IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.10.2009 PRESENT THE HONOURABLE MR. JUSTICE S.NAGAMUTHU W.P.No.21173 of 2008 and M.P.Nos.1 and 2 of 2008 Rarefield Engineering Pvt. Limited, Rep. By its General Manager, G-B, Bhageeratha Residency, No.124, Marshalls Road, Chennai 600 008. .... Petitioner Vs. 1.The Chairman, Chennai Port Trust, Rajaji Salai, Chennai 600 001. 2.The Member Secretary / Chief Engineer, Fishing Harbour Management Committee, Chennai Port Trust Fishing Harbour, Chennai 600 081. 3.M/s.Startek Shipyards Pvt. Limited, No.5-A, II Block, Chowdhery Complex, No.7, Nandanam, Chennai 600 035. ... Respondent Petition filed under Article 226 of the Constitution of India, for issuance of a Writ of Certiorarified Mandamus, calling for the records of the 2nd respondent relating to Ref.No.JDR/5869/07/E, dated 14.08.2008 and quash the same and consequently direct the 2nd respondent to grant the lease for slipway complex for operation and maintenance at Chennai Fishing Harbour on annual license basis. For petitioner : Mr.K.M.Vijayan, SC for Mr.S.Venkateswaran For respondent (s): Mr.R.Karthikeyan for RR1 and 2 Mr.S.Natarajan for R3 ORDER Chennai Fishing Harbour Management Committee, Chennai Port Trust (2nd respondent herein) invited sealed tenders under two cover system for Licensing of the Slipway Complex for Operation and https://hcservices.ecourts.gov.in/hcservices/ Maintenance at Chennai Fishing Harbour, Royapuram, Chennai on annual license basis from the firms and companies having a minimum experience of three years in building/repairing the boats, trawlers, tugs, naval/coast guard and other vessels or operating such type of slipway or dry docks and having DG Shipping Registration Certificate and average annual turnover of not less than Rs.3.00 crores in the last three years. The Firms/Companies can also quote for this tender as "Joint Venture" . Initially, the license period will be for 7 years and it is extendable for another 3 years on satisfactory performance. The departmental minimum reserve price (license fee) as mentioned in the Tender Notification is Rs.7.62 lakhs + service tax per month. The license fee shall be payable every month. The last date for submission of tenders was 18.03.2008. The completed tenders would be opened on the same day. 2. In pursuance of the same, the petitioner, 3rd respondent and yet another firm namely, M/s.KEI-RSOS Maritime Limited,Thirukadayur, Nagapattinam District submitted sealed tenders in time. The Technical Bids were opened on 18.03.2008 and the documents produced by the tenderers were scrutinised by the Superintending Engineer (P&D). He prepared an evaluation statement along with note to the tender committee. The documents were placed before the Tender Committee. The committee, in its meeting held on 11.04.2008, pre-qualified two bidders viz., the petitioner and the 3rd respondent.The 3rd bidder viz., M/s.KEI- RSOS Maritime Limited,Thirukadayur, Nagapattinam District had not produced necessary certificate showing the experience. Subsequently, necessary documents were submitted by the said firm. Thereafter, in the Tender Committee meeting held on 30.06.2008, the Committee recommended that all the 3 bidders viz., the petitioner, the 3rd respondent and M/s.KEI-RSOS Maritime Limited,Thirukadayur, Nagapattinam District may be considered for pre-qualification for licensing. The same was approved by the Chairman of Chennai Port Trust. In the mean while, the petitioner had submitted two written objections regarding the eligibility of the 3rd respondent. But, they were not considered. 3. Finally, the price bids of all the three tenderers were opened on 11.07.2008, and the price quoted by each tenderer was found as follows:- Sl. No. Name of the firm Quoted value per month % excess + or - Rank 1 M/s.Startek Shipyard (3rd Respondent) Rs.12,40,000 (+) 62.73% 1 2 M/s.KEI RSOS Maritime Rs.11,22,500 (+) 47.31% 2 3 M/s.Rarefield Engineers Rs.11,11,000 + Service Tax (+) 45.80% 3 https://hcservices.ecourts.gov.in/hcservices/ 4. The petitioner submitted letter dated 17.07.2008 claiming that the license fee quoted by them is the highest bid and therefore contract should be awarded to the petitioner. According to the petitioner , it had quoted Rs.11,11,000/- per month + Service Tax which works out to Rs.12,48,319/- ; whereas the 3rd respondent had quoted only Rs.12,40,000/- inclusive of service tax. In the said letter, the petitioner referred to various clauses in the tender documents, more particularly, Page 3 of Volume-II of the Price Bid and Clause 14.3 in Volume-I. The Superintending Engineer brought the said objections to the notice of the Committee and prepared a note on 22.07.2008 and placed the papers before the Tender Committee pointing out the objections raised by the petitioner as stated above. Since the respondents 1 and 2 could not decide as to whether the amount quoted by the 3rd respondent is "exclusive of