1 HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition No. 167 of 2009 (M/S) Alstom Hydro France …. Petitioner .. Versus Tehri Hydro Development Corporation & another … Respondents Dr. Abhishek Manu Singhvi, Senior Advocate assisted by Mr. Prashant Mehta, Mr. Sanjay Kumar Mehta and Mr. D. Barthwal, Advocates for the petitioner. Mr. G.E. Vahnavati, Senior Advocate, Mr. L.P. Naithani, Senior Advocate assisted by Mr. Shobhit Saharia, Advocate for respondent no. 1. Mr. Amarendra Sharan, Senior Advocate assisted by Mr. Amit Anand Tiwari, Mr. Gurusharan Singh and Mr. Parikshit Saini, Advocates for respondent no. 2. 29th June, 2009 Hon’ble Sudhanshu Dhulia, J. 1. The arch competitors of Europe, France and Germany, have shifted their battle grounds from the Continent to Uttarakhand, a small hill state in India. The rich upper Gangetic basin, or more precisely the Bhagirathi river catchment area, with a huge potential for hydro projects, is their new Alsace and Lorraine. 2. The petitioner, Alstom Hydro France is a French company and Voith Siemens Hydro Kraftwerkstechnik Gmbh Co. KG i.e. respondent no. 2 is a German company, both are competing for a contract for turnkey execution of Tehri Pump Storage Plant (hereinafter referred to as Tehri 2 PSP). Bids for this project have been invited by respondent no. 1 which is Tehri Hydro Development Corporation Ltd. (i.e. THDC and hereinafter referred to as “employer’). 3. This writ petition has been filed before this Court at a stage when the contract has yet not been awarded to any of the bidders. The petitioner and respondent no. 2 are the only two bidders who have qualified the pre technical bid and in the financial bid, apparently, the bid of respondent no. 2 is lower than that of the petitioner. The petitioner at this stage has filed this writ petition pointing out the “anomalies” of respondent no. 1 in the process. The two main grounds, which the learned Counsel for the petitioner Dr. Abhishek Manu Singhvi calls “the highway points” are as follows : 4. The first ground taken by the petitioner is regarding the qualifications of respondent no. 2. According to petitioner, respondent no. 2 was not a qualified bidder as it was not having the required experience for the project and it failed to provide requisite certificates for compliance of mandatory conditions and hence its bid was liable to be rejected at the pre qualification stage itself. 5. The second ground is on the bid of respondent no. 2 being “non responsive”. According to petitioner, the bid given by respondent no. 2 was a “non responsive bid” 3 as it was in violation of the mandatory conditions, given in the bidding documents, more particularly in its instructions to the bidder (now referred to as “ITB”) that “only one bid shall be submitted by each bidder”. It is contended that since respondent no. 2 has submitted two price bids he stands disqualified as his bid has become “non responsive”. 6. Both the respondents have denied these allegations of the petitioner as incorrect, in fact misleading and have urged this court to dismiss the petition at the very threshold , inter alia on the grounds that it is in public interest that the project be completed in the projected time framework and the pendency of the petition on wholly untenable grounds will only delay this project, resulting in further escalation of costs, etc. 7. A preliminary objection regarding the maintainability of the writ petition was also raised at the initial stage by both the respondents. According to them, there is an “ouster clause” in the contract, or more precisely in the Bidding document where the jurisdiction of all courts except the court at Delhi has been ousted. Whatever be the merits of this argument, nothing is being stated on this aspect here as both the learned counsels for the respondents Shri Vahnavati and Shri Sharan gave a statement at the bar that they do not wish to press with 4 this objection. Consequently, an order was passed on 4.3.2009 by this Court, which is as under : “Mr. A.M. Singhvi, Senior Advocate assisted by Mr. Prashant Mehta, Mr. Sanjay Kumar Mehta and D. Barthwal, Advocates for the petitioner. Mr. G.E. Vahnavati, Senior Advocate, Mr. L.P. Naithani, Senior Advocate and Mr. U.K. Uniyal, Senior Advocate, assisted by Mr. Sobhit Saharia, Advocate for respondent no. 1. Mr. Amrendra Sharan, Senior Advocate, assisted by Mr. Amit Anand Tiwari, Mr. Gurusharan Singh and Mr. Parikshit Saini, Advocates for the respondent no. 2. A preliminary objection has been raised in the counter affidavit filed by the respondent no. 1 and 2. In their preliminary objection, the respondents have stated that this court does not have jurisdiction in this matter inasmuch as there is an ouster clause in the Particular Conditions of Contract (PCC), by which all the parties have agreed that the jurisdiction will lie in the Court at Delhi. All the same, after the pleadings were exchanged, a statement has been made at the bar by Mr. G.E. Vahnavati & Mr. Amarendra Saran, learned Senior Advocates that they do not want to press the preliminary objection raised by them, in this case. Statement is recorded. A limited sur‐rejoinder affidavit filed today by the respondent no. 2 is taken on record. Heard parties at length. 