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



M/s. Herodex Power Systems Pvt.Ltd., Rep. by its Managing Director & Authorised Singatory, A. Vijayasenthilkumar & Another v/s The Chief Engineer/Civil/Transmission, TANTRANSCO, Chennai & Others


Company & Directors' Information:- H. P. POWER TRANSMISSION CORPORATION LIMITED [Active] CIN = U40101HP2008SGC030950

Company & Directors' Information:- E M I TRANSMISSION LIMITED [Active] CIN = U28100MH1973PLC016533

Company & Directors' Information:- HERODEX POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U51900MH1995PTC091868

Company & Directors' Information:- POWER SYSTEMS INDIA LIMITED [Strike Off] CIN = U31102PN1999PLC013231

Company & Directors' Information:- P. S. POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U31909KA2007PTC042408

Company & Directors' Information:- B V L POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U40109TG1997PTC028643

Company & Directors' Information:- A & T POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U31908TG2015PTC099121

Company & Directors' Information:- A & A POWER TRANSMISSION PRIVATE LIMITED [Active] CIN = U93000WB2012PTC175295

Company & Directors' Information:- S G M POWER SYSTEMS PVT LTD [Strike Off] CIN = U40106DL2001PTC111503

Company & Directors' Information:- L M POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U31909DL1998PTC097253

Company & Directors' Information:- M V POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U31401HR2007PTC036901

Company & Directors' Information:- D. R. POWER TRANSMISSION PRIVATE LIMITED [Strike Off] CIN = U45309DL2000PTC106115

Company & Directors' Information:- C C SYSTEMS PRIVATE LIMITED [Strike Off] CIN = U31100TG1996PTC023469

Company & Directors' Information:- U-POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U29100TN2013PTC092638

Company & Directors' Information:- B T S POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U31506DL2016PTC293040

Company & Directors' Information:- G C S POWER SYSTEMS PRIVATE LIMITED [Active] CIN = U31909DL2003PTC120288

Company & Directors' Information:- K E TRANSMISSION PRIVATE LIMITED [Active] CIN = U40104GJ2015PTC084843

    W.P. Nos. 6177 & 23599 of 2017 & W.M.P. Nos. 6659, 24791, 24792 & 34889 of 2017

    Decided On, 16 March 2018

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE K. RAVICHANDRABAABU

    For the Petitioner: AR.L. Sundaresan, Senior Counsel for P. Sankaranarayanan, Advocate. For the Respondents: R1 to R3 & R5, Abdul Saleem, Standing Counsel, R4, No appearance, R6, C. Johnson, Advocate, R7, R. Govindasamy, Special Government Pleader, Abdul Saleem, Standing Counsel.



Judgment Text

(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus to call for the records relating to the impugned letter / Order passed by the 1st respondent as far as it relates to insisting the petitioner to proceed with civil works pending CMDA approval in Lr.No.CE/C/TR/SE/C-II/TR/EE3/T-1876/LOA2758/D.318/17 dt.22.02.2017 and quash the same as far as it relates to insisting the petitioner to proceed with further construction activities pending CMDA plan approval and consequently direct the 1st respondent to collect the documents from the 2nd and 4th respondents and comply with requirements of the 6th respondent as per 6th respondent's letter dated 14.10.2016 bearing No.c4/10233/2016 and to consider extension of time for the project by 12 months form the date of approval by the 6th respondent as per clause 41.3 and 41.6 of the agreement.

Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus to call for the records relating to the impugned order bearing Lr.No.CE/C/TR/SE/TR IV/EE2/AEE1/F.T-1876/D 87/17 dated 04.08.2017 on the file of the respondent and quash the same and consequently direct the respondent to restore the contract awarded vide LOA.Nos.2758, 2759 and 2760 dated 02.01.2016 and also to restore the EMD and security Deposit cum Performance Guarantee submitted by the petitioner.)

Common Order:

1. Both these writ petitions are filed by one and the same petitioner. Since the decision to be made in the subsequent Writ Petition viz., W.P.No.23599/2017 will have a bearing on the other writ petition filed earlier in W.P.No.6177/2017, the subsequent W.P.No.23599/2017 is considered first and decided as hereunder:

The petitioner is aggrieved against the order of the respondent dated 04.08.2017. Consequently, the petitioner seeks for a direction to the respondent to restore the contract awarded vide LOA.Nos.2758, 2759 and 2760 dated 02.01.2016 and also to restore the E.M.D. and security deposit cum performance guarantee submitted by the petitioner.

