IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE ACTING THE HONOURABLE JUSTICE MR.C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN MONDAY, THE 24TH OCTOBER 2011 / 2ND KARTHIKA 1933 WA.No. 915 of 2011() -------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.2628/2011 Dated 23/05/2011 .................... APPELLANT/PETITIONER ----------------------------------- M/S.LOGIN INFOSYS, VISAKHAPATANAM, REP. BY ITS MANAGING PARTNER, K.V.R.K.RAJU, RESIDING AT MIG-143, SFS-11, SAPTAGIRI COLONY, OPPOSITE Y.S.R.STADIUM P.M.PALEM, VISAKAPATANAM. BY ADVS. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH RESPONDENT(S/RESPONDENTS ----------------------------------------------- 1. CHAIRMAN CPSU, NPR-PROJECT, M/S.BHARAT ELECTRONICS LIMITED, CORPORATE OFFICE, NAGAVARA RING ROAD, BANGALORE, KARNATAKA, INDIA-560 045. 2. CHIEF MANAGER MATERIALS, M/S.ITI LTD., KANJIKODE WEST, PALAKKAD, KERALA, INDIA-678 623. 3. PROJECT DIRECTOR, NPR-PROJECT, M/S.ELECTRONICS CORPORATION OF INDIA LIMITED, PO ECIL, HYDERABAD, ANDHRA PRADESH, INDIA-500062. 4. DY.GENERAL MANAGER (SMART CARDS), (NPR-PROJECT DIVISION), M/S.BHARAT ELECTRONICS LIMITED, CORPORATE OFFICE, NAGAVARA RING ROAD, BANGALORE, KARNATAKA, INDIA-560 045. WA.No. 915 of 2011() ----------------------------- 5. THE REGISTRAR GENERAL OF INDIA, MINISTRY OF HOME AFFAIRS, GOVERNMENT OF INDIA, NEW DELHI 6. THE COMPTROLLER AND AUDITOR GENERAL OF INDIA, NEW DELHI - 110 124. 7. UNION OF INDIA, REP. BY THE SECRETARY TO GOVERNMENT OF INDIA, HOME AFFAIRS, CENTRAL SECRETARIAT, NEW DELHI 110 001 . R1 & R4 BY ADVS. SRI.M.PATHROSE MATTHAI, SENIOR ADVOCATE SRI.SAJI VARGHESE SMT.MARIAM MATHAI R2 & 3 BY ADV. SRI.N.N.SUGUNAPALAN, SENIOR ADVOCATE SRI.S.SUJIN R5 TO 7 BY ADV. SRI.P.PARAMESWARAN NAIR,ASG OF INDIA THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 12.08.2011 THE COURT ON 24.10.2011 DELIVERED THE FOLLOWING: VK WA.No. 915 of 2011() -------------------------------- APPENDIX --------------- PETITIONER'S EXHIBITS : NIL ----------------------------------- RESPONDENT'S EXHIBITS -------------------------------------- EXT.R2(A) (1). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S. VIRGO SOFTECH LTD. EXT.R2(A)(2). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO EMDEE DIGITRONICS PVT. LTD. EXT.R2(A) (3). COPY OF THE LETTER OF INTENT DATED 06.04.2011 ISSUED TO M/S.KRISHNA INFOTECH EXT.R2(A) (4). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S. TECH SMAR INDIA PVT. LTD. EXT.R2(A) (5). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.SWISS TECH INDIA PVT. LTD. EXT.R2(A)(6). COPY OF THE LETTER OF INTENT DATED 06.04.2011 ISSUED TO M/S. SWISS TECH INDIA PVT. LTD. EXT.R2(A) (7). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S. MULTIWAVE INNOVATION. EXT.R2(A) (8). COPY OF THE LETTER OF INTENT DATED 06.04.2011 ISSUED TO M/S.SARK SYSTEMS INDIA LTD. EXT.R2(A) (9). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.SWATHY SMART CARDS HI-TECH PVT LTD. EXT.R2(A) (10). COPY OF THE LETTER OF INTENT DATED 06.04.2011 ISSUED TO M/S.SWATHY SMART CARDS HI-TECH PVT. LTD. EXT.R2(A) (11). COPY OF THE LETTER OF INTENT DATED 29.03.2011 ISSUED TO M/S.SREEVEN INFOCOM LTD. EXT.R2(A) (12). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.COMPUTER LAB WA.No. 915 of 2011() ----------------------------- EXT.R2(A) (13). COPY OF THE LETTER OF INTENT DATED 06.04..2011 ISSUED TO M/S.COMPUTER LAB EXT.R2(A) (14). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.INDIA COMPUTER TECHNOLOGY EXT.R2(A) (15). COPY OF THE LETTER OF INTENT DATED 06.04.2011 ISSUED TO M/S.INDIA COMPUTER TECHNOLOGY EXT.R2(A) (16). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.TERA SOFTWARE LIMITED. EXT.R2(A) (17). COPY OF THE LETTER OF INTENT DATED 06.04.2011 ISSUED TO M/S.TERA SOFTWARE LIMITED. EXT.R2(A) (18). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.MADRAS SECURITY PRINTERS PVT. LTD. EXT.R2(A) (19). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.EAGLE SOFTWARE INVIDA PVT. LTD. EXT.R2(A) (20). COPY OF THE LETTER OF INTENT DATED 28.03.2011 ISSUED TO M/S.WEBEL TECHNOLOGY LIMITED EXT.R2(B) (1). COPY OF THE LETTER DATED 01.07.2011 SEND BY THE RESPONDENT TO LOGIN INFOSYS EXT.R2(B(2). COPY OF THE E-MAIL DATED 01.07.2011 SEND BY THE LOGIN INFOSYS TO RESPONDENT. EXT.R2(B)(3). COPY F THE LETTER DATED 12.07.2011 SEND BY THE RESPONDENT TO LOGIN INFOSYS. / TRUE COPY / P.A. TO JUDGE VK C.N.RAMACHANDRAN NAIR, Ag. C.J. & P.S.GOPINATHAN, J. .................................................................... Writ Appeal No.915 of 2011 .................................................................... Dated this the 24th day of October, 2011. JUDGMENT Ramachandran Nair, Ag. C.J. The appellant, a registered partnership, participated in a tender invited by Consortium of Public Sector Undertakings (CPSU) for the award of contract for setting up of Data Entry Centres, Bulk Data Entry, Biometric Data Collecting and printing the Local Register of Usual Residents(LRUR). The collection and compilation of data as above through appointment of agencies on competitive basis is to prepare National Population Register (NPR) and bids were invited for the work covering nine coastal States, national capital of Delhi and Union Territory of Pondicherry. The tenders were evaluated at three stages, one for eligibility, second commercial bid and the third price bid. Even though appellant came out successful in the first two stages, appellant could not succeed the last stage because there were price bids lower than that submitted by the appellant. The appellant challenged the process of evaluation of tenders and the norms adopted in 2 eliminating unduly low tenders by filing writ petition under Article 226 of the Constitution before the Single Judge. The learned Single Judge after hearing the appellant and respondents and after going through the records found no merit in appellant's contentions and W.P.(C) is accordingly dismissed. It is against this judgment of the learned Single Judge the appellant has come up in appeal before us raising the very same contentions and in addition a few more grounds. We have heard Adv. Sri.A.K.Jayasankar Nambiar and also counsel appearing for respondents. 2. The first contention raised by counsel for the appellant is against elimination of two of the tenders on the ground that price offered was unduly low. When this contention was raised before the learned Single Judge, the same was turned down on the ground that appellant not being disqualified on account of quoting unduly low rates cannot have any grievance. The further finding of the learned Single Judge is that two of the contractors whose bids were rejected as unduly low had not challenged the basis adopted or decision taken against them by the awarding committee namely, CPSUs. Before us counsel 3 for the appellant raised the very same contention. We notice that the provision authorising the awarders to eliminate unduly low bid is contained in para 15.15 of the tender conditions which is as follows: “The bidders shall submit the methodology of arriving at their quota as per the Annexure-C2. If the bid quoted is unduly low, CPSUs have the right to reject the bid. CPSUs' decision on this will be final. The price bid will be summarily rejected if price bid (Annexure-C1) is not accompanied with Annexure-C2.) There is no dispute that the tender conditions did not fix the “base line price” with reference to which unduly low bidders have to be eliminated. Admittedly two tenders were disqualified on account of quoting of unduly low price below the Base Line Price fixed by the CPSUs. However, the contention, though not highlighted before the Single Judge and now raised before us is that the Base Line Price was fixed without including service tax component. According to the appellant,in terms of the tender conditions, all tenderers quoted rates inclusive of service tax and so much so, the Base Line Price also should have been fixed by including service tax component. In other words, the appellant's case is that if service tax was included in the Base Line Price fixed, the Base Line Price would have gone up from 4 what is fixed by the CPSUs. and in that event some more tenderers below the appellant in price would have been disqualified on account of quoting unduly low price. The appellant's prayer, therefore, is for direction to load service tax component to the Base Line Price fixed by the CPSUs. and based on the revised Base Line Price so fixed, to disqualify more tenderes which will lead to appellant's bid being the lowest, making them eligible for award of contract. Counsel appearing for the respondents opposed the claim by contending that in so far as fixation of Base Line Price for eliminating unduly low price bids is concerned, appellant cannot have a grievance because appellant is not disqualified on account of quoting unduly low price. So far as appellant's contention that service tax also should be loaded to the Base Line Price fixed by the awarding committee is concerned, the contention raised by the respondents is the same principle is uniformly applied to the contractors and appellant alone cannot have a grievance. 3. After hearing both sides, we do not find any merit in appellant's claim because the very object of calling for competitive bid is to award contract to the lowest bidder. The purpose of fixing a Base 5 Line Price was only to find out whether anybody's quoting is too low and unavoidable and to eliminate such contractors so that the work is not abandoned half way through on account of loss. The costing and profit adopted for the purpose of examining whether the quotes are realistic is not a matter which can be permitted to be disputed in court. This is because the only purpose of estimating the cost and reasonable margin is to find out whether the tenderer will be able to execute the work at the price quoted by him. However, the court cannot forget the fact that the whole purpose is to award the contract to the lowest tenderer. The margin expected by tenderers may also be varying and the lowest bidder probably provides or expects lowest margin from the work. Since the appellant has passed the two stages of evaluation and his tender was rejected on account of the lower competitive bid offered by other contractors, appellant cannot challenge the evaluation done by the respondents for assessing as to who are the tenderers who have quoted rates with which contract cannot be expected to be completed. We notice that the learned Single Judge has considered in detail the method adopted by the respondents for working out unduly low price 6 and we do not find any ground to deviate from the findings in the judgment. We, therefore, do not find any merit in the Writ Appeal and the same is accordingly dismissed. Sd/- C.N.RAMACHANDRAN NAIR Acting Chief Justice Sd/- P.S.GOPINATHAN Judge True copy P.S. to Judge pms