5 Put up this matter on 5th March, 2009 for admission/orders.” 8. The case hence proceeded on merits and examined the two main grounds of the petitioner. First point – The eligibility factor. 9. This point has been argued at great length by the senior advocate Dr. Abhishek Manu Singhvi, counsel for the petitioner. According to the petitioner, respondent no. 2 does not have the essential qualifications as given in the Bidding document*, and since it was not technically qualified its bid was liable to be rejected at the pre qualification stage itself. The petitioner has argued that as per the conditions of the Bidding document in order for a bidder to be technically qualified for submitting a bid, he “must have” completed, in the last 20 years, certain scope of works in design, manufacture, construction, installation/ erection, testing and commissioning of electro‐mechanical equipment for a hydro project of at least 150 MW capacity. For a ready reference, the extract of this technical qualifications, prescribed in clause 4.2.1 of the conditions is as follows : * The term “bidding document” has been referred in this judgment in a broad sense and refers to the entire material supplied by respondent no. 1 to the bidders which would, inter alia, include the bidding data sheet (BDS), Instructions to Bidder (ITB), etc. 6 Eligibility and Qualification Criteria No. Subject Requirement Single Entity 4.2 Experience in related field 4.2.1 Electro‐ mechanical Equipments Specific Experience Participation as Contractor, Management contractor or Subcontractor, within the last 20 years that has been successfully completed scope of works covering: • Must have done design, Manufacture, Supply, Erection, Testing and Commissioning of Reversible Pump Turbines of minimum 150 MW Unit Capacity and should be in successful operation for at least 24 months after commissioning. • Must have done Design, Manufacture, Must meet requirement 7 Supply, Erection, Testing and Commissioning of Motor Generator with related equipments for Pumped Storage Scheme of at least 150 MW Unit Capacity and should be in successful operation for at least 2 years after commissioning. 10. In order to ascertain that a bidder has fulfilled such conditions, a certificate was required to be provided by that bidder. 11. In other words as per the above condition of the bidding document it was a mandatory technical qualification that a bidder must have completed in the last 20 years, the following works of reversible pump turbines of minimum 150 MW capacity. These works are (A) Design (B) Manufacture (C) Supply (D) Erection (E) Testing and (F) Commissioning, which should have been in successful operation for at least 24 months after commissioning. Similar qualifications as above were required for the work for motor generator and related equipment for pump 8 storage scheme of at least 150 MW unit capacity which should also be in successful operation for at least 2 years after commissioning. In the present context, it is made clear that the word “erection” would also mean “installation”, and these words are being used interchangebly, here in this judgment. 12. It is petitioner’s contention that in order to comply with the above requirement respondent no. 2 as a bidder relied on having carried out, inter alia, the work of “erection” in a project known as “Ghangzhou II Pumped Storage Project, in China. According to the petitioner this was the only project Voith Siemens i.e. respondent no. 2 claimed to have done and on which it based its compliance with the mandatory requirement, which is referred above. Since respondent no. 1 has already qualified respondent no. 2 technically it is apparent that respondent no. 2 was satisfied with the aforesaid technical qualifications and the certificates submitted by respondent no. 2 to respondent no. 1. 13. Yet, the petitioner states that such certificates could not have been submitted for the project Ghangzhou II by respondent no. 2 because respondent no. 2 has not done the “Erection”/installation work at Ghangzhou II. According to the petitioner, the “erection” work at Ghangzhou II was done by a Chinese Company by the 9 name of M/s Synohydro Bureau. Consequently, the petitioner also asserts that the certificates filed showing the work of erection by respondent no. 2 for project at Ghangzhou II are false certificates and, therefore, he has indulged in a “fraudulent practice”, as defined by the conditions given in the bidding document. 