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Judgment
,,
S.Ravindra Bhat, J",,
The Petitioner Consortium, in writ proceedings impugns an order dated 15.11.2017 and a consequential letter dated 16.11.2017, (hereafter referred",,
to as the “impugned ordersâ€) issued by the first respondent i.e. the Delhi Metro Rail Corporation (“the Metroâ€) rejecting its technical bid in,,
respect of its tender for ""Property Development at Dwarka Sec-21 MRTS Station of Line-3 and Airport Xpress Line"" (hereafter “the subject",,
tender"" or “NITâ€). By the impugned orders, the Metro rejected the Petitioner Consortiumâ€s bid on the ground that it does not meet the minimum",,
financial eligibility criteria of turnover qualification in net worth requirement in terms of Clause 3.5.4 of Section 3 of the Request for Proposal,,
(“RFP"" hereafter). The bid rejection was communicated to the Petitioner Consortium on 15.11.2017; later the letter of 16.11.2017 furnished the",,
reasons.,,
On 28.8.2017 the Metro issued the RFP, in respect of the subject tender, ""Property Development at Dwarka Sec-21 MRTS Station of Line-3 and",,
Airport Xpress Line"". The tender was to be submitted latest by 9.10.2017 at 3 pm. Relevant clauses of the RFP are extracted below:",,
“3.5 ELIGIBILITY CRITERIA,,
The Bidder shall meet the following minimum Eligibility Criteria (the ""Eligibility Criteria""):",,
3.5.1 A Bidder must be a sole proprietorship firm or a partnership firm or a body corporate incorporated and registered in India under the,,
Companies Act, 1956 /2013, duly registered under the law applicable to such company, either individually or in Joint Venture or a",,
Consortium under an existing agreement and further subject to compliance with applicable laws, policies and guidelines of the Government",,
of India. In case the Selected Bidder is a Consortium, such Consortium shall be required to incorporate a company under Companies Act,",,
2013 which shall be a special purpose company (""SPG"") within 30 days of issuance of the LOA and the SPC shall enter in to Lease",,
Agreement with DMRC for implementation of the Project. The members of Consortium shall be required to maintain 100% of the equity of,,
the SPC throughout the subsistence of the Lease Agreement. In case company is not incorporated within 30days of issuance of LOA, then",,
the LOA will stand cancelled and the amount deposited by the selected bidders (i.e. tender security. Security Deposit, Upfront amount etc.)",,
shall be forfeited.,,
In case selected bidder is other than a consortium, special purpose company(SPC), may be formed within 30 days of issuance of the LOA",,
under intimation to RFP Bid Document: Dwarka Sec-21 MRTS Station (CPD-37R)DMRC and the SPC shall enter into Lease Agreement with,,
DMRC for implementation of the project. The bidder shall be required to maintain 100% of equity of the SPC throughout the subsistence of,,
the Lease Agreement.,,
3.5.2 A Bidder should have a minimum net worth of Rs. 29,00,00,000/- (Rupees Twenty Nine Crores only) during last audited financial year",,
(2016-2017).,,
In Case of JV- Net worth will be based on the percentage participation of each Member.,,
Example: Let Member-1 has percentage participation = M and Member-2 has =N. Letthe Net worth of Member-1 is A and that of Member-2,,
is B, then the Net worth of JV will be =AM+BN",,
100,,
3.5.3 The minimum average annual turnover of, a Bidder should be Rs.29,00,00,000/- (Rupees Twenty Nine Crores Only) for the preceding",,
three financial years as per the audited balance sheets of the Bidders starting from the financial year 2014-2015.The average annual,,
turnover of JV will be based on percentage participation of each member.,,
Example: Let Member-1 has percentage participation = Mand Member - 2 has =N. Letthe average annual turnover of Member-1 is “Aâ€,,
and that of Member-2 is “Bâ€, then the average annual turnover of JV will be",,
=AM+BN,,
100,,
Notes :,,
Financial data for latest last three audited financial years has to be submitted by the tenderer in Annexure-3 along with audited balance,,
sheets. The financial data in the prescribed format shall be certified by Chartered Accountant with his stamp and signature in original. In,,
case audited balance sheet of the last financial year is not made available by the bidder, he has to submit an affidavit certifying that “the",,
balance sheet has actually not been audited so farâ€. In such a case the financial data of previous “3â€audited financial years will be,,
taken into consideration for evaluation. If audited balance sheet of any year other than the last year is not submitted, the tender may be",,
considered as non-responsive.,,
3.5.4 Eligibility for a Consortium,,
In case the Bidder is a Consortium, the Eligibility of the Consortium will be judged only considering the Members holding equity 26% or",,
more. Further, the Lead Member of the Consortium must have a minimum of 51% of the Financial Eligibility specified in sub-para3.5.2 and",,
