Oral Order:- (S.J. Vazifdar, J.)
1. Petitioner No.2 is a director of petitioner No.1. The reference in this judgment to the petitioner is to petitioner No.1. Respondent No.2 is MSTC Limited - a public sector undertaking.
2. Respondent No.1 issued a notification dated 27th May 2014 inviting bids on line from eligible bidders for supply of 3.462 MT of coal of a particular specification of foreign origin for its Bhusawal, Khaperkheda, Chandrapur, Koradi Thermal Power Stations/ projects. The bids were invited in the usual two bid system viz., techno-commercial bid and price bid. The notification stated that the process would be done on e-tendering basis. Separate tenders were to be submitted for the supply of coal for each of the four power stations. The bidders submitted bids in respect of all four power stations. On 15th July 2014, the techno-commercial bids were opened.
3. The petitioners have challenged the entire tender process. In the alternative the petitioners have sought an order rejecting the second respondent's bid in respect of the Bhusawal and Koradi power stations.
4. Mr.Dwarkadas, the learned Senior Counsel appearing on behalf of the petitioners, firstly submitted that the opening of the price bids was done in inexplicable haste, indicating if not establishing mala-fides viz. to favour certain bidders. This according to him vitiated the entire tender process.
5. In support of this contention Mr.Dwarkadas relied upon clause 14 of the tender which reads as under:-
"14. OPENING OF BIDS
(a) The techno-commercial Bid opening will be at the specified time in the NIT.
(b) The evaluation committee would first check the payment of EMD and tender fee. Any mismatch between the scanned copy of EMD instruments and the physical instrument would be considered as the basis for rejection of the bids.
(c) The evaluation committee will then refer the submitted documents for a detailed scrutiny.
(d) The price Bids for only those bidders which meet the qualifying requirements and also which are technically and commercially acceptable, shall be opened at the notified time and date in the presence of the qualified bidders who choose to be present."
6] Mr.Dwarkadas contended that a bidder was entitled to remain present at the opening of the price bids as a matter of right. Implied in Clause 14 is an obligation on the part of respondent No.1 to give the bidders a reasonable time to be present. He contended that the notice given to the petitioners, was wholly inadequate, considering the distance between the petitioners' office and the first respondent's office and that there is no explanation for the haste with which the price bids were opened. In contrast, the techno-commercial bids which were scheduled to be opened on 23rd June 2014, were ultimately opened only on 15th July 2014. This conduct gives room for suspicion for the possibility of unfair practices having been adopted in favour of a certain party. The entire tender process, therefore, according to him stands vitiated.
7. The challenge to the entire tender process on this ground is unsustainable for two reasons. Firstly, it is not well founded on merits. Secondly, the petitioner cannot be permitted to raise this contention as it has deliberately chosen not to implead the necessary parties.
8. The question on merits is whether in fact the notice of the opening of the price bids was inadequate and if it was, whether in the facts of this case it vitiated the entire tender process.
9. The facts that transpired on 30th July 2014 preceding the opening of the price bids on that day are as follows:-
On 30th July 2014 at 3.00 p.m. an application for urgent interim reliefs was made before this Court. By an order dated 30th July 2014, the Division Bench of this Court recorded the statement on behalf of respondent No.1 that the contract would not be awarded to any of the parties who participated in the tender process till the next date. At about the same time viz., 3.00 p.m., the decision to open the price bids was taken by the Board of respondent No.1. It was decided after the meeting to open price bids at 5.00 p.m. All the eligible bidders were informed about the same by a common e-mail sent at 4.54 p.m. Some of the eligible bidders, including the petitioners, stated that they required further time to be present at the opening of the price bids. Respondent No.1, therefore, did not immediately proceed to open the price bids at 5.00 p.m. but waited for some time to enable the bidders to remain present. Two bidders - M/s.Adani Enterprises Ltd. and M/s.Costal Energy Private Ltd., telephonically requested respondent No.1 to wait for some time as their representatives were on their way. The petitioners' director Mr. K. Raman sent an SMS to the first respondent's representative at 5.38 p.m. stating that its representative one Mr.Vilankar was on his way to attend the price bid opening meeting. Vilankar himself also sent an SMS at 5.40 p.m. to the first respondent's Executive Engineer and at 5.43 p.m. to the first respondent's Chief Engineer stating that he would reach in about 30 minutes. Respondent No.1, therefore, waited for the representatives of the petitioner and of the other two bidders till 6.05 p.m. to open the price bids. The representatives of the other two bidders remained present when the price bids were opened. The petitioners' representative, however, did not arrive or remain present when the price bids were opened or even thereafter. The petitioners, therefore, chose to remain absent. The details of the price bids were emailed to all the eligible bidders at 7.05 p.m. The result of the price bids were uploaded on 31st July 2014.
