AJN 00-OS-WP1766.09J 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1766 OF 2009 1. M/s. Ramky Enviro Engineers, a Company incorporated under the Companies Act, 1956, having its Corporate Office at “Ramky House”, Opp. Necklace Road Railway Station, Raj Bhavan Road, Somajiguda, Hyderabad – 500 082 and having its Mumbai Office at 9, Corporate Park-II, Sion-Trombay Road, Chembur, Mumbai – 400 071. ) ) ) ) ) ) ) ) ) ) ) ) 2. Mr. Bipin Patel, adult Indian Inhabitant, aged 47 years, Authorized Representative of the 1st Petitioner having his office at 9, Corporate Park-II, Sion-Trombay Road, Chembur, Mumbai – 400 071. ) ) ) ) ) ) ) ... Petitioners Versus 1. Municipal Corporation of Greater Mumbai through Dy. Chief Engineer (Solid Waste Management) Project having his office at 3rd and 4th floor FP 92 TPS 3, Municipal Primary School Building, Bai Padmabai Thakkar Marg, Kotwadi, Mahim – 400 016. ) ) ) ) ) ) ) ) ) AJN 00-OS-WP1766.09J 2 2. M/s. Antony Waste Handling Cell Private Limited, a Company incorporated under the Companies Act, 1956, having its Office at 111, Aasti Industrial Premises, Plot No.R-798, Mahapae, Navi Mumbai – 400 701. ) ) ) ) ) ) ) ) 3. M/s. Garware Wall Ropes Limited, a Company incorporated under the Companies Act, 1956, having its office at Plot No.11, Block No.D-1, MIDC Chinchwad, Pune – 411 019. ) ) ) ) ) ) ) 4. M/s. Veolia Environmental Services, a Company incorporated under the Companies Act, 1956, having its Office at CES ONYX Pvt. Ltd. #6, Rajamannar Street, T. Nagar, Chennai – 600 017. ) ) ) ) ) ) ) 5. The Central Pollution Control Board, a statutory body, constituted under the Water (Prevention & Control of Pollution) Act, 1974 having its Office at “Parivesh Bhawan”, East Arjun Nagar, Delhi – 110 032. ) ) ) ) ) ) ) ) AJN 00-OS-WP1766.09J 3 6. The Ministry of Environment & Forests through its Secretary, Government of India, having its office at Paryavaran Bhavan, CGO Complex, Lodhi Road, New Delhi – 110 003. ) ) ) ) ) ) 7. The Maharashtra Pollution Control Board, a statutory body established under the provisions of Maharashtra Prevention of Water Pollution Act, 1969, having its office at Kalpatarau Point, 3rd and 4th Floor, Opp. Cine Planet, Sion Circle, Mumbai – 400 022. ) ) ) ) ) ) ) ) ) ... Respondents Mr. Aspi Chinoy, senior counsel with Mr. Janak Dwarkadas, senior counsel, Pradeep Sancheti senior counsel and Mr. Atit Shukla i/b Dhru & Co. for the petitioners. Mr. K.K. Singhvi for the B.M.C. Mr. Jai Chinai, senior counsel with Mr. Phiroz Palkhiwala, Mr. Vijay Pandey, Mr. Sumit Raghani, Mr. Hardik Sanghavi and Ms. Anjani Singh i/b PDS & Associates for respondent 2. Mr. C.M. Lokesh for respondent 5. Mr. R.A. Rodrigues with Mr. Advait M. Sethna and M.S. Bhardwaj for Union of India. CORAM: MRS. RANJANA DESAI & R.V. MORE, JJ. AJN 00-OS-WP1766.09J 4 DATE ON WHICH THE ORDER IS RESERVED : 1ST OCTOBER, 2010. DATE ON WHICH THE ORDER IS PRONOUNCED: 18TH NOVEMBER, 2010. JUDGMENT :- (Per Smt. Ranjana Desai, J.) 1. Rule. Respondents waive service. By consent and with the request of the counsel for the parties, the petition is taken up for final hearing. 2. Petitioner 1 company is engaged in design and construction as well as in operating and maintenance of the Integrated Municipal Waste Management Facilities in different parts of the country. Petitioner 2 is the authorized representative of petitioner 1. Respondent 1 is the Municipal Corporation for Greater Mumbai (for short, “the MCGM”) which floated a tender to which we shall refer to in detail as the petition centers round it. The petitioners and respondents 2, 3 and 4 companies submitted their bids to the MCGM. Respondent 5 is the Central Pollution Control Board, a statutory body constituted under the Water (Prevention & Control of AJN 00-OS-WP1766.09J 5 Pollution) Act, 1974. Respondent 6 is the Ministry of Environment & Forests, Government of India, which has formulated the Municipal Solid Waste (Management & Handling) Rules, 2000 (for short, “the MSW Rules”) under the Environment (Protection) Act, 1986 (for short, “the said Act”). Respondent 6 has established respondent 5 – the Central Pollution Control Board (for short, “the CPCB”). Respondent No.7 is the Maharashtra Pollution Control Board (for short, “the MPCB”). 3. In this petition, the petitioners had prayed that the action of the MCGM in disqualifying the petitioners on technical parameters be quashed; that the MCGM be directed to consider financial proposal of the petitioners along with the other technically qualified bidders and for that purpose, if necessary, the MCGM be directed to reconsider afresh the petitioners' technical bid through the said agency. The petitioners amended their petition and prayed that action of the MCGM in issuing the Letter of Intent (for short, “the LOI”) dated 31/7/2009 in favour AJN 00-OS-WP1766.09J 6 of respondent 2 and in issuing Letter of Acceptance (for short, “the LOA”) dated 19/9/2009 in favour of respondent 2 be quashed and set aside. 4. It is necessary to state the gist of the facts as stated in the petition. The MCGM floated a tender in the form of Request for Proposal (for short, “RFP”) for selecting operators for design, construction, operation and maintenance of Integrated Waste Management Facilities on design, build, own, operate and transfer (for short, “D-BOOT”) basis at Kanjur Village, Mumbai. In or around 2006, the MCGM undertook an exercise in the form of a Request for Qualification (for short, “RFQ”) of competent companies to undertake the said project on D-BOOT. The petitioners submitted response to the said RFQ in collaboration with its technical consortium partner, the City of San Diego, USA. 5. In or around June, 2007, the MCGM issued RFP to the AJN 00-OS-WP1766.09J 7 bidders, who qualified at RFQ stage. The salient features of the RFP need to be quoted : “1.1 Background to Mumbai's MSW Management. (a) MCGM has identified and procured a large site 141.77 Ha in area at Kanjur Village, in the Eastern Suburbs of Mumbai. The site is adjacent to backwaters of Thane Creek. (b) As per the waste management plan prepared for Mumbai, it is envisaged that this site will commence to receive about 4,000 TPD of MSW in the fourth quarter of 2008. Thereafter, the MW received at the site will increase linearly to 6,400 TPD by 2023 and 7500 TPD by 2030. 1.2 Objectives of MCGM. (a) MCGM is seeking proposals from eligible Bidders to set-up and operate integrate waste management facilities at Kanjur site for a period of twenty five years. (Kanjur Project”). (b) xxx xxx xxx xxx 2.2 The Scope of Works for the Kanjur Project. (a) The scope of work of this concession primarily is to receive MSW from various parts of Mumbai, construct and operate waste processing units, AJN 00-OS-WP1766.09J 8 sell the products and place the rejects in the landfill, during the concession period of 25 years. For this purpose, the bidder will be required to construct, operate and maintain two landfills. (b) The processing technology for initial waste processing capacity of 4,000 TPD is required to be composting or its variants. Thereafter for MSW processing (incoming waste) or at any point of time of concession to reduce the process residues to landfill the bidder is free to adopt any waste processing technology. A minimum allocation of 40 Ha of land area for landfill is mandatory. The actual utilization of this area for construction of landfill cells however is left to the bidder's decision. (Subsequently changed as explained in later parts hereunder following reduction in the land available for this project owing). (d) xxx xxx xxx xxx 2.4. Restriction on landfill capacity Utilization: Economizing use of landfill capacity is one of the primary concern of site management plan at Kanjur. Accordingly, the bidder will not be allowed to send at any point of time during the concession more than 20% (by weight) (subsequently it was increased to 25%) of MSW received at the gate as rejects to the landfill. 3.3 Technical Criteria. AJN 00-OS-WP1766.09J 9 The technical member(s) of the bidder whose technical experience will be taken for the purposes of evaluation of the consortium should : 2. Have built, constructed and operated at least one MSW landfill (complete with bottom liner, formation of daily cells covered with daily soil cover, equipped with gas collection / flaring systems and leachate collection and treatment system) having the capacity to handle minimum 1,000 TPD of MSW, for at least a period of two years. (ii) Have built, constructed and operated at least one integrated MSW processing facility using composting having the capacity to handle minimum 200 TPD of MSW for at least a period of two years. Each Bidder is required to submit a detailed Plan for setting up integrated waste management facilities and the two sanitary landfills as part of the Technical Bid that it submits, which should be in the format provided in Annexure `3' of this RFP Document. The Plan submitted by the Bidders must be in line with the general terms of the Kanjur Plan indicated in Vol. III of this RFP Document. xxx xxx xxx xxx xxx xxx xxx xxx “5.15 of RFP Volume 1 states as below. AJN 00-OS-WP1766.09J 10 MCGM would be forming a Technical Committee (TC) comprising representatives of MCGM and the Consultant (Infrastructure Leasing & Financial Services Ltd.) for examination and evaluation of the Proposals. MCGM would select the Contractor based on the recommendations of the TC. (a) General ... ... ... If the Bid is not in substantial compliance, the submission will be rejected and the Bidder will be eliminated from the competition. (b) Determination of Compliance of the Bid: Material Deviation. A Bid that is in total compliance is one that conforms to the preceding requirements without material deviation or