IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE EIGHTEENTH DAY OF JANUARY TWO THOUSAND AND FIVE PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM WRIT PETITIONS NOs : 20738 & 21080 of 2004 I W.P.NO. 20738 OF 2004 :- Between: M/s Karamchand Thapar Bros (CS) Ltd., Head Office: Brabourne Road, Kolkatta, A Public Limited Company regd. under Indian Companies act, 1956 having its Branch Office at 66A, R.P Road, Secunderabad, Rep. by its General Manager, Mr. Vikram Kapoor, S/o Late M.R. Kapoor, aged about 57 years, R/o 304, Archana Apartments, Somajiguda, Hyderabad – 500 082. ..... PETITIONER AND 1. The A.P. Power Generation Corporation Limited, Vidyut Soudha, Khairatabad, Hyderabad, rep.by Superintending Engineer/Generation-II. 2. M/s Anand Transport, a Partnership firm rep.by its Managing Partner, 9, Dr. Radhakrishna Salai, Opp: Mylapore, Chennai –4. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue a writ, order or direction more in the nature of Writ of Mandamus by declaring the action of the 1st respondent in accepting the Pre-qualification Bid of the 2nd respondent for award of transportation contract of 5 Lakh MT of Coal from M/s Mahanandi Coal Fields Limited on Free on Rail Talcher basis or alternatively on Free On Board, Paradeep to Rayalaseema Thermal Power Project, Muddanur, Kadapa District as supplied by M/s MCL by rail cum sea cum rail route via Paradeep and Chennai Ports, illegally though 2nd respondent has not fulfilled the prescribed tender conditions as arbitrary, illegal and violative of the Article 14 of the Constitution of India and consequentially direct the 1st respondent to award the contract to the lowest qualified bidder excluding the 2nd respondent. For the Petitioner: Mr. K.G.K. Prasad, Advocate For the Respondent No.1: The Advocate General of AP For the Respondent No.2: Mr. D.Prakash Reddy, Senior Counsel, instructed by Mr. C. Kodandaram, Advocate. W.P.NO. 21080 OF 2004 :- Between: South India Corporation (Agencies) Limited No.73, Armenian Street, Chennai 600 001, rep by Its General Manager (Stevedoring), L. Venkataramani, S/o M. Lakshminarayanan, aged about 44 years, Residing at Adayar, Chennai – 600 020. ..... PETITIONER AND 1. Andhra Pradesh Power Generation Corporation Ltd.,(APGENCO) Vidyut Soudha, Khairatabad, Hyderabad, rep.by its Superintending Engineer/Generation-II. 2. M/s Anand Transport, a Partnership firm 9, Dr. Radhakrishnan Salai,Chennai –4, represented By its Managing Partner. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus directing the 1st respondent to reject the bid of the 2nd respondent in Tender Specification No. CEG(E5)/06/2004-05 issued by the 1st respondent, and consequently direct the 1st respondent to award the contract under the said Tender Specification to the petitioner as the lowest qualified bidder. For the Petitioner: Smt. Nalini Chidambaram, Senior Counsel, instructed by Mr. K.Gopal Choudary, Advocate For the Respondent No.1: The Advocate General of AP For the Respondent No.2: Mr. D.Prakash Reddy, Senior Counsel, instructed by Mr. C. Kodandaram, Advocate. The Court Made the Following : :: ORDER :: These two writ petitions filed by M/s Karamchand Thapar Brothers (CS) Ltd., and South India Corporation (Agencies) Ltd., seek a substantially similar relief viz., a declaration that the action of the 1st respondent-Corporation accepting the pre- qualification bid (PQB) of the 2nd respondent for award of the transportation contract of 5 lakhs Metric Tons of coal from Mahanadi Coal Fields Ltd., (MCL) on either Free On Rail Talchar (FOR) basis or Free On Board (FOB) Paradip basis to the Rayalseema Thermal Power Project (RTPP) at Muddanur is illegal, since the 2nd respondent is not qualified qua the tender conditions. While in WP No. 20738/2004 the petitioner seeks a consequential direction to the 1st respondent to award the contract to the lowest bidder excluding the allegedly unqualified 2nd respondent, the petitioner in WP No. 21080/2004 seeks a direction to the 1st respondent to award the contract to him on the ground that he is the lowest qualified bidder. In view of the commonality of the issues involved and presented for adjudication, the writ petitions are heard together and taken up for disposal by this common order. Heard Mr. K.G.K. Prasad, learned counsel for the petitioner (WP No.20738/04), Mr. K.Gopal Chowdary, learned counsel for the petitioner instructing Smt. Nalini Chidambaram, Senior Counsel (WP No. 21080/04), the Advocate General for Andhra Pradesh for the 1st respondent-Corporation, Mr. D.Prakash Reddy, Senior Counsel instructed by Mr. C.Kodandaram, learned counsel for the 2nd petitioner in both the writ petitions and Mr. S. Ravi, learned counsel for the 3rd respondent (WP No. 21080/04). On 30.7.2004 the 1st respondent issued a notification in respect of tender specification No. CEG (E5) 06/2004-2005 inviting tenders in two part bids for