AR PROJECTS LTD Vs. STATE

JUDGEMENT

(1.) This petition has been filed for quashing and setting aside the action of the respondent no. 2 Sardar Sarovar Narmada Nigam Ltd. (hereinafter referred to as the "Nigam") disqualifying the petitioner no.1 company for further processing the tender for execution on Turn-key basis of five pumping stations for the Saurashtra Branch Canal of Sardar Sarovar Project as stated in its letter at annexure "U" to the petition.

(2.) The petitioner no.1 is a company and the petitioner no.2 is a director of the petitioner no. 1 company which is registered under the provisions of the Indian Companies Act and engaged in the business of construction activities such as construction of refineries, steel plants, machine structures, bridges etc. since last 25 years. It is also engaged in the business activities for the Sardar Sarovar Narmada Nigam Ltd. for the past eight years. The respondent no. 1 is a State of Gujarat and the respondent no. 2 is a wholly owned undertaking of respondent no.1. The respondent no. 3 National Thermal Power Corporation Ltd. (hereinafter referred to as NTPC) is the consultants of the respondent no. 2 providing consultancy services for the execution on turnkey basis for five pumping stations for the SBC pumping scheme. The respondent no. 4 M/s. Kirloskar Brothers is one of the offerers for execution on turnkey basis of five pumping stations for the Saurashtra Branch canal. The petitioner company is a class"AA" contractor which is the highest classification awarded by the State of Gujarat. The respondent no. 2 Nigam Nigam is the wholly owned Government company incorporated under the Companies Act and a wholly owned undertaking of the Government of Gujarat. It is engaged in executing a large m ulti-purpose river valley project across the river Narmada. The project located along the West Coast of India envisages the construction of head works of concrete dams, canal-head power house, main canal having capacity of 1133 cumecs and a length of about 458 kms. alongwith 42 numbers of branch canals for serving 1.8 million hectares command area. Out of 42 branches, the Saurashtra Branch Canal of 319 cumecs is considered as a major branch canal and takes off at chainage 263.20 kms. of the main canal near village Kadi of Mehsana district. The SBC is a 104.46 kms. long bridge canal having a discharge of 319.10 cumecs and the full supply of level at the take off point is 61.1 meters. It was proposed to allow the canal to fall which could be utilised in a hydro-electrical power station for generating electricity. For the purpose of lifting water from the depression, and for erection of five pump house plants to be constructed along with alignment of canal whereby the total lift of the pump houses would be about 71 meters, the Nigam had entered into an agreement with the National Thermal Power Corporation for providing consultancy services for the engineering of the five pumping stations of the SBC pumping scheme. The NTPC had recommended its conclusion that on the basis of the reference available and other technical considerations, the capacity of the main pump had to be 20 cumecs. The respondent no. 2 Nigam issued a public advertisement in The Times of India on 9.5.97 inviting tenders for SBC pumping scheme by way of sealed bids in two parts bidding system for execution on turn-key basis for the five pumping stations for SBC or Sardar Sarovar Project. The work consisted of design, engineering, manufacture, supply, transportation to site, storage, erection, testing and commissioning, operating of the works for two years, to be completed in two phases. Phase-I involved installation of 11 concrete volute pumps, each of 20 cumecs capacity, whereas Phase II involved the setting up of 15 concrete volute pumps each of 20 cumecs capacity. The Nigam appointed NTPC to perform engineering consultancy services. One month thereafter, the Nigam issued a corrigendum on 9.6.97 introducing amendments in the sub-clauses (b)(C) and (e) of clause 1.1 of the tender notice which required that the bidder should have designed, manufactured, erected/sueprvised erection, tested and commissioned at least 2 concrete volute pumps each of capacity of 14 cumecs or more at two different locations. This condition was deleted lateron. According to the petitioner, this was done only in order to make favour to the respondent M/s. Kirloskar Brothers Ltd. whose collaborators have till the date installed only two pumps of 14.3 cumecs each at a single location. The bidders were required to submit their bids either by registered post, speed post or hand delivery before the specified delivery date and time in two parts i.e. Part-I : Envelope-I : This envelope was required to be superscribed "unpriced bid." and shall comprise of qualifications, mm data complete technical proposal including data sheets and drawings and commercial conditions and bid forms excluding the prices. The bid security for an amount of Indian rupees thirty million was required to be enclosed. Part-II: Envelope: II was required to be superscribed " Priced bid" comprising of all the price schedules. This envelope was required to be submitted alongwith envelope-I. Envelope-III was also required to be submitted by the qualified bidder after post-bid conference. This envelope was required to be superscribed "Changes in proposal". The bidders were required to note that envelopes II and III shall be opened together. It was specifically provided in clause 20 of section 2 to the said contract that the envelope II shall not be opened and shall remain in the custody of the employer until the date of opening of envelopes II and III and that the clarification/additional information, if any, would be sought and further discussions would be held during the post-bid conference with only those bidders who meet the specified qualifying requirements and submit technical and commercially responsive bids and that based on the clarification/additional information and discussion, the employer shall issue amendments to the specification and bidding documents which would be mandatory for the bidders to comply. The pre-bid conference was held at Gandhinagar on 16.7.97 and pursuant to an inquiry by the bidder as to whether there are any reservations if the contractor provides synchronous motors in place of induction motors, synchronous motors may be proposed as an alternative offer with details of hardware required for providing DC supply to synchronous motors. Hence, the petitioner company had addressed a letter to the Nigam stating therein that if the basic parameters are reviewed with practical applications and with regard to the requirements of the project, there could be a substantial saving to the extent of 22% in the evaluated bid price. Another letter dated 13.1.98 was addressed by the petitioner company to the Chief Engineer of the SBC giving information as sought for enclosing therewith a detailed note highlighting the advantages of installation of synchronous motors for high capacity concrete volute pumps. The aforesaid proposal of supplying synchronous motors was rejected. After submission of the tender document, the respondent no. 2 Nigam vide its letter dated 29.12.97 raised queries on qualification requirements. By a letter dated 2.1.98 the petitioner company was required to confirm its evaluation strictly in line with technical specifications. The queries were replied by the petitioner company vide letters dated 13.1.98 and 28.1.98 and it was confirmed that the concrete volute pumps referred in the tender document are supplied to various clients with concrete volute and concrete draft tube without any steel liner. Finally, the respondent no. 2 Nigam conveyed to the petitioner company and the other two bidders that on the documentary evidence and other details submitted by the bidders, the respective bids were evaluated and they were provisionally qualified. It was also mentioned that the Nigam proposed to inspect various reference locations cited by bidders towards qualification requirement and that on the completion of qualification assessment and finalisation of bidders, the post-bid conference would be held. The Nigam found the petitioner pre-qualified and requested it to arrange for a visit by a letter dated 17th March, 1998. Accordingly, the petitioner arranged for a visit of the reference locations by officers of the respondent nos. 2 and 3 and kept the documents ready during the visit. The petitioner arranged the visit of the officers for the pumping stations installed in Yangier Irrigation System at Uzbekistan. There are three pumping stations at Yangier Irrigation System located at three different stations "A", "B" and "C". The pumps at station "A" are with steel lining since at that particular location, the clients insisted for steel lining, whereas pumps at stations "B" and "C" have not steel linings. The inspection team visited station "A" and since it was satisfied with the technical specifications of station "A", it did not feel necessary to visit stations "B" and "C". The petitioner company forwarded certificate issued by Ministry of Agriculture and Water Resources, Republic of Uzbekistan giving details of the pumps manufactured, supervised, erected, tested and commissioned and their capacity. After the aforesaid visit to the reference location at Uzbekistan, the respondent no. 2 Nigam and its consultants NTPC called for certain documents and certificates from the petitioner/collaborators regarding CVP which were supplied by the petitioner alongwith its letter dated 30.6.98 wherein it was confirmed that the lining in the concrete volute portions are provided as per the requirements of the clients and since in the present project, the Nigam does not desire to have steel lining, the concrete volute pumps would be constructed without steel lining and will be provided with retained steel form work in approximate thickness of 5 mm. The Government of Gujarat has constituted a Tender Purchase committee consisting of (1) Managing Director, S.S.N.N. Ltd. (2) Additional Chief Secretary, Finance Department, Government of Gujarat (3) Secretary (N) N & WRD and Director (Civil), S.S.N.N.L conferring all powers to approve tenders in the State of Gujarat valuing more than Rs. 25 crore. A meeting was held on 5.8.98 wherein all the three bidders i.e. the petitioner company, M/s. Kirlosker Brothers and M/s. G.E.C. Alsthom India Limited were approved for pre-qualification. After being satisfied with the documents submitted, the visit made to the reference location. The Tender Purchase approved the petitioner company for pre-qualification by a letter dated 14.8.98. The respondent no. 2 Nigam also informed the petitioner company that the post-bid conference as per the terms and conditions of the contract would be held on 28th August, 1998. The Nigam also required the petitioner company that its bid is satisfying the stipulated qualifying requirements and forwarded with its acceptable/unacceptable and declared/undeclared deviations on which it desired to have discussions in the post-bid conference. The observations of the respondent no. 2 Nigam as well as NTPC, their consultant were convinced and satisfied with the data and documentary evidence submitted by the petitioner company vide its letter dated 20th August, 1998 the Nigam confirmed that the petitioner company is meeting with the qualification requirements stipulated in the contract. The petitioner company vide its letter dated 26.8.98 supplied a brief note on the discussions to be held in the post bid conference. The post bid conference was held on 28th August, 1998 where the petitioner and its collaborators from Russia remained present and a thorough elaborate discussion on the deviations was held with the representatives of Nigam and NTPC. In the pre-bid conference, the petitioner company explained satisfactorily the undeclared deviations and those discussions were even confirmed by the petitioner company on the next-date. NTPC, the consultants to the project were fully satisfied with the technology offered by the petitioner company/collaborators. The