M/s. Bcits Pvt. Ltd., (Formerly Known as Bellary Computer I.T. Solutions Pvt. Ltd.) vs State of Karnataka, Chamundeshwari Electricity Supply Corporation and Nsoft Services Pvt. Ltd.

A.S. Bopanna, J.—The petitioner is before this Court assailing the order dated 04.04.2013 passed in Appeal No. EN 209 EEB/2012 passed by the first respondent which is impugned at Annexure-V to the petition and consequently dismiss the appeal filed by the third respondent on the file of the first respondent. By the said order, the first respondent-Appellate Authority has held that the disqualification of the third respondent was not justified and in that view, has set aside the tender dated 30.06.2012 awarded by the second respondent in favour of the petitioner. The brief facts are that the second respondent had issued the Tender Enquiry No. CESC/SEE(P)/C1-2342 dated 30.06.2012 for providing web based Total Revenue Management (TRM) System in Chamundeshwari Electricity Supply Company, Mysore (CESC for short). The petitioner and the third respondent had responded to the same by offering their bid. Among other terms, one of the terms relating to qualifying requirement provided that those of the bidders whose earlier work awards have been terminated for any reason in any of the ESCOMS in India since last 5 years from the date of notification of the instant tender and whose services are found not satisfactory, are not eligible to participate in the instant tender and their offer should be rejected at the technical evaluation stage itself. In such circumstance, the bid offered by the third respondent was held to be disqualified by the second respondent since according to the second respondent, the work which had been assigned by the Purvanchal Vidhyuth Vitran Nigam Ltd. (PVVNL for short) to the third respondent had been terminated. Accordingly, the petitioner who was found to be qualified was awarded the contract on 30.06.2012. The third respondent who claim to be aggrieved by the same filed an appeal before the first respondent as provided u/s 16 of the Karnataka Transparency in Public Procurements Act, 1999 (''KTPP Act'' for short) which was registered as Appeal No. EN 209 EEB/2012. On considering the rival contentions, the first respondent/Appellate Authority by its order dated 04.04.2013 has set aside the award of tender in favour of the petitioner and has directed re-evaluation of the tenders on opening the price bid of all the eligible bidders. The petitioner therefore claiming to be aggrieved by the same is before this Court.

The third respondent has filed its objection statement justifying the action of the first respondent/Appellate Authority. The stand of the second respondent however is to support the contentions of the petitioner and assail the conclusion reached by the first respondent/Appellate Authority and seek to sustain the decision taken by them.

In the above background, I have heard Sri Udaya Holla, learned senior counsel on behalf of Sri Vivek Holla, learned counsel for the petitioner, Sri Ashok Haranahalli, learned senior counsel on behalf of Sri V.S. Naik, learned counsel for the third respondent and Sri H.V. Manjunatha, learned Government Advocate for the first respondent and Sri S. Sriranga, learned Counsel for the second respondent.

Though elaborate arguments have been addressed by the learned senior counsel for the respective parties, the point that arises for consideration is limited to the aspect of noticing the relevant condition contained in the tender document relating to qualification criteria and in that circumstance, as to whether the discontinuation of the work of the third respondent relating to the contract which had been awarded by the PVVNL can be construed as a disqualification as has been considered by the second respondent. In that context, the issue is as to whether the first respondent/Appellate Authority was justified in the view that it has arrived at. Since the issue would revolve around Condition No. 9.0(g) of the invitation to bidders offered by the second respondent, it would be appropriate to notice the same which reads as hereunder:

g. Those of the bidders whose earlier Work Awards have been terminated for any reasons in any of the ESCOMS in India since last 5 years from the date of notification of this tender and whose services are found not satisfactory are not eligible to participate in this tender and their offers will be rejected at technical evaluation stage itself.

The condition extracted above is self-explanatory with regard to the circumstances under which a bidder could be disqualified by the second respondent. While examining that aspect, the fact that the third respondent had been awarded work by M/s. PVVNL in EUDC Meerut and Ghaziabad on 31.03.2008 and that the said work had been discontinued from the third respondent and awarded to one M/s. Sai Computers Private: Ltd, Meerut with effect from 01.08.2008 is the factual position regarding which there is not much dispute. The second respondent and the petitioner contend that such discontinuation is for non-satisfactory work which in effect is termination, but the third respondent contends that the same does not amount to termination but PVVNL has exercised the fall back clause contained in the agreement entered into between the third respondent and the PVVNL. In that regard, reference is made to clause-1.12 of the agreement dated 31.03.2008. In that view, it is contended that there is no termination of contract as contained in clause-22.1 for any of the defaults of the contractor as contained in clause 21.0. It is therefore contended that the third respondent themselves addressed the letter dated 17.02.2009 expressing the circumstances therein to relieve the third respondent of the responsibility of carrying out the work and as such the same does not amount to termination.

In effect the contention on behalf of third respondent is that the circumstance as enumerated in condition 9.0(g) had not arisen and the second respondent could not have disqualified the third respondent which according to the third respondent has. been correctly appreciated by the Appellate Authority. Much has been made out on behalf of the petitioner with regard to the manner in which condition 9.0(g) is to be construed and to contend that PVVNL had in fact terminated the contract of the third respondent and in that circumstance, the condition would apply. To contend that there was termination, the documents at Annexures-D to F are referred wherein PVVNL has recorded with regard to the third respondent not carrying out the work as entrusted to them and in that view, the work being withdrawn from the third respondent with effect from 01.08.2008 and the same being entrusted to M/s. Sai Computers Pvt. Ltd, Meerut. Though there is no formal administrative order with regard to the termination, the said circumstances are indicative of the same is the contention. The learned senior counsel for the petitioner has referred to the decision of the Hon''ble Supreme Court in the case of Commissioner of Income Tax, West Bengal, Calcutta Vs. Raja Benoy Kumar Sahas Roy, and in the case of South Bihar Sugar Mills Ltd., etc. Vs. Union of India (UOI) and Others, to contend that in the event of there being no definition to understand the purport of the word, it is permissible to refer to the dictionary meaning of the word. In that light, the learned senior counsel has referred to the Black''s Law dictionary to point out that the word ''termination'' has been defined therein and it is stated that with respect to a lease or contract, the term refers to an ending- usually before the end of the anticipatory term of the lease or contract, which termination may be by mutual agreement or may be by exercise of one party of one of his remedies due to the default of the other party. In that context, it is contended that the Minutes of the Meeting dated 19.09.2008 at Annexures-E and E1 and the notes and order at Annexure-E2 would clearly indicate that the third respondent had defaulted and the fact that the work assigned to them had been assigned to M/s. Sai Computers Pvt. Ltd. only after termination of the work which had been awarded to the third respondent. It is the further contention that the unsatisfactory performance is also covered under condition 9.0(g). The learned senior counsel for the respondent has contended that the said clause consists of both the eventualities as the termination should be for unsatisfactory work as the word ''and'' has been used therein. However, the learned senior counsel for the petitioner would contend that in appropriate cases the word ''and'' is also to be read as ''or''. In that regard, reliance is placed on the decision in the case of Prof. Yashpal and Another Vs. State of Chhattisgarh and Others, .

In the light of the above contentions, before adverting to the fact as to whether the services of the third respondent was considered as not satisfactory by the PVVNL and as to whether that alone is sufficient or it could also be construed as termination, the purport of condition 9.0(g) requires to be understood to come to a conclusion as to whether in either case the second respondent was justified in disqualifying the third respondent.

The said condition No. 9.0(g) has already been extracted above. It contains two parts - firstly the termination for any reasons and the second part where the services are found not satisfactory. In order to gather the intention, the said condition cannot be read and understood in a manner as would be construed while reading a statutory provision. The employer/tender inviting authority with the intention of indicating that a contractor with good credentials only would be entitled to consideration and to ensure this, it has been indicated in the said condition 9.0(g). In such circumstance, while considering the bids, if it is found that the work of any of the bidders with any other ESCOM was not satisfactory and the pre-qualification condition provides for the same, that by itself would be sufficient to disqualify since the employer/tender inviting authority need not be bound by the action of the earlier ESCOM in not choosing to terminate the contract since, unsatisfactory work alone would be sufficient for the employer to doubt the credentials of the bidder. However, if the employer feels that they will disqualify a bidder only if there is termination, it would be open for them to provide so in specific terms. Hence, it would depend on the provision made in that particular tender document.

If this aspect is borne in mind, notwithstanding the word ''and'' being employed, the said condition 9.0(g) should be read disjunctively in two parts. The first part is where the termination of a contract by an ESCOM irrespective of the reason for which it was done, would be sufficient for the employer to disqualify the bidder if there is an order of termination. The second part should therefore be read as those bidders whose services are found not satisfactory also would not be eligible. The word ''and'' is used therein only to import the phrase ''those of the bidders'', as also the phrase ''any of the ESCOMS in India since last 5 years'' to the second part of the condition. If in the present case the intention was that non-satisfactory work should be coupled with termination so as to incur disqualification, then the portion appearing after the word ''and'' should have been in the first part for the purpose of sequential reading. Therefore in my opinion, even if there is no termination order, the satisfactory completion of the work with the other ESCOMS would also be one of the circumstances for being eligible. In that view, since admittedly there is no formal administrative order of termination., the purport of the documents at Annexures-G to E2 and the documents at Annexures-R2 and R3 needs consideration to come to a conclusion as to whether the second respondent was justified in disqualifying the third respondent and the error, if any committed by the first respondent in allowing the appeal.

