WP/14896/2008 of Shenyang Furukawa Cable Co. Ltd., a Public Limited Vs Transmission Corporation of Andha Pradesh Ltd., on 31 December 2008

ORDER :

This writ petition is filed seeking a declaration that the action ofthe respondents 1 and 2 – Transmission Corporation of A.P. Limited in opening the price bids of the respondents 3 to 5 herein pursuant tothe Tender Notice No.APT/76/2007 is arbitrary and illegal andconsequently to direct the respondents 1 and 2 to evaluate thetenders strictly in accordance with the eligibility conditions prescribedunder the Tender Notification.

The facts, in brief are as under :

Precedents

The Transmission Corporation of A.P. Limited (hereinafterreferred to as ‘AP TRANSCO’) issued Tender Notice No.APT/76/2007inviting tenders for supply, erection, testing and commissioning of 220KV/132 KV Gas Insulated Sub-Stations at Erragadda (Lot-1) andChilakalaguda (Lot-2) along with supply, laying, testing andcommissioning of 220 KV XLPE Underground Cables with associatedaccessories. As per the said tender notice the bids are to besubmitted in two parts namely Techno Commercial Bid and Price Bid. The bidding by consortium with maximum three members was alsoallowed.

The petitioner, which is a public limited company registeredunder the laws of Peoples of Republic of China, joined as a JointVenture Partner with M/s. Vijai Electricals Ltd., and Xian Shiky HighVoltage Electric Company Ltd., Xian, China and participated in the bidding process for both Lot-1 and Lot-2. Five other bidders, includingthe respondents 3 to 5 herein, also submitted their bids.

The Technical Bids were opened by the AP TRANSCO on 25.03.2008 and by letter dated 27.05.2008 the petitioner wasinformed that its Technical Bid was qualified for both Lots pendingverification of documentary proofs submitted by it. The petitioner wasalso requested to attend the price bid opening on 30.05.2008. On30.05.2008 the price bids of four bidders i.e., the petitioner and therespondents 3 to 5 herein were opened in which the price quoted bythe 3[rd] respondent herein was found to be lowest in respect of both Lot-1 and Lot-2. The prices quoted by the respondents 4 and 5 hereinwere the second and third lowest respectively, whereas thepetitioner’s price was the fourth lowest. On 04.06.2008 M/s. VijaiElectricals Limited which is a joint venture partner of the writpetitioner addressed a letter to the AP TRANSCO alleging that thethree other bidders i.e., the respondents 3 to 5 herein did not meet theprescribed technical specifications and therefore their price bidsought not to have been opened. However, the AP TRANSCO failedto consider the said objection and was proceeding further tofinalize the tenders.

Hence, the present writ petition contending that the bids of therespondents 3 to 5 should have been treated as non-responsive andtheir price bids ought not to have been opened and evaluated sincethey did not meet the essential qualification criteria specified inSection 6 of the Volume 1 of Bidding document. It is also contendedby the petitioner that the conditions of Section 6 of Volume 1 relating toqualification requirements, which are prescribed in accordance withthe purchase manual of AP TRANSCO being the essential conditionsthe respondents 1 and 2 are not empowered to relax the same infavour of the respondents 3 to 5.

In the counter-affidavit filed on behalf of the respondents 1and 2, the allegation that the price bids of the respondents 3 to 5 wereopened by the AP TRANSCO even though they failed to meet theessential qualification criteria prescribed under Section 6 of Volume 1

has been denied. With regard to the alleged relaxation of conditions infavour of the respondents 3 to 5 it is contended that except thedeviation in case of cable accessories manufacture, the technicalevaluation of all the bids was in conformity with the requirements ofthe tender specification and IEC. It is explained that the deviation incase of cable accessories manufacture was allowed in view of the factthat the cost of accessories was a minor portion of the total cost ofcable system (about 20% of the total cable system and about 12% ofthe total lot cost) and moreover the respondents 3 to 5 had submittedtype test reports and satisfactory performance of the total cable systemalong with the accessories they were offering. A warranty for 60 months from the date of commissioning during which period the bidderis totally responsible for cable system has also been given. It is furtherexplained that as there are few manufacturers who make both XLPECables and Accessories, the Technical Committee thought it fit toconsider the bids of the bidders whose cable manufacturers are notmanufacturers of cable accessories. All other requirements of thetender specifications were duly followed ensuring that the project isexecuted at a reasonable cost. It is also claimed that the deviationhad increased the competition in the bid and the same is beneficial tothe AP TRANSCO as competitive rates were obtained. It is furthercontended that similar relaxation from the qualifying requirements wasgiven to the petitioner’s consortium by accepting the type test reports submitted by M/s. Vijai Electricals Limited from Wuhan High VoltageResearch Institute (National Centre for High Voltage Measurementand Quality Inspection and Testing Centre of Electric Equipment,Ministry of Electric Power, China) though it was not one of theInternational Test Laboratories mentioned in the technicalspecification. As a matter of fact, the said violation attracteddisqualification of the petitioner’s bid. However, in order to ensure better competition the Technical Committee considered the petitioner’sbid subject to the condition that they will give an undertaking to conduct type tests in the specified labs as per the tender conditions attheir cost without affecting the delivery schedule if they are successfulbidders. By their letter dated 2.5.2008 M/s. Vijai Electricals Limitedagreed for the same. Thus it is contended by the respondents 1 and 2 that the procedure followed by them in opening the price bids of therespondents 3 to 5 did not suffer from any infirmity.

A separate counter-affidavit has been filed by the respondentNo.3, which was declared as the successful bidder, contending thatits technical bids were processed by the AP TRANSCO as per theestablished practices and procedures and that the allegations made bythe petitioner were not correct. It is also contended that though thetechnical bids were opened on 25.03.2008, the petitioner failed toraise any objection and kept quiet till the price bids were opened andtherefore the present writ petition filed at a belated stage was not bonafide. So far as merits it is pleaded that the difference in the total priceoffered by the petitioner and the 3[rd] respondent was more than Rs.80crores and more over the 3[rd] respondent and its consortium partnershad successfully executed similar projects at different places andtherefore the AP TRANSCO had rightly declared it as the successfulbidder. It is also claimed that the 3[rd] respondent’s Consortium isboth a manufacturer of EHV cables and accessories and thussatisfied Condition No.1 of Section 6. The allegation that theessential tender conditions were relaxed in favour of the respondents 3to 5 has been denied and it is contended that as per the amendedclause the pre-qualification test is not necessary and the AcceleratedAgeing System Test has to be demonstrated before commencing thedelivery of cables without affecting the over all schedule of the project.

The respondent No.5 also filed a counter-affidavit contendingthat the petitioner cannot be allowed to raise an objection on theground of alleged deviations at a belated stage and on that ground alone the writ petition is liable to be dismissed in limini. It is alsopleaded that the 5[th] respondent had complied with all the qualificationrequirements, performance parameters and other criteria as per thetender specifications including the submission of Pre-qualification TestReports as per IEC-62067-2001.

Despite notice, respondent No.4 did not choose to appear.

I have heard the learned counsel for both the parties andperused the material on record.

As could be seen, the main contention urged on behalf of thepetitioner is that the bids of the respondents 3 to 5 being non-responsive to the terms and conditions of the Bidding Document theirtechnical bids are liable to be rejected and the AP TRANSCO oughtnot to have opened their price bids.

According to the petitioner, the respondents 3 to 5 failed to meetthe essential qualification requirements firstly for the reason that themembers of the respondents 3 to 5 Consortiums are manufacturers ofeither cables or accessories but not manufacturers of both EHVcables and accessories as required under Clause 2.0 of Section 6 ofVolume 1. Secondly, the respondents 3 to 5 failed to furnish the TypeTest Reports (Pre-qualification Test Reports) on Complete CableSystem as required under Clause 6.2.1 (C) of Volume-2C.

So far as the first allegation is concerned, Clause 2.0 of Section 6 of Volume 1 of the Bidding Document which runs as under is necessary to be noticed:

Clause 2.0 The bidding is also open to consortium(Maximum three Members) of which one shall be a XLPEcable and accessories manufacturer and one membershall be GIS manufacturer and the other can be a EPCcontractor who shall meet the abovementioned qualifyingrequirements individually or together subject to the following conditions.

… …. … …. … … …

It is alleged by the petitioner that none of the members of therespondents 3 to 5, who submitted their bids as joint venture partners,is the manufacturer of both cables and accessories as mandatedunder Clause 2.0. The said allegation could not be controverted bythe respondents 3 and 5 in their counter-affidavits. However it iscontended on their behalf that the interpretation sought to be given bythe petitioner that one of the members of the Consortium shall be themanufacturer of both cables and accessories is incorrect. Accordingto the respondents 3 and 5, even if the members are the manufacturersof either cables or accessories it is sufficient compliance with Clause2.0.

A plain reading of Clause 2.0 of Section 6 itself makes clear thatwhile allowing bidding by consortium with maximum three members, it is made mandatory that out of three members one shall be amanufacturer of both XLPE Cables and Accessories. It is also relevantto note that Clause-1 of Section 6 of Volume-1 provides that the biddershould be a manufacturer of EHV cables and accessories. It goeswithout saying that the same condition applies even where the bid ismade by a Consortium and therefore it is expressly provided inClause 2.0 that one of the partners of the Consortium shall be themanufacturer of cables and accessories. Hence, the contention of therespondents 3 to 5 cannot be accepted.

Even in the counter-affidavit filed on behalf of the APTRANSCO, the requirement of Clause 2.0 as contended by thepetitioner has not been disputed. As a matter of fact, the ChiefEngineer (Constructions) in paragraph-8 of the counter-affidavit filedon behalf of the AP TRANSCO conceded that there was a deviation so far as the compliance with the requirement that one of themembers shall be a cable and accessories manufacturer. Therelevant portion from the counter-affidavit wherein the deviation wasadmitted and an attempt was made to justify the said deviation may beextracted hereunder:

“I submit that the technical evaluation is inline withrequirements of the subject tender specification andI E C except for deviation in case of cableaccessories manufacture. However the same isconsidered as: (1) The cost of accessories is a minorportion of the total cost of cable system (about 20% ofthe total cable system and about 12% of the total lotcost) (2) The three bidders have submitted type testreports and satisfactory performance of the cablesystem of the total cable system along with theaccessories they were offering and also the long termperformance reports, (3) The Total cable system iswarranted for 60 months from the date ofcommissioning during which period the bidder is totallyresponsible for cable system, and (4) It increases thecompetition in the bid, which is beneficial toAPTRANSCO as competitive rates are obtained.”

Thus it is clear that whenever the bidding is made by aConsortium, it is obligatory that one of its members shall be themanufacturer of both cables and accessories and that the respondents 3 to 5 Consortiums failed to satisfy the said requirement.

The other allegation made by the petitioner is that therespondents 3 to 5 failed to furnish the pre-qualification test reports onComplete Cable System as required under Clause 6.2.1 (C) ofTechnical Specifications in Volume-2C.

The respondents 1 and 2 while denying the petitioner’sallegation contended that as per the amended Tender Specificationsthe requirement of furnishing pre-qualification test reports is deletedand as such it is sufficient if type test reports are furnished.

Similar stand has been taken by the respondents 3 and 5 and itis claimed that they had complied with all the qualificationrequirements including submission of pre-qualification test reports asper IEC-62067.

Clause 6.2 of Volume-2C as it stood prior to amendment aswell as after amendment may be extracted hereunder:

Prior to amendmentAfter Amendment

It is true that as per the amendments made to the TenderSpecifications in the Pre-Bid Meeting held on 31.10.2007 the words“and pre-qualification test reports” were deleted in Clause.6.2 of Volume-2C of the Bidding Document. Thus the bidders are required tofurnish only the type test reports for XLPE cables and accessories ofperiod not earlier than 2002. In case the test reports of period earlierthan 2002 are furnished, the bidder has to conduct and submit thetype test reports as per latest IEC Standards before commencing thedeliveries without affecting the specified delivery schedules. However, it is to be noted that Clause 6.2.1 (C) which provides fortype tests on cable system remained unamended and sub-clause (b)of Clause 6.2.1. (C) mandates pre-qualification tests on completecable system as per IEC-62067. Thus, even after the amendmentdated 31.10.2007 so far as complete cable system is concerned,furnishing of pre-qualification tests reports are mandatory unlike XLPEcables and accessories.

