IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated 30.7.2010 CORAM THE HONOURABLE MR.JUSTICE R.SUDHAKAR Writ Petition Nos.4423, 4437, 4440 and 4441 of 2010 and M.P.No.1 of 2010 in all Writ Petitions M/s.SAP Industries, represented by Harirajan, Plot No.51, Industrial Estate, Thirumudivakkam, Chennai-600 044. ... Petitioner in W.P.No.4423 of 2010 Ascott Electricals Pvt. Ltd., No.2, Murahari Street, West Jones Road, Sarathy Nagar, Saidapet, Chennai-600 015. ... Petitioner in W.P.No.4437 of 2010 Associated Transformers P. Ltd., represented by R.Venkateshwaran, C.E.O. & Authorised Signatory, F.2 Springfield Apartments, No.6 Twelfth Cross Street, Indra Nagar,Adyar, Chennai-20. ... Petitioner in W.P.No.4440 of 2010 Dhanya Electric Company, represented by Managing Partner, K.V.Pradeep, 15 Susmith Aparts, Kandappan Colony, Gill Nagar, Choolaimedu, Chennai-600 094. ... Petitioner in W.P.No.4441 of 2010 -Vs.- 1.Tamil Nadu Electricity Board, represented by its Chairman, 10th Floor, NPKRR Maaligai, 144, Anna Salai, Chennai-600 002. https://hcservices.ecourts.gov.in/hcservices/ 2.The Chief Engineer/Material Management, Tamil Nadu Electricity Board, 4th Floor, NPKRR Maaligai, 144, Anna Salai, Chennai-600 002. 3.Kerala Electricals & Allied Engineering Co. Ltd., Cochin, Kerala. ... Respondents in all W.Ps. Writ Petition No.4423 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus, calling for the records of the proceedings of the second respondent in Lr.No.SE/MM.11/EED/A2/M16/09-10D 216/2010 dated 8.2.2010 and Lr.No.SEE/MM.11/EED/A2/M16/9-10/D.225/2010 dated 11.1.2010 signed on 11.2.2010 and quash the same and consequently direct the respondents 1 and 2 to place orders with the petitioner for supply of 500 KVA/11 KV/433.V Distribution Transformers as per the Tender Specification No.M.16/2009-10 dated 12.8.2009. Writ Petition No.4437 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents 1 and 2 to treat the petitioner as L1 and conduct negotiations with the petitioner and to place orders on the basis of the so negotiated price in respect of tender specification M.16/2009/10 for supply of 500 KVA/11 KV/433.V Distribution Transformers. Writ Petition No.4440 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009. Writ Petition No.4441 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents 1 and 2 to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009. For petitioner in W.P.No.4423 of 2010 : Mr.R.Muthukumarasamy, Senior Counsel for Mr.K.Venkatasubbaraju For petitioner in W.P.Nos.4440 and 4441 of 2010 : Mr.Venkatachalapathy, https://hcservices.ecourts.gov.in/hcservices/ Senior Counsel for Mr.K.Venkatasubbaraju For petitioner in W.P.No.4437 of 2010 : Mr.G.Jermiah, For respondents 1 and 2 in all W.Ps. : Mr.P.S.Raman, Advocate General assisted by Mr.A.Selvendran For 3rd respondent in all W.Ps. : Mr.M.K.Kannan COMMON ORDER Writ Petition No.4423 of 2010 is filed praying to issue a Writ of Certiorarified Mandamus, calling for the records of the proceedings of the second respondent in Lr.No.SE/MM.11/EED/A2/M16/09-10D 216/2010 dated 8.2.2010 and Lr.No.SEE/MM.11/EED/A2/M16/9-10/D.225/2010 dated 11.1.2010 signed on 11.2.2010 and quash the same and consequently direct the respondents 1 and 2 to place orders with the petitioner for supply of 500 KVA/11 KV/433.V Distribution Transformers as per the Tender Specification No.M.16/2009-10 dated 12.8.2009. 2. Writ Petition No.4437 of 2010 is filed to issue a Writ of Mandamus, directing the respondents 1 and 2 to treat the petitioner as L1 and conduct negotiations with the petitioner and to place orders on the basis of the so negotiated price in respect of tender specification M.16/2009/10 for supply of 500 KVA/11 KV/433.V Distribution Transformers. 3. Writ Petition No.4440 of 2010 is filed to issue a Writ of Mandamus, directing the respondents to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009. 4. Writ Petition No.4441 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents 1 and 2 to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009. 