sub-para 3.5.3 above. For the purpose of evaluation of the Consortium, each memberâ€s contribution towards the turnover and net worth",,
of the Consortium shall be considered in the same ratio of their equity participation in the Consortium.,,
3.5.5 Any DMRC / Any other Metro Organisation (100% owned by Govt.), Ministry of Housing and Urban Affairs / Order of Ministry of",,
Commerce, applicable for all Ministry has not banned business with the bidder as on the date of tender submission. Also none of the work",,
has been rescinded / terminated by DMRC / Any other Metro Organisation (100% owned by Govt.), after award of contract to bidder",,
during last 3 years (from the last day of the previous month of tender submission) due to non-performance of the bid. The Bidder should,,
submit undertaking to this effect in Annexure-11.,,
3.5.6 A firm, who has purchased the tender document in their name, can submit the tender either as individual firm or in joint",,
venture/Consortium.,,
3.5.7 NON SUBSTANTIAL PARTNERS IN CASE OF JV/CONSORTIUM,,
a. Lead partner must have a minimum of 51%participation in the JV/Consortium.,,
b. Partners having less than 26% participation will be termed as non-substantial partner and will not be considered for evaluation which,,
means that their financial soundness and work experience shall not be considered for evaluation of JV/Consortium.,,
c. In case of JV/Consortium change in constitution or percentage participation shall not be permitted at any stage after their submission of,,
application otherwise the applicant shall be treated as non-responsive.,,
3.6 BID BY A CONSORTIUM OF FIRMS,,
Bids submitted by the Consortium must comply with the following requirements:,,
3.6.1 The number of members shall not exceed three (3).,,
3.6.2 The members of Consortium should have entered into a Memorandum of Association (""MOA"") (as per Annexure 7) between",,
themselves. One of the members of Consortium, holding at least 51% of the equity / ownership stake shall be authorized and nominated as",,
the “Lead member†(""Lead Member"") to act and represent all the members of the Consortium for bidding and implementation of the,",,
Project. A copy of this MOA shall been closed with the Bid.,,
3.6.3 The Lead Member shall hold not less than 51% (fifty one per cent) of the equity of the SPC during the subsistence of the Lease,,
Agreement and that each member of the Consortium whose financial capacity was evaluated for the purposes of award of the Project shall,,
hold at least 26% (twenty six per cent) of such Equity during the subsistence of the Lease Agreement. Replacement of the Lead Member shall,,
not be allowed at any time during the subsistence of the Lease Agreement.,,
3.6.4 A Bidder or a member of a Consortium can be a member in only one Consortium. If a Bidder / member participates in more than one,,
Bid for the same site / space, all Bids of which it is a part shall be summarily rejected.",,
3.6.5 All members of the Consortium shall be jointly and severally liable for the execution of the Project during Lease Period in accordance,,
with the terms of the Lease Agreement.â€,,
The Petitioner and three others submitted their bids. The bids were opened. On 15.11.2017, the day on which the financial bids were to be opened",,
(at 3pm), the Petitioner claims to have received -at 11.25am - an automated e-mail stating that its bid had been rejected during technical evaluation.",,
The reason, as stated in the e-mail, “not admittedâ€. The Petitioner Consortium immediately communicated to Delhi Metro, calling upon it to not",,
open financial bids of the other bidders, and asking for a re-evaluation of its bid. The letter was sent by email at 1.28 pm, and physically served upon",,
the Metro at about 2.15 pm. Also the Petitionerâ€s Counsel issued a letter to the Metro, calling upon it to refrain from opening the financial bids at 3",,
pm. At about 3 pm, the representatives of the Petitioner met the Chief General Manager, Contracts, of the Metro seeking reasons for rejection of its",,
bid. The said official referred to the formula furnished in Clauses 3.5.2 and 3.5.3 of Section 3 of the RFP to explain that the Petitioner does not meet,,
the financial eligibility criteria. The petitionerâ€s representatives pointed out that the Clauses 3.5.2 and 3.5.3 are applicable to Joint Venture bidders,,
and not Consortium bidders, to whom Section 3.5.4 of the RFP applies. At 5.30pm on the same day the Metro proceeded to open the financial bids of",,
the three bidders eligible according to it. The Petitioner claims to have learnt later that its bid was higher than that of the other participating bidders in,,
respect of the license fee.,,
The Petitioner issued another letter to the respondents stating that its bid was the most financially beneficial to the latter and once again requested,,
revaluation of its bid in terms of Clause 3.5.4 of Section 3 of the RFP. This was served by e-mail on 15.11.2017 and by hand on 16.11.2017.On,,
