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TMI Blog2005 (10) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... ay a compensation of ₹ 1 crore to the Writ Petitioner. This was on the finding that the contract based on the tender floated by respondent No.1, the West Bengal Power Development Corporation Limited (hereinafter referred to as 'the Power Corporation') ought to have been awarded to the writ petitioner-L T and the award of the same to respondent No.11 Subhash Projects was illegal, but it was inexpedient at that stage to set aside the award of the contract and the least that should be done was to direct Subhash Projects to disgorge at least some portion of the profit it would have earned out of the illegally awarded contract and make over the same as compensation to the writ petitioner-L T, who ought to have been awarded the contract. Feeling aggrieved, respondent No.11 in the Writ Petition, Subhash Projects, has filed Civil Appeal No. 5030 of 1999. M/s Larson Toubro, the writ petitioner and the appellant before the High Court has filed C.A. No. 5031 of 1999 submitting that the High Court having found that the award of the contract to Subhash Projects was illegal, and it should have been awarded to L T, ought to have gone ahead and struck down the award of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplications strictly limited to the seven aspects suggested at the techno-commercial evaluation and that bidders who agreed to withdraw the price variation clause must submit a positive price implication for the same. It may be noticed here that while L T claims to have made a firm bid as per its original tender, Subhash Projects had resorted to price variation clause and had not indicated the positive price implication in its tender. 3. Pursuant to the communication in that behalf issued by the Power Corporation regarding the seven deviations and the clarifications relating to the work made at the conferences, Subhash Projects made a firm bid but increased its tender amount. L T indicated an increase of ₹ 35 lakhs in view of the seven deviations mentioned in the communication, but indicated that it was willing to reduce the original tender amount by ₹ 64 crores in view of the clarifications issued about the work and in view of the proper understanding of the real scope of the work. Thereafter, the price bids were opened. As per the original price offered, L T was placed as the fifth lowest and Subhash Projects though it had resorted to price variation in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was allowed. Thus, pending the Writ Petition, Subhash Projects did a part of the work, obviously without any claim in equity and subject to the result of the Writ Petition. Though, the learned single Judge stated that, although he had no doubt that the Power Corporation, ought not to have succumbed to the pressure of the Minister of State for Power, and awarded the contract to Subhash Projects, it was not necessary to interfere with the award of the contract in the peculiar circumstances of the case, since before the contract was actually awarded to Subhash Projects, Subhash Projects was persuaded to reduce the tender amount to just below that of the sum quoted by L T and it was not in public interest to interfere since a part of the work had already been done by Subhash Projects. This judgment was modified by the Division Bench which also found that the award of contract to Subhash Projects was at the pressure of the Union Minister of State for Power, undue pressure at that, and that though the contract itself was not liable to be interfered with, Subhash Projects which had secured the contract by dubious means, was liable to be compelled to disgorge at least a portion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and award of the contract. There was, therefore, no justification in the High Court directing Subhash Projects to pay compensation to L T on the basis that the contract ought to have been awarded to L T. To a question put to him specifically, he has submitted that in case, at the end of it, this court came to the conclusion that the submissions on behalf of the Subhash Projects are not sustainable, he would prefer the judgment of the Division Bench of the High Court to be left as it is, rather than the accepting of the appeal filed by L T and setting aside the award of the contract to Subhash Projects since the adoption of such a course may lead to other consequences which would be more serious as far as Subhash Projects is concerned. 6. On behalf of the Union of India, the learned Additional Solicitor General submitted that the inference by the High Court that there was undue interference by the Minister of State for Power in the Union Government was not justified. Learned counsel submitted that the strong observations made are not warranted in the circumstances of the case. He submitted that the Minister had acted only in public interest and he had no axe to grind in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken that the reduction offered by L T should not be taken note of, Subhash Projects was permitted to reduce its offer to a figure little below that offered by L T and that the whole exercise was mala fide and was at the instance of the Minister of State for Power in the Union Government and the action in that behalf has been rightly found to be not proper by the High Court. He pointed out that the learned single Judge has also held that pressure had been brought to bear on the Power Corporation by the Minister of State for Power in the Union Government. He submitted that logically, the award of contract to Subhash Projects should be set aside and it should be directed that the contract be awarded to L T. As regards the appeal C.A. No. 5030 of 1999 filed by the Subhash Projects, learned counsel submitted that in any event, there was no reason to interference with the judgment of the High Court awarding a sum which was not even 10 per cent of the profits that Subhash Projects would have earned out of the contract. He referred to the decision in M/s A.T. Brij Paul Singh Ors. Versus State of Gujarat [(1984)4 SCC 59] to submit that in such cases, the profit could be normally es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should have been ignored cannot, therefore, be accepted. In any event, when after consulting its own consultants and the independent consultants appointed by OECF and based on the evaluation of its own Tender Evaluation Committee, the Power Corporation placed L T as the lowest tenderer, there was no justification at all in the Ministry of State for Power harping on that aspect, on the facts of the case, even without obtaining a proper opinion from OECF and Central Electricity Authority after appraising them of all the relevant facts. The persistence of the Ministry of State for Power and the manner of it, in the circumstances, looks strange. 9. Even as regards Subhash Projects, it was given an opportunity to make a firm offer which, in fact, it was bound to do on the terms of the notice inviting tenders and it was also given an opportunity to reduce its price even from the one subsequently quoted by it as its firm offer, before the award of the contract to it. Therefore, this was a case where in any event, all the tenderers should have been invited and given an opportunity to reduce their bids before accepting the most competitive of them in public interest and in the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaken by the evaluation committee and the opinions expressed by the other responsible bodies and a reappraisal of those materials, only supports the conclusion of the Division Bench on the matters in controversy. It may be noticed that the learned single Judge had also rejected the contentions of Subhash Projects, and had held that it was difficult to understand as to how the Power Corporation overlooked the original defect in the tender of Subhash Projects which included a price variation clause and not a firm price as stipulated and how it held negotiations only with it at the price bid stage when Subhash Projects admittedly lowered its bid so as to make its offer nearer to the offer of L T, despite the restriction in that regard as contained in OECF letter dated 1.7.1996 made much of to support the contract given to it and how Subhash Projects was permitted to enter into sub-contracts with other contractors, and that too, even prior to the entering into an agreement by Subhash Projects itself. The learned single Judge had also found that in any event, price variation became necessary in view of the alterations, amendments and clarifications to the tender schedule. The Divisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, this Court permitted the Power Corporation to return the Fixed Deposit Receipt to Subhash Projects subject to the condition that Subhash Projects through its Managing Director will execute an undertaking before the Registry of this Court to refund any amount that becomes payable in the event of the above appeal being dismissed by this Court within four weeks from that date. The Subhash Projects has, thus, got back the Fixed Deposit Receipt for ₹ 1 crore in the light of the undertaking given by Subhash Projects through its Managing Director. Pursuant to the order of 8.8.2003 and in view of our conclusions, Subhash Projects has to be directed to deposit a sum of ₹ 1 crore in this Court, so that the same could be disbursed to L T. Subhash Projects has had the benefit of the money which should have been disbursed to L T in the light of the directions of the High Court, which we have confirmed. So, Subhash Projects should be directed to pay some reasonable interest to L T for the amount. We feel that interest at the rate of five per cent per annum would be reasonable under the circumstances. We, therefore, direct Subhash Projects to deposit in this Court within fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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