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TMI Blog2017 (10) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractors, Sub-contractors, General Construction, Builders, Engineers, Mechanical, Electrical, Chemical, Civil, Irrigation, the business of erection, establishing, managing, maintenance, operation and repair of mobile towers in India or abroad and the laying of optical fiber cable, development, demolition, re-erection, alteration, repair, remodel or any other work in connection with any building or building scheme, roads, docks, ships sewers, bridges, canals, wells, springs, dams, power plants, reservoirs, embankments, railways, irrigations, reclamations, improvements, sanitary, water, gas, electric lights, telephone, telegraphic, television, and power supply works and also other structural work of any kind and to prepare estimates, designs, plants, specifications or models and to carry on the business of advisers, consultants, planners or managers in connection with mobile towers in India. While so, on 29.10.2015, BSNL issued the NIT for the service of outsourcing of operations and Maintenance (O&M) activities of passive infrastructure along with Sales and Marketing (S&M) work of non allocated BSNL tower sites in 21 Circles in cluster form. 3. On 27.11.2015, the petitioner, Prata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies. (Copy of object clause is enclosed herewith). i. M/s Pratap Technocrats proprietorship concern was under 100% ownership of Mr. Devendra Singh Shekhawat and in M/s Pratap Technocrats Private Limited (Earlier M/s Pratap Technocrats), ownership of Mr.Devendra Singh Shekhawat is 99.55%. ii. External Credit Rating CRISIL has also reported the above facts in their credit rating report for SME issued to M/s Pratap Technocrats Private Limited (Copy of report enclosed herewith). iii. All the administrative decisions are now been taken by the Board of the company M/s Pratap Technocrats Private Limited. iv. M/s Pratap Technocrats proprietorship concern has no more existence and all the new tender are being applied in the name of company only on the basis of technical and financial credential of earlier M/s Pratap Technocrats and all the existing contracts in the name of M/s Pratap Technocrats have already been got converted in name of company. M/s. Pratap Technocrats Private Limited or under process of conversion. On the above facts it is. cleared that the company "Pratap Technocrats. Private Limited" company incorporated under Companies Act, for converting proprieto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and likely expense of the service it seeks from private providers, rather than the form, i.e., whether it was a company for the last three years or not. Elaborating on this issue, it is submitted that as long as a concern has the quantitative requisite experience of providing services reflecting a cumulative turnover of Rs. 100 crores for the three past years, the continued composition of that concern should not be relevant. Illustrating this, it is urged that when a company that might have such experience is taken over, by complete share transfer by another company or individual, who might never have any experience, nevertheless it is deemed compliant and eligible; in the same manner, when a sole proprietorship, prospers and transforms into a private limited company, to say that the erstwhile concern's experience cannot be linked to that of the new company, or taken into consideration for determining eligibility, would be illogical and arbitrary. 6. Ms. Bhati relied on New Horizons Ltd. v. Union of India, (1995) 1 SCC 478, to say that the Supreme Court indicated the correct approach in interpreting terms of an invitation to tender, to the following effect: "the requirement rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent BSNL, argued that the petitioner's bid had to be construed in the light of the tender conditions. BSNL also produced the official record in support of its contentions. Urging that the court should confine its inquiry to seeing whether the interpretation is illegal, or procedurally regular and not tainted with mala fides, counsel stated that apart from the qualification impeached, the bidder had to be an Indian company (clause 4.1.1 "The Bidder must be Indian registered Companies under Company Act 1956.") and possess technical qualification of three years (clause 4.2.1. "The Bidder must have experience of Comprehensive O&M of total 1500 Nos. of tower sites of Telecom Service Providers (holding service license) or Infrastructure Providers (holding IP-1 registration) taken together during the three consecutive financial years"). BSNL also relied on the following conditions: "21.5 A bid, determined as substantially non-responsive will be rejected by BSNL and shall not subsequent to the bid opening be made responsive by the bidder by correction of the non-conformity. 21.6 BSNL may waive any minor infirmity or non-conformity or irregularity in a bid which does not constitute a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; and (ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article 226." Reliance is also placed on the judgment in Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. &Anr2016 SCC Online SC 940 where the Supreme Court held as follows:- "14.....a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional Court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional Court interferes with the decision making process or the decision. xxxxxxxxx 16. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of number of tower sites owned and operated during the past three years shall be submitted by the bidder." The following definitions which are part of Special Information to Bidders are also relied as important:- "1. Definitions 1.1 "BSNL" shall mean the CMD, Bharat Sanchar Nigam Ltd. (BSNL), New Delhi. 1.2 "Bid" shall mean Non-Financial and Price Bid submitted by the Bidder, in response to this Bid Document, in accordance with terms and conditions hereof* 1.3 "Bidder" shall mean Bidding Company submitting the Bid. Any reference to the Bidder includes Bidding Company. 1.4 "Bidding Company" shall mean the single registered corporate entity that has submitted a Bid in response to this document." The third parties therefore, argue that the condition highlighted by the petitioner should be read cumulatively with all other tender stipulations, which bring home the point, unlike in the case of New Horizons, that the bidder must possess all the eligibility conditions. As the petitioner does not possess them, having been incorporated barely a month after the NIT, the rejection of its bid is justified. 10. M/s Pace Power Systems also urges that the intention of the amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed by judicial review. 12. This court is of opinion that there is no infirmity with the BSNL's approach and stand. Besides, clause 4.1.1 which emphasizes that bidders must be companies, special information to Bidders, Clause 1.3 (which says ""Bidder" shall mean Bidding Company submitting the Bid. Any reference to the Bidder includes Bidding Company.") and Clause 1.4 (which says "Bidding Company" shall mean the single registered corporate entity that has submitted a Bid in response to this document."), have to all be read as a part of the eligibility criteria. These, together with Clause 4.3.1, underline that bidders should have- "minimum cumulative turnover of Rs. 100 Crores (audited) taken together during the three consecutive financial years 2014-15, 2013-14 and 2012-13 from the business of Operation & Maintenance (O&M) of passive telecom infrastructure. Bidders will be required to support claims of their financial qualification through their audited financial statements in the prescribed format." Clause 4.2.2 too is relevant; it states (as an exception to the condition that bidders' experience is necessary) that "In case of a subsidiary company seeking financial qualific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at was deemed non-responsive, because it lacked the prescribed experience in the field of telephone directory compilation and printing. The court negatived this, by resorting to the doctrine of "lifting the corporate veil" and holding that the constituents of the tenderer had the necessary experience, which could not- having regard to the tender conditions, be ignored. It was in this context, that the court held that: "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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here indicate that the sole proprietorship's business was entirely subsumed or taken over by the petitioner company. There is no document establishing that goodwill was parted; nor was a separate consideration paid. Furthermore, the sole proprietorship continued to function for a while, even after incorporation of the petitioner company. The latter did not reflect any provident fund contributions and appears to have registered early in 2016 and shown its first contributions thereafter. On the other hand, Pratap Technocrats, the sole proprietorship, with its different registration number, continued to make contributions even in June and July 2016. These facts show that the assertion by the petitioner that the sole proprietorship's business ceased after its incorporation, is not free from doubt; in any case, it cannot be termed as an established fact. 18. Courts, in exercise of judicial review jurisdiction are in a sense second guessing decisions made by the executive, which is tasked by the Constitution to make those decisions, in the first instance. The lens that courts necessarily adopt is narrow rather than wide; they are to permit greater latitude to the public agencies. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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