Case: Bhatia Coal Washeries Limited Indore, Thr. Auth. Signatory Dilip S/O Ganpatrao Wasnik Vs. Maharashtra State Mining Corporation Limited Nagpur and Others

On 5-9-2019, we heard Shri Subodh Dharmadhikari, the learned Senior Advocate, assisted by Advocates Shri D.V. Chauhan and Shri A.S. Dabadghao, appearing for the petitioner; and Shri Anand Jaiswal, the learned Senior Advocate, assisted by Advocate Shri R.A. Jain, appearing for the respondent No.1-caveator, and noted that the petition challenges the imposition of Conditions 1.5.2(A) Note (2), 1.5.3(A) and 1.6.6(4) on Pages 84B, 84C and 84D of the petition, prescribing the technical criteria requiring to be fulfilled by the bidders in response to the tender notice for the work of Beneficiation of RoM Coal and Supply of Beneficiated Coal to Chandrapur, Koradi, Khaperkheda, Nasik, Bhusawal, Parli & Paras TPS of MAHAGENCO by the respondent No.1- the Maharashtra State Mining Corporation Limited. We noted the argument that the technical criteria is best suited to favour the respondent Nos.3 and 4 and directed to eliminate the other competitors at least in Vidarbha region of the State. The criteria is arbitrary, unreasonable and totally disproportionate to the value of the demand of coal.We initially put a question to Shri Subodh Dharmadhikari, the learned Senior Advocate, to address us on the question of scope of interference of this Court in the terms and conditions of the tender notice, the imposition of which is a prerogative of the employer. Our attention was invited to the decision of the Apex Court in the case of Michigan Rubber (India) Limited v. State of Karnataka and ors., reported in (2012) 8 SCC 216.  Keeping in view the parameters laid down therein, we expressed that the matter requires consideration and permitted the respondents to go ahead with the process of opening the technical bids, but directed that the financial bids shall not be opened until further orders are passed by this Court. The notice was issued for final disposal and accordingly all the respondents have appeared before us and have clearly expressed that the replies are filed on merits and they do not want to file any additional reply.The petitioner is a Company claiming itself to be one of the leading suppliers of indigenous as well as imported coal not only to almost all the major industries manufacturing cement, oil, iron and steel, sponge iron, soda ash, chemical, paper, etc. It claims to have set up total five washeries in different locations and different parts and is an established leading washery operator. It further claims to have supplied washed coal in the past to the respondent No.2, i.e. the Maharashtra State Power Generation Company Limited, based on their allocations of raw coal from various collieries of Western Coalfields Limited.The respondent No.1 the Maharashtra State Mining Corporation Limited is a Government of Maharashtra Undertaking, whereas the respondent No.2- the Maharashtra State Power Generation Company Limited is also an instrumentality of the State Government. The respondent No.1 is appointed as a Nodal Agency for commercial and profitable exploitation and marketing of coal and other minerals in the State of Maharashtra. The respondent No.2- MSPGCL has entered into an agreement dated 21-6-2019 with the respondent No.1- Corporation for supply of washed coal to various Thermal Power Stations of the respondent No.2, located at different places, from various coal mines of Western Coalfields Limited, Mahanadi Coalfields Limited, South Eastern Coalfields Limited, which are the subsidiaries of Coal India Limited, a Government of India Undertaking.The respondent No.1- Corporation issued a tender notice dated 16-8-2019 containing the terms and conditions for beneficiation of RoM coal and supply of beneficiated coal to Chandrapur, Koradi, Khaparkheda, Nashik, Bhusawal, Parali and Paras Thermal Power Stations of MAHAGENCO. On 29-8-2019, it was claimed by the respondent Nos.1 and 2 that some of the tender conditions were relaxed and the last date for submission of online bids was prescribed as 6-9-2019. The bids were to be opened on 7-9-2019. This petition was filed on 4-9-2019 and the interim order was passed on 5-9-2019. Though the financial bids were not to be opened, the permission was granted to go ahead with the process of opening of technical bids. We are informed that even the technical bids are also not opened.

Court's reasoning:
14. The petitioner does not satisfy the technical criteria specified under Clause 1.5.2(B)(4) and (5) for Category B bidder. The petitioner has not executed the work of lifting and beneficiation of an average quantity of 3.00 million metric ton per annum of RoM Coal and supply of beneficiation coal (washed coal) in the last three financial years - 2016-17, 2017-18, and 2018-19 to any State Electricity Board, Central Government-owned Company, State-owned Company or Independent Power Producer. The petitioner does not satisfy the financial criteria for Category B bidder under Clause 1.5.3(B), i.e. as on 31-3-2019, the bidder should have a net worth of at least Indian Rs.240 crores and a turnover of at least Indian Rs.450 crores.So far as Category A bidder is concerned, the petitioner does not satisfy the technical criteria under Clause 1.5.2(A)(4) and (5). The petitioner has not executed the work of lifting and beneficiation of an average quantity of 1.50 million metric ton per annum of RoM Coal and supply of beneficiation coal (washed coal) in the last three financial years – 2016-17, 2017-18 and 2018-19 to any State Electricity Board, Central Government-owned Company, Stateowned Company or Independent Power Producer. The petitioner also does not satisfy the technical criteria under Note 2 of Clause 1.5.2(A) to satisfy that it has a minimum installed capacity of 2.00 million metric ton per annum washery in any of the three subsidiaries. The petitioner does not satisfy the financial criteria for Category A bidder, as specified in Clause 1.5.3(A), i.e. as on 31-3-2019, the bidder should have a net worth of at least Indian Rs.85 crores and a turnover of at least Indian Rs.140do not propose to refer to all such arguments and the documents placed on record in support of suchalso do not wish to refer to those documents in detail, as we are of the view that the petition can be decided on merits on a very short ground.It is an undisputed position that the petitioner does not satisfy the minimum qualifying technical criteria mentioned in sub-clauses (4) and (5) of Clause 1.5.2(A) for Category A bidder, and Clause 1.5.2(B) for Category B bidder. The conditions are of having executed the work of lifting and beneficiation of an average quantity of 1.50 or 3.00 million metric tone per annum of RoM Coal and supply of beneficiation coal (washed coal) in the last three financial years - 2016-17, 2017-18 and 2018-19 to any State Electricity Board, Central Government-owned Company, State-owned Company or Independent Power Producer.In our view, merely because the petitioner does not fulfill or satisfy the essential minimum qualifying technical criteria of requisite experience specified in sub-clauses (4) and (5) of Clauses 1.5.2(A) and 1.5.2(B) of the tender document, and stands eliminated from the competition, neither the said condition becomes unreasonable, unjust or arbitrary, nor the petitioner gets any right to challenge it. What we find is that these conditions are incorporated to ensure that the washeries available with the bidders are in good running condition and able to effectively and continuously achieve the target required. The condition of having past experience of three years proximate to the period of contract in question, is to judge the capacity and efficiency of the bidders. The conditions have, therefore, reasonable nexus with the award of contract to have smooth, efficient, regular, continuous, uninterrupted and timely supply of quality coal to various Thermal Power Stations. All those who do not satisfy would obviously and naturally stand eliminated. In such a case, there would be no question of artificial distinction and the conditions cannot per se be considered as arbitrary and unreasonable.In our view, there are disputed questions of fact. The grounds of challenges to the technical requirement of requisite experience, cannot be substantiated on the basis of the disputed questions of fact in a writ jurisdiction. We, therefore, do not find substance in the justification putforth by the petitioner.Keeping in view the aforesaid law laid down by the Apex Court, it has to be held that if a conscious policy decision is taken to deal with one firm having financial capacity to take up such a big project instead of dealing with multiple small companies, there is no malice involved in it and the conditions incorporated cannot be said to be arbitrary or discriminatory. It has to be kept in mind that the party calling for tenders is entitled to pragmatic adjustments which may be called by the particular circumstances. We have seen such circumstances existing in the present case indicating that the respondent No.2- MAHAGENCO has always been unsuccessful in getting the regular, continuous and uninterrupted supply of quality coal, as a result of which there were problems of pollution in the environment and shutting down the power units for want of smooth, regular and uninterrupted supply of coal.Once we hold that there is no substance in the challenge to the essential conditions of minimum qualifying technical requirements contained in sub-clauses (4) and (5) of Clauses 1.5.2(A) and 1.5.2(B) of the tender document, there is no occasion for us to proceed further in the matter to consider the other challenges on merits. The petitioner is out of competition in response to the tender in question and, therefore, we cannot judge the validity of the other conditions in the tender document, as are urged by Shri Subodh Dharmadhikari, the learned Senior Advocate for the petitioner, as it would merely be an academic discussion and our final decision would not alter, even if we hold those conditions to be arbitrary or unreasonable. We do not find any allegation of factual malice or favouritism even if ultimately the contract is awarded to the respondent Nos.4 and 5 or some other competitors.