experience in respect of successful
\ncompletion of recent EPC contracts in power sector = 5 per cent, thus, making it
\ntotal of 100% marks.\n<\/p>\n
2.4 On 15th March, 1999, a further clarification was issued with reference to
\nthe aforesaid clarification dated 3.3.1999. This clarification, which is at
\nAnnexure “C” to the petition (page 202) allowed the bidder to quote maximum
\npossible net guaranteed output based on guaranteed Station Heat Rate, Auxiliary
\nPower consumption and the availability of 0.9 MMSCMD gas with Net Calorific
\nValue of 8300 Kcal\/SCM as per the revised fuel supply agreement condition. It
\nwas provided that such net guaranteed output figure would be fully taken into
\nconsideration even if it is more than 160MW + 10 per cent. This the petitioners
\nrely upon to contend that the ceiling of 160MW should be taken to have been
\nlifted and the petitioner was therefore, able to quote 189MW output. In the said
\nclarification, it was stated that the configuration however, of 2 Gas Turbines +
\n2 Waste Heat Recovery Boilers + 1 Steam Turbine generating unit stays as it is.
\nIt is further stated that per Mega Watt (Gross) cost would be evaluated based on
\nsuch guaranteed Output, Station Heat Rate and Auxiliary Power consumption. It
\nwas further stipulated that in case the Gas Turbine manufacturer included as a
\nconsortium member, is a licensee, then an undertaking from the licensor
\nconfirming its back-up guarantee for successful performance of Gas Turbine
\nCombined Cycle Power Plant alongwith associated auxiliary equipment and
\navailability of spare parts should also be provided. It was further stated that
\nin case the financial package being offered by the bidder involves floating and
\nfixed interest rates, floating rates would be converted to fixed rate and cost
\nof swap would be built in as a cash outflow, for the purpose of evaluation. It
\nwas also stated that in case financial package offered by the bidders involves
\nlease financing, evaluation would be based on the actual cash out-flow for the
\nowners, based on lease rentals and tax implications, if any. In paragraph 6 of
\nthis clarification letter, it was mentioned that the bid evaluation criteria had
\nspecified loading due to increase in Station Heat Rate (average at 70 per cent
\nand 85 per cent PLF) over lowest quoted Station Heat Rate at the rate of Rs.
\n44,500 \/ K.Cal\/MW. Similarly, loading due to increase in Auxiliary Power
\nConsumption over lowest quoted Auxiliary Power Consumption had been specified at
\nRs. 2.25 lakh\/Kw\/Mw. These figures were revised to Rs. 36,000 \/ K.Cal\/Mw and Rs.
\n1.80 lakh \/ Kw\/Mw respectively for bid evaluation purpose only. These
\nclarifications were to be treated as an integral part of the RFP document.\n<\/p>\n
2.5 Again on 3rd April, 1999, further clarification was issued as per
\nAnnexure “D” to the petition (page 204), which also was to be considered as an
\nintegral part of the RFP document, as stated at the bottom of that letter, and,
\nit was thereby clarified in context of the letter dated 15th March, 1999, that
\ngross capacity offered by the bidder on the basis of 9 lakhs m3 \/ day of gas
\nhaving Net Calorific value of 8300 kCal \/ m3 would be calculated based on
\nguaranteed net SHR for field conditions. However, to account for possible
\ndeterioration in machine capacity over a period of time, a 2% reduction in
\nMaximum Capacity offerable with 9 lakhs M3 \/ day of gas would be considered. The
\nSHR to be considered at 70 per cent and 85 per cent of capacity was to be based
\non the Maximum offerable Capacity thus reduced by 2 per cent. The guarantee SHR
\nin the bid was to be compared with the published data in the Gas Turbine
\nHand-book and in case the guaranteed SHR was found to be less than the published
\ndata, a detailed justification was to be sought for from the bidder.\n<\/p>\n
2.6 On 1.5.1999, the petitioner wrote a letter to respondent No. 1, which is
\nat Annexure-18 of the Affidavit-in-Rejoinder of the petitioners (page 855),
\nproposing to optimise and to offer a plant based on marginal higher fuel
\nutilisation than specified, say a minimum of 10 per cent and requesting the
\nrespondent No. 1 to accept and evaluate their offer based on offerable capacity
\nwith higher fuel utilisation. To this, the respondent No. 1 sent a reply on 3rd
\nMay, 1999 as per Annexure “E” to the petition (page 206), informing the
\npetitioner No. 1 that the decision that the capacity that may be offered for the
\nPower Project should be based only upon the availability of 0.9 MMSCMD (i.e. 9
\nlakhs\/M3) of Gas having Net Calorific Value of 8300 Kcals\/SCM was taken after
\nexamining various aspects of Fuel Supply Agreement and development plans of the
\nrespondent No. 1 for its Hazira field and this was already clarified by the
\nrespondent No. 1 vide its earlier letter dated 15th March, 1999. It was
\ntherefore, regretted that the suggestion of the petitioner for considering
\nhigher capacity than what was possible with availability of 0.9 MMSCMD of Gas
\nwith Net Calorific Valoue of 8300 Kcals\/SCM, could not be considered.\n<\/p>\n
2.7 The respondent No. 1 issued a further clarification vide its letter dated
\n7th May, 1999, as per Annexure “F” to the petition (page 207), which was also to
\nbe treated as a part of the RFP document. It was mentioned therein while
\nextending the last date for submission of offers against RFP upto 5th June,
\n1999, that back-up guarantee would be required to be provided from the original
\nlicensor in case the machinery supplier is a licensee. This requirement was
\nspecifically applicable for Gas Turbine only.\n<\/p>\n
2.8 It appears that there were some discussions held on 15th and 16th July,
\n1999 and after those discussions, a letter was written by the respondent No. 1
\non 19th July, 1999, as per Annexure “G” to the petition (page 208), in which
\nvarious deviations\/clarifications and final decisions and additional technical
\nclarifications given during the meeting on 15\/16th July, 1999 were enclosed at
\nAnnexure I to VI to that letter. Based on these final decisions, the bidders
\nwere required to submit revised price bids in the same format as had been
\nsubmitted in the original price bids. As regards `Back-up Guarantee’, it was
\nmentioned in paragraph 4 (page 209) that an indicative format for the Gas
\nTurbine Performance Guarantee required from the Licensor\/Principal was enclosed
\nat Annexure VII and that this back-up guarantee will be over and above the
\nperformance guarantees offered by the bidder in respect of various parameters to
\nbe included in the contract. It was mentioned that consortium will have to
\nseparately produce performance guarantee from the licensor\/principal either in
\nthe format as suggested or in a format which was substantially similar to the
\none given at Annexure VII. It was specified that in case of non-receipt of such
\nback-up performance guarantee, owner reserved the right to reject the revised
\nprice-bid. In paragraph 7.0 of the letter, it was mentioned that the owner had a
\nright to treat the bid as non-responsive in case the deviations were not
\nacceptable, or deal with it in some other manner as deemed fit. Thereafter, the
\ndate for submitting the revised price bid was extended upto 12th August, 1999,
\nas per letter dated 27th July, 1999 at Annexure “H” to the petition (page\n<\/p>\n
211).\n<\/p>\n
2.9 On 30th July, 1999, the petitioner No. 1 by its letter at Annexure “I” to
\nthe petition (page 213), made a suggestion to the respondent No. 1 for
\nevaluation, mentioning therein, in paragraph 1.3, that the part load performance
\nshould not be related to the offerable capacity at 0.9 MSCMD gas utilisation as
\nit would lead to impractical low levels of loading for their 6FA machine and
\nunfair comparative position with other machines and that the part load
\nperformance was related to the PPA, which can accept the full rated capacity of
\nthe plant and was independent of the rating for gas utilisation of 0.9 MSCMD. To
\nthis, the respondent No. 1 sent its reply dated 4th August, 1999 at Annexure “J”
\nto the petition (page 216), reiterating that the evaluation criteria and loading
\nfigures were already communicated to the bidders and emphasising that evaluation
\nwas linked to offerable capacity. The petitioner No. 1 was also informed that
\nafter the price bid opening, if the guaranteed figures were found to be without
\nadequate basis and justification, then the owner reserved the right to take
\nsuitable decision in the interest of the project. It was also mentioned that all
\napplicable taxes and duties, including excise duty, irrespective of the paying
\nparty, over and above the basic price to arrive at final landed cost of the
\nitem, shall have to be indicated by the bidder in Exhibit PR-F of RFP document.
\nAs per the intimation given at Annexure “K” by the respondent No. 1, the price
\nbid was to be opened on 19th August, 1999 at 3.00 P.M.\n<\/p>\n
2.10 It appears that thereafter a meeting of the Fourth Management Committee
\nof Directors of the respondent No. 2 Company was held on 4th September, 1999 to
\nevaluate the bids. The minutes of that meeting, are at Annexure “O” (page 940)
\nto the affidavit-in sur-rejoinder on behalf of the respondents Nos. 1 and 2.
\nFrom these minutes it appears that in the process of selection of EPC contractor
\nfor the said project, the Committee had before it the technical bid
\nrecommendations of their consultant Desein Pvt.Ltd., against Request for
\nProposal (RFQ) for selection of EPC contractors for which final technical and
\nprice bids were opened on August 19, 1999. It was recorded therein that the
\nCommittee was apprised of the broad technical and commercial terms quoted by
\nvarious bidders including the deviations from RFP terms taken by bidders and
\nevaluation procedure followed in the light of the criteria laid down for
\nevaluation. A representative of Messrs Desein explained at the said meeting the
\nreport containing recommendations in detail. The discussion that took place on
\nmajor items was recorded in these minutes and to the extent that it would be
\nrelevant for the purpose of this petition, it would be referred to at an
\nappropriate stage. The Managment Committee after awarding marks under various
\nheads referred to hereinabove, for the reasons mentioned therein, resolved that
\nthe bid of the respondent No. 3 ABB Power Generation Limited be the first lowest
\nbid and be considered for negotiation and finalisation of the order for EPC
\ncontract work of CCPP at Hazira. Thereafter, the proceedings of the Management
\nCommittee meeting dated 4th September, 1999 were placed before the meeting of
\nthe Directors Committee held on 4th September, 1999 for ratification. The
\nminutes of the Directors Committee held on 4th September, 1999 are at Annexure
\n“M” to the affidavit-in-reply filed by the respondents Nos. 1 and 2 (page 429).
\nIt is recorded therein that the Managing Director briefed the Board about the
\nprocess for selection of EPC Contractor and about the rationale for selection of
\nEPC Contractor. The Board noted that the company had received twelve bids of
\nwhich seven bidders were short-listed at RFQ state. At RFP stage, three bids
\nwere received. It was noted that the bidders were brought at par technically and
\nthat final technical and price bids were opened on 19th August, 1999. The
\nrepresentative of Messrs Desein Pvt.Ltd. apprised the Board about various
\ntechnical aspects of their report and further informed the Board about
\ndeviations taken by the bidders and the manner in which these were dealt with by
\nthe company. The Board also discussed about the importance of back-up guarantee
\nof Licensor\/s and opined that such a guarantee was absolutely necessary in view
\nof recent experiences in the State. A comparison of proposal of three bidders on
\nvarious criteria of RFP was made by the representative of Messrs Desein before
\nthe Board. The Board decided to accept the report of Messrs Desein and the
\nrecommendations contained therein. The Board also considered the financing
\npackages offered by different bidders and discussed at length various terms and
\nconditions as mentioned in the minutes. It also took note of the recommendations
\ngiven by Messrs Fieldstone for adopting Internal Rate of Return (IRR) on equity
\nto be the main criteria for evaluation and based on this, the Board accepted the
\nevaluation of financial package and marks given based thereon. It was recorded
\nin the minutes that the Board approved the comprehensive evaluation done by the
\nDirectors Committee at its meeting on 4th September, 1999 and the selection of
\nrespondent No. 3 – Messrs ABB as lowest evaluated bidder. It was resolved by the
\nBoard to ratify the resolutions of the Management Committee for selection of the
\nrespondent No. 3 as EPC Contractor for the said Power Project. The Managing
\nDirector of the company was authorised to negotiate and finalise detailed terms
\nand conditions of appointment of the respondent No. 3 as EPC Contractor, on the
\nbasis of their final technical and price bids for the proposed power project,
\nkeeping in view the parameters laid down during the bidding process.\n<\/p>\n
3. In the petition when it was filed, the contentions that were raised were
\nthat the decision of the respondents Nos. 1 and 2 to award the contract to
\nrespondent No. 3 was outrageously in defiance of logic, unreasonable, arbitrary
\nand in violation of the principles of natural justice, unfair amounting to
\nfavouratism and violative of the fundamental rights of the petitioners
\nguaranteed by Articles 14 and 19(1)(g) of the Constitution of India. It was
\ncontended that the impugned decision of the respondents Nos. 1 and 2 was such as
\nno reasonable person would reach on the basis of the available bid data and
\nevaluation criteria adopted. It was contended that while evaluating the
\ntechno-commercial bids of the petitioner and that of the respondent No. 3, while
\n2 per cent reduction in maximum capacity offerable with 9 lakh M3\/day was made
\nonly in the case of the petitioner no such reduction was made from the maximum
\nofferable capacity of the respondent No. 3, on the ground that in case of the
\nrespondent No. 3, the gas utilisation being less than 9 lakh M3\/day, it would be
\npossible to take care of deterioration of machines by enhancing the gas
\navailability. It was contended that this was ex-facie untenable because in all
\nthe gas turbines there was non-recoverable degradation of power output with
\nusage irrespective of the availability of gas and further that it was never
\nclarified that 2 per cent degradation will be applied only if there was full
\nutilisation of gas. It was contended that even if this criteria is assumed to
\nhave already laid down, it was arbitrary and laid down specifically to favour
\nthe respondent No. 3, who had offered a lower capacity turbine. It was contended
\nthat the maximum capacity offerable with 9 lakh M3\/day of gas in the case of the
\npetitioner’s configuration was 189.87 MW, though the plant offered by the
\npetitioner was capable of offering 207 MW and therefore, about 9 per cent
\nadditional capacity would have been available in future to the respondent Nos. 1
\nand 2 when fuel constraint of 9 lakh M3\/day was overcome at no extra cost. It
\nwas contended that the plant offered by the petitioner would generate additional
\n127 Million units (approx.) per annum, which would provide approximately Rs. 32
\ncrores per annum of additional revenue to the respondents Nos. 1 and 2, but this
\naspect was not considered. It was contended that the justification sought to be
\noffered for “loading” for working out `per MW (gross output) EPC cost’ was
\nuntenable on the face of the tender document and the decision was based on
\nprocedural irregularities. It was contended that awarding 75 marks to the
\nrespondent No. 3 on this count and lowering marks of the petitioner No. 1 in
\ninverse proportion was violative of Article 14 of the Constitution of India. It
\nwas also contended that there was no justification to increase the price quoted
\nby the petitioner No. 1 by Rs. 8.728 crores for GE supervision, in absence of
\nthe petitioner demanding such supervision from GE. As regards the loading on the
\nbasis of taxes, it was contended that the petitioner had quoted a fixed turn-key
\nprice including all the prevailing taxes, duties, levies, tariffs etc.
\nassociated with the work. It was stated that the fixed turn-key price included
\nsales-tax of Rs. 4.662 crores. It was also contended that there was no reason
\nfor the respondents Nos. 1 and 2 to presume that the with-holding tax would be
\npayable by them when the price offered was on turn-key basis. It was therefore,
\ncontended that the loading of Rs. 1.684 crores on account of with-holding tax,
\nwas arbitrary and violative of Article 14 of the Constitution of India. As
\nregards loading of the price quoted by the petitioner on account of Works
\nContract Tax, it was contended that there was no reason for the respondent No. 1
\nto presume that they would be required to pay the sum in addition to the price
\npayable to the petitioner as turn-key price. This loading was also therefore
\nassailed as arbitrary. According to the petitioner, the techno-commercial
\nevaluation made by the respondents Nos. 1 and 2 was irrational, unreasonable,
\nunfair, arbitrary and violative of Article 14 of the Constitution of India. It
\nwas further contended that one mark deduction from the five marks awardable for
\nthe quality of proposal was not permissible in view of the fact that at the
\nmeeting held on 15th and 16th July, 1999, the respondents Nos. 1 and 2 had
\nagreed to accept a Consortium Agreement of Sumitomo and Hitachi duly notarised
\nand authenticated by the Indian Embassy in Japan and the petitioners were called
\nupon to furnish a letter from GE (licensor), which would establish that the
\nrequirement of performance back-up guarantee of licensor\/principal could be
\ndispensed with. It was contended that such agreement and letter were accepted by
\nthe respondent No. 1 and since the respondent No. 1 did not reject the
\ntechno-commercial bid before opening the price bid, there remained no ground for
\ndeducting one mark. This deduction was therefore, assailed as arbitrary. It was
\nfurther contended in the petition that the RFP read in conjunction with the
\namendment, clearly envisaged the net present value of outflow towards debt as
\nthe criteria for evaluating the financial package. According to the petitioner,
\nthe net present value of the out-flow towards debt of the package offered by the
\npetitioner was in all respects better than that of the respondent No. 3 and
\ntherefore, the petitioner No. 1 company ought to have been awarded full fifteen
\nmarks for the financial package, while the respondent No. 3 ought to have been
\nawarded proportionately lower marks – approximately 12.7468. It was further
\ncontended that the suggested tenor of the petitioner’s financial package was
\nnine years, and it had been clearly stated that two years moratorium will be
\nprovided. According to the petitioner, there was arbitrary misinterpretation of
\nthe financial package offered by it, by computing two years’ period of
\nmoratorium within seven years mentioned against the tenor of repayment.
\nAccording to the petitioner, the declaration that the petitioner’s financial
\npackage was non-responsive and giving of zero mark on that count was arbitrary
\nand the petitioner was in fact, on the basis of the criteria laid down in the
\nRFP and its clarifications made thereafter, entitled to be awarded full hundred
\npercent marks.\n<\/p>\n
In paragraph 3.12 of the petition, it was contended that the capacity of the
\nCombined Cycle Power Plant being offered by the petitioner was 207 MW, and in
\nview of the limitation of availability of natural gas to the extent of 9 lakh
\nM3\/day, the plant offered by the petitioner would be functioning under maximum
\nofferable capacity at 189.87 MW and therefore, if larger quantity of gas was
\navailable in future i.e. above the available 9 lakhs M3\/day, the respondents
\nNos. 1 and 2 would be benefitted. By not permitting such additional 207 MW, they
\nwould be losing about 250 million Kwh per year, which would mean a revenue loss
\nof approximately Rs. 62.5 crores per year in additional business.\n<\/p>\n
4. The respondents Nos. 1 and 2 filed a detailed reply with several
\nannexures, emphasising that the project was right from the beginning envisaged
\nto be of 160 MW +- 10 per cent and the clearance from the Government of Gujarat
\nand the Gujarat State Electricity Board was obtained as far back as in December,
\n1998. It was also emphasised that the bids were evaluated on the basis of the
\ncriteria already prescribed in the RFP and clarification documents. It was
\npointed out that after the selection of the respondent No. 3, until the orders
\nwere made on 30th December, 1999 by the High Court in this petition, the
\nrespondent No. 2 had already signed contracts with the respondent No. 3 – namely\n<\/p>\n
(i) C.I.F Supplies Contract; (ii) Ex-Works Supplies Contracts; and (iii)
\nServices Contract. It was submitted that the delay in the schedule would have an
\nadverse cascading effect on the cost of project, if the NTP was not issued
\nbefore 31st March, 2000. According to the respondents, each day’s delay in
\nimplementation would mean a direct loss of lakhs of rupees for GSEG besides
\nunquantified loss to the State, in terms of socio-economic development.
\nAccording to these respondents, a sum of Rs. 1300 lakhs was already expended by
\nthem towards the project till that date.\n<\/p>\n
The respondents Nos. 1 and 2 in their affidavit-in-reply referred to the
\ncriteria laid down for evaluation of the bids and the weightage of marks, which
\nwas to be given and which has been noted hereinabove. They maintained that the
\nevaluation was properly done on all counts and the decision was taken on the
\nbasis of the relevant material and with the assistance of experts after proper
\napplication of mind to all the relevant aspects of the matter. The respondent
\nNo. 3 filed a separate affidavit-in-reply taking similar contentions.
\nThereafter, even during the course of the arguments, the record of the petition
\nswelled to its present obesity by sur-rejoinders and sur-sur-rejoinders, which
\nmore or less centered around the controversy delineated above and therefore, it
\nwould be futile to repeat the contentions and averments made therein in detail
\nin the judgement.\n<\/p>\n
4.1 In response to the demand of the petitioner made in their Civil
\nApplication No. 231 of 2000 for producing documents having bearing on the
\ncontroversy involved, the respondents Nos. 1 and 2 have, during the hearing,
\nproduced technical evaluation report of Desein Private Limited dated 30th
\nAugust, 1999, the revised price-bids of the petitioner as well as the respondent
\nNo. 3 and a full copy of Request For Qualification, (which was missing in the
\nmain record, since only few pages thereof were produced). Copies of these
\ndocuments which are relevant and which are integral part of the record were duly
\nsupplied to the petitioner’s Counsel before they were relied upon by both the
\nsides.\n<\/p>\n
5. The learned Senior Counsel and other Counsel appearing for the petitioners
\ncontended that the petitioners could have been offered a more cost effective
\nconfiguration, if the configuration of 1GS + 1 WHRB + 1 ST (i.e. One Gas
\nTurbine, One Waste Heat Recovery Boiler and One Steam Turbine), which was
\nmentioned in the RFQ document earlier in 1998 had been maintained and the
\nrespondents Nos. 1 and 2 had not confined the RFP to the configuration of 2 GSs
\n+ 2 WHRBs + 1 ST (i.e. Two Gas Turbines, Two Waste Heat Recovery Boilers and One
\nSteam Turbine). It was submitted that even the configuration of 2+2+1, which was
\noffered by the petitioner was most cost effective than that of the respondent
\nNo. 3 and if the decision was properly taken in public interest and resources
\nwere to be properly utilised, the respondent No. 3 would be a non-starter. It
\nwas argued that there was a secret agenda so that the entirety of the contract
\nwas so tailored as to favour the respondent No. 3. The decisions were taken from
\ntime to time which prescribed parameters that would lean in favour of the
\nrespondent No. 3 and deprive the petitioner of the benefit of its superior
\ntechnology and equipment. It was contended that 1+1+1 configuration was
\ndeliberately dropped, because the respondent No. 3 did not have that
\nconfiguration to offer. It was further contended that a 200 MW project was
\ndeliberately scaled down and downgraded to 160MW project though this would
\nresult in a loss of Rs. 62.5 crores. Moreover, showing of lower calorific heat
\nvalue of 8300 Kcal of gas as against the actual value of about 8600 Kcal was
\nalso adopted to suit the respondent No. 3. Repeated demands were made by the
\nrespondent No. 1 to nitpick to find out reasons to put the petitioner to
\ndisadvantage and these respondents did not ask for explanations or
\nclarifications and not asking for explanation on a facile excuse, that the
\nCentral Vigilance Commissioner will smell corruption if they obtain
\nclarification, was a course adopted for deliberately not seeking the
\nexplanations that the petitioners would have offered as to incidence of taxation
\nor letter in lieu of guarantee and the other aspects. It was further argued that
\nas the petitioners’ configuration was more cost effective than that of the
\nrespondent No. 3, the respondent No. 1 embarked upon a two per cent deduction on
\nthe basis of depreciation. Irredeemable loss due to depreciation was not a
\nunique feature for the petitioners’ machinery and it would have happened even in
\ncase of the equipment of the respondent No. 3. It was therefore contended that
\ndiscrimination was practised on this count against the petitioner by not
\nimposing a similar deduction of 2 per cent from the capacity offered by the
\nrespondent No. 3. It was also contended that an irrational stand was taken that
\nthe loss of efficiency in the equipment of respondent No. 3 due to
\n“unrecoverable degradation” would be off-set by additional input of gas that the
\nrespondent No. 3 could make, since it was to use only 7.7 lakhs M3\/day gas as
\nagainst the available capacity of 9 lakh M3\/day gas, which the petitioner was to
\nfully utilise. Giving analogy of an old car, it was contended that a depreciated
\nengine will not work more efficiently just by pouring more petrol in it. It was
\nalso contended that sales-tax loading was not justified because the tender was
\non a turn-key price basis and taxes which were shown separately for break-up
\npurposes were obviously to be borne by the petitioners. No clarification was
\nsought on this count by the respondent No. 1 and the Central Vigilance
\nCommissioner’s Circular, which did not apply, was being put up as an excuse. It
\nwas also contended that the insistence of the respondents Nos. 1 and 2 on the
\nback-up guarantee of GE was unreasonable because no such lisensor would give a
\nback-up guarantee for the licensee manufacturer’s machines. Moreover, this
\nrequirement must be deemed to have been waived because the price bid was opened
\nafter the filing of the letter of GE dated 21.7.1999.\n<\/p>\n
5.1 The learned Senior Counsel further argued that the petitioners had
\noffered financial package of seven years and two years’ moratorium period which
\nwould be nine years in all, but these respondents deliberately misread the
\npackage so as to mean that two years’ moratorium was within the tenor of
\nrepayment profile of seven years. It was argued that the expression “tenor”
\nmeant the entire period i.e. duration of instalments plus the moratorium period.
\nReferring to the letter of ICICI addressed to L & T Finance, it was argued
\nthat this is how the matter was understood even by a financer. It was contended
\nthat since no clarification on this count was sought, it should be inferred that
\nthe decision was reached only with a view to favour the respondent No. 3 by
\nconsciously and deliberately giving 15 marks to it. A contention was developed
\nas the hearing progressed that the offer of financial package made by the
\nrespondent No. 3 was not a firm offer and no commitment to adhere to the
\nfinancial package was given by it to the respondent No. 2. It was contended that
\nthe financial advisor of the respondents Nos.1 and 2 – Messrs Kishore and
\nShastri, took into account the fact that the financial package offered by the
\nrespondent No. 3 was not a firm commitment to arrange the finance. The
\nrespondent No. 3 did not bind itself and the offer was therefore, no offer in
\nthe eye of law. It was therefore argued that the offer of the respondent No. 3
\nof such financial package ought to have been treated as non-responsive and no
\nmark could be allotted for it. It was contended that neither in the Management
\nCommittee’s minutes, nor in the Board Meeting’s minutes was a reference made to
\nthis aspect or to the evaluation of Messrs Kishore and Shastri on this point. It
\nwas submitted that an offer of financial package should have been clear and firm
\nso as to be capable of acceptance and reliance was placed on the text-books on
\nthe law of Contract (Atliah’s 4th Edition page 61 & Trietal 9th Edition page
\n8 and also from Anson 27th Edition Ch.II & Pollock & Mulla’s 11th
\nEdition page 132) to submit that an offer should be clear and capable of
\nacceptance and not a non-committal one. It was contended that there was thus a
\nconscious effort on the part of the respondent No. 2 to give fifteen marks to
\nthe respondent No. 3 and nil to the petitioner. It was further contended that
\nthe action of the respondent No. 1 was actuated by malafides, which can be
\ninferred from the cumulative effect of the following: (1) it was deliberately
\noverlooked that when nine lakhs M3\/day gas flow was available, its full
\nutilisation would have yielded more power\/industry\/employment; (2) choosing 160
\n+_ MW producer who could not have utilised the full nine lakh M3\/day shows that
\nthere was pre-determination to peg down production to 160 MW at the cost of the
\nState exchequer; (3) no reason was given for pegging the capacity at 160MW; (4)
\nthe higher revenue return of 62.5 crores was ignored which shows that there was
\ndetermination to fit the `cap’ on the head of respondent No. 3; (5) the fact
\nthat there was no firm offer of the respondent No. 3 was not referred to by the
\nManagement Committee or the Board, and there was a deliberate attempt made to
\nignore such relevant material with a view to support the respondent No. 3.\n<\/p>\n
5.2 In support of his contentions, the learned Counsel for the petitioners
\nrelied upon the following decisions:-\n<\/p>\n
(1) State of Punjab v. Ramji Lal,<\/a> reported in AIR 1971 S.C 1228 was relied
\n  upon in support of the contention that where validity of action taken by the
\n  State Government was challenged on the ground that action was malafide, then
\n  to establish malafides, it was not necessary for the party, alleging malafide
\n  of State action, to prove that any named officer or officers was or were
\n  responsible for that official act. The law does not cast any such burden upon
\n  the party challenging the validity of the action taken by the State
\n  Government.\n<\/p>\n
(2) M\/s. Radhakrishna Agarwal and Ors. v. State of Bihar,<\/a> reported in AIR
\n  1977 S.C 1496 was relied upon in support of the contention that Article 14 of
\n  the Constitution of India imports a limitation or imposes an obligation upon
\n  the State’s executive power under Art. 298 of the Constitution and that all
\n  constitutional powers carry corresponding obligations with them. It was held
\n  therein that at the very threshold or at the time of entry into the field of
\n  consideration of persons with whom the Government could contract, the State,
\n  no doubt, acts purely in its executive capacity and is bound by the
\n  obligations which dealings of the State with the individual citizens import
\n  into every transaction entered into in exercise of its constitutional powers.
\n  It would be noted that, in that decision it was also held that the allegations
\n  made in the case before the Supreme Court were of such a nature that they
\n  could not be satisfactorily decided without adducing evidence, which was only
\n  possible in ordinary civil suits, to establish that the State acting in its
\n  executive capacity through its officers, had discriminated between parties
\n  identically situated. It was held that such a conclusion could not be reached
\n  on the allegations in the writ petitions and the affidavit evidence on
\n  record.\n<\/p>\n
(3) M.I. Builders Pvt. Ltd. v. Radhey Shyam Sahu and Ors.<\/a> reported in
\n  (1999) 6 SCC 464 was cited in support of the contention that judicial review
\n  was called for where the Corporation’s action was unreasonable, arbitrary,
\n  unfair and against the public policy, public interest and public trust
\n  doctrine. There, the agreement under which prime land was given for a song by
\n  Mahapalika was found to be arbitrary, unfair and a fraud on its power smacking
\n  favouratism and therefore, not in public interest.\n<\/p>\n
(4) Tata Cellular V. Union of India,<\/a> reported in (1994) 6 S.C.C 651, which
\n  was referred to by both the sides, was relied upon on behalf of the
\n  petitioners for its proposition that the judicial power of review is exercised
\n  to rein in any unbridled executive functioning. It was observed that the
\n  restraint has two contemporary manifestations viz. one is ambit of judicial
\n  intervention and the other covers the scope of the court’s ability to quash an
\n  administrative decision on its merits. These restraints bear the hallmarks of
\n  judicial control over administrative action. It was held that the principle of
\n  judicial review is concerned with reviewing not the merits of the decision in
\n  support of which the application for judicial review is made, but the decision
\n  making process itself. It was held that the principle of judicial review would
\n  apply to the exercise of contractual powers by the Government bodies in order
\n  to prevent arbitrariness or favouritism. It was held that the duty of the
\n  Court is to confine itself to the question of legality and its concern should
\n  be whether a decision making authority exceeded its powers; whether it
\n  committed an error of law or committed a breach of the rules of natural
\n  justice or reached a decision which no reasonable tribunal would have reached
\n  or, abused its powers. The grounds upon which an administrative action can be
\n  subjected to judicial review are classified as illegality, irrationality and
\n  procedural impropriety. In that very decision, while deducing the principles
\n  from various cases referred, it was held that the modern trend points to
\n  judicial restraint in administrative action; that the Court does not sit as a
\n  court of appeal but merely reviews the manner in which the decision was made;
\n  that the court does not have the expertise to correct the administrative
\n  decision and if a review of the administrative decision is permitted, it will
\n  be substituting its own decision, without the necessary expertise which itself
\n  may be fallible; that the terms of the invitation to tender cannot be open to
\n  judicial scrutiny because the invitation to tender is in the realm of
\n  contract; and, that the Government must have freedom of contract, i.e. a
\n  free-play in the joints is a necessary concomitant for an administrative body
\n  functioning in an administrative sphere or quasi-administrative sphere.
\n  However, the decision must not only be tested by the application of Wednesbury
\n  principle of reasonableness, but must be free from arbitrariness not affected
\n  by bias or actuated by mala fides. Moreover, quashing decisions may impose
\n  heavy administratrive burden on the administration and lead to increased and
\n  unbudgeted expenditure.\n<\/p>\n
(5) Reference was also made to the decision of the Supreme Court in New
\n  Horizons Limited and Anr. v. Union of India and ors.<\/a>, reported in (1995) 1 SCC
\n  478, in which the Hon’ble the Supreme Court held that in the matter of
\n  entering into a contract, the State does not stand on the same footing as a
\n  private person who is free to enter into a contract with any person he likes.
\n  The State, in exercise of its various functions, is governed by the mandate of
\n  Article 14 of the Constitution which excludes arbitrariness in State action
\n  and requires the State to act fairly and reasonably. The action of the State
\n  in the matter of award of a contract has to satisfy this criterion. Therefore,
\n  while entering into contracts the Government cannot act arbitrarily at its
\n  sweet will and like a private individual, deal with any person it pleases, but
\n  its action must be in conformity with the standards or norms which are not
\n  arbitrary, irrational or irrelevant. It was further held that it is recognised
\n  that certain measure of “free play in the joints” is necessary for an
\n  administrative body functioning in an administrative sphere. Holding that the
\n  High Court had erred in taking the view that the appellant in that case was
\n  not a joint venture and that there was only certain amount of equity
\n  participation by a foreign company, the Hon’ble Supreme Court held that once
\n  it was held that the appellant was a joint venture as claimed by it in the
\n  tender, the experience of its various constituents had to be taken into
\n  consideration, if the Tender Evaluation Committee had adopted the approach of
\n  a prudent businessman.\n<\/p>\n
(6) Reliance was then placed on the decision of the Supreme Court in
\n  Sterling Computers Ltd. V. M & N Publications Ltd. and ors.<\/a>, reported in
\n  (1993) 1 SCC 445 for its proposition that even while taking decision in
\n  respect of commercial transactions, a public authority must be guided by
\n  relevant considerations and not by irrelevant ones and if such decision is
\n  influenced by extraneous considerations, which it ought not to have taken into
\n  account, the ultimate decision is bound to be vitiated, even if it is
\n  established that such decision had been taken without bias. It was held that
\n  the action or the procedure adopted by the authorities which can be held to be
\n  `State’ within the meaning of Article 12, while awarding contracts in respect
\n  of properties belonging to the State, can be judged and tested in the light of
\n  Article 14. In the said decision, it was also held that public authorities
\n  must have the same liberty as they have in framing the policies, even while
\n  entering into contracts because many contracts amount to implementation or
\n  projection of policies of the Government. In contracts having commercial
\n  element, some more discretion has to be conceded to the authorities giving
\n  them liberty to assess the overall situation for the purpose of taking a
\n  decision as to whom the contract be awarded and on what terms, so that they
\n  may enter into contracts with persons, keeping an eye on the augmentation of
\n  the revenue. It was also held that it was not possible for the Courts to
\n  question and adjudicate every decision taken by an authority, because many of
\n  the Government Undertakings which in due course have acquired the monopolist
\n  position in matters of sale and purchase of products and with so many ventures
\n  in hand, can come out with a plea that it is not always possible to act like a
\n  quasi-judicial authority while awarding contracts. It was held that even in
\n  such matters, they have to follow the norms recognised by the courts while
\n  dealing with public property, though the decisions taken in bona fide manner
\n  although not strictly following the norms laid down by the courts, are upheld
\n  on the principle laid down by Justice Holmes, that courts while judging the
\n  constitutional validity of executive decisions must grant certain measure of
\n  freedom of “play in the joints” to the executive.\n<\/p>\n
(7) The decision of the Hon’ble the Supreme Court in the case of Star
\n  Enterprises and Ors. v. City and Industrial Development Corporation of
\n  Maharashtra Ltd. and ors.<\/a> reported in (1990) 3 SCC 280 was referred to for its
\n  proposition that the State or its instrumentality entering commercial field
\n  must act in consonance with rule of law.\n<\/p>\n
(8) The decision of the Hon’ble the Supreme Court in the case of Harminder
\n  Singh Arora v. Union of India and Ors.<\/a> reported in (1986) 3 SCC 247, was
\n  referred to for its proposition that the Government may enter into a contract
\n  with any person but in so doing the State or its instrumentalities cannot act
\n  arbitrarily. If the authority chooses to invite tenders, then it must abide by
\n  the conditions laid down in the tender notice and the result of the tender and
\n  cannot arbitrarily and capriciously accept a much higher tender to the
\n  detriment of the State. It was held by the Hon’ble Supreme Court that if the
\n  authorities choose to accept the tender of the respondent No. 4 (in that case
\n  for supplying pasteurized milk, instead of fresh buffalo or cow milk as
\n  specified in the tender notice), the appellant should also have been given an
\n  opportunity to change his tender. It was noticed that if the terms and
\n  conditions of the tender were incorporated in the tender notice itself and
\n  that did not indicate giving of 10% price preference to Government
\n  undertaking, the authority concerned acted arbitrarily in allowing such
\n  preference to the respondent No. 4.\n<\/p>\n
6. The learned Senior Counsel – Additional Solicitor General, appearing for
\nthe respondents Nos. 1 and 2 strongly contended that this was not a matter where
\nthe High Court should exercise its powers under Article 226 of the Constitution
\nof India, because it was amply established from the record that there was no
\nelement of arbitrariness in the decision making process. It was contended that
\nthe decision to accept the bid of the respondent No. 3 was taken on
\nconsideration of the relevant material before the concerned body and there was
\nno reason to infer that it was taken with a view to favour the respondent No. 3.
\nIt was pointed out that on quite a few aspects where these respondents could
\nhave treated the petitioner’s bid as non-responsive, the stringent requirements
\nwere not taken to their logical effect so that the bid of the petitioner was
\nkept alive for consideration and this rules out any inference of mala fides. If
\nthese respondents had pre-determined the matter and wanted to oust the
\npetitioner No. 1, that would have been very easy on certain aspects which were
\nnot decided upon immediately for throwing out the petitioner’s bid and the
\npetitioner’s bid was considered on its merits. Illustrating this, he submitted
\nthat as per the terms incorporated in the RFP, the petitioner’s bid could have
\nbeen treated as non-responsive for the simple reason that the manufacture was
\nnot directly a part of the consortium as also for the reason that as per the
\nlater clarification which became part of the RFP document, the expected
\nundertaking of the licensor was not furnished and what was furnished was a
\nletter, which admittedly did not measure up to the requirement of the RFP
\ndocument. It was submitted that the petitioner No. 1 being itself not qualified
\nas per the terms of invitiation to bid, was not a fit person to carry the writ
\nof this Court. It was contended that there was delay in the filing of the
\npetition as the contracts were already executed on 13.12.1999. It was submitted
\nthat the loading done which brought the petitioner’s marks to 71.4 as against
\nfull 75 marks given to the respondent No. 3 for evaluating the `Per MW gross
\nout-put EPC cost’ was done on a rational basis and taking into account the
\nopinion of the technical expert Desein Pvt.Ltd., who had also recommended
\nloading of 2 to 3 million dollars in the price quoted by the petitioner in lieu
\nof the supervision, which otherwise would have been been guaranteed if the
\nundertaking of the licensor were given as per the requirement of the RFP
\ndocument as clarified. It was further argued by the learned Senior Counsel that
\nthere was no need to infer that M\/s. Kishore and Shastri appointed as advisor
\nfor commercial and financial evaluation was dropped or that M\/s. Fieldstone
\n(finance arrangers) was brought in picture with a view to favour the respondent
\nNo. 3. Referring to the letter dated 4.12.1998 (at Annexure “D” to the
\nsur-rejoinder of respondents Nos. 1 and 2 – page 899) of appointment of M\/s.
\nKishore and Shastri, the learned Counsel pointed out that Messrs Kishore and
\nShastri were appointed for financial services, legal and tax consultancy and
\npreparation\/negotiation of various project contracts and it was specified
\ntherein that the advisor will assist the respondent No. 1 in commercial and
\nfinancial evaluation of RFP bids for EPC contractor. In response to the
\ncontentions raised by the petitioners during arguments that the financial
\nadvisor M\/s. Kishore and Shastri, who were engaged for a huge fee of Rs. 20
\nlakhs was omitted as at the time when the Management Committee considered the
\nquestion of evaluating the financial package, it was pointed out that this fee
\nincluded advice on tax and legal concerns for all matters related to the
\nproject. They also included payment of legal services required for vetting of
\ndocuments\/ agreements etc. In any event it was submitted that M\/s. Kishore and
\nShastri did not evaluate the financial package and it only analysed RFP
\nrequirements and the nature of financial package offered with
\nexceptions\/deviations. It was submitted that in mere describing, in the analysis
\nmade by M\/s. Kishore and Shastri of the offers of petitioner No. 1 and the
\nrespondent No. 3, there was no opinion expressed and that their financial
\npackages were required to be evaluated on the basis of methodology, which was
\nadvised by the finance arrangers M\/s. Fieldstone to the respondent No. 2. It was
\nsubmitted that there was no question of M\/s. Fieldstone’s substituting any
\nopinion of M\/s. Kishore and Shastri because they did not evaluate the financial
\npackage but only forwarded the methodology, which was required to be adopted in
\nsuch cases. It was argued that it was open for the respondent No. 2 to seek
\nguidance from such experts with a view to evaluate such financial packages. It
\nwas also contended that there was no detailed method indicated for the
\nevaluation of financial packages, declared in the RFP and the expression that
\nthe evaluation will be made on the basis of `prudent financial practices’ left
\nample scope for evaluating the packages on the basis of a rational methodology
\nsuggested by M\/s. Fieldstone, who being Finance Arrangers were well equipped to
\ngive advice in the matter. It was further contended that there were no
\nallegations of malafide initially made in the petition and that the petitioners
\nhave, during the course of arguments, by their further pleadings, expanded the
\nscope of their initial attack. It was submitted that there was no question of
\npegging the project at 160MW with a view to favour the respondent No. 3,
\nbecause, much before the bid of the respondent No. 3 or the petitioner came, the
\ncapacity of the power project was already determined. The clarifications and the
\ndiscussion during presentations which are reflected from the record, clearly
\nshow that nothing was being tailor-made for the purpose of respondent No. 3 and
\nall basic postulates were determined openly and were known to one and all.\n<\/p>\n
6.1 In support of his contentions, the learned Senior Counsel appearing for
\nthe respondents Nos. 1 and 2 relied upon the following decisions of the Supreme
\nCourt.\n<\/p>\n
(1) The decision in Raunaq International Ltd. v. I.V.R Construction Ltd.
\n  and Ors.,<\/a> reported in (1999) 1 SCC 492 was heavily relied upon for its
\n  proposition that any judicial relief at the instance of a party which does not
\n  fulfil the requisite criteria seems to be misplaced. It was contended on the
\n  basis of this proposal that even if the entire thing goes back, it would be
\n  open for the respondent No. 1 to reject the petitioner’s bid on the ground on
\n  which it could have earlier been rejected. The Supreme Court observed that
\n  award of a contract whether it is by a private party or by a public body or
\n  the State is essentially a commercial transaction and in arriving at a
\n  commercial decision, considerations which are of paramount importance are
\n  commercial considerations. It was held that even when the State or a public
\n  body enters into a commercial transaction, considerations which would prevail
\n  in its decision to award the contract to a given party would be the same.
\n  However, because the State or a public body or an agency of the State enters
\n  into such a contract, there could be, in a given case, an element of public
\n  law or public interest involved even in such a commercial transaction. It was
\n  held that when a writ petition is filed challenging the award of a contract by
\n  a public authority or the State, the court must be satisfied that there is
\n  some element of public interest involved in entertaining such a petition and
\n  if the dispute is purely between two tenderers, the court must be very careful
\n  to see whether there is any element of public interest involved in the
\n  litigation. A mere difference in the prices offered by the two tenderers may
\n  or may not be decisive in deciding whether any public interest is involved in
\n  intervening in such a commercial transaction. It was observed that it is
\n  important to bear in mind that by Court intervention, the proposed project may
\n  be considerably delayed thus escalating the cost far more than any saving
\n  which the court would ultimately effect in public money by deciding the
\n  dispute in favour of one or the other tenderer. Therefore, unless the court is
\n  satisfied that there is a substantial amount of public interest or the
\n  transaction is entered into malafide, the Court should not intervene under
\n  Article 226 of the Constitution in a dispute between two rival tenderers. It
\n  was also held that intervention of the Court may ultimately result in delay in
\n  execution of the project. The obvious consequence of such delay is price
\n  escalation. If any re-tender is prescribed, cost of the project can escalate
\n  substantially. What is more important is that ultimately the public would have
\n  to pay a mugh higher price in the form of delay in the commissioning of the
\n  project and the consequent delay in the contemplated public service becoming
\n  available to the public. It was observed that if it is a power project which
\n  is thus delayed, the public may lose substantially because of shortage in
\n  electricity supply and the consequent obstruction in industrial development.
\n  The Supreme Court held that where the decision has been taken bonafide and a
\n  choice has been exercised on legitimate considerations and not arbitrarily,
\n  there is no reason why the court should entertain a petition under Art. 226.
\n  The Supreme Court also held that price may not always be the sole criterion
\n  for awarding a contract and often when an evaluation committee of experts is
\n  appointed to evaluate offers, the expert committee’s special knowledge plays a
\n  decisive role in deciding which is the best of it. The price offered is only
\n  one of the criteria. At times a higher price for a much better quality of work
\n  can be legitimately paid in order to secure proper performance of the contract
\n  and good quality of work, which is as much in public interest as a low price.
\n  It was held that the Court should not substitute its own decision for the
\n  decision of an expert evaluation committee. Moreover, if there is a good
\n  reason why the project should not be undertaken, then the time to object is at
\n  the time when the same is under consideration and before a final decision is
\n  taken to undertake the project. These observations were relied upon to meet
\n  with the argument of the petitioners that the project ought not to have been
\n  pegged at 160MW, as it would not be financially viable in view of the
\n  possibility of additional energy being available in future. The Supreme Court
\n  observed that it was unfortunate that despite repeated observations made by
\n  the Supreme Court in a number of cases, such petitions are being readily
\n  entertained by the High Court without weighing the consequences. It was
\n  pointed out that in the case of Fertilizer Corporation Kamgar Union (Regd.) v.
\n  Union of India,<\/a> (1981) 1 S.C.C 568, an observation was made to the effect that
\n  if the Government acts fairly, though falters in wisdom, the court should not
\n  interfere. The observation of the Supreme Court in Tata Cellular Vs. Union of
\n  India (supra), to the effect that the right to choose cannot be considered as
\n  an arbitrary power, was referred to while reiterating the conclusions reached
\n  by the Supreme Court in that case, which included the holding that the terms
\n  of the invitation to tender cannot be open to judicial scrutiny because the
\n  invitation to tender is in the realm of contract.\n<\/p>\n
(2) Decision in All India State Bank Officers’ Federation and Ors. v. Union
\n  of India and Ors.,<\/a> reported in (1997) 9 SCC 151, was referred to for its
\n  proposition that for an allegation of malafide to succeed, it must be
\n  conclusively shown that influence was wielded over all the members of the
\n  Board who were present at the meeting. Moreover, the person against whom
\n  malafides are alleged must be made a party to the proceedings.\n<\/p>\n
(3) Decision in Ashok Kumar Mishra and Ors. v. Collector, Raipur and Ors.,<\/a>
\n  reported in (1980) 1 SCC 180 was cited for its proposition contained in
\n  paragraph 7 of the judgement that it was well settled that the power of the
\n  High Court under Article 226 of the Constitution to issue an appropriate writ
\n  is discretionary and if the High Court finds that there is no satisfactory
\n  explanation for the inordinate delay, it may reject the petition if it finds
\n  that the issue of writ will lead to public inconvenience and interference with
\n  rights of others.\n<\/p>\n
(4) Decision in Ramana Dayaram Shetty v. The International Airport
\n  Authority of India and Ors.,<\/a> reported in AIR 1979 S.C 1628 was referred to, in
\n  order to point out that where the writ petition was filed by the petitioner
\n  after five months of the acceptance of the tender during which period
\n  considerable expenditure was incurred by the contractor over setting up a
\n  restaurant and the snack bars, it was held that it would now be most
\n  inequitous to set aside the contract.\n<\/p>\n
(5) Decision in State of M.P and Ors. v. Nandlal Jaiswal and Ors.<\/a> reported
\n  in (1986) 4 SCC 566 was relied upon for its proposition that there must be
\n  specific pleadings regarding malafides on the basis of which Court can arrive
\n  at its conclusion. It was also relied upon for its proposition that the
\n  challenge which was late by ten months after the Government took the decision
\n  was rightly not entertained by the High Court under Article 226 of the
\n  Constitution. The Supreme Court held that the power of the High Court to issue
\n  appropriate writ under Article 226 of the Constitution is discretionary and in
\n  the exercise of its discretion, the High Court does not ordinarily assist the
\n  tardy and the indolent or the acquiescent and the lethargic.\n<\/p>\n
7. The learned Senior Counsel appearing for the respondent No. 3 adopted the
\ncontentions which were canvassed by the learned Senior Counsel appearing for the
\nrespondents Nos. 1 and 2 and added that during the presentations it was made
\nclear to everybody that the respondent No. 1 had decided to have a configuration
\nof 2+2+1 i.e. Two Gas Turbines, Two Waste Heat Recovery Boilers and One Steam
\nTurbine. He referred to the clarifications made after the presentation in
\nJanuary, 1999 in this regard. He pointed out that it was all through out
\nmaintained that the project was to be of 160MW and not of any higher capacity.
\nIt was also pointed out from the relevant record that the justification for
\nadopting the configuration of 2+2+1 was recorded in the contemporaneous record
\nand the configuration of 1+1+1 which was earlier referred to alongwith the
\nconfiguration of 2+2+1 in the RFQ published in December, 1998 was given up for a
\nvalid reason. It was submitted that the course of events discloses that there
\nwas an effort to keep the petitioner No. 1 in the reckoning, otherwise bid of
\nthe petitioner No. 1 could have been thrown out as non-responsive on grounds
\nmore than one. It was also contended that since the petitioner No. 1 was not a
\nmanufacturer itself, it could have supplied an appropriate 2+2+1 configuration,
\nbecause, there were many manufacturers of that configuration in the field and
\nnot the respondent No. 3 alone. It was argued that the contention raised by the
\npetitioners that public interest demanded that the capacity of the power project
\nought to have been fixed of 200MW output instead of 160MW, in fact, if
\ncountenanced, would amount to entertaining a challenge against the terms of
\ninvitation to tender, which cannot be done in view of the settled legal
\nposition. It was submitted that ordinarily the respondent No. 1 would not have
\nentertained offerable capacity in excess of 160MW in the configuration, which
\nwas notified, but they were willing to make concession in favour of the
\npetitioner No. 1 that they would evaluate the price based on utilisation of 9
\nlakhs M3\/day and reduced by 2 per cent of the maximum capacity offered. It was
\npointed out that the contention that there was involved a revenue loss of Rs.
\n62.5 crores was raised ignoring the provisions which have bearing on fixation of
\ntariff, fixed costs and variable costs and pay load factor. It was submitted
\nthat the “owner” had correctly evaluated the bids and decided to accept the bid
\nof the respondent No. 3.\n<\/p>\n
7.1 The learned Senior Counsel for the respondent No. 3 relied upon the
\ndecisions, which are already cited on behalf of the respondents Nos. 1 and 2 and
\nalso referred to further following decisions of the Supreme Court.\n<\/p>\n
(1) E.P. Royappa v. State of Tamil Nadu and Anr.<\/a> reported in AIR 1974 SC
\n  555 was referred to in support of the submission that the burden of
\n  establishing malafides is very heavy on the person who alleges it. The Supreme
\n  Court held that the allegations of malafide are often more easily made than
\n  proved, and the very seriousness of such allegations demands proof of a high
\n  order of credibility. It was held that suspicion cannot take the place of
\n  proof.\n<\/p>\n
(2) Delhi Science Forum and Ors. v. Union of India and Anr.<\/a> reported in AIR
\n  1996 S.C. 1356 was relied upon to show that the capping, against which the
\n  objection was raised by the petitioners, could legitimately be done by while
\n  inviting tenders. The Supreme Court noted that the tender documents in
\n  question had clearly stated that the authority was free to restrict the number
\n  of the service areas for which one company can be licensed to provide the
\n  service and therefore, it could not be urged that the decision regarding
\n  capping restricting the award of licence in category “A” and “B” Circles to
\n  one bidder to three was taken with some ulterior motive or purpose, not being
\n  one of the terms specified and prescribed in the tender documents.\n<\/p>\n
(3) G.B. Mahajan and Ors. v. The Jalgaon Municipal Council and Ors.<\/a>
\n  reported in AIR 1991 S.C 1153 was referred to for pointing out that the very
\n  concept of administrative discretion involves a right to choose between more
\n  than one possible course of action upon which there is room for reasonable
\n  people to hold differing opinions as to which is to be preferred. In that
\n  case, the Hon’ble Supreme Court observed that in the context of expanding
\n  exigencies of urban planning, it would be difficult for the Court to say that
\n  a particular policy option was better than another. The contention that the
\n  project was ultra-vires the powers of the Municipal Council did not appeal to
\n  the Supreme Court.\n<\/p>\n
(4) Decision in G.J. Fernandez v. State of Karnataka and Ors.,<\/a> reported in
\n  (1990) 2 SCC 488 (which considered the decision reported in (1990) 2 S.C.C 486
\n  which also was cited) was referred to for its proposition that where the
\n  instrumentalities of the State consistently and bonafide interpreted the
\n  standards prescribed in a particular manner and acted accordingly, the Court
\n  should not interfere and substitute an interpretation which it considers to be
\n  correct.\n<\/p>\n
8. It is difficult to accept the extreme contention of the respondents that
\nthe Court ought not to entertain a petition to go behind the wisdom underlying
\nthe decision to accept a particular bid. It is equally difficult to accept the
\nother extreme suggested on behalf of the petitioners that would make the Court
\nplunge into the forbidden field of merits underlying the contract by examination
\nof the requirements that went into the formation of the terms inviting tenders.
