IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 21 .01.2009 CORAM THE HONOURABLE Mr. JUSTICE K.VENKATARAMAN W.P.Nos.16957, 16958, 17460, 17744, 20409, 23357, 23358 and 23795 of 2008 and M.P.Nos.1, 1, 1, 2, 3, 1, 2, 1, 2, 1, 2, 1, 2 and 3 of 2008 W.P.No.16957 of 2008:
W.P.No.16957 of 2008 has been filed under
Article 226 of The Constitution of India for the issuance of writ of certiorarified mandamus to call for the records and quash the communication of the second respondent dated 30.06.2008 in not shortlisting the petitioner for the bid stage and consequently, direct the second respondent to consider his application.
For Petitioners : Mr.Aravind Dattar, S.C., for M/s.AZB and Partners (W.P.No.16957 & 16958 of 2008) Mr.AL.Somayaji, S.C., for Mr.V.Perumal (W.P.No.17460 of 2008) Mrs.Nalini Chidambaram, S.C., for Ms.C.Uma (W.P.No.17744 of 2008) Mr.Aditya Bhat, for M/s.Arun Angumani (W.P.No.20409 of 2008) Mr.P.S.Raman, S.C., for Mr/Satish Parasaran (W.P.Nos.23357 & 23358 of 2008) Mr.Rahul Balaji (W.P.No.23795 of 2008) For Respondents : Mr.M.Ravindran, Additional Solicitor General of India, assisted by Mr.P.Chandrasekaran, Senior Central Govt. Standing Counsel, for Ennore Port Ltd. Mr.T.S.Sivagnanam, for R.1 in W.P.No.16957 & 16958 of 2008) Mr.A.Kalaiselvan, for R.1 & R.3 in (W.P.No.23795 of 2008) COMMON ORDER The petitioners in all these writ petitions question the act of the Ennore Port Limited in not shortlisting them for the next stage of bid that is RFQ stage and some challenging certain clauses in the tender forms. 2. The short matrix of the matter as put forth by the petitioner in W.P.No.17460 of 2008, in its affidavit filed in support of the petition, in nutshell, is set out here under:-
2.1. The petitioner is one of the members of the consortium by the name of India Terminal Consortium (herein after referred as the Consortium). The petitioner consortium members are reputed logistics service providers including International Port Operators. The Consortium members are (i) Terminal Investments Limited, (ii) Samsung C & T Corporation, (iii) Container Corporation of India, (iv) The Shipping Corporation of India, (v) Central Warehousing Corporation and (vi) Hind Terminals Private Limited.
2.2. On 07.03.2008, the first respondent floated Request for Qualification (RFQ) for development of Container Terminal at Ennore Port, on Build, Operate and Transfer basis (herein after referred as BOT), in order to shortlist competent applicants subject to national security clearance, who may be subsequently invited to bid for the project. The said RFQ document contains instructions to applicants and criteria for evaluation and project profile was available from the registered office of the first respondent upon submission of a demand draft in favour of the first respondent towards the cost of Request for Qualification document. The petitioner had paid the sum required by way of demand draft and after carefully gone through the RFQ document, had raised certain queries regarding certain terms and conditions of the said document and submitted written queries to the first respondent. The first respondent by its communication dated 04.04.2008 forwarded the amendments to the petitioner to the Request for Qualification document. The first respondent by proceedings dated 04.04.2008, had clarified the petitioner's queries during the pre-application conference held on 29.03.2008. Since the petitioner fulfils all the requirements, had submitted its application dated 19.05.2008 for pre-qualification for development of container terminal at Ennore Port on BOT basis on 20th May, 2008.
2.3. During the opening of the Bid on 20.05.2008, the Director, Operations of the first respondent read out the points secured by each of the Bidders. The petitioner had secured the third highest Eligibility Points amongst the participants. Thereafter, the first respondent issued a communication dated 30.06.2008 to the petitioner informing that the application for pre-qualification submitted by the petitioner had not been shortlisted for the next stage of bid, i.e., RFP stage as per clause 2.20.1. Thereafter, on 01.07.2008, the first respondent sent another letter clarifying that the communication dated 30.06.2008 be read as "this notification is in accordance with clause 2.21.1 of Request for Qualification document", instead of "this notification is in accordance with clause 2.20.1 of Request for Qualification document". The petitioner was shocked to receive the communication dated 30.06.2008 and 01.07.2008, and by reply dated 02.07.2008, the petitioner highlighting its points of submission, requested to review the omission of the consortium of the petitioner from the eligibility list of candidates for RFP stage. The first respondent has not replied to the communication dated 02.07.2008 till the filing of the writ petition.
2.4. The Chairman representing Shipping Corporation of India, one of the consortium members, met the Chairman cum Managing Director of the first respondent and wanted to know how the petitioner was not shortlisted for the next stage. It has been informed to the petitioner that the Power of Attorney issued by Container Corporation of India was not notarized and therefore, the petitioner was not shortlisted. In respect of the shortlisting of the bidders, except two of them, others are in the 9th, 11th, 14th and 15th ranks as per the eligibility points. The first respondent could have sought for clarifications to facilitate evaluation in terms of clause 2.20.1 before coming to any conclusion in respect of pre-qualification. Hence, being aggrieved over the arbitrary, discriminatory, unlawful, unsatisfactory and high handed action by the officers of the first respondent in disqualifying the petitioner in the first stage of pre-qualification, the petitioner has approached this Court by filing the present writ petition.
3.1. The case of the petitioner in W.P.No.16957 of 2008 is that the petitioner company is duly incorporated under the laws of Singapore. It is a 100% subsidiary of PSA India Private Limited, which is in turn a 100% subsidiary of PSA International Private Limited (herein after referred as PSA International) and is part of PSA Group. The PSA Group has operations in 28 ports in 16 countries across Asia, Europe and America and a global capacity of 111 million TEUs and over 66 kilometres of quarry length. For three consecutive years since 2005, PSA International has been voted "Best Global Container Terminal Operator" at the Asian Freight and Supply Chain Awards.
3.2. The petitioner together with ABG Infralogistics Limited and Schelde Container Terminal Noord N.V., formed a consortium and submitted an application pursuant to the Request for Qualification Document dated March, 2008 in relation to the proposed development of a container terminal on Build Operate Transfer basis (herein after refereed as BOT basis) at Ennore Port. The petitioner is the Lead Member of the Consortium. The petitioner submitted application of its experience through a process of self assessment i.e., by awarding itself Experience Scores. Clause 3.5 of the RFQ document provides that the credentials of eligible applicants were to be measured in terms of their total Experience Scores. While so, the petitioner was shocked to receive the impugned notice dated 30.06.2008 from the Ennore Port, the second respondent in this writ petition that the application submitted by the petitioner has not been shortlisted for the Bid Stage. Though the petitioner sought reasoning as to why it has not been shortlisted, there is no response. Hence, the petitioner has to approach this Court challenging the arbitrary rejection of the application of the consortium by the Ennore Port, the second respondent herein.
4. The case of the petitioner in W.P.No.17744 of 2008 is that the petitioner is a public limited company registered under the Companies Act. The petitioner submitted all the required information and documents as per the RFQ document. The petitioner ranks 6 in terms of experience / technical score. Though the petitioner was expecting that it would be shortlisted, it was surprised to receive the proceedings of the Ennore Port, the second respondent herein stating that the petitioner had not been shortlisted for the next stage of Bid Process i.e., RFQ state. The first respondent acted in an arbitrary and unreasonable manner and arbitrarily not included the name of the petitioner as one among the shortlisted applicants who are eligible to participate in the Bid Process. Hence, challenging the same, the petitioner has approached this Court by filing the writ petition.
5.1. The case of the petitioner in W.P.No.20409 of 2008 is that the petitioner company is incorporated under the Companies Act 1956 and it is having current operations in five ports viz., Kandla, Kolkata, New Mangalore, Paradip and Sikka and is one of the largest crane rental companies in the country. There are two subsidiary companies of the petitioner viz., ABG Kandla Contrainer Terminal Limited and ABG Kolkata Container Terminal Private Limited.
5.2. The petitioner together with PSA Ennore Limited, formed a consortium and submitted an application. The PSA Ennore Limited, who was the Lead Member of the consortium, has operations in 28 ports in 16 countries across Asia, etc. Thus, all the members of the consortium were without doubt candidates with exceptional qualifications and credentials and the petitioner was extremely confident about its chances that it will be selected for the RFP state. While so, by proceedings dated 30.06.2008, the Ennore Port Limited, the second respondent herein sent a letter to the petitioner consortium, PSA Ennore informing that the application submitted by it has not been shortlisted for the Bid Stage. The petitioner sought certain information, but till date, the information has not been furnished. Hence, the petitioner has to approach this Court by filing the present writ petition.
6. The case of the petitioner in W.P.No.23357 of 2008 is that the petitioner company is incorporated under the laws of Republic of Singapore. A consortium consisting of the petitioner, one Mundra Port and Special Economic Zone Limited and one Adani Enterprises Limited had submitted a bid in response to a tender floated by the first respondent. The petitioner consortium has not been shortlisted for the next RFP state. No reason whatsoever has been given for the exclusion of the petitioner. The petitioner made a full and complete disclosure of all facts relating to the petitioner consortium and a rival consortium (PSA Consortium) and recording that the petitioner consortium and the PSA Consortium were not in conflict of interest. Immediately upon receipt of communication dated 30.06.2008 not shortlisting the petitioner, the petitioner attempted to ascertain from the first respondent on what basis the petitioner's proposal had not been shortlisted for the next stage of Bid. But the first respondent refused to provide any information whatsoever. The petitioner's letter and the notice of the Advocate did not evoke any response. Hence, challenging the proceedings dated 30.06.2008, the petitioner has approached this Court by filing the present writ petition.
7. The petitioner in W.P.No.23795 of 2008 challenges certain clauses in the Guidelines for Pre-Qualification of Bidders for Public Private Partnership (PPP) Projects, to strike down the same as arbitrary and unconstitutional and also challenging the letter of the Ennore Port Limited, the second respondent dated 30.06.2008 and 01.07.2008 not shortlisting the petitioner.
8. The petitioner in W.P.No.23357 of 2008 filed another writ petition in W.P.No.23358 of 2008 for declaration that clause 2.2.1 (c) of RFP document is bad in law. Likewise, the petitioner in W.P.No.16957 of 2008 has filed another writ petition in W.P.No.16958 of 2008 to quash the clauses 1.2.1, 2.2.1(c), 3.2.1 and 3.2.6 of Model Request for Qualification for PPP Projects dated 05.12.2007 and for a direction to the second respondent to amend the Request for Qualification document dated March, 2008.
9. Separate counter affidavits have been filed on behalf of the respondents in each of the writ petitions.
W.P.No.17744 of 2008 9.1. As far as the counter affidavit filed in W.P.No.17744 of 2008 is concerned, it is the case of the respondents that:
(i) the composition of the consortium formed by the petitioner along with McQuarie Capital, Singapore had a floating equity ratio between them. As per the RFQ document, Clause No.2.2.3, the equity participation of the members of the consortium had to be a definite defined one and not in a manner as exhibited in the consortium of the petitioner. Having equity percentage of not less than 51% could mean having equity of 99% also by the petitioner and having equity of not more than 49% could mean having equity of 1% also by McQuarie Capital Singapore Pte. Ltd. As a result of this, only the petitioner was eligible for evaluation on account of holding at least 26% of the equity of the consortium;
(ii) the experience/technical score which was self assessed by the petitioner could not be considered because of the above referred to fact;
(iii) at no point of time, at the time of opening of applications on 20.5.2008, it was announced by the representative of the respondent that the points which were read out were secured by the applicants. It was made clear that what was being read out for the sake of transparency of the bid process was the self assessed technical score as submitted by the applicants. The announcement of the self assessed scores were subject to evaluation. The ranking of the petitioner, as stated by him, is purely his own conclusion without the respondent concurring with it.
(iv) the contention of the petitioner that he was shortlisted for invalid reasons is denied. Since typographical error crept in the communication by this respondent, it was rectified vide another communication dated 1.7.2008.
(v) the technical score derived from the experience of such a consortium member, who is a Fund Manager and is not an owner of the fund cannot be taken into account while computing the technical score of the consortium. Hence, the self assessed technical score of the petitioner consortium could not be considered and the petitioner could not be shortlisted for the next stage of bidding process;
(vi) the non-inclusion of the petitioner consortium has been on account of flawed composition of consortium. The other consortium member, i.e., McQuarie Capital Singapore Pte. Ltd., being a fund manager, its technical score could not be considered by the respondent;
(vii) As per Clause 2.17.4 and 2.21.1 of the RFQ document, the respondent was not supposed to either divulge the reason for disqualification to the applicants, or entertain any query or clarification from applicants who fail to qualify;
(viii) the respondents have acted with utmost fairness and transparency in accordance with the policy guidelines of the Government of India, as contained in RFQ document and hence, the right of the petitioner, much less
Article 14 of the Constitution of India, had not been violated. No public interest has suffered on account of the ground as stated by the petitioner; and
(ix) no right of the petitioner has been violated since the respondents have acted in a fair and non discriminatory manner.
9.2. A reply affidavit had been filed on behalf of the petitioner wherein the following facts have been set out:
(i) in each consortium, there is one lead company and the bid/application should be in the name of the lead company. The petitioner is the lead company in the consortium. The petitioner submitted its application for pre-qualification with reference to the RFQ document dated 7.3.2008 by its application dated 19.5.2008. The petitioner submitted all the required information and documents as per the RFQ document. The petitioner was ranked in the list read out by the respondent as per the self assessment. The petitioner received a communication from the second respondent dated 30.6.2008 stating that the petitioner has not been shortlisted for the next stage of bidding process. However, no reason was given in the impugned order for not shortlisting the petitioner for the next stage. In the counter affidavit, the respondents have set out the reasons for not shortlisting the petitioner;
(ii) it is alleged in the counter that though the petitioner was eligible for evaluation on account of holding at least 26% of the equity of the consortium, the other partner of the consortium is ineligible for evaluation on account of not holding at least 26% of the equity of the consortium. Secondly, it has been alleged that the consortium partner McQuaire Capital is only a Fund Manager and not the owner of the fund and hence, the technical score derived for the experience of McQuaire Capital cannot be taken into account while computing the technical score of the consortium. The first reason alleged for rejection of the application of the petitioner shows that the respondents have not looked into all the documents submitted by the petitioner along with its application and applied its mind before rejecting the application of the petitioner. Along with the bid document, the petitioner submitted the Joint Binding Agreement dated 29.4.2008. In the said agreement, it has been clearly stated that the petitioner's share holding is 51% and that of the other consortium member is 49%. Thus, the equity participation of the members of the consortium is definite and defined. However, the respondents, without referring to the shareholding pattern of the two consortium members have wrongly held that the equity participation of the members of the consortium is not definite and defined. This perverse finding led to arbitrary denial of the right of the petitioner to participate in the financial bid. Thus, the impugned order has been passed without a proper scrutiny of documents submitted by the petitioner;
(iii) the financial capacity clause 2.2.2 (B) states that the applicant shall have a minimum net worth of Rs.195 crores as at the close of the preceding financial year. The petitioner who has 51% shareholding along with its consortium partner who has 49% shareholding as per the Joint Bidding Agreement fully satisfies the technical capacity and the financial capacity as set out in the above clause;
(iv) In the case of M/s.India Terminal Consortium, the respondents have sought clarification about the information which they had already submitted. But, no such clarification was sought from the petitioner regarding the shareholding of the petitioner and the consortium partner on the basis of the information already submitted by the petitioner in the bid document. Had such a clarification been sought from the petitioner, the petitioner would have satisfied the technical capacity and financial capacity as set out in clause 2.2.2, as per the Joint Bidding Agreement;
(v) As regards the other ground of rejection that the consortium partner is only a Fund Manager, the consortium company is a company incorporated in Singapore and a 100% owned subsidiary of Macquarie Group Limited and the same is evident from its Annual/Financial Report 2008. The RFQ issued by the first respondent did not also mention that Fund Managers, either as a single entity or as a part of a group of entities, are not eligible to apply for pre-qualification for the project; and
(vi) the consortium partner can claim the technical experience of MIG and MAp. The MAp and MIG are associates of MSAPL as per the requirements of clause 2.2.9 of the RFQs of public bids.
9.3. A rejoinder was filed by the respondents to the reply affidavit of the petitioner which sets out the following facts:
(i) the Ennore Port Limited (hereinafter called "the EPL") has decided to develop a Container Terminal with quay length of 1000 Meters in a straight line with sufficient back up area through Public Private Partnership model on Build Operate Transfer (BOT) basis. The EPL, therefore, forwarded relevant documents to Public Private Partnership Appraisal Committee (PPPAC) constituted under the Planning Commission for obtaining "in-principle" approval for development of Container Terminal at Ennore Port in December, 2006. PPPAC accorded "in-principle" approval in October, 2007. The Department of Expenditure, Ministry of Finance, Government of India, though their Official Memorandum dated 5.12.2007 issued the Guidelines for Pre-Qualification of Bidders for PPP projects;
(ii) the EPL has prepared the RFQ document for development of Container Terminal and forwarded the same to the Ministry of Shipping, Road Transport and Highways, Government of India for necessary approval in September, 2007 and the same was approved by the Ministry on 11.2.2008;
(iii) a notice inviting tender was published on 7.3.2008 for sale of RFQ document. A Pre-Application conference was conducted on 29.3.2008 in which two representatives of 55 applicants each participated and raised their queries/doubts. In the meantime, the Ministry of Finance, issued an Official Memorandum dated 25.3.2008 enclosing amendments to the Model RFQ document. Under the provisions of Clause 2.10 of the RFQ document, EPL issued amendments to the RFQ document on 4.4.2008 and all the queries of the applicants were responded. The application due date was extended from 10.4.2008 to 18.4.2008 and finally to 30.4.2008. Due to the request made by the applicants, it was extended till 1300 hours IST on 20.5.2008;
(iv) The applications were opened at 1400 hours on 20.5.2008 in the presence of the representatives of the applicants. The names of the applicants and whether it was a sinle entity or a consortium were read out along with the composition of the consortium. Aggregate Technical Capacity, as stated by each applicant, was also read out. While making the announcement regarding Aggregate Technical Capacity, it has been clearly stated that the aggregates were as submitted by the applicants and unevaluated by the respondents and the Port does not take any responsibility for the correctness, genuinity or its confirmation to the provisions of the RFQ documents;
(v) the respondents have selected an Adviser after following due process, for advising/helping the respondent in conducting the entire bid process aimed at selecting the BOT Operator, who would be awarded the contract and would eventually implement the project. SBI Capital Markets Limited was selected as the Bid Adviser for the project and for rendering advice on legal matters concerning the bid process. Mulla & Mulla and Craigie Blunt & Caroe have been engaged by SBI Caps to act as bid Legal Advisers. The evaluation of the applications has been done by the Bid Adviser, i.e., SBI Capital;
(vi) the method of shortlisting the applications was to be done with reference to the following:
(a) Testing for responsiveness (Clause 2.19.1);
(b) Verification of Financial Capacity (Clause 3.4); and
(c) Computation of Technical Capacity (Clause 3.2).
A minimum threshold technical capacity has been provided in order to be eligible to apply for the shortlisting as per Clause 2.2.2 (A) of the RFQ document. Those applicants, who failed to secure the threshold technical capacity, were considered ineligible for further evaluation for shortlisting as per the said Clause;
(vii) Clause 3.5.2 of the RFQ document stipulates shortlisting of top six applicants based on their Aggregate Technical Capacity. The first stage of method of shortlisting, i.e., test of responsiveness (Clause 2.19.1 of the RFQ document) is ascertained by verifying the documents such as, one original and two copies of documents (Clause 2.12.2), etc., as put forth in the rejoinder;
(viii) the check for "Conflict of Interest" was performed in accordance with Clause 2.2.1(c) of the RFQ document. The check on Financial Capacity was performed for the applicants who had cleared previous tests of responsiveness and conflict of interest. As per Clause 2.2.2 (B) of the RFQ document, the applicant should have an aggregate net worth of Rs.195 Crores. Clause 2.2.2 (A) of the RFQ document envisages Technical Capacity, i.e., a third stage of method of shortlisting. As per the said clause, the applicants should have a minimum Threshold Technical Capacity of Rs.650 Crores and one-fourth of Threshold Technical Capacity should be from projects in Category (1) or Category (3). A project was considered non-eligible if relevant supporting information/documents for that project as stipulated under RFQ document were not submitted;
(ix) apart from the above criteria for rejection, other factors were also considered for arriving at the technical score of the project as per the RFQ stipulations. To evaluate the technical score, applicants have to give the details as per Clause 3.3 of the RFQ document. After following the above process, the shortlisting of the applications would be done as per Clause 3.5 of the RFQ document;
(x) the communication that has been sent to the petitioner informing that they have not been shortlisted for the next stage of bidding was in accordance with the provisions of Clause 2.21.1 of the RFQ document. The evaluation carried out by the respondents does not leave any ground for the petitioner to challenge the notification of its non-shortlisting;
(xi) in three places of the RFQ application in Annexure-I of Appendix-I, the equity distribution is defined as the petitioner holding not less than 51% and its other consortium member holding not more than 49%. Only after perusing the whole of the application, the respondents came to know that the petitioner's consortium has submitted its application stating different equity share between the members of its consortium deliberately in such a manner so that it could be used for different purpose at a later stage;
(xii) as per Clause 2.20.1 of the RFQ document, the respondents have sole discretion of seeking clarification from the applicants for facilitating the process of evaluation. However, clarification cannot be asked from an applicant so as to enable it to rectify the mistake it its application;
(xiii) As per the Articles of Association, the consortium member remains as Fund Manager/Invester in security and acts as Financial Adviser. The Articles of Association of McQuaire Infrastructure Group and McQuaire Airports, which are claiming experience from projects in Categories (1) and (2), as associates of McQuaire Group Limited, are not enclosed with the application, which should have been submitted as per the requirement of Clause 2.13.2 of the RFQ document. In the absence of these requirements, the contention of the petitioner that the consortium member is an asset owner cannot be accepted;
(xiv) even otherwise, the projects which have been cited by the petitioner consortium to gain technical score are ineligible for consideration because of the following reasons:
(a) the petitioner consortium claimed experience of 17 projects. Five projects by the Lead Member and 12 projects by consortium member. As per Clause 2.2.2, at least one-fourth of the Threshold Technical Capacity shall be from the eligible projects in Category (1) or Category (3) specified in Clause 3.2.1.
(b) the experience score derived by McQuaire from two projects out of three projects under Category I, are from projects whose capital cost is less than Rs.65 Crores, and the same is against Clause 3.2.3 (c) of the RFQ document;
(c) in the third project, though the capital cost is more than Rs.65 Crores, it is not supported by Statutory Auditor's Certificate apart from not submitting the Articles of Association of its Associates, which is claiming experience. Thus, the three project experience claimed under Category I goes out of consideration leaving alone four project experience claimed by the petitioner.
(d) Even those four project experience claimed by the petitioner could not be considered for the reasons that in the first two projects there are no certificates from the Statutory Auditor with regard to the revenue appropriated by the Applicant and in the remaining two projects, there is no categoric assertion in the Auditor's Certificate certifying the total project cost. Therefore, any of the project experience claimed under Category (1) and Category (2) cannot be considered for evaluation;
and
(xv) in any event, the petitioner cannot be given any second chance to rectify the mistake of his application; because it could amount to compensating the petitioner for his negligent and careless submission of his application. Any isolated relief to the petitioner and denial of the same to other applicants will amount to unfair treatment to them.
9.4. An additional reply affidavit was filed by the petitioners, setting out the following facts:
(i) it is not the case of the petitioner that the self evaluation of the applicants is final. The petitioner states that they have submitted all the required information and documents as per RFQ document, but due to non application of mind the evaluator has failed to appreciate the scope of the documents submitted by the petitioner and arbitrarily did not evaluate the technical score of McQuaire Capital (Singapore) Pte. Limited;
(ii) the equity distribution defined as the petitioner holding not less than 51% and other consortium partner holding not more than 49% is not in conflict with equity distribution defined in Joint Bidding Agreement, which is legally binding document agreed upon by both consortium members and singed by authorized signatories. The equity distribution is in line with the requirements for equity ownership of more than 26% for the technical scores of a consortium member to be taken into account for computation of Aggregate Scores. Hence, McQuarie's technical scores have been wrongfully neglected;
(iii) with regard to the allegation of the respondents that the petitioner is seeking clarification of RFQ application in order to correct the fault in the RFQ application, it is submitted that there is neither any fault in the application nor the petitioner is seeking an opportunity to rectify any defect, but intends to only clarify in the light of the documents already submitted;
(iv) the allegation of the respondents that McQuaire Capital (Singapore) Pte. Limited is a fund manager/investor in security and a financial advisor and cannot be accepted as an Asset Owner is baseless, as even as per the Memorandum and Articles of Association, they can undertake any financial and other or allied activities in relation to the investment of funds for itself, effectively allowing it to be an asset owner. Moreover, Clause 2.13.2 nowhere specifies that Associates of applicant/ Consortium member need to submit a copy of Memorandum and Articles of Associates, and hence, the technical scores of these projects cannot be rejected on the ground of non submission of Memorandum and Articles of Association for associates of applicant; and
(v) the application of the petitioner was not properly evaluated and the rejection of the application was for untenable reasons. There is no deficiency in the application of the petitioner. The respondent through its evaluation ought to have sought clarification from the petitioner under Clauses 2.20.1 of the RFQ document and in not calling for clarification, the respondent has failed to exercise the discretion in accordance with law.
W.P.No.17460 of 2008 9.5. In W.P.No.17460 of 2008, a counter affidavit had been filed by the first respondent (EPL), setting out the following facts:
(i) the rejection of the petitioner was on account of non submission of documents as laid down in the RFQ document. The following defects made the respondents not to shortlist the petitioner:
(a) The Power of Attorney furnished by Contained Corporation of India and Central Warehousing Corporation who are members of the Consortium have not been executed in accordance with procedure laid down by applicable law and the chartered documents of the executants nor under their common seal.
(b) In the responsiveness test, Terminal Investment Ltd and Container Corporation of India, as a member of the Consortium claiming experience under Category 1 has not submitted the required Statutory Auditor's Certificate and the details of the project as per Appendix I, Annex IV respectively and hence evaluation could not be done.
(c) Likewise, Samsung C & T Corporation, who is another member of the Consortium and is claiming experience from Category (3) projects has not furnished the Statutory Auditor's Certificate as stipulated. Only one Auditor Certificate for its all the 250 projects (Category 3 and Category 4) is given. The requirements as per the RFQ document as stipulated in Appendix I, Annex IV, is that the Applicant should provide a certificate from the Statutory Auditors/Clients in the format for each project to verify various facts related to a project like project cost, period of project, share of the applicant, etc and in the absence of such certificate, the claim of technical score by Samsung C&T Corporation was discarded.
(d) As per Clause 2.13.2(v) of the RFQ document, the application submitted by a consortium should contain a copy of the Memorandum and Articles of Association if the applicant/consortium member is a body corporate. Terminal Investment Ltd., being a Corporate body, has not enclosed such a copy.
(e) As per Clause 2.13.2 (vi) of the RFQ document, the copies of applicant's / each consortium member's duly audited balance sheet and profit and loss account for the preceding five years is to be provided. In respect of Terminal Investment Ltd., no such document has been provided;
(ii) the petitioner's contention that the Power of Attorney given by Container Corporation of India was given by the person who himself is a Gazetted Officer is not correct as the Power of Attorney was supposed to be accompanied with the supporting documents as mentioned in Appendix III;
(iii) the respondent was under no obligation to inform the petitioner the ground for its disqualification as per Clause 2.17.4 of the RFQ document. The pre-qualification of applicant would be entirely at the discretion of the respondents. The applicants will be deemed to have understood and agreed that no explanation or justification on any aspect of the bidding process or selection would be given. The petitioner, who was fully aware of the provisions of this Clause and had accepted it before submitting the application, cannot question the provisions of RFQ document at a later date; and
(iv) the respondent had taken 37 days to complete the evaluation work which is very reasonable under any yardstick. The entire process has been carried out with utmost transparency and reasonableness by the respondent.
The other contentions raised in the counter affidavit are similar to the one made in W.P.No.17744 of 2008.
9.6. The petitioner filed a reply affidavit which sets out the following facts:
(i) the petitioner had submitted application in 15 volumes and complied with the requirement of Clause 2.19, i.e., Test of Responsiveness and 2.2.2(A), i.e., Technical Capacity. There is no statement in the counter affidavit that the petitioner has not fulfilled the conditions adumbrated in the above referred clauses;
(ii) the contention of the respondent that the respondent never read out the technical score given by the petitioner after self-assessment was denied. The first respondent himself read out the points secured by each bidder and the respondent cannot now take a different stand;
(iii) the rejection of the bid of the petitioner is illegal as the petitioner has not received any clarification and it is the duty of the respondent to clarify the queries made by the petitioner before finalizing the ranking. The respondent has not responded to the queries raised by the petitioner and even though the petitioner was qualified for being shortlisted for pre-qualification and was eligible for participation in the bid stage, the petitioner was disqualified from the next stage of bidding which was the result of the pre-determined mind in order to favour other bidders;
(iv) the Power of Attorney submitted by the petitioner is in accordance with the tender documents. There is no proper reason given by the respondent as to why the Power of Attorney submitted by the petitioner was rejected. In Appendix III of RFQ, it has been stated that the Power of Attorney executed and issued overseas will have to be legalized by the Indian Embassy and Notarised in the Jurisdiction where the Power of Attorney is being issued. In this case, the Power of Attorney has been executed in India as per the law applicable in India and hence, notarization is not mandatory and Power of Attorney which has been executed in India is sufficient and is legally valid;
(v) the necessary Statutory Auditor Certificate was filed by the petitioner along with details as per RFQ document in Volume V. Hence, there is no justification for the respondents to disqualify the petitioner from the next stage of bidding on this ground;
(vi) the petitioner has submitted one Auditor's Certificate for all the projects and such Auditor Certificate furnished by the petitioner is a valid one and in case of any doubt, it is for the respondent to make necessary verifications and hence, rejection on this ground is untenable;
(vii) as per Clause 2.13.2 (v) of the RFQ document, the petitioner submitted the Memorandum and Articles of Association of Terminal Investment along with RFQ documents. Hence, the rejection of the bid preferred by the petitioner is not justified;
(viii) the petitioner submitted audited balance sheet and profit and loss account of Terminal Investments Limited along with RFQ documents. The petitioner, thus, had complied with the Test of Responsiveness as defined in Clauses 2.19 and 2.2.2 (A);
(ix) disqualifying the petitioner from the next stage of bidding without affording an opportunity to the petitioner to put forth its clarification is arbitrary as in Appendix III of RFQ, it has been clearly stated that in the case of a Power of Attorney which has been executed and issued overseas, the documents will have to be legalized by the Indian Embassy and Notarized in the jurisdiction where the Power of Attorney is being issued. In the present case, the Power of Attorney has been executed in India as per the law applicable in India and hence notarization is not mandatory for Power of Attorney executed in India; and
(x) though the petitioner submitted all the required documents, the respondents have failed to shortlist the petitioner without considering the documents filed by the petitioner in its proper perspective and in an unduly haste manner. The rejection of the bid without giving any proper reason is violative of principles of natural justice.
9.7. A rejoinder has been filed by the first respondent to the reply affidavit of the petitioner, wherein it has been stated that:
(i) the Container Corporation of India, which is the member of the consortium of the petitioner and is claiming experience in Category (1) projects have not submitted the details of the eligible projects as per Appendix I of Annexure IV and in the absence of such eligible project details co-relation of the project with Statutory Auditor's Certificate cannot be established and hence, any claim of experience score from this project without authenticating Auditor's Certificate will have to be discarded;
(ii) the petitioner, who is the lead member of the consortium, has submitted only one auditor's certificate for 18 projects in Category (1) as stipulated in Clause 3.3.3 of RFQ document, instead of submitting Statutory Auditor's Certificate for each of the project as per format given in the RFQ document at Annexure IV of Appendix I;
(iii) the consortium member of the petitioner submitted only one Auditor's Certificate which has neither the project details not has any information with respect to the projects from which experience is being claimed and such a certificate cannot serve any purpose for authenticating the experience score as claimed by the consortium member of the petitioner;
(iv) the Memorandum and Articles of Association of Terminal Investment Limited were not submitted by the consortium of the petitioner. The petitioner is making misrepresentation of facts by stating that the Memorandum and Articles of Association of Terminal Investment Limited are placed at Pages 7 to 10 of Volume 7. The duly audited balance sheet and profit and loss account of the preceding five y ears have also not been submitted by the Terminal Investment Limited, which is the lead member of the consortium; and
(v) the Shipping Corporation of India, Container Corporation of India, Central Warehousing Corporation despite being Public Sector Companies hold only 41% equity in the proposed consortium. In that, the Container Corporation alone is holding 26% of the equity of the petitioner's consortium, and others, viz.,Shipping Corporation of India and Central Warehousing Corporation are just nominal partners holding 8% and 7% of equity respectively and with such type of equity by PSUs in the petitioner's consortium, the consortium does not become Public Sector Undertakings consortium as the majority equity still remains in the hands of private sector.
