Case: Tamilnadu Generation And Distribution Corporation Ltd. (Tangedco), Rep. By Its Chairman And Managing Vs. Csepdi - Trishe Consortium, Rep. By Its Managing Director

2. The appellant, Tamil Nadu Generation and Distribution Corporation Ltd (for short `the Corporation) vide notification dated 06.05.2013 floated a tender for setting up of two units of 660 MW Ennore SEZ Supercricitcal Thermal Power Project at Ash Dyke of NCTPS, Chennai wherein four bidders including the respondents herein participated. However, two bidders out of four were disqualified as they failed to meet the Bid Qualification Requirements (BQR) as a result of which bids of Consortium of Trishe Energy Infrastructure Services Private Limited (CSEPDI) and Bharat Heavy Electrical Ltd (BHEL) were taken up for consideration. Prior to the opening of the price bid, CSEPDI and BHEL submitted supplementary price bids on 05.02.2014. Price bids were opened on 05.02.2014 by the appellant in the presence of the representatives of the respondents, the qualified bidders.3. The uncurtaining of facts would depict that the 1strespondent sent series of representations dated 16.06.2014, 17.06.2014, 01.07.2014 and 08.07.2014 to the appellant highlighting various aspects of the bid and the relevance of para (viii) of Clause 29.0 of the "Instructions to Bidders" (ITB) which also deals with the rejection of bids of the tenderer whose past performance/vendor rating is not satisfactory. Since the appellant paid no heed to the request made by the respondent No.1, it filed W.P. No. 19247 of 2014 seeking issue of a writ of mandamus to direct the appellant to consider the representations and comply with Tamil Nadu Transparency In Tenders Act, 1998 (for short, "the TTIT Act"). An undertaking was given before the learned Single Judge by the learned Advocate General thatrepresentations submitted by the respondent No.1 will be duly considered while finalizing the tenders and appropriate orders will be passed in accordance with the tender specifications and the TTIT Act and rules framed thereunder and in terms of the said undertaking, learned Single Judge vide order dated 31.07.2014 directed the appellant to consider and pass orders on the representations of the appellant herein after affording them an opportunity of personal hearing and directed that till such orders are passed, the tender should not be finalised.4. Being aggrieved by the said order, the appellant filed writ appeal W.A. No. 1065 of 2014 before the Division Bench which, by judgment and order dated 19.08.2014, disposed of the writ appeal by modifying the order of the learned Single Judge only to the extent that affording of opportunity of personal hearing to the person was impermissible having not contemplated under the Rules (for short, "the rules") and further permitted the respondent No.1 to submit additional documents raising all its objections and the appellant was directed to pass an order and communicate the same to the respondents, CSEPDI and BHEL. However, the Division Bench did not modify the direction of the learned Single Judge which was to the effect that till a decision was taken on representations of the 1st respondent, the bid shall not be finalised.5. After the disposal of the writ appeal, the respondent No.1 sent its representation on 25.08.2014 along with necessary documents which was rejected by the appellant vide its communication dated 27.09.2014. The legal propriety of the said rejection was called in question by way of writ petition W.P. No. 26762 of 2014 seeking quashment of the same and further restraining the owner from taking steps to finalise the tender. During the hearing of the writ petition, a copy of letter dated 27.09.2014 awarding the contract to BHEL, respondent No. 2 herein, was brought on record. It was mentioned therein with regard to price negotiation meetings with the respondent No. 2. The respondent No. 1 sent a letter dated 1.10.2014 to the appellant, highlighting the arbitrariness, anomalies and inconsistencies in its reasoning and theintent in the matter of evaluation of the bid submitted by it. However, the appellant by letter dated 10.10.2014, informed the 1st respondent that the subject tender had been finalised and awarded to BHEL.6. The letter dated 27.9.2014 awarding the contract to respondent No. 2 and letter dated 10.10.2014 were assailed by the respondent No.1 by filing W.P. No. 27529 of 2014 for annulments of the letters and further for issue of directions to the Corporation to determine the award of the tender strictly in terms of the Tender/Bid document and taking into account the bid of respondent No.1 and that of BHEL, the respondent No.2 herein.7. The learned Single Judge dismissed the writ petition primarily based on the perusal of notes in the files containing the Consultant Report dated 30.05.2014 and on that basis opined that the conduct of process of evaluation of the tenders did not appear to be arbitrary, capricious or unfair; and that price bids of the bidders had been evaluated as per the parameters indicated in the tender notification by an independent consultant who was selected as per the Board Resolution that was within the knowledge of both the bidders. The reasoning of the learned Single Judge basically hinged on the Consultants Report that had determined that the respondent No.2 herein was L1 and, therefore, the decision of the Corporation in treating BHEL as L1 and awarding the contract was neither arbitrary nor malafide.8. Aggrieved by the order of the learned Single Judge, the respondent No.1 preferred writ appeals before the Division Bench. The Division Bench took note of the various pleas raised by the respondent No.1 including violation of the statutory provisions, arbitrariness, adoption of unfair andprocedure, erroneous delineation of the consultants report by the learned Single Judge andof public interest.9. The Corporation, in its turn, contended before the Division Bench that there