Ucc-Sta (Joint Venture) vs Coal India Ltd. & Ors.

The present writ petition has been preferred inter alia praying for issuance of necessary directions upon the respondents to cancel the Letter of

Allotment (in short, LOA) dated May 7, 2018 issued by the respondent no.4 for and on behalf of the respondent no.2 accepting the purported offer of

the respondent no.5 for the work of “Hiring of HEMM for removal of OB of 461.60 L Cum and 291.00 L.Cum OB Re-handing and extraction of

140.00 L. Te coal in 11 years of Mining Operation and 2 years of backfilling (Total 13 years) at Gaurangdih Begunia OC patch in Salanpur Area.â€​

Shorn of unnecessary details the facts are that the e-tender notice (in short, NIT) was issued by M/s. Eastern Coalfields Limited (in short, ECL) on

22nd August, 2017. For opening of the tender, the date was fixed on 22.09.2017 and the Reverse Auction took place on 06.10.2017. The petitioner

was declared as the lowest bidder (in short, L1) but the LOA was withheld. Aggrieved thereby, the petitioner approached the Hon’ble High Court

at Delhi, inter alia, praying for a direction upon the respondents to forthwith issue work order in favour of the petitioner. The writ petition was filed on

22.03.2018. In the same an order was passed on 02.04.2018 directing issuance of a notice upon the respondent no.3 with a further direction upon the

said respondent to file a brief affidavit within two weeks. Subsequent thereto, the petitioner withdrew the said petition on 09.05.2018 and filed the

present writ petition before this Court on 14.05.2018. In the midst thereof, the LOA was issued in favour of the respondent no.5 on 07.05.2018.

Drawing the attention of this Court to clause 9 of the NIT, Mr. Bhattacharya, learned senior counsel appearing for the petitioner submits that there is

no specific mention in the said clause that in the value of work executed in the past, service taxes would not be included. It is implied and axiomatic

that total payment received by a firm is equal to the work executed multiplied by contracted rate along with applicable taxes and thus the work

experience will necessarily include the applicable taxes. In view thereof and as the petitioner fulfilled the eligibility criteria, there was no requirement

to seek any further clarification pertaining to such work experience. Though the petitioner was declared the lowest bidder- L1, its bid was, however,

rejected on a purported ground that the petitioner did not fulfil the said eligibility criteria. The authorities had proceeded in derogation to the tender

conditions with an intent to favour the second lowest bidder, being the respondent no.5 and such action smacks of mala fide and arbitrariness.

In the writ petition filed before the Hon’ble High Court at Delhi, the ECL filed an affidavit wherein it was categorically averred that “although

it is not expressly mentioned in the Notice Inviting Tender that the work experience should be considered without service tax but since the estimated

cost put to tender is without service tax, experience value is also considered without service taxâ€. In view of such ambiguity, the Tender Committee

sought clarification from the Independent External Monitors (in short, IEMs) as provided under Clause 40 of the NIT.

Drawing the attention of this Court to page 288 of the said petition, Mr. Bhattacharya submits that there was a unanimous decision of IEMs to the

effect that the petitioner’s bid ought not to have been rejected since in the NIT, there was no mention that service tax should be/should not be

included in the work experience and that globally the practice is to include the service tax and to give the gross value of the work executed.

Mr. Bhattacharya further contends that even after obtaining such opinion of IEMs the Tender Committee took a decision to obtain a legal opinion from

the learned Additional Solicitor General, as would be explicit from the note sheet dated 31.03.2018 signed on 06.04.2018 by the Tender Committee.

There was no such provision that in the event of any dispute pertaining to acceptance of tender the authorities would be approaching the learned

Additional Solicitor General for legal opinion. Thus, the rejection of the petitioner’s bid is thus based upon extraneous consideration.

He further submits that though the petitioner was the lowest bidder, the authorities have issued LOA to the respondent no.5 and such decision is

intended to favour the respondent no .5 and such action being arbitrary and irrational warrants interference of this Court. Drawing the attention of this

Court to the LOA dated 07.05.2018, Mr. Bhattacharya submits that in the third paragraph of the LOA it has been categorically stated that twenty

eight days from the date of receipt of letter of acceptance, the performance security has to be deposited to enable the concerned department to issue

a formal work order. Thus till date such work order has not been issued in favour of the respondent no.5 and work has not commenced.

Mr. Hirak Mitra, learned senior counsel appearing for the ECL submits that no mala fide can be attributed to the action of ECL inasmuch as the

petitioner’s objection was duly considered and deliberated upon in different meetings of the Tender Committee and the highest officer of the State

was approached and, thereafter, a final decision was taken. The invitation to tender is in the realm of contract and cannot be open to judicial scrutiny.

There is also no error in such decision making process warranting interference of this Court in exercise its discretionary jurisdiction.

Drawing the attention of this Court to clause 10(VIII) of the NIT, Mr. Mitra submits that the lowest bidder will be decided based on “cost to

company†which has been stated to be quoted price of bidder excluding GST+GST Compensation Cess (as applicable) and the payment/deposit is

the responsibility of the Contractor. From the LOA, it would also be evident that the offer was exclusive of GST and as such the petitioner’s

contention that the work experience will necessarily contain applicable taxes cannot be accepted.