service tax" or "inclusive of service tax" in terms of the tender conditions, the Committee thought it fit to get legal opinion. Mr.R.Karthikeyan, learned Advocate,gave legal opinion on 11.08.2008 , wherein he opined that what was quoted by the 3rd respondent would be exclusive of statutory dues. He had further pointed out that the department can be specific and more careful in future as to the words to be used in the tender. He further proceeded to opine that the department instead of complicating, can use the following: "Whether the license fee is exclusive or inclusive of tax". It is based on the said legal opinion, the Committee decided that the license fee quoted by the 3rd respondent was exclusive of service tax and so the 3rd respondent was the highest bidder. Accordingly, the Committee recommended for awarding contract and the same was approved by the 1st respondent and finally the contract was awarded in favour of the 3rd respondent. Challenging the same, the petitioner has come forward with this writ petition. 5. Though several grounds have been raised in the writ petition , the crux of the contentions of the learned senior counsel appearing for the petitioner can be summarised as follows: (i) The 3rd respondent was not technically qualified in as much as the 3rd respondent did not have the required experience as well as D.G.Shipping Registration certificate as per the general conditions of tender and so the technical bid submitted by the 3rd respondent ought to have been rejected. (ii) The objections raised by the petitioner in respect of technical qualification of the 3rd respondent put in writing on two occasions were not at all considered by the respondents 1 and 2. (iii) In the price bid, a tenderer, as per the conditions, was required to mention the license fee which includes service tax also. (iv) The petitioner had quoted a sum of Rs.11,11,000/- per month + service tax; where as the 3rd respondent had quoted Rs.12,40,000/- which includes service tax. If service tax as on the crucial date is calculated,it works out to Rs.1,37,319/- thereby https://hcservices.ecourts.gov.in/hcservices/ making the bid of the petitioner at RS.12,48,319/- whereas the license fee quoted by the 3rd respondent including service tax was only Rs.12,40,000/-. The price quoted by M/s.KEI-RSOS Maritime Limited,Thirukadayur, Nagapattinam District was Rs.11,22,500/-inclusive of service tax as claimed by the said firm itself. Comparatively, since the petitioner was the highest bidder, the contract should have been awarded only in favour of the petitioner. (iv) The whole exercise was done by the respondent only to favour the 3rd respondent and that is the reason why the objections raised by the petitioner regarding the Technical Qualification of the 3rd respondent were not considered and in an arbitrary manner the technical qualification of the 3rd respondent was accepted and again, though the petitioner was the highest bidder, in an arbitrary manner , the 3rd respondent was declared as the highest bidder and contract was awarded in his favour. Thus, the awrad of contract in favour of the third respondent is arbitrary, unreasonable and discriminatory. (v) Though already the contract has been awarded in favour of the 3rd respondent, since it is a service contract for a period of 7years and extendable for another 3 years, the writ petition has not become infructuous. 6. The contentions of the respondents 1 and 2 are as follows: (i) The 3rd respondent submitted the tender documents as a joint venture firm with yet another firm known as M/s.T.M. Brothers, Kolkatta, West Bengal. The joint venture partner M/s.T.M. Brothers, Kolkatta had DG Shipping Registration Certificate for ship repair up to 31.05.2009. The joint venture agreement between the said T.M. Brothers and the 3rd respondent was also submitted. According to the respondents 1 and2 , it is not necessary that the lead partner of the joint venture should have the DG shipping registration certificate and it is suffice if the joint venture partner other than the lead partner possesses the said DG shipping registration certificate. (ii) Insofar as experience is concerned, the 3rd respondent has got more than three years of experience in the field. Since the 3rd respondent satisfied all the tender conditions in respect of technical qualification, the technical bid of the 3rd respondent was rightly accepted and there is no arbitrariness in the same. (iii) In respect of price bid, according to the tender conditions, a tenderer is required to https://hcservices.ecourts.gov.in/hcservices/ quote the license fee which does not include the service tax. The service tax is to be paid independently on the license fee. The price quoted by the 3rd respondent viz.,Rs.12,40,000/- is only towards license fee which does not include the service tax. Since objection was raised in this regard by the petitioner, legal opinion was obtained and based on the opinion given by the legal expert, it was concluded that the price quoted by the 3rd respondent was only license fee exclusive of service tax. That is how the 3rd respondent was declared as the highest bidder and contract was awarded in which also there is no arbitrariness or favouritism. 