M/S Electrical Manufacturing Co.Ltd vs M/S Power Grid Corp.Of India Ld.& Anr

CIVIL APPEAL NO. 801 OF 2009 [Arising out of Special Leave Petition (Civil) No.14858 of 2008]

M/s. Electrical Manufacturing Company Ltd. .. Appellant

-versus-

M/s. Power Grid Corporation of India Ltd. & Anr. .. Respondents

JUDGMENT

MARKANDEY KATJU, J.

1. Leave granted.

2. This appeal has been filed against the impugned judgment dated

26.5.2008 of the Delhi High Court in Writ Petition (Civil) No.3668 of 2008. 2

3. Heard Shri Sudhir Chandra, learned senior counsel for the appellant,

and Shri K.K. Venugopal, learned senior counsel for the respondent and

perused the record.

4. The appellant Electrical Manufacturing Company Ltd.,

(hereinafter as `EMC') has alleged that it is a leading modern power system

company in India and is the first ISO 9001 certified company in India in

Transmission Line Projects. It was established in 1951 and carries out such

projects in India as well as overseas. It filed a writ petition in the Delhi

High Court with the following prayer :-

"To quash the decision taken by the Board of Directors in its meeting held on 06.5.2008 with respect to not awarding of contract to the petitioner with respect to Package A1, A2 & A7 in spite of the fact that it is L1, technically qualified as per the requirement and more so its bid is Rs.16.34 crores less than L2 bidders."

5. The respondent no.1, the Power Grid Corporation of India Ltd.

((hereinafter as `PGCIL') is a Public Sector Undertaking of the Government

of India working under the Ministry of Power. The petitioner has been

carrying out the contract of respondent no.1 for a long time. 3

6. On 5.11.2007, a Notice inviting tender with respect to Package A1

and A2 was made by respondent no.1 PGCIL. On 8.11.2007, Notice

inviting tender with respect to Package A7 was made by respondent no.1.

These tenders were for setting up electrical transmission lines.

7. On 8.1.2008 and 9.1.2008, bids were opened for the above mentioned

packages, respectively. In both the petitioner was declared the Lowest

Quoted Bidder (L1).

8. On 16.4.2008 the petitioner made representations to the respondent

no.1 with respect to Package A1, A2 and A7, explaining as to how the

petitioner was fully qualified and met the requirements of technical

experience stipulated in Clause 1.1 of Annexure `A' of Special Condition of

Contract.

9. On 6.5.2008, the respondent no.1, decided not to award the contract

for the above mentioned packages to the petitioner as it was of the opinion

that the appellant did not have the requisite technical experience as set out

in Clause 1.1 of Annexure `A' of the Special Condition of Contract. 4

10. The appellant has alleged that the above refusal by respondent no.1 to

award the contract for the above mentioned packages was arbitrary and

illegal since the appellant's bid was the lowest among all the bidders.

11. Shri Sudhir Chandra, learned senior counsel for the appellant has

submitted that the appellant has been denied the contract in question on an

erroneous interpretation of Clause 1.1 of Annexure `A' of the Special

Conditions of Contract. The aforesaid Clause 1.1 states :

"1.1 Technical Experience

The bidder shall have satisfactorily completed as a prime contractor or as a sub-contractor or as a member in a Joint Venture, 345/400 KV Double Circuit or higher voltage class transmission line(s) within the last seven (7) years as on date of bid opening. The bidder's experience should include the following :

(i) The bidder should have surveyed, optimized tower locations, erected and strung with tension stringing equipment, not less than following cumulative route length of transmission lines of 345/400 KV Double Circuit or higher voltage class involving bundle conductor.

Package - A7 : 100 Kms

Package - A8 : 100 Kms"

5

12. Learned counsel for the appellant submitted that the appellant fully

satisfied the requirements mentioned in Clause 1.1 namely that the

petitioner has surveyed, optimized tower locations, erected and strung with

tension stringing equipment, not less than following cumulative route length

of transmission lines of 345/400 KV Double Circuit or higher voltage class

involving bundle conductor, which in so far as the petitioner is concerned is

100 Kms. for package A1 and A7 and 200 Kms. for package A8. Hence

learned counsel submits that the appellant should have been given the

contract in question.

13. On the other hand Shri K.K. Venugopal, learned senior counsel for

respondent submitted that sub-clause (i) of Clause 1.1 has to be read along

with the main clause 1.1 which stipulates that the bidder should have

satisfactorily completed the requisite length of 100 Kms. He submitted that

the petitioner has only satisfactorily completed 83 Kms. of transmission line

as on 9.1.2008 and therefore, did not fulfill the technical experience

required by Clause 1.1.

