IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE THIRTY FIRST DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MS JUSTICE G.ROHINI WRIT PETITION NO : 14896 of 2008 Between: Shenyang Furukawa Cable Co. Ltd., a Public Limited Company, Registered Under Laws of Peoples Republic of China, having Registered Office at Hujiadian, Dashubu Village, Sujiatun District, Shenyang, China-110 115, Rep. by its Authorized Signatory Mr. Vijay Kumar Chaudhry ..... PETITIONER AND 1 Transmission Corporation of Andha Pradesh Ltd., Vidyut Soudha, Khairtabad, Hyderabad, Rep. by its CMD 2 The Chief Engineer (Construction) A.P. Transco, Vidyut Soudha, Khairatabad, Hyderabad. 3 BGR Energy Systems Limited, in Joint Venture with Delexi Group Import Export Company, China and Demirer Kablo of Turkey, 443 Anna Salaia, Teynampet, Chennai-600 018 4 EMCO Limited, in Jodint Venture with New North East (Shenyang) High Voltage Switch Gear Company Ltd., China and BAOFANG Cable Company Ltd., China Pdlot No. F-5, Road NO. 28, Wagle Industrial Estate, Thane-400 604 5 Indu Projects Limited in Joint Venture with Fujikura Shanghai Cables, China and Pinggao Group, China 1009, Indu Fortune Fields, 13th Phase, KPHB Colony, Hyderabad 500 072 .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ order or direction particularly one in the nature of writ of Mandamus declaring the action of the respondent Nos. 1 & 2 in opening the price bids of the respondent Nos. 3 to 5 pursuant to the tender Notice No. APT 76/2007 as illegal, arbitrary and consequently direct the respondents to evaluate the tenders strictly in accordance with the eligibility conditions prescribed under Section 6 of the Tender Notification. Counsel for the Petitioner : Sri SRINIVAS DAMMALAPATI Counsel for the Respondents : Sri O.MANOHER REDDY Sri I. Naveen Kumar Sri Nivarthi M.S. The Court made the following : * THE HON’BLE Ms. JUSTICE G. ROHINI + WRIT PETITION No.14896 of 2008 % 31/12/2008 # Shenyang Furukawa Cable Co. Ltd., a Public Limited Company registered under Laws of Peoples Public of China, having Registered Office at Hujiadin, Dashubu Village, Sujiatun District, Shenyang, China-11- 115, rep. by its Authorized Signatory Mr. Vijay Kumar Chaudhry. … Petitioner Vs. $ 1. Transmission Corporation of Andhra Pradesh Ltd., Vidyut Soudha, Khairatabad, Hyderabad, rep. by Its CMD., and 4 others. .. Respondents < Gist > Head Note: ! Counsel for the petitioner : Sri Dammalapati Srinivas ^ Counsel for the respondents : Sri O. Manohar Reddy Sri I. Naveen Kumar Sri Nivarthi M.S. Cases referred : [1] AIR 1990 SUPREME COURT 958 2 AIR 1991 SUPREME COURT 1579 THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.14896 of 2008 ORDER : This writ petition is filed seeking a declaration that the action of the respondents 1 and 2 – Transmission Corporation of A.P. Limited in opening the price bids of the respondents 3 to 5 herein pursuant to the Tender Notice No.APT/76/2007 is arbitrary and illegal and consequently to direct the respondents 1 and 2 to evaluate the tenders strictly in accordance with the eligibility conditions prescribed under the Tender Notification. The facts, in brief are as under : The Transmission Corporation of A.P. Limited (hereinafter referred to as ‘AP TRANSCO’) issued Tender Notice No.APT/76/2007 inviting tenders for supply, erection, testing and commissioning of 220 KV/132 KV Gas Insulated Sub-Stations at Erragadda (Lot-1) and Chilakalaguda (Lot-2) along with supply, laying, testing and commissioning of 220 KV XLPE Underground Cables with associated accessories. As per the said tender notice the bids are to be submitted in two parts namely Techno Commercial Bid and Price Bid. The bidding by consortium with maximum three members was also allowed. The petitioner, which is a public limited company registered under the laws of Peoples of Republic of China, joined as a Joint Venture Partner with M/s. Vijai Electricals Ltd., and Xian Shiky High Voltage Electric Company Ltd., Xian, China and participated in the bidding process for both Lot-1 and Lot-2. Five other bidders, including the respondents 3 to 5 herein, also submitted their bids. The Technical Bids were opened by the AP TRANSCO on 25.03.2008 and by letter dated 27.05.2008 the petitioner was informed that its Technical Bid was qualified for both Lots pending verification of documentary proofs submitted by it. The petitioner was also requested to attend the price bid opening on 30.05.2008. On 30.05.2008 the price bids of four bidders i.e., the petitioner and the respondents 3 to 5 herein were opened in which the price quoted by the 3rd respondent herein was found to be lowest in respect of both Lot-1 and Lot-2. The prices quoted by the respondents 4 and 5 herein were the second and third lowest respectively, whereas the