JUDGEMENT
KAPADIA, J. -
(1.)STATE of Maharashtra through Maharashtra STATE Road Development Corporation Ltd. (for short, "MSRDC") floated Global Tender for completing Mumbai Trans Harbour Link ("MTHL") between Mumbai and Navi Mumbai on BOT basis.
(2.)RELIANCE Energy Limited is a company registered under the Companies Act, 1956. It is engaged in generation, transmission and disbursement of power in Maharashtra, Delhi etc.
Hyundai Engineering and Construction Company Ltd. (for short, "HDEC") is a company incorporated in Korea. It is specialized in construction of bridges.
At this stage, it may be noted that the above Project is to be at the cost of Rs. 26000 million (Rs. 2600 crores). The bidders were required to submit RFQ Document by 10.1.2005. Under the PQ Document, M/s Jean Muller, France was appointed as consultant by MSRDC. Under the PQ Document, the bidders were required to submit financial statements of three financial years subject to the condition that the latest should not be earlier than the financial year ending 31.12.2002. REL/HDEC formed a consortium. As a consortium they were required to comply with clause 7.2.2 which stipulated net cash profit at Rs. 200 crores. The said consortium has been excluded from the second stage of bidding on the ground that it has not fulfilled the said criteria mentioned in clause 7.2.2. The consortium had submitted their RFQ Document on 9.1.2005. The said consortium had submitted three audited accounts for the financial years ending 31.12.2001, 31.12.2002 and 31.12.2003. At this stage it may be noted that the financial year for REL ended on 31 st March whereas the financial year for HDEC, Korea ended on 31st December.
(3.)AT this stage, we may quote the relevant provisions of the PQ Document which read as under:
"Section 5.1 in the PQ document - The objective of the Pre-Qualification is to qualify the applicants that have the necessary experience and financial and technical capabilities to undertake the work for which the Request for Proposal is to be invited. Section 5.3.7 of the PQ document inter alia, provides: No change in, or supplementary information to an application shall be accepted after its submission. However, MSRDC reserves a right to seek additional information from the applicants, if found necessary during the course of evaluation of the applicants. Section 7.2.2 For Application by a Consortium In case of a Consortium, the entity declared as the Lead Member would be required to hold a minimum of 26% of paid up and subscribed equity capital in the Project Company (MSRDC is of the view that a minimum paid up and subscribed capital of Rs.5000 million may be required for implementing the project.) until completion of construction and thereafter for a period of two years from the date of commencement of operations and meet the financial eligibility criteria of Lead Member as detailed below In case of a Consortium, the following members taken together shall commit to hold majority (minimum of 51%) of the total paid up and subscribed equity capital in the Project Company until completion of construction and thereafter for a period of two years from the date of commencement of operations. Lead Member of the consortium committing to hold a minimum of 26% of the paid up and subscribed equity capital of the Project Company, until completion of construction and thereafter for a period of two years from the date of commencement of operations and meet the financial eligibility criteria of Lead Member as given below. Those members of the Consortium committing to hold a minimum of 5% of the paid up and subscribed equity capital of the Project Company until completion of construction and thereafter for a period of two years from the date of commencement of operations. The aggregate (taken as the arithmetic sum) of Net Cash Profit and Net Worth as explained above) of all subsidiary companies in which the respective entities hold a minimum of 51 % of total paid up and subscribed equity capital would also taken into consideration. In the case of financials of subsidiary companies being considered as above, the dividend paid by these subsidiary companies to the parent company will be deducted from the Net Profit of the parent company for the purpose of evaluation. The financial evaluation criteria to be satisfied by a Consortium are detailed below. Criteria To be satisfied by Amount Net worth1 (as per the latest audited balance sheet not earlier than the FY ended December 31, 2002) Lead Member (Holding a minimum of 26% equity in the project company) Total Consortium (to be satisfied together by the Lead member and those Consortium members committing to hold a minimum of 5% equity in the project company) Rs.2,000 million (or equivalent foreign currency) Rs.1 0,000 million (or equivalent foreign currency) AND Criteria To be satisfied by Amount Net cash profit2 (simple average of the audited financial figures over the last 3 financial years of 2 calendar months each, with the latest not earlier than the FY ended December 31, 2002, will be considered for this assessment). Lead Member (Holding a minimum of 26% equity in the project company) Total Consortium (to be satisfied jointly by the Lead member and those Consortium members committing to hold a minimum of 5% equity in the project company) Rs.500 million (or equivalent foreign currency) Rs.2,000 million (or equivalent foreign currency) All figures quoted in a currency other than Indian National Rupees (INR) would be converted into Indian National Rupees (INR) at an exchange rate, which is the Telegraphic Transfer (ASSESSEE- COMPANY) buying rate of State Bank of India as on the Due Date. In the event of non-availability of exchange rate for any currency from the above source, MSRDC reserves the right to use available from any other source. 7.4 Basis of Evaluation The information to be provided by the Applicant must be in conformation with the following: The information provided by the applicant should be based on the latest available audited accounting statements. The latest audited accounting state ments should not be dated earlier than 31st December, 2002. The Request for Qualification (RFQ) must be accompanied by the last three audited annual reports/accounts statements of the applicant and should include the financial statements of all subsidiary companies of the Applicant for the last three financial years. In case of a Consortium audited annual reports/account statements of each member of the Consortium for the last three financial years should be provided and should include the financial statement of all subsidiary companies of the entities forming the Consortium. The applicant (all members of Consortium) must submit information on all pending litigations or proceeding regarding liquidation, winding up, court receivership or other similar proceedings that should have been initiated or pending against the Applicant (or any member of Consortium). In addition to the above, information must also be provided of all pending litigations against the Applicant (or any member of Consortium) in which the maximum value of liability that may arise in the event of adverse judgment exceeds Rs.100 million (or equivalent foreign currency). A consistent history of litigation/arbitration awards against the applicant or any member of the consortium "
(emphasis supplied)
Briefly the criteria and conditions were as follows:
"(a) In a consortium, the entity declared as "lead member" was required to hold the minimum of 26 per cent of paid-up and subscribed equity capital in the project company until completion of construction.
(b) The aggregate of net cash profit and net worth of the consortium was to be considered for evaluation of financial criteria of the consortium.
(c) Two criteria were required to be satisfied by the lead member (REL) as also the total consortium (REL/HDEC), namely, net worth and net cash profit.
(d) Net worth is defined as total paid-up share capital + reserves - accumulated losses, revaluation of reserves and deferred revenue expenditure only to the extent of it being not written-off. Net worth was to be calculated as per the latest audited balance sheet not earlier than F.Y. ending 31st December, 2002.
(e) The leading member (REL) was required to have a net worth of Rs.200 crores and the total of Consortium (REL/HDEC) was required to have a net worth of Rs.1,000 crores. At this stage, we may clarify that this last criterion stands satisfied.
(f) As stated above, net cash profit of the lead member under the PQ document was stipulated at Rs.50 crores whereas for the Consortium it was Rs.200 crores.
(g) For the sake of convenience we quote the definition of NCP given in the PQ document which reads as follows: "NCP = PAT (profit after tax) + depreciation + amortization, not in the form of cash transaction"