LARSEN AND TOUBRO LTD Vs. COCHIN SHIPYARD LIMITED

JUDGEMENT

(1.) Petitioner Company has approached this Court impugning Exts.P4 and P6. A mandamus is sought directing the first respondent to consider the bids received in response to the original tender enquiry as per Ext.P1 from the petitioner and the second respondent and to award the contract to the petitioner being the lowest bidder. A further mandamus is sought commanding the first respondent not to consider the bid offered by the second respondent as it was against the basic terms and conditions of the tender. Finally, a declaration is sought that the tender offered by the second respondent is invalid and further to declare that the petitioner is entitled to be awarded the contract in question.

(2.) The case of the petitioner, in brief, is as follows: Petitioner is a Company carrying on business, inter alia, in Commissioning of Defence, Nuclear Power and Aerospace Equipment, Process Plant Equipment, Fertilizer, Petrochemicals and Heat Transfer Equipments, Coal Glasifiers & Thermal Power Plant Equipment, Refinery, Cracker Plant and Oil and Gas Equipment. The Government treats the petitioner as a strategic Company for the country's interest which is evident from the share holding of Public Financial Institutions, which is almost 35%. The first respondent is the Cochin Shipyard Limited. It is a Government of India Enterprise, carrying on business, inter alia, in Ship Building, including building of Naval Ships for the Defence of the country (It is hereinafter referred to as CSL). The second respondent is also a Government of India Enterprise, carrying on business, inter alia, in construction of Naval Ships and also deals in Marine Engineering Equipments for Indian Navy (hereinafter referred to as GSL). CSL invited tender on 23/2/2006 for shafting system for manufacture of Indigenous Aircraft Career Project of Indian Navy. The invitation by the CSL was limited to the petitioner and GSL. Both the petitioner and GSL are nominated by the Indian Navy. Petitioner and GSL submitted their bids in response to the said tender. The technical bids were opened earlier and the price bids were opened on 4/12/2006 at the office of the CSL and negotiations were held both on technical and commercial aspects. It is the further case of the petitioner that as per the clarifications offered by CSL, delivery of the equipment in two groups and quoting of payments accordingly was considered as mandatory by it. The first group consisted of Intermediate shafts OD Box, Plummer Box, Bulk Head Seals, Stern Tube and Water Lubricated Bearings, Hydraulic Units and all accessories to be positioned inside the main hull. The first grouped items are to be delivered by August, 2008 and the second group comprised of tail shafts, stern tube shafts and CPP. The second grouped items are to be delivered by August, 2010. Ext.P3 is produced as the copy of the further clarification issued by CSL. It is stated that the petitioner submitted Ext.P3(a) requesting consideration of the credentials of the petitioner and delineating the foreign exchange component submitted by GSL. Ext.P3(b) is produced to show that it is emphasised that all effort should be made by the supplier of propulsion equipment to establish local support. It is stated that it is learnt by the petitioner that it was the lowest bidder in respect of the main equipment. The petitioner's bid was for Rs.132.48 crores, while that of GSL was for Rs.142.95 crores. This was in respect of a main equipment, namely the shafting system. But, the price in respect of the Base and Depot Spares is stated to be higher than the price quoted by GSL. It is further stated that though C.P.P. is an item to be supplied in the second group, it is essentially to be used while delivering the first grouped items. It costs about Rs.30.00 crores. Petitioner alleges that it had quoted the price taking into consideration the fact that the Propeller which is to be supplied after four years in the second group, has to be procured at the time of testing the two items to be supplied in the first group. It is alleged that in pursuit of finalising the tender, many negotiations and correspondence had taken place between the petitioner and CSL. During the course of the negotiations, petitioner explained that the price of the main equipment was most competitive and the price of the Base and Depot (hereinafter referred to as B & D) spares was high, since the validity required was four years upto 2010. It is also stated that the petitioner informed that if the spares were to be ordered around the same time as the main equipment, petitioner was further willing to reduce the price of the spares considerably. Petitioner has a case that the bid of GSL had foreign exchange content of 87.52 per cent against the generally accepted norms as per the DPP. While so, Ext.P4 was received by the petitioner which is a fax message from CSL and by which the CSL invited revised competitive price bids against the tender in question without any other changes in the techno-commercial requirements. Petitioner feeling aggrieved by Ext.P4, which is described as arbitrary and unscheduled, addressed the Ministry of Defence by Ext.P5 letter dtd. 1/3/2007. Ext.P5(a) dtd. 17/3/2007 is alleged to be a letter sent to the Secretary of Ministry of Shipping. Thereafter, it is stated, however, that keeping in view the keen interest and commitment of the petitioner to participate in a programme of National importance, the petitioner had submitted the second bid with the clear understanding that the first bid by petitioner would be given due consideration. Ext.P5(b) is produced as a copy of the revised bid. It is stated that the petitioner participated in the revised bid negotiations on the advice of the Director of Naval which is referred to, inter alia, as follows:

(3.) The CSL has filed a Counter Affidavit, inter alia, stating as follows: