A thermal power EPC-cum-debt-financing tender award was challenged for procedural violations, defective financial evaluation, public-interest concerns and unequal treatment. The court dismissed both petitions, finding no arbitrary, capricious or unfair evaluation and rejecting the confidentiality and reasons-based challenges.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 22.12.2014 Delivered on :07.4.2015
CORAM
THE HON'BLE MR.JUSTICE V.RAMASUBRAMANIAN
Writ Petition Nos.26762 & 27529 of 2014 & M.P.Nos.1 to 3 of 2014 in W.P.No.26762 of 2014 & M.P.Nos.1, 3 & 4 of 2014 in W.P.No.27529 of 2014
CSEPDI – TRISHE Consortium rep. By its Managing Director Sanjay K.Pillai No.6, Kasturi Rangan Road Alwarpet, Chennai 600 018. ... Petitioner in both WPs Vs.
Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) rep. By its Chairman & Managing Director 144, Anna Salai, Chennai 600 002.
The Chief Engineer/Civil/Project & Environment TANGEDCO, 3rd Floor, Eastern Wing NPKRR Maligai, No.144, Anna Salai Chennai 600 002.
Bharat Heavy Electricals Limited (BHEL) rep. by its Chairman BHEL House, Siri Fort New Delhi 110 049. ... Respondents 1-3 in both WPs
The Chief Engineer/Projects TANGEDCO, 5th Floor, Western Wing NPKRR Maligai, 144, Anna Salai Chennai 600 002. ... 4th Respondent in W.P.No.27529/14
Petitions under Article 226 of the Constitution of India praying for a
i)W.P.26762/2014:- Writ of Certiorarified Mandamus calling for the records of the first respondent culminating in the impugned
communication bearing Lr.No.CE/P/SE/M/P/EE-10/E/P/F.2x660MW Ennore SEZ/D.58/2014 dated 27.9.2014, quash the same and forbear the first and second respondents from in any manner taking any steps to proceed with the tender with the third respondent in respect of SPEC.No.CE/C/P&E/EE/E/OT No.3/2013-14 issued by the first and second respondents for the 2 x 660 MW Ennore SEZ Supercritical Thermal Power Project at Ash Dyke of NCTPS in accordance with the provisions of Clause 29(viii) of the Tender Document read with the provisions of the Tamil Nadu Transparency in Tenders Act, 1998 and the Tamil Nadu Transparency in Tenders Rules, 2000; and
ii)W.P.27529/2014:- Writ of Certiorarified Mandamus calling for the records of the fourth respondent's impugned proceedings bearing Lr.No.CE/P/SE/M/P/EE-10/E/P/F.2x660MW Ennore SEZ/STPP/D.60/ dated 27.9.2014 awarding to the 3rd respondent the tender bearing SPEC.No.CE/C/P&E/EE/E/OT No.3/2013-14 issued in respect of the 2x660 MW Ennore SEZ Supercritical Thermal Power Project at Ash Dyke of NCTPS invited by the 1st and 2nd respondents culminating in its Lr.No.CE/P/SE/M/P/EE-10/E/F.Ennore SEZ/D.64/14 dated 10.10.2014, quash the same and direct the 1st, 2nd and 4th respondents to determine the award of the tender strictly in terms of the Tender/Bid document bearing SPEC.No.CE/C/P&E/EE/E/OT No.3/2013-14 taking into account the petitioner's bid and the comparative merits of the petitioner and the 3rd respondent.
For Petitioner in both W.Ps. : Mr.N.L.Rajah For Respondents 1 & 2 Mr.AL.Somayaji in both W.Ps. & R4 Advocate General in WP No.27529/14 : Assisted by Mr.P.Gunaraj For Respondent-3 Mr.Krishna Srinivas in both W.Ps. : M/s.S.Ramasubramanian Associates COMMON ORDER
The Tamil Nadu Generation and Distribution Corporation Limited, which is the first respondent herein, issued a tender notification on 06.5.2013 for the setting up of two units of 660 MW Supercritical Thermal Power Project at the Ennore Special Economic Zone. After a pre-bid meeting held on 29.5.2013 and after changes to tenders documents were finalised on 25.6.2013, four parties submitted Techno Commercial Bids and Price Bids on 26.7.2013. Two out of those four bids were rejected for non compliance of Bid Qualifying Requirements.
