Avan Meters Private Ltd. vs Dakshin Haryana Bijli Vitan Nigam Limited and Others

Ranjan Gogoi, C.J.—This writ petition has been filed challenging the proposed decision of the Respondents to issue LOI and finalize the allotment of work in favor of the Respondents No. 4 and 5 pursuant to the NIT dated 07.07.2010. A further direction to consider the financial bid of the Petitioner pursuant to the aforesaid NIT and for grant of the purchase order to the Petitioner has been prayed for.

The case has a chequered history and it will be necessary to note, though very briefly, the facts that would be relevant for the present adjudication.

Pursuant to a NIT dated 11.02.2009 issued by the Dakshin Haryana Bijli Vitran Nigam Ltd. (hereinafter referred to as ''the Nigam'') sealed tenders were invited for supply of a specified number of single phase and three phase meters. The Petitioner, who had submitted his tender pursuant to the aforesaid NIT, was favored with the LOI. Requisite bank guarantees were asked for and furnished by the Petitioner. The formal purchase order was, however, not forthcoming. In such a situation and as the Respondents had issued a second NIT on 05.03.2010, allegedly for the supply of the same meters, the Petitioner instituted Civil Writ Petition No. 5640 of 2010 before this Court. The Respondents, in the written statement filed, took the stand that there were some anonymous complaints with regard to the quality of the meters supplied by the Petitioner in the past. Specifically, according to the Respondents, the damage rate of such meters was abnormally high. During the pendency of the aforesaid writ petition, a show cause notice for cancellation of the LOI was issued to the Petitioner on 03.04.2010. The Petitioner submitted its reply denying the allegations leveled. The writ petition was, however, withdrawn by the Petitioner at the said stage.

While the matter was so situated, a third tender notice dated 07.07.2010 was issued, in response to which the Petitioner again submitted its bids both for single phase and three phase meters. According to the Petitioner, he had qualified in pre-qualification round. In terms of the clauses of the NIT dated 07.07.2010, the sample meter(s) supplied by the bidders, were sent by the Respondents to the NABL Laboratory. According to the Petitioner, on the basis of the report(s) submitted by the laboratory the Petitioner was disqualified and the financial bids submitted by it were not considered. The Petitioner also alleges that the Respondents No. 4 and 5 who were found to be qualified were considered for the next round in the tender process and on the basis of the financial bids submitted by them, the High Powered Committee decided to issue LOI to the Respondent No. 4 in respect of the single phase meters and to the Respondent No. 5 in respect of three phase meters.

On the aforesaid facts, in the writ petition filed, it was contended by the Petitioner that the third tender process initiated by the NIT dated 07.07.2010 was wholly unauthorized and unjustified as the LOI granted to the Petitioner pursuant to the first tender notice dated 17.02.2009 was yet to be finalized. Additionally, it was contended by the Petitioner that despite numerous requests it had not been supplied with the details of the report(s) submitted by the laboratory in respect of the sample meters submitted by the tenderers and in the absence of the said information the decision to reject the case of the Petitioner and the proposed award of the work in favor of the Respondents No. 4 and 5 is arbitrary. It is the further contention of the Petitioner that the prices offered by it, both for single phase and three phase meters, are much below the prices offered by the Respondents No. 4 and 5 and therefore, the proposed action on the part of the Respondents has the effect of jeopardizing public revenue of a substantial amount without there being any justification for the same.

The Respondents No. 1 and 3 have filed a joint written statement contending that there are sufficient grounds for the decision not to allot the purchase order to the Petitioner pursuant to the NIT dated 17.02.2009. There were serious deficiencies in the quality of the meters supplied by the Petitioner against the earlier contracts which fact came to the notice of the Respondents only after the LOI was issued to the Petitioner. It is in these circumstances that the second tender notice dated 05.03.2010 was issued. The Respondents, in the written statement filed, have further stated that the LOI issued to the Petitioner was cancelled on 05.01.2011. In so far as the proposed decision to award the contract to the Respondents No. 4 and 5 on the basis of the impugned NIT dated 07.07.2010 is concerned, according to the Respondents, the sample meter(s) supplied by the tenderers were sent to the laboratory for due examination as to whether the sample(s) passed the type test(s) as per the standards prescribed by IS Specification No. 13379. The reports of the Laboratory, according to the Respondents, were to the effect that the sample meter(s) supplied by the Petitioner (both single and three phase) did not qualify some of the type tests contemplated by the different clauses of IS Specification No. 13379. Hence, in accordance with Clause 23 of the Technical Specifications, the offers made by the Petitioner were rejected. On the other hand, the cases of the tenderers who had qualified in the type tests, including the Respondents No. 4 and 5, were subjected to further test/scrutiny and the ultimate result of the process was that the bids submitted by the Respondents No. 4 and 5 were found to be technically qualified. Thereafter, the price bids of the aforesaid tenderers were opened and on the basis thereof, the LOI(s) have been issued. It is the further case of the Respondents that during the pendency of the writ petition work orders have also been issued to the aforesaid two Respondents.

On the basis of the aforesaid stand taken by the Respondents No. 1 and 3 in the written statement filed, the case argued on behalf of the Petitioners had undergone some transformation from what was pleaded in the writ petition. It was stated on behalf of the writ Petitioner that the challenge in the writ petition may be understood to be confined to the grant of LOI and the work order issued in favor of the Respondents No. 4 and 5 on the basis of the third tender notice dated 07.07.2010. A rejoinder dated 22.02.2011 has also been filed by the Petitioner to place certain new facts, which according to the Petitioner, became available only after the requisite information in that regard was furnished by the Respondents on an application filed by the Petitioner under the Right to Information Act, 2005. The additional grounds built on the basis of the facts stated in the rejoinder are to the effect that after the Petitioner and other tenderers were disqualified for having failed to clear the type tests, the sample meter(s) supplied by the remaining tenderers, including the Respondents No. 4 and 5, were further scrutinized with reference to the same report of the laboratory submitted in connection with the tests specified by the different clauses of IS Specification No. 13379. According to the Petitioner, from the information available, it appears that the sample meter(s) supplied by the Respondents No. 4 and 5 did not conform to the specifications of the type test contemplated by clauses 17.6, 17.13 and 17.13 of IS No. 13379. Yet, on the alleged ground that the failure of the sample meter(s) of the Respondents to adhere to the specifications prescribed by the aforesaid clauses of IS No. 13379 did not compromise with the requirements of the Nigam, the said Respondents were declared to be technically qualified and eligible to participate in the financial bid. It is, therefore, argued that the aforesaid action of the Respondents amount to grant of some kind of concession or relaxation in favor of the Respondents No. 4 and 5. If such relaxation had been granted to the Respondents No. 4 and 5, the same ought to have also been granted to the Petitioner, who has been ousted for failure to conform to the type tests stipulated by clauses 4.4 and 12.32 of IS No. 13379. An argument, therefore, has been made by the learned Counsel for the Petitioner that the aforesaid action on the part of the Respondents amounts to unequal treatment of equals, thereby causing hostile discrimination to the prejudice of the Petitioner.

Though the facts stated in the rejoinder dated 22.2.2011 filed by the Petitioner have not been controverted by the Respondents, photocopies of the original documents showing the details of the decision making process had been laid before the Court by the Respondents. It is contended that no relaxation or concession had been granted to the Respondents No. 4 and 5 in the matter of their eligibility and the requirement of conformity with any of the type tests prescribed under the IS No. 13379. What has been done, as the records had revealed, is that after the Respondents No. 4 and 5 were found to be technically qualified in the basic type tests, (the Petitioner had not so qualified), the laboratory reports were further analyzed with reference to certain additional type tests. In the course of such analysis though some variations were found in respect of some of the prescribed parameters, the final opinion was that such variations did not prejudice the interest of the Nigam but infact were beneficial to it. Accordingly, the price bids of the Respondents No. 4 and 5 were opened and considered. In the said facts it is contended that no question of discrimination, much less, any hostile discrimination, can and does arise in the present case.

We have carefully considered the pleadings of the parties, the photocopies of the original records placed before us as well as the contentions advanced on behalf of the parties.

Under the terms of the NIT dated 07.07.2010 and the technical specifications stipulated there under, the sample meter(s) submitted by the tenderers were required to be examined by the specified laboratory with reference to all type tests stipulated by the different clauses of IS No. 13379. Such tests were carried out. Out of the different tests prescribed by IS No. 13379, the Respondents segregated some of the tests as basic tests and some as additional type tests. All the tenderers, who failed to qualify in the basic type tests, were disqualified and those who have qualified in the said tests, were subjected to further scrutiny to find out whether the additional type tests, as understood by the Respondents, had been met and satisfied by such tenderers. While the Petitioner failed to clear the basic type tests, the Respondents No. 4 and 5 cleared the same and were, therefore, subjected to a further scrutiny with reference to the additional type tests on the basis of the laboratory reports which were already on record. In the course of such scrutiny, though some variations were noticed in respect of type tests specified by clauses 17.6, 17.13 and 17.13 for three phase meters and clauses 12.6 for single phase meters, the Respondents understood such variations to be of no consequence so far as the Nigam is concerned and, therefore, considered the same not to be a bar for acceptance of the technical bids of the Respondents. Infact, the opinion expressed was that such variations were beneficial to the Nigam.