16.11.2017, the Metro issued a letter to the Petitioner Consortium giving the reason for the rejection of the bid to be that ""the Petitioner consortium has",,
failed to meet the minimum financial eligibility criteria in Net Worth and in turnover in terms of Clause 3.5.4 of Section 3 of the RFP"". Aggrieved by",,
the impugned order dated 15.11.2017 and impugned letter dated 16.11.2017 of the Delhi Metro, the Petitioner invokes the writ jurisdiction of this court,",,
against the impugned bid rejection.,,
The Petitioner contends that the rejection of its bid on the grounds of failure to meet the criteria of minimum financial eligibility in terms of Clause,,
3.5.4 of Section 3 of the RFP is contrary to the material available on record, and has been done for extraneous and oblique considerations. It is argued",,
that if the applicable clause or stipulation were applied fairly its bid would not have been rejected. It was argued by the Petitioner that as its bid was,,
substantially higher than that of any other bidder and that the Metro will stand to lose out on a substantial sum of money, if the tender is not awarded",,
to the Petitioner.,,
Mr. Dayan Krishnan, learned senior counsel argued that it is apparent that the Metro considered a Consortium as distinct and different from a Joint",,
Venture for the purpose of bidding. The Metro contemplated that members of a Consortium will not merely participate by lending a portion of their,,
finances and resources, but will “contribute†their resources towards the consortium to meet the eligibility criteria, as is evident from Clause 5 of",,
the format memorandum of association prescribed within the RFP. Additionally, the term “contribute†as used in Clause 3.5.4 to Section 3 of the",,
RFP is different and distinct from the term “participate†as used in Clause 3.5.2 and 3.5.3 to Section 3 of the RFP. In these circumstances,,
therefore, members of Joint Ventures are assessed for their eligibility on the basis of their percentage participation while members of a Consortium",,
are assessed based on whether they contribute in terms of the ratio of equity participation, i.e., whether once resources are pooled, the Consortium",,
meets the minimum financial eligibility prescribed. In such a circumstance members of a Consortium are permitted to modify their shareholding in the,,
Special Purpose Company after execution of the lease, to the extent permitted in the RFP, which is not allowed to the Joint Venture.",,
The Petitionerâ€s counsel further contended that the Metro informed it that its bid was rejected under Clause 3.5.4 of the RFP, not under Clause",,
3.5.2 or 3.5.3 of the RFP, as is sought to be contended by the Counter Affidavit. Relying on the judgement of the Honâ€ble Supreme Court in TP",,
Senkumar v Union of India, (2017) 6 SCC 801, the Petitioner argued that it is settled law that an administrative order has to be adjudged on the",,
reasons appearing on the face of the order, and not on the basis of reasons supplied subsequently by means of a counter affidavit. Mr. Krishna also",,
questioned the interpretation by the Metro claiming that “the formula for calculating the net worth and turnover is provided in Clause 3.5.2 and is,,
same for Joint Venture Bidding as well as Consortium Bidding"", when the RFP expressly provides separate eligibility conditions with different",,
language for Joint Venture bidders and Consortium bidders. Placing reliance on the judgement of the Honâ€ble Supreme Court of India in the case,,
Ramana Dayaram Shetty v International Airport Authority of India and Others, (1979) 3 SCC 489 the Petitioner submitted that if the Respondentâ€s",,
contention was to be accepted, it would render the provisions of Clause 3.5.4 otiose and superfluous, which is impermissible. This contention of the",,
Respondent is mere eyewash, and ought to be disregarded by the Honâ€ble court.",,
Particulars,Net Worth in 2016-17,"Annual Average Turnover in
2014-15 to 2016-17
L e a d memberâ€s contribution
required (74%) (1)","21,46,00,000","21,46,00,000
Lead members actual contribution
(2)","21,83,71,627","24,95,81,956
Ordinary memberâ€s contribution
required (26%) (3)","7,54,00,000","7,54,00,000
Ordinary memberâ€s actual
contribution (4)","30,31,60,747","8,09,22,699.34
Total contribution required (1+3),"29,00,00,000","29,00,00,000
Total contribution made (2+4),"52,15,32,374","33,05,04,655.3
Particulars,"Net Worth in 2016- 17(in Indian
rupees)","Annual Average Turnover in
2014-15 to 2016-17 (in Indian
rupees)
PP Builders Pvt. Ltd.,"21,83,71,627","24,95,81,956
P P Builderâ€s contribution to
financial eligibility (74%)(A)","16,15,95,004","18,46,90,647
Home Linkers Pvt. Ltd.,"30,31,60,747","8,09,22,699.34
Home Linkerâ€s contribution to
financial eligibility (26%)(B)","7,88,21,794","2,10,39,901
Total contribution required,"29,00,00,000","29,00,00,000
Total contribution made (A+B),"24,04,16,798","20,57,30,548