reservation. A material deviation or reservation is one (1) which affects in any substantial way the scope, quality, or implementation of the Project; or (2) which limits in any substantial way MCGM's rights or the Bidder's obligation under the draft Concession Agreement, or inconsistent with the RFP documents (3) whose rectification would affect infairly the competitive position of other Bidders presenting substantially responsive Bids. AJN 00-OS-WP1766.09J 11 5.16 Evaluation of Bids. MCGM will evaluate only those Bids that have been determined to satisfy the compliance requirements set forth in this RFP Document, including the general evaluation criteria specified in this RFP Document. The Technical Proposal of the Bidders would be evaluated for adequacy of design and operations so as to comply with the conditions set out in this RFP Document and Concession Agreement. Evaluation of the Financial Proposal will be taken up only after the Technical Proposal is found to meet the requirements of this RFP. MCGM will open sealed Envelope containing `FINANCIAL PROPOSAL'.” 6.1 Evaluation Criteria. A Bid that is substantially responsive is one that conforms to the preceding requirements without material deviation or reservation. A major deviation or reservation is one : (i) which affects in any substantial way, the scope, quality, or performance of the Project, or (ii) which limits in any substantial way, inconsistent with the RFP Document, MCGM's rights or the Bidder's obligations under the Concession Agreement, or (iii) which would affect unfairly the AJN 00-OS-WP1766.09J 12 competitive position of other Bidders presenting substantially responsive Bids. The Technical proposal of the Bidders would be evaluated for adequacy of design and operations so as to comply with the conditions set out in this RFP Document and Concession Agreement. The Technical Proposal of the Bidders will be evaluated in accordance with the procedure as set out in Annexure 12.” 6. The MCGM was to pay to the successful bidder consideration in the form of Tipping Fee. Relevant clause pertaining to Tipping Fee reads as under : 8.1 Tipping Fee. MCGM shall pay to the Concessionaire a Tipping Fee for the quantity of MSW accepted by it at the Receipt Point, in accordance with the provisions of Schedule VII. (Note: This schedule will be filled as per the financial bid of the selected bidder. The indexation of the Tipping Fee shall also be in this Schedule – if it is part of the bid selected).” 7. As per the financial bid format, the bidders were AJN 00-OS-WP1766.09J 13 required to submit a table in relation to Tipping Fee. The Financial Bid had to provide for the total price for undertaking and implementing the project. 8. The MCGM awarded a Consultancy Assignment for Solid Waste Management to Infrastructure Leasing and Financial Services Limited (for short, “IL&FS”). One of the recommendations made in the report submitted by IL&FS is as follows : 5.2.3Environmental and Social Acceptability Filter. 5.2.3.2 Bioreactor Landfill. The main problems in achieving the potential benefits promised by bioreactor technology are that the nature of waste and existing landfill management practices both result in barriers to water contacting and moving uniformly through the waste. Injection and drainage systems are prone to biochemical fouling and the large volume of leachate required for flushing will ultimately require treatment and disposal. Moreover, as per the MSW Rules 2000, only inerts can be received in the landfills and thus the bioreactor landfills that receive fresh MSW are not permissible in India. AJN 00-OS-WP1766.09J 14 ... ... ... ... ... ... ... “5.6 Social Issues. Table 5.5: MSW Treatment Technologies with respect to Environmental and Social Acceptance. Sr. No. Technology Category Comments Category I – Environmentally and Socially Acceptable. 1. Composting Environmental Impacts are negligible. 2. Refuse Derive Fuel With adequate pollution control environmental impacts are manageable. 3. Anaerobic Digestion (Biomethanation) Environmental Impacts are negligible. 4. Plasma Arc Gasification Environmental Impacts are negligible. 5. Mass Burn / Incineration The combustion process cna be expected to cause emissions of gasphase air pollutants and particulate matter, acid gases, organic compounds and trace constituents (originating from the incoming waste or formed during combustion). With adequate pollution control measures the technology can be operated in an environmentally acceptable manner. Category 2 – Environmentally and Socially Suspect. AJN 00-OS-WP1766.09J 15 6. Bioreactor Landfill Environmental impacts are manageable with the provision of adequate buffer zone. However, limitation with respect to reception of organic matter, as per the MSW Rules 2000, entails separate treatment of organic fraction. As a result of application of Environmental and Social Acceptability Filter Bioreactor Landfill technology is eliminated from further considerations.” 