\nThere is a jural postulate of good faith in business relations and undertakings
\nwhich is given effect to by preventing arbitrary exercise of powers by the duty
\nbearer authority in bringing about a contractual transaction with the State.
\nDuties co-relative to rights in personam are imposed upon persons exercising
\ncertain offices or callings in recognition and for the securing of the social
\ninterest in the individual life, especially individual opportunity and
\nindividual conditions of life. Here lies the border between public law and
\nprivate law where vocational obligations cognizable in the ordinary courts of
\nlaw give rise to enforceable individual rights which are rights in personam.
\nWith the rise of the Social Service State, questions have arisen as to contracts
\nby or with incorporated public authorities owning or managing industries or
\nactivities. When such authority is a State within the meaning of Article 12 of
\nthe Constitution, there is a constitutional obligation on it not to act
\narbitrarily and discriminate against a person similarly situated as the favoured
\none. This is the constitutional limit of their authority within which there can
\nbe transactions between public authorities and private persons governed by law
\nas administered in the ordinary Courts – binding them alike in the contractual
\nfield. The public officer and the public authority are in no superior position
\nas such, because, in general, it is presumed that the State operates as a
\nprivate-law person when it carries on an industrial or commercial service or
\nlets property (see Jurisprudence by Roscoe Pound, Vol. V – page 226). Therefore,
\nin the matter of particulars of the contract, such as what is actually required
\nto be done, in what mode it is to be done, with what quality of material, in
\nwhat time frame, subject to what type of supervision, as to what should be the
\nstandards to be observed and innumerable other aspects, which may have a bearing
\non the purposes for which the State authority invites the tenders, the Court
\nwill not ordinarily interfere with them nor require the authority to ask for a
\nparticular thing in a particular manner while inviting tenders. The consensual
\nelement in contract is as much present in the State authorities as in private
\nindividuals in the matter of fixation of the stipulations on the basis of which
\na contract is to be formed. What stipulations the authority should have fixed or
\nought to fix for the purpose underlying the subject contract has a bearing on
\nthe consensual aspect of the contract where the public authority should be free
\nto determine its requirements like any private person. In short, the Court’s
\npower of judicial review does not extend to fixing stipulations of the subject
\nof the contract. It only extends to keeping the public authorities, that are
\n“State” as defined by Article 12, within the limits of their authority to
\nsafeguard the fundamental rights guaranteed by Part-III of the Constitution. If
\nthe Courts were to postulate rules ostensibly related to limitations on
\nadministrative power, but in reality calculated to open the gate into the
\nforbidden field of merits of its exercise, the functions of the Courts would be
\nexceeded. But, when it comes to the matter of exceeding or abusing the authority
\nto bring about a contractual transaction the judicial review is permissible to
\nprevent arbitrariness in the manner in which the public authority functions
\nwhile entering into a contract. That is, in reality, in the realm of judicial
\ncontrol over administrative power of the public authority to bring about a
\ncontractual relationship with a private individual and not an interference into
\nthe stipulations on the basis of which the contract is intended to be made by
\nthe authority. It is more a matter of a legitimate constitutional expectation,
\nthat a public authority i.e. State will adhere to its duty of not denying
\nequality right of persons, enshrined in Article 14 of the Constitution by acting
\nin an arbitrary manner that necessarily would result in an unjustifiable
\ndiscrimination, than a mere legitimate expectation that an obligation will be
\nfulfilled by a private individual.\n<\/p>\n
9. Considerable time was invested in impressing upon the Court that there was
\na design from the very inception, not only by the initial declaration of the
\ncapacity of the power project, but also subsequent clarifications made from time
\nto time to see to it that the respondent No. 3 alone remains in the fray and its
\nbid could be conveniently accepted. The request for proposal was published in
\nFebruary, 1999 (Annexure “A” page 25A to 190). It laid down the proposal
\nrequirements in Part-I. It was clearly indicated in paragraphs 1.1.2 thereof
\nthat the respondent No. 1 had invited pre-qualification bids (RFQ) for EPC
\nContractors for setting up a 160 MW +- 10 per cent (net) at site conditions
\n(mean) Natural Gas Fired Combined Cycle Power Plant at Hazira being built by
\nrespondent No. 1 on Build, Own and Operate (BOO) basis. It was stated that this
\nRFP document was being issued to selected pre-qualified EPC bidders (machinery
\nmanufacturers or consortium having GT manufacturer as consortium partner) for
\nsubmitting their EPC bids for the project. It was specifically stated that the
\nrespondent No. 1 was promoting the 160 MW+- 10 per cent (net) Power project
\npursuant to the Government of Gujarat sanction letter dated 1.12.1998 and
\nGujarat Electricity Board clearance dated 14.12.1998. By communication dated
\n2.1.1999 (annexure-17 of the petitioners’ rejoinder at page 854) addressed to
\nall the bidders by way of clarification on the RFQ document also, it was
\nstipulated that the configuration for generating 160MW+_10% net output at site
\nconditions shall have 2 GTSs with corresponding HRSGs and 1ST for the said 160MW
\npower project. In Part-III of the RFP document dealing with Technical
\nSpecifications it was again stated in paragraph III. 3.1.00 that the scope of
\nthe contract shall be for Engineering Procurement and Construction (EPC) of a
\nhighly reliable most modern `State of the art’ technology based GT Power Plant
\nof proven design having configuration of 2+2+1 i.e. Two Gas Turbines, Two Waste
\nHeat Recovery Boilders and One Steam Turbine, based on natural gas as fuel with
\nnecessary operating flexibility at the proposed site as a base load plant for
\ndelivering net of about 160MW +- 10 per cent continuously at the battery limit
\nof 220KV Switchyard outgoing terminal at mean site conditions. The plant shall
\nbe capable of operating at PLF (i.e. plant load factor) over 90 per cent with
\nefficient use of fuel. Under the head Gas Turbines, in Part III 2.01, it was
\nmentioned that the rating of gas turbines should be selected such that the same,
\nwith steam injection facilities from heat recovery steam generates (HRSG) with
\nsuitable Steam turbine generator (STG) for combined cycle operation, can deliver
\nnet total output of about 160MW +10 per cent. Even in the clarification letter
\ndated 3rd March, 1999, the plant was described as 160 MW Natural Gas based
\nCombined Cycle Plant. In the clarification dated 15.3.1999 made by the
\nrespondent No. 1, it was informed to the bidders that the bidder may quote
\nmaximum possible net guaranteed output based on Guaranteed Station Heat Rate,
\nAuxiliary power consumption and availability of 0.9 MMSCMD (i.e. 9 lakh M3\/day)
\ngas with Net Calorific Value of 8300 Kcal\/SCM (revised Fuel Supply Agreement
\ncondition). Such net guaranteed output figure would be fully taken into
\nconsideration only if it is more than 160MW +- 10 per cent. However, it was made
\nclear that the configuration of 2 GTSs + 2 HRSGs + 1 ST stays as it is. It was
\nspecifically mentioned that `Per MW (gas) cost’ would be evaluated based on such
\nguaranteed output, Station Heat Rate and Auxiliary Power Consumption. In a
\nfurther clarification to this, made on 3rd April, 1999 (Annexure “D” page 204),
\nit was stated that the Gross Capacity offered by the bidder on the basis of 9
\nlakhs M3\/day of gas having Net Calorific Value of 8300 Kcal\/M3 would be based on
\nguaranteed net SHR for field conditions. However, to account for possible
\ndeterioration in machine capacity over a period of time, a 2 per cent reduction
\nin maximum capacity offerable with 9 lakhs M3\/day of gas would be considered.
\nThe SHR to be considered at 70 per cent and 85 per cent of capacity would be
\nbased on the maximum offerable capacity thus reduced by 2 per cent. On this the
\npetitioner wrote a letter to the respondent No. 1 on 1.5.1999 (Annexure – 18 of
\nthe affidavit in rejoinder at page 855), proposing to optimise and offer a plant
\nbased on marginal higher fuel utilisation than specified, say a minimum of 10
\nper cent, in order to give `best value for money to the respondent No. 1. It was
\nstated that the optimum sizing suggested by the petitioner will provide
\n“additional comforts to GSEC\/GSPC in terms of better output and heat rate in the
\ntariff calculations, thus, leading to higher profitability to generating
\ncompany.” To this the respondent No. 1 gave a negative response by its letter
\ndated 3.5.1999 (Annexure “E” to the petition, page 206), stating that: “after
\nexamining various aspects of Fuel Supply Agreement and development plans of GSPC
\nfor its Hazira field, it has been decided that the capacity that may be offered
\nfor the Power Project should be based only upon the availability of 0.9 MMSCMD
\nof Gas having Net Calorific Value of 8300 Kcal\/SCM”. It was once again clarified
\nby the respondent No. 1 in their letter dated 19.7.1999 (Annexure “G” at page\n<\/p>\n
208) under the heading “Capacity”, at Item 5, that any capacity more than
\nofferable at site conditions (with 9 lakh SCM\/day of maximum gas available and
\ncalculated keeping in view the letter of respondent No. 1 dated 3.4.1999 will
\nnot be considered for evaluation. This will be so even if plant offered may have
\na higher capacity with 9 lakh M3\/day Gas or without any restriction on gas
\nquantity at ISO \/ site conditions. The time to submit revised bids was extended
\nupto 12th August, 1999 at the request of the bidders, as stated in the letter
\ndated 27th July, 1999 of the respondent No. 1 at Annexure “H” to the petition
\n(page 211). On 30th July, 1999, the petitioners wrote a letter to the respondent
\nNo. 1 (Annexure “I” to the petition at page 213), in which it was stated at item
\n1.3 under the heading “Recommendations” that; the part load performance should
\nnot be related to the offerable capacity at 0.9 MSCMD utilisation as it leads to
\nimpractical low levels of loading for the 6FA machine and unfair comparative
\nposition with other machines and that the part load performance be related to
\nthe PPA, which can accept the full rated capacity of the plant and is
\nindependent of the rating for gas utilisation of 0.9 MSCMD. The respondent No. 1
\nin its letter dated 4.8.1999 (Annexure “J” to the petition at page 216)
\nreiterated in response to the petitioners’ letter dated 30th July, 1999 that
\nevaluation criteria and loading figures were already communicated to the bidders
\nand that it may be noted that evaluation was linked to offerable capacity. The
\npetitioner thereafter submitted the revised price bid.\n<\/p>\n
9.1 It will thus be seen that from the very inception and much before the
\nqualified bidders could be identified, the capacity of the Power Plant Project
\nwas already fixed at 160 MW +_10 per cent. The petitioners’ attempt to persuade
\nthe respondent No. 1 to raise the offerable capacity of 160 MW did not succeed
\nand though it was stated that the net guaranteed output figure would be fully
\ntaken into consideration even if more than 160MW +_ 10 per cent, it was
\nconsistently maintained by the respondent No. 1 that any capacity more than
\nofferable capacity will not be considered for evaluation whether with or without
\nany restriction on gas quantity of 9 lakh M3\/day. The petitioners entered the
\nfray with open eyes and could not have insisted on raising the offerable
\ncapacity from 160MW +_ 10 per cent to a higher figure of 189MW or thereabout
\nthat its plant was capable of reaching on full utilisation of 9 lakh M3\/day gas.
\nAt that time never was it suggested by the petitioner that the offerable
\ncapacity was pegged at 160MW +_ 10 per cent with a view to favour the respondent
\nNo. 3. The fact that the petitioner knew that there was not going to be any
\nchange in the ceiling of 160MW +_ 10 per cent of the Plant Capacity already
\ndeclared while inviting the bids is clearly borne out from the record including
\nthe correspondence in respect of the financial package offered by the petitioner
\n(see letter dated 22nd April, 1999 at Annexure-13 to the affidavit-in-rejoinder
\nat page 841 with enclosures and letter dated 28.4.1999 of ICICI at Annexure-14
\npage 846 to the petitioners’ subsidiary L&T Finance Ltd.). It would be too
\nfar-fetched to think that the ceiling of the capacity of 160MW was fixed before
\neven the bidders could be ascertained with a view to favour the respondent No.\n<\/p>\n
3. No malafides can be inferred from such initial fixation of the Power Plant
\nCapacity at 160MW +_ 10 per cent. The criteria of 2 per cent reduction in
\nmaximum capacity on full utilisation of 9 lakh M3\/day gas and the calorific heat
\nvalue of 8300 Kcal were also laid down much before the giving of the bids and
\nthe petitioner No. 1 entered the competition knowing them full well and having
\nfailed to persuade the respondent No. 1 to accept its suggestions to the
\ncontrary. Neither fixation of the plant capacity at 160MW, nor incorporation of
\nthe stipulation regarding reduction of 2 per cent of the maximum capacity
\noffered or taking the heat value of the gas at 8300 Kcal could be said to have
\nbeen tailor-made to suit any particular bidder in March and April, 1999 when the
\nbids were not yet received and the dates for which were from time to time
\nextended upto 12th August, 1999.\n<\/p>\n
10. The petitioners contention that its plant of the capacity 189 MW +_ 10
\nper cent would have been more cost effective necessarily leads to an elaborate
\nstatistical and technical exercise which would exert even those who are experts
\nin the field. The rival tenderers have given their own reasons for the opposite
\nstands that they take on the issue. On the petitioners’ part a deliberate loss
\nof revenue to the tune of Rs. 62.5 crores which could have been earned on the
\nbasis of a higher output on the optimum use of the fuel and its upper marginal
\nadditional possible swing under the FSA (Fuel Supply Agreement) due to an
\nadditional 33MW of electricity is alleged (see paragraph 13 (vii) of the
\npetitioners’ rejoinder) as a ground reflecting malafides or in any case
\narbitrariness in the decision making process; on the respondents’ part this is
\ndisputed by contending that the statistical demonstration of the petitioners is
\ndeceptive and ignores several factors such as the additional capital outlay of
\nRs. 82 crores, the guaranteed minimum gas supply and offtake of 80 per cent of 9
\nlakh SCM3\/day on annualised basis and recurring additional costs, of fuel to the
\ntune of 31.32 crores, operation, maintenance, additional financing etc. The
\noutput of the 160MW +_10 per cent plant of respondent No. 3 was 156MW per 7.7
\nlakhs M3 SCM\/day as against the projected higher capacity offered by the
\npetitioner No. 1 of 189 MW on the basis of the 9 lakh M3\/day, which means there
\nwas to be additional 1.3 lakh CM3\/day gas consumption cost of which could not
\nhave been ignored. The petitioners had contended in paragraph 3.3 of the
\npetition (page 12 to 13) that “the plant offered by the petitioners would
\ngenerate additional 127 million units per annum, which will generate
\napproximately Rs. 32 crores per annum additional revenue to the respondent Nos.
\n1 and 2” and jacked up the figures in their affidavit-in-rejoinder (paragraph 13\n<\/p>\n
(vii) at page 560) by alleging that the annual loss of revenue of the
\nrespondents Nos. 1 and 2 was of 62.5 crores (approx.) In paragraph 3.2 of the
\npetition they had referred to loss of 62.5 crores per year in additional
\nbusiness in the context of the higher capacity of 207MW attainable on use of
\nquantity of gas higher than the available 9 lakh M3\/day because in future there
\nwas possibility of availability of more gas. Eminent Counsel appearing for both
\nthe sides groping with the statistics, not so vital, presumably prepared by
\nbehind the screen experts aiding them in their arguments had a tug of war over
\nthe question of the alleged revenue loss to the respondents Nos. 1 and 2. Both
\nsides dexterously demonstrated expertise in engineering economics of gas turbane
\nPower Plant Project with opposite results. Such detailed exercise by the Court
\nof assessing the pros and cons of different combinations of capacity, payload
\nfactor, operational costs, yield cost ratio etc. having bearing on financial
\nviability of a plant configuration cannot be undertaken and in absence of any
\ndefinite ground pointing at irrationality smacking of malafides or total
\narbitrariness, no inference can be drawn merely from a comparison of two
\ndifferent outcomes of a deal differing in the returns on investments.\n<\/p>\n
10.1 The contention raised in the rejoinder by the petitioner at page 560
\nthat there would be revenue loss of 62.5 crores on the basis of loss of power
\noutput at 80 per cent of plant load factor appears to be an exercise in
\noversimplification. It seems to ignore the statutory shackles of terms,
\nconditions and tariff for sale of electricity by generating company contained in
\nSec. 43A of the Electricity (Supply) Act, 1948, which admittedly would apply to
\nthis project. As provided by Section 43A, the tariff for the sale of
\nelectricity by a generating company to the Electricity Board shall be determined
\nin accordance with the norms regarding operation and plant load factor as may be
\nlaid down by the Authority and in accordance with the rates of depreciation and
\nreasonable return and such other factors as may be determined, from time to
\ntime, by the Central Government, by notification in the official Gazette. Under
\nSection 22 of the Electricity Regulatory Commissions Act, 1998, the State
\nCommissioner has power to determine the tariff for electricity, wholesale, bulk,
\ngrid, or retail in the manner provided in Section 29. It is also empowered under
\nClause (c) of Section 22(1) to regulate power purchase including the price at
\nwhich the power shall be procured from generating companies. The State Advisory
\nCommittee constituted under Section 24, advises the Commissioner on major policy
\nquestions, energy supply and overall standards of performance by utilities.