BHEL. Therefore, challenging the award of the contract to the third respondent, the petitioner came up with the second writ petition, namely W.P.No.27529 of 2014. Hence both the writ petitions were taken up together and I have heard Mr.N.L.Rajah, learned counsel appearing for the petitioner, Mr.AL.Somayaji, learned Advocate General appearing for the Board, assisted by Mr.P.Gunaraj, learned Standing Counsel for the Board and Mr.Krishna Srinivas, learned counsel appearing for the third respondent-BHEL.
bidder should be an Indian Steam Generator and Steam Turbine Generator or the manufacturer of Supercritical Steam Generator. Alternatively, the bidder should be a EPC Contractor or be part of a consortium of not more than four members who shall satisfy the criteria indicated in paragraph 4.1.3. Paragraph 6.1 of the tender document made it clear that time was the essence of the contract. A detailed procedure was laid in the tender document for the submission as well as the processing of the tender. Paragraph 25.1 made it clear that there was no obligation for the first respondent to accept the lowest or any tender. The first respondent also reserved under paragraph 25.3, the right to relax or waive any of the conditions of the specification in the best interests of the first respondent. Paragraph 31 dealt with the evaluation of technical bids and paragraph 31.1 stipulated that the provisions of Tamil Nadu Transparency in Tenders Act, 1998 and the Rules framed thereunder would be followed. Paragraph 32 laid down the procedure for evaluation of price bids. As per paragraph 32.1.6, the Present Value of the project would be determined on the basis of cash flow of the EPC Price during the construction period, IDC, cost of owner's equity, loan drawals and debt service. Under paragraph 32.1.7, certain other factors such as Power Output, Steam Generator Efficiency, Turbine Cycle Heat Rate, etc. will be taken into account. Eventually, the sum total of the factors indicated in paragraph 32.1.6 and 32.1.7 would be taken as the "Evaluated Bid Price" of the bidder.
(i) procedural impropriety and the failure of the first respondent to comply with the provisions of the Tamil Nadu Transparency in Tenders Act, 1998 and the Rules issued therein,
(ii) failure of the first respondent to consider certain issues of public interest, (iii) wrong evaluation of the price bid of the petitioner vis-a-vis the third respondent, and
(iv) breach of confidentiality, in that the first respondent negotiated with the third respondent even during the period when the evaluation process was on. Let me now take up these grounds of challenge one after another.
PROCEDURAL IMPROPRIETY
every District. The functions of the Bulletin Officers are indicated in Section 6. Under Sub-section (1) of Section 6, the Tender Bulletin Officer shall publish information (a) relating to details of notice of invitation of tender, and (b) relating to acceptance of tender together with a comparative analysis and reasons for acceptance of tenders. The bulletin so published should be made available for sale in the office of the Tender Bulletin Officer.
(i) that the procedure prescribed for evaluation of the bids of the petitioner and the third respondent under Section 10 had not been followed;
(ii) that no reasons are indicated as required by Section 10(6) for the acceptance of the tender; and
(iii) that no information was passed on, as required under Section 6 to the Tender Bulletin Officer for publication in the Gazette.
The common thread, according to the petitioner, running throughout the provisions of Sections 6 and 10 is that reasons should be recorded by the Tender Accepting Authority and that the same should also be published in the Gazette, along with a comparative analysis. The order awarding the contract, according to the learned counsel, is vitiated for non compliance of these requirements.
State Tender Bulletin Officers to publish the bulletins once in a week. The importance of such publication needs hardly to be emphasised, in view of the fact that under Sub-rule (4) of Rule 5, the Secretary to Government or the District Collector may even direct the Bulletin Officers to publish extraordinary issues of the tender bulletin, if such publication is required to be made urgently. Rule 6 mandates the Tender Bulletin Officers to make available, copies of the tender bulletin for the benefit of the public as well as to persons who subscribe to the same. Under Rule 7, the tender bulletin is required to contain only an information of the notice inviting tenders and the orders accepting a tender. Rule 7(1) makes it clear that the tender bulletin does not in itself create a legal right or liability. Rule 7(2) makes it clear that a notice inviting tender will not be invalidated merely on the ground that the notice although published in newspapers, has not been published in one or other of the District or State bulletins. Under Rule 8, all notices inviting tenders and the decisions on tenders where the value of procurement exceeds a particular limit, should be published in the District tender bulletin, subject to the provisions of Rule 10. Similarly, all notices inviting tenders and the decisions on the tenders, where the value of procurement exceeds Rs.25.00 Lakhs and where the Tender Inviting Authority is the Government or Local Authority or a Public Sector Undertaking, should be published in the State bulletin.
received. Rule 32 requires the Tender Inviting Authority to provide for pre-qualification of tenderers, on the basis of experience and past performance. But, this can be done only for reasons to be recorded in writing.
postulates the issue of a letter of intent to the successful bidder. Therefore, it is the contention of the learned Advocate General that so long as these stipulations have been complied with, the tenderer, whose bid was not accepted, cannot make out a case.
"Tender bulletin to contain information only.-
(1) The tender bulletin shall contain only information of the notice inviting tenders and the orders accepting a tender and does not in itself create a legal right or liability.
(2) A notice inviting tender will not be invalidated merely on the grounds that the notice although published in newspapers has not been published in one or the other of the District Tender Bulletins or State Tender Bulletins or when published in the State Tender Bulletin could not be published in a District Tender Bulletin or vice versa. "
as required in Section 6, in the State Tender Bulletin, the same cannot invalidate the very tender process.
"If the Tender Accepting Authority proposes to accept the tender as per the provisions of this section, he shall pass orders accepting the tender together with reasons for such acceptance."
"The Tender Accepting Authority shall intimate the information regarding the name and address of the tenderer whose tender has been accepted along with the reasons for rejection of other tenders to the appropriate Tender Bulletin Officers."
the Tamil Nadu Transparency in Tenders Act, 1998, the Right to Information Act, 2005 also has as its objects, the right to information of individual citizenry in a democracy and the need for transparency of information. Keeping these objects in mind, Section 4 of the Act lists out the obligations of public authorities. Under Section 4(1)(d) of the Right to Information Act, 2005, every public authority shall provide reasons for its administrative or quasi judicial decisions to affected persons. The definition of the expression "public authority" under Section 2(h) is very comprehensive. It includes any authority or body or institution of self-government, established or constituted either by or under the Constitution or by any other law made by Parliament or by any other law made by State legislature or by notification issued or order made by the appropriate Government. It includes a body, owned, controlled or substantially financed. More than all this, the definition includes even non-governmental organisations substantially financed, directly or indirectly by funds provided by the appropriate Government.
for its administrative decision to award the contract.
petitioner offered that the rate of interest could be scaled down from 7.2% to 6.2%. This offer of the petitioner, according to the learned Advocate General, being a post bid offer, was liable to be rejected in terms of Clause 25.4 of the tender document. But, the offer made by the third respondent for the reduction of the rate of interest was after they were identified as L1.
report of the consultant in their favour.
respondent, I do not know why the copies were also sent to the Chief Secretary to Government and the Minister for Electricity. However, the petitioner was not eventually disqualified on that account, by invoking Clause 29. Therefore, the petitioner should be happy about it.
P&H 44] that the price offered is only one of the criteria and assessment of quality of the goods and the past performance of the tenderer are material factors for deciding to whom the contract should be awarded.
counsel also brought to my attention a report of The Bank of America Merrill Lynch, Research Analyst, which compared the various projects undertaken by the Consortium company of the first respondent as well as the third respondent. Though the report also takes note of delay in the commissioning/completion of the projects, the overall performance was rated to be good. In a letter dated 12.12.2012, the first respondent itself appreciated the help extended by the third respondent, in restoring Unit IV of MTPS, when it was taken out of service due to high turbine vibration. A similar certificate was issued by the Nuclear Power Corporation of India Limited in respect of Unit II of Koodankulam Power Project appreciating the extra mile that the third respondent willing to go. Therefore, on the basis of all these, it is contended by Mr.Krishna Srinivas, learned counsel for the third respondent that the first respondent could not have judged the capacity of the third respondent only on the basis of the delay in the completion of a few projects.
third respondent, a few others had also been left in the fray, with some of them having past experience. But, when only two persons are left in the fray with one having little past experience in India worthy of any assessment and the other having a long past, some of which also had its bad patches, there is no point in finding fault with the decision of the Tender Accepting Authority in choosing the person with a huge past experience. It must be remembered that the third respondent is a public sector undertaking. Admittedly, it is rated as Maharatna company. A Central public sector enterprise is considered for Maharatna status only if the following criteria are satisfied:
(a) Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations;
(b) An average annual turnover of more than Rs.25,000 crores during the last three years;
(c) An average annual net worth of more than Rs.15,000 crore during the last three years;
(d) An average annual net profit after tax of more than Rs.5,000 crore during the last three years; and
(e) Should have significant global presence/international operations.
Court pointed out in Arun Kumar Agarwal v. Union of India [2013 (7) SCC 1] that the report of the Comptroller and Auditor General is always subject to parliamentary debates and it is for the Public Accounts Committee either to accept the Ministry's objection to the report or to reject the report itself. It is no doubt true that the Supreme Court highlighted the respect to be shown to the report. But, the Court held that the comments offered on the report also assumed significance. Therefore, I do not think that the petitioner can pitch the claim on the basis of the report. Hence the second ground of attack is also liable to be rejected.