5. The factual plea in all the writ petitions, nature of communications between the petitioners and the respondents 1 and 2 Department are identical in all aspects except minor variations which are trivial and are not relevant. The relief sought for in all the 4 Writ Petitions are almost one and the same and arise out of the same cause of action and hence, all the 4 Writ Petitions are taken up together and disposed off by this common order. https://hcservices.ecourts.gov.in/hcservices/ 6. W.P.No.4423 of 2010: The brief facts of the case are as follows: Petitioner firm is carrying on manufacturing of Transformers for over 10 years and regular supplier of transformers to the respondents 1 and 2 Electricity Board for many years by participating in tenders. The respondents 1 and 2 Electricity Board invited tenders by specification No.M16 for supply of 468 numbers 500KVA/11KV/433V Distribution Transformers. In response to the said tender notification 32 tenderers submitted their bids including the petitioner. Of this 5 are new entrants, 4 are outside State bidders, 2 are large industries and 21 are local S.S.I. units. Technical bids were opened on 12.8.2009 and price bids were opened on 19.12.2009. Petitioner made a representation on 5.1.2010 requesting the second respondent to implement price preference policy provided under the Tender Transparency Act/Rules and the clarifications issued by the State Government, stating that local S.S.I. units are eligible for price preference upto 15%. In other words whenever local S.S.I. units quote a price within a 15% range of the price quoted by the other State SSI units/large industries, they shall be treated as evaluated L1 and local S.S.I. units shall be called for negotiation of prices and separate evaluation shall be made for new entrants and for regular suppliers since there are two different Bid Qualification Requirements (BQRs). On 7.1.2010, the second respondent sent a letter asking the petitioner whether it is agreeable to supply 500KVA/11VK/433V Distribution Transformers at a variable all inclusive price excluding VAT/CST of Rs.3,19,766.80 each by matching of lowest negotiated price. On 11.1.2010, petitioner sent a letter stating that the petitioner is not in a position to comply as per Department's letter dated 7.1.2010 and pleaded for considering their claim as local SSI Unit. However, on 8.2.2010, the second respondent sent the impugned letter which reads as follows:- "Please refer to your letter cited. In this regard it is submitted that only one set of BQR conditions are stipulated in the tender documents with exception to new entrants from the experience criteria. Two BQR conditions are not specified in the tender documents and further two evaluation cannot be done in the same tender as per tender regulation. In the clarification received from the Principal Secretary to Government, Micro, Small & Medium Enterprises (F) Department vide letter No.561/F/2009-3 dated 5.5.09 it has been clearly stated that 15% price preference should be calculated on the basis of lowest quoted rate if it is quoted by a large or medium industry/SSI of another State. In this case the Local Non SSI https://hcservices.ecourts.gov.in/hcservices/ unit (New Entrant) himself has quoted the lowest rate and became the L1 tenderer. Hence the price preference of 15 percent has not been loaded in order to know as to whether any local SSI comes within the price range of Rs.115 (Rs.100+15%). As per your request for separate evaluation for new and regular supplier and giving 15% price preference does not arise as per the above clarification. Please note that this letter does not carry with it any assurance that an order will be placed on you." On 11.2.2010 the second respondent sent another letter dated 11.1.2010 to confirm whether the petitioner is agreeable to supply the distribution transformers against the specification at a variable all inclusive price excluding VAT/CST of Rs.3,40,734.22 each and sought for a reply by 15.2.2010. Petitioner sent reply insisting that price preference should be given to it