CRRC Corporation Ltd. V. Metro Link Express for Gandhinagar and Ahmedabad (MEGA) Company Ltd. - (Supreme Court) (15 May 2017)

Government owned company with its 100% wholly owned subsidiaries has to be comprehended as a single entity, eligible to bid in terms of Clause of tender conditions

MANU/SC/0633/2017

Contract

In instant case, dissension centres around exposition of an eligibility norm engrafted in tender conditions qua a prestigious project with global participation. Appellant stands disqualified by Respondent on touchstone of its perception of relevant qualifying criterion as endorsed by High Court vide judgment rendered in Special Civil Application, thus propelling it to this Court for redress. Appellant submitted that, exposition of Clause 2.4 of "Evaluation and Qualification of Criteria" furnished on behalf of MEGA and endorsed by High Court is patently erroneous and is incompatible with letter and spirit of Clause 4.1. Issues involved in present case is whether Appellant-corporation, to meet experience norm, as prescribed by Clause 2.4 of "Evaluation and Qualification of Criteria", can utilize experience of its subsidiary companies to qualify in "Initial Filter-cum-Qualification Requirement Bid".

Reading of Clause 4.1 of Instructions to Bidders reveals that, a bidder can be a single entity or a combination of such entities in form of a J.V. or a Consortium under an existing agreement or with intent to enter into such an agreement supported by a letter of intent. Thus, a single entity has been construed to be a valid bidder for all intents and purposes. In view of magnitude of project as well as experience and expertise essential for quality execution thereof, there seems to be no justification to infer, at first place, to exclude a government owned entity with its 100% wholly owned subsidiaries to be ineligible to participate in process. A single entity would assuredly include such a government owned entity along with its 100% wholly owned subsidiaries.

As recorded in Consortium of Titagarh Firema Adler SPA-Titagarh Wagons Ltd. v. Nagpur Metro Rail Corporation Limited, Appellant-corporation is a government owned entity with 100% wholly owned subsidiaries as a composite unit, so much so that, experience of any one of its constituent 100% wholly owned subsidiaries would be construable as its experience. It was proclaimed that, Petitioner (Respondent No. 2 therein) was a Government Company and owner of its subsidiary companies and that concept of "government own entity" could not be given a narrow construction so as to exclude its subsidiaries with their experience and that there was no necessity for formation of a joint venture and consortium for Government own entity to avail benefit of experience of its subsidiary companies. Acceptance of Petitioner (Respondent No. 2) therein in context of work awarded to it was in accord with public interest, Process of merger of M/s. CNR Corporation and M/s. CSR Corporation and integration thereof along with their subsidiaries to metamorphosise into Appellant-corporation is borne out by coeval records.

In that view of matter, status and entitlements of Appellant-corporation, as already adjudicated in Consortium of Titagarh Firema Adler SPA, as a single entity bidder in present tender process would also by yardstick of simple logic and analogy be available to it. Absence of words "government owned entity" in Clause 4.1, presently under consideration, is of no consequence. Plea of Respondent that, tender conditions involved demand a different perspective in overall conceptual framework thereof, lacks persuasion. Significantly, in Clause 4.1 involved in Consortium of Titagarh Firema Adler SPA, "government owned entity" had been contemplated as one of bidders in contradistinction to "private entity" and "any combination of such entities" in form of a joint venture (J.V.). Expression used in present Clause being "single entity", it is inclusive of a private as well as a government owned entity. Unit envisaged as a single entity is thus, independent of any combination or formation in form of a J.V. or a Consortium and thus, is visualised to be one integral and composite whole. In such a logical premise, a government owned company with its 100% wholly owned subsidiaries has to be comprehended as a single entity, eligible to bid in terms of Clause 4.1 of tender conditions and is to be regarded as single, coherent and homogeneous existence and not a disjointed formation.

Not only Appellant as record testifies had offered its responses to clarifications sought for, its status as a government owned corporation, by no means, has been disputed by MEGA. Further, in face of its demonstrated structural integrity and functional unity qua its subsidiaries with all consequential legal implications, apprehension of MEGA that, subsidiary companies of Appellant, if necessity so arises, would not be available for execution of project, not being a party to contract, is speculative, unfounded, farfetched and wanting in reason and rationale. Whether subsidiary companies of Appellant would be responsible for execution of work is evinced by formational specifics and functional dynamics of Appellant and its wholly owned subsidiary companies, as noticed in Consortium of Titagarh Firema Adler SPA in affirmative and does not call for further dilation.

Impugned disqualification of Appellant on ground of deficiency, in experience in terms of Clause 2.4, is unsustainable in law and on facts being grossly illegal, arbitrary and perverse. As a corollary, judgment of High Court in challenge is also set-aside. Tender process in view of the above conclusion, would be furthered as per the terms and conditions thereof and in accordance with law and taken to its logical end as expeditiously as possible.

Relevant : Consortium of Titagarh Firema Adler SPA-Titagarh Wagons Ltd. v. Nagpur Metro Rail Corporation Limited C.A. Nos. 1353-1354 of 2017

Tags : TENDER DIS-QUALIFCATION VALIDITY