The fact that the respondent Nos.3 & 5 failed to furnish suchpre-qualification tests reports along with their bids could not bedisputed by the AP TRANSCO in their counter-affidavit, however itis explained as under in paragraph-9 :

“In reply to the averments made in para-8 of theaffidavit, I submit that the PQ test is not prescribed asmandatory in the tender specification and notmandatory as per the note mentioned under Clause13.2 of IEC-62067 which states “The prequalificationtest may be omitted if an alternative long term testhas been carried out and satisfactory serviceexperience can be demonstrated”. As no alternativelong term test has been prescribed by IEC thecertificate of satisfactory operational performance ofthe 40% of the total tendered cable system for atleast 2 years is considered as long term test andhence the pre-qualification test is not insisted in thepresent specification. I submit that M/s. InduConsortium and M/s. EMCO Consortium havesubmitted P.Q. test reports as per IEC_62067 –2001and M/s. BGR Energy Systems has informed thattheir cable is under testing and the reports will be submitted before Dec-08.”

As could be seen, the pre-qualification tests are mandatoryeven according to the respondents, however the same can be omittedif an alternative long term test has been carried out and satisfactory service experience is demonstrated.

Admittedly no such alternative long term test was carried outin lieu of pre-qualification test prescribed under Clause 6.2.1 (C) (b).In the counter-affidavit filed on behalf of the respondents 1 & 2, it isstated that the respondents 3 and 5 had only submitted the certificateof satisfactory operational performance of the 40% of the totaltendered cable system for two years and the same is sufficient.

The learned counsel for the petitioner vehemently contendedthat satisfactory service of cable system for two years cannot satisfythe requirement of the accelerated ageing test i.e., the pre-qualification test on complete cable system as per IEC-62067.

Though this Court lacks technical expertise to express anyopinion as to the correctness of the rival contentions, the fact remainsthat even as per the note appended to Clause 13.2 of IEC-62067 thepre-qualification test as required under Clause 6.2.1 (C) (b) can beomitted only where an alternative long term test has been carried out apart from demonstrating satisfactory service experience. Admittedlyno such alternative long term test has been carried out in the presentcase. So far as demonstration of satisfactory service experience isconcerned, even according to the AP TRANSCO the 3[rd] respondent’scable was under testing and the reports were to be submitted beforeDecember, 2008 which shows that the said test reports were notsubmitted along with the 3[rd] respondent’s bid. Hence, the secondallegation made by the petitioner is also well founded.

In the circumstances, the question that arises for consideration is whether the action of the AP TRANSCO in opening the price bids ofthe respondents 3 to 5 even though they did not satisfy the eligibilitycriteria is sustainable in law.

Whereas the learned counsel for the petitioner vehementlycontended that the non-compliance with the qualification requirementsunder Clause 2.0 of Section 6 of Volume 1 and Clause 6.2.1 (C) (b) ofVolume 2C had rendered the bids of the respondents 3 to 5 non-responsive and consequently their price bids cannot be opened, thelearned counsel for the respondents contended that the failure of therespondents 3 to 5 to satisfy the said conditions did not render theirbids non-responsive and that it is always open to AP TRANSCO towaive such conditions since they are not essential conditions. Insupport of the said contention, the respondents relied upon Clause24.6 of Section 2 of Volume 1 of the Bidding Document under whichthe purchaser (AP TRANSCO) reserved the right to waive any minorinformality or irregularity in a Bid which does not constitute amaterial deviation.

It is contended on behalf of the respondents that Clause 2.0 ofSection 6 of Volume 1 and Clause 6.2.1 (C) (b) of Volume 2C are notessential conditions of eligibility and therefore the relaxation of thesame does not constitute a material deviation. Thus, it is contendedthat the relaxation granted in favour of the respondents 3 to 5 did notsuffer from any infirmity and the AP TRANSCO had rightly opened theprice bids of the respondents 3 to 5.

For proper appreciation of the above contentions, it isnecessary to refer to relevant Clauses as under :

Clause 13. Documents establishing Bidder’sEligibility and Qualifications 13.1 Pursuant to Clause 9 above, the Bidder shallfurnish, as part of its Bid, documents establishing theBidder’s qualifications to perform the contract.

