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M/s. Agrico Steel Engineering Works, Bishrampur & Another v/s South Eastern Coalfield Ltd. & Others

    Writ Petition No.4707 of 2010

    Decided On, 17 January 2012

    At, High Court of Chattisgarh

    By, THE HONOURABLE MR. JUSTICE SUNIL KUMAR SINHA & THE HONOURABLE MR. JUSTICE RADHE SHYAM SHARMA

    For the Petitioners: Ashok Kumar Shukla, Advocate. For the Respondents: R. K. Gupta, Sanjay K. Agarwal, P.K. Tulsyan, Advocates.



Judgment Text

SUNIL KUMAR SINHA, J.

1. Respondent South Eastern Coal Fields Limited (S. E.C.L.) issued N.I.T. dated 16-1-2010 for construction of a Coal Handling Plant (civil and structural work) at Khairaha project of Sohagpur area. Clause 23(a) of the NIT deals with the information relating to the tenderers. Clause 23(a)(V) deals with the Joint Venture, which reads as under:

Joint Venture

Two or three companies’ contractors participating in the tender as Joint Venture should submit firm-wise participation details, banker’s name, execution of work with details of contribution of each and all other relevant details.

Notes : Joint Venture must comply the following requirements:

i. Following are the minimum qualification requirements for joint ventures:

a. The qualifying criteria parameter e.g. experience, financial resources etc, of the individual partners of the J.V. will be added together and the total criteria should not be less than as spelt out in qualification.

ii. The formation of joint venture or change in the joint venture character partners after submission of the bid and any change in the bidding regarding joint venture will not be permitted.

iii. Any bid shall be signed so as to legally bid all partners jointly and severally and any bid shall be submitted with a copy of the Joint Venture Agreement (JV Agreement) providing the joint and several liabilities with respect to the contract.

iv. The pre-qualification of a joint venture does not necessarily pre-qualify any of its partners individually or as a partner in any other joint venture or association. In case of dissolution of a joint venture, each one of the constitutent firms may pre-qualify if they meet all the re-qualification requirements, subject to written approval of the employer.

v. The bid submission must included documentary evidence to the relationship between joint venture partners in the form of JB Agreement to legally bind all partners jointly and severally for the proposed agreement which should set out the principles for the constitution, operation, responsibilities regarding work and financial arrangements, participation (percentage share in the total) and liabilities (joint and several) in respect of each and all of the firms in the joint venture. Such JB Agreement must evidence the commitment of the parties to bid for the facilities applied for (if prequalified) and to execute the contract for the facilities if their bid is successful.

vi. One of the partners responsible for performing a key component of the contract shall be designated as Lead Partner. This authorization shall be evidenced by b with the bid a Power of Attorney signed by legally authorized signatories of all the partners.

vii. The JV Agreement must provide that the Lead Partner shall be authorized to incur liabilities and receive instructions for and on behalf of any and all partners of the Joint venture and the entire execution of the contract shall be done with active participation of the Led partner.

viii. Te contract agreement should be signed jointly by each Joint Ventures Partners.

ix. An entity can be a partner in only one Joint Venture. Bid submitted by Joint Ventures including the same entity a partner will be rejected.

x. The J.V. agreement may specify the share of each individual partner for the purpose of execution of this contract. This is required only for the sole purpose of apportioning the value of the contract to that extend to individual partner for subsequent submission in other bids if he intends to do so for the purpose of the qualification in that tender.

2. The petitioners submitted their bid in Joint Venture. A Joint Venture Agreement (hereinafter referred to as 'J.V. Agreement') was entered into between them on 17-2-2010 and the same was filed along with the tender documents. According to the J. V. Agreement, petitioner NO.1 was the lead partner. On 25-3-2010, a meeting of Tender Committee was called and in the meeting, the Tender Committee considered the technical bids of all the 3 bidders. According to the Tender Committee, there were serious infirmities in the J.V. Agreement of the petitioners. The Tender Committee observed that as per clause 8 of the J. V. Agreement, the J.V. Agreement legally bids the parties jointly and severally for the proposed agreement, which should set out the principles for the constitution, operation, responsibilities regarding work and financial arrangements, participation and liabilities '(by first party only)' in respect of each and all of the firms in the Joint Venture. Therefore, the Tender Committee, in light of the provisions of clause 23(a)(V) (v) found the bid of the petitioners to be non-responsive and non-acceptable and thus, the technical bid of the petitioners was rejected. Thereafter, the respondents proceeded further and bid of respondent No. 4 was accepted and after completion of due process, work order was issued to respondent No.4 on 27-5-2011. On 2-6-2011, site was also handed over to respondent No.4 vide a letter of the same date. Respondent No.4, then, completed other formalities and has begun with the work.

3. Mr. A.K. Shukla, learned counsel appearing on behalf of the petitioners, argued that the rejection of the technical bid of the petitioners on the above grounds is arbitrary and illegal. The J.V. Agreement fulfills all the requirements and the defects pointed out by the respondents were not correct. He argued that the Tender Committee would not have rejected the technical bid of the petitioners on account of the above ground, as the final agreement was yet to be executed between the selected consortium and the respondents and in that agreement, the respondents would have set-up the conditions as required by them. He cited the decision of the Supreme Court rendered in State of Kerala v. M/s. Zoom Developers Pvt. Ltd. and others, 2009 AIR SCW 1976.