7. The contentions of the 3rd respondent are almost similar to that of the respondents 1 and 2. According to him also, the 3rdrespondent has got sufficient qualification as per the tender conditions in the matter of experience. The 3rd respondent also stated that as per the tender conditions, it is not necessary that the lead partner of the joint venture should have DG shipping registration certificate and it would be sufficient if the other partner posseses such DG shipping registration certificate. 8. In respect of the price bid, it is contended by the 3rd Respondent that the tender conditions are clear and unambiguous which require to quote licence fee alone in the price bid exclusive of service tax. That is the way in which the tender conditions were plainly read and understood and thus the price quoted by the 3rd respondent was exclusive of service tax and thus, the 3rd respondent was the highest bidder. 9. It is further submitted that though interim order was sought for in this writ petition, since no interim order was granted, the contract has been awarded to the 3rd respondent and he has been doing the job and therefore, at this length of time, no interference is called for. 10. I have heard the learned senior counsel appearing for the petitioner, learned counsel appearing for the respondents 1 and 2 and the learned counsel appearing for the 3rd respondent. The learned counsel appearing for the respondents 1 and 2 has produced the entire files relating to the issues consisting of five volumes and I had the benefit of going through the same thoroughly. 11. Let me, at first, consider the issues regarding the technical bid. Before going to the facts of the case, it would be useful to extract the relevant clauses of terms and conditions of the tender relating to technical bid. 12. Clause 3 to the Instructions to the Tenderers (Section-1) is as follows:- " 3. Eligible Tenderers: 3.1 This tender is being invited on the 'Two-Cover System and is open to all firms/companies https://hcservices.ecourts.gov.in/hcservices/ having the following eligibility criteria. 1) a minimum experience of three years in building/repairing boats, tugs, naval/coast guard and other vessels or operation a slipway/dry dock and 2) Having valid D.G. (Shipping) registration certificate for building, repairing of boats, tugs and other vessels or operation and maintenance of slipway/dry dock and ...... The firms who submit their bids will be qualified for the work based on the information provided by them in respect of their financial capacity and experience. For this purpose, the tenderers are required to submit the relevant information in cover-I in the proforma enclosed with the tender documents along with the relevant documentary evidence in original or notarized. The failure, if any, in production of required documents will render the tender as non responsive and liable for rejection. The details so submitted will be evaluated critically and the Cover II (price bid) of only those firms who qualify under cover I will be opened and other offers will be returned unopened. (emphasis supplied) 3.4 Joint Venture: Tenders submitted by a joint venture of two or more firms, as partners shall comply with the following requirements: ....... (c) the lead partner shall possess the required minimum experience. The registration certificate from D.G.Shipping and annual turn over may be with any one of the JV partners; 13. A reading of Clause 3.1 as extracted above would make it manifestly clear that there shall be a minimum experience of three years in building /repairing boats, tugs, naval/coast guard and other vessels or operating a slipway or dry dock, besides D.G. (Shipping) registration certificate. 14. Admittedly, the 3rd respondent does not possess D.G. (Shipping) registration certificate. But, it claims to have more than three years of experience. It is the contention of the 3rd respondent that it is suffice that the Joint Venture partner possesses D.G. (Shipping) registration certificate. Admittedly, the Joint Venture partner has D.G. (Shipping) registration certificate. Thus, according to the 3rd respondent, he is qualified. But, the petitioner would contend that the lead partner should possess D.G. (Shipping) registration certificate. It is the further contention that the 3rd respondent does not have required experience. In my considered opinion , a close reading of Clause 3.4 (c) of the Instructions to the Tenderers would make it abundantly clear that D.G. Shipping Registration Certificate is not at all required for the leading partner. https://hcservices.ecourts.gov.in/hcservices/ 15. The learned counsel