N THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16 .02.2010 CORAM THE HONOURABLE MR. JUSTICE K.VENKATARAMAN Writ Petition Nos.27074 of 2009 and 1059 of 2010 and M.P.Nos.1 and 2 of 2010 W.P.No.27074 of 2009: 1 M/S.DOSHION VEOLIA WATER [ PETITIONER IN ] SOLUTIONS PVT. LTD. BOTH W.PS. OFFICE AT PLOT NO.24- 26 PHASE II GIDC VATVA AHMEDABAD 382 445 GUJARAT THROUGH ITS GENERAL MANAGER LEGAL NARESHMUKUND SANGANI Vs 1 INDIAN RAILWAY CATERING AND [ RESPONDENTS ] TOURISM CORPN. LTD. IN BOTH W.PS. THORUGH ITS MANAGING DIRECTOR 9TH FLOOR BANK OF BARODA BUILDING 16 PARLIAMENT STREET NEW DELHI-1 2 CHIEF PLANT MANAGER/RNP INDIAN RAILWAY CATERING AND TOURISM CORPN. LTD. SOUTH ZONE 6A THE RAIN TREE PLACE NO. 9 MC NICHOLS ROAD CHETPET CHENNAI-31 3 THE SECRETARY RAILWAY BOARD MINISTRY OF RAILWAYS RAIL BHAWAN NEW DELHI https://hcservices.ecourts.gov.in/hcservices/ 4 M/S.ION EXCHANGE INDIA LTD. TIECICON HOUSE DR.E.MOSES ROAD MAHALAXMI MUMBAI-11 Writ petition No.27074 of 2009 has been filed under Article 226 of the Constitution of India to issue a writ of mandamus forbearing the respondents 1 & 2 from taking any step in furtherance of the tender No. IRCTC/SZ/RNP/P&M/2009/02 dated 3.8.2009 issued by the 2nd respondent by receiving any performance of the works as detailed in para 6 of teh Technical Bid of the said tender from the 4th Respondent and further direct Respondent Nos. 1 to 3 to award the tender in favour of the Petitioner being the lowest bidder. Writ petition No.1059 of 2010 has been filed under Article 226 of the Constitution of India to issue a writ of certiorari to Call for the records of the 2nd Respondent in letters Nos.IRCTC /SZ/RNP/ P&M/2009/02/S dated 17.12.2009 IRCTC/SZ/RNP/ P&M/ 2009/02/E&C dated 17.12.2009 & IRCTC/SZ/RNP/ P&M/2009/02/O&M dated 17.12.2009 and quash the same. For petitioner : Mr.AL.Somayaji, Senior Advocate for Mr.Karthik Mukundan, in both the writ petitions. For respondents : Mr.Amarendar Sharan, Senior Advocate and Mr.R.Thiagarajan, Senior Advocate for Mr.V.G.Suresh Kumar, and Mr.Saurav Agarval, for R.1 to R.3 in both W.Ps. Mr.N.R.Chandran, Senior Advocate for M/s.Surana & Surana, for R.4 in both WPs COMMON ORDER Writ Petition No.27074 of 2009 was filed for a mandamus forbearing respondents 1 and 2 from taking any steps in furtherance of the tender dated 3.8.2009 issued by the second respondent by receiving any performance of the works as detailed in the Technical Bid of the said tender from the fourth Respondent and further directing respondents 1 to 3 to award the tender in its favour being the lowest bidder. 2. Writ Petition No.1059 of 2010 was filed challenging the order of the second respondent dated 17.12.2009 accepting the tender of the fourth respondent. https://hcservices.ecourts.gov.in/hcservices/ 3. The short matrix of the matter as put forth by the petitioner in the affidavits in support of the writ petitions, in nutshell, is set out here under:- (a) The petitioner is a private limited company incorporated under the provisions of the Companies Act, 1956. In February, 2009, respondents 1 and 2 floated a two part tender dated 18.02.2009 for setting up a turnkey project for Design, Engineering, Supply, Installation, Commissioning, Operation and Maintenance of Packaged Drinking Water Bottling Plan under the name of "Rail Neer", at Palur near Chennai. (b) The petitioner and the fourth respondent participated in the tender with their bids. The technical bid was opened on 30.03.2009. The Tender Committee declared three bidders as successful and thereafter, the price bids were opened on 26.06.2009. The petitioner's bid was the lowest one. However, respondents 1 and 2 decided to scrap the entire tender process by proceedings dated 27.07.2009 and the same was informed to the petitioner also. (c) The petitioner immediately protested against the said cancellation of the tender, by its letter dated 31.07.2009 to the first respondent. Later, respondents 1 and 2 called a meeting of all the three bidders on 29.07.2009 and a consultation was held in the office of the first respondent. In the said meeting, it was explained that the earlier tender was cancelled due to lack of clarity and information on certain aspects and hence, the tender was re-floated. (d) Within seven days of cancellation of the first tender, respondents 1 and 2 subsequently re-floated a new tender dated 03.08.2009. The petitioner and the fourth respondent submitted their bids. After scrutinizing the technical bids, the price bids were opened on 27.08.2009 in the presence of the representatives of all the parties. When the price bids were opened, the price offered in the price bid was Rs.18.65 Crore by the petitioner and Rs.18.66 Crore by the fourth respondent. There were certain apparent discrepancies in the price bid of the fourth respondent, which are violative of the specific terms of the tender document and the same was brought to the notice of the second respondent by a letter dated 27.08.2009, the date on which the tender was opened. (e) There were additions in the tender submitted by the https://hcservices.ecourts.gov.in/hcservices/ fourth respondent and the following discrepancies were found in the tender submitted by the fourth respondent, viz., (i) The fourth respondent failed to indicate the total excise duty amount separately. (ii) The tender submitted by the fourth respondent shall be considered as void in terms of clause 1.12 of the tender document. (iii) There was violation of clause 1.3 of the tender document. (iv) The tender document does not allow anything to be added after stamp is affixed, whereas the fourth respondent has put its stamp and signature on the right hand side of the page as well as in the middle of the page and the stamp has not been put on the bottom of the page. Even after the signature on the stamp, several lines have been added and thus, the bid as made by the fourth respondent should not have been considered. (f) Pursuant to the opening of the price bid, the petitioner by its letters dated 28.09.2009, 03.09.2009 and 10.09.2009 pointed out several discrepancies in the bid as submitted by the fourth respondent. Further, the representatives of the petitioner company met the first respondent on 11.09.2009 and pointed out the discrepancies in the price bid submitted by the fourth respondent. A letter dated 11.09.2009 was written to the first respondent pointing out that the commercial bid as submitted by the fourth respondent was incomplete and requested the first respondent to declare the price bid submitted by the fourth respondent as void and to award the tender to the petitioner. (g) Ignoring the discrepancies pointed out by the petitioner, it was found that respondents 1 and 2 acting in an arbitrary, discriminatory and highhanded manner, had awarded the tender to the fourth respondent. The fact of having awarded the tender to the fourth respondent was orally communicated to the petitioner by the second respondent. But, however, the copy of the order was not served on the petitioner. (h) The petitioner, therefore filed a writ petition in W.P.No.27074 of 2009 for a mandamus forbearing the respondents from taking any steps in furtherance of the tender dated 03.08.2009 issued by the second respondent by receiving any performance of the works of the Technical Bid of the tender from the fourth respondent and for awarding the tender in its favour. https://hcservices.ecourts.gov.in/hcservices/ (i) On 05.01.2010, respondents 1 and 2 filed a detailed counter in the said writ petition, wherein it was pointed out by respondents 1 and 2 that letter of acceptance has been issued on 17.12.2009 to the fourth respondent. In view of the said fact, the petitioner has filed another writ petition in W.P.No.1059 of 2010 challenging the said proceedings of the second respondent dated 17.12.2009. 4. Counter affidavits were filed on behalf of respondents 1 and 2, wherein the following averments have been made:- (a) It was noticed that the bidders had submitted their conditional bids with varying terms and conditions, in contrast to the tender document, having varying financial implications in respect of taxes and duties, supply of raw materials for bottling, etc. Therefore, the tender committee was of the opinion that since all the bidders were well established in the business, there would not have been a clear and unambiguous understanding of the bid resulting in variations and anomalies in the bids. The tender committee recommended for discharge of the tender in exercise of clause 1.16 of the tender document and invitation of fresh tender after incorporating all the relevant revisions in the tender document to avoid anomalies. The said recommendation was duly accepted by the Accepting Authority and thereafter, the bidders were duly informed about the cancellation of the tender on 27.07.2009. (b) Number of changes have been made in the new tender including changes so as to deal with the causes that led to the cancellation of the previous tender. The petitioner and the fourth respondent were the two bidders, who participated in the bidding process. Though the petitioner had earlier objected to the cancellation of the earlier tender, it participated in the fresh tender. In the second round of the tender, both the parties have substantially reduced their quotes towards O & M. However, coming to price of plant and equipment, while the fourth respondent has marginally reduced its price, the petitioner has substantially increased the same. (c) The technical bids were duly opened on 24.08.2009 and upon scrutiny of their technical bids, the tender committee recommended opening of the financial bids, which was accepted by the Accepting Authority. The financial bids were opened on 27.08.2009 in the presence of the representatives of both the bidders. It was noticed that the petitioner had quoted a total price of Rs.18.65 Crore whereas the fourth respondent quoted a price of Rs.18.66 Crore and also quoted a discount of 1% on the total price. https://hcservices.ecourts.gov.in/hcservices/ (d) The tender committee had deliberated in detail over the issue of the net price quoted after adjusting the discount offered by the fourth respondent. Considering that the discount quoted was unconditional, across the board and was part of the financial bid at the time of opening of the bid, the net price quoted by the fourth respondent was considered for evaluation. (e) The bidders were required to quote an all inclusive price. There was no separate column / place for indicating the excise duty which has been included in the quoted price nor it was one of the bidding criterion or part of the bid evaluation. No infirmity therefore, could be found with the bid of the fourth respondent on this count. (f) The tender committee in view of the objections raised by the petitioner had deliberated over this aspect at length and ultimately concluded that the excise duty amount was not to be reckoned for bid evaluation. The offer of the fourth respondent was accepted after considering the relevant issues. Thus, the counter affidavits sought for the dismissal of the writ petitions. 5. Counter affidavits were filed on behalf of the fourth respondent, which contain the following facts:- (a) Cancellation of earlier tender was accepted by all the bidders including the petitioner. Having participated in the fresh tender, the petitioner is estopped from stating that the earlier tender should not have been cancelled. (b) The price bids were opened by the officials of respondents 1 and 2 in the presence of the representatives of the petitioner and the fourth respondent. The discount referred to in the price bid of the fourth respondent was clearly read out when its price bid was opened. The discount offered by the fourth respondent is clearly referred to in the letter dated 27.08.2009 written by the petitioner to the second respondent. In the letter dated 27.08.2009 written by the petitioner to the first respondent, the petitioner clearly admitted that the price bid of the fourth respondent contained the handwritten discount in the price. Thus, it is clear that the price bid was opened in the presence of the representatives of the petitioner and the fourth respondent which contains the discount of 1% referred to in the price bids. When there is no specific term prohibiting such discount or restrictions in quoting any price and then giving a discount, the discount offered by the fourth respondent cannot be faulted with. https://hcservices.ecourts.gov.in/hcservices/ (c) The excise duty benefit that would accrue to the second respondent in terms of the second tender has been clearly stated in percentage terms and there is no ambiguity for the same. In any event, the excise duty could not have been part of the bid evaluation process. (d) At no point of time, after opening of the tender, was there any change in the rates as submitted by the fourth respondent in its bid. The overall price bid of the fourth respondent was considered by respondents 1 and 2 and only thereafter, the tender was awarded to the fourth respondent. There is no applicability of clause 1.12 in respect of the current case, since there was no deviation or any change in the rates, after the opening of the tender. The price bid as submitted by the fourth respondent was valid and has been rightly considered by respondents 1 and 2. Thus, the counter affidavit sought for the dismissal of the writ petition. 6. Reply affidavit was filed on behalf of the petitioner for the counter affidavits filed by respondents 1 and 2 as well as the fourth respondent, which in nutshell, is set out here under:- (a) The petitioner had adhered to the conditions in the tender and had quoted a price inclusive of all taxes and duties unlike the fourth respondent. On the contrary, the fourth respondent has violated the terms and conditions of the tender. The earlier tender was cancelled by the competent authority arbitrarily with a mala fide intention and the power to discharge the tender as per clause 1.16 was exercised with an ulterior motive to deny the tender to the petitioner, though it was the highest bidder. (b) There was no provision for providing discount in the tender form nor was it discussed and permitted in the pre bid meeting of all the bidders and respondents 1 and 2. Therefore, the tender of the fourth respondent is liable to be rejected. (c) Since representation was sent pointing out the arbitrary and discriminatory cancellation of the earlier tender, the question of waiver will not arise. The discount