IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL No 1 of 2001 in SPECIAL CIVIL APPLICATION No 12181 of 2000 with Civil Application No.34 of 2001 For Approval and Signature: Hon'ble CHIEF JUSTICE MR DM DHARMADHIKARI and Hon'ble MR.JUSTICE P.B.MAJMUDAR ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgement? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- VOLTAS LTD. Versus UNION OF INDIA -------------------------------------------------------------- Appearance: MR PRASHANT G DESAI for the Appellant Mr.S.B. Vakil, Senior Counsel, with MR MANISH R BHATT for Respondent Nos. 1 and 2. Mr.K.S. Nanavati, of NANAVATI ASSOCIATES, for Respondent No. 3 -------------------------------------------------------------- CORAM : CHIEF JUSTICE MR DM DHARMADHIKARI and MR.JUSTICE P.B.MAJMUDAR Date of decision: 07/02/2001 C.A.V. JUDGEMENT (Per : MR.JUSTICE P.B.MAJMUDAR) 1. By this Letters Patent Appeal, the appellant has challenged the order passed by the learned single Judge, by which the Special Civil Application filed by the present appellant has been dismissed. 2. The facts relating to the controversy between the parties are as under :- The appellant herein was the original petitioner of Special Civil Application No.12181 of 2000. It is the say of the appellant that it is a Limited Company, duly incorporated under the provisions of the Companies Act, 1956. Respondent No.2, Institute for Plasma Research, is an institute under the Department of Atomic Energy, Government of India. Respondent No.2 carries on experimental and theoretical research in plasma physics with emphasis on the Physics of magnetically confined hot plasmas and non-linear plasma phenomena. It is the case of the appellant that it is one of the pioneers in India in the field of Air-conditioning and Refrigeration for the last 50 years and it is having extensive experience of air-conditioning and refrigeration on turn-key basis. It is also the say of the appellant that it is having a most modern factory in Thane in the State of Maharashtra and the appellant also manufactures the entire range of air-conditioning and refrigeration equipments, such as reciprocating compressors, condensers, chillers, cooling coils, Centrifugal Liquid Chillers, vapour absorption heat pumps, packaged type A.C. units for capacity ranging from 5 T.R. to 1000 T.R. plant. As per the averment in the petition, the appellant is having full-fledged Branch Office and service station at Ahmedabad with well trained Engineers and Technicians and the appellant undertakes air-conditioning and refrigeration projects right from the stage of designing and planning at their end till execution of the Project at job site, including testing and commissioning of the system. The appellant is also having service set up at Surat, Silvasa, Baroda, and Ankleshwar to look after the business interest of their customers in the State of Gujarat and adjoining Union Territory. 3. In paragraph 5 of the petition, the appellant has pointed out the major jobs which they have undertaken which are either executed or under execution. They read as under :- ====================================================================== Sr.No. Particulars Contract Value (Rs. in crore) ---------------------------------------------------------------------- 01. Gujarat High Court 3 x 430 TR Centrifugal Water Chilling Machines. 4.5 crores. 02. Indoor Stadium for Surat Municipal Corporation 2 x 270 T.R. Centrifugal water chilling machine 3.1 crores. 03. Garden Silk Mills, Surat 2 x 500 TR Centrifugal Water Chilling Machines 2.5 crores. 04. Larsen & Toubro Ltd., Powai, Mumbai 6.5 crores. (for I.P.C.L., Dahej) 8 x 1000 TR Steam Fired Vapour Absorption Heat Pumps). 05. Space Application Centre, Ahmedabad, 5 x 100 TR Screw Chillers 4.0 Crores. 06. Gujarat Narmada Valley Fertilizers Co. Ltd. INFO Tower, Ahmedabad 2 x 200 TR Centrifugal Water Chilling Machine 2.3 crores. 07. Air Port Authority of India, Ahmedabad Air Port 2 x 300 TR 1.95 crores. 08. ISRO Air Conditioning CATR Facilities, Ahmedabad 3 x 85 TR Screw Chillers. 1.99 crores. ===================================================================== 4. It is also the say of the appellant in the petition that it has done work for the Institute for Plasma Research, i.e. respondent No.2 herein, for installing air-conditioning system for an amount of Rs.1.70 crores. Respondent No.2 herein invited tenders for the work of design manufacturing/fabrication, supply, installation, site testing and commissioning of SST-1 Water cooling system, etc., as per Tender Notice No.IPR/TN/PUR/020/99-2000 dated 13.12.1999. It is the say of the appellant that in the tender notice, it is mentioned that :- "... vendors fulfilling the conditions mentioned below and desirous of quoting against this tender notice can submit their written request to the