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Man Takraf Fordertechnik GmbH v. Neyveli Lignite Corporation Ltd. - WRIT PETITION No. 7002 OF 2002  RD-TN 220 (2 April 2002)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HON'BLE MR.JUSTICE E.PADMANABHAN
WRIT PETITION No. 7002 OF 2002
WMP NO. 9671 OF 2002
Man Takraf Fordertechnik GmbH
Torquauer Strasse 336,
04337 Leipzig, Germany ..Petitioner Vs.
1.Neyveli Lignite Corporation Ltd.,
rep. By its Chairman and Managing Director,
135, Periyar EVR High Road,
2.General Manager (Contracts)
Neyveli Lignite Corporation Ltd.,
Corporate Office, Neyveli 607 801. .. Respondents For petitioner :: Mr.N.R.Chandran, S.C.,
& Advocate General
For respondents:: Mr.N.A.K.Sharma
Writ petition filed under Art.226 of The Constitution of India praying for the issue of a writ of mandamus, as stated therein. :O R D E R
The petitioner prays for the issue of a writ of mandamus directing the respondents to consider the offer of the petitioner company dated 11.10.2001 including the price bid (Part II) pertaining to tender No.0015D/MIE/CONT.MINES/01 dated 1.8.2001 published by the first respondents corporation before finalising or approving the same.
2. On 5.3.2002 notice was ordered to the respondents. The respondents entered appearance. Certain interim order was also passed. The respondents filed their counter. Both the parties filed separate typed set containing material papers.
3. Heard Mr.N.R.Chandran, learned Advocate General appearing for Mr. K.S.Viswanathan for the petitioner and Mr. N.A.K.Sharma, learned counsel appearing for the respondents.
4. The only question that arise for consideration is:- whether a case has been made out to issue a writ of mandamus directing Neyveli Lignite Corporation to consider the tender submitted by the petitioner company along with two other price bids received and opened already?
5. The first respondents invited bids of international competitive bidding by advertisement on 8.8.2001 for design, manufacture, supply, erection, commissioning and testing for supply of Mobile Transfer Conveyor of 4420 Metric Cube/Hr -capacity- -3 Nos vide tender dated 1.8 .2001. The petitioner and other tenderers submitted Part-I Bid guarantee, technical and commercial aspects and Part-II price on 11.10.2001 which is the last date. The Bid Part-I was opened on 11.10.2001. After the opening of the technical bid and Part-I there has been exchange of correspondence between the petitioner and the respondents. On 29.10.2001 the respondents wrote to the petitioner which reads thus:-
"All the clauses in the commercial conditions of Contract and Technical Specification as detailed in Draft Contract are vital and no deviation shall be permitted in the clauses. Bids with deviation shall run the risk of rejection."
6. There has been further exchange of correspondence and the respondents called the petitioner company to send its representative for discussions on Techno-commercial conditions of the petitioner's offer at Neyveli on 11.1.2002. The meeting was held on 17.1.2002. It is alleged that the petitioner had agreed to withdraw the clarifications in writing. On 18.1.2002 the petitioner company agreed to draw their clarifications raised by a letter addressed to the respondents. AS the said letter dated 18.1.2002 had certain riders the respondents once again by reply dated 31.1.2002 requested the petitioner company to withdraw the deviations indicated by the petitioner, besides making it clear that failure of compliance of the tender conditions will result in non consideration of the offer submitted by the petitioner company. Ultimately on 2.2.2002, the respondent once again conveyed to the petitioner that the petitioner by 5.2.2002 should conform unconditional acceptance of tender conditions both commercial and technical specifications and indicated the consequences. On 4.2.2002, the petitioner claims that it had conformed its earlier position and state that there is unconditional acceptance of commercial conditions and technical specifications prescribed by NLC.
7. The petitioner came to know that the Price Bid (Part-II) was opened on 20.2.2002 without inviting the petitioner company and only two other price bids were opened. According to the petitioner the opening of the price bid is the stage where the participation of all the eligible bidders is mandatory and the breach of the same is illegal, unfair and unreasonable. The petitioner company is a reputed company and it has been rated high by the respondents. The action of the respondents in not inviting the petitioner to be present at the time of opening of the price bid Part-II amounts to arbitrary denial of reasonable opportunity in the finalisation of tenders. The respondent being a Government Of India undertaking, should act fairly and reasonably. If the petitioner's bid is not considered it would amount to denial of fair opportunity besides it is arbitrary. Hence the present writ petition.