2. The case of the petitioner is as follows:

The subject matter contract namely establishment of 230/33 KV GIS Sub-Station at Mambalam, Chennai Region, was awarded to the petitioner by letter of award dated 02.01.2016. The work involves Civil Work, Purchase and Supply of Equipment/Materials for Electrical Work and Erection of Electrical Equipment/ Materials, Testing and Commissioning. The respondent, after awarding the contract, insisted the petitioner to abide and follow the CMDA approval in constructing the structure for establishment of the Sub-Station. Thus, the respondent insisted the petitioner to get the CMDA plan approval. However, they failed to furnish the necessary documents for producing before the CMDA for getting its approval. In one communication dated 16.06.2016, it was informed to the petitioner that it was not feasible to do the work of regular pile pending CMDA approval and further rejected the GIS drawings submitted by the petitioner due to pendency of CMDA approval. The CMDA, through letter dated 14.10.2016, sought for a list of documents to be submitted for getting approval. Only due to non-supply of necessary documents by the respondent for obtaining CMDA approval, the project was delayed. The petitioner sent a representation on 06.02.2017, wherein they requested to forward the documents sought for by the CMDA for approval to enable the petitioner to proceed with the construction of the Sub-Station building strictly in line with the contract terms and conditions. However, the said request for constructing the civil work was not considered and on the other hand, a communication was sent to the petitioner on 22.02.2017 insisting the petitioner to proceed with the further construction activities pending CMDA plan approval. Challenging the said proceedings, the petitioner filed W.P.No.6177 of 2017.

3. While the said W.P. was pending, the respondent passed an order dated 14.08.2017 wherein the contract awarded to the petitioner was terminated, apart from banning the petitioner from participating in any future tenders for three years and also by forfeiting EMD. Consequently, the performance guarantee given by the petitioner was also ordered to be invoked. The said order is under challenge in W.P.No.23599/2017. The reasons stated in the impugned order with regard to the non-submission of GIS drawings, cannot be a ground for cancelling the contract. The issue related to the drawings can be finalised only after the civil work is completed. The respondent alone is liable for delay in not getting the CMDA approval as they failed to furnish the material documents. Therefore, on that ground also, the respondent is not entitled to terminate the contract.

4. The respondent filed a counter affidavit wherein it is stated as follows:

(a) The petitioner was awarded with the subject matter contract on 02.01.2016 with a condition to complete the project within a maximum period of 18 months. The petitioner has to secure approval for establishment of the Sub-Station. The respondent Corporation has extended all support in securing the required planning approval from CMDA. As the issue of planning approval was pending with the CMDA, the petitioner's request of civil design calculation and analysis was not considered by the respondent Corporation. When the CMDA, through their letter dated 14.10.2016, requested for submission of further documents, the respondents have taken all efforts to submit the documents for planning approval. By letter dated 22.02.2017, the petitioner was requested to proceed with the civil works pending CMDA approval. As per the tender specification, the petitioner has to satisfy the bid qualification requirements in which clause 3 specifies about the submission of the Type Test Reports as per the relevant IEC standards for 230 KV and 33KV or higher voltage grade GIS equipments. The petitioner, while submitting the tender had filed the test reports for 230KV and for 33 KV, the petitioner had filed test reports of 126 KV, since filing of higher test reports for higher voltage is acceptable as per the Bid Qualification Requirements specifications.

(b) By letter dated 02.03.2016, the petitioner filed vendor credentials for 33 KV GIS equipments and on scrutiny, it was found that the vendor credentials submitted by the petitioner was not that of M/s. Taian Taishan HV Switchgear Co.Ltd., China and it was of M/s. Changzhou Pacific Electric Power Equipment group Co. Ltd. (CPEPE), China. By filing the vendor credentials of another make of GIS equipment i.e., CPEPE and not that of the petitioner's consortium partner, viz., M/s. Taian Taishan HV Switchgear Co. Ltd., China, the petitioner had violated the tender specification and the said vendor credentials were rejected by the Respondent Corporation by letter dated 17.03.2016 and was further directed to produce the vendor credentials of their consortium partner i.e., M/s. Taian Taishan HV Switchgear Co.Ltd., China.

(c) By letter dated 20.04.2016, the petitioner had again insisted the Respondent Corporation to accept the vendor credentials of M/s. Changzhou Pacific Electric Power Equipment Group Co. Ltd. (CPEPE), China. However, by letter dated 02.05.2016, the Petitioner was again directed to strictly comply the tender specifications.