Purchase Officer at the above address. Vendors must furnish documentary proof in respect of following information while making request for tender documents and drawings. If the Vendor fails to comply with all the conditions stipulated in (1) to (4) below, tender documents will not be issued to such vendors ...." Last date for receipt of request with all the relevant documents asked for in the tender notice was 3.1.2000. The conditions mentioned in the tender notice were for pre-qualification of the tenderers, who intend to fill the tender as per the tender notice. About 6 parties submitted their offers to the respondent No.2. The appellant was issued the tender document and the said tender was for design manufacturing / fabrication, supply, installation, site testing and commissioning of SST-1 water cooling system, having an estimated cost of Rs.696 lacs. It is also the say of the appellant that the time of opening the tender was extended to 1.3.2000 and the time to submit tenders was also extended upto 1.3.2000. The appellant's representative was present at the time of opening of tender on 1.3.2000 and it was found that the appellant was the lowest bidder. The appellant quoted Rs.8,31,49,505/- and Respondent No.3 quoted Rs.8,87,00,786/-. According to the appellant, the aforesaid price was quoted by respondent No.3 after the discount given by respondent No.3 to the tune of Rs.20,28,453/-. It is, therefore, the say of the appellant that it was the lowest bidder and that, therefore, the price quoted by it was more favourable as compared to the price quoted by respondent No.3, as there was a difference of more than Rs.50,00,000/- between the prices quoted by the appellant and the respondent No.3. It is also the say of the appellant that it had given option for 3 x 310 TR Screw Chillers with remaining items at Rs.7,96,99,505/-. It is also submitted that two options were called for in the tender and the appellant quoted for both the options, while none of the other tenderers has quoted both the options, including the respondent No.3. It is further the say of the appellant that after opening the tender, the appellant received a letter on 6.6.2000 from the respondent No.2, raising certain technical queries and the appellant subsequently replied the said queries. It is stated in the petition that as per the request of the respondent No.2, in their letter dated 1.9.2000, the Officer of the appellant-Company accompanied the Officers of the respondent NO.2 and showed certain work done by the appellant in Bombay in the month of September, 2000. On 29.9.2000, about 4 to 5 representatives of various major sub-contractors have attended the meeting, along with the representatives of the appellant-Company, and the appellant had given all the details, as required by the respondent No.2. It is the say of the appellant that till September end and beginning of October, 2000, the appellant was made to believe that the offer of the appellant was the lowest and technically sound and, in that view of the matter, the appellant was awaiting Letter of Intent. The appellant was, therefore, legitimately expecting issuance of contract in its favour. However, to the surprise of the appellant, it got an information on or about 21.11.2000 that the Letter of Intent is issued in favour of respondent No.3. On the aforesaid premises, it is the say of the appellant that it being the lowest tenderer, having offered Rs.55,00,000/- lesser than the offer of respondent No.3, coupled with the fact that the appellant is technically competent, having executed several works all over India, the work in question should have been awarded to it. It is also the say of the appellant that it is having well equipped service centre at Ahmedabad, while the respondent No.3 is not having any Service Centre at Ahmedabad and the appellant can provide better service to respondent No.2 at Ahmedabad as compared to respondent No.3. It is the say of the appellant that the action of the respondent No.2 in not giving the Letter of Intent to the appellant was, therefore, arbitrary and without any authority. It is also the say of the appellant that there is a direction by the Central Vigilance Commission not to negotiate with any of the tenderers other than the lowest. It is the say of the appellant that its case was not considered objectively and it was not given proper opportunity in the matter of showing the work of a similar nature, which was executed by the appellant and that favouritism was shown by the respondent No.2 in favour of respondent No.3, which has ultimately resulted in awarding the contract in favour of respondent No.3. Under the above circumstances, the appellant filed the aforesaid Special Civil Application before this High Court, challenging the action of respondent No.2 in awarding the work in question to respondent No.3, ignoring the claim of the appellant for the same. It was, therefore, prayed that respondents 1 and 2 may be directed to cancel the Letter of Intent issued in favour of respondent No.3 and they may be directed to issue Letter of Intent in favour of the appellant and that the decision for awarding the contract to respondent No.3 may be quashed and set aside. 