w w w . L a w y e r S e r v i c e s . i n

M/s B. Ganga Transport and Sai Trade Link Joint Venture v/s M/s Western Coalfields Limited, Coal Estate & Another

Company & Directors' Information:- WESTERN COALFIELDS LIMITED [Active] CIN = U10100MH1975GOI018626

Company & Directors' Information:- D-LINK (INDIA) LIMITED. [Active] CIN = L72900GA2008PLC005775

Company & Directors' Information:- INDIA LINK LIMITED [Active] CIN = U74899DL1995PLC069339

Company & Directors' Information:- INDIA TRADE LINK PRIVATE LIMITED [Active] CIN = U74899DL2001PTC109158

Company & Directors' Information:- B B VENTURE PRIVATE LIMITED [Active] CIN = U52209CT2008PTC020645

Company & Directors' Information:- S R TRADE LINK PRIVATE LIMITED [Active] CIN = U74899DL1994PTC058638

Company & Directors' Information:- G G COAL TRANSPORT PRIVATE LIMITED [Active] CIN = U63090DL2003PTC123696

Company & Directors' Information:- TRADE LINK (INDIA) PRIVATE LIMITED [Strike Off] CIN = U74900DL1996PTC083897

Company & Directors' Information:- M N TRADE COAL PRIVATE LIMITED [Active] CIN = U23101GJ2008PTC053085

Company & Directors' Information:- TRADE & TRANSPORT PRIVATE LIMITED [Active] CIN = U63090WB1997PTC085873

Company & Directors' Information:- R B TRADE LINK INDIA PRIVATE LIMITED [Active] CIN = U27209CT2020PTC010860

Company & Directors' Information:- M B TRADE-LINK PRIVATE LIMITED [Active] CIN = U65990MH1988PTC050221

Company & Directors' Information:- G N TRADE LINK PRIVATE LIMITED [Strike Off] CIN = U51919MH2005PTC151930

Company & Directors' Information:- S A R VENTURE PRIVATE LIMITED [Active] CIN = U70102DL2015PTC275704

Company & Directors' Information:- G C LINK PRIVATE LIMITED [Active] CIN = U51109WB1999PTC089603

Company & Directors' Information:- SAI COAL PRIVATE LIMITED [Strike Off] CIN = U10100JH2012PTC000279

Company & Directors' Information:- A T C (WESTERN INDIA ) PRIVATE LIMITED [Strike Off] CIN = U63090MH2000PTC126350

Company & Directors' Information:- S P TRADE-LINK PRIVATE LIMITED [Active] CIN = U51909WB2008PTC130612

Company & Directors' Information:- H R TRADE LINK PRIVATE LIMITED [Active] CIN = U52609MH2014PTC259537

Company & Directors' Information:- A K D TRADE LINK PRIVATE LIMITED [Active] CIN = U51109WB2003PTC097309

Company & Directors' Information:- GANGA TRANSPORT COMPANY PRIVATE LIMITED [Strike Off] CIN = U34948KA1993PTC013948

Company & Directors' Information:- D. B. ESTATE TRADE PRIVATE LIMITED [Amalgamated] CIN = U74999MH2016PTC285515

Company & Directors' Information:- WESTERN LINK PRIVATE LIMITED [Strike Off] CIN = U51101DL1995PTC074860

Company & Directors' Information:- SAI TRANSPORT COMPANY PRIVATE LTD [Strike Off] CIN = U60210DL1988PTC034423

Company & Directors' Information:- N J VENTURE PRIVATE LIMITED [Strike Off] CIN = U70101MH2008PTC186387

    Writ Petition No. 5356 of 2015

    Decided On, 18 November 2015

    At, In the High Court of Bombay at Nagpur


    For the Petitioner: Akshay Naik, Advocate. For the Respondents: S.P. Dharmadhikari, Senior Advocate, C.S. Samudra, Advocate.

Judgment Text

Oral Judgment: (B.P. Dharmadhikari, J.)

1. Rule, made returnable forthwith and heard finally with consent of parties.

2. The petitioner Firm questions the communication dated 7.9.2015 issued to it by respondent no. 2 pointing out that it has not submitted the certificate of availability of credit from its banker towards the evidence of adequacy of working capital as per notice inviting tenders (NIT).

3. This Court issued notice in the matter on 21st September 2015 and at that time, passed the following order :

'Heard Shri A. a. Naik, learned counsel for the petitioner.

It appears that in the earlier tender process dated 16.03.2015 and thereafter dated 18.05.2015, the petitioner has been permitted to participate on the basis of documents i.e. Certificate of Chartered Accountant showing his financial capacity. The Banker's certificate which is being insisted upon now, was then not asked for.

Notice, returnable on 29.09.2015.

3. Though the respondents may proceed further with consideration of other offers, it is open to them to simultaneously evaluate offer of the petitioner also without prejudice to their defence in the present petition.

Though tender process may continue, work order shall not be issued till next date.'

4. We have heard Mr Akshay Naik, learned counsel for the petitioner and Mr S. P. Dharmadhikari, Senior Advocate with Mr C. S. Samudra, learned counsel for respondents.

5. Mr Naik points out that in response to NIT dated 13th June 2015 and as per terms & conditions, particularly clause 6B. Petitioner submitted certificate issued by a qualified Chartered Accountant dated 13th April 2015. He points out that as such, condition which required Banker's Certificate regarding availability of access to credit is not an essential condition. On earlier occasion also, certificate issued by the Chartered Accountant was accepted as sufficient evidence of adequacy of working capital and price bids submitted by the petitioner along with others were opened. He invited our attention to two such previous occasions where certificate issued by the Chartered Accountant was accepted as valid.

6. He contends that only explanation for deviating from this course as offered by the respondents in their reply-affidavit is that the present NIT is the on-line tender process while earlier, it was manual one. He submits that whether process being followed is manual or on-line is not relevant and nature of procedure has no bearing on the nature of condition. Once the condition is accepted to be co-lateral one, merely because the process being followed at this juncture is on-line, that condition cannot be elevated and read as an essential condition. He submits that earlier the contract of transportation of coal had been awarded to the petitioner in view of the price bids which were opened on the strength of Certificate of Chartered Accountant.

7. Mr S. P. Dharmadhikari, learned Senior Advocate relies upon reply-affidavit. He submits that merely because on earlier occasions certificates of Chartered Accountant were accepted, that by itself does not make the condition mentioned supra colateral one. He points out that the tender process itself consumes lot of time and looking to the same, it is essential to determine the financial ability of the tenderer. Clause 6B, therefore, stipulates that a certificate issued by a Scheduled Bank regarding availability of access to credit and it is an essential condition. As earlier certificates issued by the Chartered Accountant were accepted by the respondents, not only the petitioner, but other four bidders were also given opportunity to submit the Banker's Certificate of scheduled Bank and time of ten days was given to them with understanding that no further extension would be allowed in that respect.

8. Petitioner has on 17.9.2015 submitted an affidavit to the respondent seeking time to submit the said certificate of banker and agreed to furnish it before award of contract/issue of Letter of Acceptance, as early as possible. Ultimately, on 16.11.2015 petitioner has submitted certificate of Pusad Urban Cooperative Bank Limited, Pusad which is not a Scheduled Bank.

9. He states that looking to the nature of work to be allotted, its worth and considering the stake involved, condition imposed is rightly viewed as an essential condition. Said condition is not being assailed as arbitrary or irrelevant or unjust. Once the condition is found to be valid, the use thereof by the respondents cannot be treated as arbitrary. The condition has been inserted in public interest and if said condition is viewed as co-lateral one, the purpose of introducing it in the present e-tender notice would be frustrated.

10. Mr Naik, learned counsel for petitioner has invited our attention to other terms and conditions in an effort to demonstrate that after tender is accepted, various securities and guarantees are required to be furnished and those clauses, therefore, take care of the interest of respondents as also public interest. He submits that in a hypothetical matter, even after submission of the certificate of a Scheduled Bank regarding availability of access to credit, the person submitting tender may go back and respondent may be required to undertake the entire process afresh.

11. We find that the fact that not only the petitioner, but also other tenderers had submitted certificates of Chartered Accountant only and their tenders were not accompanied by certificate of Scheduled Bank, is not in dispute. Apart from petitioner, four other bidders vide communication dated 7.9.2015, were given opportunity to submit the requisite Banker's certificate regarding availability of access to credit. They were also given clear understanding that no further extension would be granted to them and its non-submission would disqualify them from further participation.

