IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :: 04-04-2008 CORAM THE HONOURABLE MR.JUSTICE V.DHANAPALAN WRIT PETITION No.2876 OF 2008 Shree Trading Corporation, No.151 (New No.188) Govindappa Street, 1st Floor, Chennai-600 001, represented by Mr.N.D.Mundra, Partner. ... Petitioner -vs- 1.The Chairman, Tamil Nadu Electricity Board, No.800, Anna Salai, Chennai-600 002. 2.The Chief Engineer/Transmission, Tamil Nadu Electricity Board, 6th Floor, Western Wing, No.800, Anna Salai, Chennai-600 002. 3.M/s.Easun Products of India Pvt.Ltd., 6th Floor, Temple Tower, No.672 (Old No.476), Anna Salai, Nandanam, Chennai-600 035. 4.M/s.Universal Cables Limited, Priyan Plaza, 1st Floor, No.76, Nelson Manickam Road, Aminjikarai, Chennai-600 029. ... Respondents (Fourth respondent is impleaded as per the order dated 04.04.2008 made in M.P.No.3 of 2008) Petition under Article 226 of the Constitution of India, praying for issuance of a writ of certiorarified mandamus. https://hcservices.ecourts.gov.in/hcservices/ For petitioner : Mr.S.Parthasarathy, Senior Counsel, for Mr.R.Nagasundaram. For respondents 1 and 2 : Mr.P.S.Raman, Additional Advocate General, for Mr.S.N.Kribanandam. For respondent 3 : Mr.S.Elambharathi For respondent 4 : Mr.S.R.Rajagopal O R D E R This Writ Petition has been filed, praying for issuance of a writ of certiorarified mandamus, to call for the records pertaining to the Tender Specification No.T-1458, dated 26.07.2007, published in The Economic Times, regarding the International Competitive Bidding issued by the second respondent, quash the same and consequently direct the second respondent to call for the tender afresh. 2. According to the petitioner, it is an agent of various reputed manufacturers world wide in the field of Power Engineering/Mechanical Engineering sector in a variety of business activities and also acting as agents and representatives of various Public Sector Undertakings. It has offered the services of supply of electrical conductors, accessories, cable laying, erection of joints and termination and maintenance, supervision and commissioning works at Departmental Stores, individual sites etc. in electricity field for several years and gained its own reputation and backup among the manufacturers of such accessories and cables all over the world. While so, it came across a Tender Notification Specification No.T- 1458, dated 26.07.2007, inviting International Competitive Bidding in The Economic Times news daily, floated by the second respondent for the following description of works : “SUPPLY : Design, Detailed Engineering, Manufacture, Assembly, Testing at Works, Offering for inspection, packing, transport and delivery of (i) 137.100 kms of 110 KV. 1 x 630 sq.mm. XLPE insulated, Lead Alloy sheathed, HDPE outer sheathed Aluminium Cable and (ii) 1.650 kms of 110 kv. 1 x 240 sq.mm XLPE insulated, Lead Alloy sheathed, HDPE outer sheathed Copper Cable with accessories, startup and essential spares at Departmental Stores/Site at Chennai/Madurai. ERECTION & SUPERVISION : Supervision of transport of cable drums from stores to site and cable laying (transport and cable laying will be done by the purchaser), carrying out jointing and termination, https://hcservices.ecourts.gov.in/hcservices/ supervision of final testing and commissioning and training of TNEB Personnel.” The said Tender Notification was also made available in the website of the first respondent and the petitioner downloaded the same. 3. The further case of the petitioner is that quite a few reputed manufacturing companies contacted the petitioner on having come to know about the said Tender Notification of the second respondent and were willing to authorise the petitioner as the representative/agent to submit and participate in the said tender. The Tender Notification contemplated various Bid Qualification Requirements and various instructions to the participating bidders. As per the bidding notification, the basic and primary requirements of qualification for eligibility to participate in the bidding are (i) Clause 1.1.1 : Only the manufacturer or the Group Company having minimum 5 years experience in manufacturing 110 KV or Higher Voltage Grade XLPE Cable who should have designed manufactured, tested and supplied the 110 KV or above Voltage Grade Cable and (ii) Clause 9.2.21: Bids received from Agents/Dealers will not be considered. 4. Having gone through the entire requirements, instructions etc. of the bidding notification of the second respondent, the petitioner company, being an agent/representative and found itself to be ineligible to participate therein, refrained itself from submitting any bid on behalf of its undisclosed principal. The petitioner has bonafidely believed the requirements contemplated under the bidding Notification that only the manufacturers are eligible to submit the bid and the same was confirmed by the second respondent on enquiry. Subsequently, the petitioner came to know that the bids were opened on 19.09.2007 and confirmed in the name of third respondent. 