Dismissed

M/S. Satyagiri Shipping Co. Ltd. and Anr. v. the State of Maharashtra

Bombay HC6 Sept 2010WP/1970/2010

Case brief

AI extract

What is this about?

In a writ petition challenging a public procurement process for passenger water transport, the Bombay High Court dismissed the petition. The court held that the petitioner lacked locus standi as it did not participate in the fresh tender after its previous contract was cancelled and found no arbitrariness in the agency's decision.

What did the court decide?

The petition was dismissed with no direction issued to the respondents.

M/S. Satyagiri Shipping Co. Ltd. and Anr. Vs… — Public Procurement and Tenders | Bombay HC (2010)

00-OS-WPL1817.10

AJN

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

¶5

WRIT PETITION (LODGING) NO.1817 OF 2010

¶6

Satyagiri Shipping Co. Ltd. & Anr. ... Petitioners

¶7

Vs.

¶8

The State of Maharashtra & Ors. ... Respondents

¶9

Mr. N.H. Seervai, senior counsel with Mr. Venkatesh Dhond i/b Khaitan & Jayakar for the petitioners.

¶10

Mr. D.A. Nalavade, Government Pleader with Mr. R.A. Lokhande, A.G.P. for the State.

¶11

Mr. D.D. Madan, senior counsel with Mr. Kane and Parul Kumar i/b Amarchand Mangaldas S.A. Shroff & Co. for respondent no.2.

¶12

Mr. Virag Tulzapurkar, senior counsel with Mr. M.R. Phal for respondent 3.

¶13

CORAM: MRS. RANJANA DESAI & R.V. MORE, JJ.

¶14

DATE ON WHICH THE ORDER IS RESERVED : 30TH AUGUST, 2010.

¶15

DATE ON WHICH THE ORDER IS PRONOUNCED:6TH SEPTEMBER, 2010.

¶16

ORDER :- (Per Smt. Ranjana Desai, J.)

¶17

The subject matter of this petition is a project for

00-OS-WPL1817.10

AJN

Passenger Water Transport (for convenience, “ the said project ”), which was initiated by the State of Maharashtra to relieve the existing congested transport system in Mumbai by providing an alternate mode of environment friendly water transport system along the west coast of Mumbai. The 2^nd respondent i.e. the Maharashtra State Road Development Corporation (for short, “ the MSRDC ”) was the nodal agency duly appointed to implement the said project on build, own, operate and transfer (BOOT) basis.

¶22

It is necessary to give a gist of the facts stated in the petition.

¶23

On 5/7/1998, the 3^rd respondent M/s. Pratibha Industries Limited, advertised a “Request of Proposal” for construction of jetties and other infrastructure requirements and for operation of the said project. The nodel agency i.e. the 2^nd respondent invited bids for the said purpose. In the month of July, 2003, the petitioners

00-OS-WPL1817.10

AJN

along with two others submitted their bids to the 2^nd respondent. The bids of the petitioners and one Messrs Four Seasons Marine and Air Services Limited failed to achieve the financial adequacy parameters. The matter was placed before the High Power Committee. An alternative course of action was evolved by consent of all the parties that either the bidders would improve their financial position by way of re-organizing and strengthening the consortium to meet the threshold limit as prescribed by the Financial Consultant or shortlisted bidders would furnish a bank guarantee of Rs.100 crores within 3 months.

¶28

On 18/8/2003, the petitioners along with ABS Hovercraft Limited (ABS), KJMC Financial Services Limited (KJMC) and TULIP Hospitality Services Limited (TULIP), entered into an Agreement to form a SPV / JV / Consortium as per the requirement of the bid documents. Subsequently, the petitioners also entered into an Agreement with one M/s. Videocon Industries Limited to

00-OS-WPL1817.10

AJN

include them as one of the members of the Consortium.

¶33

The bids of both the shortlisted bidders were opened by the 2^nd respondent on 19/12/2003. The petitioners' bid was found higher than that of M/s. Four Seasons Marine and Air Services Limited. On 5/2/2004, a Letter of Intent was issued by the 2^nd respondent in favour of the petitioners. According to the petitioners, later on, M/s. Satyagiri Waterways Limited being the SPV for the said project was incorporated on 15/4/2004.

¶34

It appears that certain differences arose between the Consortium partners and one of the partners i.e. KJMC withdrew from the Consortium. This was communicated to the 2^nd respondent by the petitioners on 15/9/2006. According to the petitioners, they submitted a revised pattern of the SPV.