transport of 9.00 lakh MT of coal from M/s MCL to RTPP on “FOR” Talcher basis or alternately “FOB” Paradip port basis by rail cum sea cum rail route via Paradip and Chennai. The tenders are required to be submitted in two distinct parts – part-I the pre-qualification bid and Part-II the price bid. On 26.8.2004 the 1st respondent issued an amendment to the notification dt 30.7.2004 reducing the quantity of coal to 5.00 lakh MT. This notification also set out eligibility criteria to be fulfilled by persons desirous of responding to the tender notification, which being relevant is extracted hereunder: “Eligibility Criteria: Those who are having previous experience of handling similar work of such large magnitude at the rate of minimum 4.00 lakhs MT of coal per annum on his own and also having experience in liasoning with collieries are eligible to quote. In addition to the above, tenderer shall be in possession of necessary license from port and other authorities for stevedoring work at least one of the Ports i.e., Chennai/Paradip and the contractor should have working arrangements with listed stevedores for carrying out the remaining work if any. The bidder shall produce solvency certificate for Rs.6.00 crores.” The time and date for receipt of the tenders and for opening of the PQB specified in the notification dt 30.7.2004, was altered and eventually specified as 3 pm, on 25.9.2004 and 4 pm on 25.9.2004, respectively. Specifications, Terms and Conditions of the Tender:- a. Intending tenderers were required, a requirement exemplified by the tender document, to submit their bids in two parts – (I) Pre-qualification Bid and (ii) Price Bid. Both bid components to be submitted separately and in sealed covers. b. As per the tender specification and instructions therein the PQB includes furnishing the details of work of similar type and magnitude carried out by the tenderer in the Schedule-I format. c. As per the PQB requirement set out in the tender specification the scope of the work under the two options (part-I and part-II) is specified as under: “ Option – I: ON “FOR” TALCHER BASIS i) Transportation of cal from M/s MCL,Talcher to Paradip port by rail. ii)Handling and loading of coal in to ships at Paradip port. iii)Transportation of coal from Paradip port to Chennai port by ship. iv)Handling and reloading of coal in to railway wagons at Chennai port/Korukkupeta G.S. for onward movement to Rayalaseema Thermal Power Station, Muddanur, Cuddapah Dist. (AP) by rail. Option – II: ON ‘F.O.B.’ PARADIP PORT BASIS i) Transportation of coal from Paradip port to Chennai port by ship. ii) Handling and reloading of coal in to railwayf wagons at CHENNI PORT/KORUKKUPETA G.S. for onwards movement to Rayalaseema Thermal Power Station, Muddanur, Cuddapah Dist (AP) by rail. ” d. Clause-2 of the PQB requirements specifies that Part-I called ‘PQB’ should contain inter alia the financial standing and record of previous experience. e. Clause-6 of the PQB requirements reads as under: “ Prequalification bid will be opened first to check whether qualification, experience and other requirements are adequate for opening of Price bid (Part-II). Only those tenders which contain the full information and which comply with the requirements regarding technical and financial qualifications, experience and equipment will be considered. Not withstanding anything stated above the APGENCO reserves the right to assess the tenderer’s capacity to perform the contract, should the circumstances warrant such assessment in the overall interest of the APEGENCO. In this regard the decision of the Corporation is final.” f. Clause-10 of the PQB requirements reiterates the eligibility criteria, specified in the 1st respondent’s revised notification dt 26.8.2004 (extracted supra). In addition Clause-10 specifies - “the tenderer shall enclose the experience certificates, performance reports and solvency certificate to the pre qualification bid (Part-I)”. Clause-11 sets out the other documents that need to accompany the PQB and specifies that a tender received without these certificates is liable for rejection. g. The information required to be furnished as annexures to the PQB is specified in Clause-12, which includes details of coal handled at ports per annum portwise and yearwise; infrastructure facilities available with the contractor at ports and collieries; as well as experience in handling coal – source wise and monitoring dispatches of coal and liaison with collieries. h. Clause-11 of the ‘Important Instructions to the Tenderers” in the tender specification contains the usual caveat that the 1st respondent reserves the right to reject all or any of the tenders without assigning any reasons whatsoever. This liberty of the 1st respondent is reiterated in Clause-1 Section-I of the “Special Terms and Conditions” of the tender specification. i. The detailed scope of the contract under