W.P.Nos. 16957 and 16958 of 2008 9.7(a) In W.P.Nos. 16957 and 16958 of 2008 common counter affidavit had been filed by the respondents, wherein the following facts have been set out. Apart from the statements made in the other writ petitions, it is stated that the case of the petitioner could not be short listed on account of the petitioner's consortium having 'conflict of interest' with another applicant consortium led by Mundra Ports & Special Economic Zone Limited (Lead Member), Adani Enterprises Limited and Neptune Oriental Lines Limited; as its members. In the case of consortium led by the petitioner, having 'conflict of interest' with Neptune Oriental Lines Limited, which was a member of the consortium led by Mundra Port and Special Economic Zone Limited, the petitioner could not be short listed. This fact was found by Ennore Port Limited on account of declarations made by Neptune Oriental Lines Limited. The petitioner, however, failed to make such a declaration which it was supposed to do under RFQ document. As per clause 2.2.1(c)(i) of the RFQ document, an applicant shall not have a 'conflict of interest' with another applicant participating in the bidding process. Any applicant found to have a 'conflict of interest' with another applicant shall have the effect of dis-qualifying of both the applicants. The short listing process had been a transparent one. There is no room for suspecting the said process.
W.P.No.20409 of 2008 9.8. The counter affidavit filed in W.P.No.20409 of 2008, sets out the following facts:
(i) the petitioner is a member of the consortium which has the following composition:
PSA Ennore Pte. Ltd. .. Lead Member Schelde Container .. Member Terminal Noord N.V.
ABG Infralogistics .. Member Limited
(ii) the petitioner's consortium submitted its application for shortlisting on 20.5.2008. As per Clause 2.2.6 (c) of RFQ document, the petitioner has designated PSA Ennore Pte. Ltd. as its Lead Member with all necessary power and authority to do for and on behalf of the Consortium, all acts, deeds and things as may be necessary in connection with the consortium's bid for the project and its execution;
(iii) PSA Ennore Pte. Ltd. as a lead member of the petitioner's consortium has already filed two writ petitions, viz., W.P.Nos.16957 and 16958 of 2008 against non shortlisting of the consortium for the next stage of bidding, i.e., RFP Stage. In spite of the above writ petitions, the petitioner had filed the present independent writ petition for the same relief. The petitioner has no locus standi to approach this Court independently. The disqualification of the consortium has the effect of disqualifying the members of the consortium as well and there cannot be different reasons for disqualification of the consortium and its members. Since the lead member of the petitioner's consortium has taken a legal recourse, the petitioner cannot maintain the writ petition independently;
(iv) as per the Government of India guidelines, the applicant should have acquired sufficient experience and capacity in building infrastructure projects. Such experience score has to be measured either from the construction work undertaken/commissioned by him, or from revenues of BOT/BOLT/BOO projects, or from both during the five years preceding the application due date. In case the applicant has experience across different categories, the score of each category would be computed as above and then aggregated to arrive at the experience score. In the case of a Consortium, the Aggregate Experience Score of each of its members, who have an equity share of at least 26% in such Consortium, shall be summed up for arriving at the combined Aggregate Experience Score of the Consortium. The experience score that is mentioned in the affidavit is only the self assessed experience score and it need not necessarily be the same score that would be arrived at after due scrutiny and evaluation of the experience score by following the evaluation method; and
(v) the non shortlisting of the petitioner's consortium was done by the respondent on account of the petitioner's consortium having "Conflict of interest" with another applicant consortium led by Mundra Ports and Special Economic Zone Limited (Lead Member), Adani Enterprises Limited and Neptune Oriental Lines Limited, as its members. In the case of the petitioner's consortium, PSA Ennore Pte. Ltd. was having conflict of interest with Neptune Orient Lines Ltd., which was a member of the consortium led by Mundra Port and Special Economic Zone Limited. This fact came to light on account of declarations made by Neptune Oriental Lines Ltd. The petitioner's consortium failed to make such a declaration which it was supposed to do under the RFQ document. As per Clause 2.2.1 (c) of the RFQ document, an applicant shall not have a conflict of interest with another applicant participating in the bidding process. If there is a conflicting interest, it will have the effect of disqualifying both the applicants. Thus, the petitioner consortium's lead Member, PSA Ennore Pvt. Ltd. and Neptune Oriental Lines Limited have common control shareholder, i.e., Temasek Holdings (Private) Limited which is specified as a conflict of interest in Clause 2.2.1 (c)(i) of the RFQ document.
W.P.No.23795 of 2008 9.9. The counter affidavit filed in W.P.No.23795 of 2008 sets out the following facts:
(i) the petitioner formed a consortium with Portio Management Services Limited and submitted its application for shortlisting qualified applicants for the bidding process for the development of Container Terminal on BOT basis. The petitioner's consortium was not shortlisted on account of his failure to meet the threshold technical capacity as per Clause 2.2.2 (A) of the RFQ document and hence, was not shortlisted;
(ii) the petitioner consortium claimed experience from 13 projects of Category I. The lead member of the consortium, i.e., the petitioner herein has not claimed any experience from the said 13 projects. But its member viz., Portia Management Services Ltd., has claimed experience from the said projects. Out of 13 projects, only one project experience in the BOT project of Vizag Sea Port Pvt. Ltd. could be considered for evaluation. The technical score arrived from the said project experience is 373.63. Whereas to be eligible for pre-qualification, the applicant/ petitioner consortium shall fulfill the conditions enshrined in Clause 2.2.2 (A) of the RFQ document where one of the conditions in sum that the total of the project experience should be more than Rs.650/- Crore. The other project experience claimed by the petitioner consortium was not considered for evaluation as it has not produced the Statutory Auditor's Certificate as prescribed in Annexure-IV Appendix-I. In view of the same, the project experience claimed by them in other projects became valueless. In the absence of the required threshold technical score, the petitioner consortium was not shortlisted for the next stage of bidding. Therefore, the rejection of the application of the petitioner does not suffer from any infirmity; and
(iii) the petitioner knowing fully well the tender condition participated in it and now after not being shortlisted is seeking legal recourse to stall the tender process by terming the tender condition as arbitrary and illegal. The project is of a great public importance and it would suffer in case of grant of any relief to the petitioner.
9.10. The reply affidavit filed by the petitioner sets out the following facts:
(i) for the first time, through the counter affidavit, the respondents have set out the real reason for rejection of the petitioner's bid. The rejection is contrary to the tender terms and it is evident that the documents submitted by the petitioner have not been perused and evaluated. The evaluation done by the SBI Capital Markets Limited is wholly contrary to the tender terms which mandates evaluation to be done only by the tender issuing authority and therefore, the evaluation by a third party vitiates the very tender process, rendering the impugned order liable to be set aside;
(ii) the tender originally sets out that in case duly certified audited financial statements are provided, a separate certification by auditors in respect of Clauses 2.2.4 (i) and 2.2.4 (ii) are not required for both Technical and Financial Qualification and later it was amended to state that balance sheet would be accepted only for technical capacity. In case of net worth, the auditor certificate was required to be submitted; and
(iii) as per the above-said clause and the amendment, to prove technical capacity, it is enough to submit audited balance sheet and accordingly, the consortium provided balance sheet for the last five years. The consortium member claimed eligible experience in 13 projects. The second respondent's counter affidavit however states that non-providing of statutory auditor's certificate as the reason for rejection. The said rejection is entirely erroneous for the reason that a statutory auditor's certificate was wholly unnecessary for purposes of technical qualification since Audited Annual Returns were provided. The petitioner's consortium has in fact claimed another Rs.7,006 Crores eligibility in various projects, which is supported by the Audited Balance Sheet. This figure is arrived at by converting Pounds to Indian Rupees as specified in the tender document. The rejection is, therefore, clearly contrary to the terms of the tender document and the impugned order is liable to be set aside.
W.P.Nos.23357 and 23358 of 2008 9.11. The counter affidavit in W.P.Nos.23357 and 23358 of 2008 sets out the following facts:
(i) the reason for rejection of the petitioner's consortium is because of conflict of interest between the petitioner's consortium and the consortium led by PSA Ennore Pte. Ltd.;
(ii) the petitioner's contention in his letter dated 8/10th April, 2008 stating that the petitioner's consortium and the consortium led by PSA Ennore Pte Ltd. (petitioner in W.P.Nos.16957 and 16958 of 2008) are not in conflict of interest, is totally baseless and false;
(iii) non response to the letter of the petitioner by the respondent cannot mean sharing of the same views. It was not appropriate for the respondent to respond to the letter of the petitioner at a time when the petitioner himself had not mentioned the consortium member's name and the respondent was not aware, who is going to submit applications for pre-qualification. Any response to the petitioner's letter would have amounted to guiding the petitioner. The respondent, therefore, acted with utmost fairness by not responding to the petitioner's letter;
(iv) the petitioner was well aware of such disqualifying clause in the RFQ document and it was aware that it may be attracted by this disqualifying clause as a result of which it was trying to frame its own definition of "conflict of interest" through its letters. The respondent is bound by the policy guidelines of the Government of India and therefore, cannot accept the definition other than the definition given by the Model RFQ document; and
(v) it is all the more interest to note that the petitioner and PSA Ennore Pte. Ltd. who are attracted by this "conflict of interest" have joined together by way of filing of separate writ petitions to get the conflict of interest clause annulled or by getting it redefined so as to exclude these two entities from getting attracted by the disqualifying clause of "conflict of interest".
COMMON CONTENTIONS RAISED ON BEHALF OF ALL PETITIONERS:-
10. The common and collective contentions raised by Mr.A.L.Somayaji, Mrs.Nalini Chidambaram, Mr.Aravind Datar, Mr.P.S.Raman, learned Senior Counsels and Mr.R.Balaji, learned counsel appearing for the petitioners are:-
(a) The impugned orders not shortlisting the petitioners for the next stage of bid, do not assign any reason whatsoever and on this ground alone, the impugned orders are liable to be set aside;
(b) Though reasons have been assigned in the counter affidavits for not shortlisting the petitioners, it will not cure the earlier defect viz., that the impugned orders do not contain any reasons whatsoever for not shortlisting the petitioners for the next stage of bid;
(c) The Ennore Port Limited cannot add reasons or impute reasons in their counter affidavits giving reasons for not shortlisting the petitioners for the next stage of bid;
(d) The reasons assigned in the counter affidavits which are sought to be improved at the time of arguments, shall not be accepted;
(e) The impugned orders that have been passed by the Ennore Port Limited not shortlisting the petitioners would amount to violative of
Article 14 of The Constitution of India;
(f) The impugned orders of the Ennore Port Limited in not pre-qualifying and shortlisting the petitioners are an arbitrary act without application of mind;
(g) The petitioners have submitted all the required particulars as per Request for Qualification document (RFQ). However, the Ennore Port Limited without considering the same has passed the impugned orders mechanically without applying its mind;
(h) Even assuming that the Ennore Port Limited was not satisfied with the documents produced by the petitioners, it could have clarified the same from the petitioners, which power they derive from Clause 2.20.1 of the tender Request for Qualification document of Ennore Port Limited. The failure to exercise the discretion vested with the Ennore Port Limited in seeking clarification is not only improper but also unfair and unreasonable. Even if the discretion is vested with the Ennore Port Limited to reject the tender, it is always subject to judicial review to find out whether the rejection has been made on sound and reasonable grounds especially in a project of this nature, which is of public interest and importance.
(i) The evaluation has not been done by Ennore Port Limited, but the same had been entrusted to SBI capitals and Mullah & Mullah and Craigie Blunt & Caroe. Even the contention raised on the side of the Ennore Port Limited that the evaluation of score was done by SBI capitals and Mullah & Mullah and Craigie Blunt & Caroe being assisted and coordinated by the team of officers nominated by Ennore Port Limited, the same cannot be said to be the evaluation made by the authority as per Request for Qualification document of Ennore Port Limited. The Request for Qualification document specifically stipulates that the evaluation has to be done by the authority, which will only mean the Ennore Port Limited and not any other person apart from Ennore Port Limited.
(j) The construction of a Port is not an ordinary contract. It requires more participation that too by the persons who have got experience in the said field. Hence, not shortlisting the petitioners who have got high experience in the filed would amount to denying the best out of such projects thereby the public interest, which is a paramount important, was not taken into consideration.
SPECIFIC CONTENTIONS RAISED:-
11.1. Apart from this common submissions referred to above, each of the learned Senior Counsels / counsel appearing for the petitioners would canvass the correctness of the reasons stated in the counter affidavits in each of the writ petitions putting forth the plea that the reasons for rejection of the petitioners' tender have been done--
(i)without considering the documents that have been filed by the petitioners;
(ii)taking only irrelevant factors into consideration leaving relevant factors for consideration;
(iii)non-application of mind on the documents that have been filed by the petitioners; and
(iv)without seeking clarification on the documents filed by the petitioners thereby failed to exercise the discretion vested with the Ennore Port Limited.
11.2. In three writ petitions viz., W.P.Nos.16958, 23795 and 23358 of 2008, clauses 1.2.1, 2.2.1 (c), 3.2.1 and 3.2.6 were sought to be quashed as they are bad in law.
CONTENTIONS RAISED ON BEHALF OF THE LEARNED ADDITIONAL SOLICITOR GENERAL OF INDIA AND THE LEARNED SENIOR CENTRAL GOVERNMENT STANDING COUNSEL:-
12. On the other hand, learned Additional Solicitor General of India, appearing for the Ennore Port Limited and Mr.T.S.Sivagnanam, learned counsel appearing for the Central Government would submit that --
(a) The writ petitions are not maintainable in view of the fact that contractual obligations cannot be enforced by filing writ petitions under
Article 226 of the Constitution of India.
(b) the petitioners are expected to submit the relevant particulars / documents as per Request for Qualification document and as per the format required in Request for Qualification document. While so, the failure to submit the relevant documents in the relevant format would disentitle them to participate in the further proceedings. They cannot raise a huge cry questioning the authority of the Ennore Port Limited in the given circumstances;
(c) the Ennore Port Limited is under no obligation to call for clarification from the petitioners which discretion vests with the Ennore Port Limited. The failure to call for the clarification would not render the entire process carried out by the Ennore Port Limited vitiated or invalid;
(d) The authority has got right to reject the tender of the applicants without assigning any reason, which have been enumerated under clause 2.7.1 Hence the same cannot be questioned by the persons who participated in the tender process.
(e) the petitioners participated in the tender knowing fully well about the Clauses enumerated thereon. While so, they cannot be heard to raise objections on certain clauses after they have participated in the tender and after they have not been shortlisted by passing the impugned orders;
(f) though SBI capitals and Mullah & Mullah and Craigie Blunt & Caroe have been entrusted with evaluation, they were assisted and coordinated by the two officers, who have been nominated by the Ennore Port Limited and the evaluation had been done collectively by them which has been ratified by the Board later. Thus, the argument advanced on the side of the petitioners in this regard is totally incorrect and devoid of merits;
(g) in the counter affidavits, reasons have been given for each of the case of the writ petitioners who have not been shortlisted. The reasons enumerated thereunder will prove the case of the Ennore Port Limited that the petitioners have not been pre-qualified and not shortlisted because of their own fault for not submitting the relevant documents in the format as per Request for Qualification document and hence, the Ennore Port Limited cannot be blamed for the same.
13. Before considering the rival submissions made in these writ petitions, first of all it has to be seen the subject matter of the project, bidding process, eligibility of the applicants which is involved in these writ petitions.
PROJECT:-
The Ennore Port Limited had decided to develop a Container Terminal with a quay length of 1000 metres in a straight line with sufficient back up area through private participation on Build, Operate and Transfer (BOT) basis and had decided to carry out bidding process for selection of the bidders to whom the project may be awarded. The brief particulars of the project are:-
Sl.No Name of the Project Capacity (Million TEU) Indicative Capital Cost of Project 1 Ennore Port Container Terminal 1.5 Rs.1300 Crores (Rs.13000 Million) The Ennore Port Limited intended to pre-qualify and shortlist suitable applicants, who would be eligible for participation in the Bid Stage, for awarding the project through an open competitive bidding process in accordance with the procedure set out by it. The selected bidder could be of either a company incorporated under the Companies Act, 1956 or Concessionaire, which shall be responsible for designing, engineering, financing, procurement, construction, operation and maintenance of the project in accordance with the provisions of the Concession Agreement to be entered into between the selected bidder and Ennore Port Limited. This scope of work of the project would include design, engineering, finance, construction, operation, maintenance and marketing, providing of the project facilities and services of a Container Terminal on Built, Operate and Transfer (BOT) basis for a concession period of thirty years.