Drawing the attention of this Court to Clause 13 of the NIT, he further submits that in terms of the NIT, upon opening of the price bids, a reverse

auction platform was created, displaying only the L1 price received and it was also indicated therein that H1 bid will be eliminated during price bid

opening, if more than three techno commercially acceptable bids are available as per the evaluation done by system and such bidder will not be

allowed to participate in reverse Auction. In Clause 13 (e) it has been stated that the L1/ Start Bid price is “cost to the company†price on which

the auction will be initiated.

Mr. Anindhya Mitra, learned senior counsel appearing for respondent no.5 submits that the conditions, as incorporated in the NIT, need to be

considered together and not in isolation. A particular clause cannot be taken up and highlighted. The estimated cost put to tender was without service

tax and as such experience value also needs to be considered without service tax. The L-1 bidder had included service tax component when it

declared its work experience.

He further contends that the petitioner approached the Hon’ble High Court at Delhi on 22.03.2018 praying for the same reliefs as prayed for in

the present writ petition and no interim order was passed when the matter was first heard on 02.04.2018. The Hon’ble Court was pleased to

direct the respondent no.3 therein to file an affidavit. Such order was accepted by the petitioner and subsequent thereto, they also withdrew the writ

petition without any leave to file afresh. In such circumstances, the present writ petition itself is not maintainable. As regards the opinion of IEMs, Mr.

Mitra submits that it is based on a sole observation that it is a global practice to include the service tax and to give the gross value of the work

executed. Such observation, according to Mr. Mitra, is not supported with reasons. The members did not consider the fact that in ECL there was no

such prevailing practice to include the service tax. The said observation, being a cryptic one, is not sustainable in law.

Drawing the attention of this Court to LOA, Mr. Mitra submits that the offer was accepted by the respondent no.5 and by a letter dated 09.05.2018

such consent was given by the respondent no.5 and the required bank guarantee was also issued on 14.05.2018 and as such at this stage question of

interference does not occasion. In support of his arguments, Mr. Mitra has placed reliance upon the following judgments reported in (i) (1999) 1 SCC

492 : Raunaq International Ltd. Vs. I.V.R. Construction Ltd. & Ors. (ii) (2012) 8 SCC 216 : Michigan Rubber (India) Limited Vs. State of Karnataka

& Ors. and (iii) (2016) 8 SCC 446 : Bakshi Security & Personnel Services Pvt. Ltd. Vs. Devkishan Computed Pvt. Ltd. & Others.

The note sheet dated 31.03.2018 would reveal that the Tender Committee discussed the issue as to whether the value of work done mentioned in the

certificate is including or excluding the service tax and educational cess. Pertaining to the said issue, the Tender Committee decided to seek comments

of the GM (Civil), CIL and a request to that effect was made on 11.12.2017. The Tender Committee thereafter held a meeting on 02.01.2018 and

decided to seek opinion from the IEM of the ECL. Such opinion was sought for on 06.01.2018 and received on 10.01.2018. One of the members,

namely Rakesh Jaruahar, observed that since tax is a statutory requirement and is constant for every person required to pay tax, it is not relevant to

consider it when evaluating a firm’s past experience. The member, namely, Sudhir Kumar concurred with such opinion of Rakesh Jaruahar and

observed that ECL management can go ahead to process the offers as per NIT terms and conditions excluding tax component.

After obtaining such opinion, the Tender Committee held its next meeting on 15.01.2018. On the basis of the complaints lodged against different

participants, including a complaint received from L1 bidder itself, a further meeting was held on 07.02.2018 and a decision was taken to forward the

matter to IEMs once again with a request to re-look into the issue. Pursuant thereto, the IEMs held a meeting on 23.02.2018. Sudhir Kumar observed

that globally the practice is to include the service tax and to give the gross value of the work executed and that in view of the same him, it would not

be appropriate to reject the bid of L1. The other member, namely Rakesh Kumar Jaruahar, observed that in view of the observation of Sudhir Kumar

his earlier opinion given may be kept in abeyance. Thereafter, the Tender Committee again held a meeting on 01.03.2018 to deliberate on the issue in

totality. In the said meeting it was decided that an opinion should be sought for from the learned Additional Solicitor General of India.

From the above sequence of facts, it is thus explicit that the petitioner’s bid was not abruptly rejected. The issue was deliberated upon and

discussed in various meetings of the Tender Committee. Opinion was sought for from the IEMs twice. The said opinions of the IEMs were

contradictory and accordingly, a decision was taken to approach the learned Additional Solicitor General. It is not a case that the final decision was

taken by the authorities in a perfunctory manner. The issue was deliberated and discussed at length by the Tender Committee detailing the reasons as

to why it had to be sent ultimately for opinion of the superior officer of the State. No mala fide can be attributed to such action of the authorities and it

cannot be said that the authorities have acted in a manner which would benefit a private party at the cost of the authorities.

It is also necessary to remember that price may not always be the sole criteria for awarding a contract. 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. The Writ Court cannot

transpose itself as an appellate authority and in cases where two views emerge, it cannot interfere even if it feels that one is more logical. The

petitioner has failed to establish any arbitrariness or unreasonableness in the tender process.

For the reasons discussed above, this Court is unable to grant the reliefs, as prayed for by the petitioner, and the writ petition is, accordingly, dismissed.

There shall however, be no order as to costs. Photostat plain copy of this order, duly counter-signed by the Assistant Registrar (Court), be given to the

learned advocates for the appearing parties on their usual undertaking. Urgent photostat certified copy of this order, if applied for, be given to the

learned advocates for the appearing parties upon compliance of all necessary formalities.