both the options is specified in Section-II of the tender specification. In so far as ‘FOR TALCHER BASIS’ option is concerned the detailed scope of the contract is set out in sub- sec.II (A),(B)and(C). Under this option, inter alia, the contract involves follow up with various agencies viz., Coal Controller, Railways and Coal fields, of all works relating to the execution of linkages by the respective collieries through Paradip port; monitoring loading of coal at the pit heads and lodging complaints with the respective authorities in case of any deficiency. j. Para 2.8.1 in sub-section-II(C) of the special terms and conditions (under both options) requires the contractor to monitor loading of coal at the pitheads; supervising loading into wagons and bringing to the notice of the concerned any deficiency either by way of short loading or by way of loading of stones, shale and extraneous materials. In addition, under this clause the contractor is required to report any shortfalls in the program of loading by the collieries and is also required to take up with the concerned authorities any bottlenecks in the loading or transporting of coal either from pithead to railway siding or from railway siding to destination, for want of adequate wagons. He is also required to send daily loading advice from the collieries to the 1st respondent. (3) Five persons including the writ petitioners, the 2nd respondent in the writ petitions and the 3rd respondent in WP No. 21080/04 submitted their bids within the stipulated time. The bids were opened on 25.9.2004 and the contents of the accompanying documents in the respective PQBs were read out by the officers of the 1st respondent. (4 ) Contending that the 2nd respondent did not qualify as per the information furnished in its in PQB, W.P. No. 20738 of 2004 was filed on 9.11.2004, assailing the acceptance of the 2nd respondent’s PQB by the 1st respondent. On 17.11.2004 WP No. 21080 of 2004 was filed. The petitioners herein challenge the eligibility of the 2nd respondent. In brief the contention in WP No. 21080/2004 is that the colliery experience certificate furnished by the 2nd respondent from M/s Kamal Wineries does not contain information as to the volume, periods or the scope and extent of the colliery experience; that the coal requirements of M/s Kamal Wineries is of a very small quantity; that transportation is by road; that a certificate from M/s India Cements Ltd., regarding the liasoning experience with collieries of the 2nd respondent is vague and does not specify the volume of work. This petitioner further pleads that the movement of coal for M/s India Cements Ltd., is substantially by road and not by rail and the requirement is only about 2 lakhs MT by road and a very small quantity by rail. The petitioner has also urged that the document issued by M/s India Cements Ltd in favour of the 2nd respondent is not genuine. Another substantial objection of the petitioner is that the 2nd respondent has not incurred rail- sea-rail experience with regard to the specified minimum quantity of 4 lakhs MT of coal per annum. (5) The petitioner (WP No.21080/04) impeaches the qualification and eligibility of the 2nd respondent on the following grounds (extracted to the extent relevant): A. It is submitted that the bid submitted by the 2nd respondent ought to have been rejected at the pre-qualification stage itself as the 2nd respondent had not satisfied the criteria and requirements for pre- qualification set out in the bid documents. It is submitted that the criteriaand requirements set out in the bid documents are binding on the 1st respondent and the 1st respondent can only consider the duly qualified bidders who satisfy all the pre-qualification requirements for the award of the contract. B. It is submitted that the tender conditions are very clear and that the eligible bidder should have previous experience of handing similar work of such large magnitudes. It is submitted that the eligible bidder should have performed, as an integrated scope of work, the liasioning at collieries, the transportation by rail, hire vessels themselves for transport of such volumes by sea, unload at discharge port, arrange for rail movement after discharge and load for delivery to the thermal power station. Further more, such an integrated scope of work should be for at least the specified minimum 4 lakh MT per month. C. The 2nd respondent does not have any experience in doing an integrated contract for the transport of thermal coal under the Rail-cum-Sea- cum-Rail route. The 2nd respondent has only some experience in unloading coal and handing it locally within the port. The 2nd respondent was not even considered by the 1st respondent as deserving of even being issued tender documents for a much smaller contract for a much smaller and limited scope of work in the tender for VRPS opened on 10.1.2004; and therefore it is