WRONG EVALUATION :-
Comparative Financial Evaluation
(as per Clause 32.0 "Price Bid Evaluation" of the Tender Document
Section 1, Volume I)
Amount in INR Cr
Description Consortium BHEL Advantage
S.
to First
No
Respondent
1 EPC Cost 9207.264
(Cost include
7788.000
customs duty of
Rs.908.15 crore)
2 % Debt 85% 75%
(Rs.7826.175 (Rs.5841
Crore) Crore)
3 % Equity 15% 25% 565.911
(Rs.1381.089 (Rs.1947
Crore) Crore)
Advantage
S.
Description Consortium BHEL to First
No
Respondent
4 Interest Rate per
6.20% 12.15% 5.95%
annum
5 Total Cost of
Ownership after 15.5 17182.115 18744.627 1562.512
Yrs (TCO)
6 Present Value of
Total Cost of 9671.160 10550.639 879.479
Ownership (TCO)
7 Present Value per MW 7.327 7.993 0.666
8 Present Value (After
Loading on 9844.389 10560.926
716.537
Performance (173.229) (10.287)
Guaranteed Values)
9 Present Value per MW
(After Loading on
7.457 8.00 0.544
Performance
Guaranteed Values)
Comparative Financial Evaluation
(as per Clause 32.0 "Price Bid Evaluation" of the
Tender Document Section 1, Volume I)
Amount in INR Cr
Advantage to
S.No. Description Consortium BHEL First
Respondent
1 EPC Cost 9207.264
(Cost
include
7788.000
customs duty
of Rs.908.15
crore)
2 % Debt 85% 75%
(Rs.7826.175 (Rs.5841
Crore) Crore)
3 % Equity 15% 25%
(Rs.1381.089 (Rs.1947 565.911
Crore) Crore)
| S.No. | Description | Consortium | BHEL | Advantage to First Respondent |
|---|---|---|---|---|
| 4 | Interest Rate per annum |
7.20% | 12.25% | 5.05% |
| 5 | Total Cost of Ownership after 15.5 Yrs (TCO) |
18180.421 | 18830.102 | 649.681 |
| 6 | Present Value of Total Cost of Ownership (TCO) |
10233.069 | 10598.749 | 365.680 |
| 7 | Present Value per MW |
7.752 | 8.029 | 0.277 |
| 8 | Present Value (After Loading on Performance Guaranteed Values) |
10406.298 (173.229) |
10609.036 (10.287) |
202.738 |
| 9 | Present Value per MW (After Loading on Performance Guaranteed Values) |
7.884 | 8.037 | 0.154 |
" the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; and (ii) Whether public interest is affected.
first respondent has taken into account the overall implication that the management fee, commitment fee and guarantee fee, would have upon the total financial outlay. Though the petitioner has filed a reply to the counter affidavit, purportedly attempting to remove the misgivings on the part of the first respondent, I do not think that I can take the role of a Financial Analyst to come to a conclusion as to whether the apprehensions of the first respondent were baseless or not.
BREACH OF CONFIDENTIALITY:
to receive the communication and prepare the letter of acceptance within the time span of 19 minutes. This, according to the learned counsel for the petitioner, amounted to breach of confidentiality. Under Section 10(3) of the Tamil Nadu Transparency in Tenders Act, 1998, any price negotiation during the course of evaluation was prohibited and that therefore, the impugned action is completely illegal.
the petitioner was informed of the reasons for the rejection of their bid. None of the communications of the fourth respondent bear any indication of time, at which they were signed. The letter of acceptance of the contract dated 27.9.2014 signed by the Senior Manager of the third respondent alone bears the time 15.15 hours. The letter of rejection dated 27.9.2014 sent by the first respondent to the writ petitioner appears to have been tendered at the post office (MES Post Office) at Chennai-2 at about 14.56 pm for being sent by speed post.
petitioner sent one more representation along with the documents on 25.8.2014.
(i) Way back in May 2007, the TNEB decided to set up two units of 800 MW coal based thermal power project at Udangudi in Tuticorin District under the State Sector. In October 2007, the Government of Tamilnadu approved the signing of a MOU between TNEB and BHEL. Pursuant to the MOU, a Joint Venture Agreement was signed between TANGEDCO and BHEL on 26.12.2008. The Joint Venture was named as Udangudi Power Corporation Limited and the Joint Venture Partners were to invest 26% each in the equity of the company. But, despite the fact that a sum of Rs.32.5 Crores was allotted by TANGEDCO and an equivalent amount was allotted by BHEL, environmental clearance was not obtained due to
the failure to obtain long term coal linkage.
(ii) In the meantime, a proposal for setting up a coal based thermal power plant was mooted in 2010. The Standing Committee examined the merits and demerits of several modes of execution of the project such as (i) single EPC cum finance contract; (ii) single EPC without finance contract; (iii) multiple EPC without finance contract; (iv) joint venture contract; and (v) tariff based competitive bidding. Eventually, the Board took a decision in May 2011 for the establishment of what was called "Ennore SEZ Project of 2 X 800 MW Coal Based Super Critical Thermal Power Plant in Ash Dyke of NCTPS" under single EPC without finance basis.
(iii) Thereafter, steps were taken for engaging a Project Consultant to prepare EPC bid specifications and to offer pre and post contract consultancy services till the commissioning of the plant under open tender two part system. It appears that eight consultancy firms participated and eventually a Delhi based company by name Desein Private Limited was chosen for the award of the consultancy contract in January 2012. Simultaneously, steps were also taken to enter into a memorandum of understanding with the Minerals and Metals Trading Corporation Limited, which is a Government of India Enterprise, for the supply of coal to the extent of about 4.549 MT per annum. The memorandum of understanding was entered into on 26.5.2012. (iv) But, in December 2012, the Board of TANGEDCO decided to standardise the unit capacity as 660 MW supercritical units instead of 800 MW. The Government of Tamil Nadu accepted the proposal to standardise the unit capacity as 660 MW, in February 2013. Consequent upon the standardisation of the unit capacity, the Board appears to have taken a survey of all the Thermal Units commissioned during the period 2010-11 and 2011-12 throughout India, as seen from Vol.III of the current file. Thereafter, the Board appears to have resolved to call for tender on EPC cum debt financing basis with the Government guaranteeing for the debt financing. This resolution of the Board for standardisation of unit capacity and for Government guarantee for the financing by the EPC contractor was approved by the Government on 1.2.2013.
(v) Pursuant to the above decisions, open tender with two part system was floated in May 2013. The pre bid meeting was held on 29.5.2013. 16 companies had purchased the tender documents, but only 13 attended the pre bid meeting. Out of them, 9 forwarded the pre bid queries. Among them, 4 furnished commercial queries. On the basis of the queries and reply submitted by the Consultant, necessary amendments were issued.
(vi) Thereafter, Techno Commercial Bids were opened on 26.7.2013. Only 4 bidders including the writ petitioner and the third respondent herein had submitted the bids. While the third respondent participated under the category of "Indian Steam Generator and Steam
Turbine Generator Manufacturer", as per Clause 4.1.1(a) of BQR, the writ petitioner participated as EPC contractor having consortium with an Indian partner, as per BQR Clause 4.1.3.
(A) The third respondent participated as Indian Steam Generator and Steam Turbine Generator Manufacturer, as per Clause 4.1.1(a) of BQR. The petitioner participated as a Foreign EPC Contractor having consortium with an Indian partner as per BQR 4.1.3.
(B) The third respondent furnished end user certificate dated 15.2.2012 from Sanjay Gandhi Thermal Power Station MPPGCL, MP for having supplied and installed 1 X 500 MW Coal Fired Thermal Power Unit on turnkey basis inclusive of civil, mechanical and electrical works related to boiler, turbine, cooling water system, coal handling system and their auxiliaries. But, the writ petitioner did not furnish the end user certificate for supercritical equipments along with the bid. It was only after a clarification was sought that the writ petitioner furnished copies of the end user certificates for steam generator, supercritical steam turbine and turbo generator from the respective Chinese companies.
(C) The consortium agreement entered by the writ petitioner did not include supercritical equipment manufacturer, but they had entered into a joint undertaking with supercritical equipment manufacturers. (D) The writ petitioner was noted as having not furnished documentary evidence for their own engineering division. But, when questioned, the petitioner produced a certificate dated 8.10.2013 issued by the Chinese company for having done detailed power project engineering with their own set up and
(E) Interestingly, the note dated 14.11.2013 also discloses that in their anxiety, the writ petitioner produced a Bipartite Consortium Agreement, where the name of the project was wrongly mentioned as 2 X 660 MW Udangudi Supercritical Thermal Power Project, instead of "Ennore SEZ Project". Only after the second respondent sought clarifications, the petitioner replaced the relevant pages.
petitioner as having satisfied BQR conditions. It is also seen that when the note was generated on 14.11.2013, the end user certificate duly attested and authenticated by the Indian Embassy was actually awaited. Even the Letter of Intent produced by the writ petitioner was valid only for six months, which was not in compliance with BQR. But, their bid was taken as qualified on their assurance that they will obtain extension of the validity of the Letter of Intent before the expiry.
"4.1.1.(a) Bidder shall be an Indian Steam Generator and Steam Turbine Generator manufacturer, who has designed, engineered, manufactured, supplied, erected, commissioned at least one number of 500 MW or above coal fired steam generator and steam turbine generator along with associated auxiliaries which is in successful operation for at least one year as on the date of techno commercial bid opening. Such Indian manufacturer shall have valid ongoing collaboration and technology transfer agreement(s) including license to manufacture and supply in India the supercritical steam generator and supercritical steam turbine generator sets covering the type, size and rating specified with a supercritical steam generator manufacturer and a supercritical steam turbine generator manufacturer who has supplied, erected, commissioned such equipments at least for one unit of capacity 660 MW and above. The collaboration and technology transfer could be separate for supercritical steam generator and supercritical steam turbine generator and be valid at least up to the defect liability period of the contract (or) (b) Bidder shall be a manufacturer of supercritical steam generator or a manufacturer of supercritical steam turbine generator or manufacturer of both the equipments, who has designed, engineered,
manufactured, supplied, erected, commissioned at least one unit of minimum 660 MW capacity coal fired supercritical steam turbine generator/supercritical steam generator as the case may be, along with associated auxiliaries which is in successful operation for at least one year as on date of techno commercial bid opening. If the bidder is the manufacturer of only supercritical steam generator or supercritical steam turbine generator, the bidder has to source the other equipment i.e the steam generator or steam turbine generator as the case may be, from a manufacturer who also satisfies the above criterion. The steam generator/ steam turbine generator manufacturer shall have life time facility for services and spares in India for the equipments supplied by them before the COD of the first unit and this facility shall meet the requirements indicated in Annexure 1.1 - BQR - Para 1.5 (A) of this section.
The Indian subsidiary/joint venture company set up by the above supercritical equipment manufacturer satisfying Clause 4.1.4 can also participate based on the experience and strength of the parent company/technology partner.
(or)
4.1.2. Bidder shall be a EPC contractor having their own Engineering Division who has executed EPC contracts for one coal based thermal power project of unit capacity of not less than 500 MW. These projects shall be in successful operation for at least one year as on date of techno commercial bid opening. The bidder shall source the steam generator and steam turbine generator from equipment manufacturers satisfying Cl. 4.1.1. (b) above.
(or)
4.1.3. Bidder may quote as a consortium of not more than four members and the members of the consortium will be from the following :
contract value of INR 400 Crores or more for a power generation project, which is in successful operation for at least one year as on date of techno commercial bid opening. The leader of the consortium shall either be a steam generator/steam turbine generator/EPC contractor as mentioned above.
"4.0. Evaluation 4.1 BHEL
BHEL has arranged finance from M/s.Power Finance Corporation of India.
They are arranged to finance 75% of the total cost as debt at an interest rate of 12.25% p.a.
Attached Annexures 1 to 5 indicate the methodology adopted in calculating the various components required for evaluation like IDC-Debt, IDCEquity, IDC-UF Fess, Debt Repayment Schedule etc.
4.2. CSEPDI - TRISHE
CSEPDI-TRISHE has arranged finance from M/s.ICBC, China.
They have arranged a finance 85% of the total cost as debt at an interest rate of 7.2% p.a.
Attached Annexures 6 to 12 indicate the methodology adopted in calculating the various components required for evaluation like IDC-Debt, IDCEquity, IDC-UF Fess, Debt Repayment Schedule etc.
5.0. EVALUATED LOWER COST
| BHEL | CSEPDI- TRISHE |
|
|---|---|---|
| All figures in Rs. (Croes) |
All figures in Rs. (Crores) |
|
| Capacity 1320 MW |
1320 MW | |
| A | Total EPC cost excluding VAT 7762.977 |
9207.264 |
| B | EPC Debt 75% 5822.233 |
7826.174 |
| C | EPC Equity 25% 1940.744 |
1381.090 |
| D | IDC Debt 12.25% 1295.079 |
1228.378 |
| BHEL | CSEPDI- TRISHE |
||
|---|---|---|---|
| E | EPC Debt including IDC (B+D) |
7117.311 | 9054.552 |
| F | Upfront Fees Including Interest |
8.925 | 801.180 |
| G | Total Debt (E+F) | 7126.237 | 9855.732 |
| H | Interest on Equity | 14% 509.597 |
456.606 |
| I | Total Equity (C+H) | 2450.341 | 1837.695 |
| J | Total Project Cost (G+I) | 9576.578 | 11693.427 |
| K | Total Cost per MW | 7.255 | 8.859 |
| L | PV - Debt | 7553.364 | 8164.318 |
| M | PV - Equity | 2809.403 | 2106.984 |
| N | Total PV | 10362.767 | 10271.302 |
| O | PV Cost per MW | 7.851 | 7.781 |
| P | Loading for Deficiency | 10.287 | 173.229 |
| Q | Total (N+P) | 10373.054 | 10444.531 |
| R | Evaluated Bid Price per MW |
7.858 | 7.913 |
at Delhi on 30.5.2014. This report was supposed to be confidential. The file does not disclose that this report was communicated to the writ petitioner. But nevertheless, the writ petitioner started sending representations one after another, right from 30.5.2014. In the representation dated 16.6.2014, the petitioner questioned the correctness of the calculation made by the respondents 1 and 2 to arrive at the Evaluated Bid Price per MW. I do not know how the petitioner came to be aware of the evaluation made by the first respondent.
Cost, as per the CERC Order dated 4.6.2012. Thereafter, the Consultant appears to have justified the rate reasonableness, as seen from a report attached to the note for the 164th Meeting of the Board Level Tender Committee scheduled to be held on 7.7.2014. In this note, the vendor rating of the third respondent was also recorded to be satisfactory.
post. This letter related to a clarification in respect of the financial charges provided in the Term Sheet. As in the case of the first letter dated 30.5.2014, copies of this letter dated 13.6.2014 were also sent to the various officials including the Adviser to the Government and the Secretary to the Chief Minister.
"In addition to the above, TANGEDCO Board noted that the past performance of all twelve 210 MW Units of BHEL in TANGEDCO are satisfactory with high Plant Load Factor. The period of performance of BHEL Units in TANGEDCO is a long one and twelve numbers of 210 MW Sets of BHEL are in service with high performance in TANGEDCO viz. TTPS (5 X 210 MW commissioned in July 1979, December 1980, April 1982, February 1992, March 1991 respectively), MTPS (4 X 210 MW commissioned in August 1987, June 1988, December 1989, July 1990), NCTPS (3 X 210 MW commissioned in April 1995, June 1995, March 1996). TANGEDCO is able to run these twelve numbers of 210 MW Power Plants Equipments supplied by BHEL even more than 30 years and they have been given Government of India's meritorious productivity rewards for all the three thermal stations for the 'Best Performance of the plant.'
TANGEDCO Board also noted the following bid documents submitted by BHEL in their bid in respect of 2 X 660 MW Ennore SEZ :
BHEL have installed capacity totalling to 1,09,506 MW in our country as on 31.12.2012 and that constitute 69% of the total power generated.
Worldwide, their installed capacity stands at around 1,20,000 MW.
Their sets are operating at a PLF of 77% in 201112.
BHEL have contracted 475 thermal sets with
ratings from 30 to 800 MW and many of these sets were executed on EPC basis. Major thermal projects executed on EPC basis with various capacity totalling to 12340 MW.
BHEL have enclosed for Bid Qualifying Requirements (BQR) :
i. A list of 58 numbers of 490/500/525 MW sets commissioned by them toa capacity totalling to 29,030 MW.
ii. A list of 122 numbers of sub-critical thermal plants/combined cycle power plants under execution by them to a capacity totalling to 46,991 MW.
iii. A list of 15 numbers of supercritical thermal plants under execution by BHEL to capacity totalling to 21,760 MW.
For Bid Qualifying Requirements in 2 X 660 MW Ennore SEZ, BHEL have enclosed end user certificate from :
a. Chief Engineer (Gen)/Sanjay Gandhi Thermal Power Station for having commissioned 1 X 500 MW (Unit 5) in MP.
b. Executive Director/Bellary TPS/Karnataka Power Corporation Limited for having commissioned 1 X 500 MW (Unit 1) in Karnataka.
c. Chief Engineer (Gen. P & P)/Maharashtra State Electricity Board for having commissioned 2 X 500 MW (Unit 5 & 6) at Chandrapur in Maharashtra.
d. Chief Engineer (Gen. P & P)/Maharashtra State Electricity Board for having commissioned 1 X 500 MW (Unit 7) at Chandrapur in Maharashtra.
Considering various certificates issued by the end users and also the performance of the thermal power plants supplied by BHEL in TANGEDCO, the vendor rating/past performance of BHEL is satisfactory to TANGEDCO."
Government Enterprises and Public Sector Undertakings. Therefore, there is a public perception that the award of every contract is to be viewed with suspicion. Though the Courts are not empowered to view the award of every contract with suspicion, the manner in which human mind is tuned at the subconscious level, may make it impossible to avoid the suspicion.