offered by the fourth respondent by an handwritten insertion well below the seal affixed on that page, would clearly indicate that such insertion was an after thought and the same was made with an ulterior motive to deny the tender to the petitioner. The handwritten insertion also does not satisfy the requirement of clause 1.11, Part I of the tender viz, Instructions to Bidders. In such circumstances, the tender submitted by the fourth https://hcservices.ecourts.gov.in/hcservices/ respondent is void as per clause 1.12 and therefore, respondents 1 and 2 ought not to have processed the same. (d) If the fourth respondent can quote a discount when there is no provision for the same in the tender by an handwritten insertion, in the same manner, it could have indicated the excise duty amount anywhere in the price quote. The fourth respondent has not indicated the amount pertaining to excise duty as required under Note II as well as clause 2.2 of the commercial bid. However, respondents 1 and 2 have undertaken an exercise to process the incomplete bid submitted by the fourth respondent and arrived at the amounts after applying the percentage / rates as indicated by the fourth respondent. There cannot be any discount on the excise duty payable which has to be 8.24% on the actual value of plant and machinery. As the fourth respondent has not quoted ED amount, the tender committee has undertaken the exercise on behalf of the fourth respondent to arrive at the ED amount and the exercise is clearly irrational, arbitrary, mala fide. The conditions of the tender have to be strictly complied with. (e) It is denied that the decision of the respondents 1 and 2 in awarding the tender to the fourth respondent is in public interest. The tender has been awarded to a party which did not comply with the tender conditions as stipulated, thus rendering its bid void. Therefore, there is no merit in the bid submitted by the fourth respondent and it cannot be said that the interest of the public money has been safeguarded while awarding the tender to the fourth respondent. 7. Mr.AL.Somayaji, learned Senior Counsel appearing for the petitioner in both the writ petitions, Mr.Amarendar Sharan, learned Senior Counsel and Mr.R.Thiagarajan, learned Senior Counsel appearing for respondents 1 and 2 and Mr.N.R.Chandran, learned Senior Counsel appearing for the fourth respondent have made their submissions based on the pleadings referred to above. 8. The broad submissions made by the learned Senior Counsel appearing for the petitioner are on three folds viz., (i) The cancellation of earlier tender was not valid. (ii) There were lot of discrepancies in the bid submitted by the fourth respondent and hence, the price bid of the fourth respondent ought not to have been accepted. (iii) The price bid of the fourth respondent is in https://hcservices.ecourts.gov.in/hcservices/ violation of the specific terms of the tender document and hence, its bid should not have been considered. 9. The broad submissions made on behalf of the respondents are on four folds viz., (i) The cancellation of the earlier tender was made since the offers received from the bidders were conditional with anomalies and complex situation and hence, it was not possible to evaluate the offers and decide inter-se position of the bidders in an objective manner. Hence, number of changes have been made in the tender so as to deal with the causes that led to the cancellation of the earlier tender. (ii) The petitioner having participated in the second tender, cannot now question the cancellation of the earlier tender. (iii) The price bid of the fourth respondent is not violative of any terms of the tender document and hence, the acceptance of the tender offered by the fourth respondent has been accepted by respondents 1 and 2. (iv) There are no discrepancies in the bid submitted by the fourth respondent warranting refusal of the same. 10. On the above said submissions, let me now deal with those issues. 11. The first issue is, whether the cancellation of the earlier tender was valid or not ? 12.1. The first and foremost submission that was made on behalf of the petitioner, by the learned Senior Counsel appearing for the petitioner, is that the cancellation of the earlier bid was not valid. According to the learned Senior Counsel, when the petitioner's bid was the lowest one, respondents 1 and 2 ought to have accepted the same and the failure to do so, is totally unacceptable. However, I am not inclined to accept the said contention of the learned Senior Counsel appearing for the petitioner for more than one reasons viz., (i) It was urged on behalf of respondents 1 and 2 that the offers received from the bidders were conditional with anomalies and complex situation and hence, it was not possible for respondents 1 and 2 to evaluate the offers and decide the inter-se position of the bidders in an objective manner. Therefore, the https://hcservices.ecourts.gov.in/hcservices/ tender committee was of the opinion that since all the bidders were established in the business, there would not have been a clear and unambiguous understanding of the bid resulting in variations and anomalies in the bids and recommended for discharge of the tender. The said cancellation was duly accepted by the Accepting authority and the bidders were duly informed about the cancellation of the bid. (ii) The power of discharging the tender is inconsonance with clause 1.16 of the tender document. Clause 1.16 of the tender document reads as follows:- " 1.16. IRCTC does not bind itself, to accept the lowest or any tender or to assign any reason thereof and also reserves the right to accept or reject any or all the tenders, in whole or in part without assigning any reason for doing so. The part acceptance will not violate the terms and conditions of the contract and the tenderer will execute the work at the specified rates without any extra charges or compensation within the stipulated period." Thus, the authorities are vested with the power to discharge a tender, as per clause 1.16 of the tender document. (iii) Number of changes seem to have been made in the new tender including the changes so as to deal with causes that led to the cancellation of the earlier tender. The major changes that have been made in the fresh tender were set out in paragraph 15 of the counter affidavit of respondents 1 and 2. As many as 24 changes have been made in the fresh tender. (iv) Even assuming that the cancellation of earlier tender was bad, the petitioner, who has participated in the second tender, cannot now be heard to say that the cancellation of the earlier tender was bad. Having accepted to participate in the second tender and having lost in the game, now the petitioner cannot take a stand that cancellation of the earlier tender is bad. Thus, summing up the entire controversy, I am of the considered view that the petitioner cannot be heard to say that the cancellation of the earlier tender is bad. 13. The second issue, whether there exists any lot of discrepancies in the bid submitted by the fourth respondent ? and https://hcservices.ecourts.gov.in/hcservices/ the third issue, whether the bid of the fourth respondent is in violation of the specific terms of the tender document warranting rejection of its bid ? are liable to be considered. 13.1. In this connection several infirmities in the tender submitted by the fourth respondent was made. The first and foremost infirmity that was pointed out is that the fourth respondent failed to indicate the total excise duty amount separately which is contemplated under the tender document and thereby violated the terms and conditions of the tender document. 13.2. Before adverting to the said contention, raised on the side of the petitioner, it would be useful to extract note II of tender document (part II Commercial Bill. It states -- "Vendor should indicate the total excise duty amount included in above prices (for Plants and Equipments)" 13.3. The fourth respondent, according to the petitioner only indicated "Excise Modvat gate pass will be provided on material for which ED is applicable". The fourth respondent included the excise duty at 8.24%, but it did not indicate the amount in figures. Thus, according to the petitioner, since the fourth respondent failed to indicate the total excise duty amount separately, violated the terms and conditions of the document. 13.4. The said contention raised on the side of the petitioner has to be rejected on the following grounds namely, (i) There is neither separate column or place for indicating the excise duty, which has been included in the quote price, nor it was one of the bidding criteria or part of the bid evaluation. (ii) The fourth respondent had indicated the excise duty at 8.24%, though it did not indicate the amount in figures. Note II referred above did not require that the amount of excise duty has to be indicated in rupee terms only. No such requirement is found in Note II of the tender document. (iii) Respondents 1 and 2, in para 30 of the counter affidavit, have stated that the tender committee had deliberated over the issue of excise duty in great deal and have unanimously concluded that the excise duty amount was not a criteria of bidding evaluation. The bidders were only required to indicate the amount of excise duty included in the price quoted for plant and machinery and quotation of rates / percentage of excise duty was https://hcservices.ecourts.gov.in/hcservices/ sufficient as by quoting the percentage of excise duty, the rupee amount could be ascertained and the bid could not have been disqualified. 13.5. When such stand was made by respondents 1 and 2 in the counter