14. The dispute thus in this case is whether the appellant has the requisite

technical experience mentioned in Clause 1.1 of the Special Conditions of

Contract.

6

15. Shri K.K. Venugopal, learned senior counsel for respondent

submitted that the appellant has satisfactorily completed only 83 Kms. of

transmission lines as on the date of the opening i.e. 8/9.1.2008 instead of the

requisite 100 Kms. He submitted that the appellant had in addition laid

various incomplete transmissions lines, but these cannot be added to

the lines

satisfactorily completed because they are incomplete. The chart showing

the work done by the appellant is as follows:

Transmission Extent completed Total extent of Lines Line by petitioner as on the line in Satisfactorily 8/9.1.2008 question Completed by petitioner Meerut- 60 km (on 29.9.03) 60 km 60 km Mandola Bhadrawati- 23 km (on 13.4.06) 23 km 23 km Chandrapur Trivenveli- 134 km (on 136 km Udmalpet 8/9.1.08; 2 km incomplete) TAPP- 87 km (on 8/9.1.08; 97.3 km Kankaroli 10.3 km incomplete) Total 304 km 83 km 7

16. A perusal of the above chart shows that the appellant has only

satisfactorily completed 83 Kms. of transmissions lines. The line

Trivenveli-Udmalet in Tamil Nadu was incomplete because only 134 Kms.

out of the total extent of the line of 136 Kms. had been completed by the

appellant. Hence this transmission line could not be treated to be

satisfactorily completed. Similarly the line Tapp-Kankaroli was also

incomplete as it was only laid for 87 Kms. but the entire line had to be 97.3

Kms.

17. Shri Sudhir Chandra, learned senior counsel for the appellant has

submitted that the view taken by the High Court that satisfactorily

completing the line means commissioning the line is not correct. We are of

the opinion that even if satisfactory completion may not necessary mean

commissioning of the line but it certainly means completion of the entire

length of the line and thereafter testing the line to find out whether it is

functioning satisfactorily. Without testing it how can one be sure that it has

been completed satisfactorily.

18. For instance, if an electrical line is laid inside a person's house, the

only way to find out whether the electrical line has been laid satisfactorily is

to find out by pressing the switch and seeing whether the bulb in the house 8

is lighted or the fan starts running. Merely putting wires dangling inside the

house but which do not light the bulb or turn the fan cannot be said to be

satisfactory completion of the electrical line.

19. In the present case, as can be seen from the chart set out above the

appellant has not completed the lines from Trivenveli to Udmalet nor from

Tapp to Kankaroli. Unless the entire line is laid and is found to be

functioning satisfactorily, it cannot be said that there was satisfactory

completion of the line.

20. As regards the interpretation of Clause 1.1 we cannot agree with Shri

Sudhir Chandra that the words `Satisfactorily Completed' would not govern

sub clause (i) of Clause 1.1. A fair reading of the entire Clause 1.1 along

with sub clause (i) clearly indicates that the requisite technical experience

requires satisfactorily completion of the requisite length of the line. Sub

clause (i) is a part of Clause 1.1 and hence mere surveyance, optimizing

tower locations, erecting and stringing with tension stringing equipment,

etc. is not sufficient to give the requisite technical experience to the bidder

unless such work was satisfactorily completed, which means that it was

tested and found to be functioning satisfactorily. 9

21. If the bidder has surveyed, optimized tower locations, erected and

strung with tension stringing equipment, the requisite length of transmission

lines, but these transmission lines do not function, surely it cannot be said

there was satisfactory completion of these transmission lines. In our

opinion the expression `Satisfactory Completion' govern sub clause (i) of

Clause 1.1 also. Hence mere surveying, optimizing tower locations,

erecting and stringing with tension stringing equipment the requisite length

of transmission lines will not be enough to give the necessary technical

experience because it is possible that even after doing the above work the

transmission lines may not function. Unless after doing the above works the

line is tested and found to be successfully functioning it surely cannot be

said that there was satisfactory completion of the transmission lines.

22. Apart from the above, completion of a part of the line will be of no

avail and the entire line from one location to another has to be completed

before there can be said to be satisfactory completion of the line.

Completion of part of the line has to be totally ignored as a line is one

integral whole and cannot be divided into sections.

23. Thus there is no force in this appeal and it is dismissed. No costs. 10

..............................J. (Altamas Kabir)

...........................

...J. (Markandey Katju)

New Delhi;

February 09, 2009