14. Petitioner has further elaborated that before the Ghangzhou II project in China, there was a Ghangzhou I project which was completed by none other than the petitioner and, therefore, the petitioner has first hand knowledge of the kind of work one can do and the kind one cannot do in China. While the petitioner carried out phase I of Ghanghou Project no. I, petitioner was awarded the contract of design, manufacture, supply, testing and commissioning of the project but not for “installation” or “erection” work, because according to the petitioner the laws in China do not permit erection/installation work by an outside company and such work (of erection/installation), as per the prevailing Chinese law, has to be done by a domestic company. The petitioner further asserts that for this reason the petitioner has not submitted any certificate relating to the work done by it at Ghangzhou I project because submitting such certificates, according to the petitioner, would amount to making a false claim. Respondent no. 2’s claim for having done 10 erection work/installation in China at Ghangzhou II is therefore incorrect and the certificates so submitted are false certificates, says the petitioner. 15. In order to substantiate this point, petitioner has relied upon the following documents : (i) The report of the Asian Development Bank which is inter alia regarding the Hydro Project at Ghangzhou II. (ii) The counter certificates issued by the authorities/companies in China showing that erection work has not been done by respondentmno. 2 but it has been done by a local company in China. (iii) Magazine published by Voith Siemens, for advertisement of the work done by it. 16. Apart from this petitioner has also submitted legal opinion from China showing that the work of erection/installation in such projects, as per the prevailing Chinese law, has to be given to domestic companies. 17. The report of the Asian Development Bank (from hereinafter referred to as the ADB report) dated November, 2001 titled “Asian Development Bank – PCR :PRC 26369; Project Completion Report on the Guangzhou 11 Pumped Storage Stage II Project (Loan 1241‐PRC) in the People’s Republic of China –November 2001”. The relevant portion of the report on which reliance has been placed by the petitioner reads as follows : “5. Guangdong Pumped Storage Joint Venture Company (GPSJVC) was the Executing Agency for the Project. GPSJVC was established in 1988by three shareholders : Guangdong Power Holding Company (GPHC; 54 percent), Guangdong Nuclear Investment Company (GNIC; 23 percent), and State Development and Investment Company (23 percent). Appendix 2 provides the organization chart of the executing agency. A domestic design institute was responsible for the design, with two domestic hydropower firms as the supervising engineers. A domestic contractor carried out the civil and erection works. Electromechanical equipment was provided by a foreign supplier but was installed by the domestic contractor under the supervision of the international consultants. These implementation arrangements worked out 12 well, with proper coordination performed by GPSJVC. There was good cooperation and teamwork among all parties involved. The project facilities were well constructed, with actual performance meeting design standards. “ (Emphasis added) 18. This report has been annexed in the writ petition and is a part of record. The petitioner contends that since the ADB report clearly states that a domestic contractor carried out the “Civil and Erection Works”, the claim of respondent no. 2 that it was Voith Siemens which carried out the work of erection/installation at Ghangzhou II is false and misleading. 19. The veracity of the certificates which have also been filed by respondent no. 2 in its counter affidavit (which are from China, ostensibly from the authorities who were responsible for the project Ghangzhou II) have been challenged by the petitioner, and it has been pointed out before this Court by the learned counsel for the petitioner that these certificates on the face of it appear to be fake as the certificates are not signed! It is therefore contended by the petitioner that since the certificates submitted by Voith Siemens were unsigned certificates, at least the employer i.e. respondent no. 1 should have cross 13 checked the claim of respondent no. 2 instead of making him technically qualified on the basis of unsigned certificates ! 