1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1492 OF 2009 WITH CHAMBER SUMMONS NO.296 OF 2009 IN WRIT PETITION NO.1492 OF 2009 1. ACME Tele Power Limited A Company incorporated and registered under the Companies Act, 1956, having its registered office at Plot No.2, Sector 34, E.H.T.P.Gurgaon- 122 001 Haryana. 2. Mr.Yogesh Sanklecha, A Citizen of India and a Shareholder of ACME Tele Power Ltd. Residing at Plot No.68, Jedhenagar, Near Chntamani Hospital, Divyawadi, Pune-32 .. Petitioners V/s 1. Union of India Through its Secretary Department of Telecommunications, Ministry of Communications and Information Technology, having its office at Sanchar Bhawan, Ashoka Road, New Delhi – 110 001. 2. Bharat Sanchar Nigam Limited, A Government of India Enterprise and a company registered under 2 the Companies Act, 1956 having its office of the Maharashtra Telecom Circle at “D” Wing, 6th Floor, BSNL Administrative Building, Juhu Tara Road, Santacruz, Mumbai 400 054. 3. KEC International Limited, A company registered under the Companies Act, 1956 having its registered office at CEAT Mahal, 463, Dr.Annie Besant Road, Worli, Mumbai 400 030. 4. GTL Limited, A Company registered under the Companies Act, 1956, having its registered office at Global Vision, E.S.II, T.T.C.Industrial Area Mahape, Navi Mumbai 401708 .. Respondents Mr.Rohit Kapadia with Mr.Jimmy Pochkhanwala, Mr.Jayesh Desai, Mr.Sandeep Narain and Ms.Amrita Thakore i/by M/s.Singhi & Co.for the Petitioners. Mr.V.D.Shukla with Mr.S.D.Shukla i/by M/s.Shukla & Associates for Respondent No.2. Mr.V.R.Dhond with Mr.Ameya Gokhale i/by M/s.Khaitan & Co.for Respondent No.3. Mr.P.N.Mody with Ms.Najma Shaikh i/by M/s.Vigil Juris for Respondent No.4. 3 CORAM : A.M.KHANWILKAR & R.G.KETKAR, JJ. DATE : 16TH OCTOBER, 2009. JUDGMENT: (Per R.G.Ketkar, J.) 1. Heard the learned counsel for the parties. Rule. Counsel for the Respondents waive service. By consent rule is made returnable forthwith and the matter is taken up for hearing and final disposal. By this petition under Article 226 of the Constitution of India, the petitioners pray for issuance of the writ of mandamus directing the Respondent No.1 (Union of India) and the Respondent No.2-Bharat Sanchar Nigam Limited (BSNL), to withdraw, recall and cancel the evaluation of the bids carried out by them and revaluate the said bids strictly in accordance with the terms of the tender dated May 1, 2008, issued by the BSNL; for issuance of a writ, order or direction prohibiting the BSNL from taking any steps or awarding any contract to Respondent No.3-KES International Limited and Respondent No.4- GTA Limited. The controversy arises in the following circumstances. 2. On behalf of the BSNL sealed tenders were invited on two stage bidding system in four parts from the eligible bidders for planning, engineering, supply, installation, testing and commissioning of GSM/UMTS based cellular mobile and supply, installation, testing and commissioning of infrastructure for network of capacity of 25 4 million lines to be rolled out in three phases in the the licensed service areas of the BSNL in West Zone covering Maharashtra, Gujrat, Madhya Pradesh, Chatisgarh. 3. The tender is in four parts. Part-1 covers planning, engineering, supply, installation, testing and commissioning of GSM based cellular network together with 3GPP R4 Core, IMS, IN and VAS. Part-2 covers planning, engineering of 3G network, VAS and MBMS. Part-3 covers supply, installation, testing and commissioning of infrastructure and associated items for radio sites. Part-4 covers OSS/BSS. Eligible bidders can participate in one or more of the parts independently, subject to the fulfillment of the specified eligibility criteria. 4. The tender is divided in XI Sections. Section-I is Notice Inviting Tender (NIT). Clauses 3 to 4.8 lay down the eligibility criteria as per Section- I. Clause 3 thereof provides for eligibility criteria common for all parts. Clause 4.1 lays down eligibility criteria for part-1. Clause 4.2 lays down eligibility criteria for part-2, Clause 4.7 lays down eligibility criteria for part-3 and finally clause 4.8 lays down eligibility criteria for part-4. 5. The tender envisages planning, design, engineering, supply, installation, testing, commissioning and Annual Maintenance Contract (AMC) for 25 million lines of GSM/UMTS R6 equipment in four parts 5 for BSNL Network, each part on turnkey basis in the service areas in which the BSNL has been licensed to operate its mobile services in West Zone. The project is proposed to be executed in four parts, out of which parts I, II and III will be executed in three phases whereas part IV will be executed in only two phases. 6. Clause 6 of Section-I (NIT) lays down that the bid security in the form of Bank Guarantee is Rs.120 crores (Rupees One Hundred Twenty Crores only) for part-1, Rs.15 crores (Rupees Fifteen Crores only) for part-2, Rs. 30 crores (Rupees Thirty Crores only) for part-3 and Rs.15 crores (Rupees Fifteen Crores only) for part-4. 7. Clause 4.2 of Section-II deals with Instructions to Bidders (ITB). Clause 4.2 provides that the bidder is expected to examine all instructions, forms, terms and specifications in the tender document. Failure to furnish all information required as per the tender document or submission of the bid not substantively responsive to the tender document in every respect will be at bidder’s risk and may result in rejection of the bid. Clause 5.1 provides that a prospective bidder requiring any clarification of tender shall notify the purchaser (BSNL) of such queries in writing or by fax at the BSNL’s address indicated in the invitation of the bid, among other things. Clause 5.2 provides that any clarification issued by BSNL in response to the query raised by prospective bidders shall form integral part of the tender document 6 and would amount to amendment of relevant clauses of the tender. 8. Clause 9.1 lays down that a bidder shall give total composite price inclusive of all levies and taxes viz.excise duty, customs duty, VAT, sales tax, service tax, packing, forwarding, freight and insurance etc., but excluding octroi/entry tax which will be paid extra as per the actual, wherever applicable as per the terms of payment specified in Section-IV. The basic unit price and all other components of the price need to be individually indicated against the goods and services it proposes to supply under the contract as per the price schedule given in Section-VII. Clause 9.2 lays down that the prices indicated in the price schedule shall be entered in a particular manner. Clause 9.5 which is mandatory term of the tender lays down that the discount, if any, offered by the bidders shall not be considered unless specifically indicated in the price schedule among other things. Clause 10 which is mandatory term of the tender provides for the documents establishing bidder’s eligibility and qualification. 9. Clause 11.2 provides that the documentary evidences of the conformity of the goods and services to the tender may be, in the form of literature, drawings, data etc., and the bidder shall furnish among other things the compliance of techno-commercial compliance of the tender terms, conditions and technical specification as sought as per the procedure more particularly set out therein. Clause 11.2 (c) (i) to 7 (vi) is mandatory term of the tender setting out the procedure through which techno-commercial compliance of the tender term or condition and technical specification is sought. Clause 12.1 provides for the amount and form of bid security, which is mandatory term of the tender. Clause 12.3 thereof provides that the bid security shall be in the form of a bank guarantee issued by a scheduled bank in favour of the purchaser, valid for a period of 180 days from the date of bid opening. The purchaser reserves the right to request the lowest bidder during the period of bid evaluation to extend the bid security for a further period of 120 days and the bidder shall extend the same accordingly. Refusal to extend the bid security will result in forfeiture of the bid security. 10.Clause 13.1 is a mandatory term of the tender and lays down that bids shall remain valid for 150 days from the date of opening prescribed by the purchaser pursuant to clause 19.1 and a bid valid for a shorter period shall be rejected by the purchaser as non- responsive. Clause 15.1 is also a mandatory term of the tender that provides for submission of bid in two covers. The first cover shall contain original and four copies of the bid duly marked “ORIGINAL” and “COPY”. The second cover shall contain documents establishing bidder’s eligibility as per clause 2 alongwith bid security as per clause 12. Both the covers should be sealed separately by the personal seal of the bidder. Clause 20 provides for clarification of bids and lays down 8 that to assist in the examination, evaluation and comparison of bids, the purchaser (BSNL) may, at its discretion ask the bidder for the clarification of its bid. The request for the clarification and the response shall be in writing. However, no post bid clarification at the initiative of the bidder shall be entertained. 11.Clause 21 provides for technical and commercial evaluation. Clause 21.2 thereof is one of the important clauses of the tender and provides that the purchaser (BSNL) shall determine the substantive responsiveness of each of the technical and commercial bids to the requirements of the tender document. A substantively responsive bid is one which conforms to all technical specifications and commercial terms and conditions of the tender document without material deviation/exceptions. The BSNL’s determination of bid’s responsiveness shall be based on the contents of the bid itself without recourse to extrinsic evidence. Clause 21.3 provides that during the evaluation, BSNL at its discretion may call upon the bidder to give a techno-commercial presentation of its offer, to explain the products offered, its capability to undertake the project and to respond to any question from BSNL. Clause 21.4 lays down that a bid, determined as substantively non-responsive will be rejected by the purchaser and shall not subsequent to the bid opening be made responsive by the bidder by correction of the non-conformity. Clause 21.5 which is one of the important clauses, provides that the BSNL may waive any minor 9 infirmity or non-conformity or irregularity in a bid which does not constitute a material deviation, provided such waiver does not prejudice the establishment of techno-commercial parity among the bids. Clause 21.6 is also important term of the tender and lays down that the financial bids of only those technical and commercial bids that are determined as substantively responsive shall be opened. The financial bids of those technical and commercial bids that are determined as substantively non-responsive shall be returned to the respective bidders unopened. 12.Clause 22.1 is also important clause of the tender and provides that the BSNL shall evaluate and compare the financial bids in detail of those technical and commercial bids previously determined to be substantively responsive pursuant to clause-21. Clause 22.2 (a) lays down that the evaluation and comparison of responsive bids shall be done on the basis of net cost to BSNL on the prices of the goods offered inclusive of duties and taxes (but excluding CENVAT-able duties & taxes), sales tax, packing, forwarding, freight and insurance charges etc., as indicated in col.17 of the price schedule in the Section VII, Part-II of the tender document, and as stipulated in clause 9.1 the octroi/entry taxes are not to be included in the composite price and hence the same will not be considered for the purpose of evaluation and comparison of responsive bids. 10 13.Section IV lays down special conditions of contract. Clause 46 therein provides for Evaluation. Clauses 46.2(i) and 2(vii)(a) are quoted hereinbelow for ready reference; 46.2 “Further, the tender shall be evaluated as a package quoted by the bidders for various equipments/materials/services as per the criterion given below: (i) The price of various components forming part of the package detailed in the SoR at Section-V shall be evaluated. It shall also include all those items which respective bidders consider essential for commissioning purposes. The sanctity of the price of individual items shall be maintained by the bidders within the package even though the evaluation is package based.” “46.2(vii) : In order to establish techno-commercial parity among the bids, the financial bids shall be loaded as below: (a) Cases in which bidder has not quoted the price of the item mentioned in the SoR of the tender document and has not given any comments/justifications for not quoting the same, the price bid will be loaded with the maximum price quoted for that item by any other bidder for the purpose of evaluation.” 14.The tender seeks a comprehensive and complete requirement of infrastructure items for the successful installation and commissioning of the IMPCS network. Clause 54 of the tender deals with Annual Maintenance Contract (AMC) and lays down that the bidder shall quote cost of AMC for a period of seven years (AMC for 6th & 7th year is optional) from the date of completion of each of the three phases of the project and on the expiry of warranty as mentioned in clause 53. Annexure-II deals with AMC. Clause 2.4 thereof provides that the 11 supplier shall submit list of spares required alongwith the bid and cost of the same is to be quoted in price schedule. The price shall be same as that quoted in the bill of material against the concerned item in the Schedule Of Requirement (SOR). 15.In the present case BSNL invited bids by a tender dated May 1, 2008. The technical & commercial bids were opened on September 10, 2008 and the following bidders had participated : i. M/s.GTL Ltd. (Respondent No.4) ii. M/s.Spanco Pvt.Ltd. iii.M/s.Aster Teleservices Pvt.Ltd. iv. M/s.ACME Tele-Power Ltd. (Petitioner) v. M/s.ICOMM Tele Ltd. vi. M/s.Teracom Pvt.Ltd., vii.M/s.KEC International Ltd. (Respondent No.3) On the scrutiny of technical and commercial bids, the bids of following bidders were found to be eligible for opening of financial bids. 1. M/s.GTL (Respondent No.4) 2. M/s.Spanco 3. M/s.KEC (Respondent No.3) 4. M/s.ACME 12 5. M/s.ICOMM 16.By letter dated February 24, 2009 BSNL intimated the eligible bidders that the financial bids will be opened on February 28, 009 so that the bidders can depute their representatives to attend the same. In the first stage of evaluation of the bids, the Technical and Evaluation Committee (TEC) was required to evaluate the technical and commercial bids in accordance with clause 21 of Section -II. The financial bids of the bidders whose technical and commercial bids were found by TEC to be substantively responsive were to be evaluated further in the second stage of financial evaluation by the Financial Evaluation Committee as per clause 22 of Section-II of the tender document. Upon evaluation of the financial bids, the Financial Evaluation Committee would determine ranking of the bidder as lowest (L-1), second lowest (L-2), third lowest (L-3) and so on. The tender stipulate that the lowest bidder would be awarded 50% of the contract in the inverse ratio of the bid amounts. The lowest bidder could also be invited for further reduction in their prices by Price Negotiation Committee (PNC) and the second & third lowest bidders were also obliged to execute the contract at such reduced prices of the lowest bidder. After completing this formalities, the purchase orders for the respective quantities are to be placed on lowest, second lowest and third lowest bidders. 13 17.It is the case of the petitioners that the Financial Evaluation Committee carried out financial evaluation between March 1, 2009 and April 30, 2009 and submitted its final report before April 30, 2009. During this evaluation the ranking of the parties as SPANCO as lowest (L-1), GTL-4th Respondent as second lowest (L-2), KEC-3rd Respondent as third lowest (L-3), and the petitioner as L-4. It is the further case of the petitioners that the PNC invited lowest bidder SPANCO Limited for negotiation for further reduction in the price sometime in the first week of May, 2009. The prices were lowered by SPANCO and even the PNC recommended issuance of purchase orders to L-1, L-2 & L-3 in July, 2009 in respect of Western Zone on such reduced and negotiated prices. 18.The petitioners challenge the techno-commercial evaluation as well as financial evaluation in respect of the item spares which is the major line item of supply as required by BSNL. The said item is at serial No. 19 of Section-V dealing with SOR (part III). It is the case of the petitioners that the list of spares was mandatorily required to be furnished in the techno-commercial bid, as per clause 11.2 of Section- II of the tender read with clause 9.1 of Section-III dealing with General (Commercial) Conditions of Contract. The third Respondent has also not quoted the price of such spares in its financial bid. In so far as 4th Respondent is concerned, the grievance of the petitioner is that in col.5 & 6 of the financial bid, it was necessary for the bidder to 14 quote excise duty. Both the respondents viz.3rd and 4th Respondent did not quote the amount of excise duty in col.5 & 6 in the financial bids. This being the mandatory term of the tender, the BSNL ought to have declared their bids as substantively non-responsive bids. It is the submission of the petitioners that since the mandatory terms of the tender document were not fulfilled by Respondent Nos.3 & 4, as per the terms of tender, the BSNL ought to have declared the bids of Respondent Nos.3 & 4 as substantively non-responsive bids and ought to have rejected the same. If that was done by the BSNL, there was no question of opening the financial bids of Respondent Nos.3 & 4, and should have been returned to the respective bidders unopened in terms of clause 21.6. In support of this submission, the petitioners rely upon- (i) Clause 11.2 (b) of Section II (ii) Clause 9 of Section III (iii) Query No.65 and Reply (iv) Clause 54.4 of Section IV (v) Clauses 2.4, 2.5 and 2.6 of Annexure II of Section IV. 19.In so far as excise duty is concerned, the excise duty leviable on all items of SOR was also mandatorily required to be filled in percentage as well as in amount in the financial bids, which were to be filled in as per the price schedule as set out in Section VII of the tender. In support of this submission, the petitioners rely upon - 15 (i) Clause 9.1 of Section II, (ii) Clause 9.2 of Section II, (iii)Query No.458 and its Reply. 20.The petitioners rely upon the judgment of the Apex Court in West Bengal State Electricity Board V/s.Patel Engineering Co.Ltd., (2001) 2 SCC 451. 21. The respondents have filed affidavits in opposition to the petition. On behalf of the BSNL, Devid S.A., working as AD (MM-I) has sworn affidavit on August 20, 2009. It is contended that the evaluation process is still under process and no cause of action has arisen. It is contended that the petition is pre-mature and same is based upon assumption/anticipation for the purpose of trying to delay the tender process. On behalf of 3rd Respondent, Surinder Bir has sworn affidavit on August 25, 2009 contending interalia that the petition is pre-mature. It is submitted that the financial bids were opened on February 28, 2009 and the present petition is instituted on August 3, 2009 which suffers from delay and latches. It is further submitted that the evaluation of bids is under process and the BSNL has not yet issued purchase orders. On merits, it is submitted that the contentions raised by the petitioners that the 3rd Respondent has not complied with the mandatory terms of the tender and in that the technical bid 16 did not contain the list of spares, as also the financial bid was not in compliance with the terms and conditions of the tender and the bid is liable to be rejected, are wholly misconceived. In substance, the argument of the 3rd Respondent is that these are not the mandatory terms of the tender. As far as excise duty is concerned, under the provisions of the Central Excise Act and Rules, every person who produces or manufactures any excisable goods has to pay duty leviable on such goods. The 3rd Respondent is neither the producer nor the manufacturer of any of the goods. Reliance is placed upon clause 22.2 of Section-II read with Section-VII, Part-2 dealing with the Price Schedule for indigenous equipments (including partly imported) and service costs and price schedule for imported equipments. 22.On behalf of 4th Respondent, Arunkumar Sinha, the constituted attorney has sworn affidavit on August 18, 2009. It is submitted that the petitioners are not entitled to any reliefs as the petition is barred by gross and unexplained delay and latches. The petitioners acquired knowledge on February 28, 2009 when the financial bids were opened and the petition is instituted on August 3, 2009. At any rate, techno- commercial bids were opened as far back as on September 10, 2008 and if the petitioners contention is valid, the BSNL ought to have declared the bids of 3rd and 4th Respondents as substantively non- responsive and consequently there was no question of BSNL opening their financial bids. Since the BSNL did not declare the bids of 3rd 17 and 4th Respondents as substantively non-responsive bids after opening of these bids on September 10, 2008 and proceeded further for evaluating the financial bids, the cause of action accrued to the petitioners then and there itself. The petitioners allowed the BSNL to open financial bids of 3rd & 4th Respondents on February 28, 2009. In view of this, the petitioners are precluded from challenging the techno commercial evaluation of the 3rd & 4th Respondents. In so far as financial evaluation is concerned, it is submitted that the financial bids were opened on February 28, 2009 and the present petition is instituted on August 3, 2009. The petition therefore suffers from gross delay and latches. 23.Mr.Rohit Kapadia, learned senior counsel for the petitioners submitted that the spares are important component of the goods that are required to be supplied under the tender as they would be required for replacement, upkeep and maintenance and regular functioning of mobile telephone services by BSNL immediately upon expiry of one year warranty period after commissioning of the infrastructure for such mobile telephones. The spares are required to be supplied under the tender itself and are to be kept in adequate quantities at all sites so that they can be immediately replaced as and when required. 24.In the instant case, the 3rd Respondent did not furnish list of spares and also has not quoted price of such spares in its financial bids. If at 18 all the detailed list of spares was not provided for any reason, a deviation/exception statement justifying for not providing such list was required to be furnished as per clause 11.2 (b)(ii) of Section II of the tender. As per clause 31 (iv) of Section II of the tender if the compliance, deviation/exception statement as prescribed are not given, a bid is to be rejected at the stage of techno-commercial evaluation. The 3rd Respondent has also not furnished any deviation/exception statement. In view of this, the BSNL ought to have rejected the bid of the 3rd Responent at the stage of techno- commercial evaluation. The fact that the 3rd Respondent did not furnish list of spares is established from the Evalution Chart (pre- clarification) annexed by BSNL to its affidavit. In view of this, it is submitted that the techno-commercial bid of the 3rd Respondent was liable for outright rejection under clause 31 (iv) of Section II. In this connection, it is further submitted that under clause 9.2 (ii) of Section II, the bidders were to quote as per the price schedule given in Section VII of the tender for “all” the items given in the SOR. The bidder was to quote the price of such spares in its financial bid. If the prices were not filled in as required in the price schedule, the financial bid was liable for