(d) Since the petitioner failed to produce the documents in compliance of the tender specifications, a reminder was sent to the petitioner on 28.05.2016 and as the replies submitted by the petitioner was not in conformity with earlier letters and tender specifications, a show cause notice dated 11.07.2016 was issued to the petitioner seeking explanation.

(e) In response to the show cause notice, the petitioner submitted various documents on 29.07.2016 and on further scrutiny of the documents, it was found that the construction drawings of 33 KV GIS equipments submitted in pursuance of the the show cause notice is the same as that of M/s. Changzhou Pacific Electric Power Equipment group Co. Ltd. (CPEPE) and not that of M/s. Taian Taishan HV Switchgear Co. Ltd., China. The said drawing of 33 KV GIS of M/s. Changzhou Pacific Electric Power Equipment Group Co. Ltd. (CPEPE) was already rejected by the respondent Corporation as the same was not in conformity with the tender specifications. Hence, by letter dated 21.11.2016, the petitioner was directed to submit drawings for approval and a show cause notice was also issued on 22.11.2016 for non-compliance of the Bank guarantee towards Security deposit and performance guarantee.

(f) Meanwhile, letter dated 28.11.2016 was issued to M/s. Taian Taishan HV Switchgear Co. Ltd., China, the technical partner of the consortium for clarification of queries in respect of the drawing submitted by the petitioner herein.

(g) The technical partner of the consortium M/s. Taian Taishan HV Switchgear Co.Ltd., China, vide letter dated 13.01.2017, issue a clarification stating that the drawing were submitted in their presence. It is pertinent to mention that Chinese partner has not confirmed that the equipment drawing pertains to their Company and hence, the said clarification issued by M/s.Taian Taishan HV Switchgear Co. Ltd., China was rejected and the same was communicated by proceedings dated 10.02.2017.

(h) Taking note of the entire facts and circumstances that transpired from the date of award, considering the vendor credentials submitted by the petitioner wherein the petitioner had submitted drawings of a different company than that of the consortium partner and non-submission of the Guaranteed Technical particulars, drawings and Type test reports of the 33 KV GIS equipment, the tender awarded to the petitioner was terminated by proceedings dated 04.08.2017, and the security deposit cum performance guarantee was invoked.

(i) Pursuant to the termination order, respondent Corporation had issued a fresh notification dated 29.10.2017 calling for fresh tender. In furtherance of the tender, respondent Corporation had received 'Three tenders' and the technical bid was opened on 23.12.2017. Thus, nothing survives in the present Writ Petitions and the same are liable to be dismissed.

(j) The above facts would reveal that the impugned order was passed by the respondents since the petitioner was not able to produce the guarantee technical particulars, drawings and type test reports as mandated under the tender specification.

5. Mr.AR.L.Sundaresan, learned senior counsel appearing for the petitioner submitted that the petitioner cannot be faulted in not getting the CMDA approval when the respondent has not filed the necessary documents before the CMDA for test approval. He further submitted that the drawings submitted is in confirmity with the tender document except the fact that it contained a wrong logo. In other words, it is his contention that the drawing submitted by the petitioner is that of the M/s. Taian Taishan HV Switchgear Co.Ltd., China, which is the consortium parter of the petitioner. He further submitted that in addition to the termination of the contract, the respondent has also chosen to black list the petitioner and invoke the Bank guarantee without issuing a show cause notice to that effect.

6. Per contra, the learned counsel appearing for the respondent submitted that the approval from CMDA issue is not the reason for passing the impugned order and on the other hand, the non-submission of the credential as per the terms and conditions is the sole issue and ground for passing the impugned order. He further contended that the consortium partner namely M/s.Taian Taishan HV Switchgear Co. Ltd., China, has never stated that the drawings submitted by the petitioner admittedly with wrong logo, is that of their drawings and on the other hand, they only stated that the same was presented by the petitioner in their presence. He further submitted that though the petitioner was given opportunity even after submission of such logo drawings, to furnish the correct drawings, the petitioner has not utilised the same and till date, no such drawing was submitted by the petitioner. He argued further that the petitioner has mislead the respondent by producing the drawing of some other company with wrong logo. Thus, he submitted that in pursuant to the impugned order of termination another tender was flouted and technical bid submitted by the participants therein were opened 23.12.2017 and three bidders were found qualified and that the petitioner has already abandoned the site on 06.02.2017 itself and therefore, the petitioner is not entitled to any relief in this writ petition. His final submission is that even assuming that the petitioner is having any cause of action, the same has to be agitated only before the Civil Court by filing a Civil Suit and not by way of a writ petition.