5. It is also stated by the petitioner that the third respondent is neither a manufacturer of cables nor the group company, having minimum five years experience in manufacturing 110 KV or Higher Voltage Grade XLPE Cable, which is a primary requirement under the Bid Qualification Requirements and, instead, he is an agent, having business activities in the similar trade of the petitioner company. Aggrieved over the awarding of contract to the third respondent, the petitioner sought for clarification with the second respondent and came to know that though the bid had been confirmed and awarded in favour of the third respondent, the necessary formalities for conferring and commissioning of the bid specification have not been commenced till-date. The petitioner was also given to understand that M/s.Universal Cables Limited, fourth respondent herein, who was one of the participants to the bidding, seemed to have taken up the issue of awarding the bid in contravention of the notification with the first respondent, but no prospective developments have come to its rescue. Also, the second respondent, for the reasons best known to him, has awarded the bid to the third respondent in a high-handed manner and in breach of the conditions specified in the Bid Notification. Had the bid notification permitted the agents/representatives to submit the bids, there would have been a https://hcservices.ecourts.gov.in/hcservices/ tough competition and the petitioner company, being one among such agents/representatives, would have participated and submitted its bid and due to the contravening attitude of the second respondent in confirming the bid in favour of the third respondent, the business prospect of the petitioner company has been affected, resulting in loss of revenue. Hence, this Writ Petition. 6. Respondents 1 and 2-Electricity Board have filed a counter affidavit, stating that in order to cater to the needs of the public and to meet the requirements of HT consumers and for the industrial growth of the State and also to ensure uninterrupted power supply, the Tamil Nadu Electricity Board proposed to instal 17 nos. of 110 KV feeder lines using 110 KV XLPE Cables in and around Chennai and Madurai Districts, for which approval was accorded on 04.07.2007. Further, to procure the standard/quality materials, the Board decided to invite international bids and accordingly issued the Tender Notification No.T-1458, which was published in the daily The Economic Times, dated 26.07.2007, and also in Tamil Nadu Electricity Board/Tamil Nadu Government Website simultaneously, prescribing the Bid Qualification Requirements and, therefore, the tender inviting authority strictly followed the provisions contained in the Tamil Nadu Tender Transparency Act and the Rules thereunder. 7. It is further stated in the counter that as per the Bid Qualification Requirements in Clause 1.3, the bidding/participating in the tender is also open to consortium (maximum three members) and, therefore, it is for the petitioner to go through each and every condition stipulated in the Bid Qualification Requirements and failure to notice the above condition stipulated in the tender specification is a fault committed by the petitioner, for which the respondents cannot be blamed. The petitioner is not an eligible person and has not even purchased the tender schedule nor participated in the pre-bid meeting conducted by the second respondent on 29.08.2007 and as such the petitioner has no locus standi to question the tender process. The averment by the petitioner that these respondents have confirmed the bid in favour of the third respondent is not correct and the fact remains that the third respondent is one among the participants in the tender process with required pre-qualifying conditions. Two tenderers, namely, M/s.Universal Cables Ltd. and the third respondent qualified the technical bid and the price bid was also opened and placed before the committee for evaluation. It is also stated that the project is proposed to be completed with huge cost running into several crores of rupees to develop the infrastructure to meet the growing power demand, but, in view of the interim order granted by this Court, the entire process is stalled. Therefore, the interim order is to be vacated and this Writ Petition dismissed with costs. 8. Third respondent company has filed a counter stating that the petitioner has filed the Writ Petition on the basis that the third respondent is not a manufacturer and the said company has submitted the tender document as an agent of a foreign company. As per the Tender Notification, the third respondent company has participated in https://hcservices.ecourts.gov.in/hcservices/ the tender as a consortium, consisting of the third respondent company, who is the consortium leader, and M/s.Phelps Dodge Thailand Limited, who is a manufacturer. As per the Bid Qualification Requirements in particular Clause 1.3, contained in Section II of the Tender Document, bidding is open to consortium consisting of maximum three members who shall meet the qualifying requirements individually or together subject to the conditions as stated therein. If any manufacturing company wanted to participate in the tender, there was no prohibition for it to participate in the bid on its own. The petitioner has not participated in the tender and the letter, dated 04.01.2007, which is being sought to be relied upon by him, was issued by M/s.Phelps Dodge Thailand Limited and it was with reference to a different Tender Notification, which was much prior to the present Tender Notification. The third respondent has participated in the tender as a consortium and not as an agent and he did not contravene any bid requirements. There was no breach of conditions specified in the Bid Notification. The petitioner wanted the bid condition to be relaxed so as to accommodate it, which is not permissible. The petitioner has no right to challenge the Tender Notification, as it is not qualified to bid. The petitioner has filed this Writ Petition with an ulterior motive to stop the tender process, at the behest of the persons, who have failed in the bid and, hence, this Writ Petition is liable to be dismissed with costs. 9. Mr.S.Parthasarathy, learned Senior Counsel for the petitioner, would contend that the third respondent lacks the basis Bid Qualification Requirement specified in Clause 1.1.1 of the Notification and, hence, awarding of the bid in its favour is illegal and in contravention of the bid notification. According to him, the second respondent has committed breach of trust in exercising his duties, while accepting the bid of the third respondent and awarding the same to him, which has directly affected the business prospects of the petitioner and taken away the right of the petitioner to secure an international competitive bid, notified by the second respondent. 