for the respondents 1 and 2 as well as the learned counsel for the 3rd respondent would submit that it is not like a driving license issued under the Motor Vehicles Act without which one cannot gain experience in driving. The learned senior counsel for the petitioner is not in a position to demonstrate as to how D.G. Shipping registration certificate is sine-quo-non to gain experience in the matter of building/repairing the boats, trawlers, tugs, naval/coast guard and other vessels or operating such type of slipway or dry docks. Thus, I find no material on record to hold that to gain experience D.G. (shipping) registration certificate is necessary. As it is rightly pointed out by the learned counsel for the respondents 1 and 2 as well as the learned counsel for the 3rd respondent, it would be suffice that the partner of Joint Venture firm has got such D.G. Shipping Registration Certificate. In this regard, I am inclined only to reject the contention of the petitioner. 16. Nextly, the contention regarding the minimum experience needs to be considered. A perusal of the records would go to show that along with the tender documents, the 3rd respondent had produced as many as 3 documents to show its experience in the field, besides few other documents relating to the work under progress. They are as follows:- (1) Construction of 3 Nos. of cutter suction dredgers for Mazagon Dock Limited, Mumbai for a value of Rs.1575 lakhs during 28.02.2003 to 15.03.2004 (2) Design, construction of 2 Nos. of cutter suction dredger for Gujarat Maritime Board, fo avalue of Rs.1067 lakhs during 30.07.2004 to 30.10.2005 (3) Overhauling and trials of Schhottle Hydraulic unit for Naval Dock Yard, Mumbai for a value of Rs.30 lakhs during 2005. 17. The tender committee consisting of experts was satisfied with the same and that is how they have concluded that the 3rd respondent satisfies the experience norms prescribed in the tender conditions. The learned senior counsel appearing for the petitioner has not contended before this Court that any of the certificates produced by the 3rd respondent is either doubtful or false. When an expert body, on evaluation, has accepted such certificates, this Court hardly finds any reason to doubt the correctness of the said conclusion. The learned senior counsel appearing for the petitioner is also not able to explain as to how the conclusion arrived at by the expert committee is either unreasonable or arbitrary. Therefore, I am of the view that the 3rd respondent has satisfied all the requirements of the tender conditions and so, I reject the contentions of the petitioner in this regard. 18. It is, of course, true that on two different occasions objections were raised by the petitioner regarding the eligibility https://hcservices.ecourts.gov.in/hcservices/ of the 3rd respondent. The first one was misunderstood by the respondents 1 and 2 as though it was a clarification sought for. It should be noticed that if any clarification in respect of terms and conditions of the tender is required by any intending tenderer that should be asked for 10 days prior to the last date for receipt of tenders. The first letter raising objection regarding the eligibility of the 3rd respondent was submitted subsequent to the last date for submission of the tenders. The said letter cannot be construed to be a letter calling for clarification. A reading of the said letter would go to show that it contains only objection regarding the eligibility of the 3rd respondent. However, the respondents 1 and 2 have failed to consider the same properly. 19. The 2nd letter of objections was sent on 08.07.2008 by the petitioner, by which time, the tender had already been opened. Assuming that the objections were considered, that would not have altered the ultimate conclusion arrived at by the respondents 1 and 2 in respect of eligibility of the 3rd respondent. Therefore, on the ground of non consideration of the objections of the petitioner, I am not inclined to interfere with the decision of the respondents 1 and 2 with regard to eligibility of the 3rd respondent. 20. Now, let me move on to the issues regarding the price bid. 21. Section 1 of Clause 1 (vii) of the Instructions to the Tenderers provides as follows:- "The licence fee per month ( at the rate quoted by the successful tenderers per month) shall be remitted by the licensee regularly on or before 25th day of the preceding month for the monthly license fee of the succeeding month without fail." 22.1. Clause 14.2 of the Instructions to the Tenderers provides as follows:- "No change in the price proposal submitted will be allowed after opening of tender." 22.2. Clause 14.3 of the Instructions to the Tenderers provides as follows:- "The amount quoted by the tenderer in the price proposal shall be the license fee (sic) one calendar month or part thereof after Octroi, Customs duty, Excise duty, Service tax, VAT or any other duties, taxes or charges whatsoever payable on the performance of the contract. The amount quoted shall be firm and not subject to variation for any reasons whatsoever. 