8. Per contra, the respondents while resisting the writ petition as devoid of merits and the contentions raised are vexatious and abuse of process set out the details of the tender notification. According to the respondents the international competitive bidding consist of two Parts, namely Part-I Bid guarantee, technical and commercial aspects ;and Part II, Price. In all three companies submitted their bids on 11.10.2001 in two parts. On 11.10.2001, Part I of the Bids were opened. The technical and commercial portions of the respective bids were read out in the presence of representatives of the three bidders including the petitioner. Thereafter the tender Committee scrutinised Part-I of the respective bids. On scrutiny certain minor errors/ defects were noted with respect to the wordings of bid guarantee and pre-qualification requirements. All the three bidders were required to rectify the defects. Three bids were taken up to ascertain satisfaction of technical and commercial aspects. By a covering letter dated 1 1.10.2001 while submitting the bid the petitioner had set out thus:-
"Keeping in view the overall picture of the tender and our past experiences, we have sought few clarifications to the commercial conditions of contract as an annexure to this cover letter, which could be discussed and mutually agreed during techno-commercial/pre-award discussions."
9. Along with the bid the petitioner had annexed a 14 page letter listing out clarifications/deviations to some of the clauses in the tender document (Vol.II). To ensure that all the three bidders uniformly agree to all the commercial and technical aspects as contained in the international competitive bidding separate communications were addressed to the three bidders on 17.10.2001 calling upon them to confirm whether they agree to comply with the terms and conditions ( commercial and technical aspects) as contained in the tender schedule in toto and they were required to confirm the same by 20.10.2001. Two other bidders confirmed their acceptance of all the terms and conditions without any reservation. The petitioner alone did not conform in clear terms the acceptance of its terms and conditions (commercial and technical aspects) in toto.
10. By letter dated 18.10.2001 the petitioner sought to raise certain objections to the commercial and technical terms. In other words, the petitioner had sought numerous deviations from commercial aspects and some of the deviations the petitioner sought for are serious and implicated substantial change in certain basic significant aspect of the contract. In Para 12 of the counter affidavit the same has been detailed. In view of the long contractual relationship the petitioner was once again called upon by letter dated 9.11.2001 to confirm as to whether it is ready to comply with the commercial and technical aspects in toto as contained in the tender conditions without any reservation. This was followed with another letter dated 7.12.2001. As there was no change in the stand despite its attention being drawn and exchange of correspondence the petitioner was called upon to attend a Meeting. The meeting was attended and the petitioner's representative adopted the same contradictory stand inasmuch as on the one hand they wished to confirm acceptance of the commercial terms, while on the other hand, they insisted that the contract should include the various aspects, on which deviations had been specifically taken by the petitioner. Hence, it is clear that the petitioner did not come forward to accept unconditionally the commercial and technical terms as per the stipulations contained in the tender documents. Once again on 18.1.2002, the petitioner had addressed reiterating the same stand and insisted for deviations, in disregard of the tender conditions. However, the petitioner was once again called upon by the respondent on 30.1.2000 to withdraw the deviations and to confirm acceptance of the commercial conditions as per the tender documents. Though the petitioner proclaims that they have withdrawn the clarifications/ deviations, but insisted that the basic principles contained in their letter dated 18.1.2002 ought not to be viewed as deviations. AS the said deviations being inconsistent and the petitioner was persistent, once again another opportunity was given to the petitioner. The petitioner again on 4.2.2002 reiterated its position without change. The resultant position was that the petitioner did not accept in toto the commercial terms and conditions as contained in the tender document and the bid being subject to the understanding of the contract should include the seven items listed in the petitioner's letter dated 18 .1.2002. Hence the tender Committee on 6.2.2002 decided not to consider the tender submitted by the petitioner as the petitioner has taken deviation in commercial conditions. Only the two tenderers remained who have accepted the entire commercial conditions as it is. The two price bid covers were opened on 20.2.2002. The price bid cover submitted by the petitioner was not opened. However, in view of the interim orders of this court, the evaluation process of the price has not been proceeded further.
11. The writ petitioner has filed a reply affidavit reiterating the contents of its stand and seeking to explain the contents, its reservations or explanations or clarifications which it has called for in respect of the commercial conditions and technical specifications.
12. In the light of the case and counter case the only point that arises for consideration has to be decided. Though Mr. N.R.Chandran, learned senior counsel and Advocate General contended that all the points raised by the petitioner with respect to the commercial terms and conditions have been withdrawn, factually it is not so as detailed in the counter affidavit. The petitioner was persisting deviations from the commercial conditions or stipulations already prescribed in the tender schedule. The persistence of deviation relates to the following terms:-
"1. Whenever a payment relevant certificate/document (Verification receipt certificate, inspection certificate, billing schedule etc.) is to be issued by the Purchaser, such papers shall be issued within 7 days after notification by the Contractor. This shall also include consultant's approvals if any. Xx xx xx xx xx xx xx xx x xx xx xx xx xx xx xx xx x 4. Any changes of law/regulations/statutory requirements etc., in India shall not be automatically the burden of the Contractor. 5. Those items in the minutes of discussions of 22/23.12.2000 ( including subsequent correspondence), which were agreed or noted by NLC, shall also be considered as agreed under this tender."