20. On the other hand, the petitioner has filed certificates in this Court and has made repeated averments in affidavits after affidavits before this Court, contending that the erection work for Ghangzhou II was actually done by a Chinese company and the claim of respondent no. 2 that it had done the erection work for Ghangzhou II is false. The petitioner and respondent no. 2 were both trying to outwit each other by filing affidavit and presenting certificates showing the hollowness of other’s claim, and this was leading nowhere when a suggestion was given at the bar by Shri Goolam E. Vahnavati, learned Solicitor General of India (as he was then) representing respondent no. 1 the employer, to which all parties agreed. As per this agreement respondent no. 1 agreed to verify the allegations of petitioner regarding the qualifications of respondent no. 2, and to examine afresh the claim of respondent no. 2 regarding work done at Ghangzhou II in China. By this time, the normal pleadings were already complete, inasmuch as the petition, the counter affidavits on behalf of all the respondents and the rejoinder affidavit 14 by the petitioner was already on the record. All the same, the following interim orders were passed on 5.3.2009: “Mr. A.M. Singhvi learned Senior Advocate assisted by Mr. Prashant Mehta, Mr. Sanjay Kumar Mehta and Mr. D. Barthwal, Advocates for the petitioner. Mr. G.E. Vahnavati, learned Senior Advocate, Mr. L.P. Naithani, learned Senior Advocate assisted by Mr. Shobhit Saharia, Advocate for the respondent no. 1. Mr. Amarendra Sharan, learned Senior Advocate assisted by Mr. Amit Anand Tiwari, Mr. Gurusharan Singh and Mr. Parikshit Saini, Advocates for the respondent no. 2. During the course of arguments, a consensus has reached between the parties on some aspects. Consequently, Mr. G.E. Vahnavati, learned Senior Advocate appearing for T.H.D.C./ respondent no. 1 states that notwithstanding the stand taken in the counter affidavit filed by respondent no. 1 i.e. T.H.D.C. in these proceedings, respondent no. 1 will verify whether respondent no. 2 (Voith Siemmens) is duly qualified in relation to the experience claimed by respondent no. 2 and for this purpose, it will also take into account the submissions made by the petitioner in the writ petition and the rejoinder affidavit and the submissions of the respondent no. 2 in the 15 counter affidavit and the sur-rejoinder filed by the respondent no. 2. Put up this matter on 26.3.2009 for admission in daily cause list. Meanwhile, in view of the statement given by Mr. G.E. Vahnavati, which has been duly noted in order dated 19.2.2009, there is no need of passing any interim order.” 21. Consequently when the matter was listed, an affidavit was filed by the employer stating that consequent to the order dated 5.3.2009, the employer deputed a team of its officials who visited Guangdong Pumped Storage Co. Ltd. (GPSC) and the Guangzhou Pumped Storage Project in China. This team comprised of senior officers who remained in China,,,,betweennn16.3.2009 to 20.3.2009. The names of the persons in China whom this team met have also been given in the affidavit. The certificates which were submitted by the Voith Siemens Hydro Company pertaining to their experience in Ghangzhou II project have also been examined and the documents which have been submitted by the petitioner have also been taken into consideration. After having said this in some detail, the affidavit states that the committee has given the following findings after its visit to China and its appraisal of the documents. These findings are as follows: 16 (i) The certificate dated 23.08.04, 07.02.05 & 21.02.05 (for work done at Ghangzhou II) were issued by Guangdong Pumped Storage Co. Ltd. (GPSC). These certificates are normally sealed as per Chinese practice but on the request they are now signed by the project authorities. (ii) The ADB report is not contract specific and it is true that no separate contract was signed for erection of electro‐mechanical equipments other than those specified in the annexure of the ADB report under reference. (iii) The erection contract signed with M/s SINOHYDRO BUREAU 14 was for supply of skilled & unskilled labour and general purpose tools and tackles etc. which is mandatory as per Chinese practice/rules. (iv) Voith Siemens Hydro Power Generation company (Then joint Venture of JM Voith GmbH and Siemens AG) under the contract no. 94‐ML‐460080 DE signed on 15th September 1994 was awarded the work of design, manufacture, supply erection and commissioning of equipments of Guangzhou II 17 pumped storage project (4x 300 MW) and they have successfully designed, manufactured supplied, erected and commissioned these equipments and the project was put into operation in March 2000 and the units are operating smoothly since then. GPSC is satisfied with the performance and quality of the equipments supplied by M/s Voith Siemens and with their services rendered for Guangzhou II project. 22. In short, finding of the team suggested that there is no strength in the claim of the petitioner that respondent no. 2 had not done the erection work at Ghangzhou II or the certificates submitted by respondent no. 2 are false. 