23. What is "license fee" has not clearly been defined in the above clause. https://hcservices.ecourts.gov.in/hcservices/ 24. In the Memorandum of tender for licensing , in clause 2(a), the term "license fee" has been defined as follows: "2(a) License fee for operation and maintenance of slip way Complex: Minimum Reserved price is Rs.7.62 lakhs / calendar month / part thereof (Rupees Seven lakhs and sixty two thousand only) + service tax fixed by the statutory authorities from time to time. 2(b) License fee – For the additional land outside the slipway complex if required: Rs.3225/100 sq m+ service tax or part thereof per calendar month or part thereof for the land to be licensed outside the limit as indicated in the drawing to be developed and new compound wall to be constructed after dismantling the existing compound wall by the licensee. The development cost shall be borne by the Licensee. " 25. A plain reading of the above clause would make one to have the understanding that license fee means, fee offered more than the reserve price + service tax (i.e.) the amount to be quoted shall include service tax also. 26. Section 3 of Clause 3 of the Instructions to the Tenderers (General Instructions) speaks of licence fee, which runs as follows:- "3. The tenderer/Licensee shall quote the monthly fee they intend to offer. For this purpose, it may be noted that the reserve price fixed is Rs.7.62 lakhs per calendar month or part thereof for a period of 7 years payable by Licensee 3.a. The license fee have to be paid at quoted rate along with service tax as fixed from time to time by the statutory authorities." 27. A reading of the above clauses 3 would make one to have an impression that what is to be quoted in the price bid is only fee offered above, the reserve price, which does not include service tax. A close reading of Clause 3 (a) above would show that license fee have to be paid along with service tax. This would indicate that license fee does not include service tax. 28. Again, in the Proforma of Price Bid Proposal Clause (i) is as under:- (i) LICENSE FEE: License fee Rs.___________ (Rupees_________) per calendar month or part thereof; (ii).... (iii).... (vi)... (v).... Note: 1. The Reserve Monthly License fee is Rs.7.62 lakhs + service taxes per calendar month https://hcservices.ecourts.gov.in/hcservices/ or part thereof. 2. The Tenderer shall quote the monthly license fee more than the reserve monthly license fee, both in figures and words, legibly in the spaces specified above. 3. The rates quoted lower than "Reserve Monthly License Fee" shall be treated as "INVALID" and such offers will be "REJECTED". 29. A reading of Note No.(1) above, would again indicate that the monthly license fee will include service tax also. 30. It is contended by the learned senior counsel appearing for the petitioner that all the above clauses, if read plainly, would go to mean only that the price to be quoted in the price bid is inclusive of service tax also or in the alternative, service tax should be separately mentioned. He would further submit that so far as the price quoted by the petitioner is concerned, he had mentioned the offer above the reserve price and the service tax separately. The amount of Rs.11,11,000/- mentioned by the petitioner according to the learned senior counsel, would mean the fee offered above the reserve fee and he has also agreed to pay service tax which, if calculated at the prevailing rate, would work out to Rs.1,37,319/- and the total amount of license fee, if calculated as mentioned above would be Rs.12,48,319/-. Since the 3rd respondent had quoted only Rs.12,40,000/- which included service tax also, the 3rd respondent's offer should have been rejected by the respondents 1 and 2. 31. In contrast, it is the contention of the learned counsel appearing for the 3rd respondent that if the above clauses are plainly read, it would go a long way to clearly indicate that the tenderers are required to quote only license fee and not service tax, because service tax is to be paid separately on the license fee. He would further submit that Rs.12,40,000/- quoted in the price bid by the 3rd respondent refers only to license fee and it does not include service tax. He would further add that service tax cannot be included with the license fee, because license fee is paid to the Port Trust; whereas service tax is paid to the some other authority. Since, Rs.12,40,000/- quoted by the 3rd respondent was the license fee in terms of the above clauses and since the same was the highest offer, the respondents 1 and 2 rightly accepted the same, it is contended. 32. Admittedly, based on his understanding of the above clauses relating to license fee, the petitioner raised objection in writing on more than one occasion. A