Bombay High Court
Rajasthan Transport & Hct(Jv),A … vs Western Coalfields Ltd. Thr. The … on 2 March, 2020
Bench: Ravi K. Deshpande
1 wp8537j.2019.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH : NAGPUR WRIT PETITION NO. 8537 OF 2019 Rajasthan Transport & HCT (JV), a Joint Venture/Consortium of M/s. Rajasthan Transport and M/s. Harjeet Coal Tranport- both Partnership Firms, through Nitesh Bohra-Partner of M/s. Rajasthan Transport and Lead Member of the Joint Venture/Consortium, having its Head Office at Plot No. 15, Transport Nagar, Korba-495 677, Chhatisgarh. . . . PETITIONER …V E R S U S.. 1. Western Coalfields Limited through the Chairman-cum-Managing Director, Coal Estate, Civil Lines, Nagpur-440001 Maharashtra. 2. Western Coalfields Limited through the General Manager (CMC), Coal Estate, Civil Lines, Nagpur-440001, Maharashtra. 3. Union of India, through the Secretary, Ministry of Coal, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi-110001. 4. M/s. Punjab Transport Company, Plot No. 35, Ward No. 61, Surana Layout, Raj Nagar, Nagpur-440013, Maharashtra. . . . RESPONDENTS ———————————————————————————————— Shri C. B. Dharmadhikari, Advocate for petitioner. Shri Subodh Dharmadhikari, Senior Advocate a/w. Shri K. N. Shukul, Advocate for respondent nos. 1 and 2. Shri U. M. Aurangabadkar, A.S.G.I. for respondent no. 3. ———————————————————————————————–::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 2 wp8537j.2019.odt CORAM :- R. K. DESHPANDE AND AMIT B. BORKAR, JJ.
RESERVED ON :- 12.02.2020 PRONOUNCED ON :- 02.03.2020 JUDGMENT (PER : AMIT B. BORKAR, J.):-
1. Rule returnable forthwith. Heard finally by consent of learned counsels appearing for the parties.

2. The petitioner is challenging communication dated 23.11.2019, thereby rejecting the bid of the petitioner for transportation of Coal on the ground that the petitioner was not eligible as per condition no. 6(a). Petitioner is also challenging the order of allotment dated 23.11.2014, issued in favour of respondent no. 4.

3. The facts which are relevant for adjudication of the petition are as under:-

The petitioner firm is Joint Venture/Consortium made on 19.09.2019 by and between M/s. Rajasthan Transport and M/s. Harjeet Coal Transport. Both are partnership firms registered under the Indian Partnership Act 1932. Respondent no. 1 is subsidiary Company of Coal India Limited under the administrative control of::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 3 wp8537j.2019.odt the Ministry of Coal, which has been incorporated under the Companies Act. Respondent no. 1 is official of respondent no. 3, who has issued a notice inviting Tender in which the petitioner’s bid was rejected. Respondent no. 3 is the Ministry of Coal under whose administration, respondent no. 1 functions. Respondent no. 4 is a private party, who was L-2 bidder and has been awarded the contract after the rejection of bid of the petitioner.

