* THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO <+ WRIT PETITION NO.17445 OF 2007 % 22-04-2008 # S.R.Communication Systems, C.12,Electronic Complex Kushaiguda, Hyderabad-500062, rep.by its partner V.Venakta Ram, S/o.V.N.B.Chowdary aged 45 years, R/o.Hyderabad ...Petitioner. Versus $ 1. Greater Hyderabad Municipal Corporation, tank bund Hyderabad, rep.by its Commissioner and Special officer 2. The Addl.Commissioner (Electrical &Parks), Greater Hyderabad Municipal corporation , Tank bund, Hyderabad 3. The Executive Engineer (Electrical), Greater Hyderabad Municipal Corporation, Tank Bund,Hyderabad ...Respondents. ! Counsel for the Petitioner: MR.N.NAGARAJA KAPOOR ^ Counsel for the Respondents: R.RAMACHANDRA REDDY,SC FOR MCH 1,2,4&6 < Gist: > Head Note: ? Cases referred: 1. AIR 2000 SC 801. 2. AIR 2007 SUPREME COURT 437 @ 450 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY SECOND DAY OF APRIL TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NO : 17445 of 2007 Between: S.R.Communication Systems, C.12,Electronic Complex Kushaiguda, Hyderabad-500062, rep.by its partner V.Venakta Ram, S/o.V.N.B.Chowdary aged 45 years, R/o.Hyderabad ..... PETITIONER AND 1. Greater Hyderabad Municipal Corporation, tank bund Hyderabad, rep.by its Commissioner and Special officer 2. The Addl.Commissioner (Electrical &Parks), Greater Hyderabad Municipal corporation , Tank bund, Hyderabad 3. The Executive Engineer (Electrical), Greater Hyderabad Municipal Corporation, Tank Bund,Hyderabad .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of mandamus or any other appropriate writ order or direction declaring the action of the 2nd respondent in issuing the impugned letter No.Addl/Comm/Elec/GHMC/07-08/D.No.945 dated 9.8.2007 in rejecting our representation dated 1.8.2007 for extension of time of submission of report on energy saving as illegal, arbitrary and violative of principles of natural justice and consequently direct the respondents to allow the petitioner to participate in the tender process on par with other short listed firm. Counsel for the Petitioner:MR.N.NAGARAJA KAPOOR Counsel for the Respondent No.: R.RAMACHANDRA REDDY,SC FOR MCH 1,2,4&6 The Court made the following : THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.NO.17445 OF 2007 ORDER: This writ petition has been instituted calling in question the correctness and validity of the communication dated 09-08-2007 of the Additional Commissioner (Electrical) of the Greater Hyderabad Municipal Corporation, informing the writ petitioner the inability to consider its representation dated 01-08- 2007 seeking extension of a day’s time for submission of the report. The 1st respondent – Greater Hyderabad Municipal Corporation (henceforth referred to as ‘the Corporation’) had floated a tender notice dated 27-04-2007 inviting proposals/expression of interest from eligible energy management firms / partnerships / consortiums / joint ventures for the implementation of “Street Lighting Energy Efficiency and Automation Project” in the twin cities of Hyderabad and Secunderabad. The expressions of interest (henceforth referred as ‘the EOI’, for brevity) are liable to be submitted on or before 5-00 pm on 11-05-2007. There are certain requirements, which have to accompany along with the expression of interest, such as, EMD in a sum of Rs.10,000/-. The firms submitting EOI are required to undertake all the following works: Sl.No. Name of the works 1. Developing base line energy consumption through surveys as per accepted International Performance Monitory and Verification Protocol (IPMVP). 2. Develop, design, execute, energy efficiency measures, operation and maintenance. 3. Develop the project into a Clean Development Mechanism (CDM) project and register with United Nation Framework Convention on Climate Change (UNFCCC) CDM executive board. 4. Transfer knowledge and train municipal engineers during the contract period. 5. Implementation of automation and energy saving solutions for streelights. The Municipal Commissioner reserved the right to accept or reject any or all the offers without assigning any reasons therefor. It appears that 16 firms/consortiums have submitted their EOI before the deadline set in the tender notice dated 27-04- 2007. A Committee, which has been constituted by the Corporation to evaluate the bids, has decided to call upon the firms to have a presentation on 23-06- 2007 at 11-00 am in the office chambers of the 2nd respondent. The writ petitioner has also presented and after going through the presentation and after considering the relative merits, the Committee appears to have short listed 5 firms for demonstrating the efficiency of their equipment by installing automation and energy saving equipment for both single phase and three phase on field on or before 15- 07-2007 before the final evaluation and they were also required to submit their financial bids on or before 15- 07-2007. The following are the said short-listed 5 firms: i. M/s Sharada Inventions Nasik. ii. M/s Servomax India Ltd. iii. M/s Infoline Communication Pvt. Ltd. iv. M/s M2M – SSIL – GRC Consortium. v. M/s S.R.Communications Systems. The communication in this regard sent by the Commissioner and Special Officer of the Greater Hydeabad Municipal Corporation on 06-07-2007, to the extent relevant, reads as under: “It is decided to go for