13. Even thereafter once again the respondents called upon the petitioner to confirm acceptance of the commercial conditions as per the tender documents and stipulations by its letter dated 31.1.2002. Even for that the writ petitioner though sent a reply to the effect that it has withdrawn the clarifications or deviations, yet, it is insisted the basic principles contained in its letter dated 18.1.2002 which are nothing but deviations. In this respect the learned counsel for the respondents have filed a typed set in which pages 8 to 20 relate to the clarifications sought for or the deviations which the petitioner stipulated as a counter terms and conditions contained in the tender specifications. Prominent of them are: ------------------------------------------------------------ Clause No., As per the Tender Clarifications in the Tender Specifications
For delay in completion of supply of spares beyond the stipulated dates, liquidated damages at the rate of 0.5 per week or part thereof on the total contract price for spares of the undelivered portion subject to a maximum of 10 of the value of contract price of the undelivered portion. The maximum liquidated damages for spares shall be 5 of the undelivered value of the contract price.
If the contractor fails to complete the supplies erection/scope of work within the agreed time schedule, interest at the prevailing rates as applicable to cash credit facilities shall be paid for the delayed period by the contractor to the purchaser for the unadjusted portion of advance paid for supplies/erection/scope of work.
If the contractor fails to complete the TOT within the agreed time schedule, interest at the prevailing rates as applicable to cash credit facilities shall be paid for the delayed period by the contractor to the purchaser for the unadjusted portion of advance paid.
All the Bank guarantees shall be irrevocable. In the case of Indian rupee portion the bank guarantee shall be from any nationalised bank other than Bank of Baroda or a schedule Bank in India authorised by Reserve Bank of India to issue a Bank guarantee. In the case of foreign contractor the same shall be from a reputed commercial bank of the contractors country acceptable to the purchaser /Reserve Bank of India which has to be confirmed by any Indian Nationalised bank other than Bank of Baroda. The confirmation shall be in a stamp paper of value of Rs.40 and the stamp paper shall be in the name of the Bank or in the name of the contractor.
All the Bank guarantees shall be irrevocable. In the case of Indian rupee portion the Bank guarantee shall be from any nationalised bank other than Bank of Baroda or a scheduled bank in India authorised by Reserve Bank of India to issue a Bank guarantee or a foreign bank acceptable to the purchaser/Reserve Bank of India and confirmed by any Indian nationalised bank other than Bank of Baroda. In the case of foreign contractor the same shall be from a reputed commercial bank of the contractors country acceptable to the Purchaser/Reserve Bank of India which has to be confirmed by any Indian nationalised bank other than Bank of Baroda. The confirmation, if issued in India shall be in a stamp paper of value Rs.40 and the stamp paper shall be in the name of the Bank or in the name of the contractor.
..Payment will become due and payable by the purchaser within a reasonable period which will not exceed one month from the date of receipt of contractors bill/invoice/debit note by the purchaser provided that the documents submitted are complete and correct in all respects.
Please add the following a the end of this para: It shall be within the purchasers obligations that the documents to be issued by the purchaser to the contractor (inspection reports/ inspection waivers/ certificate of receipt of material at site/ material verification of certificate for equipment received at site/ Purchasers certificate of successful completion of TOT) shall be furnished to the contractor within 1 week of receipt contractors written intimation of occurrence of the said event.
First down payment 5 second down payment 5%
One down payment of 10 shall be made within 30 days as of date of LOA 10.7.1.c
In case of ex works supplies the same shall be against certificate of receipt of consignment at site by the purchaser
Please add the following:
The certificate of receipt of consignment at site by the purchaser shall be issued to the contractor within 1 week of the receipt of written intimation from the contractor of the arrival of consignment at site. 10.7.1.d
..and on verification and certification by the purchaser Please add the following at the end of this sentence: The verification and certification by the purchaser shall be issued within 1 weeks of receipt of written intimation from the contractor of the arrival of consignment at site. Alternatively we propose to make this instalment payable along with the 65 instalment.
However the total claim shall be restricted to and not exceeding the total lumpsum ceiling agreed to in the contract for respecting taxes and duties. Statutory variation in taxes and duties from those indicated in the contract as the basis of lumpsum ceiling, imposition of new Governmental taxes/duties levies etc., from the tender submission date shall however be to the account of the purchaser.
Test certificate, if no such certificate is necessary, confirmation by NLC to this effect.