23. In addition to the above development, what has actually weakened the claim of the petitioner on this aspect is the copy of the “contract” which has now been filed by means of an affidavit dated 24.3.2009 by respondent no. 2. This is the contract which was signed between respondent no. 2 and the Chinese authority pertaining to Ghangzhou II project, about which the whole issue has been made by the petitioner as to the erection work done by respondent no. 2 at Ghangzhou II. Both Shri Goolam E. Vahnavati, the learned Solicitor General of 18 India, learned counsel for respondent no. 1 and Shri Amrendra Sharan, Senior Advocate for respondent no. 2 have meticulously read before this Court provision after provision of the contract to show that Voith Siemens had done the work relating to erection at Ghangzhou I project. 24. It is not necessary to quote the detail provisions of this contract as emphasised before this Court by the learned counsels for the respondents. However, some of provisions as read before this Court by the respondents may just be referred. According to the respondents, a conjoint reading of the definition of works, for example, in clause 1.8 and clause 2.1 of this contract make it clear that it was the responsibility and liability of Voith Siemens to ensure “functional integration” of the “works” and, Voith Siemens was made expressly responsible for the “Technical Performance and Time Schedule of Installation, Tests and Trial Operation”. Again as per clause 16.1.2 of Ghangzhou Contract, the entire responsibility for “the technical excellence of the installation, adjustment, commissioning and trial operation of the Works was with Voith Siemens”. Further clause 16.2.4 of the Ghangzhou Contract which provided for the selection of the installation team it was laid that selection of the installation team was subject to Voith Siemens’ “final decision” and vide clause 16.2.6 it required that the 19 installation team was to work under “the direction and supervision” of Voith Siemens and the Ghangzhou Contract also gave Voith Siemens the right to request the Chinese Project Authorities “to replace, without delay, the workers or even the senior management staff of the installation team”. It has also been pointed out to this Court that clause 1.8 of Ghangzhou Contract read with clause 5.2.1 (B) of the contract makes it clear that the contract price of Voith Siemens included Voith Siemens’ costs for installation. Other provisions have also been brought to the notice of this Court which provided that the Voith Siemens was to train the personnel of the Chinese Project Authorities as well as the installation team at the work site for installation, commissioning, operation and maintenance of the equipments. 25. What has emerged from a reading of these provisions is that though respondent no. 2 may not have done the actual installation work at Ghangzhou II project, as it was indeed done by a local Chinese company called M/s Synohydro Bureau but the installation work was under the supervision and control of respondent no. 2 and not only this, the final responsibility regarding installation also rested with respondent no. 2. In other words, though respondent no. 2 or its team may not have done the actual “nut and bolt” job, but where the nuts and bolts have to 20 be placed and “how” the machinery has to be installed was under the supervision and control of respondent no. 2. As Shri Vahnavati, asserted “the buck stopped with respondent no. 2”, as the ultimate responsibility for installation in the project was with respondent no. 2. 26. In its rebuttal to the aforesaid recital of the provisions of Ghangzhou contract, Dr. Abhishek Manu Singhvi, learned counsel for the petitioner stated that the extracts of the contract only show that respondent no. 2 was “supervising” the erection work and it did not undertake the actual erection or installation work for Ghangzhou II PSP. The terms of the said contract, he states, make it clear that erection work for Ghangzhou II PSP was awarded to a local Chinese installation team, namely, Synohydro Bureau 14 for which there was a separate tender and a separate contract between Guangdong Pumped Storage Co. Ltd and Synohydro Bureau 14. It is argued by the petitioner’s counsel that merely the fact that respondent no. 2 may have been responsible for supervising erection work, which was actually carried out by a third party, does not and cannot meet the qualification criteria and in any event it was not the basis on which respondent no. 2 was pre qualified. It is also argued that there is a clear difference between having carried out erection, and being responsible for erection. It 21 is also contended that when respondent no. 1 was appreciating the documents and the certificates filed by respondent no.2, it had held respondent no. 2 as technically qualified on the basis of his claim of doing the erection work for Ghangzhou II PSP and not as a management contractor or as a person supervising erection or responsible for erection. There is a clear change of stand now both by respondent no.