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M/S DONGFANG ELECTRIC CORPORATION versus RELIANCE ENERGY LIMITED & ORS

High Court of Punjab and Haryana, Chandigarh

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M/S DONGFANG ELECTRIC CORPORATION v. RELIANCE ENERGY LIMITED & Ors - CWP-13811-2005 [2006] RD-P&H 42 (6 January 2006)

C.W.P.No.13811 of 2005 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

C.W.P.No.13811 of 2005

Date of decision: January 27, 2006

M/s Dongfang Electric Corporation

...Petitioner

Through:

Mr.A.K.Chopra, Senior Advocate

with Mr.Ashish Chopra and

Mr.Sunil Goel, Advocates

v.

Reliance Energy Limited and others

...Respondents

Through:

Mr.Rajiv Atma Ram, Senior

Advocate with

Mr.Sunish Bindlish, Advocate

for respondent No.1.

Mr.H.S.Hooda, Advocate General

Haryana with

Mr.Sanjiv Bansal, Additional

Advocate General, Haryana

for respondents No.2 and 3.

CORAM:
Hon'ble Mr.Justice D.K.Jain, Chief Justice Hon'ble Mr. Justice Hemant Gupta

1. Whether Reporters of local papers maybe allowed to see the judgment ?

2. To be referred to the Reporters or not ?

3. Whether the judgment should be reported in the Digest? C.W.P.No.13811 of 2005 [2]

D.K.Jain, C.J.

Rule DB.

2- Since the project, subject-matter of the present litigation, is of vital public importance, disposal of the case does not brook any delay.

Accordingly, with the consent of learned counsel for the parties, who have addressed us at considerable length, we proceed to dispose of the matter at the motion hearing stage.

3- By this writ petition, under Articles 226/227 of the Constitution of India, the petitioner, hereinafter referred to as `DEC', a Corporation organized and existing under the laws of People's Republic of China, with its registered office in China, questions the legality and propriety of decision, dated 18.9.2005, taken by the Haryana Power Generation Corporation Limited, respondent No.2, hereinafter referred to as `the owner', permitting respondent No.1, namely, Reliance Energy Limited, (for short, `REL') to change its collaborator and to extend the zero date of the project up to 20.8.2005, subject to certain conditions, stipulated in the said letter.

4- The factual matrix, on which the foundation of this judicial action is laid, is as follows:

C.W.P.No.13811 of 2005 [3]

On 20.5.2004, the owner, a Public Sector Undertaking, under the control of Government of Haryana, respondent No.3 herein, issued notice inviting bids, (`NIB', for short) for engineering, design, manufacture, erection, testing and putting into satisfactory operation a thermal power generating station plant of 2x300 MW capacity at Yamunanagar on turnkey Engineering, Procurement and Construction (`EPC', for short) basis. The bulky tender document, running into few hundred pages, in more than one volume, contained several tender conditions. The qualification requirement of a bidder was spelt out in clause 1.8.15 of the instructions to the bidders, contained in Volume-I, Section 1 of the Bid Document. The relevant portion of the said clause reads thus:

"A regular turnkey management and contracting agency, which has executed coal fired thermal power plants on EPC basis for at least (2) units of 210 MW or higher rating would be eligible to bid. In such a case, prior to submission of bid, the bidder should associate/ collaborate with the manufacturer of Steam Generator and Steam Turbine Generator of at least two (2) sets of 250 MW or higher rating and should furnish along with the Bid, a copy of the agreement jointly executed for this project by him and the manufacturers of SG and STG for successful performance of the thermal power plant including SG, STG and associated auxiliary C.W.P.No.13811 of 2005 [4]

equipment".

5- According to the eligibility criteria, a regular turnkey management and constructing agency, who had executed coal fired thermal power plants on EPC basis for at least two units of a particular rating was eligible to bid. The said clause contemplated association/collaboration of the bidder with a manufacturer of Steam Generator (SG) and Steam Turbine Generator (STG), but it was stipulated that in order to be eligible to bid, the bidder should collaborate with the manufacturer of SG and STG prior to the submission of the bid and furnish along with the bid, a copy of the agreement jointly executed for this project by him and the manufacturer of SG and STG for successful performance of thermal power plant including SG, STG and associated auxiliary equipment. According to DEC, since REL was interested in the project, but on its own did not fulfil the aforenoted eligibility criteria, as it was neither a manufacturer of SG nor STG, it approached DEC to collaborate with it. After preliminary discussions, vide its letter dated 14.7.2004, DEC expressed its willingness to collaborate with REL for Boiler, Turbine and Generator (for short, `BTG').

6- A joint agreement, styled as "Deed of Joint Undertaking of C.W.P.No.13811 of 2005 [5]

Consortium Members" (hereinafter described as `JDU'), was executed and signed between DEC and REL , in favour of the owner of the project. The said JDU was submitted as annexure to the bid.

7- After the submission of the bid, discussions took place between REL and the owner. DEC claims to have also participated in the said discussions, which included technical discussions, relating to main plant package. It is averred that subsequently, during the course of discussions, REL sought deviations in certain clauses of the tender document, including permission of the owner to replace DEC with some other manufacturer of the BTG portion of the project, but on being objected to by the owner, the proposed deviations were withdrawn by REL in the meetings held on 14.8.2004, 19.8.2004 and 28.8.2004.

8- Ultimately, the work was awarded to REL, vide owner's letter of award dated 30.9.2004. It is alleged that although after the issue of letter of award, in terms of the JDU, REL should have signed the equipment supply agreement with DEC, but instead, it made an unreasonable demand upon DEC to reduce the price substantially by 15%, which was contrary to the understanding between DEC and REL. On 15.12.2004, REL approached the owner seeking its consent for change of C.W.P.No.13811 of 2005 [6]

the collaborator. It also simultaneously approached the Chinese authorities for their approval. Some correspondence was exchanged between REL and China Chamber of Commerce for Import & Export of Machinery & Electronics Products. However, REL's request for change of collaborator was rejected by the owner, vide letter dated 13.6.2005 and REL was advised to implement the project, as per the terms of contract and letter of award. Instead of complying with the said letter, vide its letter dated 15.6.2005, REL again requested the owner to reconsider its request for change of collaborator. It is averred that DEC learnt from a news item, published on 11.8.2005, that the owner has permitted REL to change its collaborator and has also extended the zero date.

9- It is pleaded that permission to change the collaborator behind the back of DEC is not only violative of the tender conditions; the extension of zero date would also delay the project and the owner shall suffer a loss to the extent of Rs.209 crores besides loosing interest subsidy, from the Government of India, to the tune of Rs.150 crores. It is thus, pleaded that the decision to permit change of BTG collaborator, being actuated by mala fides; discriminatory; unreasonable and unconstitutional, deserves to be quashed.

C.W.P.No.13811 of 2005 [7]

10- The writ petition is contested by the respondents. In the written statement, filed on behalf of the owner, various preliminary objections to its maintainability have been raised. It is pleaded that the writ petition is not maintainable because: (i) DEC has no locus standi to prefer the instant writ petition as there is no privity of contract between it and the owner, who has issued the impugned communication; (ii) being a company incorporated in China, DEC has no juristic entity in India and therefore, it cannot invoke the extra-ordinary writ jurisdiction under Articles 226/227 of the Constitution, as a foreign company is not entitled to claim protection guaranteed under Article 19 of the Constitution; (iii) the decision to permit change of collaborator is purely an administrative decision, taken by the authorities in the interest of the State, and cannot be subjected to judicial review and (iv) DEC cannot be permitted to enforce its contractual rights, if any, by invoking writ jurisdiction. Asserting that the owner had an unfettered discretion/power under clause 1.22.6 of the tender conditions to permit change of membership structure and that the said power was exercised keeping in view the larger public interest and to ensure the success of the project. It is clarified that REL's request for deviations was not acceded to in the meetings held on 14.8.2004 and 19.8.2004, because C.W.P.No.13811 of 2005 [8]

the same was viewed as deviation before the finalisation of the tender, which is not permitted.

11- REL has also raised similar preliminary objections to the maintainability of the writ petition. In addition thereto, it is stated that clause 2.26.0 of the general conditions of contract (Volume-I/1.0-23) contemplates reference of disputes or differences arising out of or in connection with the contract to arbitration and therefore, DEC cannot be permitted to invoke the writ jurisdiction of this Court. It is also averred that REL has already signed a material supply agreement with another Chinese Company, namely, Shanghai Electric (Group) Corporation, China, which is recognized as a Ist class Power Plant Equipment Manufacturing Company.

Various disputes, which are stated to have arisen between DEC and REL have been enlisted in the written statement. Subsequently, an additional affidavit was filed on behalf of REL, wherein it is pointed out that both DEC as well as the new collaborator, namely, Shanghai Electric (Group) Corporation being Chinese State-owned enterprise, the plea of arbitrariness as enshrined in Article 14 of the Constitution is not available to DEC because any benefit on account of supply of equipment by either of the parties shall ultimately accrue to the Government of China.

C.W.P.No.13811 of 2005 [9]

12- Mr.A.K.Chopra, learned senior counsel appearing for DEC, making a frontal attack on the impugned decision, has urged that there is no provision in the NIB which permits change of a collaborator after the submission of the bid and therefore, by permitting such a change, the owner has deviated from the essential conditions, stipulated in the tender documents as well as in the letter of award. It is argued that insofar as clause 1.22.6 of the instructions to the bidders, heavily relied upon by the respondents in support of their stand that it authorises the owner to permit the change, is concerned, it is not applicable in the case of a collaborator because it falls under the heading "Constitution of the Bidder" (1.22.0).

Admittedly, DEC is not a bidder. To buttress the stand, learned counsel has referred us to the afore-extracted clause 1.8.15, which, inter alia, mandates execution of a joint agreement between the bidder and the collaborator, prior to the submission of the bid. Elaborating the proposition, learned counsel submits that furnishing of a copy of the agreement jointly executed by the bidder with the collaborator, in favour of the owner, along with the bid, for successful performance of the thermal plant being an essential condition, the question of furnishing such an undertaking after the acceptance of the bid does not arise, which would be the case in the event C.W.P.No.13811 of 2005 [10]

of change of the collaborator. Reliance is also placed on Poddar Steel Corporation v. Ganesh Engineering Works and others, (1991) 3 SCC 273 to contend that an essential condition of a tender notice cannot be waived. It is pleaded that a similar request, made by REL, during the course of finalisation of the bid, seeking permission to change the collaborator, having been rejected earlier, in the absence of any change in the circumstances, replacement of the collaborator could not be permitted. It is urged that mala fides and connivance between REL and the owner are obvious from the fact that request of REL for change of collaborator was received and processed on the same very day, namely, on 18.8.2005.

Learned counsel has also argued that in view of the differences between DEC and REL, it was open to the owner to award the contract to the second bidder, namely, Bharat Heavy Electricals Ltd. or to invite fresh bids.

Learned counsel has also urged that DEC, having been accepted as a collaborator, making REL eligible to bid, an opportunity of being heard before issuing the impugned letter should have been granted to them.

Lastly, it is submitted that respondent No.2 having accepted the JDU, executed in its favour jointly by the bidder and the collaborator and having evaluated the bid by taking into consideration the experience and C.W.P.No.13811 of 2005 [11]

qualification of the collaborator, it cannot now be allowed to oust the collaborator by keeping the same bidder. Learned counsel has strenuously urged that the impugned decision is based on extraneous considerations and therefore, deserves to be set aside. In support of the proposition that even in contractual matters, the State or its instrumentality has an obligation in law to act fairly, justly and reasonably, reliance is placed on the decisions of the Supreme Court in ABL International Limited v. Export Credit Corporation of India Ltd., (2004) 3 SCC 553; Kumari Shrilekha Vidyarthi and others v.

State of U.P. and others, (1991) 1 SCC 212; Ramana Dayaram Shetty v. The International Airport Authority of India, AIR 1979 SC 1628 and Tata Cellular v. Union of India, (1994) 6 SCC 651.

