GAMMON INDIA LIMITED Vs. PUNJAB STATE ELECTRICITY BOARD

JUDGEMENT

(1.) M/s. Gammon India Limited, a Company incorporated under the Companies Act, through its area representative and attorney Shri A. K. Mirchandani, styles the contract given to M/s. National Building Construction Corporation - respondent No. 3 herein, of Design, Construction and Commissioning 2 No. Natural Draft Cooling Towers for Guru Nanak Dev Thermal Plant Stage-III, Bhatinda, as illegal, arbitrary, mala fide and violative of Articles14 and 19(1) (g) of the Constitution of India. The obvious prayer of the petitioner is, thus, to cancel or set aside letter dated December 18, 1994 as also the order of allotment issued to respondent No. 3 vide letter dated January 30, 1995, consequential prayer, after setting aside the work allotted to respondent No. 3 of the petitioner is to direct respondents 1 and 2 to give the said work to it.

(2.) Brief facts, on which the relief asked for by the petitioner-Company, is sought to rest, reveal that the Punjab State Electricity Board (hereinafter referred to as the Board) invited tenders for design, construction and commissioning of the two natural draft cooling towers for Guru Nanak Dev Thermal Plant Stage-III, Bnatinda. The tenders were to be received by June 10, 1994 and opened on the same day at 3 PM. However, this date was later extended to August 22, 1994. The petitioner claims that it has necessary expertise and competence in the field of construction and commissioning of Natural Draft Cooling Towers and has to its credit successful completion of more than 80 Cooling Towers for Various Boards including the Andhra Pradesh State Electricity Board, Haryana State Electricity Board, Gujarat State Electricity Board, as also the respondent Board itself and others. It, thus, applied for allotment of the said work. Besides the petitioner, four other concerns, namely, M/s. Vig Brothers, M/s. L and T, M/s. Paharpur Cooling Towers and M/s. National Buildings Construction Corporation had also submitted their tenders on August 22, 1994. Inasmuch the tenders were submitted in two covers i.e. one containing the Technical Bid and the second containing the price bid, the respondent board proceeded to ascertain the technical soundness and competence of the concerns applying. Out of the five contenders, referred to above, the respondent-Board did not find M/s. Paharpur Cooling Towers and M/s. National Buildings Construction Corporation Ltd. sound and capable for the design, construction and commissioning of 2 No. Natural Draft Cooling Towers. It is, thus, the case of the petitioner that the tenders of the aforesaid two concerns were rejected on the point of technical viability and competence and, therefore, the price bids were opened with regard to three contenders which included, of course, the petitioner. When the price document was opened, it revealed that whereas the petitioner had quoted the price at Rs. 21,40 crores, M/s. Vig Brothers had quoted the price at Rs. 37.53 crores and M/s. L and T had quoted the price at Rs. 35.14 crores. As the rates offered by the petitioner were far lower than the rates quoted by the other two concerns, it was asked to extend the validity of its tender upto January 19, 1995. As such a long extension could have had financial repercussions and cost escalations, the petitioner agreed to extend its offer only up to December 31, 1994 with a clear stipulation that any further extension shall be subject to upward revision of the price offered by it. The respondentBoard, after carefully examining various aspects of the tenders, offered by the petitioner, proceeded to accept the same and allotted the work to it vide telex message dated December 18, 1994. It is further the case of the petitioner that after opening the technical bid, the Board asked the petitionerCompany to withdraw certain conditions but it emphasised that it was not possible without financial implications, Reference in this regard has been made to letters dated September 26, 1994 and September 27, 1994. It is, thus, the positive case of the petitioner that the work was allotted to it by the respondent-Board vide decision dated December 18, 1994. However, for the reasons best known to the Board, it started showing some inclination towards respondent No. 3, which concern was rejected by respondentBoard itself on technical viability and competence. Despite having allotted the work to the petitioner-Company vide orders dated December 18, 1994, in an illegal, arbitrary and mala fide manner, respondent-Board started pressing the petitioner for changing the stage building (billing) schedule. As change in the stage billing schedule not only affected the schedule of completion but also the cash flow which, in turn, could have resulted in heavy financial loss, the petitioner requested for the issuance of the detailed purchase order so that it could examine as to how far it was possible to meet their subsequent requirements i.e. modification in the Stage Billing Schedule. It is the case of the petitioner that the Board having once accepted all the terms and conditions of the contract, could not start varying the same. However, the petitioner, keeping in line with the suggestions offered by the respondentBoard, agreed to modify the stage billing schedule bringing it down from 30% to 25% against item 10(b). The Board, however, called the representative of the petitioner once again on January 25, 1995 wherein it was asked if it could reduce its price. The representative of the Company objected to it on the ground that once the bid, offered by it, had been accepted, it was no stage for making such a demand. The representative of the Company again emphasized that the respondent-Board should give in writing all its queries so that the same could be examined and suitably replied. The Board, in turn, issued letter dated January 30, 1995 wherein, it is the case of the petitioner; the respondentBoard, in an illegal, arbitrary and mala fide manner, wanted to reopen the terms and conditions which were duly deliberated upon before the allotment of work to the petitioner vide letter dated December 18, 1994. Petitioner, however, submitted reply to the letter aforesaid. When all this correspondence way going on, it was surprised to find a press news in that the Hindustan Times, Delhi the National Buildings Constitution Corporation had bagged Rs. 33.5 crores project. It is on the facts broadly stated above that the action as also various orders passed by the respondent-Board in allotting the work to respondent No. 3 and impliedly cancelling the work order allotted to it, have been stated to be illegal, arbitrary, mala fide and violative of Article 19(1)(g) of the Constitution of India.

(3.) The matter came up for motion hearing before the Division Bench off February 14, 1995 when notice of motion was issued for March 7, 1995 and it was further ordered that the tenders would not be finalised meanwhile. The matter, however, came up for hearing on April 20, 1995 when it was admitted and ordered to be listed for hearing before the single Judge on April 25, 1995, high-up in the list. When the matter came up before the learned single Judge of this Court on August 9, 1995, it was referred to the Division Bench by the learned, single Judge having regard to the urgency of the matter and importance of the points raised. This is how this matter has come up before us for final disposal.