10. We agree with Mr.Joshi's submission that the allegations regarding malafides on account of the alleged haste in opening the price bids are unfounded in the facts of this case.
11. Mr.Joshi, the learned Senior Counsel appearing for respondent No.1 relied upon the averments in the first respondent's affidavit in reply to contend that on line tenders are processed on SeTS (Secured e-Tendering System). He submitted that the system is fool proof, in compliance with the Information and Technology Act, 2000 and adheres to the standards, guidelines and policies of various regulatory bodies including of the Central Vigilance Commissioner and the World Bank.
12. It is not for the Court to decide this issue in such a proceeding. We will assume as contended by Mr.Dwarkadas that the system is not absolutely fool proof. The petitioners, however, have not indicated any reason why the Court ought to presume that the system was tampered with. The petitioner has not even suggested the manner in which the system was or may have been manipulated. We are not inclined to annul an entire tender process merely on conjecture or speculation. The allegations of tampering with the system and mala-fides in the process are not even alleged, except to the extent we have already indicated.
It is important to note two things. Firstly, the petitioner did not even seek a postponement of the opening of the price bid to the next day. Secondly, the petitioner in fact requested for time to enable it to attend the meeting for opening of the price bids. Despite the same, the petitioner remained absent. It is not open to the petitioners then to contend that the process is vitiated on account of inadequate notice of the time of opening the price bids.
13. Mr.Dwarkadas relied upon the judgment of the Supreme Court in Noida Entrepreneurs Association vs. Noida & Ors, (2011) 6 SCC 508 in respect of his contention that when anything is done in post haste manner, mala-fides would be presumed, that anything done in undue haste can also be termed as arbitrary and cannot be condoned in law and that a Court may draw an adverse inference from such conduct.
14. As we mentioned earlier, the petitioners in fact sought time to attend the meeting on the same day. They did not seek a postponement to another day. Further the petitioners have not alleged anything that indicates the nature of malafides. No allegation of tampering with the system has been made.
15. The judgment of the Supreme Court in W.B. State Electricity Board vs. Patel Engineering Co. Ltd. & Ors. (2001) 2 SCC 451 is of no assistance to the petitioners either. Mr.Dwarkadas relied upon the judgment to contend that merely because a bid is the lowest, the requirements of compliance with the rules and conditions cannot be ignored. The question of respondent No.1 having ignored the rules and conditions in this regard does not arise.
16. It is not even open to the petitioners to raise this contention in view of their having consciously refused to implead the necessary parties. Mr.Dwarkadas's submission that it was not necessary to implead the other parties, as the petitioners merely seek an order against respondent No.1, requires merely to be stated to be rejected.
17. As we mentioned, the tenders were invited for supply of coal to the first respondent's thermal power stations at Bhusawal, Koradi, Chandrapur and Khaperkheda. The ranking of the bidders were as under:-
L-1 : Respondent No.2
L-2 : Petitioners
L-1 : Respondent No.2
L-2 : Adani Enterprises Ltd.,
L-3 : Petitioners
L-1 : Adani Enterprises Ltd.,
L-2 : Petitioners
L-1 : Costal Energy Pvt.Ltd.
L-2 : Adani Enterprises Ltd.,
L-3 : Petitioners.