9. The petitioners submitted their bid as per the prescribed proforma in September, 2007 in two separate envelopes containing Technical Bid and Financial Bid. MCGM vide its letter dated 10/4/2008 informed the petitioners that it had submitted Kanjur Project to respondent 6 i.e. the Ministry of Environment and Forests and respondent 6 had conveyed that Kanjur Project cannot be allowed in the CRZ notified area and, therefore, the overall site area available for development work stands reduced to approximately 75 Ha. All the bidders were requested to re-submit their Technical and Financial Bid in accordance with the changes in the area AJN 00-OS-WP1766.09J 16 consideration. By the said letter, the MCGM suggested following modifications to the original bid conditions. (i) Change in the technology by the Bidder is allowed as long as the technology is `proven' and is permissible by the MSW Rules, 2000; (ii) Bidder is free to add an additional Consortium Partner, provided change in the technology option is considered; (iii) Bidders to submit the Tipping Fee estimate without CERs. 10. According to the petitioners, they re-submitted the Technical and Financial bid in June, 2008 as required by the MCGM. In the new bid composting process remained as the primary technology. According to the petitioners, in addition, they introduced Refuse Derived Fuel so as to AJN 00-OS-WP1766.09J 17 ensure that land fillable rejects shall be ensured to a level of 20% even though the permissible level is 25% as per RFP. This would mean a reduction of 1.64 Million tones of waste to be land filled and consequent reduction in the area requirement in view of the shrinkage of the land on account of CRZ Rules. 11. Thereafter, meetings took place between petitioner 1 and the MCGM. According to the petitioners, they submitted all clarifications sought by the MCGM. The MCGM by its letter dated 22/12/2008 rejected the proposal of the petitioners on the ground that it had failed to score the qualifying marks i.e. 80 marks as mentioned in the RFP document. The petitioners were informed that the petitioners' offer was treated as Non-responsive and their financial packet will not be opened. 12. The petitioners replied to the said letter by their letter dated 6/2/2009. According to the petitioners, they expressed concern about methodology adopted for AJN 00-OS-WP1766.09J 18 evaluation, criteria of evaluation and comparison of proposals for a level playing field amongst bidders. The petitioners pointed out that the evaluation of the technical proposal for a project like this should have been entrusted to a group of knowledgeable and independent persons. The petitioners expressed concern about the fact that the proposals based on a process technology such as Bio- reactor Landfill proposed by some of the other bidders which is a non-compliant process as per MSW Rules is accepted by the MCGM. The petitioners submitted repeated reminders dated 17/2/2009, 20/4/2009 and 30/6/2009. However, the MCGM did not respond to them. 13. The petitioners filed the instant petition on 28/8/2009 inter alia for a direction to the MCGM to consider the petitioners' financial proposal along with the other technically qualified bidders. In their affidavit in reply, respondent 2 disclosed that the MCGM had issued LOI dated 31/7/2009 in their favour. Subsequently, the MCGM issued LOA dated 19/9/2009 in favour of AJN 00-OS-WP1766.09J 19 respondent 2. The petitioners therefore, amended the petition and prayed for quashing and setting aside of LOI dated 31/7/2009 and LOA dated 19/9/2009 issued in favour of respondent 2. 14. We have heard Mr. Chinoy, learned senior counsel appearing for the petitioners at great length. We have also gone through the written submissions tendered by him. 15. Counsel submitted that the MCGM has arbitrarily and mala fide entertained and accepted respondent 2’s bid and purported to award contract to them. Counsel submitted that the contract in question is a commercial contract with public utility. The MCGM has exhibited rank arbitrariness in awarding it to respondent 2. Relying on the judgment of the Supreme Court in West Bengal Electricity Board v. Patel Engineering Co. Ltd., AIR 2001 SC 682 counsel submitted that the MCGM and the bidders are bound by the terms of RFP which are required AJN 00-OS-WP1766.09J 20 to be complied with scrupulously. If the RFP requirements are given a go-bye, it will encourage discrimination, arbitrariness and favouritism. Counsel submitted that respondent 2’s bid was ex facie non-compliant with the RFP requirements because the terms of the RFP and concessionaire agreement required bidders to provide for and operate a waste processing unit and place the rejects from the processing unit in a separate sanitary landfill and this was to be done during the concession period of 25 years. Counsel pointed out that after 1/10/2010 the landfill was not to receive any fresh MSW, that not more than 20% by weight of MSW received for processing could be sent to the landfill rejects and the residue reaching the landfill was not to exceed 1000 TPD. After 1/10/2010 the mandatorily required sanitary landfill could only be used to receive process residues rejects. 16. Counsel submitted that the bid submitted by respondent 2 in June, 2008 did not provide for any separate sanitary landfill. It only provided for a AJN 00-OS-WP1766.09J 21 composting unit of 1000 TPD and a Bio-reactor Landfill of 250 TPD. Counsel pointed out that respondents 1 and 2 have asserted that the Bio-reactor Landfill was a processing technology and is not a sanitary landfill as per the MSW Rules. In this connection, counsel drew our attention to the relevant extracts from the affidavits of respondents 1 and 2. 17. Counsel submitted that despite the total absence/non provision of a sanitary landfill respondent 2's bid was entertained and considered by the Evaluation Committee. Despite the total absence of a separate sanitary landfill, respondent 2 was awarded 26.5 marks out of a total 32.5 marks for landfill. Though the mandatory requirement of sanitary landfill was not fulfilled, its financial bid was opened. On 13/1/2009, the Tender Committee recommended respondent 2’s bid as lowest responsive offer. 18. Counsel drew our attention to the affidavit of the AJN 00-OS-WP1766.09J 22 MCGM dated 22/09/2009 to the effect that as per assessment of the technology made by the MPCB, a separate sanitary landfill had to be set up and for the said reasons respondent 2 was asked to submit a revised financial bid by the MCGM. Counsel drew our attention to the Tender Committee’s Minutes dated 31/3/2009 where it is recorded that the contractor has agreed to provide a sanitary landfill for the processed rejects from the compost plant along with the Bio-reactor Landfill. Counsel submitted that even the revised bid submitted by respondent 2 provided for sanitary landfill which is adequate to receive and store only 250 tons per day the process rejects from the 1000 tons per day composting units. The revised bid even did not provide for a sanitary landfill to receive rejects from the Bio-reactor Landfill although both the MCGM and respondent 2 have reiterated that the inerts/rejects from the Bio-reactor Landfill would after mining be sent to the sanitary landfill. 19. Counsel pointed out that the contract provides that AJN 00-OS-WP1766.09J 23 by the 25th year, the MSW in the Bio-reactor Landfill would be 6500 TPD (with 1000 TPD being in the composting unit). Counsel submitted that even if only 5000 TPD is taken, the annual quantity would be 18,25,000/- tons and 20% would be 365,000 tons. Counsel submitted that respondent 2’s approved proposal makes no provision for a sanitary landfill to receive annually 365,500 tons of process inerts/rejects. 20. Counsel submitted that respondent 2's bid and the contract awarded by the MCGM to respondent 2 is ex- facie not in accordance with the RFP conditions and respondent 2's LOA both of which require the concessionaire to process the MSW, place the rejects in the sanitary landfill during the concession period of 25 years and hand back possession of the site to the MCGM on completion of the agreement period of 25 years. In this connection, counsel drew our attention to clause 2.2 of the RFP, Cl.6(d) of the Instructions to bidders, Cl.16 of the concessionaire agreement and the relevant portion of AJN 00-OS-WP1766.09J 24 the MCGM's LOA. 21. Counsel submitted that respondent 2's bid stipulates storage of waste received each year is a separate Bio- reactor for processing over a period of 6 to 7 years. Counsel submitted that accordingly MSW from the 19th to 25th year (for which tipping fees would have been paid by the MCGM to respondent 2) would be remaining under process in the Bio-reactors at the end of the 25th year and would require to be processed and removed annually for the next six years and inerts placed in a sanitary landfill. Counsel pointed out that according to the LOA from the 19th to the 25th year waste received for processing in the Bio-reactor Landfill is estimated at 5800 – 6500 TPD (with 1000 TPD being processed in the composting unit). Counsel submitted that even if 6000 TPD is taken during the 19th to the 25th year, 6000 TPD x 365 days x 6 years; 131,50,000 tons would still be remaining unprocessed and would require processing for the next six years i.e. from the 25th to the 31st year. Counsel submitted that the AJN 00-OS-WP1766.09J 25 explanation given by respondent 2 in its affidavit dated 23/11/2009 is absurd. It is stated that respondent 2 will operate the Bio-reactor process even after completion of the concession period limited to the process of bio-mining till all