Certificate to the effect that liquidated damages have been deducted/no L.D., is payable by contractor.
Test certificate issued by the contract in the L/C it shall read beneficiary) 10.15.1.2.ii
Certificate of verification by purchaser for components received directly at site
...the contractor shall arrange the necessary import including arrangement of licences and foreign exchanges as may be required on his own. ...however, in any case not later than 90 days as of date of shipment against presentation of invoice and copy of L/C it is however understood that the purchaser shall furnish the necessary Essentiality and other relevant certificates approved by Governmental Authorities to enable the Contractor avail concessional benefits currently applicable for Deemed Export Projects as stated by the Purchaser.
.. a copy of all insurance policies and documents taken out by him in pursuance of the contract.
..or certificates of insurance.
Long Term Performance Test
As the equipment will be integrated into an existing system the LTPT shall be completed within 6 months as of the date or deemed date of TOT. Any failure of the existing equipment shall not be to the burden of the Equipment supplied or burden of the LTPT. The LTPT shall be deemed to have been completed latest 7 months from actual or deemed date of the TOT, whichever is the earlier. 30.0
The warranty conditions as described under this para shall be 12 months from date of TOT, however, ending latest 15 months after scheduled date of TOT, whichever ends first.
..the Contractor shall pay interest for the entire amount received for the defective component noticed at the prevailing bank rate for the duration of such rectification/replacement...
Any financial cost or interest are indirect or consequential damages and shall not be adhered to.
14. Very many other deviations have been stipulated by the writ petitioner. In the said background after opening of the petitioner's technical bid, the respondents called upon the petitioner to confirm whether it is willing to accept the terms and conditions, namely the commercial terms and conditions, stipulations as set out in the tender schedule and unless the petitioner confirms the same, the respondents will not open the price bid. Despite that the petitioner has been except making a formal statement that it has given up, factually it was persisting and there is no doubt in the mind of the court in this respect.
15. The law on the subject is well settled. A tender is an offer and when the tenderer submits the tender it shall be unconditional, conform to the terms and conditions of obligation, conform to the time schedule, willing to perform the obligations and like. In this respect, it would be proper to refer to one of the pronouncement of the Supreme Court in TATA CELLULAR VS. UNION OF INDIA (F.B.)., reported in 1994 (6) SCC 651. Mohan J., as he then was speaking for the Full Bench, held thus:-
"69. A tender is an offer. It is something which invites and it communicated to notify acceptance. Broadly stated, the following are the requisites of a valid tender:-
a) It must be unconditional
b) Must be made at the proper place. c) Must conform to the terms of obligation. d) Must be made at the proper time
e) Must be made in the proper form
f) The person by whom the tender is made must be able and willing to perform his obligations
g) There must be reasonable opportunity for inspection
h) Tender must be made to the proper person. i) It must be of full amount.
70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down." In the light of this pronouncement the petitioner cannot in law stipulate its conditions in deviation of tender conditions and terms.
16. In Union of India Vs. Hindustan Development Corporation, reported in 1993 (3) SCC 499, the Apex Court held thus:- "...the Government had the right to either accept or reject the lowest offer but that of course, if done on a policy, should be on some rational and reasonable grounds. In Erusian Equipment & Chemicals Ltd., Vs. State of W.B. (1975 (1) SCC 70), this court observed as under: "When the Government is trading with the public, "the democratic from of Government demands equality and absence of arbitrariness and discrimination in such transactions". The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure."
17. In Sterling Computers Ltd., Vs. M. & N Publications Ltd., reported in 1993 (1) SCC 445, the Apex Court observed thus:- "In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation o the revenue. But, even in such matters they have to follow the no rms recognised by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of `play in the joints' to the executive".
18. In the light of the above pronouncements of the Apex Court, when the petitioner is not willing to accept the tender conditions, it cannot be held that the petitioner has submitted a valid tender. As the petitioner has not submitted a valid tender, in that, by accepting the stipulations or commercial terms unconditionally, and has not agreed to the terms or obligations as stipulated by the respondents, and when it was not willing to perform the obligations as set out in the tender schedule, this court has to necessarily hold that this is not a fit case where this court would be justified in issuing a writ of mandamus as prayed for on the facts of the case.
19. In the circumstances, the writ petition is dismissed. Consequently, connected WMP is also dismissed. The parties shall bear their respective costs.
Index : Yes
1.Neyveli Lignite Corporation Ltd.,
rep. By its Chairman and Managing Director,
135, Periyar EVR High Road,
2.General Manager (Contracts)
Neyveli Lignite Corporation Ltd.,
Corporate Office, Neyveli 607 801.
W.P.No.7002 of 2002
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