18. If the entire tender process were to be set-aside, Adani Enterprises Limited and Costal Energy Private Limited would be directly affected, as they were ranked L-1 in respect of Chandrapur and Khaperkheda power stations. It would be unfair in the extreme to Adani Enterprises Limited and Costal Energy Private Limited if this Court were to annul the tender process without hearing them. Such an order would be contrary to every rule of fair play, justice and equity. That the petitioners seek an order against respondent No.1 alone is of no consequence and is irrelevant on the question of non-joinder of necessary parties. The order, if passed against respondent No.1 would directly affect the interests of Adani Enterprises Limited and Costal Energy Private Limited. Any party likely to be affected by an order must be impleaded in the proceedings and heard by the Court. No Court can presume that a third party will have nothing to say. It is no answer that their interests being common to those of a party before the court would be represented. Every necessary party is entitled to be heard by the Court. A view to the contrary could lead to a gross miscarriage of justice for a variety of reasons too obvious to enumerate. Thus, even if we were with Mr.Dwarkadas on merits, we would have rejected this contention on this ground alone.
19. We clearly informed Mr.Dwarkadas at an early stage of the hearing that the rights of third parties would be involved and the petitioner ought therefore to consider impleading them. The petitioners however proceeded without doing so. In the circumstances, even if we were in agreement with Mr.Dwarkadas' submission on merits, we would have rejected this contention on the ground of non-joinder of necessary parties. This is not a mere technicality. It is a matter of substance.
20. Mr.Dwarkadas then submitted that the bid by respondent No.2 for the Bhusawal power plant ought to be rejected as it had failed to furnish a bank guarantee as required by the terms and conditions of the tender. Clauses 7, 12 and 12.10 of the tender read as under:-
'7.0. BID SECURITY (EMD):
7.0 The bidder shall submit the Bid security i.e. unconditional EMD of amounts equal to Rs. 10 Cr./MMT, separate for each items specified quantity, offered along with its bid.
7.1 Bid security can be submitted in one of the following forms:
a. Crossed Demand Draft in the name of Maharashtra State Power Generation Co. Ltd. payable at Mumbai drawn on any scheduled bank.
b. A Bank Guarantee strictly as per the proforma specified in Annexure-I (enclosed) in favour of Maharashtra State Power Generation Co. Ltd. on behalf of bidder OR Lead member of the consortium (if the bidder is a consortium) issued by any Scheduled Commercial Bank notified by Reserve Bank of India drawn on and payable at Mumbai branch only.
7.2 The validity of the bank guarantee against Bid security shall be at least for 120 days from the date of opening of techno-commercial Bid and the same shall be extended as may be required. Bid security for shorter value and period shall make the Bid liable for rejection.
7.3 No interest will be paid on bid security irrespective of mode of submission.
7.4 Existing permanent bank guarantee if any submitted by any bidder with the purchaser shall not be considered for exemption from the payment of bid security (EMD) against this bidding or Security – cum – Performance Guarantee to be provided in terms of Clause 19 herein below.
7.5 Any bid not accompanied by Bid security (EMD) or having submitted shorter amount than specified under Clause 7.1 above shall be disqualified.
7.6 The Bid submitted by a bidder shall be treated invalid and the Bid security shall be forfeited.
i) If the bidder withdraws/modify his bid within the bid validity specified in the Bid Specification. OR
ii) The successful bidder fails to submit performance guarantee and/or to execute contract agreement within the prescribed period in accordance with the instructions to the bidder. OR
iii) If the Bidder does not accept the arithmetical calculation of the landed Price for evaluation of the bid. OR
iv) If the bidder being the successful bidder fails to furnish the acceptance of Letter of Award, within the specified time limit. OR
v) If the bidder gives any wrong/false information/documents in the bid for making the bid qualified (eligible).
12.0. SUBMISSION OF BIDS:
12.10. The scanned copy of the demand draft/bank guarantee for EMD shall be uploaded and the 'Physical copy' shall be sent to the Purchaser at the given address in Clause 2.3 as per timelines. In case of non-receipt of the on-line Bid as per this Bid Specification (including the time period stipulated in NIT) or the EMD, the Bid shall be considered void.'
21. Mr.Dwarkadas relied upon the following facts in this regard. At the instance of respondent No.1, Bank of India issued a guarantee in the sum of Rs.9,77,00,000/- on 20th June, 2014 in favour of respondent No.2 for supply of coal for the Chandrapur thermal power station, on a stamp paper of Rs.100/-. The amount and the thermal power station were according to him incorrect.