13.2 The documentary evidence of the Bidder’squalification to perform the contract shall establish tothe purchaser’s satisfaction:qualification to perform the contract shall establish tothe purchaser’s satisfaction:

(a) that the Bidder has the financial, technical andproduction capability necessary to perform theContract meeting the criteria outlined in thequalification requirements at Section 6 andBidders should furnish information on their pastperformance as per proforma in Section 7 (Form8); andproduction capability necessary to perform theContract meeting the criteria outlined in thequalification requirements at Section 6 andBidders should furnish information on their pastperformance as per proforma in Section 7 (Form8); and (b)that, in the case of a Bidder not doing businesswithin the Purchaser’s country, the Bidder is orwill be (if successful) represented by an agent inthat country equipped and able to carry out theSupplier’s maintenance, repair and spare partsstocking obligations prescribed by the Conditionsof the Contract and/or Technical Specifications.within the Purchaser’s country, the Bidder is orwill be (if successful) represented by an agent inthat country equipped and able to carry out theSupplier’s maintenance, repair and spare partsstocking obligations prescribed by the Conditionsof the Contract and/or Technical Specifications.

(c) Consortium/Joint venture agreement.

13.3 Each Bidder shall submit only one Bid either byhimself, or as a partner with other firms. A Bidder whosubmit or participates in more than one Bid (other thanalternatives) shall be disqualified.

Clause 14. Documents establishing Good’s Eligibilityand conformity to Bidding Documents 14.1 Pursuant to Clause 9, the Bidder shall furnish, aspart of its Bid, documents establishing the eligibilityand conformity to the Bidding Documents of allGoods and Services, which the Bidder proposes tosupply under the Contract.part of its Bid, documents establishing the eligibilityand conformity to the Bidding Documents of allGoods and Services, which the Bidder proposes tosupply under the Contract.

14.2 … .. .. .. . .. …14.3 … .. .. … … …. …

14.4 … … …. …. … …. …

Clause 15. Bid Security

15.1 Pursuant to Clause 9, the Bidder shall furnish, aspart of its Bid, Bid Security in the amount not lessthan amount indicated against each lot in IndianRupees or equivalent US dollars, as per the formatas provided in Section 7 (Form-2).part of its Bid, Bid Security in the amount not lessthan amount indicated against each lot in IndianRupees or equivalent US dollars, as per the formatas provided in Section 7 (Form-2).

… … .. .. .. . .. …

Clause 24. Preliminary Examination

24.1 The Purchaser will examine first theEnvelope 1 to assess essentially whether Bid Security and Bidder’s Qualification & Technicalrequirement are satisfactory to Clauses 13, 14 and15 hereof respectively. Bid not satisfying this criteriawill not proceed to opening and evaluation of theEnvelope 2.

24.2 … … … … .. …

24.3 … … … … … …

24.4 Prior to the detailed evaluation, pursuant toClause 26, the Purchaser will determine thesubstantial responsiveness of each Bid to theBidding Documents. For purpose of these Clauses, asubstantially responsive Bid is one of whichconforms to all the terms and conditions of theBidding Documents without material deviations. ThePurchaser’s determination of a Bid’s responsivenessis to be based on the contents of the Bid itself withoutrecourse to extrinsic evidence.

24.5 Bid determined as not substantiallyresponsive will be rejected by the Purchaser andmay not subsequently be made responsive by theBidder by correction of the non-conformity.24.6 The Purchaser may waive any minorinformality or non-conformity of irregularity in a Bid,which does not constitute a material deviation,provided such waiver, does not prejudice or affectthe relative ranking of any Bidder. Deviations from orobjections or reservation to critical provisions, suchas those concerning of Bid Security (ITB clause 15),Applicable law (GCC clause30) and Taxes andDuties (GCC clause 32) will be deemed to be amaterial deviation.

While placing much reliance upon Clause 24.1 and thedefinition of material deviation in Clause 24.6 of Section 2, it iscontended on behalf of the respondents that Clauses 13, 14 & 15 of Section 2 and Clauses 30 & 32 of GCC alone are essential conditionsthe non-compliance of which shall result in rejection of the technicalbids.

There can be no dispute that the tender conditions in theNotification Inviting Tenders can be classified into two categories i.e.,the conditions which lay down the essential conditions of eligibility requiring strict compliance and the conditions which are merelyancillary or subsidiary with the main object to be achieved by thecondition. It is true that the non-compliance of the second category ofconditions does not disqualify a tenderer. As explained by the ApexCourt in M/s. G.J. FERNANDEZ v. STATE OF KARNATAKA[[1]]and PODDAR STEEL CORPORATION v. GANESH ENGINEERINGWORKS[[2]]’S case, the pre-conditions of eligibility which are essentialconditions cannot be deviated from and are required to be enforcedrigidly, whereas it is open to the authority issuing the tender to deviatefrom and not to insist upon the strict literal compliance of the otherconditions in appropriate cases.

The law is also well-settled that the Tender Inviting Authoritycan fix its own terms of the Invitation to Tender and it is free to grantany relaxation for bona fide reasons if the tender conditions permitsuch 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 fromthem arbitrarily {vide AIR India Limited vs. Cochin International AirportLimited [(2000) 2 SCC 617} }.

In the case on hand, Clause 24.6 of Section 2 of Volume 1 ofthe Bidding Document permitted relaxation of tender conditions. However, it is made clear that only minor irregularities in a bid which

do not constitute a material deviation and particularly where suchwaiver does not prejudice or affect the relative ranking of any biddercan be relaxed or waived. Though some of the material deviations are specified in Clause 24.6, the same are not exhaustive as could beseen from the language of Clause 24.6 itself. Hence, there is noreason to hold that the conditions referred to in Clause 24.6, thedeviation of which is not permissible, alone are essential conditions. Similarly the contention of the respondents that Clauses 13, 14 & 15 of Section 2 are the only essential conditions which are required to beenforced rigidly is also without any substance.

Then the next question that requires consideration is what arethe essential conditions of eligibility in the case on hand.

The Bidding Document which is the subject-matter of thepresent writ petition consists of Volume 1 to Volume 2C prescribingcontract terms, goods and services required and bidding proceduresamong others. Volume 1 of the Bidding Document deals withcommercial and general aspects. As per Clause 5 of Section 1(Invitation for Bids) of Volume 1, bids are to be submitted in two partsviz: PART-A: Techno-Commercial Bid containing complete technicaland all commercial aspects except price, and PART-B: Price Bidcontaining price element only.

Clause 22.1 of Section 2 (Instructions to Bidders ) of Volume1 provides that the purchaser will open the Envelope 1 (qualifications& technical bid) first. Clause 24.1 of Section 2 further provides thatthe purchaser will examine first Envelope 1 to assess essentiallywhether bid security and bidders’ qualification & technicalrequirement are satisfactory to Clauses-13, 14 & 15 respectively andthat the Bids not satisfying this criteria will not be considered and theEnvelope-2 of such bidders will not be opened and evaluated. Clause 13.2 (a) of Section 2 stipulates that the bidder shall furnish along with his bid all the documents establishing that the bidder has the financial, technical and production capability necessary to perform the contract meeting the criteria outlined in the qualificationrequirements at Section 6 of Volume 1.

The qualification requirements which are required to besatisfied by every bidder are specified in Section 6 of Volume 1. Thesaid requirements, as they stand after the amendment in the pre-bidmeeting held on 31.10.2007, are as under :

Qualification Requirements

1. The bidder should be a manufacturer of EHVcables and accessories and GIS Switchgear equipmentsystems, who must have designed, manufactured,tested, supplied, laid and commissioned successfully220 KV or higher voltage cable and accessories and220 KV or higher voltage GIS systems and shall meetthe following criteria.

For XLPE cable

(a) The bidder should be a manufacturer of EHVcables and accessories, who must have designed,manufactured, tested, supplied, laid and commissionedsuccessfullyat least 80%of the total tendered quantity of220 KV or higher voltage cable and accessories indicatedin the “Schedule of Requirement” in one continuousperiod of 12 months of the last five years.At least 40%ofsimilar material offered against this Specification shouldbe in successful operation since 2 years as on the date ofopening of the Bid.

(b) The bidder shall furnish Type Test reports for220 KV or Higher Voltage XLPE Cables andAccessories. The type tests must have been conductedon the cables & accessories as per IEC 62067, from thereputed International Test Laboratories as mentioned intechnical specification not earlier than 2002. The offers,which shall not confirm the above, shall be treated asNon-Responsive. (emphasis supplied).

