Universal Cables Ltd Vs State of Maharashtra (Bombay High Court)
Conclusion: CIDCO were the best judge to consider compliance with technical and financial conditions. MSETCL was consulted by CIDCO, both on account of the fact that the project had been undertaken by CIDCO on behalf of MSETCL as well as the execution of the same under the supervision of MSETCL. Therefore, the order of CIDCO was upheld in holding BNC to be technically qualified.
Held: CIDCO proposed to free up some space occupied by overhead power corridor of Maharashtra State Electricity Transmission Company Ltd. (MSETCL) in Kharghar Node of Navi Mumbai with twin purposes of prevention of unauthorised occupation and utilisation of that space for public purposes and for sale of plots. CIDCO therefore decided to undertake the work of conversion of overhead power cables of MSETCL to underground cable system under supervision of MSETCL. CIDCO published Notice Inviting Bids for carrying out the work of conversion of existing lines of MSETCL and MSEDCL into underground cable system. The estimated cost provided in the NIB was Rs.50,77,79,970.04. Under the NIB, it was permissible for a bidder to collaborate with an Indian cable manufacturer and also with a foreign collaborator. The last date for submission of bids was 3rd December 2021. Assessee submitted their online bid on 3rd December 2021. BNC as well as one more company, viz. M/s. KEI Industries Limited also submitted their bids. BNC executed Manufacturer Authorization Form with Sterlite Power Transmission Ltd. (Sterlite Power), an Indian cable manufacturer who in turn had collaborated with Taihan Cables and Solutions Company Ltd., (Taihan) a Korean Company, as permissible under Clause 6H of the NIB. Under arrangement proposed by BNC, Sterlite Power would manufacture cable systems of requisite technical specifications at its facility in collaboration with Taihan and BNC would execute the work of laying the cable system. CIDCO opened technical bids and found the three bidders, i.e., assessee, BNC and M/s. KEI Industries Ltd. to be technically qualified. The technical bids of all the bidders were uploaded by the CIDCO on e-tender portal. Assessee noticed certain deficiencies in the bid documents submitted by BNC and therefore addressed letter to CIDCO pointing out such deficiencies. Tender Committee had recorded its minutes and held BNC eligible. Upon opening the financial bids, the financial bid of BNC was the lowest and it was shortlisted in L-1 category, whereas assessee were shortlisted as bidder under L-2 category. Assessee had filed the present petition challenging the decision of CIDCO in holding BNC as eligible, despite the alleged deficiencies pointed out by them in BNC’s bid. Assessee’s case was that in case BNC was disqualified, assessee being L-2, would be awarded the contract. The Court held that it could not sit as an Appellate Authority over the decision of the respondents/CIDCO. The evaluating committee consisted of experts. They were the best judge to consider compliance with technical and financial conditions. MSETCL was consulted by CIDCO, both on account of the fact that the project has been undertaken by CIDCO on behalf of MSETCL as well as the execution of the same under the supervision of MSETCL. The order of CIDCO was upheld in holding BNC to be technically qualified.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Upon being declared L-2 in the tender process, Petitioners seek disqualification of rival bidder declared L-1 (Respondent No. 8). Petitioners challenge the decision of City and Industrial Development Corporation (“CIDCO”) declaring respondent no.8 as technically qualified to participate in the tender process and seek rejection its bid for not meeting mandatory eligibility criteria and technical qualifying requirement under the tender.
Facts:
2. CIDCO proposed to free up some space occupied by overhead power corridor of Maharashtra State Electricity Transmission Company Ltd. (MSETCL) in Kharghar Node of Navi Mumbai with twin purposes of prevention of unauthorised occupation and utilisation of that space for public purposes and for sale of plots. CIDCO therefore decided to undertake the work of conversion of overhead power cables of MSETCL to underground cable system under supervision of MSETCL. On 3rd November 2021, CIDCO published Notice Inviting Bids for carrying out the work of conversion of existing 220kV and 33kV EHV/HT O/H lines of MSETCL and MSEDCL into underground cable system in Sector-5, Kharghar Node (NIB). The estimated cost provided in the NIB was Rs.50,77,79,970.04. Under the NIB, it was permissible for a bidder to collaborate with an Indian cable manufacturer and also with a foreign collaborator. The last date for submission of bids was 3rd December 2021. Petitioners submitted their online bid on 3rd December 2021. Respondent no.8-BNC Power Projects Limited (BNC) as well as one more company, viz. M/s. KEI Industries Limited also submitted their bids. BNC executed Manufacturer Authorization Form with Sterlite Power Transmission Ltd. (Sterlite Power), an Indian cable manufacturer who in turn has collaborated with Taihan Cables and Solutions Company Ltd., (Taihan) a Korean Company, as permissible under Clause 6H of the NIB. Under arrangement proposed by BNC, Sterlite Power would manufacture cable systems of requisite technical specifications at its facility in collaboration with Taihan and BNC would execute the work of laying the cable system. CIDCO opened technical bids on 6th December 2021 and found the three bidders, i.e., petitioners, BNC and M/s. KEI Industries Ltd. to be technically qualified. The technical bids of all the bidders were uploaded by the CIDCO on e-tender portal.
3. Petitioners noticed certain deficiencies in the bid documents submitted by BNC and therefore addressed letter dated 14th December 2021 to CIDCO pointing out such deficiencies. Tender Committee met on 2nd December 2021 and recorded its minutes and held BNC eligible. Upon opening the financial bids, the financial bid of BNC was the lowest and it was shortlisted in L-1 category, whereas petitioners were shortlisted as bidder under L-2 category. Petitioners have filed the present petition challenging the decision of CIDCO in holding BNC as eligible, despite the alleged deficiencies pointed out by them in BNC’s bid. It is the case of the petitioners that in case BNC is disqualified, petitioners being L-2, would be awarded the contract.
4. This Court, by its order dated 12th December 2022, recorded the statement of the learned counsel for CIDCO that the work order shall not be issued till the next date. The said statement has been continued from time to time, in pursuance of which the work order has not yet been issued to BNC.
Submissions:
5. Appearing for petitioners, Mr. Khandeparkar the learned counsel would submit that the respondent no.8-BNC does not fulfill material and essential terms of tender and could not have been held technically qualified by CIDCO. He has taken us through the mandatory eligibility conditions of the NIB under various clauses, particularly Clauses 6 and 7, under which the bidder, manufacturer and collaborator are mandatorily required to meet the criteria stipulated therein.
He would then take us through the bid documents submitted by BNC (filed along with compilation of documents) to demonstrate that several of the mandatory and essential requirements under tender are not met by BNC. Since we propose to refer to each of the objection raised by Petitioners while recording our findings in later part of the Judgment, we are not burdening this judgment by recording detailed submissions canvassed by Mr. Khandeparkar in that regard.
Mr. Khandeparkar would then contend that though deviation from non-essential/non-material terms of tender by tendering authority could be acceptable, deviation from material and essential terms of the tender is impermissible. In support of this contention, he would rely upon the judgments in Poddar Steel Corporation vs. Ganesh Engineering Works & Ors.1, Rashmi Metaliks Limited & Anr. vs. Kolkata Metropolitan Development Authority & Ors.2, Bakshi Security and Personnel Services Private Limited vs. Devkishan Computed Private Limited & Ors.3 and Central Coalfields Limited & Anr. vs. SLL-SML (Joint Venture Consortium) & Ors.4. Mr. Khandeparkar would submit that CIDCO being public authority must act in a fair, reasonable and transparent manner and ought to have scrutinized the veracity and validity of documents submitted by BNC instead of overlooking the defects and discrepancies in its bid documents. That CIDCO and MSETCL have extended a favour to BNC by deliberately ignoring the deficiencies and defects in the bid documents, thereby exhibiting arbitrariness. In support of his contention, Mr. Khandeparkar would rely upon the judgments in Tata Cellular vs. Union of India5, Siemens Public Communication Networks Private Limited & Anr. vs. Union of India & Ors.6, and Uflex Limited vs. Government of Tamil Nadu & Ors.7.
Mr. Khandeparkar would further submit that despite the objections about discrepancies and defects in the bid documents of BNC being specifically brought to the notice of CIDCO, the same were deliberately ignored and now justifications for doing so are sought to be pleaded in the form of affidavit-in-reply. That the reasons for rejection of objections raised by petitioners which are not to be found in the minutes of meeting of tender committee cannot now be supplemented in the form of affidavit-in-reply. In support of his contention, Mr. Khandeparkar would rely upon the judgment in Mohinder Singh Gill & Anr. vs. The Chief Election Commissioner, New Delhi & Ors.8. Lastly, Mr. Khandeparkar would contend that CIDCO, who is a tendering authority, has virtually abdicated its functions and delegated the power of determining the eligibility of biddres to MSETCL. That there is complete non-application of mind on the part of CIDCO while holding BNC eligible as CIDCO relied upon recommendations of the third body, i.e., MSETCL for doing so. Even that recommendation of MSETCL is faulty as mere qualification of respondent no. 8 in alleged similar work at Shendra-MIDC and Seawood-TSS would not result in its automatic qualification in the present tender in absence of any material to show similarity of tender conditions in those works.
6. Mr. Hegde, the learned senior advocate appearing for CIDCO would oppose the petition and support the decision to hold respondent no.8 technically qualified. Mr. Hegde would take us through the justifications offered with regard to each objection raised by petitioners about eligibility of BNC by inviting our attention to the additional affidavit dated 10th January 2023. He would further submit that CIDCO is fully satisfied about BNC’s eligibility, who meets all essential terms and conditions of NIB. That CIDCO, being the tendering authority, is the best judge to determine whether BNC is technically qualified or not and petitioners cannot seek to substitute its own opinion in place of CIDCO’s opinion in that regard. That MSETCL is ultimately going to take over installation of cable systems and that therefore, MSETCL cannot be termed as a third party for ignoring its recommendations altogether. That the Chief Engineer of MSETCL was also a member of technical committee of the tender and since MSETCL is going to supervise the work on the basis of TQR provided by it, CIDCO is justified in relying on MSETCL’s recommendation about BNC being held qualified for similar works at Shendra MIDC in Aurangabad Zone and at Seawood TSS.
That the financial bid of respondent no.8 is substantially lower (-7.75%) as compared to the one submitted by petitioners (+4.5%) and that CIDCO would be in a position to save substantial amount of over Rs.6 Crore by awarding contract to BNC, who is fully qualified by meeting all the technical terms and conditions of the NIB. Mr. Hegde would place on record International Standard – IEC 62067.
Lastly, Mr. Hegde would contend that even if two interpretations are possible about BNC’s eligibility, the one placed by CIDCO, being the tendering authority, would prevail over the one sought to be placed by petitioners.
7. Mr. Jagtiani, the learned senior advocate appearing for respondent no.8-BNC would also oppose the petition. He would deal with each objection raised by petitioners about BNC’s eligibility and by taking us through the relevant terms and conditions of the NIB, BNC’s bid documents and IEC 62067, would demonstrate as to how BNC fully complied with all the essential and mandatory conditions of the NIB. Here again, instead of recording detailed submissions of Mr. Jagtiani about each objection raised by petitioners, we would refer to the same while recording our findings thereon in the later part of the judgment.
Mr. Jagtiani would further submit that awarding of contracts being commercial function performed by CIDCO, this Court would be loath in interfering with its decision, particularly with regard to holding a particular bidder as technically qualified. He would submit that the well settled principle of impermissibility to supplement reasons through affidavit-in-reply propounded in Mohinder Singh Gill (Supra) would have no application to the present case where CIDCO is entitled to demonstrate before this Court as to how BNC meets all the eligibility criteria. Mr. Jagtiani would further submit that it is CIDCO who has ultimately applied its mind on technical qualifications of bidders and has not, in any manner, abdicated or delegated the function to MSETCL as sought to be alleged by petitioners. Inviting our attention to the minutes of the tender committee, he would submit that a reference was required to be made to MSETCL only on account of objections raised by petitioners. That the decision taken by CIDCO, therefore, does not suffer from the vice of non-application of mind. In support of his contention, Mr. Jagtiani would rely upon judgments of the Supreme Court in Silppi Constructions Contractors vs. Union of India & Anr.9, Agmatel India Private Limited vs. Resoursys Telecom & Ors.’0, Galaxy Transport Agencies, Contractors, Traders, Transports and Supplies vs. New J. K. Roadways, Fleet Owners and Transport Contractors & Ors.” and N. G. Projects Limited vs. Vinod Kumar Jain & Ors.’2.