22. There is no question of the second respondent having submitted an inaccurate or incorrect bank guarantee. By a letter dated 14th July, 2014 addressed to respondent No.1, Bank of India amended the guarantee by substituting the word 'Chandrapur' with 'Bhusawal' and altering the amount to Rs.12,52,00,000/- throughout. Thus Bank of India by the letter dated 14th July, 2014 corrected the name of the place and the amount of the bank guarantee. The bank guarantee dated 20th June, 2014 therefore, stood modified/corrected by the letter dated 14th July,2014. The letter expressly stated that all other terms and conditions of the bank guarantee remained unchanged. The bank guarantee must be read with the said letter. So read, it is in compliance with clause 7.1(b). A scanned copy of the bank guarantee dated 20th June, 2014 and of the letter dated 14th July, 2014 were uploaded while submitting the tender. Physical copies thereof were also furnished. The same was done on 15th July, 2014, which was the last date for submission thereof. There was no question therefore, of respondent No.1 rejecting the guarantee on the ground that it was for an inadequate amount and in respect of the wrong station.
23. Mr.Dwarkadas then submitted that the bank guarantee was on inadequate stamp paper. He submitted that under clause 7.1(b) the bank guarantee was to be strictly as per the proforma specified in Annexure-I. A caption of Annexure-I reads as under:-
'PROFORMA FOR BANK GUARANTEE AGAINST BID SECURITY (EMD)
(To be submitted on Indian non-judicial stamp paper of appropriate stamp duty)'
Mr.Dwarkadas submitted that the appropriate stamp duty is higher than Rs.100/-. He further submitted that under section 14-A of the Bombay Stamp Act, 1958, even an amendment must be duly stamped. The amendment was not stamped and therefore, cannot take effect. The appropriate stamp duty was paid only on 24th July 2014 i.e. nine days late. Consequently, according to him, the bid ought to have been rejected in view of clauses 7.2 and 7.5.
24. Clause 7.2 makes a bid liable for rejection if the bid security is 'for shorter value and period'. It does not make the bid liable for rejection if the guarantee is inadequately stamped. It is not the petitioners' case that the guarantee is for shorter value or for shorter period. The second respondent's bid cannot be rejected under clause 7.2.
25. For the same reason, the second respondent's bid cannot be disqualified under clause 7.5 either. It is not that the bid was not accompanied by bid security or that it had been submitted for a shorter amount. Further clause 7.1(b) requires the bank guarantee to be strictly as per the proforma specified in Annexure-I. Strict compliance therefore, is in relation to the proforma i.e. the text. The quantum of the stamp duty is not a part of the proforma. Respondent No.1 could have made even the quantum of the stamp duty to be an essential condition but chose not to do so. That was for respondent No.1 to decide. Respondent No.1 decided not to make the quantum of stamp duty an essential term probably due to the comparitively negligible amount involved and because even if the bank guarantee is not duly stamped, it would not be rendered void. Inadequacy, if any, of the stamp duty can always be rectified.
26. Mr.Dwarkadas' reliance upon clause 12.10 is also of no assistance to the petitioners. The second sentence of clause 12.10 would render a bid void in case of non-receipt of the on-line bid 'as per this Bid Specification (including the time period stipulated in NIT) or the EMD'. In other words, clause 12.10 would render a bid void only when it is not uploaded and a physical copy is not sent to respondent No.1 as stipulated in the first sentence of clause 12.10.
27. This brings us to the last ground of challenge to the bids submitted by respondent No.2 for Bhusawal and Koradi. Mr.Dwarkadas submitted that the bid stood invalid on account of respondent No.2 having withdrawn the same. Clause 7.6(i), 8 and 15 of the tender read as under:-
'7.6 The Bid submitted by a bidder shall be treated invalid and the Bid security shall be forfeited.
i) If the bidder withdraws/modify his bid within the bid validity specified in the Bid Specification. OR
8. VALIDITY OF BIDS:
Offers/bids should be valid for a period of at least 90 days from the date of opening of techno-commercial Bid.
Bids with shorter validity shall be liable for rejection at the discretion of the purchaser.
15.0. POST BIDDING CORRESPONDENCE:
In view of the Clause 2.3 above, the bidder should note that no correspondence shall be entertained or considered after the due date and time of submission of bids unless otherwise sought by the Purchaser.'
28. In this regard Mr.Dwarkadas relied upon the following facts.
3:00 p.m. on 15th July, 2014 was the cut off time for submission of techno-commercial bids. As per clause 8, the bid validity period was of ninety days from 15th July,2014. At 4:00 p.m. on 15th July, 2014, all electronic bids automatically stood opened. This brings us to two crucial fax messages on which the present contention is based.
A). On 15th July, 2014 at 4:01 p.m. i.e. after the time for opening of the bids, respondent No.2 addressed the following fax:-
'This is to inform that we have submitted bids for BHUSAWAL and KORADI THERMAL POWER STATIONS/PROJECTS today but we inadvertantly quoted wrong bids.
Accordingly we request you to kindly return the bids to our representative Mr.Ganesh.'
B). At 5:15 p.m. on 15th July, 2014, respondent No.2 addressed the following fax:-
'Please refer to MSTC letter of even number dated 15.07.2014 where in we had requested you to return the bid submitted by MSTC.
We would request you to kindly ignore our letter referred above and consider our bid for tender evaluation.
Inconvenience caused to you is regretted.'
C). Mr.Dwarkadas placed considerable reliance upon the fact that after the first fax sent at 4:01 p.m. and before the second fax sent at 4:30 p.m., techno-commercial bids of the bidders other than the bid of respondent No.2 were opened and that the bid of respondent No.2 was opened only after the second fax was sent at 5:15 p.m. Mr.Dwarkadas submitted that in view of the withdrawal of the bid, the second respondent's bid ought to be treated as invalid. He submitted that clause 7.6 is an essential and mandatory term and that respondent No.1 had no discretion in the matter.
29. Mr.Dwarkadas submitted that by the first fax message sent at 4.01 p.m. on 15th July 2014, respondent No.2 withdrew the bid itself. Dr.Tulzapurkar on the other hand submitted that what respondent No.2 sought was a return of the bid document to enable it to carry out necessary corrections therein. The second respondent never intended withdrawing from the tender process or abandoning its bids.
30. We are inclined to accept Dr.Tulzapurkar's submission. The first fax message does not indicate the second respondent's intention to abandon its bid altogether. Had that been its intention, the fax messages would have read differently. All that was required was a communication stating that the second respondent was not interested in the contract. The fact that respondent No.2 sought the "return of the bid" indicates that it sought a return of the bid document in order to make a correction therein. If the intention was not to perform the contract, it would not have been necessary to seek a return of the bid document at all. A communication to that effect and a refusal to sign the contract was all that was required.
31. Mr.Dwarkadas places strong reliance on para 9 of the second respondent's affidavit in reply, which reads as under:-
'As regards the third contentions, I say that the Tender was required to be submitted before 3.00 pm on 15th July, 2014. After submitting the Tender documents in time both online and in physical form it was by mistake thought that wrong bid amount was mentioned in the Tender. Therefore, Respondent No.2 had submitted a letter dated 15th July, 2014 to MAHAGENCO withdrawing its offer. This letter was submitted to MAHAGENCO by Respondent No.2 not online but by Fax/Email, because no online documents after 3.00 pm on 15th July, 2014 could be submitted. Hereto annexed and marked Exhibit-'4' is the copy of the said letter issued on behalf of Respondent No.2 which shows the time and date of its submission. I say that immediately after submission of the withdrawal letter the Respondent No.2 realised that there was no mistake in offer price therefore the Respondent No.2 issued another letter dated 15th July, 2014 to MAHAGENCO requesting them to ignore the earlier letter of same date for withdrawal and consider their original bid for Tender evaluation. This second letter of the Respondent No.2 withdrawing its original withdrawal of offer letter was also sent to MAHAGENCO by Fax/Email after 3.00 pm on 15th July, 2014. The letter was submitted by fax and not online because no documents could be submitted after 3.00 pm on 15th July, 2014. Hereto annexed and marked Exhibit- '5' is the copy of the said letter showing the date and time of its submission. I further say that both the aforesaid letters were issued by Respondent No.2 to MAHAGENCO at about 4.00 pm much later than the closing time of the aforesaid Tender. The closing time of the Tender was at 3.00 pm on 15/7/2014.'