Since I have noticed that there is no formal administrative order of termination, the reference to clauses 21.0 and 22.1 in Annexure-R.2 is not of much relevance. Though clause 1.12 relating to fall back arrangement in the same document is relied on by the learned senior counsel for the third respondent, the circumstance which led to PVVNL curtailing the contract of the third respondent and entrusting the work to M/s. Sai Computers Pvt. Ltd, even if it is a fall back arrangement would be relevant. To notice this aspect, a perusal of the documents at Annexures-E and E1 will disclose that in the meeting dated 19.09.2008, ex-post-facto approval was considered with regard to the work relating to the EUDC- Meerut and the work relating to EUDD I and III - Ghaziabad being withdrawn and being handed over to M/s. Sai Computers Pvt. Ltd. i.e., with effect from 01.08.2008. '''' The proceedings recorded therein would refer to the complaints received against the third respondent and in that circumstance, the work being withdrawn. The decision taken was also that if any extra cost is involved, that will be debitable to the third respondent. In the proceedings in Annexure-E1, the third respondent no doubt has been permitted to continue the billing work in EUDD-V of Ghaziabad. In view of such continuation in EUDD-V and the subsequent payment of bills and also the Bank. Guarantees being returned without forfeiture, the learned senior counsel for the third respondent would contend that it cannot be considered as termination but, only alternate arrangement has been made. in respect of a portion of the work. In that light, though the letter dated 17.02.2009 (Annexure-R.3) was addressed by the third respondent withdrawing from the one work which was continued in their favour, the fact that all other work had been withdrawn from the third respondent by PVVNL much earlier i.e., with effect from 01.08.2008 is evident from the records.

The learned senior counsel for the third respondent, to contend that the documents at Annexures-E, E1 and E2 are the internal proceedings of PVVNL and therefore the same cannot be considered to their prejudice, has relied on the decision in the case of State of West Bengal etc. Vs. M.R. Mondal and Another, wherein it is held that an order passed but retained in file without being communicated to the plaintiff can have no force or authority whatsoever and the same has no valid existence in the eye of law or claim to have come into operation and effect. It is also held that no reliance can be placed on the same to even assert a claim based on its contention. The said decision is rendered in a circumstance wherein the respondent therein had sought for the benefit without re-tendering based on internal decisions and the High Court had taken the decision in that regard in the contractors favour which was reversed by the Hon''ble Supreme Court. The said decision would not be of assistance in the instant case since even if the conclusion reached as at Annexures-E and E1 in the instant case were not communicated, the said decision was only ex-post-facto approval of the action which had already taken effect from 01.08.2008. Such action was that of discontinuing the contract of the third respondent and awarding it to M/s. Sai Computers Pvt. Ltd. Hence, the fact of discontinuance of the third respondent and the reason therefore was known to them and they were also aware that the continuation was only in respect of EUDD-V.

In such circumstance, when the contract was awarded to the third respondent by PVVNL after the tender process and if in fact the third respondent had not given any room for complaint, certainly they would not have accepted the withdrawal of the work from them and awarding to another contractor lying down and would have agitated for their right to continue the same. Instead the very tone of the communication dated 17.02.2009 (Annexure-R.3) would disclose that the third respondent was rather apologetic. In such situation, the third respondent can only take consolation from the fact that one of the work relating to Ghaziabad was continued and their bank guarantees were not invoked, but the same does not take away the fact that PVVNL had considered the work of the third respondent as not satisfactory. When a particular employer/Tender accepting authority has different options of dealing with a contractor who does not work to their satisfaction, merely because a termination order is not made or if the deposit or the bank guarantee is not forfeited, the reason for which the discontinuance or withdrawal of the work was made will not stand condoned. Therefore,. when there is material which is a part of the records of PVVNL with regard to the complaints received and the decision recorded by them which resulted in withdrawal of the work, the second respondent would be justified in taking note of the same while evaluating the bids offered by the tenderers even if there is no formal administrative order of termination and in the instant case the second respondent who has noticed these aspects of the matter were justified in their conclusion in view of the provision made for the same in the tender conditions.

In that light, the reference to the impugned order dated 04.04.2013 passed by the first respondent will disclose that though the Appellate Authority has taken note of the documents relating to the work being withdrawn horn the third respondent and being assigned to M/s. Sai Computers Pvt. Ltd., has construed condition 9.0(g) in a manner to understand that in addition to poor performance the contract should have been terminated and therefore it was of the opinion that only if there was termination, the disqualification could have been made. Such conclusion, in my considered opinion is not only contrary to the factual position, but is also due to the erroneous consideration of the records which would lead to perversity. Hence, the said order of the first respondent cannot be sustained. In the result, the following:

ORDER

(i) The order dated 04.04.2013 passed by the first respondent in Appeal No. EN 209 EEB/2012 (Annexure-V) stands quashed and the appeal is dismissed.

(ii) The petition in allowed in the above terms.

(iii) The parties to bear their own costs.