Reasons and Analysis:
8. Power corridors set up by transmission companies involve utility of large stretch of lands beneath such corridors. When such power corridor passes through an urban area, there is tendency to encroach upon public land beneath the power corridor. With the novel objective of preventing encroachment of land covered by power corridor in Sector-5, Kharghar as well as for using that land for public utilities and for plotted development, CIDCO decided to undertake the work of shift/conversion of overhead lines into underground cable system. The land freed by such conversion is to be utilized for development of plots for cultural complex, art gallery, center for performing arts as well as commercial plus residential plots in Sector 5, Kharghar, Navi Mumbai. Since overhead lines of MSETCL and MSEDCL are proposed to be converted into underground cable system, the work is to be carried out under the supervision of MSETCL. The technical specifications are also provided by MSETCL.
9. For appointing a contractor to execute the work of conversion of overhead lines of MSETCL and MSEDCL into underground cable system in Sector 5, Kharghar node, CIDCO invited NIB. NIB estimated cost of the work at Rs.50,77,79,970.04. The bidders possessing valid electrical contractor license and registered with CIDCO or with State Government of Maharashtra and its undertaking were permitted to submit their bids. Some relaxation is given in condition of registration. Since the execution of work involves laying of cables, which could be manufactured by third parties (manufacturer), technical eligibility criteria for manufacturer is also spelt out in the NIB, in addition to the eligibility criteria for bidders. Under the NIB, it is permissible for such Indian cable manufacturer to have technical collaboration with a foreign firm (collaborator) subject to submission of manufacturer authorization form to the bidder. Such collaborator is also required to meet some of the terms and conditions (Clauses B to D) in the NIB.
10. The relevant terms and conditions of the NIB are reproduced thus: –
“2) The bidder should have experience of work of “Supply, Erection, Testing & Commissioning of 220 KV EHV underground cable work” completed during the last 5 years.
a) One similar completed work of costing not less than the amount equal to 50% of the cost put the Bid:
OR
b) Two best similar completed works adding to a total cost of minimum 80% of the cost put to the Bid.
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3) Joint Venture/Consortiums are not permitted.
4) FINANCIAL CRITERIA: The Prospective Bidders will be qualified only if they have minimum financial capabilities as below: –
(A) Working Capital (Current Assets – Current Liabilities): Working Capital (Net Cash Flow) of the Prospective Bidders during last audited financial year should be greater than Rs.8.46 Crores.
(B) Profitability: Profit after Tax should be Positive for “Any Three Years” out of last five consecutive financial years. The profit shall not be negative for last two consecutive financial years.
(C)New Worth: Net worth of Prospective Bidder during last audited financial year should be greater than Rs.5.08 Crores.
(D) Average Annual Turnover: The average annual turnover of last three financial years should be equal to or greater than Rs.33.85 Crores.
NOTE:
i) The information regarding Financial Criteria and Average Annual Turn Over Certified by Chartered Account will be only considered.
ii) If bids are called between 1st April & 30th September of the year then latest audited financial year shall be a year before previous year for financial criteria (for e.g. if bids are called between 1st April 2021 & 20th September, 2021. Then latest audited financial year shall be a year before previous year for financial criteria i.e. 2019-20). However, the audited statement if submitted by the bidder for 2020-21 it will be accepted.
5) BID CAPACITY CRITERIA:
The Prospective Bidder will be qualified only if their available bid capacity (Certified by Chartered Account) is more than the Cost put to the Bid (For item rate percentage bid) / block estimated cost worked out by the department (for lump sum bid) of the work as per notice inviting Bid. The available bid capacity will be calculated base on the following formula:
Available Bid capacity= 1.25 x A x N – B
where,
A= Average Annual Turn Over for last Three financial years.
N = No. of years prescribed for Completion of the work.
B = Value of existing commitments and ongoing works to be completed during the period of Completion of work.
6) Technical Eligibility Criteria for 220 KV Cable Manufacturer:
A. The 220kV Cable manufacturer should be an Indian cable manufacturer having manufacturing facility in India for 220kV or above voltage grade.