irrational and unreasonable to consider that the 2nd respondent could be qualified for this tender. The documents submitted bythe 2nd respondent to show pre-qualification experience were vague, false or misleading and the 1st respondent ought to have made the necessary inquiries with due diligence and ascertained the truth of the matter and rejected the bid of the 2nd respondent. The 2nd respondent has not done any transport of coal by sea. The 2nd respondent has no valid collieries experience. The 2nd respondent has no valid integrated contract experience of the nature and magnitude called for in this tender. The 2nd respondent’s bid ought to have been rejected at the pre-qualification stage itself by the 1st respondent. D. It is submitted that the 1st respondent, has violated the sanctity of the tender process by asking the 2nd respondent, and allowing the 2nd respondent, to furnish further documents to establish pre- qualification after the bid opening. It is submitted that the documents submitted on the date of the opening of the tender alone are to be considered for the purpose of pre-qualification and, if the documents submitted by the 2nd respondent originally at that time do not satisfy the required pre-qualification criteria, that tender ought to have been rejected outright. At best, clarification may be asked on the documents already submitted by them; but no new or further documents could have been lawfully asked for or accepted by the 1st respondent. It is submitted that the very action of the 1st respondent in asking and/or allowing the 2nd respondent to furnish further or better qualifying documents and/or accepting and considering any further documents submitted by the 2nd respondent after the date of opening of the tender is arbitrary, discriminatory, unreasonable, not bona fide or fair or just and violative of Article 14 of the Constitution of India.” (6) Earlier on 10.11.2004 this court while directing that the miscellaneous application be listed on 16.11.2004, permitted the 1st respondent to process the tender while directing that the same be not finalised. On the same day the price bids of 4 of the tenderers ie., the two petitioners, the 2nd respondent and the 3rd respondent (WP No. 21080/04) were opened. (7) Earlier on 28.9.2004 (the 3rd Respondent in WP No.21080/04) addressed a letter to the 1st respondent stating that the proof of colliery experience submitted by the 2nd respondent on the basis of the two letters of M/s Kamal Wineries, Hyderabad, and M/s India Cement ltd., Chennai, did not contain satisfactory information regarding the eligibility of the 2nd respondent. This letter stated that the certificates did not mention the quantity, period and actual type of work, that the letter was not in conformity with the PQB requirements regarding the monitoring, loading, supervision and liasoning at collieries and that the bid of the 2nd respondent should therefore be eschewed. Later on 9.11.2004 (before the opening of the price bids) the petitioner (WP No. 21080/04) addressed the Chief Engineer of the 1st respondent alleging disqualification of the 2nd respondent. This letter reads as under: “We have received a communication from you that the price bid for the tender specification No. CEG(E5)06/2004-05 is slotted for opening on the 10th November 2004. We reliably learnt that the technical bid of Anand Transport, Chennai who are totally an ineligible tenderer has been accepted by APGENCO and their price bid is also being opened tomorrow. We are shocked and surprised that the tender of Anand Transport who does not fulfil most of the tender conditions has been accepted by APGENCO. We had utmost faith that your organisation would be fair and upright in finalising all tenders and we have not bothered to lodge any protest against any tenderer even though we noticed several infirmities in the documents submitted by a few tenderers. As far as Anand Transport is concerned, it was pointed out during the tender opening itself that the certificates enclosed by them towards handling of thermal coal and also towards colliery experience were totally inadequate. As far as handling of thermal coal is concerned, we understand that as the document submitted by them were not sufficient they have submitted documents subsequent to opening of technical bid to show their qualification for loading to ships. We understand they have produced a certificate for having carried out this work for several lakh tones in Vizag Port for the period December 1997 to January 2001. We wish to inform you that we were the only handling agents appointed by Tamil Nadu Electricity Board for carrying out work for them during this period. Anand Transport has been one of our sub-contractor who was performing only part of the handling contract. Hence their experience is not as a direct contractor and only as a sub-contractor that too not for entire scope of