was no violation of procedure and the award of the contract was not amenable to judicial review in the obtaining factual matrix and any interference would only delay the execution of the work. It was also urged that Tender Accepting Authority (TAA) had accepted the lowest tender and negotiations were held only with lowest bidder; that Clause 25.4 of the Instruction to Bidders did not permit the bidder to change the substance of the bids after the bids were opened; that though the respondent No.1 had offered lower rate on interest, the original interest rate offered was not in accordance with tender terms, for as per clause 14.0(d)(5) the rate of interest quoted should be fixed, whereas the CSEPDI had not specified the fixed rate of interest; that there was no perversity or arbitrariness in the decision taken as per the terms of the tender, prevalent banking practice and the Term Sheet given by the lender; that the Consultant was appointed pursuant to the Board Resolution dated 28.01.2012 who participated in allid meetings and the minutes had been signed by all the parties and the consultant and, therefore, CSEPDI was very much aware of appointment of the consultant and the role played by consultant could neither be criticised nor ignored.10. The 2nd Respondent herein contended that respondent No.1 lacked credibility to make any allegation against it; that design was the core area of leader of the consortium and they have no experience in India insofar as supercritical Thermal Power Projects are concerned; and that the work was under progress and they had expended substantial amount.11. After hearing the rival contentions, the Division Bench placed reliance on Jagdish Mandal v. State of Orissa, 2007(1) R.A.J. 397 : (2007) 14 SCC 517     and observed that the approach of the owner was unfair in the tendering process. It further analysed the scheme of Section 10 of the TTIT Act and held that the Tender Accepting Authority (TAA) has a role to cause objective evaluation of the tenders. Referring to Section 10(6) of the TTIT Act, it held that the Corporation had not complied with the said provision and it was a case of procedural impropriety, unfair approach and arbitrariness. The appellate Bench referred to the authority in Star Enterprises v. City and Industrial Development Corporation of Maharashtra Ltd., (1990) 3 SCC 280     and declined to accept the stand of the Corporation by opining that reasons for rejection of 1st respondents representations could not be treated as reasons for rejection of its bid and hence, the decision making process was flawed and in breach of Section 10(7) of the Act. It further held that in the "Tender Bulletin", absence of reasons for acceptance of tender, no statement of evaluation of tenders and no comparative statement of tenders received and, decision thereon was in clear violation of the requirements of Section 6(1) read with Section 10 of the TTIT Act and Rule 30(3) of the TTIT Rules. On the interest component and commitment fee, the Division Bench held that the approach was wholly arbitrary and the intention was to oust the respondent No.1, for the evaluation process adopted was meant to suit one and reject the other. It further held that the process adopted and the decision taken by the owner was arbitrary, unfair, irrational, biased and mala fide and did not serve the larger public interest. In view of the said analysis, the Division Bench allowed the appeals and directed the Corporation to evaluate the price bid of the respondents in the light of its findings and taking into consideration all relevant parameters including the representations/documents submitted by respondent No. 1 and to record detailed reasons for the decision and communicate the same to the respondent No.1 so as to comply with the requirement of the provisions of the TTIT Act and TTIT Rules and various decisions of this Court.12. Being aggrieved by the aforesaid judgment, the corporation and the successful bidder, by way of special leave, have preferred separate appeals.

Reasoning: 16. There is no dispute that as per the Price Evaluation Report by the Consultant, the EPC price of the respondent No. 1 was Rs. 9207.264 crores and respondent No.2 to whom the contract was awarded was Rs. 7762.977 crores. Thus, the difference between the two EPC price is Rs. 1444.287 crores. The 1st respondent disputed the Price Evaluation Report by the Consultant on the ground that it wrongly loaded the sum towards (a) the commitment fee, (b) interest on management fee during IDC period; and (c) interest of guarantee fee during IDC period in its bid amount which had led to the evaluation of quoted financial charges with interest to Rs. 801.18 crores.As has been stated earlier, the issue pertaining to correctness of Consultants report has to be adjudged and scrutinized within the scope of limited power of judicial review in the obtaining factual score. The Division Bench in the impugned judgment has taken exception to the process adopted in the identification of L1. It has referred to its order dated 19.8.2014 wherein the 1st respondent was granted the time to submit additional documents. The impugned order takes note of the fact that at that point of time, the Corporation had never averred that tender had been finalized. It has referred to the earlier order of the Division Bench that representations were to be considered and till then the bid should not be finalized. It has referred to the letter of theDirector of the Corporation dated 20.7.2014 and opined that it appears to be a misstatement of fact.22. Be it stated that the Division Bench has posed two questions:"(i) Whether interest offered by appellant is vague; and(ii) Whether the reduction of interest from 7.2% to 6.2% should be accepted."23. While dealing with the said issue, the Division Bench has referred to the publication in the tender bulletin stating about the decision on tender:e of the, Chennaie of thet of60 MW Ennore