Case: M/s. Electrical Manufacturing Company Ltd Vs. M/s. Power Grid Corporation of India Ltd. &amp; Another

4. The appellant Electrical Manufacturing Company Ltd., (hereinafter as ‘EMC) has alleged that it is a leading modern power system company in India and is the first ISO 9001 certified company in India in Transmission Line Projects. It was established in 1951 and carries out such projects in India as well as overseas. It filed a writ petition in the Delhi High Court with the following prayerquash the decision taken by the Board of Directors in its meeting held on 06.5.2008 with respect to not awarding of contract to the petitioner with respect to Package A1, A2 & A7 in spite of the fact that it is L1, technically qualified as per the requirement and more so its bid is Rs.16.34 crores less than L2 bidders.The respondent no.1, the Power Grid Corporation of India Ltd. ((hereinafter as ‘PGCIL) is a Public Sector Undertaking of the Government of India working under the Ministry of Power. The petitioner has been carrying out the contract of respondent no.1 for a long time.6. On 5.11.2007, a Notice inviting tender with respect to Package A1 and A2 was made by respondent no.1 PGCIL. On 8.11.2007, Notice inviting tender with respect to Package A7 was made by respondent no.1. These tenders were for setting up electrical transmission lines.7. On 8.1.2008 and 9.1.2008, bids were opened for the above mentioned packages, respectively. In both the petitioner was declared the Lowest Quoted Bidder (L1).8. On 16.4.2008 the petitioner made representations to the respondent no.1 with respect to Package A1, A2 and A7, explaining as to how the petitioner was fully qualified and met the requirements of technical experience stipulated in Clause 1.1 of Annexure ‘A of Special Condition of Contract.9. On 6.5.2008, the respondent no.1, decided not to award the contract for the above mentioned packages to the petitioner as it was of the opinion that the appellant did not have the requisite technical experience as set out in Clause 1.1 of Annexure ‘A of the Special Condition of Contract.10. The appellant has alleged that the above refusal by respondent no.1 to award the contract for the above mentioned packages was arbitrary and illegal since the appellants bid was the lowest among all the bidders.

Court's reasoning:
We are of the opinion that even if satisfactory completion may not necessary mean commissioning of the line but it certainly means completion of the entire length of the line and thereafter testing the line to find out whether it is functioning satisfactorily. Without testing it how can one be sure that it has been completed satisfactorily.18. For instance, if an electrical line is laid inside a persons house, the only way to find out whether the electrical line has been laid satisfactorily is to find out by pressing the switch and seeing whether the bulb in the house is lighted or the fan starts running. Merely putting wires dangling inside the house but which do not light the bulb or turn the fan cannot be said to be satisfactory completion of the electrical line.19. In the present case, as can be seen from the chart set out above the appellant has not completed the lines from Trivenveli to Udmalet nor from Tapp to Kankaroli. Unless the entire line is laid and is found to be functioning satisfactorily, it cannot be said that there was satisfactory completion of the line.20. As regards the interpretation of Clause 1.1 we cannot agree with Shri Sudhir Chandra that the words ‘Satisfactorily Completed would not govern sub clause (i) of Clause 1.1. A fair reading of the entire Clause 1.1 along with sub clause (i) clearly indicates that the requisite technical experience requires satisfactorily completion of the requisite length of the line. Sub clause (i) is a part of Clause 1.1 and hence mere surveyance, optimizing tower locations, erecting and stringing with tension stringing equipment, etc. is not sufficient to give the requisite technical experience to the bidder unless such work was satisfactorily completed, which means that it was tested and found to be functioning satisfactorily.21. If the bidder has surveyed, optimized tower locations, erected and strung with tension stringing equipment, the requisite length of transmission lines, but these transmission lines do not function, surely it cannot be said there was satisfactory completion of these transmission lines. In our opinion the expression ‘Satisfactory Completion govern sub clause (i) of Clause 1.1 also. Hence mere surveying, optimizing tower locations, erecting and stringing with tension stringing equipment the requisite length of transmission lines will not be enough to give the necessary technical experience because it is possible that even after doing the above work the transmission lines may not function. Unless after doing the above works the line is tested and found to be successfully functioning it surely cannot be said that there was satisfactory completion of the transmission lines.