13- Mr.Rajiv Atma Ram, learned senior counsel appearing for REL, has vehemently argued that the present petition is not maintainable because: (i) a writ petition, alleging violation of Article 14 of the Constitution, cannot be entertained at the behest of a foreign company, as Article 14 has to be read in conjunction with Article 19 of the Constitution, which benefit is not available to a foreign company; (ii) there is no privity of contract between DEC and the owner and respondent No.3 or any other government agency; (iii) the JDU, being in the nature of a contract, a writ C.W.P.No.13811 of 2005 [12]

of mandamus cannot be issued for enforcing contract qua contract and (iv) there is an arbitration agreement between the parties for settlement of any dispute or differences arising out of or in connection with the contract (clause 2.26.1). In support of the preliminary objections, reliance is placed on several decisions of the Supreme Court, including Indo-China Steam Navigation Co.Ltd. v. Union of India, AIR 1964 SC 1140; Yusuf Abdul Aziz v. State of Bombay, AIR 1954 SC 321, wherein it was held that plea under Article 14 cannot be sustained without falling back upon under Article 19 of the Constitution and State of Jammu and Kashmir v. Ghulam Mohd. Dar and another, 2004(12) SCC 327, wherein it was observed that writ in the nature of mandamus would not ordinarily issue for enforcing the terms and conditions of a contract. On merits, the stand of the learned counsel is that there is no clause in the NIB, which prohibits the change of collaborator.

14- Mr. H.S.Hooda, learned Advocate General, Haryana, appearing on behalf of the owner, has urged that under clause 1.22.6 of the NIB, after the selection, membership structure of the bidder may change with the prior approval of the owner, but a lead member of the consortium, which is not the case here, cannot be changed under any circumstances. It is C.W.P.No.13811 of 2005 [13]

argued that the power to permit a change is inherent in the power to permit association of a collaborator. It is contended that Joint Undertaking, in terms of clause 1.8.15, is not a tripartite agreement between the bidder, collaborator and the owner. It is a Joint Undertaking by DEC and REL in favour of the owner for successful performance of the plant and associated auxiliary equipment. It may be irrevocable at the instance of DEC and REL, but does not bind the owner and in any case, the same does not take away the right of the owner to permit the change of collaborator. Referring us to certain conditions in the JDU (in form `J'), learned Advocate General has submitted that under the said undertaking, the collaborator does not have an independent liability for the completion and performance of the project, for which only the bidder is responsible. It is submitted that collaborator's liability is only towards the bidder and their relationship is governed by the equipment supply agreement, to be signed between the bidder and the collaborator, which admittedly has not yet been signed in the present case.

While asserting that the owner had an unfettered discretion to permit change of collaborator, learned counsel has pointed out that the change was permitted, keeping in view the following factors: (i) the contract was awarded on engineering, procurement and construction basis against C.W.P.No.13811 of 2005 [14]

International Competitive Bidding in favour of REL at a contract price of Rs.2097 crores, which is one of the most competitive prices for such a project, more-so when the prices are firm and not affected by price escalation; (ii) the alternate collaborator has offered same technology with some better performance parameters and is standing guarantee of improved performance; (iii) while allowing change of collaborator and extension of zero date, the completion period has been compressed to 27 and 30 months for Unit I and II respectively in place of original 30 and 33 months, thereby salvaging 3 months from the time lost due to unnecessary dispute between DEC and REL and (iv) by change of collaborator, the project implementation shall be quicker than with any other available option without paying a single extra penny. It is also pointed out that the option to re-tender would have involved a further delay of about a year in award of the work, besides higher cost due to over-all price escalation. It is thus, pleaded that the impugned administrative decision, taken in the larger interest of the State, is not amenable to judicial review. In support, reliance is placed on a decision of the Apex Court in Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd., (1997) 1 SCC 738.

C.W.P.No.13811 of 2005 [15]

15- Before adverting to the rival stands, it would be necessary to bear in mind the broad parameters governing the exercise of power of judicial review while examining an administrative decision. Although Article 226 of the Constitution confers on the High Courts a very wide power of judicial review to examine whether the administrative action is valid or not, but judicial restraint, albeit self recognised, in interfering in matters relating to administrative functions, particularly in contractual matters is the order of the day. True that even in contractual matters a public authority does not have an unfettered discretion to ignore the norms recognized by the Courts while dealing with public authority but at the same time if a decision has been taken by a public authority in a bona fide manner, although not strictly following the norms laid down by the Courts, such decision is upheld on the principle that the Courts, while judging the constitutional validity of executive decision, must grant certain measure of freedom of "play in the joints" to the executive (See: Sterling Computers Ltd. v. M & N Publications Ltd., (1993) 1 SCC 445). Taking note of these observations, in Union of India v. Dinesh Engineering Corporation, (2001) 8 SCC 491, referred to by learned counsel appearing for the petitioner, their Lordships of the Apex Court have observed that a public authority even in C.W.P.No.13811 of 2005 [16]

contractual matters should not have an unfettered discretion and in contracts having commercial element even though some extra discretion is to be conceded in such authorities, they are bound to follow the norms recognized by the Courts while dealing with public property. This requirement is necessary to avoid unreasonable and arbitrary decisions being taken by public authorities, whose actions are amenable to judicial review.

16- In Air India v. Cochin International Airport Ltd., JT 2000 (1) SC 481, taking note of various earlier decisions, including Ramana Dayaram Shetty's case (supra) and Tata Cellular's case (supra), their Lordships of the Supreme Court observed that the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily.

Though that decision is not amenable to judicial review, but the Court can examine the "decision making process" and interfere if it is found vitiated by mala fides, unreasonableness or arbitrariness. It was held that even if some defect is found in the decision making process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on C.W.P.No.13811 of 2005 [17]

the making out of a legal point. It was emphasized that the Court should always keep larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to the conclusion that overwhelming public interest requires interference, the Court should intervene. (Also see: Master Marine Services (P) Ltd. v. Metcalfe and Hodgknison (P) Ltd., (2005) 6 SCC 138).

17- Thus, the moot question which arises for consideration is as to whether the decision of the owner to permit the replacement of DEC , who was associated with REL as its collaborator at the time of submission and acceptance of the bid, could be said to be arbitrary, warranting interference in judicial review on the touch-stone of the afore-noted broad principles ?

18- To answer the question, it would be useful to notice a few clauses of the NIB, to which reference was made by learned counsel for the parties.

19- The term "bidder" is defined in clause 2.3.7(a) of the general conditions of contract and it means a single company, a consortium of companies, a joint venture or any other appropriate form, who qualifies to participate in the process of bidding. Clause 1.22.0 (Vol.I Section 1.0) of C.W.P.No.13811 of 2005 [18]

the instructions to the bidders, deals with constitution of the bidder. It provides that the bidder and/or each of the individual member of the consortium should be a company under the Companies Act, 1956. Clause 1.22.2 stipulates that the bidder may be a single company, a consortium of companies, a joint venture or any other appropriate form. The term "consortium" is also defined in the same clause, but we are not exactly concerned with this definition because the parties are ad idem that in the present case, the bid was submitted by REL as a single company with the petitioner as its collaborator. We may, however, note that in terms of this clause, a copy of the agreement entered into amongst the members of the consortium was required to be attached with the technical proposal, in the format prescribed in Annexure `J' to the NIB. Though, not being a case of consortium, the clause was not applicable in the present case, yet the joint undertaking was furnished in the format prescribed in the said Annexure.

Clause 1.22.6, which is at the center stage, reads as follows: "Change in Membership Structure: Once a Bidder is selected, the membership structure of the Bidder shall not be changed, without the prior written approval of the Owner. The lead member, in case of a consortium, shall not be changed under any circumstances." (Emphasis supplied by us).

C.W.P.No.13811 of 2005 [19]

It is manifestly clear from the clause that after the selection of a bidder, its membership structure cannot be changed without the prior written approval of the owner. To put it differently, the membership structure of the bidder could be changed with the prior written approval of the owner. However, the change of a lead member, in the case of consortium, is prohibited. We, therefore, find substance in the stand of the owner that they had the discretion to permit the change of membership structure of the bidder, which obviously included a collaborator or an associate. We do not read any explicit or implied condition in the NIB, prohibiting change of a collaborator. We, therefore, reject the argument of learned counsel for DEC that the owner has acted in violation of the essential conditions in the bid document.