SEZThermal Power Projecte of, Tamiln onat Heavy7 Croreser Finance Corporationt ofg theon was calledwith the. Afterum of, China4 CroresBank of Chinae ofs accepted byts andof the tenderW Ennore SEZCrores wasand orderof the tender4. Thereafter, the Division Bench has recorded as follows:"31.3 While it is the plea of the appellant that fixed5% per annum or LIBOR floating rate has been quoted by them, it is theof the learned Advocate Generalthat Clause 12.1 of the Instructions to Bidders stated that interest is to be quoted at fixed rate and it is not subject to change, and since the interest quoted is variable, it is not possible to evaluate the bid.31.4 It is seen from the records, that subsequently, based on a query from the first respondent, the appellant had confirmed that it would be fixedst at 7.2%. the same was also confirmed in the Repayment Schedule and the samest was taken into consideration by the Consultant in his report dated 30.5.2014. He did not find faultt. It is to be noted that the Term Sheet was submitted during July, 2013 and tender was evaluated in the year 2014. The contention of vagueness inst does not appeal to us. When the Consultants report dated 30.5.2014CO for then, it has to be accepted for all purposes, though we haveon the Consultantsreport dated 30.5.2014. There is, therefore, no vagueness in thest quoted at 7.2%.31.5 The second issue relates to the reduction oft. It is not in dispute that various meetings were held between the appellant and the TANGEDCO. The learned Advocate General states that the Consultant was appointed based on the 21st Board Meeting on 28.1.2012 and the Consultant participated in allid meetings and minutes were signed by all parties, including BHEL and the appellant. He stated that the appellant wasof the Consultantsappointment and his role. This only fortifies the fact that there have been series of consultation between both the bidders. The finding of the learned Single Judge that the appellant acted on inside information is demolished by the standof the learned Advocate Generalas above. The insinuation has no basis.31.6 Coming to theon oft, taking into consideration the prevailing market rate, thed to reduce thest from 7.2% to 6.2% on 5.6.2014, even prior to any form of litigation. When such an offer was given by the appellant the tender was not accepted in terms of Section 10(6) of the Act. To recapitulate, what has happened earlier is that the writ petition in W.P. No. 19247 of 2014 was filed on 17.7.2014, subsequent tor made on 5.6.2014. The first interim order was passed on 18.7.2014. The second interim order was passed on 31.7.2014. The Division Bench passed an order on 19.8.2014. At thate, there was never a statement by the TANGEDCO that L1 was identified and discussion was going on. We have also clearly stated that theing Director of TANGEDCO that the representations of the appellant will be duly considered by the Board of Directors whileer and appropriate orders will be passed strictly in accordanceer specifications and bythe provisions ofTTIT Act and TTIT Rules.31.7 Therefore, the issue relating toof interestshould have been considered. This reasoning of ours is also based on the fact that we have clearly held that the third respondent could not be ascertained as L1 on 2.6.2014 as per theCO or on 30.5.2014 as per the finding of the learned Single Judge. Once there is no1, TANGEDCO is bound to consider the reduction inf both theappellant in their offer dated 5.6.2014 andof the third respondentof interestfrom 12.25% to 12.15%.31.8 Even otherwise, bywer under Clause 25.3 of the Instructions to bidders, which states that "The Purchaser reserves the right to relax or waive any of the conditions of this Specification in the best interests of the TANGEDCO", the TANGEDCO could have considered such reduceded by the appellant and the third respondent."25. With regard to commitment fee, the analysis of the Division Bench is worth referring to:"It clearly states that Commitment Fee is only on the cancelledhe loan. That apart, even as per the Drawdown Schedule, the fee is to be paid only if the loan amount is not drawn by the 18th, 30th and 42nd month. Moreover, the appellant in the letters dated 13.6.2014,16.6.2014 and 17.6.2014, clarified that Commitment Fee is only on the unused credit line and that there shall be no Commitment Fee if the loan amount is fully utilized as per the Drawdown Schedule. All these representations sent by the appellant were not considered by TANGEDCO, despite there being a specific direction by the Division Bench of this Court to consider the same. It is a clearss in approach and intended to oust the appellant. Thisof the TANGEDCOis nothing but ade in evaluation process to suit one and reject the other.se we are constrained to add something. We do so with immense pain. The respondent, beforeof the financialbid submitted series of representations andof the ownerit knocked at the doors of the writ court which directed forhe representations. We are disposed to think that the High Court at that stage should have exercised caution. If the courts would exercise power of judicial review in such a manner it is most likely to cause confusion and also bring jeopardy in public interest. An aggrieved party can approach the Court at the appropriate stage, not when the bids are being considered. We do not intend to specify. It is appreciable the owner in certain kind of tenders call the bidders for negotiations to show fairness transparently. But the present case is not ach nature. Once the price bid was opened, a bidder could not have submitted representations on his own and seek a mandamus from the Court to take certain aspects into consideration. We have stressed this aspect only to highlight theCourt keeping in mind the established8. In view of our preceding analysis wered opinion that the Division Bench through the delineation has adopted the approach of an appellate forum or authority and extended the