Case: Elektron Lighting Systems Pvt Ltd And Anr  Vs. Shah Investments Financials Developments And Consultants Pvt Ltd And Ors Etc

One month was consumed in carrying out the said activities and in no way can it be termed as a hurried process, as held by the High Court. 19. Therefore, in our opinion, the High Court has erred in law in holding that the work order was illegally given to the appellants in respect of replacement of street lights by LED fittings and refurbishment of street light infrastructure on BOT basis. 20. Now, we come to that part of work order and consequential agreement by which advertising rights were also granted to the appellants on the basis of letter dated 19.8.2014 sent by the appellants to the Municipal Corporation. The High Court has taken serious note of the letter dated 19.08.2014 (a day before submission of technical bid) in which the appellants has made certain suggestions to the municipal corporation. Copy of said letter is reproduced below: - The Commissioner, Aurangabad Municipal Corporation Aurangabad, Maharashtra Sub: Additional Suggestions toward Tender-UNCONDITIONAL Respected Sir, We are participating in the tender for the LED Street Lighting due to be opened on 21st August, 2014, & there are some additional suggestions towards the same for your kind consideration. These suggestions are unconditional & are being made in favour of the improvement for the City of Aurangabad. It shall be completely at your kind discretion to accept or reject these suggestions. We can offer to implement the Online Internet based Control & Monitoring of the Street Lights from the Switching point. The suitable systems shall use GSM based modems to control the switching ON & OFF of the street lights, to be installed in each control Panel. Though the cost of such a system is quite high, however we are hereby offering to implement the solution at a reduced price of Rs. 36,000/- per Control Panel along with the recurring costs of the GSM communication & software to Online monitor it, provided the Exclusive Advertising rights for all the Street Lights Poles are extended to us. The stipulated number of Control Panels is about 1200, as per the Tender. In case it is decided to implement the New Technology Online control System, we may mutually plan to reduce the number of existing Control Panels to about 600, as the Switching Point system load shall get substantially reduced after implementation of LED Lights. Thus we may offset the cost of reduced Control Panels by using Online Technology without burden of AMC. In case due to logistic issues, the Street Lighting cannot be controlled by the proposed 600 Panels, then whatever additional nos. may be required, cost for the same shall be borne by AMC. As a reciprocal towards implementation of the Online Monitoring & Control, we seek the Exclusive Advertising Rights for all the Street Light Poles. 2. Additional Extended Guarantee Period of Two Years:- We can extend the Additional Guarantee Period from Two Years to Four Years, if required by AMC, on the same terms of Cost as per Part D, i.e. on payment of Rs.95/- per fixture per month. This offer has. Joint Venture Bidder (Electron Lighting System (P) Ltd. & Paragon Cable India) Sd/- Authorized Signatory 21. The above letter discloses that the suggestions were unconditional, leaving it open for the municipal corporation to accept or not to accept the same. Through the above quoted letter the appellants suggested that if exclusive advertising rights are given to the bidder on the street lights pole, the bidder would reduce price by Rs. 36,000/- per control panel. The stipulated number of control panel was 1,200/-, which could be reduced through mutual plan to 600/-. We are of the view that the above offer relating to advertising rights was uncalled for and severable, and not a part of the work for which tender was floated. Learned counsel for the appellants submitted that the appellants are ready to execute the work without taking benefit of said letter as per the work contract relating to replacement of street lights by LED on BOT basis. 22. It is submitted on behalf of the respondent No.3 that though revenue from advertising in city of Aurangabad from other sources, for the financial years 2011-2012, 2012-2013 and 2013-2014 was Rs. 81,31,091=00, 81,15,438=00 and 89,03,976=00 respectively, but the same from advertising on Street Light Poles was nil for each of the three years. As such, the municipal Corporation did not commit any illegality in negotiating the matter with the appellants while awarding the work order to it. 23. In our opinion, the matter regarding advertising rights was separate, and the municipal corporation which is a statutory body and instrumentality of the State should have acted fairly by making it open for all eligible to submit their offers. As such, we think that the respondent No.3 was not justified in giving the advertisement rights to the appellants without inviting tender for it. To that extent, in our opinion, respondent No.3 has not acted fairly. As such, the manner in which the advertising rights are given to the appellants with the work order cannot be said to be fair and contract to that extent was liable to be quashed without interfering with rest of the work order. 24. Explaining the doctrine of severability contained in Section 57 of Indian Contract Act, 1872, in B.O.I. Finance Ltd., v. Custodian and others (1997) 10 SCC 488), a three Judge Bench of this Court has held that question of severance arises only in the case of a composite agreement consisting of reciprocal promises. In Shin Satellite Public Co. Ltd. V. Jain Studios Ltd. (2006) 2 SCC 628 ), this Court has observed that the proper test for deciding validity or otherwise of an order or agreement is substqantial severability and not textual divisibility. It was further held by this Court that it is the duty of the Court to sever and separate trivial and technical parts by retaining the main or substantial part and by giving effect to the latter if it is legal, lawful and otherwise enforceable.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]17. It is pertinent to mention here that the tender was invited incorporating the National Lightening Code to ensure the safety of pedestrians and motorists. The tender also specified the Lux levels to be achieved and to be maintained for eight years. The power consumption required to be guaranteed and the contractor was made liable to bear the difference between the excess of actual energy bill over the quoted energy bill. The contractor was made responsible for comprehensive maintenance for all installed equipment over BOT period including any breakage, theft, loss on any account whatsoever. It is worthwhile to mention here that in the pre-bid meeting, representatives of eight bidders stated to have participated and clarified various points regarding the tender notice18. In our opinion, there appears to be no hurry on the part of the municipal corporation, in awarding contract as the tender had been issued on 01.08.2014 and the same was finalized only on 03.09.2014, i.e. after a period of more than one month. Pre-bid meetings were held and the last date for submission of tender was extended twice from 20.08.2014 to 25.08.2014 and thereafter to 28.08.2014, which by itself shows that the process was not carried out in haste. Exhaustive pre-bid meeting was held on 12.08.2014, which was stated to have been attended by eight prospective bidders and the minutes of the pre-bid meetings running into several pages changed many terms in favour of the respondent Corporation to ensure even stricter contract execution responsibilities and thus became part of the tender through issuance of two corrigenda. The pre-bid meeting was held to understand the requirements of the contract viz. the opinion of the prospective bidders, to give sufficient time for bid preparation, evaluation of bids and award of contract. One month was consumed in carrying out the said activities and in no way can it be termed as a hurried process, as held by the High Court19. Therefore, in our opinion, the High Court has erred in law in holding that the work order was illegally given to the appellants in respect of replacement of street lights by LED fittings and refurbishment of street light infrastructure on BOT basis21. The above letter discloses that the suggestions were unconditional, leaving it open for the municipal corporation to accept or not to accept the same. Through the above quoted letter the appellants suggested that if exclusive advertising rights are given to the bidder on the street lights pole, the bidder would reduce price by Rs. 36,000/- per control panel. The stipulated number of control panel was 1,200/-, which could be reduced through mutual plan to 600/-. We are of the view that the above offer relating to advertising rights was uncalled for and severable, and not a part of the work for which tender was floated. Learned counsel for the appellants submitted that the appellants are ready to execute the work without taking benefit of said letter as per the work contract relating to replacement of street lights by LED on BOT basis