petitioner’s price was the fourth lowest. On 04.06.2008 M/s. Vijai Electricals Limited which is a joint venture partner of the writ petitioner addressed a letter to the AP TRANSCO alleging that the three other bidders i.e., the respondents 3 to 5 herein did not meet the prescribed technical specifications and therefore their price bids ought not to have been opened. However, the AP TRANSCO failed to consider the said objection and was proceeding further to finalize the tenders. Hence, the present writ petition contending that the bids of the respondents 3 to 5 should have been treated as non-responsive and their price bids ought not to have been opened and evaluated since they did not meet the essential qualification criteria specified in Section 6 of the Volume 1 of Bidding document. It is also contended by the petitioner that the conditions of Section 6 of Volume 1 relating to qualification requirements, which are prescribed in accordance with the purchase manual of AP TRANSCO being the essential conditions the respondents 1 and 2 are not empowered to relax the same in favour of the respondents 3 to 5. In the counter-affidavit filed on behalf of the respondents 1 and 2, the allegation that the price bids of the respondents 3 to 5 were opened by the AP TRANSCO even though they failed to meet the essential qualification criteria prescribed under Section 6 of Volume 1 has been denied. With regard to the alleged relaxation of conditions in favour of the respondents 3 to 5 it is contended that except the deviation in case of cable accessories manufacture, the technical evaluation of all the bids was in conformity with the requirements of the tender specification and IEC. It is explained that the deviation in case of cable accessories manufacture was allowed in view of the fact that the cost of accessories was a minor portion of the total cost of cable system (about 20% of the total cable system and about 12% of the total lot cost) and moreover the respondents 3 to 5 had submitted type test reports and satisfactory performance of the total cable system along with the accessories they were offering. A warranty for 60 months from the date of commissioning during which period the bidder is totally responsible for cable system has also been given. It is further explained that as there are few manufacturers who make both XLPE Cables and Accessories, the Technical Committee thought it fit to consider the bids of the bidders whose cable manufacturers are not manufacturers of cable accessories. All other requirements of the tender specifications were duly followed ensuring that the project is executed at a reasonable cost. It is also claimed that the deviation had increased the competition in the bid and the same is beneficial to the AP TRANSCO as competitive rates were obtained. It is further contended that similar relaxation from the qualifying requirements was given to the petitioner’s consortium by accepting the type test reports submitted by M/s. Vijai Electricals Limited from Wuhan High Voltage Research Institute (National Centre for High Voltage Measurement and Quality Inspection and Testing Centre of Electric Equipment, Ministry of Electric Power, China) though it was not one of the International Test Laboratories mentioned in the technical specification. As a matter of fact, the said violation attracted disqualification of the petitioner’s bid. However, in order to ensure better competition the Technical Committee considered the petitioner’s bid subject to the condition that they will give an undertaking to conduct type tests in the specified labs as per the tender conditions at their cost without affecting the delivery schedule if they are successful bidders. By their letter dated 2.5.2008 M/s. Vijai Electricals Limited agreed for the same. Thus it is contended by the respondents 1 and 2 that the procedure followed by them in opening the price bids of the respondents 3 to 5 did not suffer from any infirmity. A separate counter-affidavit has been filed by the respondent No.3, which was declared as the successful bidder, contending that its technical bids were processed by the AP TRANSCO as per the established practices and procedures and that the allegations made by the petitioner were not correct. It is also contended that though the technical bids were opened on 25.03.2008, the petitioner failed to raise any objection and kept quiet till the price bids were opened and therefore the present writ petition filed at a belated stage was not bona fide. So far as merits it is pleaded that the difference in the total price offered by the petitioner and the 3rd respondent was more than Rs.80 crores and more over the 3rd respondent and its consortium partners had successfully executed similar projects at different places and