7. Heard both sides.

8. Point for consideration in this writ petition is as to whether the impugned orders of the respondent are liable to be interfered with by exercising the discretionary jurisdiction under Article 226 of the Constitution of India.

9. The petitioner was awarded with a time bound performance of the contract. Though it is vehemently contended on behalf of the petitioner that the delay in obtaining the CMDA approval is not due to the fault of the petitioner and therefore such reason cannot be cited as a ground for terminating the contract, a perusal of the impugned order would show that the CMDA approval issue was not the reason for terminating the contract. On the other hand, it is seen that the respondent has chosen to terminate the contract on the reason that the construction drawings submitted by the petitioner are not that of its consortium partner namely M/s. Taian Taishan HV Switchgear Co.Ltd., China, and on the other hand, the same were pertaining to another Chinese Company, namely M/s.Changzhou Pacific Electric Power Equipment Group Company (CPEPE). Perusal of the impugned order would further show that the drawings submitted by the petitioner on 04.11.2016 was scrutinised by the respondent and they have noticed, the following lapses or defects, which was considered by the respondent as misleading attempt of the petitioner.

The drawings submitted is of M/s.Changzhou Pacific Electric Power Equipment Group Company (CPEPE) made of 33 KV GIS equipments which has been rejected by vide this office Lr. Dt. 17.03.2016 and again reiterated vide Lr. Dt. 02.05.2016. M/s. Herodex have again tried to mislead by producing the documents of M/s. Changzhou Pacific Electric Power Equipment Group Company (CPEPE) without the name, but with their logos (Switchgear type XGN-80) as brand name for M/s.Taian Taishan HV Switchgear Co.Ltd., China make 3KV GIS equipments. Further, it is stated that as per the tender document submitted by satisfy Bid qualification requirement clause (3), M/s. HERODEX Power System (P) Ltd. Has to furnish GTP and drawings of Taian Taishan HV Switchgear Co.Ltd., China make 33 KV GIS equipments only.

10. Therefore, the respondent, apart from calling upon the petitioner to file the drawings of its consortium partner, by letter dated 17.03.2016 & 02.05.2016, also called upon the said consortium partner, namely M/s.Taian Taishan HV Switchgear Co.Ltd., China, through letter dated 28.11.2016, to confirm the genuineness of the consortium agreement signed between the petitioner and the said Company and also the genuineness for vendors credentials construction drawings as submitted by the petitioner. By their reply letter dated 13.01.2017, the said consortium partner of the petitioner Company replied to the respondent, more particularly, with regard to the genuineness for vendors credentials as follows:

The vendor credentials of 110 KV GIS equipment and 33 KV construction drawing had been submitted by M/s. Herodex in the presence of me (Zhang Hongliang). The same is confirmed as genuine/authentic.

11. The said reply was considered by the respondent as not acceptable, since the construction drawings submitted were pertaining to another Company, namely M/s. Changzhou Pacific Electric Power Equipment Group Company (CPEPE), which was already rejected by the respondent on 17.03.2016. Therefore, the petitioner was again called upon by the respondent on 10.02.2017 to submit the drawings of M/s.Taian Taishan HV Switchgear Co.Ltd., China, along with the original brochure/ catalogue of the said Company before 15.02.2017. The fact remains that the petitioner has not submitted such drawings till this date as found in the impugned order itself.

12. Now it is sought to be contended before this Court now is that the drawings submitted by the petitioner are that of the Company, namely M/s.Taian Taishan HV Switchgear Co.Ltd., China, and however, the logo found therein is a wrong one. Therefore, it is contended that merely submitting the drawings containing wrong logo, cannot be a reason to reject, as though it is not that of M/s.Taian Taishan HV Switchgear Co.Ltd., China. I do not propose to accept such contention of the petitioner, more particularly, when such drawings submitted by the petitioner were already rejected and the petitioner was given several opportunities to submit the drawings of their consortium partner, which they have admittedly failed to comply. Whether the wrong submission of the drawings and the vendor credentials would lead for terminating of the contract are purely technical aspects of the matter, which the respondent alone is competent to decide, with which, this Court is not inclined to interfere with. When it is stated that the drawings submitted by the petitioner were not that of its consortium partner and on the other hand, they belong to some other Company and when it is seen that the petitioner has failed to utilise several opportunities for producing such drawings, I find no ground to interfere with the order insofar as the termination of the contract is concerned. At this juncture, it is is to be noted that the consortium partner company has not categorically stated in writing that the disputed drawings are that of them. They only say it was presented in their presence. Hence, the respondent is justified in terminating the contract.