\nSection 29(1) of the Act provides that notwithstanding anything contained in any
\nother law, the tariff for supply of electricity, grid, wholesale, bulk or
\nretail, as the case may be, in a State shall be subject to the provisions of the
\nsaid Electricity Regulatory Commission Act and the tariff shall be determined by
\nthe State Commission in accordance with the provisions of that Act. The
\ngenerating companies are obliged to adopt such principles in order that they may
\nearn an adequate return and at the same time they do not exploit their dominant
\nposition in the generation, sale of electricity or its inter-State transmission.
\nThere are financial principles and their applications contained in Schedule VI
\nto the Electricity (Supply) Act, 1998, which are to be kept in mind for fixation
\nof tariff. By Notification dated 30th March, 1992, issued under Section 43A
\nof the Electricity (Supply) Act, the Central Government determined the factors
\nin accordance with which the tariff for sale of electricity by Generating
\nCompanies to Electricity Board shall be determined. The two part tariff for sale
\nof electricity from Thermal Power Generating Stations, including gas and naptha
\nbased Stations, is provided consisting of annual fixed charges and energy
\n(variable) charges. The first part of annual fixed charges covers (a) interest
\non loan capital; (b) depreciation, operation and maintenance expenses (excluding
\nfuel); (c) taxes on income reckoned as expenses; (d) return on equity and (e)
\ninterest on working capital at a normative level of generation. The second part
\nof energy (variable) charges covers fuel cost recoverable for each unit
\n(Kilowatts hours) of the energy supplied on the basis of the norms prescribed in
\npara 1.1 of that notification. Norms of operation and plant load as laid down by
\nthe authority are subject to modifications if any under Section 43A. These
\nrefer to plant load factor during stabilisation at 4500 hrs. \/KW\/year and for
\nsubsequent period 6000 hrs.\/KW\/year, Station Heat Rate for gas based stations,
\nAuxiliary consumption, and Stabilisation period which is 90 days for Combined
\nCycle Gas\/Naptha based Station. Clause (e) of para 1.5 relating to the method of
\ncomputing annual fixed charges lays down that Return on equity shall be computed
\non the paid up and subscribed capital relatable to the generating unit, and
\nshall be 16 per cent of such capital. Full fixed charges shall be recoverable at
\ngeneration level of 6000 hours\/KW\/year (which is 68.5 per cent of the total
\nhours in a year and therefore, known as 68.5 per cent plant load factor). It is
\nspecifically provided in para 1.6 that “there shall not be any payment for fixed
\ncharges for generation level above 6000 hours\/KW\/year i.e. above 68.5 per cent
\nof plant load factor. Only additional incentive not exceeding 0.7 per cent of
\npaid up and subscribed capital was to be given for each per centage point
\nincrease of Plant Load Factor above the normal level of 6000 hours\/KW\/year i.e.
\n68.5 per cent of PLF.\n<\/p>\n
10.2 The above narration is made just to indicate that a host of factors go
\ninto the economic aspect of the returns from the power generation and that these
\nare statutorily regulated. It will therefore be too naive to accept the
\noversimplified approach of the petitioners raised for the first time in the
\nrejoinder wailing over huge revenue loss worked out (at page 560) on an
\nassumption of 80 per cent plant load factor and other assumptions which may not
\nbe in reality warranted. In fact such dabbling of an outsider into estimating
\nthe possible revenue returns of a generating company that is shackled by several
\nterms and conditions for fixation of tariff and has to keep in view 16 per cent
\nreturn on equity is not permissible at the instance of the petitioners or of its
\nown by the Court while examining whether there has been arbitrary denial of
\ncontract to the petitioner. No such exercise is at all warranted for a sort of
\n`post-mortem’ of the decision fixing the requirement for tenders. Fixing the
\nplant capacity of a Generating Company which regulated by statutory provisions
\nas to tariff is no one else business. The analysis of reasons that led to fixing
\nthe plant capacity required for the project is in no way Courts’ concern. It is
\nnot for the Court to study whether the project was viable and then to infer
\narbitrariness or malafides. The decision making process with which the Court is
\nconcerned for ruling out arbitrariness or malafide exercise of power is the
\nprocess of deciding whom to award the contract and not any anterior process of
\ndeciding as to what should be the requirements for inviting tenders. In short
\nthe Court cannot in a petition of this nature ask the State authority “why do
\nyou install a 160MW project, why not 200MW?” That has nothing to do with the
\ndecision making process in the matter of award of contract, which starts only
\nafter the tenders are invited. The cardinal principle that the terms of the
\ninvitation to tender are not open to judicial scrutiny in the realm of contract,
\nis laid down by the apex Court in Tata Cellular and Ronaq International (supra).
\nAs noted above, the decision to have 160 MW Combined Cycle Plant was conceived
\nin the middle of 1998 and the sanction of the State Government was given on
\n1.12.1998 as can be seen from the communication of the State Government at
\nAnnexure “A” to the affidavit-in-reply of the respondents Nos. 1 and 2 (page\n<\/p>\n
298). The RFQ published in December, 1998 also mentioned the project as 160MW
\nProject. It is stated that ninteen persons showed interest, eleven submitted
\ndocuments and seven were pre-qualified. In the clarification of 2.1.1999
\n(Annexure – 17 of Sur-rejoinder of respondents Nos. 1 and 2 – page 854), it was
\nmade clear to everyone that the respondent No. 1 had decided to have
\nconfiguration of 2+2+1 for their 160MW Power Project. In the management
\npresentation held on 4.1.1999 (minutes at Annexure “C” to the Sur-rejoinder of
\nrespondents Nos. 1 and 2 at page 895), it was stated that the GSPC had obtained
\nfor 2GTs, 2HRSGs and 1ST configuration and that the capacity of 160MW, which was
\ndeclared will not be changed. In the meeting of Board of Directors held on
\n18.1.1999 (minutes at Annexure “N” to the affidavit-in-rejoinder of respondents
\nNos. 1 and 2 at page 938), the rationale for going for 2GTs + 2 HRSGs + 1 ST
\nconfiguration was explained. The RFP document published in February, 1999
\nclearly mentioned that the power project was to be of 160MW and the
\nconfiguration to be 2+2+1. These then were clearly the terms of invitation to
\ntender and therefore not subject to judicial review. Even in the letter of
\n1.5.1999 which is Annexure “18” to the petitioner’s rejoinder at page 855, the
\npetitioner had rightly shown 160MW natural gas based Power Project at Hazira in
\nthe communication. The petitioner clearly knew the capacity of the proposed
\nproject and responded to the invitation to tender on that footing.\n<\/p>\n
10.3 The Courts are not concerned with the wisdom or desirability of the
\nterms on which a party is willing to contract. The Courts will not reconstitute
\nor renegotiate the terms of contract. At the stage of negotiation of the terms
\nof the proposed contract, there is everything to be said for allowing the
\nparties to formulate the terms and conditions as per their respective
\ncontractual intentions. The parties are free to determine for themselves what
\nprimary obligations they will accept. The preliminary negotiations leading upto
\nthe execution of a contract are to be distinguished from the contract itself.
\nThere is no meeting of minds of the parties while they are merely negotiating as
\nto the terms of an agreement to be entered into. To be final, the agreement must
\nextend to all the terms which the parties intend to introduce.\n<\/p>\n
10.4 If in the decision making process of entering into a contract by the
\nState there is element of arbitrariness that results in violation of fundamental
\nrights guaranteed by Article 14 of the Constitution, then the power of judicial
\nreview would extend to correcting it. It would however not extend to requiring
\nthe “State” to enter into a particular type of contract or to vary the subject
\nof the contract. When offer is invited by the offeree, it is the offeree who
\nsets the parameters of the offer and the offeror cannot dictate as to what the
\nofferee should seek. The offeror has no choice in fixing the requirements of the
\nofferee. A fortiori, the Court cannot exercise its jurisdiction to confer such
\nchoice on him and tune the requirements of the contract to suit the offeror’s
\ncapacity and will. Those would be the elements that go into the constitution of
\na contractual relationship and will have no bearing on the aspect of
\narbitrariness in a decision making process by which contract is entered into.
\nThe arbitrariness that can justify Court’s interference in award of contract by
\n“State” is not the arbitrariness in determining the requirements for which the
\noffer is invited but the one that results in discrimination against the offeror
\nwho fulfils the requirements with a valid offer, by bypassing him for no valid
\nreason whatsoever. It is such pre-contractual situation that would make the
\ndecision to award a contract prone to challenge. Such arbitrary award of
\ncontract is bad not because of its terms but because of the manner in which it
\nhas resulted in violation of the fundamental right of a person bidding for it or
\ndue to violation of the statutory, including procedural requirements laid down
\nfor the purpose. There again, if evidence is required to be led the matter ought
\nnot to be summarily adjudicated on affidavits in exercise of the writ
\njurisdiction of the High Court. Thus, the petitioner cannot insist that the
\nrequirement in the invitation to offer should have been for a gas turbine
\ngenerator of capacity of 200MW and that the respondent No. 1 should not have
\npegged it down to 160MW capacity or that the basis of Calorific Value of gas
\nought to have been 8300 Kcal instead of 8600 Kcal or that no back up guarantee
\nof the GE i.e. the licensor, in respect of the gas turbine which were to be
\nsupplied by the licensee Hitachi or a letter supporting the back-up guarantee of
\nthe licensee should have been insisted upon by the respondent No. 1. In the
\nmatter of what the State wants for in a contract, the Court should hardly have
\nany say. Fixing these requirements for calling offers for a contract was a
\nunilateral exercise of the entity calling the offers and the offerer was not in
\npicture at all at that stage. The petitioners therefore, cannot complain of
\narbitrariness against fixing of these requirements for which the offers were
\ninvited. The guarantee against arbitrariness under Article 14 is not intended to
\nobliterate the essential elements of a contract and convert all contracts by
\nStates into a purely statutory relationship.\n<\/p>\n
10.5 Merely because one bidder who has ultimately satisfied all the tender
\nconditions remains, because other bids are not found to be acceptable due to
\nnon-compliance with the terms of invitation to tender, it would not warrant an
\ninference that a single bid situation is created to suit the bidder who alone
\nhas answered the terms. The question of bias in favour of the lone bidder who
\nhas qualified, can arise only if any other bidder was wrongly disqualified
\ndespite his having satisfied all the conditions. The question whether conditions
\nwere satisfied for qualifying as a bidder would depend upon objective facts
\nrelatable to the requirements laid down in the conditions prescribed for the
\npurpose while inviting the tenders.\n<\/p>\n
10.6 There have been broad based expert committees that had examined all the
\nfacets of the deal involving a scores of high ranking officials of the public
\nauthorities and expert bodies and it will be too much to assume that they all
\nacted in concert to favour the respondent No. 3 and disfavour petitioner No. 1
\nforming sort of an unlawful assembly to do such acts that may verge on
\ncriminality. The contemporaneous record in form of expert reports, evaluation
\nand the reasoned decisions of the Management Committee of respondent No. 2 and
\nof the Board of Directors of the respondent No. 1 rules out any deliberate
\ndesign either from inception or during the consideration of the bids to show any
\nundue favour to the respondent No. 3 at the cost of the petitioner. The decision
\ntaken cannot be branded as one which no person in his normal sense would ever
\ntake. Mere variation in assessments without anything more would not justify a
\nconclusion of arbitrariness or legal malafides.\n<\/p>\n
11. It was contended that the financial package offered by the respondent No.
\n3 was non-committal and should have therefore been treated as non-responsive
\nwith zero mark. However, this aspect was deliberately ignored to favour the
\nrespondent No. 3. Financial package was a proposal requirement covered by item
\n1.1.1.2 of the RFP document. It was mentioned therein that the respondent No. 1
\nrequired contractor’s plan (including strategy and approach) for securing
\nsuppliers’ credit, support or any other form of Financial Assistance and
\ncommitment for the equipment and the terms and conditions of the same. The
\nresponse was to be given by the bidders using the format of Ex. PR-C. As stated
\nin the Evaluation Criteria Para 1.5.1 of the RFP document, for the Financial
\nPackage, the Financial Assistance can be offered by way of suppliers’ credit or
\nin any other form. The bidders were required to mention the quantum offered,
\nRates, Credit enhancement required and any other terms and conditions. It was
\nstated that the FP would be evaluated considering the currency, rate of
\ninterest, credit enhancement costs and other costs arising due to the terms and
\nconditions. The lowest evaluated cost contractor would be given highest marks
\nand others proportionately lower marks. It was specifically made clear that the
\nFinancial Package offered may or may not be availed of by the respondent No. 1.
\nIn the event of respondent No. 1 not opting for the Financial Package offered by
\nthe bidders, the marks indicated for the Financial Package were to be
\nreallocated. If the respondent No. 1 availed of the Financial Package offered,
\nthe rates and terms and conditions quoted in the RFP were to be binding on the
\nbidders. In the Ex-PR-C proforma of “Financial Package offered”, the
\ncontractor’s organisation plan to secure suppliers credit\/any form of financial
\nassistance, source, repayment profile (its tenor, instalments and moratorium),
\nrate, currency, details of credit enhancement required and other terms and
\nconditions, major covenants were required to be stated. In the clarification
\ndated 3.3.1999 (at Annexure “B” to the petition page 191 at page 195) of the
\nRFP, a detailed evalution criteria was enclosed and it was to form an integral
\npart of the RFP document as stated therein. Accordingly, fifteen marks were
\nearmarked for evaluation of the Financial Package offered. The relevant para of
\nEvaluation of Financial Package around which the arguments centered, reads as
\nunder:-\n<\/p>\n
*”- Where the bidders offer a financial package for 50 per cent or less of
\n  the value of its bid, such a financial package will be considered non
\n  responsive and no marks will be awarded under this category.\n<\/p>\n
*- In the event the bidders offer a Financial package for more than 50 per
\n  cent but however, does not fund value of the entire EPC Bid offered, the
\n  evaluation of the NPV for the portion not offered will be evaluated based on
\n  the following assumptions.                     –       Currency         : Rupee\n<\/p>\n
                    –       Tenor            : 9 years\n<\/p>\n
                    –       Interest         : 18% (All inclusive)\n<\/p>\n
                    –       Repayment        – Quarterly instalment’s
\n                                               after a moratorium
\n                                               of six months.\n<\/p>\n
*- Terms and conditions and covenants stipulated for availing of the
\n  financial package must adhere to those offered under prudent financial
\n  practices. The security package available under the project will be offered on
\n  pari passu basis to all lenders – whether part of this bid or mobilised
\n  separately by GSPCL. Where in the opinion of GSPCL the financial package
\n  stipulates norms not in line with the prudent financial practices, such a
\n  financial package will be considered non responsive and no marks will be
\n  awarded under this category.\n<\/p>\n
*- Present value of the outflow towards debt will be computed using 12% as
\n  a discount factor.”\n<\/p>\n
11.1 By its letter dated 18.8.1999, the petitioner submitted revised price
\nbids and enclosed Financial Package offered (PRC-of RFP) “based on current
\nmarket conditions”. This was in form of a letter dated July 24, 1999 from L
\n& T Finance Ltd. addressed to the respondent No. 1. It was, inter-alia,
\nstated therein as under:-\n<\/p>\n
 “The lenders would appraise the project and perform due diligence
\n  on the final terms and documents on award of the EPC contract to Larsen &
\n  Toubro and on their satisfaction the loan will be disbursed.”\n<\/p>\n
This means the FP offered depended upon the appraisal of the project by the
\ntenders and their diligence on the final terms and documents. It is only when
\nthe tenderers were satisfied that the loan would be disbursed. Therefore, the
\nbidder did not give a firm commitment but left it to the satisfaction of the
\ntenderer L & T Finance Ltd., who offered the Financial Package under the
\ncontractors plan for securing the financial assistance. There was no commitment
\nthat the funds would flow merely on the basis of this package offered in the
\nFinancier’s letter. In fact in the very nature of things such a Financial
\npackage would be only indicative reflecting how the contractor intended to plan
\nthe Financial Assistance and would not be a firm offer that could be accepted
\nstraightway without any further negotiations. The Financial Package offered by
\nthe petitioner was in view of the above stipulation not a firm commitment on the
\npetitioners part to procure funds on the lines indicated and the matter was
\nclearly left to the lender’s discretion. Equally so was with the Financial
\nPackage offered by respondent No. 3 which was described as indicative terms of
\nfinancing subject to technical feasibility and financial viability of the
\nproject and all approvals and satisfactory completion of the lender’s due
\ndiligence and internal credit approval as mentioned in the lender ICICI’s letter
\ndated 28.4.1999 addressed to respondent No. 3 in response to their letter of
\n22.4.1999. It is significant to note that even the petitioner had through L
\n& T Finance Ltd. approached for the financial package to the same ICICI as
\nstated in its affidavit-in-rejoinder (page 546), which secured letter of the
\nICICI as per Annexure 14 (page 846) also dated 28.4.1999, which also clearly
\nstated that indicative terms would be subject to technical feasibility and
\nfinancial viability of the project being established and GSEG obtaining all
\napprovals and satisfactory completion of the lenders (ICICI’s) due diligence and
\ninternal credit approvals. It was also mentioned that the quotes were indicative
\nand were being provided on a non-exclusive basis. In the annexure to that letter
\n(page 847) it was stated that the terms and conditions were valid for three
\nmonths from the date of the letter and this was a stipulation identical to the
\nstipulation contained in the letter of ICICI of even date addressed to the
\nrespondent No. 3 as reflected in M\/s. Kishore and Shastri’s letter dated 31st
\nAugust, 1999 (page 911). Thus, in the financial packages offered by both the
\npetitioner and the respondent No. 3, the terms were indicative and only the
\nability and readiness of the financer to arrange a financial package was
\ndisplayed as a part of the contractors’ organisation plan to arrange for a
\nfinancial assistance and there was no question of making a firm offer of actual
\nfunds which could be accepted without anything more and bind the parties into a
\nfinancial contract. In fact, there was no “offer” of actual finance at all from
\nthe prospective lenders in the strict sense of the word, in either case, which
\ncould straightway be accepted without any more.\n<\/p>\n
11.2 In the evalution criteria mentioned in the RFP document (Annexure “A”)
\nunder the sub-head “Assumptions of Evaluation” (page 52), it was provided that
\nthe bidders were required to mention the quantum offer, rates, credit
\nenhancement required and any other terms and conditions. Rival contentions were
\ncanvassed on the assumptions for evaluation contained in sub-paragraph (2) of
\nparagragh 1.5.1. having bearing on the evaluation criteria of the financial
\npackage for the project and therefore, the same is reproduced hereinbelow:-
\n “2. Bidders are invited to offer Financial Package for the
\n  Project. Financial Assistance can be offered by way of Suppliers Credit or in
\n  any other form. The bidders are required to mention the Quantum offered,
\n  Rates, Credit enhancement required and any other terms and conditions. The
\n  financial package would be evaluated, considering the currency, rate of
\n  interest credit enhancement costs and other costs arising due to the terms and
\n  conditions. The lowest evaluated cost Contractor would be given highest marks
\n  and other Contractors would be given proportionately lower marks. Bidders may
\n  also indicate the time frame for arranging the financing package. It may be
\n  noted that the Financial Package offered may or may not be availed by GSPCL.
\n  In the event GSPCL does not opt for the financial package offered by the
\n  bidders then the marks indicated for the financial package will be
\n  reallocated. In the event GSPCL avails the Financial Package offered the rates
\n  and terms and conditions quoted in the RFP would be binding on the
\nbidders.”\n<\/p>\n
Thus, while it was open for the respondents Nos. 1 and 2 not to opt for the
\nFinancial Package, if it was availed then the rates and terms and conditions
\nquoted in the RFP were to be binding on the bidders. This means that rates and
\nterms which were offered in the Financial Package in PR-C regarding
\nquantum\/repayment profile\/rate\/currency would bind the bidder, meaning thereby,
\nif there was any deviation the bidder would be liable to reimburse the
\nrespondent Nos. 1 and 2. The contractor’s organisational plan to secure
\nsupplier’s credit\/financial assistance was to be documented (see PR-C page 56).
\nIt was therefore rightly contended that in the owner’s view nothing turned upon
\nthe description of the Financial Package offered by the petitioner No. 1 as
\n“firm Financial Package” by M\/s. Kishore and Shastri Consultants (P.) Ltd. in
\nthe accompaniment to its letter dated 31st August, 1999 at Annexure “F” to the
\nsur-rejoinder of the respondents Nos. 1 and 2, (page 905). It will be noted that
\nthe said letter only purported to forward bidders quotes\/deviations vis-a-vis
\nthe RFP requirement, and was not an evaluation of the Financial Package. The
\ncontention that M\/s. Kishore and Shastri was dropped to bring in M\/s. Fieldstone
\nto evaluate the Financial Package is erroneous, because, M\/s. Fieldstone only
\nfurnished the methodology for assessment to the respondent No. 1 and did not
\nitself evaluate. A bare reading of the evaluation criteria annexed to the
\nclarification dated 3.3.1999 at Annexure “B” to the petition shows that it did
\nnot lay down any detailed method of evaluation of the terms of the Financial
\nPackage, but only provided that the terms and conditions and covenants for
\navailing of the financial package must adhere to those offered under prudent
\nfinancial practices. It was also provided that where in the opinion of GSPCL the
\nfinancial package stipulates norms not in line with the prudent financial
\npractices, such a financial package will be considered non-responsive and no
\nmarks will be awarded under this category (see Annexure “B” to the petition at
\npage 195). Reliance on behalf of the petitioner on the net present value as the
\nmethod indicated in the evaluation criteria is misconceived because in the
\ncontext in which net present value is referred to, it was to be applied to the
\nportion of financial package not offered which was not the case here. Reference
\nto present value of the outflow towards debt which was to be computed using 12
\nper cent as a discount factor was also not the method laid down for evaluating
\nall the aspects of the financial package since it referred only to the present
\nvalue of outflow towards debt. The paramount consideration was that the terms
\nand conditions and covenants stipulated for availing of the financial package
\nmust adhere to those offered under prudent financial practices which were not
\nelaborated. There were also stipulations in the clarification of 15.3.1999
\n(Annexure “C” to the petition) to the following effect:-\n<\/p>\n
“3. In case the financial package being offered by the bidder involves
\n  floating and fixed interest rates, floating rates would be converted to fixed
\n  rate and cost of swap would be built in as a cash outflow, for the purpose of
\n  evaluation.\n<\/p>\n
4. In case financial package offered by the bidders involves lease
\n  financing, evaluation would be based on the actual cash out-flow for the
\n  owners, based on lease rentals and tax implications if any.”\n<\/p>\n
11.3 The respondent No. 1 was therefore, justified in inquiring about the
\nmethodology of evaluation of the Financial Packages from M\/s. Fieldstone who
\nwere experts in the field being finance arrangers. Their communication at
\nAnnexure “H” to the sur-rejoinder of respondents Nos. 1 and 2 at page 913 to
\n916, shows that they only forwarded to these respondents, their recommended
\nmethodology for evaluating different financial packages submitted by EPC bidders
\nin connection with GSEG’s combined cycle power project. The methodology takes
\ncare of the relevant aspects including the Power Purchase Agreement, which
\nprovides a tariff on a cost plus 16 per cent return on equity at 68.5 per cent
\nplant load factor with incentives at higher plant load factor. The two-part
\ntariff formula typical to the power projects was to be kept in mind alongwith
\nthe Government of India guidelines which are referred. It was stated that in any
\ntwo financing packages for different type and capacity of equipment where cash
\nflows are positive on a year to year basis in a two power tariff project, the
\nonly way to compare them would be based on return on equity. It was opined that
\nthe only way one can evaluate different EPC offers with financing will be to
\nevaluate the effect the financing package will have on the common denominator,
\nwhich was return on equity. Thus, it is not as if M\/s. Fieldstone had themselves
\nevaluated the financial packages. They only indicated the method of evaluation
\nto the `owner’ who on that basis evaluated the financial packages of the rival
\nbidders. Therefore, the contention that evaluation made by M\/s. Kishore and
\nShastri was substituted by the evaluation by M\/s. Fieldstone to favour the
\nrespondent No. 3 has no basis whatsoever. It was open for the respondent No. 2
\nto evaluate the financial packages on the Return on Equity\/Equity IRR basis
\nwhich they have done as is evident from the evaluation of these Financial
\nPackages done by the Managing Committee of the respondent No. 2 (minutes at
\nAnnexure “O” to the sur-rejoinder of respondents Nos. 1 and 2 at page 940) and
\nthe decision of the Board of Directors dated 9.9.1999 at Annexure “M” to the
\naffidavit-in-reply of respondents Nos. 1 and 2 (at page 429), by which the
\nevaluation made by the Managing Committee was approved.\n<\/p>\n
11.4 The real issue however was as to the terms and conditions of the
\nfinancial package in Ex. PR-C offered by the respective bidders. The relevant
\nterms and conditions of Financial Packages offered by the petitioner Company and
\nthe respondent No. 3, which were binding on these bidders, are as under:-\n<\/p>\n
Petitioner No. 1’s Financial Package:\n<\/p>\n
Document Contractor’s organization plan to secure supplier’s credit\/any
\n  form of Financial assistance.       Source                           :       Indian Banks<\/p>\n
      Quantum of Finance Offered       :       Upto 55 Crores<\/p>\n
      Repayment Profile<\/p>\n
             *       Tenor             :       7 Years
\n             *       Instalments       :       Quarterly
\n             *       Moratorium        :       Till capitalisation<\/p>\n
                     Rate              :       16.75 PTPM<\/p>\n
                     Currency          :       INR<\/p>\n
Financial Package Offered:\n<\/p>\n
Document contractor’s organisation plan to secure supplier’s credit \/ any
\n  form of Financial assisstance.\n<\/p>\n
       Source                          :       Indian Banks\/FIs etc. \n      \n       Quantum of Finance Offered      :       Upto 500 Crores\n                                               comprising of Rupee term\n                                               loan Secured Redeemable\n                                               Non convertible\n                                               Debentures and Government\n                                               Guaranteed Bonds.\n   \n\nRepayment Profile        \n             *       Tenor             :       7 Years\n             *       Instalments       :       Quarterly\n             *       Moratorium        :       2 years. \n      \n                     Rate              :       Weighted  average  coupon\n                                               rate  of  14.5  per  cent\n                                               (exclusive   of  interest\n                                               tax) payable semi-annually.\n\n                                                     \n                     Currency          :       INR.\n      \n      \n      \n      xxx               xxx              xxxx\n      \n      xxx               xxx              xxxx\n   \n\n<\/pre>\n
Major covenants will be as applicable to project finance deals of this
\n  nature and will be decided mutually at the time of financial
\nclosure.”\n<\/p>\n
Respondent No. 3’s Financial Package:\n<\/p>\n
      Source Offshore:<\/p>\n<\/blockquote>\n
             (1) ECA Facility (Swiss ERG)       ANZ Bank or others\n             (2) Commercial Facility            ANZ Bank or others\n      \n             Onshore :\n      \n             (3) Commercial Facility            ICICI or others\n             (4) Deferred Payment Guarantee\n                 (\"DPG\") for offshore \n                 facilities)                    ICICI or others\n      \n      Quantum of Finance Offered:\n      \n             (1)       MUS $ 51 (plus IDC and 85% ECA premium)\n             (2)       MUS $ 9 (plus IDC and 15% ECA premium)\n             (3)       MUS $ 40 in INR.\n      \n      Repayment Profile:\n      \n             * Tenor             :  (1)       14 years\n                                    (2)       8 years\n                                    (3)       10 years\n      \n             * Instalments          (1)       24 semi-annually\n                                    (2)       11 semi-annually\n                                    (3)       32 quarterly\n      \n             * Moratorium (from financial close) (1) 2 years\n                                             (2) 2.5 years\n                                             (3) 2 years\n      \n      Rate:\n             (1)       45 bp (margin)\n             (2)       175 bp (margin)\n             (3)       350 bp (margin)\n      \n      Currency:\n      \n             (1)       US$ or CHF\n             (2)       US$ or CHF\n             (3)       INR \n   \n\nDetails of credit Enhancement Required:\n   \n\n<\/pre>\n
(1) Swiss ERG guarantee, and from IFIs\/Indian banks acceptable to ERG and
\n  lender.\n<\/p>\n
(2) DPG from IFIs\/Indian banks acceptable to lender.\n<\/p>\n
(3) Securities in the project company acceptable to lender and further
\n  securities to be determined.\n<\/p>\n
Terms and Conditions, Major Covenants:\n<\/p>\n
The above terms and conditions are indicative. They do not constitute any
\n  commitment for any ABB company or the above parties to arrange financing to
\n  the above terms and conditions.”\n<\/p>\n
11.5 According to the petitioners, the respondent No. 1 had deliberately
\nconstrued the tenor of the Financial Package supplied by the petitioner so as to
\nexclude two years’ moratorium period which was required to be added to the tenor
\nof 7 years during which the instalments were to be paid for repayment. It was
\nargued that the tenor was infact of nine years because the moratorium period of
\ntwo years was required to be added to the tenor of seven years.\n<\/p>\n
11.6 The word “tenor” in the context in which it is used in the PR-C under
\nthe heading “Repayment Profile” would mean the settled course of the whole
\nrepayment profile and not just the period of instalments for repayment. The
\nsettled course of repayment profile would include both the period covered by the
\ninstalments as well as the initial moratorium period. Moratorium would be the
\nlegal authorisation to the debtor to postpone the repayment, or the total period
\nof such postponement. The period of moratorium will necessarily fall within the
\nperiod for which the financial assistance will stand good and usually be the
\ninitial part of the total period during which the debt is scheduled to be
\nrepaid. The tenor of repayment profile was indicated in the RFP document
\n(Annexure “A” at page 195) to be nine years as a method of evaluation of NPV in
\nthe context of the portion not offered in the offer of Financial Package. The
\nrepayment profile in that context was indicated to be nine years, quarterly
\ninstalments after a moratorium of six months. Both instalments and moratorium
\nare indicated under the sub-heading `Repayment Profile’. That method of dealing
\nwith the portion not offered could, however, not be taken as the basis for
\ncomparision of the offers made by these bidders, as was initially sought to be
\nsuggested during the arguments on behalf of the petitioners. In their case there
\nwas required to be made comparison on the basis of method of evaluation which
\nwas equity IRR. In the form of Financial Package offered under the head
\n`Repayment Profile’ three things were to be stated namely tenor, instalments and
\nmoratorium. This would mean tenor of repayment profile which would be the total
\nperiod of time by which the repayment has to be made for satisfying the debt,
\ninstalments for such repayment, and the moratorium during the period in which
\ndebt is to be repaid. Moratorium by its very nature would fall within the tenor
\nof the repayment profile. Non-payment of debt during the agreed period of
\nmoratorium is also a part of `Repayment Profile’ which in the context would mean
\nthe course agreed for making repayment of debt. The two termini of duration of
\nfinancial assistance i.e. incurring of debt and its discharge by repayment would
\nconstitute the period within which the number of instalments agreed and the
\nperiod of deferring repayment would both fall. Thus, if the tenor of repayment
\nprofile is seven years with moratorium of two years, it means that the debt is
\nto be discharged within seven years from the date when it was incurred within
\nwhich period the agreed moratorium of two years would fall and after which the
\ninstalments will commence so as to repay the debt fully on the expiry of seven
\nyears from the date when it is incurred. This would mean that the instalments
\nwere to be for five years. The Financial Package of the petitioner at Annexure
\n“I” to the affidavit-in-reply of respondents Nos. 1 and 2 (at page 323) is
\ncapable of this interpretation adopted by the respondents Nos. 1 and 2 and
\ntherefore, it cannot be said that it has been deliberately misunderstood or that
\nthe tenor of the petitioner’s repayment profile should have been taken to be
\nnine years and not seven years. The tenor of repayment profile of the Financial
\nPackage of the respondent No. 3 was 14 years 8 years and 10 years for the three
\ntypes of finances offered with respective moratorium from financial close, of 2,
\n2.5 and 3 years and respective instalments – 24 semi-annual, 11 semi-annual and
\n32 quarterly. Therefore, the period of repayment profile in the plan of
\nfinancial package offered by the respondent No. 3 which had average tenor of
\nmore than ten years was found to be prudent and acceptable as borne out from the
\nfollowing minutes of the meeting of the Managing Committee held on 4.9.1999
\nunder the head of `Evaluation criteria for award of 15 marks for `Financial
\npackage offered’. The shorter tenor of 7 years of the petitioners’ offer was
\nconsidered not prudent as it would cause low cash flow resulting in very low
\ndebt service coverage ratio which itself would render financing not feasible.
\nThe offer of financing made by the petitioner was found to result in an equity
\nIRR of above 10.42 per cent as against the higher equity IRR of 17.47 per cent
\nfrom the offer of financial package made by the respondent No. 3.\n<\/p>\n
Excerpts from the Minutes.\n<\/p>\n
“The evaluation criteria awards 15 marks for financial package offer.\n<\/p>\n
(i) The financing package offered by the bidders were discussed at legnth.
\n  M.D informed that BSES consortium did not provide any financing package with
\n  their revised bid but sent a separate letter after the bid opening date. It
\n  was decided that their offer, therefore, cannot be considered.\n<\/p>\n
(ii) RFP provided for adjustments to be made in the financing offered such
\n  as correcting the figures for the exchange rate on the date of bid opening,
\n  adjusting for additional financing when the financing offered was less than
\n  100 per cent of the EPC price. Letter dated 3.3.99 to bidders, which is a part
\n  of the RFP also indicated that the financing should flow prudent financial
\n  practices for financing power projects. The RFP and subsequent clarifications,
\n  however, did not clearly lay down the criteria that will be used in evaluating
\n  different financing offers. The committee accepted M\/s. Fieldstone’s
\n  recommendations that Return on Equity to be the criteria that should be used
\n  in evaluating the financing package. It was also the general consensus of the
\n  Committee that any equity investor should consider primarily Return to the
\n  investors as the relevant criteria.\n<\/p>\n
The specifics of the financing package offered by L&T and ABB were
\n  discussed in the light of foregoing L&T’s financing had a tenor of Seven
\n  years and ABB’s average tenor was more than ten years. The PPA allows for
\n  recovery of capital or principal payment of loans through depreciation, which
\n  was about 7.98 per cent per year. Any financing that had short tenor such as
\n  L&T’s would tend to reduce the Return on Equity. Also financing tenor of 7
\n  years will cause low cash flow resulting in very low debt service coverage
\n  ratio which itself will render financing not feasible.\n<\/p>\n
The indicative calculations, prepared in house on the basis of common
\n  assumptions, confirmed the foregoing and showed that L&T’s offer of
\n  financing will result in an equity IRR of about 10.42 per cent and that of ABB
\n  in an equity IRR 17.47 per cent.\n<\/p>\n
Moreover, it had been laid down that where in the opinion of GSPCL the
\n  financing package stipulates norms not in line with the prudent financial
\n  practices, such a financing package will be considered non-responsive and no
\n  marks will be awarded under this category.\n<\/p>\n
The committee deliberated the issue at length and in view of:\n<\/p>\n
(i) Cash flow problems,(ii) Poor Return on Equity,<\/p>\n
in case of financing package of L&T, decided to allocate Zero marks to
\n  L&T’s offer. ABB’s financing package was given 15 marks.”\n<\/p>\n
This evaluation was accepted by the Board of Directors on 9.9.1999 (Annexure
\n“M” to the affidavit-in-reply at page 429) after considering financial packages
\noffered by different bidders and a detailed discussion of various terms and
\nconditions and the methodology recommended by Messrs Fieldstone for adopting IRR
\non equity to be the main criteria for evaluation.\n<\/p>\n
11.7 Variation in the tenor of repayment profile in the components of
\ninstalments for repayment fixed and moratorium would have a direct financial
\nimplication on the cost of the project and consideration of this factor and the
\nreturn to the investor on equity criteria while judging the bids would be
\nperfectly germane to a decision on acceptance of a financial package. There is
\ntherefore, no element of arbitrariness on this count nor can it be inferred that
\nany special favour was shown on this count to the respondent No. 3, whose tenor
\nof Repayment Profile was found to be comparatively more beneficial on the
\nrelevant IRR on equity criteria as per the prudent financial practices, so as to
\nearn 15 marks as per the stipulations contained in clarifications dated 3.3.1999
\n(page 195), by which it was provided that “where in the opinion of GSPCL the
\nfinancial package stipulation norms are not in line with the prudent financial
\npractices such a financial package will be considered non-responsive and no
\nmarks will be awarded under this category.” It would be hazardous for the court
\nto venture into any detailed inquiry as to why GSPCL found the financial package
\nof the petitioner to be not in consonance with the prudent financial practices.
\nThere is no indication from the stand taken by GSPCL on the basis of the type of
\nfinancial packages offered by the petitioner No. 1 and the respondent No. 3 that
\nit came to a conclusion so very arbitrary as no person, with the normal prudence
\nexpected in such field, would have reached unless he acted with a pre-determined
\nmind to oust the petitioner and favour the respondent No. 3. It is therefore,
\ndifficult to question the impugned decision awarding 15 marks to the respondent
\nNo. 3 and zero to the petitioner for the Financial Package offered.\n<\/p>\n
12. The award of 75 marks to the respondent No. 3 for the lowest `Per MW
\n(gross output) EPC cost’ and the corresponding inverse proportion of 71.4 marks
\nawarded to the petitioner was assailed on the grounds, that the 2 per cent
\nreduction in the capacity offered by the petitioner which was 189 MW was not
\njustified, because no such reduction was made in case of the 156 MW capacity
\noffered by the respondent No. 3, on the basis of depreciation graphs of
\nunrecoverable degradation of turbines which warranted similar reduction; that
\nthe offer of the petitioner being on “turn-key” basis there was no justification
\nto load the price quoted by the petitioner; and finally, that there was no valid
\nreason for the Management Committee to load the quoted price of the petitioner
\nby 2 million U.S dollars on the spacious ground of non-production of a back-up
\nguarantee from the licensor GE when no licensor in his senses would ever offer
\nsuch guarantee for the turbines manufactured by the licensee here Hitachi.\n<\/p>\n
12.1 Weightage of 75 marks was fixed in the evaluation criteria declared, in
\nthe clarification dated 3.3.1999 at Annexure “B” to the petition – (page 192 to\n<\/p>\n
194), which formed integral part of the RFP document for “Per MW (gross output)
\nEPC Cost” determined. The per MW (gross) evaluated cost was to be worked out by
\n“loading” the quoted prices with the cost of missing items and further by a
\nfactor as indicated in the table, for increase in heat rate (average of heat
\nrate at 85 per cent and 70 per cent) and auxiliary power consumption. Such
\nevaluated per MW (gross) cost was to be worked out for all the bids. The lowest
\nbid was to be awarded 75 marks and other bids were to be awarded marks in the
\ninverse proportion of bid price to lowest bid price multiplied by 75.\n<\/p>\n
12.2 On 7.1.1999, the respondent No. 1 appointed Desein Pvt. Ltd. as their
\nconsultants by letter at Annexure “E” of the sur-rejoinder of respondents Nos. 1
\nand 2 (page 901), for a detailed technical review and evaluation of the EPC bids
\nfor the compliance with the specified technical aspects and carrying out
\ndetailed technical analysis of the bids and evaluate them based on technical
\nconsiderations. The bid evaluations were to be submitted by Desein with
\nconclusions and recommendations to the Respondent No. 1 for final decision and
\nthe bid evaluation document was to remain as a permanent record of the basis for
\nprocurement decision. At the instance of the petitioners the respondents Nos. 1
\nand 2 placed on record certain documents which included the technical evaluation
\ndone by Desein and award of marks out of total possible 75 marks. The report was
\nforwarded to the respondent No. 1 by Desein under its letter dated 30.8.1999.
\nThe report refers to seven pre-qualified EPC bidders and to the fact that the
\nbids were received from three international\/domestic EPC contractors namely ABB,
\nL&T – Sumitomo-Hitachi and BSESBHEL Ansaldo. As regards the petitioner, it
\nwas observed in paragraph 4.9 of the report that “the L&T consortium does
\nnot have all the three partners as direct members of the consortium. This aspect
\nneeds to be further examined legally by GSPC”. In para 4.10 of the report it was
\nnoted qua the petitioner that the back-up guarantee was not satisfactory. It was
\nnoted that RFP had required that in case gas turbine manufacturer is a licensee,
\nthe GT manufacturer must obtain a back-up guarantee from the licensor in respect
\nof guarantees and availability of spare-parts. It was further noted qua the
\npetitioner that: “In respect of L&T consortium, Hitachi claims to be
\nco-developer with GE. However, the same is not borne out by GE letter as it
\nstates that “Frame 6FA Licence Agreement grants Hitachi, the right to
\nmanufacture the entire gas turbine”. The GE letter does not specifically
\nguarantee the machine performance. This is borne out from GE’s letter dated
\n21.7.1999 which is at annexure “N” to the petition (at page 240). It was
\nobserved that `L&T consortium strictly does not fulfil RFP requirement’. It
\nwas further noted that probably GE has to place supervisory personnel at
\nlicensee’s works at a considerable cost to enable them to issue the requisite
\nguarantee. Such charges, according to Desein could be of the order of two to
\nthree million U.S. dollars; although no evaluation was done on this count. All
\nthe three bids were evaluated by Desein to arrive at evaluated cost and loading
\non account of technical item loading, auxiliary power consumption and station
\nheat rate averaged at 85 per cent and 70 per cent and the results were annexed
\nat annexure-I of the report. Desein concluded that on the basis of evaluation
\ncriteria the bid of respondent No. 3 was evaluated and awarded 75 marks and the
\npetitioner was awarded 73.86 marks (The third bidder BSES was given 62.26
\nmarks). From the comparative statement of bids at Annexure-I of the report it is
\nclear that the total cost\/MW (gross) of the petitioner’s bid was higher and that
\nof the respondent No. 3 was the lowest meriting it 75 marks. In the note below
\nit was explained how loading was done in the prices quoted by these three
\nbidders. Therefore, an independent expert had evaluated the bid of the
\nrespondent No. 3 as the lowest and awarded 75 marks. There is absolutely no
\nvalid reason for the court to question this evaluation.\n<\/p>\n
12.3 This report was considered by the Fourth Management Committee of
\nDirectors of the company in detail in paragraphs (i) to (vi) as can be seen from
\nits minutes of the meeting held on 4.9.1999 at Annexure “O” to the sur-rejoinder
\nof the respondents Nos. 1 and 2 (at page 940). The report was found to be in
\norder and the Committee therefore decided to accept it. A representative of
\nDesein Pvt. Ltd. was present during the meeting as recorded in the minutes. The
\nManagement Committee so assisted by the presence of the expert, applied its mind
\nto the factors relevant to loading the price quoted by the bidders including the
\npetitioner. The following excerpt from the minutes at annexure “N” to the
\nsur-rejoinder of the respondents Nos. 1 and 2 at pages 941 to 953 shows the
\ndecision taken by the Committee, for accepting the recommendations as submitted
\nby the technical advisor Desein Pvt. Ltd. and of further loading the
\npetitioner’s bid by US dollars 2 million on the basis of the estimated cost due
\nto non-availability of the GE’s back-up guarantee which would entail cost that
\nmay have to be incurred over supervisory specialists at manufacturer’s work and
\nother related costs, resulting in the further reduction of marks of the
\npetitioner from 73.86 to 71.41 on the basis of the formula which was
\npre-determined for evaluation (see Annexure “B” to the petition at page 192 to
\npage 194).\n<\/p>\n
Excerpt from the Minutes <\/p>\n
” (v) L & T quoted prices are stated to be envisaged on a split
\n  contract structure to optimise works contract tax implication. The exact split
\n  of “off shore” supplies and “on shore” erection and other service contract
\n  between rupee contracts for supplies and services is provisional and will be
\n  advised by L&T during negotiation. This may lead to higher incidence of
\n  Excise and Sales Tax if `on shore’ supplies portion increases. Further, the
\n  price schedule indicated that in the event of foreign currency component
\n  actually incurred and invoiced is lower than the quoted amount, the balance
\n  amount shall be paid in equivalent rupees at exchange rates prevailing at the
\n  time of invoicing. Such a stipulation cannaot be acceptable to GSEC.\n<\/p>\n
Works contract tax on civil works, withholding tax on foreign services and
\n  local sales tax on HRSG (being offered on lease) boiler do not appear to be
\n  included and are loaded as shown in M\/s. Desein’s evaluation.\n<\/p>\n
(vi) The evaluated per MW cost, was arrived at by loading quoted cost by
\n  missing items, mentioned above, and considering offered output with 9 lac
\n  cubic meters\/day gas and derated by 2 per cent to account for deterioration of
\n  SHR as per criteria already laid down. This was further loaded with
\n  differential “auxiliary power” and “heat rate” loading. The technical
\n  evaluation has awarded maximum 75 marks to the “lowest evaluated per MW cost”
\n  bid. Other bids are marked in inverse proportion of their “evaluated per MW
\n  cost”. Thus, ABB gets 75 marks, L&T – Sumitomo & BSES-BHEL-Ansaldo get
\n  73.86 and 62.26 marks respectively as shown in Recommendation report of M\/s.
\n  Desein. This report was found to be in order and hence, committee decided to
\n  accept it.\n<\/p>\n
RFP had required that in case of manufacturer being a licensee, the
\n  licensee should submit a back up guarantee from original manufacturer licensor
\n  in respect of performance guarantees and supply of spares. A format was also
\n  furnished to bidders. Hitachi had stated that for frame 6FA they are
\n  co-developers of GE. Subseaquent GE clarification letter furnished by Hitachi
\n  states that gas turbine(s) will be built pursuant to existing license or
\n  manufacturing associate agreement. Under the agreement, Hitachi, is granted
\n  the right to manufacture entire gas turbine. The letter further states that GE
\n  provides Hitachi with technical information on numerous gas turbine models as
\n  well as technical support during manufacture, if required, including visits by
\n  GEPS engineering and technical specialists to Hitachi Ltd.’s factories. The
\n  aforesaid GE letter makes it clear that Hitachi is indeed a licensee of GE.
\n  And GE’s back-up guarantees come with posting of supervisory specialists at
\n  manufacturer’s works at cost and may involve some other costs. Desein has
\n  estimated cost of such effort at the level of USD 2 to 3 million although they
\n  have not considered the same in evaluation. The Committee deliberated on the
\n  issue and decided to load L&T offer further by USD 2 million. Similarly in
\n  case of BSES also the arrangement offered is not satisfactory as brought out
\n  in para 4.10 of Desein’s Report. Hence, Committee decided to load BSES bid
\n  also by the same amount of USD 2 million.”\n<\/p>\n
12.4 The resolutions passed by the Management Committee at its meeting held
\non 4.9.1999 were ratified by the Board of Directors on 9.9.1999. The Board was
\nassisted by the representative of Desein Pvt. Ltd., who apprised the Board about
\nvarious technical aspects of their report and about deviations taken by the
\nbidders and the manner in which these were dealt with by the company. The
\nimportance of back-up guarantee of licensor was discussed and the Board was of
\nthe opinion that such a guarantee was absolutely necessary in view of recent
\nexperiences in the State. The Board approved the comprehensive evaluation done
\nby the Directors Committee at its meeting on 4th September, 1999 and the
\nselection of the respondent No. 3 as lowest evaluated bidder and passed the
\nimpugned resolution.\n<\/p>\n
12.5 It will thus be seen that the decision making process involved
\nevaluation by the expert (Desein Pvt.Ltd.) who made its report entitled
\n“Technical Bid recommendation against RFP for selection of EPC contractor”. The
\nbasis for such evaluation was debated at the meetings of the Management
\nCommittee and the Board and loading of price quoted by bidders was done for
\nreasons noted in the relevant record. The decision appears to be well informed,
\ntaken after proper consideration of the relevant material and for justifications
\ngiven by interaction of several responsible persons. No extraneous factor that
\ncan vitiate such decision is discernible. It cannot be said, on a close scrutiny
\nof the decision making process, that the impugned decision is such as no
\nreasonable person would take.\n<\/p>\n
12.6 The next contention raised on behalf of the petitioners was that the
\nderating of the output offered by the petitioner company alone at 189MW by 2 per
\ncent was not warranted because it was based on deterioration of the
\nconfiguration unit which would be common to all machines and was not a unique
\nflaw of the petitioners’ offer. It was argued that increased fuel input would
\nnot add to the output in any significant way when the level of degradation
\nreaches its lowest and makes the efficiency `unrecoverable’ as per the graphs of
\ndepreciation of such machines. To this the Counsel for the respondents argued
\nthat this derating of 2 per cent was linked with the use of 9 lakh CM3\/day of
\nfuel for the capacity offered by the petitioner. It was contended that the
\nrespondent Nos.3’s configuration with output of 156MW would not have consumed
\nthe entire available 9 lakh CM3\/day and would have worked on 7.7 lakh CM3\/day,
\nleaving scope for maintaining the output when the depreciation sets in on the
\nbasis of the scope of using the remaining fuel upto 9 lakh CM3\/day.\n<\/p>\n
12.7 There was an animated debate over the issue whether when the machines
\nwear out to an `unrecoverable’ level would it be possible to improve their
\nperformance by injecting more fuel. The Counsel for the petitioner would say
\n`No’ and remind us of an old battered engine of a car not putting in any
\nadditional speed or mileage by pouring in more petrol while the respondents’
\nCounsel would say `Yes’ because it was so thought while stipulating the derating
\nof 2 per cent and even relying upon a part of the report of Professor Kale (who
\nwas engaged by the petitioners on 15.1.2000 as per his report at Annexure 12
\n(page 836) of the petitioners’ affidavit-in-rejoinder, to opine amidst the
\ncontroversy already started by way of this petition), dealing with the ability
\nof a gas turbine to pass additional fuel and make-up for fall over a period of
\ntime in which he could not with an intellectual honesty presumed of an
\nacademician, dispute that “The only method for making-up the power output of the
\nturbine is to increase the gas (i.e. air and fuel) flow rate through it.”
\nHowever though in answer to his engagement he did finally conclude that “the
\nloss or reduction capacity due to degradation over time cannot be made up by
\nadditional fuel”, he left the trail of sound theory in the process of forming
\nhis opinion as under:-\n<\/p>\n
 “The power output of a turbine is the product of the mass flow
\n  rate of gases passing through it and the available enthalpy drop. With
\n  degradation, the temperature of exhaust gases leaving the turbine increases
\n  and the available enthalpy drop across the turbine decreases. The only method
\n  for making-up the power output of the turbine is to increase the gas (i.e. air
\n  and fuel) flow rate through it. For reasons cited above, the only possibility
\n  for realizing this objective is to increase the fuel flow rate. Usually, the
\n  fuel mass flow rate is a fraction of the air mass flow rate.”\n<\/p>\n
Prof. Kale, however, for reaching his conclusion resorted to the reasoning
\nthat “the required increase in mass flow rate through the gas turbine, is
\nhowever, much greater and it will not be possible to make up for the short-fall
\nin power output and that firing additional fuel has a serious limitation, namely
\nincreased heat release rate in the combustor which will increase the TIT (mass
\nflow rate of air is unaltered).\n<\/p>\n
12.8 We cannot get entangled in a technical debate of this sort by pretending
\nto understand the engineering nuances nor should we remember that a car with an
\nold engine would consume more fuel than before for covering the same distance.