4. On the other hand, learned counsel for the respondents opposed these arguments and supported the decision taken by the authorities of the SECL. It was mainly argued that in the J. V. Agreement, it was mentioned by the petitioners that the requisite liabilities would be owned by first party only, therefore, the J.V. Agreement was not in line with the tender requirement and the decision taken by the Tender Committee was fully justified. It was further argued by Mr. Agrawal, learned counsel appearing on behalf of respondent No.4, has already done substantial work and a sum of Rs. 80 lacs has already been paid to respondent No.4 as part payment against the work done. Therefore, now, the situation cannot be disturbed on hyper technical grounds.

5. We have heard learned counsel for the parties at length and have also perused the records of the writ petition.

6. Clause 23(a) (V) of the N.I.T. clearly provides that the Joint Venture Agreements (J.V. Agreements) must comply the requirements contained in sub-clauses (i) to (x) of clause 23 (a) (V). It has clearly been notified by the respondents in the above clause that the Joint Venture Agreement, which was to be filed along with the technical bid, must legally bind all the partners jointly and severally for the purpose of the proposed agreement. It should set out the principles for constitution/operation/responsibilities regarding work and financial arrangements, participation (percentage in total) and liabilities (joint and several) in respect of each and all the firms in the Joint Venture, whereas, clause 8 of the J.V. agreement filed by the petitioners states, responding the above clause, 'that the Joint Venture Agreement legally binds the parties jointly and severally for the proposed agreement which should set out the principles for the constitution, operation, responsibilities regarding work and financial arrangements participation and liabilities (by first party only), in respect of each and all of the firms in the joint venture.' Since the liabilities were declared to be owned by the first party only, the J.V. Agreement was not found to be correct and the above decision was taken. The difference between requirement of 'joint and several liability' and 'liability of first party' are two different things and none can be presumed to substitute the other. If the requirement of the NIT was of the agreement binding all the parties jointly and severally the declaration of the liability to be owned by one party alone, therefore, would not satisfy the tender requirement.

7. We find that by a letter dated 4-5-2010, another J.V. Agreement (amended J.V. Agreement) dated 4-5-2010 (Annexure P/3) was also filed by the petitioners, but the same was not considered by the authorities of the respondents on the ground that the agreement itself was entered into on 4-5-2010 i.e. after closing date of the bid. The copy of the amended J.V. Agreement dated 4-5-2010 has been filed by the petitioners. This agreement also does not speak about the condition of joint and several liability of all the partners for the purpose of the agreement. Even if we read both the agreements together that also does not fulfill the criteria of the tender contained in clause 23(a)(V) (v) of the NIT. The requirement of the NIT is clear from the words use din the NIT that the joint venture must comply the requirements contained in clause 23(a)(v)of the NIT. Therefore, the Joint Venture Agreement filed by the petitioners was not in conformity with the above clause of the NIT, which was a mandatory clause set-out by the respondents.

8. In State Kerala v. M/s. Zoom Developers Pvt. Ltd. and others (supra) one of the points for consideration was as to 'whether use of the expression 'joint and several responsibility' in place of 'joint and several liability' would justify rejection of the bid proposal made by the consortium led by M/s. Zoom Developers as non-responsive/non-admissible in terms of the Request For Proposal (RFP). 'The Supreme Court while considering the mater held that under the subject agreement, duties and responsibilities of each of the members were carved out and the members of the consortium were made 'jointly and severally responsible' for every stage of implementation of the project. The only objection raised by the employer was that the word 'liable' ought to have been used instead of the word 'responsible' in clause 7 of the agreement and since that word has not been used, the bid proposal of M/s. Zoom Developers Pvt. Ltd. needs to be dismissed. In the said case, in the meetings held prior to 8-4-2008, no such objection was ever raised and no opportunity was given to M/s. Zoom Developers to cure this defect though it was given to another consortium. The Supreme Court held in the said case that Bid Evaluation Committee (EC) treated the above objection as curable defect and, therefore, it was an afterthought. It is in these circumstances, the Supreme Court said that the High Court was right in holding the bid to be responsive in terms of the RPF, and declaration for considering the technical and financial proposals submitted by the consortium led by M/s. Zoom Developers was made.

9. The case of Zoom Developers is distinguishable from the present case on facts. It is not a case in which similar words and expressions were used and were not considered by the SECL. It is a case in which the petitioners had declared that the liabilities would be owned by first party only i.e. one of the consortium partners. The defect was never treated to be curable and the objection in this regard was taken at the first opportunity.

10. We are of the view that in the above facts and circumstances o the case, the respondents were fully justified to reject the technical bid of the petitioners and we find no fault with such rejection made by them.

11. For our non-interference, there is yet

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another important factor in the matter. This writ petition was filed on 13-8-2010 and it was fixed on 20-8-2010 and notices were directed to be issued. When it came up for hearing on 9-9-2010, no one appeared for the petitioners and it was dismissed for want of prosecution. Later on, by an order dated 24-9-2010 passed in MCC No.513/2010 (restoration application), the writ petition was restored and was taken up for hearing on 8-10-2010. On that day, since there was delay in payment of Process Fee, I.A. No.05 was filed by the petitioners for condonation of delay and the delay was condoned and then only, the notices were issued. Thereafter, the parties appeared on 16-12-2010 and time was taken to file reply and on 21-1-2011, time was taken by the petitioners to file rejoinder. Thereafter, the matter was listed for hearing on many occasions, but no interim order was pass din favour of the petitioners. In the meanwhile, the work order was issued to respondent No.4 and, as stated by learned counsel for respondent No.4, respondent No.4 has already done substantial work and has been paid Rs. 80 lacs by now. Therefore, on this account also, we do not deem it appropriate to interfere in the matter at this stage. 12. In the result, the writ petition is dismissed with no order as to cost. Petition dismissed.
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