demonstration of the equipment on field, therefore the above firms are requested to install the automation and energy saving equipment for single phase (conventional lighting) and three phase (modern lighting) on or before 15th July 2007 for final evaluation by the committee, pertaining to street light automation and energy efficiency service. On installation of the Automation and Energy Saving Equipment the firms have to make all arrangement for evaluate of data to show automation and energy saving by 31-7-2007 and submit the reports on energy saving by 01-08-2007 positively.” Thus, before 15-07-2007 the firms were required to install automation and energy saving equipment and also submit the financial bids on or before 15-07-2007 in a sealed cover. The 3rd respondent Executive Engineer was to furnish the location for installation of the single phase and three phase automation and energy saving equipment. Accordingly, the petitioner had submitted its financial bid and installed the automation and energy saving equipment at the site allotted to it, namely, Lalapet Flyover. The equipment installed by the petitioner has been inspected on 17- 07-2007. After the trial period of 15 days expired, the firms were required to submit the reports on energy saving by 01-08-2007 positively. However, the petitioner could not submit the said report on 01-08- 2007, as according to it, it’s computer local area network had broken down and hence, it submitted a representation on 01-08-2007 seeking a day’s time to submit the necessary report. Accordingly, in fact, it had submitted the report, on energy saving of the equipment, installed by it at Lalapet Flyover, on 02- 08-2007. But however, through the impugned communication dated 09-08-2007 of the 2nd respondent, the representation submitted by the petitioner on 01-08-2007 soliciting a day’s time more for submission of the report, had been rejected. In effect, the case of the petitioner for further consideration for award of the contract is not being taken up by the Corporation and hence, this writ petition came to be instituted. Heard Sri D.Prakash Reddy learned senior counsel for the petitioner and Sri R. Ramachandra Reddy learned Standing Counsel for the Corporation. Sri Prakash Reddy would submit that the EOI solicited by the Corporation had indicated in detail the nature of work, which has got to be performed by the successful offerer and for the purpose of short listing, the offerers were all asked to make their presentation on 23-06-2007 and of the 16 firms, only 5 firms have been short listed for further consideration and of the said 5 firms, the petitioner is one amongst them and through the communication dated 06-07-2007 of the Commissioner of the 1st respondent Municipal Corporation, the short listed firms are required to install the automation and energy saving equipment offered by them for field trial by 15-07-2007 and the financial bid of each firm is also required to be submitted by 15-07-2007 itself. So, therefore, Sri D. Prakash Reddy submits that, the firms are essentially required to accomplish the installation of their equipment and also submit their financial bid in a sealed cover latest by 15-07-2007. The further requirement, that after the field run for 15 days period to submit a report on the energy saving is, therefore, not an essential requirement, but a positive ingredient required to be taken note while finalizing or making an assessment of the competitiveness amongst the bidders. Therefore, submission of the data relating to the energy saving, achieved during the field trial, is merely a technical requirement and not a substantial ingredient, failure of submission of which, can render the bid liable to be rejected. In other words, the substantial requirements of submission of financial bid and successful installation of the equipment by 15-07-2007, are the essential ingredients and the data of the field run of the equipment is only an additional input, which can, perhaps, render necessary assistance to the Corporation in the matter of finalisation of the bid. This apart, it is not as if that the Corporation had set a deadline or intended to finalise the bids on 01-08-2007 itself. The fact that the petitioner had submitted its report on 02-08-2007 would demonstrate its genuine attempt to establish its bona fides in the matter. What is needed by the Corporation is to ascertain the installation of the equipment by 15-07-2007 and its successful run for the next 15 days thereafter. Therefore, the delay in submission of the data of the energy saving achieved during the field run is a mere technical requirement and not a substantial requirement and hence, the delay in submission of the same by a day should not render the petitioner ineligible for being considered. Per contra, the learned Standing Counsel would submit that of the 5 firms, which have been short listed after the presentation is over on 23-06-2007, one firm, which had turned up late by about 1 ½ hours has been not considered for allotment of a suitable site for installation of its equipment by the Corporation and hence, the petitioner cannot be accorded any concession by extending the time for submission of the data by a day more. The learned Standing Counsel has also pointed out that there are two other firms, which had also submitted their financial bids by 