13. Let me now consider the validity of the other limb of the impugned order which banned the petitioner from participating in any future tenders for a period of three years and also forfeited of E.M.D. and invoked the performance guarantee.

14. It is contended by the petitioner that banning the petitioner for three years and invoking the performance guarantee attract civil consequence and hence, the said punishment or penalty cannot be imposed in violation of principles of natural justice. It is also stated that the petitioner was issued with one show cause notice dated 11.07.2016 wherein the petitioner was called upon only to show cause as to why the contract awarded shall not be terminated. A copy of the said show cause notice is placed before this Court. Perusal of the same would show that there is no reference or indication whatsoever about the proposed action of banning and the invocation of the Bank guarantee as well. It is also seen that apart from the said show cause notice, there is no other show cause notice issued to the petitioner to that effect in respect of the proposed banning and invocation of performance guarantee. No doubt, in the counter affidavit, it is referred as though a show cause notice was issued on 22.11.2016 for non-compliance of the bank guarantee towards security deposit and performance guarantee. But perusal of the impugned order would show that such notice was issued to the petitioner to confirm the following:

i) Genuineness of the consortium agreement signed between M/s. Herodex Power System (P) Ltd., Nasik and M/s. Taian Taishan HV switchgear co. Ltd., P.R.China which was submitted along with Tender document against specification T-1876 by M/s. Herodex Power System (P) Ltd, Nasik.

ii) Genuineness for Vendor credentials of M/s. Taian Taishan HV switchgear Co.Ltd, China make 110KV GIS equipments, 33 KV construction drawings as submitted by M/s. Herodex Power Systems (P) Ltd.

Iii) Manufacturing of M/s. Taian Taishan HV switchgear Co.Ltd., China make 33 KV GIS Switchger and typed test reports for the same.

15. Even otherwise, it is to be noted further that the impugned order does not discuss anywhere as though a specific show cause notice was issued calling for explanation about the proposed banning and the invocation of bank guarantee. Learned counsel for the respondent, in fact, sought to contend that since the petitioner had misled the respondent, there is no necessity to issue such show cause notice. I do not think that such contention can be accepted, more particularly, when the punishment of banning and invocation of performance guarantee is major penalty which attracts civil consequences. Therefore, the same cannot be imposed without giving an opportunity to the petitioner to putforth their case. Whether the reasons set out in the impugned order for terminating the contract would equally apply to ban the petitioner and invoke the performance guarantee, is certainly a matter, which has t

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o be considered and decided by the respondent only after putting the petitioner on notice and hearing their objection. In the absence of a notice to that effect, I am of the considered view that the impugned order insofar as banning the petitioner for three years from participating in any future tenders and also invoking the performance guarantee, cannot be sustained, only on the ground of violation of principles of natural justice. Therefore, without expressing any view on the merits of the matter, this Court is of the view that the impugned order only insofar as banning the petitioner from participating the future tender for three years and invoking the performance guarantee is to be set aside and the matter is to be remitted back to the respondent for considering the above said issue afresh after putting the petitioner on notice and receiving their explanation. 16. Accordingly, W.P.No.23599 of 2017 is allowed in part and the impugned order is set aside only insofar as banning the petitioner for three years from participating in any future tenders and forfeiture of E.M.D. as well as invoking the performance guarantee alone are concerned. In all other respects, the impugned order, insofar as terminating the contract is held valid. Thus, the respondent shall issue notice to the petitioner within a period of two weeks from the date of receipt of a copy of this order in respect of the proposed banning, forfeiture of EMD and the invocation of performance guarantee. The petitioner shall furnish their reply within a period of two weeks on receipt of such notice. The respondent shall pass fresh orders on merits and in accordance with law after receipt of such explanation and also after affording an opportunity of personal hearing to the petitioner. Such order shall be passed by the respondent within a period of four weeks from the date of receipt of explanation from the petitioner. Till an order is passed as stated supra, the respondent is directed not to invoke the bank guarantee. If the bank guarantee furnished already is to expire in the mean time, the petitioner shall extend such bank guarantee for further period accordingly. 17. In view of the order passed in W.P.No.23599 of 2017, no further order is necessary in W.P.No.6177/2017. Accordingly, W.P.No.6177/2017 is closed. No costs. Consequently, connected miscellaneous petitions are closed.
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