20- Clause 1.23.1, in the same volume and section, contemplates furnishing of contract performance guarantee by the successful "bidder" in the form of bank guarantee of 10% of the contract price for timely completion. Similarly, clause 1.24.0 stipulates furnishing of equipment performance guarantee by the successful bidder. Clause 1.20.8 lays down the criteria for evaluation and comparison of bids and provides that evaluation of "bidder's" proposal will be based on detailed proposal C.W.P.No.13811 of 2005 [20]

analysis with emphasis on technical ability, quality and experience of the "bidder." From these clauses, it is evident that the responsibility for successful execution of the contract and trouble-free performance of the plant/unit primarily and mainly lies on the bidder, which, in the instant case was REL.

21- It seems that after the submission of the bid, some differences were brewing between REL, who admittedly was the bidder, and DEC. From various documents, referred to by learned counsel for the parties, it appears that the allegation of REL was that DEC was unwilling to conform to the project specifications; despite their best efforts at the top level, the issues could not be sorted out and they had no option but to snap association with DEC. Whereas DEC's letter, dated 15.4.2005, addressed to the Principal Secretary to the Chief Minister, Haryana, inter alia, controverting bidder's allegation of non- cooperation and objecting to their request for change of collaborator, indicates that, according to them, the bone of contention was REL's demand for 15% reduction in the quoted price, which could not be accepted. It appears from the said letter that DEC had asked for additional price for the additional work, REL had asked them to undertake. Be that as it may, the correspondence exchanged between the C.W.P.No.13811 of 2005 [21]

parties shows that DEC and REL had reached a point of no return and hence they could not jointly carry on with the project. Perhaps conscious of its obligations under the bid conditions, some of which have been referred to above and the letter of award, REL again took up the matter with the owner for change of the collaborator. Having found that the owner had the power to permit change of the collaborator, the question, which now arises is whether under the given circumstances, the impugned decision could be characterised as arbitrary or actuated by any mala fides, as alleged by DEC.

22- Having glanced at the "decision making process", in the light of the material available on record, we are of the considered view that the decision of the owner to permit change of collaborator, cannot be said to be arbitrary or actuated by mala fides.

23- At the out-set, we may note that the stand of DEC that request for change of collaborator was made on 18.8.2005 itself is not borne out from the record. From the correspondence, available on record, it appears that the request made by REL, on 15.12.2004, for change of collaborator was rejected on 13.6.2005. Thereafter, vide their letter dated 15.6.2005, while explaining their conduct and indicating reasons for snapping association with DEC, REL asked the owner to have a re-look on C.W.P.No.13811 of 2005 [22]

their request for approval for change of collaborator. DEC explained their stand, vide letter dated 25.6.2005, and objected to the change of BTG collaborator. Notwithstanding DEC's objection, a meeting of the Special High-Powered Purchase Committee took place on 11.8.2005. In the minutes of the meeting, it was recorded that on receipt of request on 15.12.2004, for change of their collaborator with another main plant equipment manufacturer, which request was contested by DEC on the ground that REL had qualified for the bid on their strength, the matter was referred to the Advocate General, Haryana for opinion. He advised that there was no directly applicable provision of the bid documents, which permits or bars a change of collaborator and it was open to the owner to take the final decision in the matter at its own level and in exercise of the inherent discretion vested in it. The case was subsequently considered by the State Government and a meeting was held jointly with the representatives of DEC and REL on 14.4.2005. In the said meeting, REL explained that it was not possible for them to continue with DEC, since they were not agreeable to abide by the technical and commercial conditions of the NIB. They proposed to take Shanghai Electric (Group) Corporation as the collaborator, who was offering better technical parameters. The meeting note further C.W.P.No.13811 of 2005 [23]

records that it was apparent that both the parties had no common meeting ground and differences between them were so wide that a reconciliation was not possible. The Committee then examined the other options of either awarding the work to the second bidder or to go in for fresh tendering. It found that both the said options were not feasible due to likely time and cost overrun in view of steep price rise in steel and other metal alloys etc.