10. The mainstay of the learned Senior Counsel is that all along from the Tender Notification till the date of opening and placing the bids before the Evaluation Committee, the respondents 1 and 2 totally disregarded the specifications in the bid document and acted in total contravention of the same, thereby depriving the petitioner of an opportunity to participate in the tender, in the capacity of an agent. In other words, his contention is that the third respondent, being only an agent like that of the petitioner, cannot submit any bid either in his individual capacity or as an associate of a consortium with a manufacturer and, therefore, the impugned Tender Specification has to be quashed. 11. In support of his contentions, the learned Senior Counsel has relied upon the following decisions : https://hcservices.ecourts.gov.in/hcservices/ (i) Sai Chalchitra v. Commissioner, Meerut Mandal and Others, 2005 (3) Supreme Court Cases 683 : “5. After hearing the counsel for the parties, we are of the opinion that the High Court clearly erred in dismissing the writ petition filed by the appellant on the ground of locus standi. The appellant being in the same trade as respondent 3 has a right to seek the cancellation of the licence granted to respondent 3 being in violation of the Act and the Rules.” (ii) M/s.Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and Others, AIR 2000 SUPREME COURT CASES 2272 : “10 .... (i) .... (ii) The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate between persons similarly situate.” “12.... If a term of tender is deleted after the players entered into the arena, it is like changing the rules of game after it had begun and, therefore, if the Government or the Municipal Corporation was free to alter the conditions, fresh process of tender was the only alternative permissible.... By reason of deletion of a particular condition, the wider net will be permissible and a larger participation or more attractive bids could be offered.” (iii) Reliance Energy Ltd. and Another v. Maharashtra State Road Development Corporation Ltd.and Others,2007 (8) Supreme Court Cases 1: “38. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This “legal certainty” is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms, it may result in unequal and discriminatory treatment. It may violate doctrine of “level playing field.” 39....In matters of judicial review, the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision-making power and he must give effect to it. Otherwise, it may result in illegality. The principle of “judicial review” cannot be denied even in contractual matters or maters in which the https://hcservices.ecourts.gov.in/hcservices/ Government exercises its contractual powers, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however, such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision- maker and the bidders and other stakeholders, uncertainty and thereby breach of the rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. .......Whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above, “certainty” is an important aspect of the rule of law.” 12. Conversely, the contentions of Mr.P.S.Raman, learned Additional Advocate General, appearing for respondents 1 and 2, are two folded viz., (i) maintainability of the writ and (ii) scope and object of consortium bidding. 13. With regard to the first point, the learned Additional Advocate General would contend that the writ petitioner is a party, who has not even purchased the tender document, and, therefore, the party, who is not a tenderer, cannot maintain the Writ Petition, challenging the tender conditions or the final selection, unless it is a writ claimed to be filed in public interest, which is not so in the present case. According to him, in matters of tender, the interference of Courts is restricted only to the extent of the tender evaluation process being arbitrary or illegal and, as such, the decision can never be challenged in the writ proceedings. 14. On the second point, the learned Additional Advocate General would submit that the purpose of accepting consortium bidding is that in modern commercial tenders where varied fields of expertise are required, a single party may or may not possess all the requisite qualifications and, therefore, consortium bidding is permitted so that the members of the consortium may collectively bring with them their varied expertise into the tender bid. He further submits that whenever a consortium bidding is done, it is unnecessary for every member of the consortium to satisfy each of the tender qualifications and, hence, in such cases, it is a common practice that the tender authorities will require the members of the consortium to enter individually or collectively satisfy the tender requirements. https://hcservices.ecourts.gov.in/hcservices/ 15. To substantiate his arguments, the learned Additional Advocate General has relied upon the following decisions : (i) New Horizons Limited and Another v. Union of India and Others, 1995 (1) Supreme Court Cases 478 : “The expression “joint venture” is more frequently used in the United States. It connotes a legal entity in the nature of a partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement to share both in profit and losses. A joint venture can take the form of a corporation wherein two or more persons or companies may join together. A joint venture corporation has been defined as a corporation which has joined with other individuals or corporations within the corporate framework in some specific undertaking commonly found in oil, chemicals, electronic, atomic fields. Joint venture companies are now being increasingly formed in relation to projects requiring inflow of foreign capital or technical expertise in the fast developing countries. There has been similar growth of joint ventures in our country wherein foreign companies join with Indian counterparts and contribute towards capital and technical know-how for the success of the venture.” (ii) A decision of this Court in W.P.No.23950 of 2004 and batch, dated 13.09.2005 in the case of South India Corporation Limited v. Ennore Port Limited : "11. On the above settled law, the facts of the case on hand must be considered. Bidding Company is defined as a company if the RFQ for the project is submitted by a single corporate entity. Bidding consortium is defined if the RFQ for the project is submitted jointly by more than one entity, then this group of entities shall be referred to as a Bidding Consortium. Each entity in the Bidding Consortium shall be referred to as a Consortium Member. In case of Bidding Consortium, the Lead Developer/Lead Consortium Member shall be that Consortium Member vested with the prime responsibility of developing the project. The Lead Consortium Member (including https://hcservices.ecourts.gov.in/hcservices/ its Promoters and/or Affiliates in case they are also members of the Consortium and provided all these entitles are corporate entities) shall necessarily make the maximum entity contribution in the project among the consortium members and this equity contribution shall not be less than 26%. Part VII of RFQ documents relates to "Eligibility criteria for the request for qualification". (iii) Reliance Energy Ltd. and Another v. Maharashtra State Road Development Corporation Ltd. and Others,2007 (8) Supreme Court Cases 1 : "39....As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of the rule of law will not arise..." (iv) A decision of this Court dated 05.02.2008 made in W.P.No.36006 of 2007 and other connected matters. In the above case, this Court has dealt with a similar matter in detail and following the ratio laid down by the Supreme Court in various decisions held the case in favour of the Board. 16. I have given my rapt attention and careful consideration to the rival submissions and also gone through the decisions cited by the learned counsel for the parties. 17. At the outset, it is to be noted that the petitioner is not a party to the Tender Notification, as it has neither purchased a tender document nor participated in the bid so also in the pre-bid meeting conducted by the second respondent on 29.08.2007. It is also not the case of the petitioner that it has purchased the bid document and participated in the tender process and consequently its bid was rejected. Further, the petitioner, having gone through the entire Bid Notification, being only an agent, found itself to be ineligible to participate in the bid and refrained itself from participating in the Tender Notification in any manner. On the other hand, it is the case of the petitioner that the third respondent is also a similarly placed agent and, therefore, he cannot submit any bid either in his individual capacity or as an associate of a consortium with a manufacturer. 18. A perusal of the records would indicate that the third respondent has participated in the tender as a consortium, consisting of itself as the consortium leader and M/s.Phelps Dodge Thailand Limited, who is a manufacturer. When the petitioner is equally qualified with that of the third respondent, what prevented it from purchasing the tender document and participating in the tender https://hcservices.ecourts.gov.in/hcservices/ process remains unanswered. Further, it is the own admission of the petitioner that it is not a consortium or group company, having minimum five years experience in the relevant field and thereby it is ineligible to participate in the tender. When that be so, this Court is at a loss to understand as to how the petitioner is prejudiced by the impugned tender notification. When according to the petitioner the third respondent does not meet the required pre-bid qualifications, it is for the tender inviting authority or the tender evaluation committee to examine each and every aspect of the matter and take a decision whether to confirm the bid in its favour or not. At this stage, the petitioner has no locus standi to question the propriety of the third respondent. 19. The terms and conditions in the tender notification are prescribed by the Board bearing in mind the nature of contract. In such matters, the authority, calling for the tender, is the best judge to prescribe the terms and conditions of the tender. Further, the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. The Board must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Court would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Court cannot strike down the terms of the tender prescribed by the Board, merely because it feels that some other terms in the tender would have been fair, wiser or logical. The Board can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. In addition, in the matter of policy decisions or exercise of discretion by the Government so long as the infringement of fundamental right is not shown, Court will have no occasion to interfere and the Court will not and should not substitute its own judgment for the judgment of the executive in such matters. Besides, it is the prerogative of the tender calling authority to impose pre- qualifying conditions in the tender process and, therefore, the petitioner has no right to question the procedure fixing of pre- qualifications, as the respondent Board has got every right and power to fix the pre-qualifications, to suit the standards and performance of the materials, to be supplied. At the same time, the petitioner cannot dictate to the Government/Board of the pre-bid qualification requirements, when the respondent Board, while issuing the Tender Notice, has followed the procedure contemplated under the Tamil Nadu Tender Transparency Act,1998, and the Rules made thereunder and no hideouts were played. 20. In this case, the third respondent, namely, M/s.Easun