on the basis of the provisions of the Act/Rules and the clarification letter issued by the State Government dated 5.5.2009. Second respondent once again sent a letter on 17.2.2010 requesting the petitioner to confirm the supply at Rs.3,40,734.22 by 19.2.2010 and failing to comply, it will be construed that the petitioner is not interested in matching with above price and further action as per tender procedure will be taken. On 19.2.2010, petitioner sent a reply as follows:- "We are in receipt of your letter 5th cited and thanking you for the same. As per the Tender Transparency Act, our rates are evaluated L1, as per Bid Qualification Requirements, prescribed in the Tender Specification. Being evaluated L1, we should be invited for the Price Negotiation. On contrary, your goodself has negotiated with other state firm (who is not evaluated L1), violating the Tender Transparency Act. So, we humbly request you to kindly please be invited us for negotiation." The Department did not evince any interest in petitioners offer and was repeatedly calling upon the local SSI Units to match the price of the SSI Unit of the other State. Petitioners felt that the respondents 1 and 2 Electricity Board are taking steps to place orders with the third respondent for supply of transformers contrary to the Act and Rules. According to the petitioners, the third respondent unit is an unit outside the State of Tamilnadu. If the https://hcservices.ecourts.gov.in/hcservices/ respondents 1 and 2 Electricity Board strictly observes the provisions of the Tamil Nadu Transparency in Tenders Act, 1998/Tamil Nadu Transparency in Tenders Rule, 2000 (hereinafter called as the Act and the Rules) and understands the spirit of the clarification letter dated 5.5.2009 issued by the State Government, there cannot be any negotiation with the third respondent. The respondents 1 and 2 Electricity Board by preferring outside State S.S.I. unit like the third respondent is acting against the provisions of the Act/Rules and clarification letter issued by the Government. The respondents 1 and 2 Electricity Board should have accepted the tender of the petitioner once it is within 15% of the price range when compared with the price quoted by the third respondent, SSI unit of the other State, by treating the petitioner as L1 as petitioners is a domestic S.S.I. unit. It is contended that the approach of the respondents 1 and 2 Electricity Board directing the petitioner to match the rates of SSI of other State and to split the procurement between the petitioners and the third respondent is misconceived and unacceptable and against the spirit of the Act/Rules and Policy of State Government to give price preference to domestic SSI Units. On this premise, the writ petitions have been filed challenging the letters issued by the second respondent Board stating that the Department is acting arbitrarily and contrary to the Act and the Rules. 7. Though the facts pleaded in the three other writ petitions vary to some extent, the nature of the case and the relief sought for in all the four writ petitions are one and the same, and hence the facts of other cases are not set out once again. 8. Respondents 1 and 2 Electricity Board filed separate counter-affidavits in all the four writ petitions. The common contentions raised in the counter-affidavits in all the four writ petitions are as follows:- There is an appeal provision provided under Section 11 of the Tamil Nadu Transparency in Tenders Act, 1998 (hereinafter referred to as "the Act") and as such the writ petitions would not lie as there is an alternate remedy by way of an appeal. As per Rule 31(1) of the Tamil Nadu Transparency in Tender Rules, 2000 (hereinafter referred to as "the Rules"), negotiation has to be conducted strictly with reference to the price offered by the lowest evaluated tenderer and not as claimed by the petitioner. The respondents 1 and 2 Electricity Board has acted in terms of the Act and the Rules and also the clarificatory orders issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises (F) Department in Lr.No.561/F/2009-3 dated 5.5.2009. The 15% price preference shall be applicable only in the event of the L1 tenderer is a large/medium/SSI of another State. In other words, if the L-1 is a domestic tenderer then the question of applicability of 15% price preference does not arise. In the instant case, M/s.Wilson Power and Distribution Technologies Private Limited being L-1 and domestic tenderer, the petitioner is not https://hcservices.ecourts.gov.in/hcservices/ entitled to seek price preference. The third respondent comes under regular category and as such the averments of the petitioner relating to new entrant have no nexus to the relief sought for. The writ petitions are based on presumptions and assumptions without there being any cause of action on the date of filing the writ petitions. As a matter of fact, the 21 domestic tenderers under regular category have quoted Rs.3,92,295.84 (excluding VAT) and Rs.4,07,951.67 (including VAT) and not as stated in the affidavit filed by the petitioner. In the price bids of the eligible 30 firms opened on 19.12.2009 the rates quoted by the tenderers and the evaluated rates are as follows:- Sl .N o. Name of the firm Qty offer ed All- inclusi ve Price includi ng VAT/CST Evaluat ed Price Eval u- ated Rank -ing Local/ Outsid er Regula r/New 1 M/s.Wilson Power and Distribution Technologies Pvt Ltd., Chennai 10 333080. 32 320308. 00 L1 Local Non SSI New Entran t 2 M/s.Kerala Electrical & Allied Engineering Co. Ltd., Cochin, 468 347555. 50 347555. 50 L2 Outsid er Regula r 3 M/s.Vinai Electric Company, Chennai 5 407028. 55 391411. 68 L3 Local SSI New Entran t 4 M/s.S.L.Electr icals, Chennai 5 407028. 55 391411. 68 L3 Local SSI New Entran t 5 M/s.Indus Power Equipments, Vellore 5 407028. 55 391411. 68 L3 Local SSI New Entran t 6 M/s.Auro Tech Transformers, Cuddalore 5 407028. 55 391411. 68 L3 Local SSI New Entran t https://hcservices.ecourts.gov.in/hcservices/ Sl .N o. Name of the firm Qty offer ed All- inclusi ve Price includi ng VAT/CST Evaluat ed Price Eval u- ated Rank -ing Local/ Outsid er Regula r/New 7 M/s.Current Electricals Limited, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 8 M/s.Senthil Engineering Co., Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 9 M/s.Venkateswa ra Electrical Industries (P) Ltd., Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 10 M/s.Hindusthan Heavy Electricals, Coimbatore 468 407951. 67 392295. 84 L4 Local SSI Regula r 11 M/s.Electromec h Industries, Coimbatore 468 407951. 67 392295. 84 L4 Local SSI Regula r 12 M/s.Sri Ramakrishnan Transformers, Villupuram 468 407951. 67 392295. 84 L4 Local SSI Regula r 13 M/s.Tamil Nadu Transformers, Ranipet 468 407951. 67 392295. 84 L4 Local SSI Regula r 14 M/s.Sarayu Engineering, Dindigul 468 407951. 67 392295. 84 L4 Local SSI Regula r 15 M/s.SAP Industries, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 16 M/s.Supreme Power Equipment Pvt. Ltd., Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 17 M/s.Blue Star Exports, Tiruvallur 468 407951. 67 392295. 84 L4 Local SSI Regula r https://hcservices.ecourts.gov.in/hcservices/ Sl .N o. Name of the firm Qty offer ed All- inclusi ve Price includi ng VAT/CST Evaluat ed Price Eval u- ated Rank -ing Local/ Outsid er Regula r/New 18 M/s.Danya Electric Company, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 19 M/s.Associated Transformers (P) Ltd., Dindigul 468 407951. 67 392295. 84 L4 Local SSI Regula r 20 M/s.Veltech Transformers Pvt. Ltd., Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 21 M/s.Bala Industries, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 22 Sri Vinayaga Star Electricals, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 23 M/s.Hindusthan Transformers, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 24 M/s.Sun Tech Transformers, Ranipet 468 407951. 67 392295. 84 L4 Local SSI Regula r 25 M/s.Ascott Electricals Ltd., Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 26 M/s.IPL Products, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 27 M/s.Sri Thirumala Fabricators, Chennai 468 407951. 