5. On behalf of respondents 1 and 2, the aforesaid petition was resisted by filing an affidavit-in-reply. It is pointed out in the affidavit-in-reply in paragraph 2 that the Institute for Plasma Research (IPR) is an internationally reputed premier scientific research organisation, established by the Department of Science and Technology. The objective of the Institute is promoting, guiding and conducting basic and applied research in the field of Plasma Physics and Thermonuclear fusion research with a long term goal of developing fusion as a source of energy. It is stated that research in plasma physics is of great strategic importance and is intended to lead the Nation towards the development of fusion as an alternative source of energy in order to meet the ever growing power needs. It is also stated that procedure for tender requirement of equipments and materials needed by a Scientific research organisation engaged in the research, which is frontline and strategic in nature, is different from the equipments and materials required by a non-scientific organisation due to technical complexity involved to achieve the desired scientific output. According to respondents 1 and 2, SST-1 is a unique experiment to come on line first in the whole global plasma physics experimental scenario. It is an extremely prestigious international Project undertaken by India to be completed in stipulated time to keep the Nation's scientific progress in the forefront of the international community. The successful operation of SST-1 in the first few years of the new century will put India in the front league of fusion research. A parallel programme of development of highly sophisticated technologies together with other institutions is highly crucial for the future of SST-1 programme. By delaying the project due to non-availability of the desired water cooling system, IPR will not only mis-utilise the government fund, but also put the scientific reputation of the Nation at stake. It is stated that the total project cost is estimated at Rs.200/- crores. In the event of the vendor not being in a position to properly commission SST-1 water cooling system, it will not only result in delay in execution of the Rs.200/- crore project, but will also result in loss on account of idle man-days apart from loss of reputation of India in the scientific field internationally. It is pointed out that with a view to ensuring that the procurement is made in the right way, IPR has set up various Committees, like Need Aspect Committee, Junior Purchase Committee, Senior Purchase Committee (SPC) and Tender Award Committee (TAC), for scrutiny and finalisation of offers, consisting of Senior Scientists and Engineers and representatives of Accounts and Purchase. It is stated that involvement of senior Scientists and Engineers, including external Expert/s in the field, ensures selection of technically acceptable vendors for scientific materials and equipments. In the affidavit-in-reply, tendering procedure has also been explained. It is also stated in the reply that there is a specific mention in the tender notice that vendors fulfilling the conditions mentioned in the tender can submit their request with documentary proof and that there is no mention in the tender notice that the vendors fulfilling the conditions are short-listed or pre-qualified. It is also stated in the reply that the tender document itself clearly states that IPR is not bound to accept the lowest bids and IPR shall be under no obligation to accept the lowest tender and that the purchaser reserves the right to accept any bid irrespective of whether it is the lowest or otherwise or to reject any or all bids without assigning any reasons therefor or to split the contract at the initial contract award stage or during the progress of the work due to unsatisfactory work or progress of any one contractor. All the decisions normally taken for development as well as for award of contract is by a High Power Committee, consisting of Experts of similar / various fields. In the present case, IPR had included Experts from Bhabha Atomic Research Centre, Department of Atomic Energy, Government of India (Mr.P.B. Kulkarni, Head - Technical Services Division), who is having vast experience in similar systems, Mr.N.R.K. Moorthy, an Engineer of Nuclear Power Corporation of India Limited, a Government of India undertaking under DAE, who is also having vast experience in similar systems, and