\nMercifully, there is a stipulation initially incorporated, long before the
\ndispute peeped out of the horizon, that would steer us through without having to
\ntest the opinions of experts on a point that they alone are presumed to
\nunderstand. The stipulation having bearing on reduction of 2 per cent of the
\nmaximum capacity when offered on the basis of use of the entire 9 lakh CM3\/day
\nof gas with net Calorific Value of 8300 K.cal\/SCM (which was as per the revised
\nFuel Supply Agreement condition (See Annexure “I” of respondents’ sur-rejoinder
\ndated 2.2.2000), clearly had figured in the clarification to the RFP document
\nthat was made on 3rd April, 1999 as per annexure “D” to the petition (page 204)
\nin context of the earlier clarification dated 15.3.1999 at Annexure “C” to the
\npetition (page 202). It was provided therein that the gross capacity offered by
\nthe bidder on the basis of 9 lakh M3\/day of gas having net calorific value of
\n8300 K.cal\/CM3 would be calculated based on guaranteed net SHR for field
\nconditions. However, to account for possible deterioration in machine capacity
\nover a period of time, a 2 per cent reduction in maximum capacity offerable with
\n9 lakh M3\/day of gas would be considered. This would form the basis of the SHR
\nto be considered at 70 per cent and 85 per cent of capacity. The earlier
\nclarification dated 15.3.1999 (page 202) while permitting the bidder to quote
\nmaximum possible net guaranteed output based on guaranteed Station Heat Rate,
\nAuxiliary Power Consumption and availability of 0.9 MMSCMD i.e. 9 lakh K.cal
\nM3\/day gas with net calorific value of 8300 cal\/SCM made it clear that per MW
\n(gross) cost would be evaluated based on the guaranteed output, SHR and
\nauxiliary power consumption. The petitioner’s proposal dated 1st May, 1999 (at
\nAnnexure 18 of its rejoinder at page 855) to optimise the plant capacity on fuel
\nutilisation marginally higher than 9 lakh M3\/day was turned down by the
\nrespondent No. 1 by its letter dated 3.5.1999 at Annexure “E” (page 206), in
\nwhich the petitioner was informed that after examining various aspects of Fuel
\nSupply Agreement and development plans of GSPC for its Hazira field, it had been
\ndecided that the capacity that may be offered for the power project should be
\nbased only upon the availability of 0.9 MMSCMD of gas being Net Calorific Value
\nof 8300 K.Cal\/SCM as clarified in the letter dated 15th March, 1999. The
\npetitioner cannot challenge the above terms of invitation to tender by
\ncontending that the criteria of evaluation which envisaged reduction of 2 per
\ncent of the maximum capacity offered on the basis of the use of 9 lakh CM3\/day
\nshould not have been applied in the case of the petitioner who offered 189.870MW
\ncapacity with the use of 9 lakh CM3\/day gas. The maximum capacity offered by the
\npetitioner 189MW was therefore, reduced by 2 per cent to 186.070 as recorded in
\nthe table at Annexure “I” of Desein’s report as “offered capacity after 2 per
\ncent deterioration due to SHR”, in accordance with the stipulated terms and the
\npetitioners cannot make any valid grievance on this count.\n<\/p>\n
12.9 The justification for loading the price quoted by the petitioner on the
\nground of non-inclusion of Works contract tax, Withholding tax and local Sales
\ntax is reflected from Desein’s report as under”:-\n<\/p>\n
“4.12 xxx xxx xxx . In respect of L&T the works contract tax on civil
\n  works, withholding tax on foreign services and local sales tax on HRSG do not
\n  appear to be included. The offer is therefore, loaded on that account as shown
\n  in Annexure I.”\n<\/p>\n
“NOTE:\n<\/p>\n
* Prices quoted by L&T are envisaged on a split contract structure with
\n  a view to optimize works contract tax implication. The exact split of offshore
\n  supplies and onshore erection and other service contract between rupee
\n  contracts for supplies and services is provisional and will be advised during
\n  negotiation. The custom duty charges, though payable in Indian rupees, are
\n  shown in foreign currency. Further, the price schedule indicate that in the
\n  event of foreign currency components actually incurred and invoiced is lower
\n  than the quoted amount, the balance amount shall be paid in equivalent rupees
\n  at exchange rantes prevailing at the time of invoicing. Works contract tax is
\n  loaded at the rate of 2 per cent of civil works cost estimated at 50 per cent
\n  of on shore erection and other services quoted price of Rs. 538.92 million.
\n  Withholding tax applicable is 15 per cent in US and UK and 20 per cent in
\n  Japan. HRSG is offered on lease and local sales tax is loaded at the rate of
\n  10 per cent on indicated price of Rs. 550 million.\n<\/p>\n
* Loading due to increase in heat rate has been calculated at the rate of
\n  Rs. 36000\/Kcal\/MW over averaged differential heat rate at 85 per cent and 70
\n  per cent of offerable capacity.\n<\/p>\n
* Loading due to increase in Auxiliary Consumption has been calculated at
\n  the rate of Rs. 1.80 lakhs\/KW\/MW of installed capacity over averaged
\n  differential auxiliary power consumption at 85 per cent and 70 per
\ncent.”\n<\/p>\n
12.10 As noted above, this evaluation made by Desein as reflected into its
\nreport was considered and approved by the Management Committee as recorded in
\nits minutes of the meeting held on 4th September, 1999 at Annexure “O” to the
\nSur-rejoinder of the respondents (page 940). The petitioner company has
\ntherefore, miserably failed in its challenge against the award of 75 marks to
\nthe respondent No. 3, and in its claim to get marks higher than 71.46 awarded to
\nit after further loading of estimated cost of US dollars 2 million due to lack
\nof availability of the back-up guarantee of the licensor GE as required by the
\nterms of invitation to tender.\n<\/p>\n
13. The learned Senior Counsel appearing for the petitioners questioned the
\njustification for reduction of one mark from 5 marks allotted for “Quality of
\nProposal and background”, on the ground that the manufacturer was not part of
\nconsortium. It was argued that no licensor would be ready to become part of the
\nlicensee manufacturers transactions. It was too much to expect the licensor GE
\nto become member of the consortium and the letter of GE dated 21.7.1999 (at page\n<\/p>\n
240) was accepted good enough and satisfactory because the revised price bid of
\nthe petitioner was opened after the petitioner had submitted the letter
\nalongwith its bid on 18.8.1999.\n<\/p>\n
13.1 The RFP document (page 196) required that manufacturer should be part of
\nthe consortium and that the bid not conforming to this requirement will be
\ntreated as non-responsive and will be rejected. In the clarification dated
\n15.3.1999 (page 202), it was in para 2 laid down that in case the gas Turbine
\nmanufacturer included as a consortium member, is a licensee, then undertaking
\nfrom the licensor confirming its back-up guarantee for successful performance of
\nGas Turbine Combined Cycle Power Plant alongwith associated auxiliary equipment
\nand availability of spare parts should also be provided. The letter of the
\nrespondent No. 1 dated 19.7.1999 (at page 208 without annexures and also at page
\n327 to 424 with annexures), furnished the format of such guarantee at Annexure
\nVII to that letter (at page 423). The letter of GE dated 21.7.1999 profferred by
\nthe petitioner at Annexure “N” (page 240) was nothing short of a mockery of this
\nterm of invitation to tender. There is not a word in that letter which can
\nconstitute an undertaking of the licensor in support of the licensee
\nmanufacturers back-up guarantee in respect of the project in question. The
\nDesein in its Evaluation Report dated 30.8.1999 referred in para 2.6 to the fact
\nthat RFP required GT machinery manufacturer to be part of the consortium bidding
\nfor the project and recorded in para 2.8 that the bidders were asked for the
\nback-up guarantee from the licensor in respect of guarantees and availability of
\nspare parts observing in para 4.9 in respect of the petitioner’s consortium that
\nthe original consortium comprised L&T Sumitomo and later Hitachi as GT
\nmanufacturer joined hands with Sumitomo to become consortium member through
\nSomitomo. It was observed that the L & T (i.e. petitioner’s) consortium did
\nnot have all the three partners as direct members of the consortium.\n<\/p>\n
13.2 The Management Committee which met on 4.9.1999 deleberate on this issue
\nassisted by the representatives of M\/s. Desein who explained their report in
\ndetail as recorded in the minutes, and held that the arrangement did not exactly
\nfulfil the RFP criteria in respect of consortium arrangement and it therefore,
\ndecided that one mark be deducted in case of the petitioner on this count from
\nthe total of 5 (awardable under head “Quality of Proposal & Back-up
\nguarantee”) as recorded in the minutes at Annexure “O” (page 940) in clause\n<\/p>\n
(iv). This evaluation was confirmed by the Board as reflected in its minutes
\n(Annexure “M” page 429) after discussing the importance of back-up guarantee of
\nlicensors and being of the opinion that such guarantee was absolutely necessary.
\nThus, the deduction of 1 mark under the head “Quality of proposal” on the basis
\nof the terms of invitation to tender cannot be said to be unjustified, arbitrary
\nor calculated to favour the respondent No. 3.\n<\/p>\n
13.3 Back-up guarantee was required from the manufacturer of gas turbines. A
\nlicensee of manufacturer manufactures on the basis of the licence granted by the
\noriginal manufacturer and if such license is cancelled he cannot lawfully
\ncontinue the manufacture of the product. Therefore, the requirement that back-up
\nguarantee of the original manufacturer be obtained by its licensee cannot be
\nsaid to be an arbitrary requirement calculated to favour the respondent No. 3.
\nThis requirement was in fact diluted by allowing back-up guarantee of the
\nlicensee manufacturer to be supported by an undertaking of the licensor
\nconfirming its back-up guarantee for successful performance of Gas Turbine
\nCombined Cycle Plant alongwith associated auxiliary equipment and availability
\nof spare parts. The letter dated 21.7.1999 of GE (page 240) did not provide the
\nneeded assurance. The contention that because the bid was not rejected earlier
\non the ground of non-production of the letter of GE as stipulated in the
\ncommunication of 19.7.1999 and the price bid of the petitioner was opened, it
\nshould be assumed that the condition was dispensed with, is mis-conceived. Can
\nit be contended from the mere fact that price bid was opened that the earlier
\nrequirement of letter from the licensor was dispensed with? The price bids of
\nbidders were to be opened in presence of bidders who chose to remain present on
\na given day. The position after the meeting on 15\/16.7.1999 as summarised at
\nitem 2 of Annexure “I” to the letter dated 19.7.1999 (Annexure “J” collectively
\nat pages 327 and 335 to 336) in context of the requirement of back-up guarantee
\nwas that the consortium of Sumitomo\/Hitachi will furnish letter from GE
\nspecifying arrangement between GE and Hitachi with regard to manufacture of the
\ngas turbine (Frame 6FA). It was stipulated that unless this letter clearly
\nestablishes that the requirement of performance back-up guarantee of
\nlicensor\/principal can be dispensed with, the same will have to be produced, as
\nmentioned in para 4 of the covering letter dated 19.7.1999. It was also stated
\nthat the consortium agreement between Sumitomo-Hitachi on one hand as against
\ntriparte agreement will be subject to the owner’s approval. Then comes clause\n<\/p>\n
(iv) on which reliance was placed to contend that opening of the price bid
\nshould be construed as acceptance of the GE’s letter and in any event the
\nrequirement should be taken to have been waived. This clause reads that “Price
\nbid will be opened only after receipt of above for the bidder”. It is obvious
\nthat the contention is raised in desperation and cannot be countenanced.
\nPhysical opening of the price bid cannot be attributed with an efficacy of
\nwaiver of all preceding requirements. By opening of the revised price bid the
\nquestion of evaluation of the Quality of proposal for which 5 marks were to be
\nallocated and which required manufacturer to be a member of the consortium did
\nnot evaporate. No conscious decision of waiver of this requirement was at all
\ntaken at the intermittant stage of opening of the bid. The petitioner put forth
\nGE’s letter dated 21.7.1999 (page 240) before the price bid was opened. There is
\nnothing to show that any decision over the validity of that letter was taken by
\nthe “owner” or that it was in any manner decided to waive the important basic
\nrequirement. The state of formal rejection of a bid comes at the end and
\ncontinued consideration till the end will not imply intermittent irreversible
\napproval of the matters under consideration or implied waiver of basic
\nconditions specifically required to be fulfilled by the bidder.\n<\/p>\n
14. In view of what has been stated hereinabove, there is absolutely no
\nwarrant for interfering with the impugned decision taken by the respondents Nos.
\n1 and 2 for awarding the contract to the respondent No. 3. The petition is
\ntherefore, rejected. Notice is discharged with no order as to costs. Interim
\nrelief stands vacated.\n<\/p>\n
At this stage, a request has been made on behalf of the petitioners that the
\ninterim relief in form of status-quo which has been operating till today may be
\nextended for two weeks. This request cannot be countenanced having regard to the
\nfacts and circumstances of the case and keeping in view the ratio of the
\ndecision of the Hon’ble Supreme Court in Ronaq International
\n(supra).<\/p>\n","protected":false},"excerpt":{"rendered":"
Gujarat High Court Larsen And Toubro Limited vs Gujarat State Petroleum … on 7 February, 2000 Equivalent citations: (2000) 2 GLR 1814 Author: R Abichandani Bench: R Abichandani JUDGMENT R.K. Abichandani, J. 1. The petitioner company challenges the decision of the respondent No. 2 in awarding Engineering, Procurement and Construction contract for natural gas fired […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-156074","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"\nLarsen And Toubro Limited vs Gujarat State Petroleum ... on 7 February, 2000 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Larsen And Toubro Limited vs Gujarat State Petroleum ... on 7 February, 2000 - Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000\" \/>\n<meta property=\"og:site_name\" content=\"Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalindiaCom\/\" \/>\n<meta property=\"article:published_time\" content=\"2000-02-06T18:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-01-03T05:20:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"512\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Legal India Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@legaliadmin\" \/>\n<meta name=\"twitter:site\" content=\"@Legal_india\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Legal India Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"123 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000\"},\"author\":{\"name\":\"Legal India Admin\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\"},\"headline\":\"Larsen And Toubro Limited vs Gujarat State Petroleum … on 7 February, 2000\",\"datePublished\":\"2000-02-06T18:30:00+00:00\",\"dateModified\":\"2019-01-03T05:20:38+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000\"},\"wordCount\":24635,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"articleSection\":[\"Gujarat High Court\",\"High Court\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000\",\"name\":\"Larsen And Toubro Limited vs Gujarat State Petroleum ... on 7 February, 2000 - Free Judgements of Supreme Court & High Court | Legal India\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\"},\"datePublished\":\"2000-02-06T18:30:00+00:00\",\"dateModified\":\"2019-01-03T05:20:38+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Larsen And Toubro Limited vs Gujarat State Petroleum … on 7 February, 2000\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"name\":\"Free Judgements of Supreme Court & High Court | Legal India\",\"description\":\"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"alternateName\":\"Free judgements of Supreme Court & High Court of India | Legal India\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\",\"name\":\"Judgements of Supreme Court & High Court | Legal India\",\"alternateName\":\"Legal India\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"contentUrl\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"width\":512,\"height\":512,\"caption\":\"Judgements of Supreme Court & High Court | Legal India\"},\"image\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/LegalindiaCom\\\/\",\"https:\\\/\\\/x.com\\\/Legal_india\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\",\"name\":\"Legal India Admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"caption\":\"Legal India Admin\"},\"sameAs\":[\"https:\\\/\\\/www.legalindia.com\",\"https:\\\/\\\/x.com\\\/legaliadmin\"],\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/author\\\/legal-india-admin\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Larsen And Toubro Limited vs Gujarat State Petroleum ... on 7 February, 2000 - Free Judgements of Supreme Court & High Court | Legal India","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000","og_locale":"en_US","og_type":"article","og_title":"Larsen And Toubro Limited vs Gujarat State Petroleum ... on 7 February, 2000 - Free Judgements of Supreme Court & High Court | Legal India","og_url":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000","og_site_name":"Free Judgements of Supreme Court & High Court | Legal India","article_publisher":"https:\/\/www.facebook.com\/LegalindiaCom\/","article_published_time":"2000-02-06T18:30:00+00:00","article_modified_time":"2019-01-03T05:20:38+00:00","og_image":[{"width":512,"height":512,"url":"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1","type":"image\/jpeg"}],"author":"Legal India Admin","twitter_card":"summary_large_image","twitter_creator":"@legaliadmin","twitter_site":"@Legal_india","twitter_misc":{"Written by":"Legal India Admin","Est. reading time":"123 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#article","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000"},"author":{"name":"Legal India Admin","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea"},"headline":"Larsen And Toubro Limited vs Gujarat State Petroleum … on 7 February, 2000","datePublished":"2000-02-06T18:30:00+00:00","dateModified":"2019-01-03T05:20:38+00:00","mainEntityOfPage":{"@id":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000"},"wordCount":24635,"commentCount":0,"publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"articleSection":["Gujarat High Court","High Court"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000","url":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000","name":"Larsen And Toubro Limited vs Gujarat State Petroleum ... on 7 February, 2000 - Free Judgements of Supreme Court & High Court | Legal India","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/#website"},"datePublished":"2000-02-06T18:30:00+00:00","dateModified":"2019-01-03T05:20:38+00:00","breadcrumb":{"@id":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.legalindia.com\/judgments\/larsen-and-toubro-limited-vs-gujarat-state-petroleum-on-7-february-2000#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.legalindia.com\/judgments\/"},{"@type":"ListItem","position":2,"name":"Larsen And Toubro Limited vs Gujarat State Petroleum … on 7 February, 2000"}]},{"@type":"WebSite","@id":"https:\/\/www.legalindia.com\/judgments\/#website","url":"https:\/\/www.legalindia.com\/judgments\/","name":"Free Judgements of Supreme Court & High Court | Legal India","description":"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.","publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"alternateName":"Free judgements of Supreme Court & High Court of India | Legal India","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.legalindia.com\/judgments\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.legalindia.com\/judgments\/#organization","name":"Judgements of Supreme Court & High Court | Legal India","alternateName":"Legal India","url":"https:\/\/www.legalindia.com\/judgments\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/","url":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","contentUrl":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","width":512,"height":512,"caption":"Judgements of Supreme Court & High Court | Legal India"},"image":{"@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/LegalindiaCom\/","https:\/\/x.com\/Legal_india"]},{"@type":"Person","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea","name":"Legal India Admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","caption":"Legal India Admin"},"sameAs":["https:\/\/www.legalindia.com","https:\/\/x.com\/legaliadmin"],"url":"https:\/\/www.legalindia.com\/judgments\/author\/legal-india-admin"}]}},"modified_by":null,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/156074","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/comments?post=156074"}],"version-history":[{"count":0,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/156074\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/media?parent=156074"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/categories?post=156074"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/tags?post=156074"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}