4. Respondent nos. 1 and 2 floated e-Tender notice No. 2019_WCL_148759_1, dated 31.08.2019, inviting bids from the experienced and reputed contractor for work on transportation of coal. The total work was to the tune of ₹ 15,52,08,000/- and the 15,52,08,000/- and the Earnest Money Deposit (EMD) is ₹ 15,52,08,000/- and the 17,70,300/- which was to be deposited along with the bid for participation in the said Tender process. As per Tender’s condition in Clause 6(a), the eligibility criteria for participation in the Tender process was mentioned. Clause 6(a) reads thus:-
“6. Eligibility Criteria a. Work Experience: The bidder must have in its name or proportionate share as a member of JV/Consortium, experience of having successful executed (includes completed/ongoing) works of similar nature (such as Loading of coal into wagons/ Transportation/ Removal of Coal/ Overburden /Shale/ Extraneous materials/Sand/etc) valuing 65% of the annualized::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 4 wp8537j.2019.odt estimated cost of the work put to tender (for period of completion over 1 year)/ 65% of the estimated cost of the work (for completion period up to one year) put to Tender in any year (consecutive 365 days) during last 7 (seven) years ending last day of month previous to the one in which bid application are invited. “Annualised value” of the work shall be calculated as the “Estimated Cost/Period of completion in Days X 365″. The cost of executed work shall be given a simple weightage to bring them at current price level by adding 5% for each completed year (total number of days/365) after the end date of experience till the last day of month previous to one in which e-Tender has been invited.”
5. Clause (6a)(viii) is as under :- “6(viii). In case the experience has been earned by the bidder as an individual or proprietor of a proprietorship firm or partner of a partnership firm, then 100% value of the experience will be considered against eligibility. However, if the experience has been earned by the bidder as a partner in a Joint Venture firm then the proportionate value of experience in proportion to the actual share of the bidder in that Joint Venture will be considered against eligibility.”
6. As per Tender conditions, after opening all bids, the system would show the lowest price quoted by L-1 bidder and the process of the reverse auction was to be followed. At the end of the reverse auction process, L-1 bidder was to submit break-up of price confirming to the lowest rate quoted by him. Once bids were open and L-1 bidder was identified, Clause (12) of the Tender condition::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 5 wp8537j.2019.odt provided for further evaluation of documents submitted by L-1 bidder in Cover-1 by the Tender Committee. In case, there was any deficiency in uploaded documents by L-1 bidder, a period of 7 days was to be granted to L-1 bidder to submit requisite documents. In case of failure to submit the requisite documents online or if any information is found to be wrong, then the bid is to be rejected and EMD of the L-1 bidder was to be forfeited and the Committee should thereafter evaluate the documents of the L-2 bidder.
7. The petitioner participated in the said auction process by submitting his bid as per the instructions mentioned in the e-Tender notice. The petitioner along with other documents submitted a certificate issued by Bharat Aluminum (BALCO) certifying that M/s. Rajasthan Transport completed Coal loading and transportation work of total value of ₹ 15,52,08,000/- and the 14,38,01,978/- in a financial year from April-2017 to March-2018. After evaluation of Technical Bid, the petitioner’s Financial Bid was opened and the petitioner was allowed to participate in the reverse auction in which the petitioner emerged as L-1 bidder. However, the Technical Evaluation Committee found that there is a short-coming in the Technical Bid of the petitioner. Therefore, the petitioner was called upon to submit additional documents on 30.09.2019. The petitioner submitted the documents::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 6 wp8537j.2019.odt which included T.D.S. certificate of work experience from 01.04.2017 to 31.03.2018.

8. On 23.11.2019, respondent no. 3 communicated the decision to the petitioner that, during financial evaluation by the duly constituted Committed, the bid of the petitioner was rejected and on the same day the letter of acceptance was issued in favour of respondent no. 4. The petitioner challenged both the aforesaid communications dated 23.11.2019 by way of the present petition. This Court on 27.12.2019 was pleased to issue notice to the respondent and was pleased to grant ad-interim relief in terms of prayer-clause (2), which had the effect of granting a stay to the effect, execution and operation of both the communications under challenge and also restraining respondents from taking further steps in the Tender process in pursuance of award of contract to respondent no. 4.

9. Respondent nos. 1 and 2 appeared in the present petition and filed their reply. It was contended by way of said reply that the experience certificate of M/s. Rajasthan Transport, which was the sole proprietorship of one Shri Pukhraj Jain, was converted into a partnership firm on 01.12.2018. The said partnership firm on 01.12.2018 had three partners in addition to Shri Pukhraj Jain. Shri::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 7 wp8537j.2019.odt Pukhraj Jain died on 07.12.2018. Current partnership firm M/s. Rajasthan Transport was constituted by a partnership dated 10.12.2018 and the business of the said firm was thereafter carried out by the remaining three partners Shri Pukhraj Jain is not a partner of M/s. Rajasthan Transport after 10.12.2018. The T.D.S. certificate of work experience submitted by the petitioner is in the name of the late Shri Pukhraj Jain, which was proprietary firm and therefore said experience of proprietary firm of Shri Pukhraj Jain cannot be used to count the experience of M/s. Rajasthan Transport. It is further submitted in the said reply that respondent has invoked clause 12(v) and (vii) of the Tender condition and has rejected the bid of the petitioner and forfeited amount of ₹ 15,52,08,000/- and the 17,70,300/-. Respondent nos. 1 and 2 therefore, prayed for dismissal of the petition.
10. Shri C. B. Dharmadhikari, learned counsel appearing for the petitioner submitted that as per Section 14 of the Partnership Act 1932, the property of the firm includes all rights or interest in the property originally brought into by firm as the stock, which includes experienced goodwill of the said firm. It was further submitted that on 01.12.2018 when the M/s. Rajasthan Transport partnership was constituted it included Shri Pukhraj Jain as a partner. On the said date experience brought in by Shri Pukhraj Jain as the proprietary::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 8 wp8537j.2019.odt firm would constitute the property of partnership firm, which was subsequently reconstituted by deed dated 10.12.2018. The said partnership reconstituted on 10.12.2018 is in joint-venture with M/s. Harjeet Coal Transport and therefore, the experience of Shri Pukhraj Jain needs to be counted as an experience of M/s. Rajasthan Transport. Therefore, it has been submitted that the rejection of bid of the petitioner was arbitrary requiring interference at the hands of this Court. It is thereafter submitted that in any case, the forfeiture of earnest amount was unjustified in the facts of the present matter. The information submitted by the petitioner is by no stretch of imagination can said to be wrong or false information, which warrant forfeiture of earnest amount and therefore, prayed for direction to refund earnest amount.

11. Shri Subodh P. Dharmadhikari, learned Senior Advocate along with Shri K. N. Shukul, learned counsel for the respondent nos. 1 and 2 submitted that once Shri Pukhraj Jain died on 07.12.2018 and the new partnership was constituted on 10.12.2018, the surviving partners had no experience of the work as contemplated by the Tender conditions and therefore, the rejection of bid of the petitioner was legal and proper. The learned Senior Advocate relied upon the judgment of Hon’ble Apex Court in the case of New Horizon::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 9 wp8537j.2019.odt Ltd. Vs. Union of India and others, reported in 1995 (1) SCC 478 and submitted that the issue involved is fully covered by para no. 23 of the said judgment. Therefore there is no merit in the petition and the same is required to be dismissed. Justifying the action of forfeiture of earnest amount, the learned Senior Advocate submitted that scope of judicial review in the matter of Tenders is extremely limited and therefore, in the facts and circumstances of the present case, the action of forfeiture was fully within the powers of the respondents.

12. We have heard learned counsel appearing for both parties and have carefully gone through the entire record of the petition. After going through the record, the following material facts emerged as undisputed facts:-

(i) Pukhraj Jain carried on work of Coal transportation for a period of April-2017 to March-2018, in the name of sole proprietary firm, M/S Rajasthan Transport.

(ii) On 01.12.2018, M/s. Rajasthan Transport, a proprietary firm was constituted between Shri Pukhraj Jain and three other partners.

(iii) On 07.12.2018, Shri Pukhraj Jain died.::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 10 wp8537j.2019.odt (iv) On 10.12.2018, M/s. Rajasthan Transport was
reconstituted by surviving three partners except for Shri Pukhraj Jain.
(v) M/s. Rajasthan Transport, a partnership firm constituted on 10.12.2018 submitted bid as joint-venture along with M/s. Harjeet Coal Transport.

13. In the above backdrop, the first submission made by Shri C. B. Dharmadhikari, placing reliance upon Section 14 of the Partnership Act, 1932 has no merit. The condition no. 6(a) of the Tender conditions is clear, which requires that bidder must have in its name or proportionate share as a member of a joint venture, the experience of successful execution of work of similar nature valuating 65% of the estimated cost of the work put up in Tender. Clause (viii) also makes it clear that experience earned by the bidders as an individual or proprietary firm shall be considered to its 100% valuation while deciding eligibility .If the said bidder has earned it as partner in joint-venture, then proportionate valuation of experience in proportion of the actual share of the bidder shall be considered. It is not in dispute that M/s. Rajasthan Transport as a sole proprietary firm had an experience of similar work for a period from April-2017 to March-2018. M/s. Rajasthan Transport was initially constituted on 01.12.2018 by Shri Pukhraj Jain along with::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 11 wp8537j.2019.odt three other partners. Shri Pukhraj Jain died on 07.12.2018. On 10.12.2018, M/s. Rajasthan Transport, who submitted the bid in question had remaining three partners except for Shri Pukhraj Jain and therefore, in the absence of an experienced partner, Section 14 of the Partnership Act, 1932 would not assist the petitioner.
14. The Hon’ble Apex Court in the case of New Horizon Ltd. Vs. Union of India (cited supra) has made the following observations in the context of rejection of Tender containing similar conditions. The relevant para no. 23 of the judgment is as under :- “23. Even if it be assumed that the requirement regarding experience as set out in the advertisement dated 22-4-1993 inviting tenders is a condition about eligibility for consideration of the tender, though we find no basis for the same, the said requirement regarding experience cannot be construed to mean that the said experience should be of the tenderer in his name only. It is possible to visualise a situation where a person having past experience has entered into a partnership and the tender has been submitted in the name of the partnership firm which may not have any past experience in its own name. That does not mean that the earlier experience of one of the partners of the firm cannot be taken into consideration. Similarly, a company incorporated under the Companies Act having past experience may undergo reorganisation as a result of merger or amalgamation with another company which may have no such past experience and the tender is submitted in the name of the reorganised company. It could not be the purport of the requirement about experience that the experience of the company which has merged into the reorganised company::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 12 wp8537j.2019.odt cannot be taken into consideration because the tender has not been submitted in its name and has been submitted in the name of the reorganised company which does not have experience in its name. Conversely there may be a split in a company and persons looking after a particular field of the business of the company form a new company after leaving it. The new company, though having persons with experience in the field, has no experience in its name while the original company having experience in its name lacks persons with experience. The requirement regarding experience does not mean that the offer of the original company must be considered because it has experience in its name though it does not have experienced persons with it and ignore the offer of the new company because it does not have experience in its name though it has persons having experience in the field. While considering the requirement regarding experience it has to be borne in mind that the said requirement is contained in a document inviting offers for a commercial transaction. The terms and conditions of such a document have to be construed from the standpoint of a prudent businessman. When a businessman enters into a contract whereunder some work is to be performed he seeks to assure himself about the credentials of the person who is to be entrusted with the performance of the work. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a company he will look into the background of the company and the persons who are in control of the same and their capacity to execute tile work. He would go not by the name of the company but by the persons behind the company. While keeping in view the past experience he would also take note of the present state of affairs and the equipment and resources at the disposal of the company. The same has to be the approach of the authorities while considering a tender received in response to the advertisement issued on 22-4-1993. This would require that::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 13 wp8537j.2019.odt first the terms of the offer must be examined and if they are found satisfactory the next step would be to consider the credentials of the tenderer and his ability to perform the work to be entrusted. For judging the credentials past experience will have to be considered along with the present state of equipment and resources available with the tenderer. Past experience may not be of much help if the machinery arid equipment is outdated. Conversely lack of experience may be made good by improved technology arid better equipment. The advertisement dated 22-4-1993 when read with the notice for inviting tenders dated 26-4-1993 does not preclude adoption of this course of action. If the Tender Evaluation Committee had adopted this approach and had examined the tender of NHL in this perspective it would have found that NHL, being a joint venture, has access to the benefit of the resources and strength of its parent/owning companies as well as to the experience in database management, sales and publishing of its parent group companies because after reorganisation of the Company in 1992 60% of the share capital of NHL is owned by Indian group of companies namely, TPI, LMI, WML, etc. and Mr Aroon Purie and 40% of the share capital is owned by IIPL a wholly-owned subsidiary of Singapore Telecom which was established in 1967 and is having long experience in publishing the Singapore telephone directory with yellow pages and other directories. Moreover in the tender it was specifically stated that IIPL will be providing its unique integrated directory management system along with the expertise of its managers and that the managers will be actively involved in the project both out of Singapore and resident in India.”

Taking into consideration the observations quoted above of the Apex Court, experience gained by Pukhraj Jain could not be counted as an experience of M/S Rajasthan Transport ,reconstituted::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 14 wp8537j.2019.odt on 10.12.2018, who submitted the bid in question.
15. Scope of judicial review in the case of Tender matter has been laid down by Hon’ble Apex Cout in case of Tata Celluar Vs. Union of India, reported in 1994 (6) SCC 651. The Hon’ble Apex Court has observed as under:- “74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself. 77. 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 powers? 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 powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent 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.::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 15 wp8537j.2019.odt (ii) Irrationality, namely, Wednesday unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind28, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, “consider whether something has gone wrong of a nature and degree which requires its intervention”.

Once it is held that there is no substance in the submission of the petitioner that, the experience of Shri Pukhraj Jain need to be counted as an experience of M/s. Rajasthan Transport constituted on 10.12.2018, then considering the limited scope of judicial review, the decision-making process of rejection of bid does not suffer from arbitrariness.

16. Shri C. B. Dharmadhikari submitted that the act of forfeiture of earnest amount was an arbitrary exercise of power on the part of Respondents. There was no deliberate attempt by the petitioner to mislead the authority regarding any information submitted by the petitioner. There is no mis-representation or wrong information submitted by the petitioner to the respondents requiring action of forfeiture of the earnest amount. Petitioner is therefore entitled to the relief of a refund of earnest amount.::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 :::
16 wp8537j.2019.odt
17. The condition which according to respondents entitle them to forfeit earnest amount is clause 12(v). Clause 12(v) reads thus :- “12(v). In case the L-1 bidder fails to submit requisite documents online as per NIT or if any of the information/declaration furnished by L-1 bidder online is found to be wrong by Tender Committee during the evaluation of scanned documents uploaded by bidder, which changes the eligibility status of the bidder then his bid shall be rejected and EMD of L-1 bidder will be forfeited.”
18. Reading of the aforesaid condition makes it clear that, it is only when information submitted by the bidder is found to be wrong by the Tender Committee, the earnest amount of the bidder is liable to be forfeited. In the facts and circumstances of the present matter, the petitioner could claim that the information submitted by the petitioner as regards the experience of Shri Pukhraj Jain be counted as an experience of M/s. Rajasthan Transport,was his bona fide impression. The said impression by the petitioner about counting of the experience of Pukhraj Jain can be considered as a bonafide impression. It is not the case of the respondents that there was a deliberate attempt or design by the petitioner to get a contract awarded, by submitting false information. The wrong information as contemplated by Clause (v) of the said condition, must be ‘wrong information of fact’ to the knowledge of the petitioner. Since, in the::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 ::: 17 wp8537j.2019.odt present facts and circumstances, the information regarding the counting of experience of Shri Pukhraj Jain cannot be said to be wrong information as contemplated by Clause 12(v) of the Tender condition, the respondents were not justified in forfeiting the earnest amount of the petitioner. Therefore the petitioner is entitled to get back the earnest amount forfeited by the respondents.
19. We, therefore, pass the following order:-

(i) Writ Petition is partly allowed.
(ii) Respondent nos. 1 and 2 are directed to refund an amount of ₹ 15,52,08,000/- and the 17,70,300/- within a period of four weeks from today.
20. Rule is made absolute in aforesaid terms. No order as to costs.

JUDGE JUDGE RR Jaiswal::: Uploaded on – 02/03/2020 ::: Downloaded on – 04/03/2020 03:21:55 :::

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