Tender Purchase committee approved the minutes of the post-bid conference held between the Nigam, NTPC and all the three bidders including the petitioner company. The respondent Nigam had pre-determined to weed out the petitioner company from consideration of its project for extraneous considerations. If the Nigam accepts the tender based on technical data available in envelope-I, without making any changes in the specifications as discussed in the post-bid conference, one of the bidders M/s. Kirloskar Brothers would get a price preference of about Rs. 75 crore over Alstom and Rs. 120 crore over the petitioner company on a tender estimated at Rs. 375 crore. The petitioner supplied further information on the technical aspect and specifically conveyed that it can provide the concrete volute pump with steel lining or without steel lining according to the requirements of the Nigam. After the said visit, the respondents raised certain queries which were replied satisfactorily by the petitioner. Therefore, only the petitioner company was pre-qualified and called for the post-bid conference. But the Nigam again vide its letetr dated 16th March, 1991 raised certain queries which were explained in detail by the petitioner company vide its letter dated 17th March, 1999. The Nigam had pre-determined to weed out the petitioner company from consideration of its project for extraneous considerations. Hence, the petitioner company offered a re-visit to the pumping stations in Republic of Uzbekistan and further discussions with the Technical Experts and Senior Officials of the Irrigation Ministry of Uzbekistan. The petitioner company sent a letter dated 22nd May, 1998 from its collaborators PEC whereby the collaborators confirmed that the steel lining in the volute pump was provided on client's requirement for erosion consideration. It also confirmed that all other pumps referred in the reference plant as well as in the other pumping station of Karshi Canal are of concrete volute type without steel casing. As the inspection team was satisfied after visiting station "A", they did not feel it necessasry to visit station "B" and station "C". The petitioner sent another letter dated 16th November, 1999 to the Managing Director of the Nigam and offered a discussions with the collaborators at their office at their convenient time. But no response was given. Though the petitioner was informed by a letter dated 18th November, 1999 that no final decision has so far been taken on Saurashtra Branch Canal Pumping scheme and after the policy decision is taken on this issue, they will meet again. The respondent vide its letter dated 21st December, 2000 intimated the petitioner company that the Nigam has decided to disqualify the petitioner company for further process of tender of SBC Pumping Scheme. Thereupon the petitioner company lodged a protest by its letter dated 30th December, 2000 and submitted that the impugned order disqualifying the petitioner has been passed and is based on flimsy grounds and on irrelevant and extraneous considerations. The said action of the respondent Nigam could lead to a single bidder situation inasmuch as one of the three bidders who have been prequalified is a foreign bidder who will have a loading of price of 15% on the FOB price of the equipment as per clause 21.3.2 of Volume I and would therefore, not be able to compete. It is also stated that the pre-qualified bid never contained any stipulation about concrete volute pump without steel liners and therefore, the visit of the inspection team which was after the pre-qualification and before the post-bid conference was also arranged for the volute pumps with steel form work.

(3.) The petitioner submitted regarding ground nos. 1, 2and 3 stated in the impugned letter at annexure "U" for disqualifying the petitioner that the petitioner has fulfilled all the qualifying requirements as per clause 1.0 qualifying requirements of bidders and none of the sub-clauses pertaining to qualifying requirement specifies unlined concrete volute in the tender. The tender document is silent about the requirement of liner being a qualifying requirement. Even the questionnaire in attachment 3A of the tender document regarding details of specification etc. of previous experience of the bidders on similar jobs also does not ask anywhere about presence of steel liners in the pumps. Hence, there was no question of referring to or representing to the Nigam as per clauses 1.01.1(f)(g) and (h) referred to in the impugned letter. As regards ground no. 4 about non-furnishing of information, the petitioner stated that the information was never asked for by the Nigam and therefore, there was no question of not furnishing the same. In the contract worth more than Rs. 400 crore, it is not expected of an employer to disqualify a bidder of repute and experience on the trifle ground that a particular details or information was not furnished. The Nigam could have well sought for such an information and the petitioner company would have had no hesitation in furnishing the same to the Nigam. But without asking for such an information, it does not lie in the mouth of the Nigam to weed out the petitioner company from processing its reasonable and acceptable tender. As regards ground nos. 5 and 6, the petitioner has stated that the pumping station inspected by the inspection team of the Nigam was selected on the logistic reasons and in case the team wanted to visit only the station with concrete volute pumps without steel liners, the visit could have been arranged accordingly. However, on extraneous considerations, the Nigam did not consider the requirement of unlined concrete volute pumps as primary qualifying criteria. In the post-bid conference which was attended by several Chief Engineers of the Nigam and NTPC and where various techno-commercial points were discussed in detail, supply of lined and unlined concrete volute pumps was not highlighted and it was left to the bidder to choose lined and unlined pumps as per their convenience and preference.