The procedure adopted by the Respondents i.e. segregating the type tests into basic and additional type test has, indeed, introduced a little confusion in the decision making process. It is on account of the aforesaid segregation that the Petitioner complains of hostile discrimination and unfairness. However, if the matter is to be viewed from the perspective that the Court proposes to do, the objections raised by the Petitioner would have no significance. If the segregation of the type test stipulated by IS No. 13379 is not to be made and all such tests are to be understood to be integral parts of one process, the picture which would emerge is that while there were variations or shortcomings in the sample meter(s) of the Petitioner, there were similar variations in the sample meter(s) of the Respondents No. 4 and 5. How far such variations are relevant for the purpose of determining the suitability of a meter offered by a tenderer, is for the experts in the field to determine. Even if sample meter(s) supplied by one of the tenderers failed to conform to some of the prescribed type tests whether such failure is fatal to the acceptance of the meter(s) or the same would still be acceptable inspite of the variations, is a decision that has to be taken on a consideration of highly technical questions. Time and again it has been stressed by the Courts that such facts are to be decided by the experts whose judgment in the matter must have the respect of the Courts. In Raunaq International Limited Vs. I.V.R. Construction Ltd. and Others, it has been held as under:

It is also necessary to remember that price may not always be the sole criterion for awarding a contract. Often when an evaluation committee of experts is appointed to evaluate offers, the expert committee''s special knowledge plays a decisive role in deciding which is the best offer. Price offered is only one of the criteria. The past record of the tenderers, the quality of the goods or services which are offered, assessing such quality on the basis of the past performance of the tenderer, its market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a much better quality of work, can be legitimately paid in order to secure proper performance of the contract and good quality of work-which is as much in public interest as a low price. The court should not substitute its own decision for the decision of an expert evaluation committee.

Equally, on innumerable occasions, the Court has emphasized that it is not the merits of the decision which should be subjected to scrutiny under Article 226 of the Constitution of India; rather it is the process by which the decision has been reached which should be scrutinized by the Court. In the present case, all the sample meter(s) of all the tenderers were sent to the laboratory for its report in respect of all the type tests prescribed by IS Specification No. 13379. On the basis of the reports submitted by the laboratory, the case of each of the tenderers was considered. On such consideration while the meter (s) supplied by the Petitioner were found to be not acceptable in view of the deficiencies recorded by the laboratory, the meter(s) supplied by the Respondents No. 4 and 5 were found to be acceptable, though, some variations with the prescribed standards were noticed. This, in the considered view of the Court, is the final picture that emerges from an analysis of the decision making process. Such a situation has to be appreciated on the basis of the law laid down by the Courts, the gist of which has already been noticed above, namely, interference with the views of the Experts should not be ordinarily made. In the present case, the acceptability/suitability of a particular meter offered involved the taking of a decision on consideration of highly technical issues and questions. Any such decision must be allowed to rest and should not be carried any further. If the issue to be understood in the above manner, the entire claim of the Petitioner that the meter(s) of the Respondents No. 4 and 5 were subjected to further tests in which such meters were also found to be deficient and, yet, the same were accepted, would hardly hold any ground. The exercise adopted by the Nigam in segregating the type tests into basic and additional type tests was an exercise that could have been best avoided. However, in the context of what has been analyzed and understood by us such a ''misadventure'' by the Nigam would hardly make its decision legally fatal.

In so far as the issue with regard to the price is concerned, it must always be kept in mind that a price offered cannot be the sole criteria for awarding a contract. A higher price for a more acceptable product would serve public interest in a more effective manner than a less acceptable offer though at a lower price. Judged from the aforesaid perspective the contention raised on behalf of the Petitioner with regard to the difference in price and the resultant public benefit if the offer of the Petitioner is to be accepted cannot have the Court''s acceptance.

For the aforesaid reasons, we are of the view that the decision of the Respondents to award the LOI and the work order to Respondents No. 4 and 5 should not be disturbed by us. We, therefore, dismiss the writ petition. However, in the facts and circumstances of the case, we make no order as to costs.