12. The petitioner has, after this communication, submitted an affidavit which is sworn in on 17.9.2015. In this affidavit, there is express reference to the communication dated 7.9.2015 and it stated that petitioner has already submitted working capital certificate of Chartered Accountant. It is added that petitioner is interested in participating further and, therefore, aspired to qualify for opening of Part-2 of tender process. Petitioner asserts that it was in the process of procuring certificate from banker and that process would take some time. After submitting this affidavit, present writ petition came to be filed on 21.9.2015. Immediately on the very same day, this Court has passed the order reproduced supra.

13. During the pendency of this petition, admittedly, petitioner has not produced a certificate issued by any Scheduled Bank. Pusad Urban Cooperative Bank Limited has issued certificates dated 16.11.2015 which mention that petitioner has 'loan to traders working capital cash credit limit' of Rs. Four crores fifty lacs. Admittedly, this Bank is not a Scheduled Bank.

14. The eligibility criterian are laid down in clause 6 of NIT. Clause 6B which is relevant for present purposes, reads as under:

'B. Working Capital : The bidder must produce the evidence of adequacy of a minimum working capital either 20% of the annualized value of estimated cost of the work (for period of completion over one year) or 20% of the estimated cost of the work (for period of completion upto one year), for this work. Banker's Certificate (Scheduled Bank) regarding availability of access to credit (issued within 3 months prior to the last date of submission of Bid).'

As per Clause 8 (d), entire information as required under clauses 6 and 7 was required to be uploaded in the links cover-I. As per clause 8 (e), the price Bid was to be submitted in cover-II.

15. Clause 23 in NIT is regarding notification of award and signing of Agreement. Clause 24 to which our attention was drawn by petitioner, is about performance security/security deposit. It speaks of security deposit in two parts. The first part is about performance security to be submitted at award of work and second part is about retention money to be recovered from running bills. Clause 4.2 of the conditions of contract then stipulates the quantum of performance security to be 5% of annualized value of contract amount and it is to be submitted within 28 days of issue of Letter of Acceptance by the successful bidder. Clause 4.3 requires the performance security to be furnished by a bidder through a Scheduled Bank or by a foreign bank located in India and acceptable to the respondents. Clause 4.5 is about refund of security deposit.

16. Thus, all these clauses come into picture after Letter of Acceptance is issued by the respondents. Contingency that a successful bidder may not furnish the later securities/guarantees cannot have any relevance while construing clause 6B which is on availability of (i) working capital and (ii) access to credit.

17. When Clause 6B is viewed in this background, it is apparent that it determines eligibility and, therefore, enables the person to qualify at first stage. Words used therein show that it is obligatory on the bidder to produce evidence as to the adequacy of a minimum working capital. The very same clause also stipulates certificate of a Scheduled Bank regarding availability of access to credit and it should have been issued within three months prior to the last date of submission of bid. In the light of this clause, petitioner submitted only a certificate of Chartered Accountant. It is dated 13.4.2015 and it shows that petitioner has working capital of Rs. 2.08 crores as on 31.3.2015 in the business.

18. Thus, this certificate is not issued by a Scheduled Bank regarding availability of access to credit. It only points out working capital available with the petitioner as on 31.3.2015. It, therefore, takes care of first part of Clause 6B and not its later part.

19. Subsequent conduct of petitioner in showing readiness and willingness to comply with the demand as per communication dated 7.9.2015; submission of affidavit by him on 17.9.2015 and then providing a certificate of a cooperative bank dated 16.11.2015 all show that the petitioner was aware of the need of a certificate requiring him to establish availability of access to credit in terms of said clause 6B. We find that certificate issue by Chartered Accountant or certificates issued by a cooperative bank on 16.11.2015 do not meet this requirement.

20. Petitioner does not claim that ce

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rtificate of a non-scheduled Bank submitted by it after stipulated period of ten days should be accepted as sufficient compliance. Petitioner did not seek any extension of time from respondents for that purpose. Access to availability of credit is needed to ascertain not only financial stability of contractor, but his competency to arrange for finance for the work under NIT in case of any emergency. Such a requirement cannot be treated as a non-essential or a co-lateral condition. 21. The submission that it has to be treated as a co-lateral condition cannot be accepted. Access to credit is demanded to determine the competency of petitioner who already has two contracts to complete the work for which he is bidding. The fact that earlier respondents accepted certificate of Chartered Accountant as sufficient compliance with Clause 6B is not decisive looking to the purpose with which such a provision has been made. The said stipulation, therefore, is an essential condition. 22. In view of this, no case is made out for interference. Petition fails and is dismissed. Needless to mention, interim order dated 21.9.2015 stands vacated. Rule discharged. No costs.