(i) that the third respondent is a Government of India Enterprise with a Maharatna status, while the petitioner is a private limited company having a consortium agreement with a Chinese company;
(ii) that the debt component of the offer made by the third respondent would also come only from a Government of India Enterprise namely the Power Finance Corporation Limited, while it has to come from the Industrial and Commercial Bank of China in so far as the writ petitioner is concerned;
(iii) that normally a decision in favour of a public sector undertaking whose major shareholding is with the Government of India, may have to be viewed with a lesser amount of suspicion than a decision in favour of private players;
(iv) that though after the advent of globalisation, no argument can be advanced on the basis of Videshi-Swadeshi concept, the fact remains that a decision in favour of a public sector enterprise cannot be easily upset without a strong case being made out and
(v) that it is seen from the current files that the writ petitioner was aware of every move and every step taken by the respondents 1, 2 and 4 and the writ petitioner appears to have chased the decision making process at every stage right from 30.5.2014, making their conduct more suspicious than that of the others. Therefore, the 4th contention of the writ petitioner also deserves the same fate as that of the others.
competitors. It is the Consultant appointed for the purpose by the TANGEDCO, who had arrived at the evaluated price per MW by following certain methodology. The Consultant was appointed through an independent process of selection that preceded this tender. Moreover, under paragraph 32.1.7, certain factors such as Power Output, Steam Generator Efficiency, Turbine Cycle Heat Rate, etc. will have to be taken into account. Eventually, the sum total of the factors indicated in paragraph 32.1.6 and 32.1.7 are to be taken as the "Evaluated Bid Price" of the bidder. Therefore, there is no substance in the contention of the petitioner.
"This Court can take a judicial notice of the fact that this State is reeling under power shortage and the commissioning of the above said projects is vital and very much important to the welfare of the State and therefore, expects the respondents 1 and 2 to act fairly and reasonably by considering the representations of the petitioner dated 16.6.2014, 17.6.2014, 1.7.2014 and 8.7.2014. The letter dated 20.7.2014 addressed to the learned Advocate General by
the Principal Secretary/ Chairman and Managing Director of TANGEDCO also states that the above said post bid representations submitted by the petitioner will be duly considered by its Board of Directors while finalising the tenders and appropriate orders will be passed strictly in accordance with the tender specifications and Tamil Nadu Transparency in Tenders Act, 1998 and the rules framed thereunder and being a State Agency, it is under obligation to do so and till the respondents 1 and 2 consider and pass orders on the above said representations, after affording opportunity of personal hearing to the authorised representative of the petitioner and communicate the same to the petitioner, finalisation of bid/ tender cannot be done.
"13. On a perusal of the statutory provisions, we find that the rule nowhere contemplates affording of personal hearing to the person who is objecting. Hence, the first respondent cannot demand personal hearing, as a matter of right. However, it is made clear that if any clarification is required regarding the documents submitted by the first respondent to the appellants to consider its objections, the same shall be called for from the first respondent and if such clarification is sought, the same shall be communicated to the second respondent also and after considering the clarification to be given by the first respondent, the first appellant shall pass an order as directed by the learned Single Judge. It is also made clear that if an opportunity of personal hearing is
afforded to the first respondent, if it is required to be afforded, after considering the clarification given by the first respondent, the same shall be extended to the second respondent also.
There will be no order as to costs. Consequently, M.P.Nos.1 of 2014 in both the writ petitions are also dismissed.
Sd/-
Assistant Registrar(CS V)
//True Copy//
Sub Assistant Registrar
kpl/RS
To
1. The Chairman & Managing Director
Tamil Nadu Generation and Distribution
Corporation Limited (TANGEDCO)
144, Anna Salai, Chennai 600 002.
+3cc's to Mr.N.L.Rajah, Advocate, S.R.No.18945 +2cc's to Mr.P.Gunaraj, Advocate, S.R.No.18935
W.P.Nos.26762 & 27529 of 2014
GR(CO) CA(22/04/2015)
3 issues framed by the court
Did the tender award violate statutory duties to record reasons, communicate them and publish tender information?
Did the financial evaluation and assessment of past performance warrant judicial interference with the tender award?
Did negotiations with the successful bidder breach confidentiality or deny the petitioner a level playing field?
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10 provisions across 5 enactments
CSEPDI – TRISHE Consortium
Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO)
The Chief Engineer/Civil/Project & Environment TANGEDCO
Bharat Heavy Electricals Limited (BHEL)
The Chief Engineer/Projects TANGEDCO
V.RAMASUBRAMANIAN
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