However if a bidder submits the test reports ofperiod earlier than 2002 the bid will be considered for evaluation subject to condition that bidder shall submit anundertaking that bidder will conduct and submit the typetest reports as per latest IEC standards at his cost beforecommencing the deliveries without affecting the deliveryschedule as specified. If he is a successful bidder.

… … … .. …. … … ….

… … … … … …. … ….

On a reading of the qualification requirements at Section 6 ofVolume 1 together with Clause 13.2 of Section 2, it is clear that thequalification requirements found in Section 6 are the essentialconditions of eligibility which the bidder is bound to satisfy so as toestablish his capability to perform the contract. Clause 1 (b) ofSection 6 further declared that the non-compliance of thequalification requirements found in Section 6 shall render the bidsnon-responsive. Thus, it is apparent that the said qualificationrequirements are the essential conditions requiring strict compliance.In other words, the deviation from such conditions would amount to amaterial deviation which is impermissible under Clause 24.6 ofSection 2.

For the reasons stated above, I am of the opinion that what isprescribed in Section 6 of Volume 1 is the essential eligibility criteria which the bidder is bound to satisfy so as to consider the price quotedby him. As noticed above, since the respondents 3 to 5 did not satisfy the eligibility criteria under Clause 2.0 of Section 6 of Volume 1and Clause 6.2.1 (C) (b) of Volume 2C of the Bidding Document, which are the essential conditions of eligibility, their price bids contained in Envelope-2 cannot be opened and evaluated. Apparently, the AP TRANSCO failed to identify the essentialconditions of eligibility specified in Section 6 of Volume 1 and proceeded on a wrong assumption that the relaxation of the saidconditions is permissible under Clause 24.6 of Section 2. Such relaxation of the essential conditions of eligibility in favour of therespondents 3 to 5 in breach of the norms and standards prescribedamounts to arbitrary exercise of power apart from being discriminatorysince it resulted in exclusion of other persons similarly situated formtendering for the contract. Thus the entire decision making process isvitiated by arbitrariness.

The law is well-settled that the State or its Instrumentalities have the public duty to be fair to all concern and if the decisionmaking process of the State or its Instrumentalities is found to bevitiated by unreasonableness, arbitrariness or mala fides, it is open tothis Court to interfere in exercise of its discretionary power underArticle 226 of the Constitution of India.

The AP TRANSCO being an instrumentality of the State isbound to adhere to the standards and procedure laid down by it underthe Tender Notice and it is obligatory on its part to evaluate the bidsreceived strictly in accordance with the conditions prescribedparticularly with regard to the qualification requirements which areessential conditions.

Even assuming that the petitioner Consortium failed to submit the Type Test Reports from the International Test Laboratories asmentioned in the Technical Specification and that the AP TRANSCOhas relaxed the said condition in favour of the petitioner, the samecannot be a valid ground to permit the AP TRANSCO to relax the essential qualification requirements in favour of the other bidders.

I am also unable to agree with the contention raised by therespondents that the petitioner cannot be granted any relief since thewrit petition was filed at a belated stage long after opening of thetechnical bids. The material on record shows that though thetechnical bids were opened on 25.03.2008 the petitioner and other bidders were informed by the AP TRANSCO only on 27.05.2008 thatthe technical bids were qualified pending verification of thedocumentary proofs and calling upon them to attend the price bidopening on 30.05.2008. After the price bids were opened on30.05.2008, one of the joint venture partners of the petitioner Consortium addressed a letter to the AP TRANSCO on 04.06.2008 making a specific allegation that the respondents 3 to 5 herein didnot meet the prescribed technical specifications and therefore theirprice bids ought not to have been opened. Since the AP TRANSCOfailed to consider the said objection, the present writ petition came tobe filed on 04.07.2008. Hence, no laches can be attributed to thepetitioner and the contention that the writ petition is not bona fide isuntenable.

Accordingly, the Writ Petition is disposed of declaring theimpugned action of the respondents 1 and 2 in opening the price bidsof the respondents 3 to 5, who failed to comply with the essentialeligibility conditions prescribed under the Tender Notice the relaxationof which is impermissible, as arbitrary and illegal. No costs.

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G. ROHINI, J.

Dt. 31.12.2008

gbs

[1]AIR 1990 SUPREME COURT 958AIR 1990 SUPREME COURT 958

[2]AIR 1991 SUPREME COURT 1579AIR 1991 SUPREME COURT 1579