therefore the AP TRANSCO had rightly declared it as the successful bidder. It is also claimed that the 3rd respondent’s Consortium is both a manufacturer of EHV cables and accessories and thus satisfied Condition No.1 of Section 6. The allegation that the essential tender conditions were relaxed in favour of the respondents 3 to 5 has been denied and it is contended that as per the amended clause the pre-qualification test is not necessary and the Accelerated Ageing System Test has to be demonstrated before commencing the delivery of cables without affecting the over all schedule of the project. The respondent No.5 also filed a counter-affidavit contending that the petitioner cannot be allowed to raise an objection on the ground of alleged deviations at a belated stage and on that ground alone the writ petition is liable to be dismissed in limini. It is also pleaded that the 5th respondent had complied with all the qualification requirements, performance parameters and other criteria as per the tender specifications including the submission of Pre-qualification Test Reports as per IEC-62067-2001. Despite notice, respondent No.4 did not choose to appear. I have heard the learned counsel for both the parties and perused the material on record. As could be seen, the main contention urged on behalf of the petitioner is that the bids of the respondents 3 to 5 being non- responsive to the terms and conditions of the Bidding Document their technical bids are liable to be rejected and the AP TRANSCO ought not to have opened their price bids. According to the petitioner, the respondents 3 to 5 failed to meet the essential qualification requirements firstly for the reason that the members of the respondents 3 to 5 Consortiums are manufacturers of either cables or accessories but not manufacturers of both EHV cables and accessories as required under Clause 2.0 of Section 6 of Volume 1. Secondly, the respondents 3 to 5 failed to furnish the Type Test Reports (Pre-qualification Test Reports) on Complete Cable System as required under Clause 6.2.1 (C) of Volume-2C. So far as the first allegation is concerned, Clause 2.0 of Section 6 of Volume 1 of the Bidding Document which runs as under is necessary to be noticed: Clause 2.0 The bidding is also open to consortium (Maximum three Members) of which one shall be a XLPE cable and accessories manufacturer and one member shall be GIS manufacturer and the other can be a EPC contractor who shall meet the abovementioned qualifying requirements individually or together subject to the following conditions. … …. … …. … … … … … …. … … … … It is alleged by the petitioner that none of the members of the respondents 3 to 5, who submitted their bids as joint venture partners, is the manufacturer of both cables and accessories as mandated under Clause 2.0. The said allegation could not be controverted by the respondents 3 and 5 in their counter-affidavits. However it is contended on their behalf that the interpretation sought to be given by the petitioner that one of the members of the Consortium shall be the manufacturer of both cables and accessories is incorrect. According to the respondents 3 and 5, even if the members are the manufacturers of either cables or accessories it is sufficient compliance with Clause 2.0. A plain reading of Clause 2.0 of Section 6 itself makes clear that while allowing bidding by consortium with maximum three members, it is made mandatory that out of three members one shall be a manufacturer of both XLPE Cables and Accessories. It is also relevant to note that Clause-1 of Section 6 of Volume-1 provides that the bidder should be a manufacturer of EHV cables and accessories. It goes without saying that the same condition applies even where the bid is made by a Consortium and therefore it is expressly provided in Clause 2.0 that one of the partners of the Consortium shall be the manufacturer of cables and accessories. Hence, the contention of the respondents 3 to 5 cannot be accepted. Even in the counter-affidavit filed on behalf of the AP TRANSCO, the requirement of Clause 2.0 as contended by the petitioner has not been disputed. As a matter of fact, the Chief Engineer (Constructions) in paragraph-8 of the counter-affidavit filed on behalf of the AP TRANSCO conceded that there was a deviation so far as the compliance with the requirement that one of the members shall be a cable and accessories manufacturer. The relevant portion from the counter-affidavit wherein the deviation was admitted and an attempt was made to justify the said deviation may be extracted hereunder: “I submit that the technical evaluation is inline with requirements of the subject tender specification and I E C except for deviation in case of cable accessories manufacture. However the same is considered