WP/13037/2008 of M/s. TRF Limited, a company incorporated under the Vs M/s. A.P.GENCO on 30 December 2008

O R D E R:

This writ petition is filed seeking a Mandamus declaringthe action of the 1[st] respondent in canceling the tender issued undertender specification No. PCT-R5/07-08 in December, 2007 vide Letterdated 30.5.2008 as arbitrary, illegal and violative of Article 14 of theConstitution of India; consequently to set aside the same and direct therespondents to re-initiate the tendering process with the petitioner andaward the contract to it.

The case of the petitioner is that for the purpose ofestablishing coal handling plant, the 1[st] respondent issued tenderspecification bearing No.PCTR5/07-08 in December, 2007 calling fortenders for the design, engineering, manufacture, supply, testing atmanufacturer’s works, inspection, packing, forwarding, transit, insurance,delivery at site, erection, testing and commissioning of coal handling plantwith all accessories and 12 months operation and maintenance. Pursuantto the same, though several organizations were interested in participatingin the tender process, at the stage of filing of bids there were only twotenderers, namely, the petitioner and M/s. Techpro. The said M/s. Techprowas also disqualified at the pre-qualification stage and the petitioner was

the sole tenderer for the contract. After the analysis, the price bid wasopened on 28.4.2008 and the petitioner was called upon by 1[st]respondent to attend a meeting with the officials of 1[st] respondent on28.4.2008 for the post bid clarifications. The petitioner accepted,unconditionally, all the clarifications raised by 1[st] respondent and alsoagreed to give discount of Rs.65.00 lakhs on the tender price. Thevariations were referred to the consultants – M/s. DESEIN Consultants aswell as the Technical Scrutiny Committee – and both of them haveagreed, in principle, for the change of technical specifications andaccepted the discount offered by the petitioner. The technical consultantsarrived at a figure of Rs.75 crores excluding the taxes, duties etc. Thepetitioner quoted a price of Rs.99.95 Crores inclusive of all taxes andduties. Thereafter, the technical scrutiny committee, after taking intoconsideration the taxes etc. estimated the tender at Rs.102.482 Croresand the evaluated price with the alternative proposal for alternativespecifications was estimated at Rs.101.853 Crores. Thus, the pricequoted by the petitioner is almost at par with the evaluated price.However, the petitioner received a letter issued by 1[st] respondent dated30.5.2008 informing that the tender had been cancelled.

The grievance of the petitioner is that the persons whocould not participate in the tender due to non-possessing of requisiteexperience in undertaking such projects have prevailed upon 1[st]respondent and its officials to scuttle this tender to enable the firstrespondent to change the pre-qualification requirements and to enablethe unqualified persons also to participate in the next round of tendering.The cancellation of the tender for the coal handling plant withoutassigning any reason and without any just cause is highly arbitrary andviolative of Article 14 of the Constitution of India. Hence, this writ petition.

The respondents have filed counter affidavit denying theallegations made by the petitioner. Though they have admitted that the

petitioner has quoted Rs.99.95 Crores for execution of the entire packageand offered a discount of Rs.63 lakhs in view of minor technicaldeviations from original specification, it is stated even prior to opening ofthe price bid of the petitioner, M/s. Desein Pvt. Ltd., New Delhi, Technicalconsultants for the project have furnished the revised estimate for thesubject tender vide their letter dated 19.4.2008, fixing revised estimate @Rs.75 Crores. The original estimated price furnished by the consultantsduring October 2007 was Rs.45 Crores. There is an increase of 30 crores(66%) within a span of five months. The subject proposal was put up forconsideration of the Board of A.P. Genco, which has opined that the pricequoted by the bidder is on very high side than the original estimated priceof Rs.45 crores and refused to accept the proposals and cancelled thetender by directing to re-tender the subject work by relaxing the tenderconditions so as to have more competition. In view of the said decision ofthe Board, vide letter dated 14.5.2008 the petitioner was informed aboutthe cancellation of the tender and the EMD was also returned. As thepetitioner was still pursuing vide letters dated 17.5.2008 and 28.5.2008, itwas informed vide letter dated 30.5.2008 that the tender had already beencancelled and no further correspondence would be entertained. Theallegation made by the petitioner that the tender has been cancelled forextraneous reasons and to accommodate persons who were not qualifiedis also denied and it is stated that the tender was cancelled only onaccount of exorbitant price quoted by the petitioner over and above theestimated price and in the public interest.

Learned senior counsel Sri D. Prakash Reddy, appearingfor the petitioner, strenuously contended that the petitioner quoted a priceof Rs.99.95 Crores inclusive of all taxes and duties and, in fact, thetechnical consultant of the respondent-Board arrived at Rs.75.00 Croresexcluding the taxes and duties. Thus, if the taxes are included, it wouldcome to the same figure as was quoted by the petitioner i.e. Rs.99.95

Crores (round about Rs.100 Crores). In fact, the technical scrutinycommittee, after taking into consideration the taxes etc., estimated thetender at Rs.102.482 Crores and evaluated the price with alternativeproposal with alternative specifications, at Rs.101.853 Crores. Thus, theprice quoted by the petitioner is almost at par with the evaluated price.Therefore, there was no necessity for cancellation of the tenders, lookingfrom any angle. Learned senior counsel further contended that only toprefer some 3[rd] parties who are disqualified in the original tender, thetender conditions are relaxed and the respondent-Board has takendecision to re-tender the subject work and this is sought to be justified bysaying that there will be more bidders to obtaincompetitive price;otherwise, there was no necessity of canceling the tender offered by thepetitioner, particularly, when it was recommended by the Committee to therespondent-Board. Therefore, the action of the respondents in cancelingthe earlier tender is arbitrary and illegal.

On the other hand, learned counsel for the respondent-Board Sri K. Chidambaram reiterated the same stand as was taken in thecounter and submitted that the contention of the petitioner that the tenderwas cancelled to suit certain disqualified persons etc. is all imagination,unfounded and baseless. Even if the technical consultant and thetechnical committee had recommended for acceptance of the tender of thepetitioner, it is not obligatory on the part of the respondent-Board to do so.Admittedly, there was only one tenderer who remained qualified i.e. thepetitioner; therefore, only to have transparency and to have more biddersin order to obtain competitive price, the same was cancelled and decisionwas taken to re-tender the subject work. The writ petition is devoid ofmerits and liable to be dismissed.

I have given my earnest consideration to the respectivesubmissions made by the learned counsel on either side, perused theimpugned order and other material available on record.

Admittedly, the petitioner quoted Rs.99.95 Crores forexecution of the entire package and also offered a discount of Rs.63.00lakhs in view of minor technical deviations from original specifications.The price was evaluated at Rs.102.482 Crores after including the cost ofcertain items which shall be supplied free of cost to the contractor as perthe specifications and the said price was evaluated at Rs.101.853 Croresafter deducting the discount of Rs.63.00 lakhs offered by the petitioner.The technical consultant for the project had sent the revised estimate forthe subject tender, vide letter dated 19.4.2008, estimating the price atRs.75.00 Crores, excluding the taxes. Further, the technical committeealso recommended for acceptance of the bid by the respondent-Board.Therefore, as is submitted by the learned senior counsel appearing for thepetitioner, the fact that the price quoted by the petitioner is almost at parwith the evaluated price, cannot be doubted and disputed. Thus, it cannotbe said that the price quoted by the petitioner was exorbitant and over andabove the estimated price, therefore, the tender was cancelled in thepublic interest.

Further, absolutely there are no reasons furnished forcancellation of the tender except saying that on 14.5.2008 the petitionerwas already informed that the tender was cancelled and no furthercorrespondence can be entertained in the matter. However, in the counteraffidavit, the respondents sought to justify the cancellation on the groundthat to have more bidders to obtain competitive price and since thepetitioner was the only party qualified and available as per the tenderconditions, the earlier tender was cancelled and decision was taken to re-tender the subject work by relaxing the tender conditions. From this, whatneeds to be gathered is that there is some sort of extraneousconsideration for canceling the tender and seeking to re-tender thesubject work by relaxing the tender conditions, making the alreadydisqualified persons eligible for being participated in the fresh tenders.

Therefore, the needle of suspicion indicates rather shrowds against thecourse of action adopted by the respondents in canceling and splitting thetender and inviting fresh tenders.

In the above circumstances, the writ petition is disposed ofdirecting the respondents to re-consider the case of the petitioner withoutreference to the impugned order of cancellation dated 30.5.2008, takinginto account all the circumstances into consideration, namely, offer madeby the petitioner, advise of the technical consultant and the technicalcommittee to the respondent-Board, particularly, in the light of the fact thatthe price quoted by the petitioner is almost at par with the evaluated price.The respondents shall take up this exercise and complete the samewithin four weeks from the date of receipt of a copy of this order andcommunicate the same to the petitioner. Till such time, the tenders, if any,called for shall not be finalized and given effect to.

The writ petition is accordingly disposed of. No order as to costs.

C.V. RAMULU, J.