IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 23-02-2010 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND (*) THE HONOURABLE MR.JUSTICE T.RAJA O.S.A.No.12 of 2010 and M.P.No.1 of 2010 M/s.Sauter Race Technologies Private Ltd., Represented by its Head Finance and Administration Mr.A.Ravikumar At Old No.248, New No.114, Royapettah High Road ..Appellant/Applicant/ Royapettah, Chennai 14. Plaintiff vs 1.M/s.Tidel Park Coimbatore Ltd., No.4, Rajiv Gandhi Salai Taramani, Chennai 600 113 Rep. By its General Manager Finance R.Rajeswari 2.M/s.Metronic Engineering Sdn. Bhd. Having its registered office at No.2, Jalan Astaka U8/83, Seksyen U8, Bukit Jelutong, 40150 Shah Alam, Selangor Darul Ehsan Malaysia Represented by S.Manickavasagam Director of Metronic Engineering Pvt. Ltd., at First Floor, Door No.2/9, 3rd Cross Street, Seethamma Colony ..2nd Respondent/2nd Alwarpet, Chennai 18. Respondent /2nd Defendant Original side appeal preferred under Order XXXVI Rule 1 of the O.S. Rules read with Clause 15 of the Letters Patent against the https://hcservices.ecourts.gov.in/hcservices/ order of this Court dated 18.12.2009 made in O.A.No.1179 of 2009 in C.S.No.1018 of 2009 praying that this Hon'ble Court be pleased to pass an order of ad interim injunction restraining the 1st respondent from anyway permitting the 2nd respondent to do any work covered by the agreement dated 14.10.2009 pertaining to the Integrated Building Management System Works entered into between the 1st Respondent and 2nd Respondent pursuant to the alleged letter of ward dated 25.09.2009 Ref. TPCL/IBMS/2009 issued by the 1st Respondent to the 2nd Respondent relating to tender dated 18.05.2009 for integrated building management systems works in construction of building complex of information technology park at Villankurichi (SEZ area) Coimbatore pending final disposal of the Civil Suit No.1018 of 2009. For Appellant : Mr.T.V.Ramanujan Senior Counsel for Mr.P.J.Rishikesh For Respondents : Mr.G.Masilamani Senior Counsel for M/s.King & Patridge for R1 Mr.V.T.Gopalan Senior Counsel for M/s.M.G.Rajeswari for R2 JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) This intracourt appeal challenges an order of the learned Single Judge of this Court made in O.A.No.1179 of 2009 whereby the request of the appellant/plaintiff for an interim order of injunction was denied. 2.The facts and circumstances, under which the instant appeal has arisen are as follows: (a) The appellant as plaintiff filed a suit in C.S.No.1018 of 2009 for declaration that the agreement entered into between the first defendant and the second defendant on 14.10.2009 is null and void and also for a permanent injunction to restrain the first defendant from permitting the second defendant to do the work pursuant to the said agreement alleging that pursuant to the tenders called for by the first respondent, the appellant and the second respondent participated in the tender process. The entire process consists of three stages namely (i) opening of EMD; (ii) evaluation of the technical cum prequalification; and (iii) price bid. The plaintiff has followed and satisfied the conditions as prescribed in https://hcservices.ecourts.gov.in/hcservices/ the tender documents. After declaring the plaintiff as the lowest bidder, the first respondent called upon the plaintiff to attend a negotiation meeting. In that meeting, one of the officials of the first respondent raised a query whether a Sony CCTV system could be provided for the video streaming instead of Indigovision CCTV offered by the plaintiff. The plaintiff sought time. (b) It was further alleged that the procedure followed by the first respondent is in violation of the tender conditions. The appellant sent number of communications, but was always kept in dark, and hence, they invoked the provisions of RTI Act and sought answers to several questions. But the first respondent has not responded. In the meanwhile, the first respondent awarded the contract in favour of the second respondent, and it was out of collusion between them. Thereafter, the appellant filed a suit in C.S.No.964 of 2009 for a mandatory injunction. The second respondent is not even qualified to participate in the tender itself. The second respondent, a foreign company, participated in the tender without a branch office in India. Apart from that, the second respondent has not fulfilled the tender conditions. Under the circumstances, the balance of convenience is in favour of the appellant. Under the circumstances, the appellant filed an application for interim injunction. (c) The opposite party was given an opportunity for filing their counter. Accordingly, counter affidavits were filed. (d) The learned Single Judge on enquiry, dismissed the application. Hence this appeal has arisen before this Court. 3.Advancing arguments on behalf of the appellant, the learned Senior Counsel Mr.T.V.Ramanujan would submit that the second respondent was not even qualified to participate in the tender process; that the mere averment in the affidavit that the second defendant has got a branch office in India is not at all sufficient; that even in an interlocutory application, averments and statements made in affidavits must be supported by documents; that by allowing some a company namely the second respondent, which is not at all qualified to participate in the tender, the first respondent has committed a fraud on the tender conditions with an intention to nullify the bonafide rights of the lowest bidder namely the appellant; that apart from that, FEMA regulations have been violated by the respondents; that the contract awarded to the second respondent, is against the provisions of Sec.23 of the Indian Contract Act; and that it is pertinent to note that it was always the vendor's prerogative to select the design, size and the quantities of the servers; that even the second respondent has also provided only one server with required storage for 90 days. https://hcservices.ecourts.gov.in/hcservices/ 4.Added further the learned Senior Counsel that there was no inconsistency in the statements made by the appellant on the makes of the CCTV and price implications; that the appellant offered makes of Indigovision and GE as per their letter dated 2.7.2009, which was very well within the scope of the tender conditions; that the first respondent has not responded to the letters addressed by the appellant; that in fact, the second respondent has violated Clause 23 of Part-1A of the conditions of contract; that the supply and installation of IBMS works can be started only after the building works including the civil works are completed; that even as on today, the building has not been completed; that under the circumstances, interim injunction should have been granted; that interim injunction if granted would not affect anybody's right nor would prejudice the respondents; that in such a situation, the Court should have interfered into the matter for granting an injunction since the decision of the first respondent in awarding the contract in favour of the second defendant is unreasonable; that the balance of convenience is always in favour of the appellant and hence the order of the learned Single Judge has got to be set aside. 5.The learned Senior Counsels Mr.G.Masilamani and Mr.V.T.Gopalan appearing for the respective respondents in their sincere attempt of sustaining the order of the learned Single Judge, have made their submissions. 6.This Court paid its anxious consideration on the submissions made. 7.As could be seen above, the plaintiff filed the suit seeking a declaration that the agreement dated 14.10.2009, pertaining to the Integrated Building Management System Works entered into between the first defendant and the second defendant pursuant to the letter of award dated 25.9.2009, relating to the tender dated 18.5.2009, is null and void and also consequential permanent injunction to restrain the first defendant from in any way permitting the second defendant to do the work pursuant to the said agreement. Pending the suit, the instant application was filed by the plaintiff seeking an interim injunction against the first defendant from permitting the second defendant to do any work covered under the said agreement dated 14.10.2009. In other words, the interim injunction asked for in the interlocutory application was in the line of the consequential relief asked for in the main suit. 8.Admittedly, the first defendant for construction of the state of the art IT park with built up area namely 161500 sq. m. in IT SEZ area at Vilankurichi, Coimbatore, called for the international competitive tender for providing Integrated Building Management System Works. The scope of work included monitoring and control of utility systems and safety and security systems. Accordingly, it called for tender on 18.5.2009, and in total eight companies https://hcservices.ecourts.gov.in/hcservices/ including the plaintiff and the second defendant, participated in the tender process. The plaintiff furnished the earnest money deposit of Rs.7 lakhs vide a bank guarantee which was a pre-requisite to participate in the tender process. Following the tender notice published on 11.5.2009, the pre-bid meeting was held on 3.6.2009. The last date for submission of tender document was 19.6.2009. The plaintiff and the second defendant had submitted their tenders within the stipulated time. On 9.7.2009, the tender evaluation meeting was held. Following the same, a letter dated 12.8.2009, was sent by the first defendant to the plaintiff communicating that the price bid will be opened on 14.8.2009 at 10.00 A.M. Accordingly, on that date, the price bid was opened, and the first defendant sent a letter on 21.8.2009, to the plaintiff calling upon it to attend the evaluation meeting on 27.8.2009. There was a board of directors meeting of the first defendant on 28.8.2009 wherein a decision was taken that the plaintiff's bid was not acceptable on technical grounds. Thereupon, the first defendant called the second defendant, the next lowest tenderer, on 14.9.2009, and had discussions with him. Pursuant to the negotiation, the second defendant reduced the price so as to put it in par with the plaintiff's price. Accordingly, the contract was awarded to the second defendant. There were exchange of communications between the parties, and finally, the plaintiff filed the suit before the Court on 12.11.2009. 9.Though an application for interim injunction was filed along with the suit, notice was issued, and both the defendants entered appearance and filed their respective counters. The learned Single Judge took the view that it was not a fit case where interim injunction could be granted. 10.From the submissions made by the learned Senior Counsel for the appellant, it could be seen that the second defendant is a foreign company which was not having a branch in India, and so long as the second defendant was not having a branch in India, it was not competent to get the contract, and hence the first defendant should not have awarded the contract in favour of the second defendant, and thus, the contract itself was illegal. It could be further seen that though there were exchange of communications, the plaintiff was kept in darkness in respect of the award of contract in favour of the second defendant which would be indicative of the malice and also the fraud committed by the first defendant; that by awarding the contract all the legal formalities and procedures have been bypassed; that the awarding of the contract was in utter violation of Sec.23 of the Indian Contract Act and also FEMA regulations; that despite the fact that the plaintiff sought for information under the provisions of the Right to Information Act, the first defendant did not give any reply which would clearly indicate that there was no transparency at all; that even the reply given belatedly was so bald; that was intended to prevent the plaintiff from approaching the Court and obtain the legal remedies, and hence it was to be restrained. https://hcservices.ecourts.gov.in/hcservices/ 11.On the contrary, the defence plea before the learned Single Judge and equally here also is that the plaintiff has not made out a prima facie case or shown balance of convenience in its favour for getting an interim relief; that there were laches on the part of the plaintiff which would suffice to deny the interim injunction sought for; that apart from that, if the conduct of the plaintiff is looked into, it would be quite clear that it was not a fit case where the plaintiff can seek for interim injunction or the relief of interim injunction could be granted in its favour; that there was no violation of any one of the provisions of law either the Contract Act or FEMA Regulations or RTI Act in awarding the contract by the first defendant in favour of the second defendant; that during the relevant time, the second defendant, a foreign company, had sufficient experience in the field and was also having number of branches as stated in the counter; that apart from that, as per the FEMA regulations, it has to establish a branch in India provided it has secured a project in India; that the bid of the plaintiff was not found acceptable on technical grounds; that the plaintiff was not entitled for the relief of interim injunction also on the ground that all the contentions raised by both sides could be decided only on appreciation of evidence to be adduced by both sides at the time of trial and not at this stage; that the work under the contract awarded to the second defendant is nearing completion and the inauguration is scheduled according to the completion of work on or before 31.3.2009; that the inauguration is scheduled to take place in the first week of April 2010; that under the circumstances, the balance of convenience would be in favour of the defendants by refusing to grant interim injunction; that apart from all the above, if the plaintiff's case was finally accepted by the Court at the time of trial, the plaintiff could be well compensated by awarding damages, and in such circumstances, it was not a fit case for granting interim injunction and hence, it should be refused. 