B. Manufacturer should have experience of manufacturing & supplying of 220kV XLPE cable for at least 5 years.
C. The manufacturer should have carried out Design, Engineering, manufacturing, Type & PQ Testing on cable system as per relevant IEC along with accessories.
D. The manufacturer must have Designed, supplied, erected, tested and commissioned or supervised erection, testing and commissioning at least 10 km of 220 kV or higher voltage class EHV XLPE cable of lead/Corrugated Al./Poly Al. laminated sheath with accessories and the cable supplied by manufacturer should have been in satisfactory operation for a minimum period of 2 years.
E. All the type test and PQ Test should be within the Last 10 years.
F. Cable laying, jointing and termination shall be carried out under supervision from respective manufacturers only. For erection work, jointer of 220kV cable should be certified by accessory manufacturer.
G. The EHV cable and accessories of offered voltage class 220KV or above of size as mentioned in the scope of tender or above should have been successfully PQ & Type tested earlier. Such type test should be within last 10 years. The PQ test & type test should have been certified by any of the following National/International Accredited Laboratories.
1) CPRI, India 2) KEEMA, Holland
3) CESI, Itali 4) F.G.H., Germany
5) CERL, UK 6) EDS, France
7) Hydro-Quebec, Candada 8) KERI, Korea
9) CRIEPI, Japan 10) EDF, France
11) IPH, Germany 12) STRI, Sweden
The type test should have been conducted on the cable as well as accessories manufactured in the plant from where the manufacturer is proposing to supply the tender cable system.
H. Indian manufacturers who have established plant in India and have Technical Collaboration with a foreign firm (collaborator) are also eligible to give MAF (Manufacturer authorize form) to eligible Bidders/Contractors, provided the said Collaborator meets the experience as mentioned in clause no. B to D above provided Indian manufacturer has conducted PQ & type test as per IEC on cable system. Following documents shall be submitted by the Indian manufacturer
a. The Indian manufacturer shall submit Technical Collaboration agreement confirmation from their collaborator.
b. The Collaborator/Parent Company/ Principals should ensure backup support for 5 years for successful operation of the offered cable and accessories.
c. PQ test & Type test for 220kV Cable conducted for cable manufactured in Indian Plant.
7) Technical Eligibility Criteria for 220 KV Cable Accessories:
A. The manufacturer of accessories should have designed, manufactured, types test & PQ tested as per IEC and supplied the joints & termination for 220kV or higher-class cable system in last 10 years as on the date of opening of bids.
B. Cable accessory manufacturers to give assurance that hot spares will be supplied within 10 days from the date of order and the bidder/contractor has to ensure the availability of jointer/supervisor within 10 days from date of intimation.
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NOTES:
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5) Bidders will not eligible to participate for bidding, if
i. The bidder is deemed by law unable to pay his debts as they fall due, or enters into voluntary or involuntary bankruptcy, liquidation or dissolution (other than a voluntary liquidation for the purpose of amalgamation or reconstruction), or become insolvent, or makes an arrangements with, or assignment in favor of, his creditors, or agree to carry out the bidding under a committee of inspection of his creditors, or if a receiver, administrator, trustee or liquidator is appointed over any substantial part of his assets, or if, under any law or regulation relating to reorganization, arrangement or readjustments of debts, proceedings are commenced against the bidder or resolutions passed in connection with dissolution or liquidation or if any steps are taken to enforce any security or interest over a substantial part of the assets of the bidder, or if any act is done or event occurs with respect to the bidder or his assets which, under any applicable law has a substantially similar effect to any of the foregoing acts or events, then the bidder is not eligible to participate in bidding process.
ii. Blacklisted / debarred/ convicted contractors (s) are not eligible to participate the bidding process. Intending bidders should furnish the affidavit duly notarized on an appropriate value of stamp paper as per Sr.No.5 of NIB.”
11. Petitioners submitted their bid on 3rd December 2021. The exact details of manufacturer and collaborator, if any, in respect of petitioners’ bid are not available. However, in view of the fact that eligibility of petitioners is not questioned, such details are otherwise unnecessary. Respondent no.8-BNC submitted its bid in which Sterlite Power was shown as an Indian cable manufacturer. Along with its bid, BNC produced Manufacturer Authorization Form of Sterlite Power. The manufacturer-Sterlite Power has technical collaboration agreement for design, manufacturing, engineering and testing of 220 KV cable with Taihan Electric Wire Company Ltd., which is a company incorporated under the laws of South Korea. In support of such collaboration arrangement, a certificate dated 12th January 2021 issued by Taihan was filed along with the bid documents.
12. The technical bids were opened by CIDCO on 6th December 2021 and tender summary was published on its e-portal showing three bids to be technically compliant, namely, BNC, Universal Cables Ltd. (petitioners) and KEI Industries Limited. It appears that CIDCO also uploaded the technical bids of all three bidders on its e-tender portal. This is where petitioners undertook the exercise of examining the documents submitted by BNC in support of its technical eligibility. By their letter dated 14th December 2021, petitioners pointed out various alleged discrepancies in BNC’s technical bid. Petitioners however did not choose to challenge BNC’s technical qualification till opening of financial bids. Before opening of financial bids, the tender committee met on 2nd December 2021. The tender committee considered the objections raised by petitioners to BNC’s bid. In its first meeting, the tender committee had decided to submit all the technical documents for scrutiny of MSETCL as the work is to be executed on behalf of the MSETCL as per their sanctioned estimate and technical specifications. It was therefore decided to include Chief Engineer EHV PC, MSETCL, Vashi Zone as member of technical committee. The views of MSETCL were accordingly obtained on technical documents, especially in the light of the objections raised by petitioners. Based on the report submitted by MSETCL, an opinion was formed by the tender committee that there was no doubt on technical requirements of Sterlite Power for manufacturing of cables as per specifications. It would be appropriate to reproduce the relevant minutes of the second Tender Committee meeting held on 2nd February, 2022, which read thus: –
“1. During the technical scrutiny of the documents, letter is received from M/s. Universal Cables Ltd. & they have raised some technical observations on the documents submitted by M/s. BNC Power Projects Ltd. and their proposed manufacturer of 220 KV Cables M/s. Sterlite Power Transmission Ltd.
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1. As decided in the 1st tender committee meeting the subject work is to be executed on behalf of MSETCL as per their sanction estimate & technical specifications, it is decided to forward the technical documents for scrutiny to MSETCL authorities and obtain their views on the technical documents submitted by bidders. It is also decided that the Chief Engineer EHV PC, MSETCL, Vashi Zone is to be included as the member of technical committee for the subject tender.
Accordingly, the technical documents and technical observation raised by M/s. Universal Cables Ltd. were sent to Chief Engineer EHV PC, MSETCL, Vashi Zone (pls ref C/49). CE MSETCL has sent the detailed report on verification of technical bid documents of M/s. BNC Power Projects Ltd. in view of the objection raised by M/s. Universal Cables Ltd. In the report it is clarified that CIDCO has floated the tender for the subject work which is to be executed under supervision of MSETCL by using TQR provided by MSETCL. Hence the bidder M/s. BNC Power Projects Ltd. collaboration with M/s. Sterlite Power Transmission Ltd. for 220KV cable manufacturer may be qualified as per mentioned TQR as have been qualified by corporate office, MSETCL, Mumbai for same work of 220KV Shendra MIDC under Aurangabad Zone and also, they had executed the work successfully for 220KV Seawood TSS and substation was charged on 31.03.2019 and till date working satisfactorily. Hence there is no doubt on M/s. Sterlite Power Transmission Ltd. for manufacturing of cables as per specification.
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Tender committee after reviewing the details of mandatory eligibility criteria and minimum qualifying marks as per NIB and satisfied with the clarification of the grievances received and recommended for opening of the financial bids of 3 nos. of bidders who are qualifying mandatory eligibility criteria and minimum qualifying marks as per NIB is as below.
i) M/s. KEI Industries Ltd.
ii) M/s. BNC Power Projects Ltd.
iii) M/s. Universal Cables Ltd.”
13. The financial bids were opened on 4th February 2022. Thus, for a substantial period from 6th December 2021 (when technical bids were opened and uploaded) till 4th February 2022, petitioners did not challenge technical qualification of BNC, except addressing letter dated 14th December, 2021. The financial bids of the three companies are as under:
