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TMI Blog2015 (10) TMI 2717X X X X Extracts X X X X X X X X Extracts X X X X ..... or furnishing the Performance Bank Guarantee is not contrary to the tender terms but is, in fact, an option available to PNGRB. It chose that option in public interest and therefore the grant of extension of time cannot be faulted and the petitioner cannot claim any right to seek quashing of this action on the part of PNGRB, particularly when the petitioner lost the race at the LOI stage and there was nothing in the tender terms barring the grant of extension of time to the successful entity - IOAGPL. The PNGRB is free to accept the Performance Bank Guarantee for ₹ 4248 crores submitted by IOAGPL and to grant the authorization in its favour in terms of the 2008 Regulations and the tender conditions - petition dismissed. - W.P. (C) 2113/2015, CM Nos. 3800/2015 and 7604/2015 - - - Dated:- 5-10-2015 - Badar Durrez Ahmed and Sanjeev Sachdeva, JJ. For Appellant: Dushyant Dave, Sr. Advocate, Vikas Mehta, Vaibhav Gaggar, Anushree Menon, Nitish Sharma and Rajat Sehgal For Respondents: Anand K. Ganesan, Rakesh Dewan and Akshi JUDGMENT Badar Durrez Ahmed, 1. Through this writ petition, the petitioner (Synergy Steels Ltd. ['sSL']) seeks:- (a) q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated in Regulation 7(3) of the 2008 Regulations as also in the tender conditions got triggered, which required the submission of additional bid bonds. It was contended that IOAGPL submitted an additional bid bond of ₹ 1059 crores whereas SSL submitted an additional bid bond of only ₹ 10 crores, followed by Kerala GAIL Gas Ltd. which submitted an additional bid bond of ₹ 3 crores only. Therefore, IOAGPL became the 'selected entity' and also furnished the bank guarantee for the additional bid bond amount of ₹ 1059 crores within the stipulated time on 12.01.2015. It was contended that IOAGPL, having complied with all stipulations and timelines, was validly issued the LOI on 20.01.2015 and at that stage SSL was out of the race. The only thing remaining to be done was to furnish the performance bank guarantee which was to be four times of the bid bond (original plus additional). The performance bank guarantee of ₹ 4248 crores was also furnished, though after extension of time. It was submitted that in terms of the tender conditions itself, time for furnishing the performance bank guarantee could be extended at the option of PNGRB. It was submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to Bidders reads as under:- 4.2.2 Financial Bid All financial bids shall be tabulated and compared as per the bidding criteria specified at regulation 7 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 and amendments thereto. Bidder with the highest composite score shall be declared as successful in the bid. In case of a tie in the highest composite score between the bidding entities, such entities shall be asked to submit additional bid bond for an amount to be decided by the respective entity and the entity that submits bid bond for higher amount shall be declared as successful bidder. (underlining added) 8. On 04.12.2014 the financial bids were opened. There was tie in the Highest Composite scores of Kerala GAIL Gas Ltd., SSL and IOAGPL. 9. On 09.12.2014, PNGRB issued letters to the said three entities requiring them to submit their respective additional bid bond amounts in sealed envelopes by 16.12.2014. It was also indicated that the successful bidder would be required to submit the bid bond within 15 days from the communication from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. By a letter dated 15.12.2014, PNGRB extended that date of submission of additional bid amounts to 29.12.2014. 11. On 29.12.2014, the sealed envelopes containing the additional bid bond amounts were opened. As mentioned earlier, IOAGPL submitted an additional bid bond of ₹ 1059 crores whereas SSL submitted an additional bid bond of only ₹ 10 crores, followed by Kerala GAIL Gas Ltd. which submitted an additional bid bond of ₹ 3 crores only. Consequently, by a letter dated 29.12.2014, PNGRB required IOAGPL to submit the additional Bid Bond Bank Guarantee for ₹ 1059 crores valid upto 31.03.2015 within 15 days from the date of the said communication. 12. On 12.01.2015, IOAGPL submitted the additional Bid Bond Bank Guarantee for the amount of ₹ 1059 crores. This was within the stipulated period of 15 days. Consequently, PNGRB issued the LOI for Grant of Authorization in favour of IOAGPL on 20.01.2015. The said LOI was as under:- Petroleum and Natural Gas Regulatory Board 1st Floor, World Trade Centre, Babar Road, New Delhi-110001 20th January, 2015 To, M/s. Indian Oil Adani Gas Private Limited, (Attn: Shri Bhashit Dholakia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thereafter for the period of grant of authorization by the Board. (2) The amount of the bid bond and performance bond shall be rounded off to the nearest multiple of lakh rupees and for the purpose any part of a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of lakh, then, if the last figure in the amount is fifty thousand or more, the amount shall be increased to the next higher amount which is a multiple of lakh and if the last figure in that amount is less than fifty thousand, the amount shall be reduced to the next lower amount which is a multiple of lakh. (3) The performance bond has been prescribed for guaranteeing the timely commissioning of the proposed CGD network as per the prescribed targets and also for meeting the service obligations by the selected entity during the operating phase of the project. 10. Grant of authorization. (1) The selected entity shall be issued a letter of intent (LOI) to grant authorization upon finalization of the bid. The entity shall be required to furnish Performance Bank Guarantee within 15 days of issue of LOI and complete such other formalities as may be directed by the Board. Upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project is achieved. 4.5.2 The selected entity shall submit performance bond guaranteeing the timely commissioning of the proposed CGD network as per the prescribed targets and meetings the service obligations during the operation phase of the project. 4.53 Performance Bond shall be submitted by way of Demand Draft or Pay order or Bank Guarantee, payable at Delhi, from any scheduled bank DD/Payorder shall be in the joint name of PNGRB and the entity, payable to either, at Delhi, Bank Guarantee shall be as per proforma of Performance Bank Guarantee prescribed at Annexure 12. 4.6 GRANT OF AUTHORIZATION The authorization shall be granted to the selected entity as specified in regulation 10 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008. 4.7 ACCEPTANCE TO GRANT OF AUTHORIZATION 4.7.1 Within 14 (fourteen) days from date of receipt of the Grant of authorization, the entity shall sign the Proforma for 'Acceptance of the Grant of Authorization' enclosed with Schedule-D of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g so that the condition could be complied with. Insofar as the rest of the tender process is concerned, the status quo, order will continue to apply. Renotify on 01.05.2015. 17. Thereafter, CM No. 7604/2015 was moved by IOAGPL seeking interim directions. On 27.04.2015, the said CM was taken up and it was directed to be listed on 01.05.2015. This court also directed that no coercive measure be taken till then . The petition was listed on several dates and the abovementioned interim orders were continued. On 18.08.2015 this court passed the following order:- Mr. Gopal Subramaniam, the learned senior counsel appearing on behalf of the respondent No. 2, states that a bank guarantee for an amount of ₹ 4248 crores has been given to the respondent No. 1 on 17.06.2015 and that the original bid and the bid bond has been returned to the respondent No. 2. The learned senior counsel appearing for the respondent No. 2 further submitted that the status quo order be vacated and in the least, the respondent NO.1 be permitted to issue the authorization letter to the respondent No. 2 subject to final orders that may be passed in this writ petition. However, the learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evel playing field embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of equality should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of level playing field . According to Lord Goldsmith, commitment to the rule of law is the heart of parliamentary democracy. One of the important elements of the rule of law is legal certainty. Article 14 applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of reasonableness , then such an act or decision would be unconstitutional. (underlining added) 19. In W.B. SEB v. Patel Engg. Co. Ltd: (2001) 2 SCC 451 the Supreme Court observed as under:- 24. The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;; (ii) Whether public interest is affected. The Supreme Court further held that, if the answers to the above questions were in the negative, then there should be no interference under Article 226. This view has been reiterated in Michigan Rubber (India) Ltd. v. State of Karnataka:: 2012 (8) SCC 216 and Maa Binda Express Carrier v. North- East Frontier Railway: 2014 (3) SCC 760. In Michigan Rubber (supra), the Supreme Court, after a survey of the prior decisions on the subject, also observed as under:- 23. From the above decisions, the following principles emerge: (a) The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; (b) Fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no complaint by SSL with regard to the tender process right upto and including the issuance of the LOI in favour of IOAGPL. There was a tie in the highest composite scores of three bidders - IOAGPL, Kerala GAIL Gas Ltd. and SSL. Consequently, the tie-break rule enshrined in Regulation 7(3) of the 2008 Regulations and Clause 4.2.2 of the Instructions to Bidders was invoked. All the three were invited to give their additional bid bond amounts. As mentioned earlier, IOAGPL offered the highest additional bid bond amount of ₹ 1059 crores followed by a distant second-highest offer of ₹ 10 crores by SSL and a third-highest offer of only ₹ 3 crores by Kerala GAIL Gas Ltd. As per the 2008 Regulations and the tender terms, IOAGPL was declared as the successful bidder and was required to submit an additional bid bond bank guarantee for ₹ 1059 crores within 15 days. IOAGPL complied with this and submitted a bank guarantee for the said amount of ₹ 1059 on 12.01.2015. It is, thereafter, that PNGRB issued the LOI dated 20.01.2015 in favour of IOAGPL. From this sequence of events, it is clear that IOAGPL had won the 'race', as it were, fair and square inso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the second option of cancelling the tender would set back the project in time which would also not be in public interest. In our view, the PNGRB cannot be faulted in going by the first option as it was in public interest and was also not in contravention of the tender conditions. 25. At this point, it would be instructive to examine clause 4.7.3 of the Instructions to Bidders which we had extracted in the earlier part of this judgment. It stipulates that if, the entity does not deposit the Performance Bond within specified time period, PNGRB reserves the right to cancel the proposed authorization without prejudice to various rights and remedies including forfeiting the Bid Bond of the entity and without being liable in any manner whatsoever to the entity . This clause clearly indicates that PNGRB has the option to cancel the proposed authorization in case the Performance Bond / Bank Guarantee is not furnished within the specified time. But, the other side of the coin is that PNGRB need not cancel the proposed authorization and may extend the time for furnishing the Performance Bank Guarantee. Thus, extension of time for furnishing the Performance Bank Guarantee is not cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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