12.At the outset, it has to be pointed out that it is a suit for declaration that the agreement entered into between the first defendant and the second defendant dated 14.10.2009, pursuant to the letter of award dated 25.9.2009, relating to the tender dated 18.5.2009, was null and void and also for a consequential permanent injunction to restrain the first defendant from permitting the second defendant to do any work under the said agreement. Thus, the plaintiff has not sought for any relief on the strength of the tender placed by the plaintiff. Even if the reliefs asked for by the plaintiff were to be granted, fresh tenders were to be called for for doing the said work, and the plaintiff could also participate along with others in the tender auction after following the procedural formalities. Hence, it can be stated that the suit itself with the consequential relief of such an injunction in the line of which the interim relief is sought for, is to maintain the status-quo on the fervent hope that the plaintiff might get the contract in its favour in future. Since the plaintiff has not asked for any relief in its https://hcservices.ecourts.gov.in/hcservices/ favour, it would be quite evident that the intention of the plaintiff in filing the suit and asking for a consequential relief is to stall the entire construction work. 13.Admittedly, the tender notice was published on 11.5.2009 followed by a pre-bid meeting on 3.6.2009. Both the plaintiff and the second defendant submitted their tender documents in time. Tender meeting was held on 9.7.2009. Following the communication to the plaintiff, the price bid was opened on 14.8.2009. A negotiation meeting was convened on 27.8.2009. Admittedly, the plaintiff also participated in that meeting. At the time of that meeting, the second defendant sought for revising its offer to install INDIGOVISION CCTV by Sony. The plaintiff informed the first defendant that if they were to be done, it would result in increase in price. The next day, the Board of Directors when they met, decided that the plaintiff's bid was not acceptable on technical grounds. From the available materials, it could be seen that the price bid has taken place at the third stage following the first stage namely opening of the EMD, and the second stage namely the evaluation on the technical cum prequalification bid to assess the basic prequalification criteria and the queries in the bid document. Thus, the final stage in that process was the price bid in which the bidders were to satisfy the basic prequalification criteria, and they have substantially responded to the queries. If it was satisfied, only then the contract could be given in favour of that bidder. The plaintiff has sent a communication on 27.8.2009, wherein it is stated as follows: "Thank you for inviting us for techno commercial discussions today. As explained during the discussions, we have offered Indigovision CCTV system, which uses state of art H.264 compression technology. This helps in effective transmission of video streaming and saving in the servers and the storage without compromising the quality and resolution at continuous recording. As desired by you, if alternative vendor Cameras are to be offered, there will be a change in the requirements of software and servers. In case if you need any specific make cameras, we need to look at the entire requirement of servers and software, which will have a price implication." 14.As pointed out by the learned Senior Counsels for the respondents, the first respondent was sticking on to the specifications made in the tender documents; but, the appellant was to make a deviation therefrom. It is also quite evident from the above communication that there will be price implication if they need any specific cameras. Under the tender conditions, it was specified that the system should support the ability to provide continuous background recording from any camera managed by the system. But, the https://hcservices.ecourts.gov.in/hcservices/ representatives of the plaintiff informed to the Committee that there was no provision for 24 Hrs x 7 days continuous recording in case there was no movement in the coverage area in the make offered by them. No doubt, this was also contrary to the tender conditions. On the next day, when the matter was placed before the Board, they did not give acceptance to the plaintiff's offer since the bid made by the plaintiff, was not in accordance with the technological specifications and have rejected the same. 15.The contention put forth by the learned Senior Counsel for the appellant that all attempts were made by the officials of the plaintiff to satisfy the requirements of the first defendant, in the considered opinion of the Court, cannot be accepted. It is true that the plaintiff came forward to provide CCTV System with art H 264; but, that was not the requirement of the first defendant as could be seen from item 71(a) of the Bill of Quantity wherein it is specifically stated that the requirement of the first defendant was the compression MPEG 4. Hence it would be quite evident that the plaintiff did not satisfy the specifications as found in the tender documents and as required by the first defendant. Under such circumstances, the contract was not awarded in favour of the plaintiff. Even now, the appellant/plaintiff is unable to show that the plaintiff company was ready to place necessary technical requirements. So long as the plaintiff was