work but only a portion of the work involved. We have now enclosed a letter from Vizag Port which will show that Anand Transport were only our sub-contractor. Your tender document is very clear that parties who have carried out work of similar nature and magnitude alone will be considered. Jobs performed as a sub-contractor shall not be acceptable in any tender process. You can see from our records that we have obtained certificates from TNEB for the quantity handled through Vizag Port during the years specified. Thus for the same job done, is APGENCO going to qualify both us as well as Anand Transport? Anand Transport being a sub-contractor cannot be found to be eligible. Further as they have not submitted all the documents along with the technical bid, any decision now being taken based on documents submitted by them subsequent to the tender opening is not fair. We noticed that they have produced insufficient certificates to prove experience in liaisoning at pitheads/colliery. The certificate submitted by them are very vague and does not show any volume of business etc. If APGENCO has sought further certificates from them and a decision was taken based on the subsequent documents, such practice is not followed in normal tender procedures not only by APGENCO but also by any Government undertakings/public utilities. It is apparent that Anand Transport has a close link with India Cements who has issued them certificates which do not represent the correct position. We reliably learn that “Balaji Transport Agency, 6-3-883/15/A Jaffer Ali Bagh, Somajiguda, Hyderabad – 500 082” was the coal agents for India Cements (their group companies) for all these years. The records available with mines and railways show this name only. In our opinion the technical bid of Anand Transport has to be rejected without any furtherinvestigation as the documents submitted at the time of tender opening (documents submitted after tender opening should not be considered at all) do not show that they have relevant experience and qualifying requirement similar to the scope of work given in the tender document. If at all APGENCO wants to carry out further investigation, the same should be done by writing to Singareni Colliery/Railways and Vizag port Trust authorities and not to parties who have issued the certificates in a very vague manner. Unless such investigation is carried out and their bid is rejected, the price bid of Anand Transport should not be opened at all. We regret very much for writing this letter as we were all along keeping quite because we were confident that APGENCO will be transparent and fair in finalizing the tenders based on the documents submitted by parties without seeking additional documents etc. It is common knowledge that as far as pre-qualification is concerned no additional documents are encouraged in such large tenders. However, as we were shocked and surprised to learnt that the document submitted by Anand Transport has been accepted and found fulfilling the tender conditions (which really is nor right) we wanted to point out these deficiencies for corrective action by you. Even though the opening of price bid has been fixed tomorrow, we are sure it is not very late to disqualify the party and open only the bids of parties who are fully eligible.” (8) Presumably in response to the 3rd respondent’s (WP No.21080/04) letter dt 28.9.2004 wherein the 2nd respondent’s experience and qualification was questioned, the 1st respondent addressed a Fax on 16.10.2004 to the 2nd respondent calling upon it to furnish documentary evidence if any regarding the experience of the 2nd respondent in respect of loading of coal into ships and transportation of the coal by ships. The apparent reason for this is stated in the communication to be that the 2nd respondent had submitted experience certificate related only to handling of coal at various ports. Though the letter dt 28.9.2004 had also alleged that the 2nd respondent had no experience in collieries liasoning, the 1st respondent’s Fax message dt 16.10.2004 did not call upon the 2nd respondent to furnish any documentary evidence on this aspect of the 2nd respondent’s experience. (9) On the opening of the price bids on 10.11.2004, the bid of the 2nd respondent was seen to be the lowest, at Rs.915.84 per MT. The price bid of the petitioners and the 3rd respondent (WP No.21080/04) are – petitioner in WP 21080/04 Rs.1087.37 per MT; 3rd respondent (WP No.21080/04) Rs.1125.49 per MT and petitioner in WP No.20738/04 Rs.1148.99 per MT. Response of the 1st respondent:- The 1st respondent-Corporation has filed counter affidavits which contain substantially similar averments. According to this respondent, 5 tenders were received within the time stipulated, the PQBs were opened and all tenderers who were pre-qualified were intimated by the answering respondent’s letter dated 8.11.2004, that the price bids