15-07-2007 and had also installed their equipment and those two firms have stuck by the time schedule and submitted the energy saving data by 01-08-2007 and hence, consideration of the data submitted by the petitioner on 02-08-2007 would result in conferring a favour on the petitioner. I have given my anxious consideration for the rival submissions. When the EOIs have been invited by the Corporation on 27-04-2007, it had given the complete detail of the nature of works required to be performed by the successful offerer. The 16 firms, which have submitted their EOIs, have been asked to make a presentation to enable the Committee constituted by the 1st respondent to finalise the most competitive offer and only 5 firms have been short listed. The petitioner is, undoubtedly, one amongst them. Of the 5 firms, only 3 have installed their equipment by the cutoff date, namely, 15-07-2007. They were also required to submit their financial bids in sealed covers by 15-07-2007. Therefore, it is clear that the firms are required to make their financial bids available to the Corporation by 15-07-2007 and also demonstrate their readiness and preparedness by accomplishing the installation of the equipment on the site allotted to them latest by 15-07-2007. Clearly, therefore, these two factors form the core and substantial ingredients for the purpose of finalizing the offer that suits the interests of the Corporation, the best. The equipment installed by all the three firms is subjected to a field run, therefore, they have been inspected during that stage by the officials of the Corporation. The equipment installed by the petitioner has also been inspected on 17-07-2007. Therefore, the component relating to the data of the energy saving during the trial run, which is to be submitted on 01-08-2007, undoubtedly, offers an additional component for the purpose of evaluating the efficacy and the efficiency of the equipment installed. Perhaps, if the offers made by all the three firms are equally competitive, then, the higher rate of energy saving efficiency achieved by the equipment may tilt the balance. Hence, the requirement of submission of the data positively on 01-08-2007 is liable to be construed as an additional technical component, which is to be taken into consideration for purposes of finalizing the bids. If the Corporation had attempted to finalise the bids by 01-08-2007, perhaps, the submission of the energy saving data, achieved during the field run of the equipment, could have acquired an altogether significant dimension. Nowhere it emerged from the material on record that the Corporation had attempted to finalise the bid amongst the three firms, which have installed their equipment, on 01-08-2007. Looked at it from that perspective, it can be reasonable to infer that the energy saving data collected during the field run of the installed equipment would play not a substantial component of the evaluating process, but is liable to be used as an additional tool in the matter of finalisation of the offers. In that sense, the condition in that regard requiring submission of the energy saving data positively by 01-08-2007, is liable to be viewed as a non substantive or a technical requirement alone and failure to comply with the said condition by 01-08-2007 should not render the offer to be vitiated. There is yet another angle from which it is liable to be viewed. If the equipment installed by the petitioner firm appears to be the most effective energy saving equipment and at the same time the financial bid offered by the petitioner also appears to be the most competitive of the three offers, then, rejection to take the offer of the petitioner into consideration would only result in denying a great advantage for the Corporation. The Corporation would not only be loosing in terms of its revenue, but would also be denying to itself the advantage of installation of the most energy efficient equipment. The main objective behind the very project undertaken by the Corporation is to secure installation of the best and the most efficient energy saving equipment, which will help the Corporation in achieving its primary objective of reduction of carbon levels and simultaneously resulting in substantial saving of the energy consumption, which incidentally, would also help in improving the revenue of the Corporation. Money saved is the money earned, by the Corporation. I am, therefore, of the considered opinion that denying to consider the data submitted on 02-08-2007 by the petitioner firm is opposed to the larger and overwhelming public interest, which forms the very backbone for this project undertaken by the Corporation. I, therefore, conclude that the action of the respondents in rejecting to take into consideration the data made available by the petitioner firm on 02-08-2007 appears to be an arbitrary decision. The Corporation seemed to be worried more from the perspective of the possible objections from the other two firms. The concern exhibited by the Corporation in this regard is understandably genuine and is a right concern. If the petitioner were to derive any additional advantage than the other two competitors, due to the process of delay in submission of the data, then, perhaps, the action of the Corporation would have become unexceptional. The Corporation, being the creature of a Statute, is liable to hold a level playing field amongst all the players. It cannot allow one of them to take any undue advantage in comparison to the others. In the instant case, the financial bids of the respective offerers are required to be submitted to the Corporation not on 01-08-2007, but by 15-07-2007 itself. Such financial bids are not liable to be altered subsequent thereto. The equipment is liable to be installed on the site allotted to each of the offerers by 15-07-2007. Accomplishing this requirement would demonstrate the actual preparedness of the respective parties. The petitioner had installed its equipment at the site allotted to it, namely, Lalaguda Flyover, by 15-07-2007. The equipment of the petitioner has been inspected on 17-07-2007 and, obviously, the equipments of the other two firms also would have been inspected by the officials of the Corporation any time between 15- 07-2007 and 31-07-2007. That was to satisfy itself about the efficacy and efficiency of the functioning of the equipment installed. Therefore, all substantial and primary requirements have to be accomplished latest by 15-07-2007. The data was required to be submitted on 01-08-2007, which reflects with necessary accuracy, the efficiency of the equipment installed and, perhaps, the data could have supplied an additional input or component in the decision making process, but, that by itself, would not have played any substantial role in the matter of finalization of the contract itself. It will be worthy to notice the principle enunciated by the Supreme Court in AIR INDIA LIMITED v COCHIN INTERNATIONAL AIR PORT LIMITED[1], which pointed out that it is the larger public interest, which is the key element for intervention by Courts in contractual matters. Though the Corporation is a public body, while entering into commercial transactions with third parties, doubtless, would be weighing its options purely in commercial terms, it nonetheless, it had to necessarily get guided on a paramount basis by the compelling considerations of public interest. As noted supra, the element of public interest is overwhelming in securing installation of the most energy efficient equipment and at a most competitive price too. Therefore, the Corporation should not put itself in a position of losing out such an opportunity, by rejecting to consider the data submitted by the petitioner on 02-08-2007. It is also equally important to notice the following legal principles that have been settled in Para 68, by the Supreme Court in M/S B.S.N.JOSHI AND SONS LIMITED v M.S NAIR COAL SERVICE LIMITED[2]. i) If there are essential conditions, the same must be adhered to; ii) If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully; iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction.. v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with. (vi) The contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority. (vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint. Thus, strict compliance with the core or essential requirements of tender is what is to be insisted upon, while there can be some general latitude in the matter of compliance of the rest of the other requirements of the tender process, so long as such conditions do not form part of the essential ingredients in the decision making process. This apart, the Corporation had not set the deadline for itself as 01-08-2007 for the purpose of finalizing the tenders. It had only set that date for submission of the data by the tenderers. It is, therefore, reasonable, for one, to infer that perhaps the same Committee, which has witnessed and heard the presentation of the firms on 23-06-2007, will have to be re-convened for the purpose of assessing the efficacy and efficiency of the equipment installed by the respective offerers. Possibly, it would have called for technical expertise on the part of the Members, who constitute such a Committee. Hence, submission of the data by the petitioner on 02-08-2007 had not conferred on it any additional advantage than what could have been available for the remaining two firms. After all, the report, perhaps, has to reflect the analysis of the data collected during the 15-day trial run. The trial run having been successfully accomplished, perhaps, by all the three firms and the data having already been recorded during the said trial run, the same, by its analysis on 02-08-2007 by the petitioner, in contrast to the submission of the other two firms on 01-08- 2007, had not put the petitioner at any greater advantageous position than the rival competitors. Therefore, the concern and apprehension entertained by the Corporation need not detain it from taking into consideration the data submitted by the petitioner. I, therefore, allow this writ petition setting aside the communication dated 09-08-2007 sent up by the 2nd respondent herein and direct the Corporation to take into consideration and account the data of the trial run of the equipment installed by the writ petitioner at Lalapet Flyover and finalise the tender on its merits. With this, the writ petition is allowed, but however, in the circumstances, with costs. -------------------------------- Nooty Ramamohana Rao, J Note: LR copy to be marked. (bo) mrk 22-04-2008 ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{TRK} [1] AIR 2000 SC 801 [2] AIR 2007 SUPREME COURT 437 @ 450