unable to place the specifications as found in the tender documents and also as required by the first defendant, it cannot have any grievance to ventilate that the contract should have been awarded in favour of the plaintiff. It is not in controversy that among the tenderers, the low cost was quoted by the plaintiff. But, since the plaintiff did not satisfy the technical requirements as found in the tender documents, the first defendant did not accept the same. 16.It could also be seen from the materials available that when five servers were needed with one redundancy, the plaintiff was able to give only one server for one redundancy, and this would also indicate the non-compliance of the specifications in the tender document. The contention put forth by the learned Senior Counsel for the appellant that even now they are ready to provide five servers as required by the first defendant was after the non-acceptance of the bid. Hence, in short, it can be well stated that the plaintiff did not satisfy the specifications in respect of the technological requirements as put forth in the tender document. In such circumstances, this Court is of the considered opinion that the plaintiff has not sought for any relief in its favour on the strength of the bid made by it. 17.Admittedly, the plaintiff has already filed a suit in C.S.No.964 of 2009 seeking for a mandatory injunction against the first defendant in which the second defendant was neither a party, nor any relief was sought for against the second defendant. It is https://hcservices.ecourts.gov.in/hcservices/ pertinent to point out that a letter emanated from the plaintiff on 25.9.2009, which reads as follows: "We were informed by Mr.Lakshmanan that the subject with regard to CCTV was discussed by the committee including your Architects and Consultants M/s. TCE after the opening of the price bid and based on their recommendation, it has been decided to award the contract to the L2." 18.No doubt, L2 which is mentioned therein is the second defendant in the present suit. From the very reading of the said communication sent by the plaintiff on 25.9.2009, it would be quite clear that the plaintiff had the clear knowledge that the first defendant has decided to award the contract to the second defendant. But, after a month when the said suit was filed on 28.10.2009, there was no whisper about the decision of the first defendant to award the contract in favour of the second defendant. The instant suit was laid on 10.11.2009, seeking for the declaration that the contract given by the first defendant to the second defendant is null and void. It remains to be stated, at this juncture, that even before the filing of the instant suit, the plaintiff has got back the EMD money and that too without any protest whatsoever. Thus, it would be quite clear that the plaintiff who had the knowledge of the decision of the first defendant to award the contract in favour of the second defendant even on 25.9.2009 itself, filed a suit for mandatory injunction in C.S.No.964 of 2009 on 28.10.2009, and after receiving the EMD without protest, has filed the instant suit on 10.11.2009. All these facts would clearly be indicative of the conduct of the plaintiff. 19.In a given case like this while exercising the discretion to grant an interlocutory injunction, the Court is not only to look into the prima facie case and balance of convenience, but also the conduct of the party seeking injunction. In the case on hand, admittedly, on the rejection of the bid made by the plaintiff, the contract has been awarded to the second defendant. It is also an admitted position that the cost of the entire construction of the Tidel Park would be more than Rs.300 crores out of which the present tender would cover Rs.6 crores and odd. It is brought to the notice of the Court that the major part of the construction work of the entire project is completed. It is also not in controversy that the second defendant pursuant to the contract awarded in its favour, has commenced its work, and also the part of the work is done. In such circumstances, if an injunction as asked for by the plaintiff is granted, the entire project will come to a halt, and no doubt, injury would be caused not only to the first defendant, but also to the second defendant. On trial, if the plaintiff makes out a case that he should have been preferred than the second defendant, he could be well compensated in terms of money. It is settled proposition of law that in a given case, if the plaintiff could be compensated by way of damages for the https://hcservices.ecourts.gov.in/hcservices/ breach caused, injunction has to be necessarily refused in view of the availability of the alternative remedy. Under the stated circumstances, the following decisions of the Apex Court would squarely apply to the present facts of the case. (i) In AIR 2008 SC 2291 (MANDALI RANGANNA V. T.RAMACHANDRA), the