Dr.M.B. Jain, retired Head of Mechanical Engineering, Department of L.D. College of Engineering. In addition to these external Experts, the TAC consisted of Senior Scientists of the Institute. The TAC, in its first meeting, concluded that it should go in for Centrifugal Chillers, running on R-134a Refrigerant due to its technical superiority. It is the further say in the affidavit-in-reply that since the appellant's bid was commercially lowest, TAC decided to call them for techno-commercial discussions on 29th September, 2000. TAC also authorised a team (consisting of 6 TAC members - 3 representatives from IPR and 3 external experts) to visit and evaluate the installations of the appellant. However, in spite of repeated requests, the appellant failed to show any installation with process cooling equipment similar to what IPR was looking for. They could show only three installations exclusively meant for Comfort Air Conditioning. Accordingly, the reply says, the appellant failed to show their own capability in the area of process cooling equipments to convince the TAC about their technical competence. 6. In the reply, respondent No.2 has also dealt with the salient features of the equipment, in detail, in paragraph 13 of the reply. Ultimately, on the basis of the recommendation of the Committee, the work in question was awarded to the respondent No.3. It is the say of the respondent No.2, therefore, that there is no substance in any of the averments made in the petition. 7. Respondent No.3 also resisted the claim of the appellant by filing affidavit-in-reply, which is at page 83 of the compilation. 8. The learned single Judge, by his order dated 26th December, 2000, dismissed the said Special Civil Application. It was found by the learned single Judge that it is not proper to look only at financial aspect as the respondent No.2 wanted the best person available to execute the work in question. It was also found by the learned single Judge that it is not open for the Court to substitute its decision for the decision of a party awarding the contract, particularly when such decision is taken on the recommendation of an Expert Committee. The learned single Judge also found that respondent No.2 bona fide believed that the respondent No.3 is technically qualified to execute the job and they will be able to get the work done efficiently through respondent No.3. In that view of the matter, ultimately, the aforesaid Special Civil Application was dismissed by the learned single Judge, against which the appellant has filed this Letters Patent Appeal. 9. At the time of hearing of this Letters Patent Appeal, it was argued by Mr.Desai for the appellant that the decision making process is vitiated as the appellant was not given adequate opportunity to put his case before the Committee and to show similar type of work, which is carried out by the appellant, which has resulted in discrimination as against respondent No.3. Mr.Desai also pointed out that the appellant had quoted both the options and as against that, respondent No.3 and other tenderers had quoted only one option. Mr.Desai also submitted that except the appellant, no other tenderer has given second option and, therefore, the appellant was the only qualified person, who could have been considered for awarding the work in question. He also submitted that from the beginning, it was decided to award the work to respondent No.3 as it was known that only respondent No.3 was having experience for installing Centrifugal Chillers, running on R-134a refrigerant. 10. It is also the say of Mr.Desai that the Committee did not consider any other offer except the offer of respondent No.3 in its true perspective and, therefore, the action of the Committee is arbitrary and is liable to be set aside. According to the appellant, it has got very wide experience in similar type of work. It is further submitted that the decision to go for Centrifugal Chillers running on R-134a Refrigerant was not communicated to the appellant or to any other tenderer except to respondent No.3. In substance, it is the say of the appellant that the respondent No.2 has shown favouritism in favour of respondent No.3 by issuing Letter of Intent with deviation and no opportunity was given to the appellant or to any other tenderer at any point of time in respect of deviation. It is also the say of the petitioner that the respondent No.2 has deviated from the terms and conditions by giving excise duty exemption to the sister concerns of the respondent No.3, whereby advantage of Rs.50/- lacs is given to the respondent No.3 and its sister concerns. On technical aspect of the matter, it was submitted by the appellant that so far as R-134a Refrigerant is concerned, it is only a gas component and it has nothing to do with any design of the Project. The material design does