31. In particular, Mr.Dwarkadas relied upon third sentence and especially the words : 'Therefore, Respondent No.2 had submitted a letter dated 15th July, 2014 to MAHAGENCO withdrawing its offer.'
(emphasis supplied) therein.
32. It is true that the pleadings could have been clearer averring exactly what Dr.Tulzapurkar had submitted before us. The case, however, must be seen as a whole and the documents themselves ought to be examined. It would be unfair to visit the drastic consequence of annulling the bid upon respondent No.2 only on account of these three words. Considering all the circumstances and reading the affidavit as a whole, it appears to us that the words "withdrawing its offer" really meant withdrawing the documents. For instance, later in the paragraph, it is averred that respondent No.2 realised that there was no mistake in the offer price and, therefore, issued the second telefax requesting the second respondent to ignore the earlier fax and consider their original bid for tender evaluation. If the intention had been to withdraw the bid altogether, it would not have been necessary to plead that respondent No.2 requested respondent No.1 to consider its "original bids". The words "original bids" suggest that there was an intention to correct an assumed mistake and re-submit the tender for evaluation. Thus, at the highest, it could be said that the pleadings could have been clearer. We do not read the three words in para 9 viz., "withdrawing its offer" as an admission of an intention to abandon the bids.
33. The next question is whether even this disqualifies / invalidates the second respondent's bid for Bhusawal and Koradi. Mr.Dwarkadas submitted that whatever the reason, there was a withdrawal of the bids. It is immaterial whether the withdrawal was to correct or modify the bid document or not.
34. The words "Bidder withdraws/ .... his bid" in clause 7.6(i) refer to an intention to abandon or annul the bid. In other words, they refer to a bidder refusing to perform the contract even if awarded in its favour.
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It does not refer to a bidder seeking to withdraw the bid document to correct it. Indeed such a situation is not even contemplated in the clause. 35. Mr.Dwarkadas then submitted that even a modification of the bid invalidates the bid. Even assuming that a modification referred to in clause 7.6 (i) includes a correction of an error, it will make no difference, for in the present case, there was no modification at all. The question of modification does not arise in the present case for respondent No.2 mistakenly believed that there was an error in its bids, when in fact, there was no such error. Accordingly respondent No.2 did not carry out any modification in its bid document. 36. Decided cases on the questions whether there was an error in the bid document itself are of no assistance in this case. The case before us is entirely different. There was in fact no error in the bid document. For a period of about one hour, the second respondent was under a mistaken belief that there was an error. That is an entirely different thing from a case where the bid document contains an error. In our opinion, if this mistaken impression is corrected, almost immediately, it cannot be said that the bid is invalidated for that reason. 37. The view taken by us does not prejudice any party. The first respondent has not accorded to respondent No.2 any benefit to the exclusion of others. None of the parties are prejudiced by the second respondent realising within an hour that it in fact had committed no error. It would be unjust and even against public policy to invalidate a bid in such cases thereby conferring a benefit upon the other bidders to the detriment of the public exchequer by compelling the first respondent to accept the next bid only on account of a mistaken belief of an error and not on account of an error in the bid document itself. 38. In the circumstances, the respondent No.1 cannot be faulted for having accepted the bid of respondent No.2. 39. The Writ petition is accordingly dismissed. Mr. Dwarkadas applies for a stay of the entire tender process for a period of four weeks from today. The respondents opposed the application. We are inclined to continue only the ad-interim order dated 31.07.2014 till 02.09.2014. Looking to the urgency of the requirement of the coal expressed by respondent No.1, we are inclined to grant a stay only upto 02.09.2014. We are inclined to continue only the ad-interim order till 02.09.2014 which is only in respect of the Bhusawal plant. Considering the view that we have taken, we see no reason to grant a stay of the tenders in respect of the other three thermal power stations. This relief was not even granted at the ad-interim stage. Needless to add that the respondents shall be entitled to take all steps for issuing of the letter of award even in respect of the Bhusawal plant except to issue the final letter of award in favour of respondent No.2 till 02.09.2014.