BIDDING PROCESS:-
The Ennore Port Limited had adopted two stage process (Bidding Process) for selection of bidder for awarding of the project. The first stage is Qualification Stage and the second stage is Bid Stage. The first stage of the process involves qualification of interested parties / consortia, who make an application in accordance with the provisions of the Request for Qualification document (RFQ). At the end of that stage, the Ennore Port Limited would announce the shortlisting of suitable pre-qualified applicants, who shall be eligible for participation in the second stage of bidding process viz., Bid Stage comprising the Request for Proposals (RFP). Guidelines were issued for disqualification of bidders. In the qualification stage, applicants would be required to furnish information specified in the Request for Qualification document. Only those applicants that are pre-qualified and shortlisted by the Ennore Port Limited, shall be invited to submit their bids for the project. In the Bid Stage, the bidders would be called upon to submit their financial offers in respect of the project in accordance with Request for Proposals and other documents to be provided by the Ennore Port Limited pursuant to the Request for Qualification document. The bid would be valid for a period of not less than 120 days from the dates specified in the Request for Proposals for submission of the bids.
14. Since the second stage of bid viz., Bid Stage had not reached in view of the writ petitions filed, the requirement / details regarding the second stage had not been traversed here under.
Eligibility of the applicants:-
Clause 2.2 deals with the same.
Clause 2.2.1 (a):- The applicant for pre-qualification may be a single entity or a group of entities (the Consortium). However, no applicant applying individually or as a member of a Consortium can be member of another applicant Consortium.
Clause 2.2.1 (b):- An applicant may be natural person, private entity or any combination of them.
Clause 2.2.1 (c):- An applicant shall not have a conflict of interest that affects the bidding process. What is conflict of interest has been enumerated in sub-clauses (i) to (vi) which are as follows:-
(i) Such applicant (or any constituent thereof) and any other applicant (or any constituent thereof) have common controlling shareholders or other ownership interest; provided that this qualification shall not apply in cases where the direct or indirect shareholding in an applicant or a constituent thereof in the other applicant (or any of its constituents) is less than 1% of its paid up and subscribed capital; or
(ii) a constituent of such applicant is also a constituent of another applicant; or
(iii) such applicant receives or has received any direct or indirect subsidy from any other applicant, or has provided any such subsidy to any other applicant; or
(iv) such applicant has the same legal representative for purposes of this application as any other applicant; or
(v) such applicant has a relationship with another applicant, directly or through common third parties, that puts them in a position to have access to each others' information about, or to influence the application of either or each of the other applicant; or
(vi) such applicant has participated as a consultant to the authority in the preparation of any documents, design or technical specifications of the project.
2.2.1 (d):- An applicant would be disentitled if the legal financial or technical adviser of the authority in relation with the project is engaged by the applicant in any manner for matters related to or incidental to such project.
Clause 2.2.2 speaks about the conditions for eligibility for pre-qualification and shortlisting which are-
(i) TECHNICAL CAPACITY and (ii) FINANCIAL CAPACIT The other important clauses would be taken into consideration and would be referred as and when occasion arises henceforth. 15. On the basis of the above referred project, the bidding, eligibility of the applicants coupled with the contentions raised on either side, the following issues emerge for consideration in these writ petitions viz., (i) Whether the writ petitions filed by the petitioners are maintainable ? (ii) Whether the authority viz., Ennore Port Limited is obligatory to assign reasons for refusal of the tenders of the applicants thereby not shortlisting them for the next stage of bid. (iii) Whether the discretion to seek clarification by the authority from the applicants is mandate or qualified ? (iv) Whether entrusting of evaluation by the authority to S.B.I. Capitals and Mulla and Mulla assisted by the officials of E.P.L would be sufficient or whether the authority alone is empowered to evaluate the applications of the applicants. (v) Whether the reasons for rejection of the petitioners' tenders without shortlisting them for the next stage of bid is justifiable, reasonable and without arbitrariness ? (vi) Whether clauses 1.2.1, 2.2.1 (c), 3.2.1 and 3.2.6 are liable to be quashed as they are bad in law ? On the above issues, I will now deal with each one of them here under:- 16. WHETHER THE WRIT PETITIONS ARE MAINTAINABLE ?
16.1 As regards the first question, whether a writ will lie in contractual matters, it has been contended by the learned Senior Counsels appearing for the petitioners that even in contractual matters, the judicial review is possible whenever the decision of the authorities conferred with power is violative of
Article 14 or public element is involved or there exists mala fide or ulterior motive. Even existence of disputed question of fact ipso facto not a bar to the exercise of the writ jurisdiction by the High Courts. On the other hand, it has been pointed out by the learned Additional Solicitor General of India appearing for the Ennore Port Limited that in contractual matters, a writ would not lie and there cannot be any judicial review on such matters.
16.2. Before dealing with the said issue, it would be useful to consider the pronouncement of the Hon'ble Apex Court and this Court in various matters.
16.3. In (2006) 10 Supreme Court Cases 236 Noble Resources Ltd., v. State of Orissa and another, Their Lordships have held that even in contractual matters, the power of judicial review is vested to prevent arbitrariness and favouritism. Paragraphs 15, 19, 27, 28 and 29 are usefully extracted here under:-
" 15. It is trite that if an action on the part of the State is violative of the equality clause contained in
Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the courts scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of
Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter.
...
19. On a conspectus of several decisions, a Division Bench of this Court in ABL International Ltd.1 opined that such a writ petition would be maintainable even if it involves some disputed questions of fact. It was stated that no decision lays down an absolute rule that in all cases involving disputed questions of fact, the party should be relegated to a civil court.
...
27. Contractual matters are, thus, not beyond the realm of judicial review. Its application may, however, be limited.
28. Although the terms of the invitation to tender may not be open to judicial scrutiny, but the courts can scrutinise the award of contract by the Government or its agencies in exercise of their power of judicial review to prevent arbitrariness or favouritism. (See Directorate of Education v. Educomp Datamatics Ltd.) However, the court may refuse to exercise its jurisdiction, if it does not involve any public interest.
29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public law element is involved, judicial review may be permissible. (See Binny Ltd. v. V. Sadasivan and G.B. Mahajan v. Jalgaon Municipal Council.)"
16.4. In (2007) 8 Supreme Court Cases 1 Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd., the same view has been taken by the Hon'ble Apex Court. Paragraph 36 of the said judgment is extracted here under:-
" 36. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy.
Article 14 of the Constitution embodies the principle of non-discrimination. However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like
Article 21 of the Constitution. The said
Article 21 refers to right to life. It includes opportunity. In our view, as held in the latest judgment of the Constitution Bench of nine Judges in I.R. Coelho v. State of T.N., Articles 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of life. Level playing field is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of level playing field. We may clarify that this doctrine is, however, subject to public interest. In the world of globalisation, competition is an important factor to be kept in mind. The doctrine of level playing field is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally placed competitors are allowed to bid so as to subserve the larger public interest. Globalisation, in essence, is liberalisation of trade. Today India has dismantled licence raj. The economic reforms introduced after 1992 have brought in the concept of globalisation. Decisions or acts which result in unequal and discriminatory treatment, would violate the doctrine of level playing field embodied in
Article 19(1)(g). Time has come, therefore, to say that
Article 14 which refers to the principle of equality should not be read as a stand alone item but it should be read in conjunction with
Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of level playing field. According to Lord Goldsmith, commitment to the rule of law is the heart of parliamentary democracy. One of the important elements of the rule of law is legal certainty.
Article 14 applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of reasonableness, then such an act or decision would be unconstitutional."
16.5. In (1996) Supreme Court Cases 11 Tata Cellular v. Union of India, at paragraphs 93 and 94, Their Lordships have laid certain guidelines while interfering with the contractual matters and the same are extracted here under:-
" 93. The duty of the Court is to confine itself to the question of legality. Its concern should be
1. whether a decision making authority exceeded its power ?
2. committed an error of law ?
3. committed a breach of the rules of natural justice?
4. reached a decision which no reasonable tribunal would have reached or
5. abused its power.
94. Therefore it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extend of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:-
(i) Illegality: This means the decision maker must understand correctly the law that regulates his decision making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury and reasonableness.
(iii) Procedural impropriety."
16.6. In A.I.R. 1979 Supreme Court 1628 Ramana v. I.A.Authority of India, the Hon'ble Apex Court has held that the State cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but it must be in conformity with some principles which meets the test of reasons and relevance. It shall satisfy
Article 14 of The Constitution of India. Paragraphs 20 and 21 of the said judgment are usefully extracted here under:-
" 20. Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance.
21. This rule also flows directly from the doctrine of equality embodied in Art. 14. It is now well settled as a result of the decisions of this Court in E.P.Royappa V.State of Tamil Nadu (1974) 2 SCR 348: (AIR 1974 SC 555) and Maneka Gandhi V. Union of India (1978) 1 SCC 248; (AIR 1978 SC 597) that
Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory; it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by
Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory. This principle was recognised and applied by a Bench of this Court presided over by Ray, C.J., in Erusian Equipment and Chemicals Ltd. V. State of West Bengal (AIR 1975 SC 266) (supra) where the learned Chief Justice pointed out that 'the State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution.
Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of black-listing - A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling- It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods.' It must, therefore follow as a necessary corollary from the principle of equality enshrined in
Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non-discriminatory ground."
16.7. However, learned Additional Solicitor General of India appearing for the Ennore Port Limited relying on the decision reported in (2007) 6 Supreme Court Cases 44 Ram Singh Vijay Pal Singh and others v. State of U.P. And others, would submit that the scope of judicial review or interference under
Article 226 of The Constitution of India in respect of policy matters is very limited and normally the Court shall not interfere in such matter. That is the matter where the shops, godowns and sheds of the Mandi Samiti, which have been allotted to the writ petitioners thereon, claimed that they should be sold to them on hire-purchase basis and they cannot be called upon to execute a lease for payment of monthly rents. The Hon'ble Apex Court considering the said facts and circumstances of that case, has held that it is purely a matter of policy as the property belongs to the Mandi Samiti and it is for the Mandi Samiti or Mandi Parishad to have a policy decision in this regard and the Court cannot examine the correctness or otherwise of the said policy except in a very narrow campus. In the present case on hand, since no policy decision is involved, the said decision may not have any application to the facts of the present case.
16.8. Learned Additional Solicitor General of India further relied on a decision reported in (2002) 2 Supreme Court Cases 333 Balco Employees' Union (Regd) v. Union of India and others. That is the case where the Hon'ble Apex Court has held that the Court cannot examine relative merits of the different economic policies and cannot strike down a policy merely on the ground of another policy would have been fairer and better. In the case on hand, the policy decision of the Government is not in question. Hence, the said judgment also may not have any application to the facts of the present case.
16.9. In yet another decision that has been relied on by the learned Additional Solicitor General of India is reported in (2002) 2 Supreme Court Cases 617- Air India Ltd. v. Cochin International Airport Ltd. The learned Additional Solicitor General of India more relied on paragraph 7 of the said judgment. Paragraph 7 of the said judgment in fact supports the case of the petitioners rather than the Ennore Port Limited. Paragraph 7 of the said judgment is extracted here under:-
" 7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty v. International Airport Authority of India (1979 (3) SCC 489), Fertilizer Corporation Kamgar Union (Regd.) v. Union of India (1981 (1) SCC 568), CCE v. Dunlop India Ltd. (1985 (1) SCC 260), Tata Cellular Vs. Union of India (1994 (6) SCC 651), Ramniklal N.Bhutta v. State of Maharashtra (1997 (1) SCC 134) and Raunaq International Ltd. v. I.V.R Construction Ltd. (1999 (1) SCC 492). The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making-process the court must exercise its discretionary power under
Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene. "
The said judgment clearly indicates that the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. Further it has been held that even when some defect is found in the decision making process the court must exercise its discretionary power under
Article 226 of the Constitution of India with great caution and should exercise it only in furtherance of public interest and not merely on the making out a legal point. Thus, if the public interest is involved, the Court can definitely interfere with the decision making as held by the Hon'ble apex Court in the said decision.
16.10. Yet another decision relied on by the learned Additional Solicitor General of India is reported in (1996) 2 Supreme Court Cases 405 Delhi Science Forum v. Union of India. That is the case where the petitioners in different writ petitions have questioned the power of the Central Government to grant license to different non-government companies to establish and maintain telecommunication system in the country and validity of the procedure adopted by the Central Government for, the said grant of license. In such circumstances, the Hon'ble Apex Court has held that the policy of the government cannot be interfered with by the Court exercising power under
Article 226 of the Constitution of India. The said decision also may not be applicable to the facts of the present case since the petitioners are not challenging the policy of the Government but only challenging the decision making of the Ennore Port Limited pursuant to the tender notification.
16.11. Thus, the catena of the decisions cited above would indicate that interference in the contractual matters is permissible if decision-making process is illegal, irrational, arbitrary and procedural impropriety. Further, it must meet the test of reasons and relevance. Thus, this point is held in favour of the writ petitioners.
WHETHER THE IMPUGNED ORDERS ARE LIABLE TO BE SET ASIDE FOR NOT ASSIGNING REASONS:-
17.1. The submission made on behalf of the petitioners is that the impugned orders of the Ennore Port Limited dated 30.06.2008 informing them that their applications have not been shortlisted for the next stage of bidding i.e., Request for Proposals stage without assigning any reason whatsoever, shall be set aside for the sole reason that the same does not disclose the reasons for not shortlisting the petitioners. This contention raised at the instance of the petitioners deserves consideration by this Court. In such a public importance project, the authority which has considered the petitioners, who are not ordinary persons, should have been put on notice as to why they have not been considered and why their applications have not been shortlisted for the next stage of bidding. It is expected that the Ennore Port Limited should have assigned reasons thereof, in the impugned orders.
17.2. In fact in 1978 I SCC 405 -Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi and others, the Hon'ble Apex Court held that reasons ought to be mentioned in the order itself and it cannot be supplemented by way of affidavit or otherwise. Para 8 of the judgemtn is usefully extracted here under:-
" 8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji:
Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself."
17.3. The learned Additional Solicitor General of India appearing for the Ennore Port Limited would draw my attention to the judgment reported in (1991) 3 Supreme Court Cases 38 Union of India and others v. E.G.Nambudiri and would contend that it has never been a principle of natural justice that reasons should be given for decisions. However, even in the said decision, it has been held as follows:-
" ... Though the principles of natural justice do not require reasons for decision, there is necessity for giving reasons in view of the expanding law of judicial review to enable the citizens to discover the reasoning behind the decision. Right to reasons is an indispensable part of a sound system of judicial review. Under our Constitution an administrative decision is subject to judicial review if it affects the right of a citizen, it is therefore desirable that reasons should be stated."
17.4. In yet another decision reported in (2007) 10 Supreme Court Cases 712 Union of India and others v. Jai Prakash Singh and another, the Hon'ble Apex Court has held that reasons should be given while making a decision and para 7 of the said judgment is usefully extracted here under:-
" 7. '11. Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Court's judgment not sustainable.
12. Even in respect of administrative order Lord Denning, M.R. in Breen v. Amalgamated Engg. Union observed: (All ER p.1154/1) ' The giving of reasons is one of the fundamentals of good administration. In Alexander Machinery (Dudley) Ltd., v. Crabtree, it was observed: Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the 'inscrutable face of the sphinx', it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. The 'inscrutable face of a sphinx' is ordinarily incongruous with a judicial or quasi-judicial performance."
17.5. In yet another decision reported in (1990) 3 Supreme Court Cases 280 Star Enterprises v. C.I.D. of Maharashtra Ltd., the Hon'ble Apex Court has held that while rejecting the tender, reason shall be recorded for such action. Paragraph 10 of the said judgment is usefully extracted here under:-
" 10. In recent times, judicial review of administration action has become expansive and is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. State activity too is becoming fast pervasive. As the State has descended into the commercial field and giant public sector undertakings have grown up, the stake of the public exchequer is also large justifying larger social audit, judicial control and review by opening of the public gaze; these necessitate recording of reasons for executive actions including cases of rejection of highest offers. That very often involves large stakes and availability of reasons for actions on the record assures credibility to the action; disciplines public conduct and improves the culture of accountability. Looking for reasons in support of such action provides an opportunity for an objective review in appropriate cases both by the administration superior and by the judicial process. The submission of Mr.Dwivedi, therefore, commends itself to our acceptance, namely, that when highest offers of the type in question are rejected reasons sufficient to indicate the stand of the appropriate authority should be made available and ordinarily the same should be communicated to the concerned parties unless there be any specific justification not to do so".
17.6. But, however, I am not inclined to set aside the impugned orders of the Ennore Port Limited on the ground that the same do not contain reasons since though in the impugned orders reasons have not been assigned, the reasons are forthcoming through the counter affidavits of the Ennore Port Limited. Even if the impugned orders are set aside and remitted back to the Ennore Port Limited, it would not serve any purpose since the Ennore Port Limited had already set out the reasons for rejection in their counter affidavits and it would be a futile exercise to ask them now to give reasons, which have already been set out by the Ennore Port Limited through their counter affidavits. Hence, the contention raised on the side of the petitioners in this regard does not require any consideration at this stage.
WHETHER THE ENNORE PORT LIMITED IS JUSTIFIED IN REFUSING TO EXERCISE ITS DISCRETION TO SEEK CLARIFICATION:
18.1. The next contention of the learned Senior Counsels appearing for the petitioners is that even assuming that the Ennore Port Limited was not satisfied with the documents produced by the petitioners or it requires any clarification regarding certain particulars furnished by the petitioners in their applications, the same could have been clarified from them, which power they derive from Clause 2.20.1 of the Tender Request for Qualification document of Ennore Port Limited. The failure to exercise the discretion vested with the Ennore Port Limited in seeking clarification is not only improper but also unfair and unreasonable. If the discretion vested with the Ennore Port Limited had not been exercised properly, the same is subject to judicial review especially in a project of this nature, which is of public interest and importance.
18.2. In answer to the said contention, learned Additional Solicitor General of India appearing for the Ennore Port Limited submitted that Ennore Port Limited is under no obligation to call for clarification from the petitioner, which discretion vests with the Ennore Port Limited. The failure to call for clarification would not render the entire process carried out by the Ennore Port Limited vitiated or invalid.
18.3. Before dealing with the rival contentions raised in this regard, it would be useful to extract the relevant Clause in the tender notification. Clause 2.20.1 reads as follows:-
" To facilitate evaluation of applications, the authority may, at its sole discretion, seek clarifications from any applicant regarding its applications. Such clarification(s) shall be provided within the time specified by the authority for this purpose. Any request for clarification(s) and all clarification(s) shall be in writing."
On the above clause, the learned Senior Counsels appearing for the petitioners would submit that though it is stated that Ennore Port Limited has got sole discretion in seeking clarification from the applicants, the discretion has to be exercised reasonably and justifiably. Ennore Port Limited cannot say that it will not seek clarification even if it entertains doubt regarding the particulars submitted by the applicants on the ground that it is its discretion to seek clarification or not. Even though, according to the learned Senior Counsels appearing for the petitioners, the relevant clause reads that the authority may, at its sole discretion, seek clarification from the applicants, it is not an empty formality in introducing the said clause. The very purpose of incorporating the said clause seeking clarification would definitely mean that the Ennore Port Limited, the authority concerned, if it entertains any doubt regarding the particulars submitted by the applicants, it shall seek clarification from the applicants.
18.4. However, the learned Additional Solicitor General of India appearing for the Ennore Port Limited would submit that it is not necessary always that Ennore Port Limited shall seek clarification from the applicants regarding the particulars furnished by them in their applications and the discretion is vested with the Ennore Port Limited to seek clarification or not.
18.5. While dealing with the said contention, it would be more appropriate to reproduce the next clause viz., 2.20.2., which reads as follows:-
" If an applicant does not provide clarification(s) sought under sub clause 2.20.1 above within the prescribed time, its application shall be liable to be rejected. In case the application is not rejected, the authority may proceed to evaluate the application by construing the particulars requiring clarification(s) to the best of its understanding and the applicant shall be barred from subsequently questioning such interpretation of the authority. "
Thus, Clause 2.20.1 if read with Clause 2.20.2 would make it clear that though discretion is vested with the authority viz., the Ennore Port Limited to seek clarification(s) from the applicants regarding the particulars submitted by them in their applications, the discretion has to be exercised fairly, reasonably and justifiably. Otherwise, there is no point in incorporating clause 2.20.1, wherein though it is stated that the discretion is vested with the authority in seeking clarification, it further reads that such clarification if sought for, shall be provided within the time stipulated by the authority for the said purpose. Further, the said clause reads that such clarification shall be in writing. Not only that, the next clause viz., 2.20.2 reads that if the applicant does not provide clarification(s) sought for, within the prescribed time, the application shall be liable to be rejected and if not rejected, the authority may proceed to evaluate the application by construing the particulars requiring clarification to the best of its understanding. Further, the said clause reads that the applicants shall be barred from subsequently questioning such interpretation of the authority. Thus, a conjoint reading of clauses 2.20.1 and 2.20.2 would make it very clear that though the word "discretion" had been employed in clause 2.20.1, the authority concerned shall seek clarification whenever it entertains a doubt about the particulars submitted by the applicants. Otherwise, even if a minor clarification is required by the Ennore Port Limited, which may not tilt the award of the project itself and which is very insignificant one, the authority vested with power would reject such applications even though they possess all other required and important factors in their favour. The project of this nature has to be entrusted with a right person, who possesses all necessary factors and the same cannot be thrown out for insignificant reasons.
18.6. Further more, when a discretion is vested with the authority, it cannot arbitrarily refuse to exercise the same. It cannot be heard to say by Ennore Port Limited that though it has got power to seek clarification, since discretion is vested with it, it will not exercise such discretion. Such attitude can only be called as arbitrariness in its action guided by irrelevant consideration. Therefore, the Ennore Port Limited ought not to have acted arbitrarily in refusing to seek clarification. Ennore Port Limited ought to have acted fairly and ought to have adopted a procedure which is "fair play in action".
18.7. It would be appropriate, at this juncture, to rely on the judgment of the Hon'ble Apex Court reported in 1986 2 SCC 679 - Comptroller and Auditor-General of India v. K.S. Jagannathan,. In paragraphs 19 and 20, the Hon'ble Apex Court has held as follows:-
19. ... In Halsburys Laws of England, 4th Edn., vol. I, para 89, it is stated that the purpose of an order of mandamus is to remedy defects of justice; and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right; and it may issue in cases where, although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual.
20. There is thus no doubt that the High Courts in India exercising their jurisdiction under
Article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or a policy decision of the government or has exercised such discretion mala fide or on irrelevant considerations or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case a High Court can, in the exercise of its jurisdiction under
Article 226, issue a writ of mandamus or a writ in the nature of mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred upon the government or a public authority, and in a proper case, in order to prevent injustice resulting to the concerned parties, the court may itself pass an order or give directions which the government or the public authority should have passed or given had it properly and lawfully exercised its discretion."
18.8. In (1993) I SCC 71 Foor Corpn. of India v. Kamdhenu Cattle Feed Industries , the Hon'ble Apex Court in paragraph 7 has held as follows:-
" 7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to confirm to
Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.
8. The mere reasonable or legitimate expectation of a citizen, in such situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent."
18.9. In (2001) 8 SCC 491 - Union of India v. Dinesh Engineering Corpn., the Hon'ble Apex Court, after extracting a passage in the judgment reported in 1993 1 SCC 445 Sterling Computers Lt., v. M & N Publications Ltd., has held that even though discretion is vested with the authority, the same requires reasonableness and should not be arbitrary. The same is extracted here under:-
... Mr Iyer, learned Senior Counsel appearing for EDC drew our attention to a judgment of this Court in Sterling Computers Ltd. v. M & N Publications Ltd. which has held: (SCC p.455, para 12) 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.
16. But then as has been held by this Court in the very same judgment that a public authority even in contractual matters should not have unfettered discretion and in contracts having commercial element even though some extra discretion is to be conceded in such authorities, they are bound to follow the norms recognised by courts while dealing with public property. This requirement is necessary to avoid unreasonable and arbitrary decisions being taken by public authorities whose actions are amenable to judicial review. Therefore, merely because the authority has certain elbow room available for use of discretion in accepting offer in contracts, the same will have to be done within the four corners of the requirements of law, especially
Article 14 of the Constitution."
18.10. Thus, summing up over this issue, I am of the considered opinion that since the discretion has been vested with the authority to seek clarification from the applicants regarding their applications as provided under clause 2.20.1, such discretion should have been exercised reasonably, where certain clarifications are required. To say that even though I can seek clarification, since discretion is vested with me to seek clarification or not, I will not exercise such discretion, is nothing but arbitrary, irrational and unfair. It is not an unfettered discretion vested with the authority. Since the discretion is vested with the authority, impliedly it means that it must exercise its discretion fairly.
18.11. It is now well settled that the statutory body which is entrusted by statute with a discretion must act fairly. Whether its functions are judicial or quasi-judicial or an administrative one, it must act fairly. The discretion of a statutory body can never be unfettered. The discretion has to be exercised according to law, which means it shall be guided by relevant considerations and not by irrelevant one. The Ennore Port Limited cannot claim that it has got unfettered discretion with which the Courts have no right to interfere. In contractual matter, it is an implied term that the discretion should be exercised fairly. Thus, the argument of the learned Additional Solicitor General of India that the authority is vested with the discretion in seeking clarification or not and if it has not sought for clarification, the same cannot be questioned, is liable to be rejected in toto.
WHETHER THE ENTRUSTMENT OF THE EVALUATION PROCESS TO SBI CAPITALS AND MULLA & MULLA AND CRAIGIE BLUNT & CAROE IS JUSTIFIED ?
19.1. It is the case of the petitioners on this count that the evaluation has to be done by the authority and it cannot shirk its responsibility to others including SBI Capitals or Mulla & Mulla and Craigie Blunt & Caroe. In this connection, the learned Senior Counsels pointed out clause 2.19.1. which reads that " prior to evaluation of applications, the authority shall determine whether such application is responsive to the requirement of the RFQ....
Clause 2.20.1. reads that to facilitate evaluation of applications, the authority may at its sole discretion, seek clarifications from any applicant...
Clause 2.21.1. After the evaluation of applications, the authority would announce a list of short-listed pre-qualified applicants(Bidders)....
19.2 The above clauses according to the Senior Counsels appearing for the petitioners would indicate that the evaluation has to be done only by the authority viz., E.P.L. and the same cannot be entrusted to any other third party. However, it is submitted on behalf of the respondents by the Additional Solicitor General of India that even though the evaluation has been entrusted to SBI Capitals and Mulla & Mulla and Craigie Blunt & Caroe, it is being assisted by the officials of Ennore Port Limited actively taking part in the evaluation and later ratified by the Board and hence it can no longer be said that the authority had entrusted the matter to the SBI Capitals and Mulla & Mulla and Craigie Blunt & Caroe without any involvement of the officials of the Ennore Port Limited and hence the said contention raised on behalf of the learned Senior Counsels appearing for the petitioners deserve to be rejected.
19.3 While considering the said submissions made in this regard, I am of the considered view that entrustment of the evaluation process in toto without active participation by the officials of the Ennore Port Limited would have given room for the petitioners to raise an objection that the authority viz., Ennore Port Limited had nothing to do with the decision making power of SBI Capitals and hence the evaluation made by them is liable to be rejected. However, it has been made very clear on behalf of the respondents that though the evaluation process has been trusted to SBI Capitals, the Ennore Port Limited Officials actively had taken part in the evaluation which has been ratified by the Board later. This statement made on behalf of the respondents need not be doubted at all. Further, I am of the considered opinion that entrustment to third parties for evaluation of the applications of the applicants so long as the petitioners have not made out any bias against the persons to whom the evaluation process has been entrusted, there cannot be any grievance on the part of the petitioners. Hence the ground taken in this regard on behalf of the petitioners is liable to be rejected.
20. Now the question that has to be considered is whether the rejections made by the first respondent in not shortlisting each of the petitioners for the next stage of bid as put forth in the counter affidavit of the first respondent is justified and reasonable ?
W.P.No. 17460 of 2008 20.1. The defaults on the part of the petitioner , according to the respondents are as follows:-
(a) The Power of Attorney furnished by Container Corporation of India and Central Warehousing Corporation who are members of the Consortium have not been executed in accordance with procedure laid down by applicable law and the chartered documents of the executants nor under their common seal.
(b) In the responsiveness test, Terminal Investment Ltd and Container Corporation of India, as a member of the Consortium claiming experience under Category 1 has not submitted the required Statutory Auditor's Certificate and the details of the project as per Appendix I, Annex IV respectively and hence evaluation could not be done.
(c) Likewise, Samsung C & T Corporation, who is another member of the Consortium and is claiming experience from Category (3) projects has not furnished the Statutory Auditor's Certificate as stipulated. Only one Auditor Certificate for its all the 250 projects (Category 3 and Category 4) is given. The requirements as per the RFQ document as stipulated in Appendix I, Annex IV, is that the Applicant should provide a certificate from the Statutory Auditors/Clients in the format for each project to verify various facts related to a project like project cost, period of project, share of the applicant, etc and in the absence of such certificate, the claim of technical score by Samsung C&T Corporation was discarded.
(d) As per Clause 2.13.2(v) of the RFQ document, the application submitted by a consortium should contain a copy of the Memorandum and Articles of Association if the applicant/consortium member is a body corporate. Terminal Investment Ltd., being a Corporate body, has not enclosed such a copy.
(e) As per Clause 2.13.2 (vi) of the RFQ document, the copies of applicant's / each consortium member's duly audited balance sheet and profit and loss account for the preceding five years is to be provided. In respect of Terminal Investment Ltd., no such document has been provided;
Thus, according to the first respondent the above defaults had created a situation, where the consortium could not exhibit the threshold technical capacity which was a primary pre-requisite for being eligible for shortlisting, which was the reason for not shortlisting the petitioner.
20.2. By way of reply, the petitioner sought to explain the same hereinafter mentioned:-
(a) With regard to the first ground of rejection, it has been replied by the petitioner that the power of attorney submitted by it is in accordance with the tender documents. There is no proper reason given by the respondent as to why the power of attorney submitted by the petitioner was rejected. In Appendix III of RFQ, it is clearly stated that the power of attorney executed and issued overseas, the documents will have to be legalised by the Indian Embassy and notarised in the jurisdiction where the power of attorney is being executed. In the case on hand the power of attorney had been executed in India as per the law applicable in India and hence notarisation is not mandatory and the power of attorney, which has been executed in India is sufficient and legally valid. Further, there is no provision of law, which in anyway prescribes the submitted power of attorney as illegal voidable, non-binding and non-effective. The power of attorney submitted by the petitioners is duly executed binding and admissible in court.
20.3. The first respondent by way of rejoinder to the reply had submitted the following facts:-
The power of attorney for appointing the lead member of the consortium has to be in accordance with the format given at Appendix III. Container Corporation of India and Central Warehousing Corporation, who are members of the consortium had not executed the power of attorney in accordance with the procedure laid down by the applicable law and the chartered documents of the executants nor it is under their common seal. The power of attorney furnished by Container Corporation of India and Central Warehousing Corporation do not have supporting board resolution authorising the signatories to execute the power of attorney nor the execution of power of attorney had been done under the common seal. Shipping Corporation of India which is also a member of the consortium and also a public sector enterprise had followed the procedure as its power of attorney is backed by board resolution and executed under a common seal. The respondent could not consider the power of attorney which was incomplete and which was improperly executed. The power of attorney of the two members of the consortium of the petitioner were not executed as per the provisions of clause 2.19.1 of the RFQ document.
20.4. Mr.A.L.Somayaji, the learned Senior Counsel appearing for the petitioner and Mr.M.Ravindran, the learned Additional Solicitor General of India have made elaborate submissions on those points.
20.5. Mr.A.L.Somayaji, the learned Senior Counsel appearing for the petitioner would submit that the power of attorney if it is executed at overseas, it should be notarised, but if it is executed in India, it does not require any notarisation.
20.6. Clause 2.19.1.(d) of the RFQ document states that the application shall be accompanied by the power of attorney as specified in Clause 2.2.5 and clause 2.2.6(c). Clause 2.2.5 reads as follows:-
The Applicant should submit a Power of Attorney as per the format at Appendix 2, authorising the signatory of the application to commit the Applicant.
Clause 2.2.6(c) reads as follows:-
Members of the consortium shall nominate one member as the lead member (the "Lead Member"), who shall have an equity share of at least 26% in the Consortium. The nomination(s) shall be supported by a Power of Attorney, as per the format at Appendix 3 signed by all the other members of the Consortium.
Appendix III is the format of power of attorney for lead member of a consortium. Thus, though in the counter affidavit it is stated by the first respondent that the power of attorney furnished by the Container Corporation of India and Central Warehousing Corporation, who are members of the Consortium have not been executed in accordance with procedure laid down by applicable law, in the rejoinder it is stated that the power of attorney furnished by the by the Container Corporation of India and Central Warehousing Corporation, who are members of the Consortium is not only in accordance with the procedure laid down by applicable law but also do not have supporting board resolution authorising the signatories to execute the power of attorney nor the execution of power of attorney has been done under the common seal.
20.7. As rightly pointed out by Mr.A.L.Somayaji, the learned Senior Counsel appearing for the petitioner, the power of attorney requires notarisation, if it is done in overseas, but if it is executed in India, it does not require so. Even at the end of Appendix III, it is clearly stated that for a Power of Attorney executed and issued overseas, the document will also have to be legalised by the Indian Embassy and notarised in the jurisdiction where the Power of Attorney is being issued. Further more, the law prevailing in India as of now is that if the power of attorney if executed in India, it does not require any notarisation.
20.8. As regards the contention that the Container Corporation of India and and Central Warehousing Corporation, who are the members of the petitioner Consortium do not have supporting board resolution authorising the signatories to execute the power of attorney it has to be seen that such a reason was not there in the impugned order and not even in the counter affidavit filed by the first respondent. For the first time, it is sought to be raised by way of rejoinder after reply filed by the petitioner to the counter affidavit. The respondents cannot add on reasons after the impugned order or at least after filing of the counter affidavit. This shows that the first respondent is imputing reasons after the impugned order dated 30.6.2008 rejecting the tender of the petitioner by not shortlisting it.
20.9. The next ground of rejection is that in the responsiveness test, Terminal Investment Ltd and Container Corporation of India, as a member of the Consortium claiming experience under Category 1 had not submitted the required statutory auditor's certificate and the details of the project as per Appendix I, Annex IV respectively.
20.10. Reply affidavit had been filed for this ground of rejection which states that the necessary statutory auditor certificate was filed by the petitioner along with details as per RFQ document in Volume V. Further, the petitioner had complied with requirement under Appendix I read with Annexure IV, respectively and hence there is no justification for the respondent to disqualify the petitioner on this ground from bidding in the next stage. The auditors are international auditors of repute and having audited each one of the projects have rendered single certificate encompassing all the projects. Thus, the question of separate certificate does not arise.
20.11. Rejoinder had been filed on behalf of the respondents, wherein it has been stated that the Terminal Investment Limited and the Container Corporation of India had not submitted the statutory auditor certificates for each of the projects, which was required to be done as per clause 3.3. (Annexure IV of Appendix I) of the RFQ document. Clause 3.3. reads as follows:-
3.3 Details of Experience 3.3.1 The applicant should furnish the details of Eligible Experience for the past 5 (five) years preceding the Application Due Date.
3.3.2 The Applicants must provide the necessary information relating to Technical Capacity as per format at Annex-II of Appendix -I 3.3.3 The Applicant should furnish the required information and evidence in support of its claim of Technical Capacity, as per format at Annex-IV of Appendix-1 20.12. The learned Senior Counsel appearing for the petitioner would submit that the particulars of the project given and non-furnishing of the code number does not make out any significance. Since it is very insignificant matter, the rejection made on this ground is liable to be set aside. Further, he has submitted that it has to be seen that how many projects and what project undertaken makes out the matter instead of code number which is very insignificant. The more required and important is the eligible project.
20.13. While dealing with the said contention it has to be seen that in the counter affidavit one of the reason that has been stated is that the Terminal Investment Ltd and Container Corporation of India, as a member of the Consortium claiming experience under Category 1 had not submitted the required statutory auditor's certificate and the details of the project as per Appendix I, Annex IV. After the reply filed by the petitioner, a rejoinder had been filed by the respondents wherein the details of the objections had been dealt with. Whether the details which have not been furnished by the petitioner is significant or insignificant has to be considered. Before dealing with the same, it has to be seen the other reasoning in the said category viz., whether the required statutory auditor certificate had been furnished by the petitioner or not.
20.14. On this ground, the learned Senior Counsel appearing for the petitioner would submit that the auditor certificate is not necessary if audited annual financial statement is given. In this connection it has to be seen that when a query had been raised in this regard, reply had been sent by the Ennore Port Limited dated 4.4.2008, wherein referring about the queries it states that the amendments issued to the RFQ document (Annexure-1) had been enclosed. In that amendment to the tender, Sl. No.8 is relevant for the purpose of the present issue which is set out hereunder:-
2.2.4(i) foot note 13 "In case duly certified audited annual financial statements are provided, a separate certification by statutory auditors would not be necessary in respect of Clauses 2.2.4(i) and 2.2.4(ii)"
"In case duly certified audited annual financial statements containing the requisite details are provided, a separate certification by statutory auditors would not be necessary in respect of Clause 2.2.4(i) 20.15. Thus a conjoint reading of Appendix 1 of Annexure IV and the amendment to the query dated 4.4.2008 of Ennore Port Limited would show that the auditor certificate is not necessary if the audited annual financial statements is given by the petitioner. This leaves the other question whether non-furnishing of the project code is a significant omission or insignificant one. When particulars of the projects had been furnished by the petitioner, the non-furnishing of the code number alone would not make out a significant omission which makes the petitioner ineligible for not shortlisting.
20.16. The Hon'ble Apex Court in B.S.N. Joshi & Sons Ltd., v. Nair Coal Services Ltd. reported in (2006) 11 SCC 548, has held as follows:-
"61. Law on the similar term has been laid down in Poddar Steel Corpn. v. Ganesh Engg. Works, (1991) 3 SCC 273 in the following terms:
6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance with the condition in appropriate cases."
Thus the second ground of rejection also is not on sound reasons.
20.17. The third ground is rejection is that Samsung C & T Corporation, another member of the Consortium which claims experience from Category (3) projects had not furnished the Statutory Auditor's Certificate as stipulated. Only one Auditor Certificate for its all the 250 projects had been given. The requirements as stipulated in Appendix I of Annexure IV has not been met with by the petitioner. In answer to that it is stated by the petitioner that one auditor certificate for all the projects had been submitted by the petitioner and such certificate is a valid one and in case of any doubt, the respondents ought to have made necessary verification.
20.18. Mr.A.L.Somayaji, the learned Senior Counsel appearing for the petitioner would submit that the format of the certificate from the statutory auditor regarding BOT project does not stipulate separate certificate and further the entire object is the experience of the consortium and hence the rejection is not justified. Appendix I of Annexure IV , which is relevant for the purpose of deciding the issue reads as follows:-
" We further certify that the total estimated cost of the project as on date of commissioning was Rs.... Cr. Of which Rs.... Cr of capital expenditure was incurred during the past five financial years as per year-wise details noted below:-
As rightly pointed out by the learned Senior Counsel appearing for the petitioner the format does not a stipulate a separate certificate for each project. The object of such certificate is to know the experience of the consortium members. Hence the rejection on this ground is not justified.
20.19. Regarding the next ground of rejection, it is alleged by the respondent that the Memorandum and Articles of Association have not been accompanied along with the application of the petitioner. However, it is stated on the side of the petitioner that the Memorandum and Articles of Association had been sent.
20.20. Then the next question that arises is whether the respondents could have asked for Memorandum and Articles of Association from the petitioner before rejecting the bid. I have already held that the respondent did not exercise the discretion in calling for details which is arbitrary. The Ennore Port Limited exercising the discretionary power vested under clause 2.20.1 ought to have sought for clarification. The failure to enclose Memorandum and Articles of Association may not be very much significant document. Even assuming so, as stated already the Ennore Port Limited could have sought clarification why it was not enclosed, especially in the context that it is alleged by the petitioner that it has enclosed Memorandum and Articles of Association.
20.21. The 5th ground of rejection is that as per clause 2.13.2(vi) of the RFQ document, the copies of the applicant's/ each consortium member's duly audited balance sheet and profit and loss account for the preceding five years is to be provided and the failure to provide the same is the reason for not shortlisting the petitioner to the next stage of bid.
20.22. On this ground Mr.A.L.Somayaji, the learned Senior Counsel appearing for the petitioner would submit that such particulars have been furnished by the petitioner. The auditor certificate and the balance sheet though would not be in accordance with the Indian format, it is in accordance with the format prevailing in the said country. Hence the rejection is totally misconceived.
20.23. To this Mr.M.Ravindran, the learned Additional Solicitor General would submit that the first respondent expected the auditor certificate and balance sheet in a particular format, without furnishing the same, the petitioner cannot be heard to say that the auditor certificate though not in Indian format, is in a format prevailing in the said country and the same has to be accepted. Though the required auditor certificate ought to have been furnished or on the other hand the Auditor Certificate is not in the format as per RFQ, the Ennore Port Limited could have sought clarification as required under clause 2.20.1. Hence, this reasoning also requires to be rejected.
W.P.No.17744 of 2008 21.1. The petitioner in W.P.No.17744 of 2008 was not shortlisted on two counts viz.,
(i) only the petitioner was eligible for evaluation on account of holding atleast 26% of the equity of the consortium and the other member of the consortium is ineligible for evaluation on account of not holding atleast 26% of the equity of the consortium;
(ii) that the consortium partner McQuarie Capital, Singapore is only a Fund Manager and not the owner of the fund and hence, the technical score derived from the experience of McQuarie Capital cannot be taken into account while computing the technical score of the consortium.
21.2. Reply affidavit had been filed on behalf of the petitioner wherein it has been set out that a Joint Bidding Agreement dated 29.04.2008 had been submitted along with the application and in the said agreement, it has been clearly stated that the proposed shareholding of each member in the JV Company is as follows:- Sical Infra Assets Limited (SIAL) 51 %, McQuarie 49%. Thus, the equity participation of the members of the consortium is defined and definite. The Ennore Port Limited without referring about the shareholding pattern of the two consortium members as set out in the Joint Bid Agreement have wrongly held that the equity participation of the members of the consortium is not defined and definite. Thus, the said finding is perverse leading to arbitrary denial of the rights of the petitioner to participate in the financial bid by not pre-qualifying and not shortlisting the petitioner.
21.3. As regards the second rejection that the consortium partner McQuarie Capital is only Fund Manager and not owner of the fund is totally on misconception. In the annexure filed along with bid document, it could be seen that McQuarie Singapore Private Limited is not a Fund Manager. The principal activities of McQuarie Capital Singapore Private Limited, a company incorporated in Singapore and a 100% owned subsidiary of Macquair Group Limited consists of distribution, dealing and trading of stocks, shares and bonds and corporate and structured finance advisory services as is evident from its annual financial report 2008. Thus, the technical score of McQuarie Capital Singapore Private Limited cannot be nullified on account of it being a Fund Manager. While computing technical capacity and the net worth of McQuarie Capital Singapore Private Limited, who is a consortium member, the technical capacity and net worth of its associate viz., McQuarie Infrastructure Group (MIG) would be eligible as provided under clause 2.2.9 of the Request for Qualification document. Thus, according to the petitioner, the associate relationship between McQuarie Capital Singapore Private Limited and McQuarie Bank Limited (MBL), McQuarie Capital Singapore Private Limited and McQuarie Infrastructure Group (MIG) and McQuarie Capital Singapore Private Limited and McQuarie Airports (MAP) are substantiated by furnishing the same in the annexures in the bid application.
21.4. Additional reply affidavit had been filed on behalf of the petitioner wherein apart from other things, it has been stated that clause 2.13.2 requires all applicants to submit copies of Memorandum and Articles of Association, if the applicant / consortium member is a body corporate and if a partnership then a copy of the partnership deed. It nowhere specifies that associates of the applicant / consortium member need to submit a copy of Memorandum and Articles of Association. Hence, according to the additional reply affidavit, the technical score of these projects cannot be rejected on the ground of non-submission of Memorandum and Articles of Association for associates of the applicants.
21.5. Thus, from the foregoing pleadings of the petitioner and the Ennore Port Limited, the following conclusion emerges:-
(i) In the bid agreement, the shareholding pattern had been clearly set out by the petitioner wherein it has been stated that SIAL 51% and McQuarie 49%. The bid agreement and the underlined shareholding does not seem to have been considered at the time of evaluation.
(ii) As regards the second reason for not shortlisting the petitioner is concerned, the petitioner seems to have filed annexure along with the bid document wherein it has been shown that McQuarie Capital Singapore Private Limited is not a Fund Manager and the principal activities of the said company having 100% owned subsidiary of Macquair Group Limited. The associate relationship between McQuarie Capital Singapore Private Limited and McQuarie Bank Limited (MBL), McQuarie Infrastructure Group (MIG) and McQuarie Airports (MAP) seems to have been annexed along with the bid document submitted by the petitioner. While so, whether SBI capital and the Ennore Port Limited had taken into account these factors while not shortlisting the petitioner is not known.
(iii) Further more, the Ennore Port Limited failed to seek clarification which has resulted in all confusion. SBI capitals seems to be under the impression that the petitioner had not fulfilled the requirements as set out above, which has resulted in not shortlisting the petitioner. The clarification would have solved the entire matter in issue and would have benefited to both Ennore Port Limited and the petitioner in arriving at a just and reasonable conclusion. However, the failure to do so is totally unjust.
(iv) Further more, though two reasons have been set out in the counter affidavit viz., the consortium partner does hot hold atleast 26% equity and that the consortium partner McQuarie Capital Singapore Private Limited is only a Fund Manager, however, in the rejoinder, some more reasons have been added viz., that the Articles of Association of the McQuarie Infrastructure Group and McQuarie Airports which are claiming experience from projects in Category 1 and 2 as associates of McQuarie Group Limited are not enclosed with the application which should have been submitted as per the requirement of clause 2.13.2 of the Request for Qualification document. Further, the rejoinder sets out that as per clause 2.2.2 atleast one fourth of the threshold technical capability shall be from the eligible projects in category I or category 3 specified in clause 3.2.1. These are the new inventions for rejection in the rejoinder of the Ennore Port Limited. Thus, the Ennore Port Limited while not giving any reason for rejection or for not shortlisting the petitioner in the impugned order, has sought to give two reasons in the counter affidavit, which is sought to be expanded in the rejoinder. Thus, confusion seems to have writ large at the time of shortlisting the applicants to the next stage of bid.
21.6. In view of the above discussions and findings, the following conclusion could be arrived at:-
(a) The failure to shortlist the case of the petitioner to the next stage of bid on the two grounds referred to in the counter affidavit which have been set out earlier, requires reconsideration in view of the reply affidavit and the additional reply affidavit to the rejoinder of Ennore Port Limited.
(b) When it is stated on the side of the petitioner that the bid agreement and the annexures make out clear that the technical capacity of the petitioner had been wrongly understood at the time of evaluation, the SBI capitals who evaluated the entire process has to be informed about the stand taken by the petitioner and on the basis of the same, SBI capitals has to evaluate once again the case of the petitioner.
(c) The failure to seek clarification has resulted in chaos which should have been avoided by the Ennore Port Limited.
W.P.No.23795 of 2008 22.1. W.P.No.23795 of 2008 is concerned, it is the case of the Ennore Port Limited that the petitioner could not be shortlisted on account of its failure to make the threshold technical capacity as per clause 2.2.2 (A) of the Request for Qualification document. Further, it has been averred that the petitioner consortium claimed experience from 13 projects of category-I. But, however, the lead member of the consortium i.e., the petitioner herein has not claimed any experience from the said 13 projects. But, its member viz., Portia Management Services Limited has claimed experience from the said projects. Out of the 13 projects, only one project experience in the BOT project of Vizag Sea Port Private Limited could be considered for the evaluation. The technical score arrived from the said project experience is 373.63, whereas to be eligible for pre-qualification, the petitioner consortium, shall fulfil the conditions enshrined in clause 2.2.2 (A) of the Request for Qualification document where one of the conditions is that the total project experience should be more than Rs.650 Crores. The other project experience claimed by the petitioner consortium was not considered for evaluation as it has not produced the statutory auditor's certificate as prescribed in Annexure-IV, Appendix-I. In view of the same, project experience claimed by the petitioner in the other projects became valueless. Thus, in the absence of the required threshold technical score, the petitioner consortium was not shortlisted for the next stage of bid. By pointing out the same, it is averred in the counter affidavit that the rejection of the application of the petitioner does not suffer from any infirmity.
22.2. Reply affidavit had been filed on behalf of the petitioner wherein it has been pointed out that while the impugned order apparently stated that the rejection was on the ground set forth in paragraphs 2.21.1 of the Request for Qualification document, in reality, as revealed in the counter, it appears to have been done under clause 2.2.2 (A) of the Request for Qualification document. Further, it has been pointed out in the reply affidavit that after amendment of the foot note 13 in clause 2.2.4(i), to prove technical capacity, it is enough to submit audited balance sheet and accordingly, the consortium, provided balance sheet for the last five years. The consortium member has claimed eligible experience in 13 projects. However, the counter affidavit of the Ennore Port Limited states that non-providing of the statutory audited certificate is the reason for rejection for rejection. The said rejection is entirely erroneous for the reason that a statutory audited certificate was wholly unnecessary for the purpose of technical qualification since Audited Annual Returns were provided. The petitioner's consortium has in fact claimed another Rs.7,006 Crores eligibility in various projects, which is supported by the audited balance sheet. Thus, the rejection, according to the reply affidavit, is clearly contrary to the terms of the tender document and the impugned order is liable to be set aside.
22.3. I have considered the submissions made by the learned counsel appearing for the petitioner and the learned Additional Solicitor General of India, appearing for the Ennore Port Limited in this regard.
22.4. Certain deficiencies have been pointed out by the authorities for not shortlisting the petitioner's application which does not form part of the impugned. Further, the ground of rejection originally set out in the impugned order was that the petitioner's application could not be shortlisted on the ground set forth in para 2.2.1 of the Request for Qualification document, but, however, in the counter affidavit, it has been stated that the rejection was under clause 2.2.2(A) of the Request for Qualification document. It is the case of the authorities that though the petitioner claimed experience from 13 projects of Category-I, it has not claimed any experience from the said 13 projects. But, its consortium member viz., Portia Management Services Limited has claimed experience in the said projects. Out of 13 projects, only one project experience in the BOT project of Vizag Sea Port Private Limited could be considered for evaluation. Further, in the absence of details in the statutory audited certificate, information given by the petitioner has been considered as inadequate. When such a plea has been taken for the first time in the counter affidavit, reply affidavit has been filed on behalf of the petitioner stating that when audited balance sheet is furnished as per the amendment to clause 2.2.4 (i), foot note No.13, the rejection on the ground of non-production of the statutory audited certificate is totally erroneous.
22.5. Clause 2.2.4 (i) and (ii) and foot note reads as follows:-
" The applicants shall enclose with its application, to be submitted as per the format at Appendix-I, complete with its annexures, the following:
(i) Certificate(s) from its statutory auditors or the concerned client(s) stating the payments received or works commissioned, as the case may be, during the past 5 years in respect of the projects specified in paragraph 2.2.2 (A) above. In case a particular job / contract has been jointly executed by the applicant (as part of consortium), he should further support his claim for the share in work done for that particular job / contract by producing a certificate from its statutory auditor or the client; and
(ii) Certificate(s) from its statutory auditors specifying the networth of the applicant, as at the close of the preceding financial year, and also specifying that the methodology adopted for calculating such net worth conforms to the provisions of this clause 2.2.4 (ii). For the purposes of this RFQ, net worth (the "Net Worth") shall mean the sum of subscribed and paid up equity and free reserves from which shall be deducted the sum of revaluation reserves, miscellaneous expenditure not written off and accrued liabilities.
Foot Note: In case duly certified audited annual financial statements are provided, a separate certification by statutory auditors would not be necessary in respect of clauses 2.2.4 (i) and 2.2.4 (ii).
The requirement pertaining to the auditor's certificate was amended and Ennore Port Limited amendment letter dated 04.04.2008 at Sl.No.8 reads as follows:-
Sl.No.
Reference clause No. Existing provisions Amended provision to be read as 8 2.2.4(i) foot note 13 In case duly certified audited annual financial statements are provided, a separate certification by statutory auditors would not be necessary in respect of clauses 2.2.4 (i) and 2.2.4(ii).
In case duly certified audited annual financial statements containing the requisite details are provided, a separate certification by statutory auditors would not be necessary in respect of clause 2.2.4 (i).
22.6. Thus, when it is the case of the petitioner that separate auditor certificate is not necessary in view of the furnishing of the audited balance sheet through their rejoinder after coming to know of the ground of rejection made by the first respondent, if a clarification had been sought for by the authorities, it would have solved the entire problem. The petitioner could have represented that the required particulars have been given and the authorities could have pointed out that required documents have not been furnished. Further more, the discretion vested with the authorities seeking clarification has not been properly exercised, which resulted in chaos.
22.7. Hence, the ground of rejection for not shortlisting the petitioner to the next stage of bid is totally erroneous and is liable to be set aside.
W.P.No.23357 of 2008 23.1.The defects on the part of the petitioner in W.P.No.23357 of 2008, according to the Ennore Port Limited, is the conflict of interest. According to the Ennore Port Limited, the petitioner which was a member of the consortium led by Mundra Port and Special Economic Zone Limited was having conflict of interest with P.S.A. Ennore Private Limited, the petitioner in W.P.No.16957 and 16958 of 2008 and hence, it has not been shortlisted for the next stage of bid.
23.2. Before dealing with the merits in issue which has been raised by the petitioner as well as the Ennore Port Limited, it would be useful to extract clause 2.2.1 (c) of the Request for Qualification Document and the same is extracted here under:-
2.2.1 (c):- An application shall not have a conflict of interest (the "Conflict of Interest") that affects the Bidding Process. Any application found to have a conflict of interest shall be disqualified. An applicant may be considered to have a conflict of interest that affect that Bidding Process, if:
(i) the applicant, its Member or Associate (or any constituent thereof) and any other applicant, its Member or Associate (or any constituent thereof) have commons controlling shareholders or other ownership interest; provided that this disqualification shall not apply in cases where the direct or indirect shareholding of an applicant, its Member or Associate (or any shareholder thereof having a shareholding of more than five percent of the paid up and subscribed share capital of such applicant, Member or Associate, as the case may be) in the other applicant, its Member or Associate is less than one percent of the paid up and subscribed share capital thereof; provided further that this disqualification shall into apply to a bank, insurance company, pension fund or a Public Financial Institution referred to in
section 4A of the Companies Act, 1956; or
(ii) a constituent of such applicant is also a constituent of another applicant; or
(iii) such applicant receives or has received any direct or indirect subsidy from any other applicant, or has provided any such subsidy to any other applicant; or
(iv) such applicant has the same legal representative for purposes of this application as any other applicant; or
(v) such applicant has a relationship with another applicant, directly or through commons third parties, that puts them in a position to have access to each others' information about, or to influence the application of either or each of the other applicant; or
(vi) such applicant has participated as a consultant to the authority in the preparation of any documents, design or technical specifications of the project."
Clause 2.2.2 (A) of the Request for Qualification document subsequent to the amendment issued by the Ennore Port Limited vide letter dated 04.04.2008 is usefully extracted here under:-
" 2.2.2:- To be eligible for pre-qualification and shortlisting, an applicant shall fulfil the following conditions of eligibility:-
(A) Technical Capacity: For demonstrating technical capacity and experience (the "Technical Capacity"), the applicant shall, over the past 5 (five) financial years preceding the application due date, have:-
(i) Paid for, or received payments for construction of Eligible Project(s); and / or
(ii) paid for development of Eligible Project(s) in Category 1 and / or Category 2 specified in clause 3.2.1; and / or
(iii) collected and appropriated revenues from Eligible Project(s) in Category 1 and / or Category 2 specified in Clause 3.2.1, such that the sum total of the above is more than Rs.650 Crore (Rupees six hundred fifty Crore only) (the "Threshold Technical Capability).
Provided that atleast one fourth of the Threshold Technical Capability shall be from the Eligible Projects in Category 1 or Category 3 specified in clause 3.2.1".
Clause 3.2.1 of the Request for Qualification document reads as follows:-
" 3.2.1.:- Subject to the provisions of clause 2.2, the following categories of experience would qualify as Technical Capacity and eligible experience (the "Eligible Experience") in relation to eligible projects as stipulated in clauses 3.2.3 and 3.2.4 (the "Eligible Projects").
Category 1: Project experience on Eligible Projects in Port sector that qualify under clause 3.2.3. Category 2: Project experience on Eligible Projects in core sector that qualify under clause 3.2.3. Category 3: Construction experience on Eligible Projects in port sector that qualify under clause 3.2.4. Category 4: Construction experience on Eligible Projects in core sector that qualify under clause 3.2.4....." 23.3. One of the amendment made was to clause 2.2.1 (c). It sought to include within the scope of clause 2.2.1 (1): "associates" of bidders.
23.4. The petitioner seems to have addressed a letter dated 08.04.2008 to the Ennore Port Limited making disclosure of the petitioner's consortium and the P.S.A. Consortium and stated thereon that P.S.A. Consortium were not in conflict of interest in the petitioner consortium. The said letter, according to the petitioner, was forwarded to the Ennore Port Limited under a cover of a letter dated 10.04.2008. Further, a declaration seems to have been made by the petitioner in the Request for Qualification document, which reads " we declare that (a) I/We have examined and have no reservation to the RFQ document, including any addendum(s) issued by the Authority; (b) I/We do not have any conflict of interest in accordance with Clauses 2.2.1(c) and 2.2.1(d) of the RFQ document; please refer attached letter dated 10th April 2008 from APL."
23.5. In ground D and E of the affidavit in support of the writ petition, it has been specifically stated as follows:-
" D. After the amendment of RFQ on 4th April 2008 (which contained the statement in 2.2.1 (c) reading as below) in its letter of 8th April 2008, the petitioner made a full and complete disclosure. It was stated in the letter of 8th April 2008 and brought to the notice of the first respondent that:
4.Neputue Orient Lines Limited (NOL) the petitioner herein is a Singapore incorporated company listed on the Singapore stock exchange. Currently Temasek Holdings (Private) Limited (Tamasek) has a total of about 67% interest in NOL.
5.PSA, a global terminal operator with concessions in India Ports, is 100% owned by Temasek.
It was also expressly stated in the letter of 8th April 2008.
6. We do not have any knowledge of whether PSA will respond to the RFQ. To err on the side of caution and in order to facilitate the qualification process (in case PSA is also one of the applicants), we would like to draw your attention to the above shareholding structure and to the fact that, in our view, it does not prevent either NOL or PSA to qualify for and independently participate in the bidding process of Ennore.
7. Although, technically, Temasek is a common shareholder of NOL and PSA Corporation, the two entities are not linked in any way other than by virtue of the shareholdings by Temasek. We contend that NOL does not have a conflict of interest in presenting an application even if PSA Corporation were to respond to the RFQ, based on the following reasons....
(i) No Common Directors Each entity has its own board of directors, who act in the best interest of the entity concerned. None of the director of NOL is also a director of PSA, and vice versa
(ii) No centralised management.
Temasek's shareholdings in NOL and PSA Corporation are only passive investments. There is no centralised management linking NOL and PSA. Neither are there any centralised planning and control systems such as a central administration, common HR policies, or a central treasury, or any structural or strategic consultations shared by the two companies. On the contrary, each entity has its own independent management and control.
E. The letter of 8th April 2008 was forwarded to the first respondent with a covering letter of 10th April 2008 headed:
"SUBJECT: REQUEST FOR QUALIFICATION FOR THE DEVELOPMENT OF CONTAINER TERMINAL AT ENNORE PORT ON A BUILD, OPERATE AND TRANSFER BASIS.
Dear Sir, At the very outset, we would like to thank you for issuing further amendments to the REQ document and responding to the queries by us.
After receiving the amendment to clause 2.2.1 (c), we still feel that there are some ambiguities which require further clarifications or discussions with EPL. Attached is the letter from NOL which set out in detail our position regarding the said clause. Our position is further supported by a legal opinion from Trilegal. We are also attaching a background on the corporate governance policy of Temasek Holdings (Private) Ltd.
We encountered a similar situation with the Port of Rotterdam recently when NOL and PSA separately tendered their bids for the development of the first container terminal at Massvlakte 2. The Port of Rotterdam agreed with our views and did not disqualify NOL and PSA from tendering the bid. In fact, the consortium formed by NOL was awarded the contract.
In the meantime, while responding to the REQ, NOL will be attaching the same documents with the application.
We sincerely hope that Ennore Port Limited shares and adopts our views in case both NOL and PSA separately respond to the RFQ."
The reference to the "queries by us" was to the pre-bid meeting where all bidders were present and where the petitioners had raised certain queries which were duly answered by the representatives of the Respondent Authority.
The last paragraph in the said letter of 10th April 2008 viz., "We sincerely hope that Ennore Port Ltd., shares and adopts our views in case both NOL and PSA separately respond to the RFQ".
was written expressly to elicit a response from the authority that they did share or adopt these views. A copy of the letter of 10th April 2008 enclosing the letter of 8th April 2008 was also addressed to the Ministry of Shipping, Road Transport and Highways and the Planning Commission. The latter because the Planning Commission is the Authority that sets out guidelines for tendering projects which are to be implemented on a Public-Private-Partnership (PPP) basis."
As stated above, in the declaration also it has referred about the attached letter dated 08.04.2008 from APL. Thus, the petitioner seems to have pre-disclosed all the relevant facts pertaining to clause 2.2.1 (c) before submitting RFQ document and at the time of submitting RFQ document.
23.6. Further, it has been set out in ground 'H' that the petitioner and PSA Ennore Private Limited are wholly independent companies with independent set of Directors and they have no common Directors and have been competing in international projects against one and another and not in order to form a cartel for bidding purpose at all.
23.7. It has been further stated in ground 'J' that the shareholders of the petitioner are Lentor Investments Private Limited 39.81% approximately; Temasek Holdings Private Limited 26.08 % approximately and members of the public 34%. Temasek Holdings Private Limited is not a shareholder in any of the members of the PSA consortium. Temasek Holdings Private Limited owns equity in the company which owns equity in PSA Ennore Private Limited.
23.8. Thus, an elaborate statement had been made in the affidavit in support of the writ petition that there is no conflict of interest between the petitioner and the PSA Ennore Private Limited, the petitioner in W.P.Nos.16957 and 16959 of 2008.
23.9. Counter affidavit had been filed on behalf of the Ennore Port Limited and it is stated that rejection of the petitioner consortium is because of conflict of interest between the petitioner consortium and the consortium led by PSA Ennore Private Limited. It is admitted that a letter has been received from the petitioner dated 8/10th April 2008 stating that the petitioner consortium and the consortium led by PSA Ennore Private Limited are not in conflict of interest. However, it is stated that "non-response to the letter of the petitioner by the Ennor Port Limited is due to the fact that at the time when the petitioner itself has not mentioned the consortium members' name and the Ennore Port Limited was not aware who is going to submit application for pre-qualification, any response to the petitioner's letter would have amounted to guiding the petitioner. Thus, Ennore Port Limited did not reply to the said letter. The petitioner and the PSA Ennore Port Limited, who are attracted by the conflict of interest have joined together by filing separate writ petitions to get the conflict of interest annulled or by getting it redefined so as to exclude these two entities from getting attracted by the disqualifying clause of conflict of interest.
23.10. On the basis of the pleadings extracted above, it has to be seen whether the failure to shortlist the petitioner on the ground of conflict of interest is justifiable or not. The Request for Qualification document so far as conflict of interest is concerned seems to have been incorporated in order to prevent an applicant from submitting more than one application in the name of its other holding companies. Clause 2.4.1 of the Request for Qualification document clearly states that an applicant should submit only one application for shortlisting. Thus, in order to prevent the development of cartelisation or monopoly, it has been set out in 2.2.1 (c) that an applicant shall not have a conflict of interest and if it is found that it has got conflict of interest, it would be disqualified. The object of introducing the said clause cannot be faulted at all. But, however, it has to be seen whether the petitioner is having any conflict of interest with PSA Ennore Private Limited, the petitioner in W.P.Nos.16957 and 16958 of 2008. The petitioner, in grounds 'H' and 'J' of the affidavit in support of the writ petition has made it very clear that the petitioner and the PSA Ennore Private Limited are wholly independent companies with independent set of Directors and have been competing in international projects against one another. The shareholding of the petitioner has also been set out in ground 'J' of the affidavit. Absolutely there is no denial about the same in the counter affidavit filed by the Ennore Port Limited. Further more, when the petitioner even before submitting its application, had disclosed to the authorities in its letter dated 08.04.2008, which has been extracted above, the Ennore Port Limited ought to have clarified the position to the petitioner. To say that it did not clarify since it would amount to guiding the petitioner cannot be accepted. I have already held above that failure to seek clarification is totally unjust, especially when there is a clause in the Request for Qualification document that the Ennore Port Limited could seek clarification from the applicants. Since I have elaborately discussed about the same and given a finding in favour of the petitioner, I am not inclined to reiterate the same once again.
23.11. Yet another aspect that has to be seen is that when the petitioner sought to explain in his affidavit in support of the writ petition that there is no conflict of interest setting out shareholders of the petitioner and also setting out that the petitioner and the PSA Ennore private Limited are wholly independent companies with independent set of Directors, etc., there is absolutely no denial about the same. Whether these factors were considered by the Ennore Port Limited or SBI capitals, which had evaluated the Request for Qualification documents for shortlisting the applicants could not be ascertained. Prima facie it could be concluded that these materials were not either before the Ennore Port Limited or the SBI capitals at the time of evaluation of the applications for shortlisting the applications to the next bid stage.
23.12. The other aspect which has to be borne in mind is that a mere conflict of interest alone would not disqualify a person from participating in the bid. Clause 2.2.1 (c) of the Request for Qualification document clearly says that "an applicant shall not have a conflict of interest that affects the bidding process". Thus, even assuming that there is a conflict of interest, it must be one which affects the bidding process. To be more elaborate, every technical non-compliance with the conditions in sub clauses (i) to (vi) does not ipso facto entail a disqualification. Unless such a conflict of interest affects the bidding process, there cannot be any disqualification on the ground of conflict of interest alone. Further more, as rightly contended by the learned Senior Counsel appearing for the petitioner that clause 2.2.1(c) reads that an applicant may be considered to have a conflict of interest that affects the bidding process if sub clauses (i) to (vi) are found, which cannot be read as statutes, as the said sub clauses (i) to (vi) are not water tight compartments and the words used thereunder have to be meaningfully construed or interpreted in a manner which would give commercial sense and meaning to the ultimate object of the said clause. Further, as rightly contended by the learned Senior Counsel appearing for the petitioner, the object underlying the disqualification contemplated under clause 2.2.1 (c) is that no two bidders should be so connected that their connection results in a situation where a cartel is formed and / or an unrealistic and / or unfair and / or artificially low bid is submitted. The object further seems to be to ensure that the bids which are received are fair and not manipulated. Even the learned Additional Solicitor General of India appearing for the Ennore Port Limited would submit that the object of clause 2.2.1(c) is to only ensure that an applicant submits only one application for shortlisting and it would effectively prevent an applicant from submitting more than one applications in the name of its other holding companies especially in the background that clause 2.4.1 of the Request for Qualification document states that an applicant should submit only one application for shortlisting. Thus, summing up the matter in issue, I am to hold as follows:-
(i) The failure to seek clarification from the petitioner in respect of conflict of interest which has been set forth for rejecting the claim of the petitioner to the next stage of bid, in spite of the clarification sought for by the petitioner before submitting the application, is totally unjust;
(ii) The claim of the petitioner that it is not having conflict of interest with PSA Ennore Port Limited as set out in its writ petition could not have been considered by the SBI capitals which has evaluated the applications since at the time of evaluation, the points raised by the petitioner regarding its shareholdings, independent entity without common Directors etc., were not available for evaluation;
(iii) Even as per the language employed in clause 2.2.1 (c), the conflict of interest should affect the bidding process. It is nowhere stated that the conflict of interest between the petitioner and PSA Ennore Private Limited affected the bidding process. Sub clauses (i) to (vi) to clause 2.2.1(c) could not be construed as rules in statutes which should be given a strict meaning and implications. The said clause has to be construed and interpreted in a manner which will give a commercial sense and meaning so as to ultimately achieve the object of incorporating the said clause viz., 2.2.1 (c) viz., the two bidders should not be so connected where there is a possibility of cartelisation or monopoly. Since the said clause had been introduced with the object of preventing the development of cartelisation or monopoly, the said clause all the more shall be viewed with commercial sense that the ultimate object for which the said clause had been incorporated.
W.P.No.23358 of 2008 24.1. As regards the challenge in W.P.No.23358 of 2008 to clause 2.2.1 (c) of the Request for Qualification document is concerned, I am not inclined to accept the contention raised in this regard by the learned Senior Counsel appearing for the petitioner. The petitioner having taken part in the tender process knowing about the clause therein, cannot be heard to say that the tender clause referred to above is bad in law or unconstitutional. The challenge with regard to that clause has been made only after the Ennore Port Limited failed to shortlist them to the next stage of bid.
24.2. Learned Additional Solicitor General of India appearing for the Ennore Port Limited further relied on the decision reported in (2001) 2 Supreme Court Cases 451 W.B.State Electricity Board v. Patel Engineering Co., and contended that strict adherence to bidders is essential and it cannot be branded a pedantic approach. A party cannot be allowed to correct an error appeared in the bid document. However, there is a case where more mistake has crept in while submitting the bid documents, which is sought to be rectified and the Hon'ble Apex Court has held that the impugned order of the Division Bench of Calcutta permitting the parties to correct the bid documents and to consider all the bids after correction along with other bids has been set aside. In the given case on hand, it is not the case of the petitioners that in the bid documents submitted by them mistake has crept in for which they sought for corrections. Hence, the said judgment may not have any application to the facts of the present case.
24.3. The Hon'ble Apex Court in (2004) 4 Supreme Court Cases 19 Directorate of Education v. Educomp Datamatics Ltd., while considering judicial review on the terms and conditions inviting open tender for leasing of supply, installation and commissioning of computer systems in various government / government-aided senior secondary, secondary and middle schools under the Directorate of Education, Delhi, commenting the introduction of a criterion of turnover of Rs.20 Crores to enable the companies to participate in the tender, had held that "it was for the authority to set the terms of tender. The Courts would not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. While exercising the power of judicial review of the terms of the tender notice, the Court cannot say that the terms of the earlier tender notice would serve the purpose sought to be achieved better than the terms of tender notice under consideration and order change in them, unless it is of the opinion that the terms were either arbitrary or discriminatory or actuated by malice. The provision of the terms inviting tenders from firms having a turnover of more than Rs.20 Crores has not been shown to be either arbitrary or discriminatory or actuated by malice.
24.4. Again in yet another decision reported in (2007) 10 Supreme Court Cases 33 Puravankara Projects Ltd., v. Hotel Venus International and others, the Hon'ble Apex Court has held that the principles of natural justice cannot be invoked to amend, alter or vary the expressed terms of the contract between the parties. The Hon'ble Apex Court while holding so, had relied on the decision reported in (1981) 1 SCC 537 New Bihar Biri Leaves Co. v. State of Bihar, and paragraphs 31 and 33 are usefully extracted here under:-
" 31. In New Bihar Biri Leaves Co. v. State of Bihar, it was observed at para 48 as follows: (SCC p.558)
48. It is a fundamental principle of general application that if a person of his own accord, accepts a contract on certain terms and works out the contract, he cannot be allowed to adhere to and abide by some of the terms of the contract which proved advantageous to him and repudiate the other terms of the same contract which might be disadvantageous to him. The maxim is Qui approbat non reprobat (one who approbates cannot reprobate). This principle, though originally borrowed from Scots law, is now firmly embodied in English common law. According to it, a party to an instrument or transaction cannot take advantage of one part of a document or transaction and reject the rest. That is to say, no party can accept and reject the same instrument or transaction (per Scrutton, L.J., Verschures Creameries Ltd., v. Hull & Netherlands Steamship Co. see Douglas Menzies v. Umphelby, AC at p.232: see also Stroud's Judicial Dictionary, Vol.I p.169 3rd Edn.)
33. Just as the principles of natural justice ensure fair decision where function is quasi-judicial, the doctrine of fairness is evolved to ensure fair action when the function is administrative. But the said principle cannot be invoked to amend, alter or vary the expressed terms of the contract between the parties."
24.5. Thus, considering the above facts and circumstances and also considering the law laid down by the Hon'ble Apex Court as referred to earlier, the contentions raised regarding the tender clauses do not require any consideration at all and the same shall be rejected in toto.
W.P.No.16957 of 2008 25.1. W.P.No.16957 of 2008 is filed challenging the impugned order dated 30.06.2008 in not shortlisting the petitioner for the bid stage and consequently directing the Ennore Port Limited to reconsider its application. The petitioner has also filed W.P.No.16958 of 2008 challenging clause 1.2.1, 2.2.1(c), 3.2.1 and 3.2.6 of Request for Qualification document and consequently directing the Ennore Port Limited to amend the same.
25.2. Why the petitioner was not shortlisted, though not stated in the impugned order, as per the counter affidavit, is on account of conflict of interest. It is alleged that the petitioner consortium is having conflict of interest with another applicant consortium led by Mundra Ports & Special Economic Zone Limited, Adani Enterprises Limited and Neptune Oriental Lines Limited, as its members. In the case of the consortium led by the petitioner, PSA Ennore Private Limited was having conflict of interest with Neptune Orient Lines Limited, which was a member of the consortium led by Mundra Ports & Special Economic Zone Limited, which came to light on account of declaration made by Neptune Oriental Lines Limited.
25.3. I am not traversing about the conflict of interest by extracting the clauses in the Request for Qualification document in view of the fact that I have already dealt with those clauses at length in the writ petitions in W.P.Nos.23357 and 23358 of 2008. The discussions and the reasonings which have been arrived at by me in those writ petitions are applicable to these writ petitions also. Both the petitioner in these writ petitions and the petitioner in W.P.Nos.23357 and 23358 of 2008 are on the same footing. It is averred by the petitioner that while it is true that Temasek Holdings Private Limited holds the entire share holdings of PSA International Private Limited, in turn PSA International Private Limited holds the entire shareholdings of the petitioner, this mere fact does not translate into involvement in the governance of the petitioner by Temasek. Temasek, it is averred, is a Corporation owned by Government of Singapore and is in the nature of a financial investor with holdings and interest world wide. The day to day affairs of the petitioner and other entities in which Temasek has direct or indirect shareholdings are managed and governed by independent boards free of interference from Temasek.
25.4. In those circumstances, it is possible that both the listed entities themselves may not aware of each others shareholding. In such circumstances, it would have been fair had the Ennore Port Limited ascertained the facts from the applicants including the petitioner and provided them opportunity whether a conflict of interest in fact is existed between the applicants.
25.5. Thus, summing up the matter in issue, I am to hold as follows:-
(i) The failure to seek clarification from the petitioner in respect of conflict of interest which has been set forth for rejecting the claim of the petitioner to the next stage of bid, in spite of the clarification sought for by the petitioner before submitting the application is totally unjust;
(ii) The claim of the petitioner that it is not having conflict of interest with PSA Ennore Port Limited as set out in its writ petition could not have been considered by the SBI capitals which has evaluated the applications since at the time of evaluation, the points raised by the petitioner regarding its shareholdings, independent entity without common Directors etc., were not available for evaluation;
(iii) Even as per the language employed in clause 2.2.1 (c), the conflict of interest should affect the bidding process. It is nowhere stated that the conflict of interest between the petitioner and PSA Ennore Private Limited affected the bidding process. Sub clauses (i) to (vi) to clause 2.2.1(c) could not be construed as rules in statutes which should be given a strict meaning and implications. The said clause has to be construed and interpreted in a manner which will give a commercial sense and meaning so as to ultimately achieve the object of incorporating the said clause viz., 2.2.1 (c) viz., the two bidders should not be so connected where there is a possibility of cartelisation or monopoly. Since the said clause had been introduced with the object of preventing the development of cartelisation or monopoly, the said clause all the more shall be viewed with commercial sense that the ultimate object for which the said clause had been incorporated.
W.P.No.16958 of 2008 26.1 As regards the challenge in W.P.No.16958 of 2008 to clauses 1.2.1., 2.2.1 (c), 3.2.1 and 3.2.6 is concerned, I am not inclined to accept the contention raised in this regard by the learned Senior Counsel appearing for the petitioner. The petitioner having taken part in the tender process knowing about the clauses therein, cannot be heard to say that the tender clauses referred to above are vague, illegal and arbitrary. The challenge with regard to those clauses has been made only after the Ennore Port Limited failed to shortlist them to the next stage of bid. I have dealt with the challenge of clause 2.2.1(c) in W.P.No.23358 of 2008, wherein I have elaborately considered why the challenge of the said tender clause 2.2.1(c) is not bad in law in the said writ petition and hence I am not traversing the same in this writ petition. Hence, the contentions which have been raised challenging those clauses, do not require consideration at all.
26.2. As regards the challenge in W.P.No.23795 of 2008 in regard to clauses 1.2.1, 3.2.1, 3.2.6 of RFQ is concerned, since I have elaborately dealt with the same in W.P.No. 23358 of 2008 and has held that the said clauses are not bad in law, I am not traversing the same once again in this writ petition. Hence, the contentions which have been raised thereunder challenging those clauses do not require any consideration at all.
W.P.No.20409 of 2008
27. The petitioner in W.P.No.20409 of 2008 viz., ABG Infralogistics Limited is the consortium member along with PSA Ennore Private Limited, the lead member. PSA Ennore Private Limited had already filed two writ petitions in W.P.Nos.16957 and 16958 of 2008 questioning the failure to shortlist it to the next stage of bid and also for quashing of certain clauses in the Request for Qualification document. While so, when one of the consortium member viz. PSA Ennore Private Limited, a lead member has already approached this Court challenging its non-shortlisting, the present writ petition may not be sustainable. Whatever the benefit that has accorded to the lead member PSA Ennore Private Limited may be an advantage to the consortium member, the petitioner herein. Hence, the prayer in this writ petition does not require to be considered.
FINAL CONCLUSION:-
28. The discussions and the findings arrived at by me above would lead to the following irresistible conclusion viz.,
(i) The writ petitions filed by the petitioners questioning their non-shortlisting are perfectly maintainable under
Article 226 of The Constitution of India as discussed and held in paragraphs 16.1 to 16.11.
(ii) Though the Ennore Port Limited is obligatory to assign reason for refusal of the tenders of the applicants thereby not shortlisting them for the next stage of bid, I am not holding it against the Ennore Port Limited since the reasons for the same have been stated in the counter affidavit filed by the Ennore Port Limited as discussed and held in paragraphs 17.1 to 17.6.
(iii) The Ennore Port Limited is not justified in refusing to exercise its discretion in seeking clarification from the applicants, as held in paragraphs 18.1 to 18.10.
(iv) The entrustment of evaluation process to SBI capitals and Mullah & Mullah and Craigie Blunt & Caroe cannot be faulted with, as held in paragraphs 19.1 to 19.3.
(v) The reasons for rejection of the petitioners' tenders when shortlisting them for the next stage of bid are not justifiable, as held in paragraphs 20.1 to 23.12 and 25.1. to 25.5.
(vi) Clauses 1.2.1, 2.2.1(c), 3.2.1 and 3.2.6 of Request for Qualification document are not bad in law and do not require to be quashed as held in paragraphs 24.1. to 24.5 and paragraphs 26.1 and 26.2.
(vii) In a project of this public nature which requires efficient participants, who have got experience in the Port and its management should have been the prime concern of Ennore Port Limited while shortlisting the applicants to the next stage of bid. The entire object should have been to select the best available persons for the prestigious project. Since public interest is involved in this project, the best talented person shall be the paramount consideration.
(viii) The Ennore Port Limited seems to have taken irrelevant reasons for not shortlisting the petitioners' tenders. The state largesse while awarding contract shall not act as a private party, but should have seen that the selection process would not adversely affect the larger public interest. The Ennore Port Limited seems to have left out relevant factors and taken into account irrelevant factors.
(xi) Further more, as stated already, the explanation offered by the petitioners in their affidavits and the reply affidavits could not be before the SBI capitals, who had made evaluation and in the result, the impugned orders have been passed not shortlisting them.
29. For all the reasons stated above, it would be appropriate to remit the matter for reconsideration by the Ennore Port Limited, who did the evaluation through the SBI capitals with the assistance of the officials of Ennore Port Limited, who have been nominated. Since the project requires urgent consideration, which has to be executed without any delay to cater the end of the present situation, I deem it necessary to direct the Ennore Port Limited to direct the SBI capitals to make evaluation after seeking clarification from the petitioners and also after considering the points which have been raised by them in these writ petitions. I hope the entire process would get through within a period of two months from the date of receipt of a copy of this order.
30.1. In fine, W.P.Nos.17460, 17744, 16957, 23795 (in part) and 23357 of 2008 are allowed, directing the Ennore Port Limited to reconsider its decision in non-shortlisting them for the next stage of bid, keeping in mind the discussions made above and the contentions raised by them in these writ petitions.
30.2. W.P.Nos.16958, 23358 and 20409 of 2008 are dismissed. The challenge of clause 4 in PPP Project and clauses 1.2.1, 3.2.1, 3.2.6 of Request for Qualification in W.P.No. 23795 of 2008 alone is rejected .
No order as to costs. Consequently, connected miscellaneous petitions are closed.
sbi/krr To
1.The Secretary, Union of India, Ministry of Shipping, Road Transport and Highways, Transport Bhavan, 1 Parliament Street, New Delhi 110 001.
2.The Chairman and MD, Ennore Port Limited, No.23, Rajaji Salai, First Floor, Chennai 4