67 392295. 84 L4 Local SSI Regula r 28 M/s.Raychem RPG Ltd., Chennai 100 430510. 00 430510. 00 L5 Outsid er New Entran t https://hcservices.ecourts.gov.in/hcservices/ Sl .N o. Name of the firm Qty offer ed All- inclusi ve Price includi ng VAT/CST Evaluat ed Price Eval u- ated Rank -ing Local/ Outsid er Regula r/New 29 M/s.Indo Tech Transformers Ltd., Chennai 468 463539. 86 445788. 33 L6 Local SSI Regula r 30 M/s.Southern Power Equipment Co. Pvt. Ltd., Bangalore 468 474020. 40 474020. 40 L7 Outsid er Regula r Some Transformer companies have represented to the respondents Electricity Board and contended that the Board has specified two sets of BQR, one for regular supplier and another for new entrants and requested for separate evaluation and 15% price preference shall be given to them and they shall be invited for price negotiation and orders to be placed on them. As there is no restriction in the Act and the Rules, such requests were not entertained (the proper word should be prescription and not restriction). As a matter of fact, incorporation of new entrant clause was to encourage new players and for competition so as to secure competitive price and such concessions to new entrants is in force from the year 2003. Paras 11.0, 12.0, 14.0, 15.0, 17.0 and 18.0 of the counter-affidavits which is relevant read as follows:- "11.0. I respectfully submit that in the Govt. letter dt.5.5.09, the Govt. has issued the clarification as extracted below:- I am directed to invite your attention to the letters cited and despite that in your letter first cited you have stated that the following issues have been highlighted as impediments in the implementation of the Purchase preference Policy of the Government by TNEB. i) The MSEs in Tamil Nadu form a cartel to increase their prices. ii) The purchasing Department has to pay 15 percent higher price in all their purchase resulting in a considerable loss. iii) Quality products offered by MSEs from other https://hcservices.ecourts.gov.in/hcservices/ states could not be purchased because of the price preference available to the Tamil Nadu MSEs. 2. In this connection, I am directed to state that i) Upto 15% price preference for evaluation should be allowed to SSIs of Tamil Nadu, who have quoted in the same tender application. ii) 15% price preference should be calculated on the basis of the lowest quoted rate if it is quoted by a large or a medium industry/SSI of another state. iii) The lowest bids by the SSI unit from Tamil Nadu within the 15% price preference for awarding the tender, as illustrated below: Determination of the lowest evaluated price involving domestic SSI units and large and medium industries/Micro and Small enterprises of other states. L1 L2 L3 L4 Large and Medium Industries/Micro and Small Enterprises of other states Micro and Small Enterprise s of Tamil Nadu Micro and Small Enterprise s of Tamil Nadu Micro and Small Enterprise s of Tamil Nadu Rs.100 Rs.108 Rs.112 Rs.115 • Range of price preference is upto Rs.115, i.e. Rs.100 + 15% of Rs.100. • The Micro and Small Enterprises L2, L3 and L4 are eligible to be considered. • Tender is to be awarded to L2 at Rs.108 as it is the lowest evaluated price. 3. You are requested to follow the above procedure for determining the lowest evaluated price of Micro, Small and Medium Enterprises of Tamil Nadu." "12.0. I respectfully submit that, in the said clarification received from the Principal Secretary to Government, Micro, Small & Medium Enterprises (F) https://hcservices.ecourts.gov.in/hcservices/ Department vide letter No.561/F/2009-3 dated 5.5.09 it has been clearly stated that 15% price preference should be calculated on the basis of lowest quoted rate if it is quoted by a large or medium industry/SSI of another State. In other words, if the L1 is a domestic tenderer, then the question of applying 15% price preference to domestic SSIs does not arise at all." "14.0. I respectfully submit that from the above it may be seen that Price Preference of 15% has to be calculated only on the basis of