¶35

The petitioners received letter dated 7/2/2008 whereby the 2^nd respondent had withdrawn and revoked

00-OS-WPL1817.10

AJN

the Letter of Intent dated 19/6/2004 and Letter of Award dated 19/7/2006 issued to the petitioners on the ground that the petitioners had been constantly changing the members of the Consortium and had not submitted the shareholding pattern of the Consortium to the 2^nd respondent.

¶40

Admittedly, the petitioners have filed a suit being Suit No.1233 of 2008 in this court challenging the said revocation. The petitioners took out Notice of Motion No. 1458 of 2008 and Notice of Motion No.2853 of 2008 in that suit for interim relief. By judgment and order dated 4/9/2008, learned Single Judge refused interim relief to the petitioners. Both the notices of motion were dismissed. Admittedly, the appeal filed challenging the said order has been admitted by this court on 8/10/2008. The petitioners took out Notice of Motion No.1331 of 2010 for interim relief. The said notice of motion was disposed of by the Division Bench of this court by the following order:

00-OS-WPL1817.10

AJN

“The appeal was admitted in the year 2008. No interim relief was granted. Considering that no case for placing the matter on board for hearing. Notice of motion is disposed of.”

¶45

Thus, as of today, no order granting interim relief is passed in favour of the petitioners. What is important to note is that the petitioners' grievance regarding revocation of the Letter of Intent and Letter of Award is sub-judice in this court. Obviously, therefore, the petitioners cannot agitate those issues in this petition.

¶46

On 7/6/2008, the 2^nd respondent issued a subsequent tender and invited fresh bids for the said project. On or around 30/7/2008, the 2^nd respondent put up a notice on their website inviting proposal for the said project. The 2^nd respondent extended the deadline for submission of bids under the subsequent tender documents over 10 times. On 21/6/2010, the 2^nd respondent again extended the time to submit the bids. In short, the 2^nd respondent

00-OS-WPL1817.10

AJN

repeatedly floated fresh tenders and repeatedly extended the last date of the bids but managed to attract the single bid of the 3^rd respondent. The grievance of the petitioners is that the 2^nd respondent accepted the single bid of the 3^rd respondent and in order to accommodate the 3^rd respondent, the 2^nd respondent changed, altered and amended the technical criteria for assessing the bids. According to the petitioners, for the safety of passengers, it is most important that a technical tie up with a ferry operator is in place. The 2^nd respondent deleted the criteria, which is extremely critical for the safety of the public in general. The criteria which was changed was that of having a ferry operator with minimum experience of certain number of years in handling passenger traffic as a part of the Consortium of the bidders. According to the petitioners, this alteration is grossly arbitrary and such a change would be detrimental to the safety of the passengers. It is also the case of the petitioners that acceptance of single bid is contrary to the Guidelines issued by the Central Vigilance Committee (for short, “ the

00-OS-WPL1817.10

AJN

CVC ”). The petitioners have, therefore, inter alia prayed that a direction be issued under Article 226 of the Constitution of India to injunct the 2^nd respondent from issuing any Letter of Award or the Letter of Intent for the said project to the 3^rd respondent and that an order or direction be issued injuncting the 2^nd respondent from proceeding any further with the evaluation of the bids submitted by the 3^rd respondent.

¶55

We have heard Mr. Seervai, learned senior counsel for the petitioners, Mr. Madan, learned senior counsel for the 2^nd respondent and Mr. Tulzapurkar, learned senior counsel for the 3^rd respondent.

¶56

Mr. Seervai, learned counsel for the petitioners reiterated the points raised in the petition. He accepted that the issues involved in the suit filed by the petitioners cannot be raised in this petition. When his attention was drawn to certain averments made in the petition raising the grievance as regards revocation of Letter of Intent and

00-OS-WPL1817.10

AJN

Letter of Award in respect of which the suit is filed, he submitted that the court should go by the prayers made in the petition and not by the averments made in the body of the petition. He pointed out that in the petition, no relief is prayed as regards revocation of Letter of Intent and Letter of Award. Mr. Seervai made three submissions. He submitted that alteration in the criteria of the bid document endangers the safety of passengers. The alteration is grossly arbitrary. The 2^nd respondent has changed the criteria which required having a ferry operator with maximum experience of certain number of years in handling passenger traffic to be a part of the Consortium. Counsel submitted that such drastic alteration in the criteria is done to accommodate the 3^rd respondent at the cost of safety of passengers.

¶61

Counsel submitted that the single bid of the 3^rd respondent has been accepted by the 2^nd respondent contrary to CVC Guidelines. He drew our attention to letter dated 27/4/2008 addressed by the Under Secretary

00-OS-WPL1817.10

AJN

to the Government of India to the Secretaries of State PWDs dealing in National Highways and other authorities where it is inter alia stated that as per the existing CVC Guidelines, single tenders can be accepted only with detailed justification in support of the acceptance. Counsel submitted that there is no such justification offered by the 2^nd respondent. Counsel submitted that the justification cannot be offered now in the court by way of affidavit. Justification must be preexisting. Counsel submitted that as per the CVC Guidelines, the single tender must be cancelled without opening the bid and fresh tender will have to be invited. Counsel lastly submitted that it is true that the present petition is not a public interest litigation. However, even in a petition which is moved in private interest, if a lamentable state of affairs is disclosed in floating the tenders and accepting bids for an important project like the present project, it is the duty of the court to ensure that the truth and the validity of the allegations made is inquired into. In this connection, counsel relied on the judgment of the

00-OS-WPL1817.10

AJN

Supreme Court in Shivajirao Nilangekar Patil v. Dr. Mahesh Gosavi & Ors. (1987) 1 SCC 227 . Counsel also relied on E.P. Rayappa v. State of Tamil Nadu & Anr. (1974) 4 SCC 3 and submitted that an arbitrary act is violative of Article 14 of the Constitution of India. The State's action must be based on valid relevant principles and must not be guided by any extraneous and irrelevant considerations which is exactly what has happened in this case and, therefore, the arbitrary action of the 2^nd respondent needs to be struck down. Counsel submitted that indeed a case is made out for admission of the petition.

¶70

Mr. Madan, learned counsel for the 2^nd respondent submitted that the project in question is of great national importance. It is pending for more than last 30 years. It is true the 2^nd respondent floated tenders on several occasions. However, there was no adequate response. Even after the terms were relaxed, on 15/4/2010, six persons purchased the bid documents and only one

00-OS-WPL1817.10

AJN

person submitted the bid and the bid was closed on 30/5/2010. Counsel submitted that a project of this kind does not brook any further delay. He pointed out that the petitioners have not put in their bid. If the petitioners were so concerned about the safety of people, they should have put in a bid. Inasmuch as the petitioners have not participated in the bid, they have no locus to file the present petition. Relying on the judgment of the Supreme Court in Reliance Airport Developers (P) Limited v. Airports Authority of India & Ors. (2006) 10 SCC 1 , counsel submitted that it is perfectly legal for an authority to relax conditions of a bid. Counsel submitted that the annexure to letter dated 27/4/2008 is a truncated document. He produced a complete copy of the annexure which is titled as “Common Irregularities / Lapses observed in Stores / Purchase Contracts and Guidelines for Improvement in the Procurement System”. Counsel pointed out that the letter itself suggests that it pertains to single tender for national highway work. He submitted that, therefore, the petitioners cannot draw any support

00-OS-WPL1817.10

AJN

from the said letter. Counsel submitted that the present petition is not a public interest litigation. Because the petitioners' contract is cancelled as far back as in 2008 and the petitioners have not succeeded in getting any relief from this court in the suit filed by them, the petitioners are trying to create impediment in the commissioning of the Passenger Water Transport project. He submitted that the petition may, therefore, be dismissed.

¶79

Mr. Tulzapurkar, learned senior counsel appearing for the 3^rd respondent submitted that it is the authority who floated the bids which can decide the terms of the bid. Counsel submitted that the petitioners have not participated in the bid and have no locus to file the present petition. The petitioners cannot make any grievance about the terms of the bid or relaxation or alteration of the terms of the bid. Counsel submitted that there is no absolute bar to the acceptance of a single bid. He submitted that the letter dated 27/4/2008 on which

00-OS-WPL1817.10

AJN

reliance is placed by the petitioners itself states that the single tenders can be accepted with detailed justification in support of the acceptance. Counsel submitted that justification cannot precede the acceptance of the bid. The stage for justification will come later. Counsel submitted that reliance placed on the judgment of the Supreme Court in Shivajirao Nilangekar Patil is misplaced. In that case, the Supreme Court was concerned with the affairs of the University. The contention of the petitioner therein was that the Chief Minister of Maharashtra had tampered with the mark list to favour his daughter. Counsel submitted that the facts of this case are different. Here, we are concerned with commercial contract. To the facts of the present case, the judgment in Shivajirao Nilangekar Patil is not applicable. Counsel submitted that the petitioners could have offered their bid after relaxation of the conditions. The petitioners have not done so. He submitted that the petition is filed with a mala fide intent to thwart the commissioning of the said project because the petitioners'

¶84

AJN 00-OS-WPL1817.10

¶85

¶86

contract has been cancelled. In the circumstances, the petition be dismissed.

¶87

As we have already noted since the petitioners have filed a suit in this court challenging the revocation of Letter of Intent and Letter of Award, they cannot agitate those issues in this petition. We, however, find that repeatedly in the petition, the petitioners have touched upon revocation of Letter of Intent and Letter of Award and made a grievance about it. In fact, in paragraph 5, the petitioners have stated that being aggrieved by the arbitrary revocation of the Letter of Award and Letter of Intent issued by the 2^nd respondent, they have preferred the present petition. We are unable to accept Mr. Seervai's submission that since there are no prayers relating to revocation of Letter of Intent and Letter of Award on the basis of some averments made in the petition, it is not open to contend that the petitioners are re-agitating the same issues in this petition. It is not possible for us to ignore the contents of the petition

00-OS-WPL1817.10

AJN

particularly when the petitioners have stated that being aggrieved by the revocation of the Letter of Intent and Letter or Award, the petitioners have approached this court. In fact, from the tenor of the petition, it is obvious that the petitioners are really aggrieved by the revocation of Letter of Intent and Letter of Award. The petitioners have not been able to get any interim relief in the suit. We are of the opinion that the petitioners have, therefore, filed this petition to stall the said project.

¶92

It is true that the 2^nd respondent has repeatedly floated tender and altered the criteria of the bid document. But, the decisions as regards floating of tender and change of criteria of bid document has to be taken by the authority, who floats the tender. After the petitioners' Letter of Intent was cancelled, if the petitioners were so concerned about the safety of people, they should have offered a fresh bid. The petitioners have not participated in the bid. They have, therefore, no locus to challenge the tender process.

00-OS-WPL1817.10

AJN

Counsel for the petitioners has conceded that this is not a public interest litigation. Relying on the judgment of the Supreme Court in Shivajirao Nilengekar , however, he urged that even in a petition filed in private interest, if lamentable state of affairs is disclosed affecting people at large, the court should not close its eyes to it but inquire into the case. We are in respectful agreement with this proposition. But, we are not in a position to hold that any lamentable state of affairs is disclosed in this case. The said project is of great public importance. It is hanging fire for a long time. The fact that the 2^nd respondent has repeatedly floated tenders and extended the date of submission of bid, indicates that the 2^nd respondent has been desperately trying to get a bidder obviously because the project is sufficiently delayed. The relaxation of criteria falls in the 2^nd respondent's domain and no case is made out to interfere with it. The facts in Shivajirao Nilengekar cannot be equated with the present case where this court is considering a commercial contract and

00-OS-WPL1817.10

AJN

where extensions of date of submission of bid, repeated floating of tenders or change in the criteria is not unknown. Assuming the CVC Guidelines on which reliance is placed by the petitioners are applicable to the present case, the guidelines do not say that single bid can never be accepted. Guidelines state that the single bid can be accepted with detailed justification. The admitted facts indicate that there is sufficient justification. The project is pending for more than 30 years. Obviously, on account of this delay, great inconvenience is caused to the people. If repeated floating of tenders and relaxation of condition does not attract bidders, we do not think that any impropriety was committed by the 2^nd respondent in accepting the single bid of the 3^rd respondent. As of today, no material is brought to our notice that single bid is accepted for any extraneous consideration. Ratio of Royappa's case is not attracted to this case because as of today, we do not find any arbitrariness in the action of the 2^nd respondent. The petitioners who have not participated in the bid cannot challenge the acceptance

¶101

00-OS-WPL1817.10

¶102

AJN 19

¶103

of single bid on the specious ground of public interest. There is no merit in the petition. The petition is dismissed.

¶104

[MRS. RANJANA DESAI, J.]

¶105

[R.V. MORE, J.]

M/S. Satyagiri Shipping Co. Ltd. and Anr. v. the State of Maharashtra

Case brief

What is this about?

What did the court decide?

M/S. Satyagiri Shipping Co. Ltd. and Anr. v. the State of Maharashtra

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Ramesh Namdeo Bharmal Vs Thane Municipal Corporation and Ors.

Avinash Ganpatrao Chavan Vs State of Maharashtra and Ors.

Bhimashankar Ishwara Mali Vs the State of Maharashtra and Anr.

Sarvarali Sayyad Ali Vs the Municipal Corporation of Greater Mumbai

Sadanand Shankar Patil Vs the Municipal Corporation for Greater Mumbai and 3 Ors.

Nand Kutir Co-Operative Housing Society Limited Vs Mrs. Urmila Hiralal Thakkar and 4 Ors.