not change because of the gas component and the gas component can be imported from outside by any party and, thereby, there is no need of expertise for doing the work of R-134a Refrigerant. It is also submitted that the appellant is already doing the work of R-134a components at Vadodara. It is also submitted that in spite of the request, the respondent No.2 has not supplied the copy of the report or the copy of the tender submitted by respondent No.3 and that no such report exists and that respondent No.2 has suppressed material facts from the Court. It is submitted that till September, 2000, in all the correspondence, there was no specific mention about the Centrifugal Chiller Machines with R-134a Refrigerant and letter was written after the sites were visited on 21.9.2000 and that was only in order to favour respondent No.3 who is having more experience regarding Centrifugal Chillers running on R-134a Refrigerant. According to the appellant, therefore, the insistence upon R-134a gas component was only for favouring respondent No.3 and that the said gas component is not relevant for the installation of the project in question. It is also the say of the appellant that TAC has overlooked the drawbacks of respondent No.3. The appellant has also pointed out that in the Minutes of the first meeting of the T.A.C. held on 22.8.2000, the Committee has decided to opt for R-134a Refrigerant. It is also mentioned in the Minutes that the Committee has decided to initially call only M/s. Voltas Limited, the appellant herein, for the technical discussion at IPR. It has also been decided to inspect the installations of M/s.KPCL. After taking the decision, the Committee visited the installation on 21.9.2000. At that time, the appellant was not informed about the decision taken by the Committee for opting only for Centrifugal system. In that view of the matter, it is the say of the appellant that no proper opportunity was given to the appellant and that the appellant has already shown their project management capability. Therefore, the decision making process of the Committee is bad. The appellant has given various details about the work, which either were in execution or were executed by them. It is also the say of the appellant that certain works, which were carried out by them, have not been taken into consideration by the respondent No.2 and, therefore, the decision making process is arbitrary. The appellant, in substance, has also challenged the decision of the Committee on the ground that it suffers from the vice of arbitrariness and discrimination. It is also stated by the appellant that even though this Court may not sit in appeal over the decision of the Committee, still, the Court can go into the question of decision making process to find out whether it was just or not or whether it was suffering from the vice of irrationality, viz., Wednesbury's unreasonableness. 11. We have heard the arguments of both the sides in detail and we have also gone through the various documents submitted by both the sides. We have also considered the case law cited by both the sides. 12. It is not in dispute that the Project in question is a very important National project and for the aforesaid Project, the respondent No.2 wanted the best available person, who can complete the job satisfactorily and without any difficulty. It is also required to be noted that this Court is not sitting in appeal over the decision of an expert body or an expert committee, which is possessed with technical knowledge of the subject. It is also not possible for this Court, therefore, to substitute its own decision on merits for that of the Authority vested with the decision making process. Even otherwise, the Court is not qualified to pronounce upon this technical subject. What is required to be seen is whether the decision making process was in a just and proper manner and whether relevant facts and circumstances of the case were considered by the Committee and whether all the parties were also given equal chance to prove their credentials before the Expert Committee. 13. Keeping the aforesaid principles in view, we may now examine the contentions of Mr.Desai for the appellant. The first argument of Mr.Desai is that as per the schedule of quantity (Part A1), Item No.(A) options for both the items, i.e. 1.A and 1.B, were required to be quoted and since the other tenderers have not quoted both the options, their cases were not required to be considered further and that the appellant, who quoted both the options, was the only eligible person who remained in the fray. 14. Mr.Vakil for respondents 1 and 2 pointed out that the water chilling machines with centrifugal compressor was essentially the main requirement and as such, the same was suitable for the nature of work which was to be executed as compared with