Taking into consideration various factors, like the interest subsidy, financial repercussions, completion of project on schedule, guarantee of improved parameters by Shanghai Electric (Group) Corporation and the undertaking given by REL to offset any loss of interest subsidy in case of failure to meet the commissioning schedule, the Committee decided to approve the request of REL for change of collaborator with the following conditions:

"(i) The Zero date of the project be extended to 20.8.2005. The completion period shall be 27 months and 30 months for the Unit-1 & Unit-2 respectively from the extended Zero date.

(ii) REL shall indemnify against any possible litigation by M/s DEC against the State/HPGC and financial repercussions arising out of change of collaborator for GoH/HPGC.

C.W.P.No.13811 of 2005 [24]

(iii) REL shall guarantee the improved performance parameters of the new collaborator.

(iv) The new collaborator shall qualify as per pre- qualification criteria and abide by all terms and conditions of the tender. The collaborator shall be required to furnish bank guarantee equivalent to 5% of contract price of collaborator's scope of supply as per norms indicated by CEA.

(v) REL shall undertake to off set any loss of interest subsidy under the AG&SP scheme, subject to maximum of Rs.20.00 crore, in case HPGC looses interest subsidy due to extension of time for the realization of the project.

(vi) In case the work is suspended because of any litigation by M/s DEC, then REL shall refund the entire mobilization advance to HPGCL within seven days of the order of such suspension of work failing which the HPGCL would encash the bank guarantee and suitable provision shall be made by REL in the bank guarantee for mobilization advance in this regard.

(vii) All other terms and conditions of the original LoI shall remain unchanged."

24- Having regard to the factual scenario, as emerging from the record, we hardly find any material to hold that the impugned decision is arbitrary or irrational or actuated by malafides or is "so outrageous in its defiance of logic or of accepted moral standards that no sensible person who C.W.P.No.13811 of 2005 [25]

had applied his mind to the question to be decided could have arrived at it" and thus, it suffers from Wednesbury unreasonableness, as analysed by Lord Diplock in Council of Civil Service Union v. Minister for the Civil Service, 1984(3) All ER 935, warranting interference in judicial review.

25- The plea of DEC that being the collaborator and a party to the JDU, furnished to the owner (respondent No.2), an opportunity of hearing should have been granted to them, before taking a final decision on the request made by REL for change of collaborator is also devoid of any substance. As noted above, in the joint meeting of DEC and REL, convened by the owner, after hearing their respective versions, it was felt that there was no common meeting ground and differences between the two were so wide that a reconciliation was not possible. This fact has been recorded in the minutes of the Special High Powered Purchase Committee, held on 11.8.2005. Even otherwise, rules of natural justice are not strait-jacketed formula. They are flexible and depending on the facts and circumstances of a case, they can even be excluded altogether (See: Bar Council of India v.

High Court of Kerala, (2004) 6 SCC 311; Union of India v. Tulsiram Patel, (1985) 3 SCC 398. In Chairman, Board of Mining Examination v. Ramjee, (1977) 2 SCC 256, their Lordships of the Supreme Court observed that if C.W.P.No.13811 of 2005 [26]

fairness is shown, there can be no complaint of breach of natural justice.

Under the given circumstances, we feel that grant of an opportunity of hearing to DEC by the owner was meaningless. Accordingly, we reject the contention.

26- For the foregoing reasons, we are of the considered view that the impugned decision to permit change of collaborator goes beyond the scope of judicial review, as elucidated in the afore-noted decisions of the Apex Court. We may, however, clarify that our comments on the afore- mentioned clauses of the NIB and the conduct of the parties are purely incidental for the purpose of this writ petition and in the event of DEC choosing to avail of any other remedy, for the redressal of any grievance, with regard to the subject contract, the same shall be considered on its own merits, uninfluenced by any observation in this judgment.

27- For the view, we have taken above, we deem it unnecessary to go into the merits of the preliminary objections raised by the respondents in regard to the maintainability of the writ petition.

28- In the final analysis, therefore, we do not find any merit in the writ petition and the same is dismissed accordingly. Rule is discharged.

C.W.P.No.13811 of 2005 [27]

29- However, on the facts and circumstances of the case, there will be no order as to costs.

( D. K. Jain )

Chief Justice

( Hemant Gupta)

Judge

January 27, 2006

mk


Copyright

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