the price offered by lowest evaluated tenderer as per rule 31(1) of the Tamil Nadu Transparency in Tender Rules 2000 and not as claimed by the petitioner. In the present case, the lowest tenderer M/s.Wilson Power and Distribution Technologies Pvt. Ltd., Chennai is a domestic tenderer and hence the price preference of 15 percent is not applicable to the case of the petitioner." "15.0. I respectfully submit that in the meanwhile it was negotiated with M/s Wilson Power and Distribution Technologies Pvt. Ltd., on 31.12.09 and it has reduced the ex-works price from Rs.2,95,000/- to Rs.2,94,500/-. The All Inclusive price of L1 tenderer after negotiation is Rs.3,32,517.47 (including VAT). The all inclusive price including VAT is Rs.3,19,766.80." "17.0. I respectfully submit that since the L1 tenderer has quoted for 10 Nos. and in order to cover the balance quantity, Negotiation was conducted with the Evaluated L2 tenderer M/s.Kerala Electrical & Allied Engineering Co. Ltd., Kochi (third respondent) on 10.2.2010. They have reduced their Ex-works price from Rs.3,10,100/- to Rs.3,10,000/-. Negotiated all inclusive price including CST works out to Rs.3,47,445.10. All inclusive price excluding CST works out to Rs.3,40,734.22. All the remaining 23 regular tenderers were requested to match with the negotiated L2 price Rs.3,40,734.22 (all inclusive price exclusive of CST). M/s.Southern Power Equipment Co. Pvt. Ltd., Bangalore and M/s.Indo Tech Transformer Ltd., Chennai vide their letter dt.15.2.10 have regretted to match with the L2 price. The other 21 firms (including the petitioner) who were requested to match with L2 price have given their letter dt.15.2.2010 stating that they are eligible for price preference upto 15% and they shall be treated as Evaluated L1 and they shall be invited for price negotiation. They have also stated that TNEB has specified two sets of BQR, one for regular supplier and another one for new entrants and requested two separate evaluation which request would be https://hcservices.ecourts.gov.in/hcservices/ impermissible under the provisions of the Act and the Rules made thereunder. The petitioner was once again requested vide Letter dt.17.2.2010 to confirm their willingness to match the L2 price. However they have again requested to call them for price negotiation vide letter dt.19.2.2010. The action of the petitioner shows that they are not interested in matching the L2 price." "18.0. I respectfully submit that only one set of BQR conditions are stipulated in the tender documents with small concessions to new entrants from the experience criteria. Two BQR conditions are not specified in the tender documents and further two evaluation cannot be done in the same tender as per tender regulation." The price difference between the petitioner and the third respondent is huge. The writ petitions are premature in nature without there being a cause of action. The writ petitions are based on false and frivolous grounds and are abuse of process of the Court. Petitioners want unjustly enrich themselves. Therefore, all the writ petitions must be dismissed. 9. We shall now consider the tender which is the bone of contention. As per the Specification No.M.16, the Bid Qualification Requirements reads as follows:- "SECTION-II (Specn.No.M.16) BID QUALIFICATION REQUIREMENTS (BQR) THE BIDDERS shall become eligible to bid on satisfying the following "BID QUALIFICATION REQUIREMENTS" and on production of the required documentary evidences along with the tender. I) "The Bidders shall be actual manufacturer of Distribution Transformers. II) They should have supplied satisfactorily a minimum of 5 Nos. 500 KVA/11 KV/433V Distribution Transformers with same voltage rating or higher KVA/higher KV capacity during any one of the previous three years period (2006-2007, 2007-2008, 2008-09) to State Electricity Boards/Power Utilities. The details of Purchase orders executed during the above three years period shall be furnished. This should be attached inside Envelope – A cover. Tenders with non-submission of these details