as: (1) The cost of accessories is a minor portion of the total cost of cable system (about 20% of the total cable system and about 12% of the total lot cost) (2) The three bidders have submitted type test reports and satisfactory performance of the cable system of the total cable system along with the accessories they were offering and also the long term performance reports, (3) The Total cable system is warranted for 60 months from the date of commissioning during which period the bidder is totally responsible for cable system, and (4) It increases the competition in the bid, which is beneficial to APTRANSCO as competitive rates are obtained.” Thus it is clear that whenever the bidding is made by a Consortium, it is obligatory that one of its members shall be the manufacturer of both cables and accessories and that the respondents 3 to 5 Consortiums failed to satisfy the said requirement. The other allegation made by the petitioner is that the respondents 3 to 5 failed to furnish the pre-qualification test reports on Complete Cable System as required under Clause 6.2.1 (C) of Technical Specifications in Volume-2C. The respondents 1 and 2 while denying the petitioner’s allegation contended that as per the amended Tender Specifications the requirement of furnishing pre-qualification test reports is deleted and as such it is sufficient if type test reports are furnished. Similar stand has been taken by the respondents 3 and 5 and it is claimed that they had complied with all the qualification requirements including submission of pre-qualification test reports as per IEC-62067. Clause 6.2 of Volume-2C as it stood prior to amendment as well as after amendment may be extracted hereunder: Prior to amendment After Amendment 6.2 : Type Tests Reports : The bidder shall furnish two sets of type test reports and pre- qualification test reports for 220 KV or Higher Voltage XLPE cables and accessories. The Type tests must have been conducted on the cables and accessories as per IEC- 62067 from the reputed international test laboratories not earlier than 2001. The offers received without type tests reports o r pre-qualification test reports shall be treated as non-responsive. 6.2.1:(A) Type Tests on Cables : … … … … … … … … …. … … … … … … … … …. … … … … … … … … …. (B) Type Tests on Accessories: … … … … … … … … …. … … … … … … … … …. … … … … … … … … …. (C)Type Tests on Cable System: (a) Examination of the cable system with cable and accessories ( b ) Pre-qualification tests on complete cable system as per IEC 62067. 6.2 The Bidder shall furnish two sets of type test reports for 220 KV or higher voltage XLPE cables and accessories. The type tests must have been conducted on the cables and accessories as per IEC 62067 from the reputed international test laboratories as mentioned in the technical specification not earlier than 2002. The offers received without type test reports shall be treated as non- responsive. However, if a bidder submits the test reports of period earlier than 2002 the bid will be considered for evaluation subject to condition that bidder will conduct and submit the type test reports as per latest IEC standards at his cost before commencing the deliveries without affecting the delivery schedules as specified, if he is a successful bidder. - Not Amended – - Not Amended – - Not Amended - It is true that as per the amendments made to the Tender Specifications in the Pre-Bid Meeting held on 31.10.2007 the words “and pre-qualification test reports” were deleted in Clause.6.2 of Volume-2C of the Bidding Document. Thus the bidders are required to furnish only the type test reports for XLPE cables and accessories of period not earlier than 2002. In case the test reports of period earlier than 2002 are furnished, the bidder has to conduct and submit the type test reports as per latest IEC Standards before commencing the deliveries without affecting the specified delivery schedules. However, it is to be noted that Clause 6.2.1 (C) which provides for type tests on cable system remained unamended and sub-clause (b) of Clause 6.2.1. (C) mandates pre-qualification tests on complete cable system as per IEC-62067. Thus, even after the amendment dated 31.10.2007 so far as complete cable system is concerned, furnishing of pre-qualification tests reports are mandatory unlike XLPE cables and accessories. The fact that the respondent Nos.3 & 5 failed to furnish such pre-qualification tests reports along with their bids could not be disputed by the AP TRANSCO in their counter-affidavit, however it is explained as under in paragraph-9 : “In reply to the averments made in para-8 of the affidavit, I submit that the PQ test is not prescribed as mandatory in the tender specification and not mandatory as per the note mentioned under Clause 13.2 of IEC-62067 which states “The prequalification test may be omitted if an alternative long term test has been carried out and satisfactory service experience can be demonstrated”. As no alternative long term test has been prescribed by IEC the certificate of satisfactory operational performance of the 40% of the total tendered cable system for at least 2 years is considered as long term test and hence the pre-qualification test is not insisted in the present specification. I submit that M/s. Indu Consortium and M/s. EMCO Consortium have submitted P.Q. test reports as per IEC_62067 –2001 and M/s. BGR Energy Systems has informed that their cable is under testing and the reports will be submitted before Dec-08.” As could be seen, the pre-qualification tests are mandatory even according to the respondents, however the same can be omitted if an alternative long term test has been carried out and satisfactory service experience is demonstrated. Admittedly no such alternative long term test was carried out in lieu of pre-qualification test prescribed under Clause 6.2.1 (C) (b). In the counter-affidavit filed on behalf of the respondents 1 & 2, it is stated that the respondents 3 and 5 had only submitted the certificate of satisfactory operational performance of the 40% of the total tendered cable system for two years and the same is sufficient. The learned counsel for the petitioner vehemently contended that satisfactory service of cable system for two years cannot satisfy the requirement of the accelerated ageing test i.e., the pre- qualification test on complete cable system as per IEC-62067. Though this Court lacks technical expertise to express any opinion as to the correctness of the rival contentions, the fact remains that even as per the note appended to Clause 13.2 of IEC-62067 the pre-qualification test as required under Clause 6.2.1 (C) (b) can be omitted only where an alternative long term test has been carried out apart from demonstrating satisfactory service experience. Admittedly no such alternative long term test has been carried out in the present case. So far as demonstration of satisfactory service experience is concerned, even according to the AP TRANSCO the 3rd respondent’s cable was under testing and the reports were to be submitted before December, 2008 which shows that the said test reports were not submitted along with the 3rd respondent’s bid. Hence, the second allegation made by the petitioner is also well founded. In the circumstances, the question that arises for consideration is whether the action of the AP TRANSCO in opening the price bids of the respondents 3 to 5 even though they did not satisfy the eligibility criteria is sustainable in law. Whereas the learned counsel for the petitioner vehemently contended that the non-compliance with the qualification requirements under Clause 2.0 of Section 6 of Volume 1 and Clause 6.2.1 (C) (b) of Volume 2C had rendered the bids of the respondents 3 to 5 non- responsive and consequently their price bids cannot be opened, the learned counsel for the respondents contended that the failure of the respondents 3 to 5 to satisfy the said conditions did not render their bids non-responsive and that it is always open to AP TRANSCO to waive such conditions since they are not essential conditions. In support of the said contention, the respondents relied upon Clause 24.6 of Section 2 of Volume 1 of the Bidding Document under which the purchaser (AP TRANSCO) reserved the right to waive any minor informality or irregularity in a Bid which does not constitute a material deviation. It is contended on behalf of the respondents that Clause 2.0 of Section 6 of Volume 1 and Clause 6.2.1 (C) (b) of Volume 2C are not essential conditions of eligibility and therefore the relaxation of the same does not constitute a material deviation. Thus, it is contended that the relaxation granted in favour of the respondents 3 to 5 did not suffer from any infirmity and the AP TRANSCO had rightly opened the price bids of the respondents 3 to 5. For proper appreciation of the above contentions, it is necessary to refer to relevant Clauses as under : Clause 13. Documents establishing Bidder’s Eligibility and Qualifications 13.1 Pursuant to Clause 9 above, the Bidder shall furnish, as part of its Bid, documents establishing the Bidder’s qualifications to perform the contract. 13.2 The documentary evidence of the Bidder’s qualification to perform the contract shall establish to the purchaser’s satisfaction: (a) that the Bidder has the financial, technical and production capability necessary to perform the Contract meeting the criteria outlined in the qualification requirements at Section 6 and Bidders should furnish information on their past performance as per proforma in Section 7