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M/s Telephone Cables Ltd. v/s Bharat Sanchar Nigam

Ltd & Others
    CW 5808/2001
    Decided On, 29 April 2004
    At, High Court of Delhi
    By, THE HONOURABLE CHIEF JUSTICE MR. B.C. PATEL & THE
HONOURABLE MR. JUSTICE BADAR DURREZ AHMED
    For the Petitioner : A.S. Chandkiok, Sr Advocate, Siddharth Dutta,
Nishant Kumar Singh and Namita Chadda, Advocates. For the
Respondents : Ravi Sikri, Advocate.

Published In:-
Published In 2004 (112) DLT 112,   2004 (5) AD (Del) 203,   2004 (13) ILR (DLH) 325

Judgment Text
Badar Durrez Ahmed, J.

1.The petitioner is a manufacturer of polythene Insulated Jelly Filled (PIJF)

Cables. These PIJF Cables are required by the Respondent No.1 Bharat
Sanchar Nigam Limited (BSNL). For this purpose BSNL, issues tenders on an
annual basis. Those who bid for the tenders are, if they are found to be
qualified and eligible, allocated shares in the tender quantity depending on
their vendor ratings. The vendor ratings in turn are calculated on the basis of a
formula depending upon, inter alia, the price rating, delivery rating and quality
rating. In this petition we are concerned primarily with the delivery rating and
the resultant effect on the vendor rating.

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2.The tender in question is the Tender No. NN/SW/032001/000220 which was

issued on 27.3.2001 for the supply of PIJF Underground Cables. The notice
inviting tender was also issued on 27.3.2001 wherein it was indicated that the
tender quantity would be 441 LCKM and that the tenders would be opened on
22.5.2001 at 1200 hours. The petitioner as well as the respondent No.4
NICCO Corporation Limited (NICCO), amongst others, bid for the tender
quantity for supply of the said PIJF Cables. The petitioner as well as the
respondent No.4 were found to be qualified and eligible and accordingly were
to be allocated their respective shares of the total tender quantity in terms of
their respective vendor ratings. According to the petitioner the Delivery Rating
of the respondent No.4 (NICCO) was altered by the BSNL contrary to the
terms of the tender and subsequent to the date of issue of the tender whereby
the vendor rating of the petitioner was adversely affected. The petitioner who,
if the change in the delivery rating of the respondent No.4 was not made,
would have been V-1 and, therefore, would have been eligible to supply 30%
of the tender quantity, was relegated to the position of V-2 and accordingly the
allocation of the petitioner was reduced. This, in short, is the grievance of the
petitioner.

3.In this context the petitioner has prayed that a writ of certiorari be issued
quashing the Advance Purchase Orders issued on 11.9.2001 by the BSNL to
NICCO. The petitioner has also prayed for a writ of mandamus commanding
the BSNL to issue fresh Advance Purchase Orders in terms of the Vendor
Rating as on 22.5.2001, i.e. the date of opening of the tender, to the petitioner.
The petitioner has also prayed for a writ of certiorari quashing the Revised
Delivery Rating of the respondent No.4 (NICCO) asset out in the Internal office
Memo dated 27.2.2001.

4.Thus, this petition is to be decided on the simple issue as to whether it was

permissible for the BSNL, under the Tender Conditions, to alter the Delivery
Rating of the tenderers after the date of opening of the tender, i.e. 22.5.2001
and, if so, to what extent? In order to arrive at an answer, it would be
necessary to refer to certain Clauses of the Special Conditions of Contract
pertaining to the tender in question. We need to note Clauses 13(i), 13(ii),
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Clause 19, 19.3.8 and Clause 22(d). The aforesaid Clauses are set out herein
below:-

“13(i). The purchaser intends to limit the number of bidders selected for
ordering against this tender to 2/3rd of the participating and eligible bidders in
each group (eligible as per Clause 2 of Sec. II of the Bid Documents). The
bidders for placement of order will be selected from the list of technically and
commercially responsive bidders arranged in decreasing order of the Vendor
Rating starting from the highest. Any fraction below 0.5 in the number of
vendors, as computed above shall be ignored and the same equal and above
0.5 will be rounded off to the next higher integer.

13(ii). The bidder with the highest Vendor Rating (V-I bidder) will be
considered for about 30% of his tendered quantity. The balance quantity will
be distributed amongst the remaining selected bidders in each group in direct
ratio of their Vendor Rating.”

“19. All the vendors will be rated as per the following Vendor Rating formula.

VENDOR RATING (VR) = 0.6PR + 0.3DR + 0.1QR

Vendor PR = Price Rating.

DR = Delivery Rating.

QR= Quality Rating.

"19.3.8 If the delay is caused due to Departmental reasons as certified by

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Competent Authority or Force Majeure Conditions, it will not be taken into

account in computing delays in supply."

“22. Clarifications on VRS:

xxxx xxxx xxxx xxxx

xxxx xxxx xxxx xxxx

(d) Any modification obtained by supplier on his request made after the date of
NIT which are in the nature of affecting the existing DR will not be taken into
account.

xxxx xxxx xxxx xxxx ”

5. Also of relevance is Clause 17 of the General (Commercial) Conditions of

Contract pertaining to the tender in question:-

“17. FORCE MAJEURE

17.1 If, at any time, during the continuance of this contract, the performance in
whole or in part by either party of any obligation under this contract is
prevented or delayed by reasons of any war, or hostility, acts of the public
enemy, civil commotion, sabotage, fires, floods, explosions, epidemics,
quarantine restrictions, strikes, lockouts, or act of God (hereafter referred to as
events) provided notice of happenings of any such eventuality is given by
either party to the other within 21 days fro

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the date of occurrence thereof, neither party shall by reason of such event be
entitled to terminate this contract nor shall either party have any claim for
damages against other in respect of such non-performance or delay in
performance, and deliveries under the contract shall be resumed as soon as
practicable after such an event come to an end or cease to exist, and the
decision of the Purchaser as to whether the deliveries have been so resumed
or not shall be final and conclusive. Further that if the performance in whole or
part of any obligation under this contract is prevented or delayed by reasons
of any such event for a period exceeding 60 days, either party may, at its
option, terminate the contract.

17.2 Provided, also that if the contract is terminated under this clause, the
Purchaser shall be at liberty to take over from the contractor at a price to be
fixed by the purchaser, which shall be final, all unused, undamaged and
acceptable materials, bought out components and stores (Illegible) which may
be in possession of the contractor at the time of such termination or such
portion thereof as the purchaser may deem fit, except such materials, bought
out components and stores as the contractor may with the concurrence of the
purchaser elect to retain.”

6. At the time of opening of the tender i.e. on 22.5.2001, the Delivery Rating of
the petitioner was 1 (one) and that of Respondent No.4 was 0.922183. While
the petitioner's Delivery Rating continued to remain 1 (one), the Respondent
No.4's (NICCO's) Delivery Rating was altered subsequently (on 27.7.2001) to
0.940763. In other words, the Respondent No.4's Delivery Rating was
increased and since all other things remained the same, relative to the
petitioner, the Vendor Rating of the Respondent No.4 was altered to the
detriment of the petitioner. This is clear from examining the formula for
calculating the Vendor Rating as indicated above. Vendor Rating is a function
of Price Rating, Delivery Rating and Quality Rating. If the Price Rating and the
Quality Rating remain the same, a change in the Delivery Rating would have
the consequential effect of changing the Vendor Rating. Thus, in such a
situation, if the Delivery Rating is increased or decreased the Vendor Rating
increases or decreases.
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7. The Delivery Rating of the respondent No.4 - NICCO was altered/modified

on the basis of a representation dated 25.5.2001 submitted by NICCO. In the
said representation dated 25.5.2001 it was indicated that as a result of
massive floods, from 23.9.2000, extensive damage was caused to the
equipments and as such there was an interruption in all production related
activities of NICCO for a period of over three and a half months. Because of
this, the respondent No.4 (NICCO) requested BSNL to take action in
recalculating their delivery schedule based on 90 days relaxation in delivery
for orders listed in Annexure 'A' and 60 days for orders listed in Annexure 'B' to
the said representation.

8. It is pertinent to note that on 6.6.2001 the Delivery Rating Review

Committee met to review the representation received from different
manufacturers (including the respondent No.4-NICCO) after the opening of
the tender on 22.5.2001. As regards NICCO the report of the said Delivery
Rating Review Committee reveals as under:

"M/s. Nicco Corporation represented that insufficient time is given under force
majeure clause. Since the subject does not come under this committees
purview the case may be forwarded to MM Cell, Sanchar Bhavan, New Delhi."

Ultimately, as recorded in the letter dated 27.7.2001, BSNL altered NICCO's

delivery rating from 0.922183 (as was originally intimated on 21.5.2001) to
0.940763 after giving the benefit of force majeure condition to Respondent
No.4 (NICCO).

9. In the counter affidavit filed on behalf of the BSNL, it is indicated that the
Vendor Rating consisted of three components as is clear from the formula
itself. It is further indicated in the counter affidavit at page 226 of the paper
book as under:-
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“The Respondent No. 4 had better PR than petitioner. The Delivery Rating of
the respondent No. 4 is however, lower than that of the petitioner. The
petitioner has Delivery Rating of one. Upon small correction of the respondent
No.4’s Delivery Rating from 0.922118 (sic) to 0.940763, by virtue of the fact
that the Respondent No.4 had better Price Rating, the Respondent No.4
becomes the Vendor with the rank one in the cable size 10/.5 mm (U/A).
Accordingly 30% of this size has been allotted to the Respondent No.4. The
petitioner being ranked at Vendor-2 also received orders for this size although
lesser than the respondent No. 4.”

The following table gives the relative Vendor Rating Position of the petitioner
and respondent No.4 before the modification in the Delivery Rating of the
Respondent No.4 was made:-

Name

QR

PR

DR

VR

Position as per Vendor Rating

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Petitioner

0.943570

0.966142

V-1

NICCO (R-4)

0.975290

0.922183

0.961829

V-3

10. It is the case of the petitioner that the alteration in the Delivery Rating by
invoking the force majeure clause cannot at all be permitted in view of the
Clause 22(d) of the Special Conditions of Contract particularly after the
opening of the tender. If that be the case then the petitioner would be V-1 and
would have been entitled to an allocation of 30% of the tender quantity. The
total tender quantity for the cable size 10/.5 mm (U/A) was 19.61400 LCKM
and if the petitioner was regarded as V-1 it would be entitled to 30% thereof,
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i.e. 5.37 LCKM. However, the petitioner was relegated to a lower position as a
result of the modification in the Delivery Rating of the Respondent No.4 which,
after the modification became V-1 and was allocated 30% of the tender
quantity. The petitioner, in fact, as a result of this modification, only got an
allocation of 0.51492 LCKM. Thus, according to the petitioner, it was deprived
of the allocation that it was entitled to under law. And, contends the petitioner

this was done in clear violation of the terms of the tender. This action is
alleged to be arbitrary and discriminatory.

11.On the other hand, it was contended on behalf of the respondents that the
force majeure clause had been invoked prior to the issuance of the NIT and
the subsequent modification in the delivery rating was not relatable to any
event subsequent to the issuance of the NIT or the opening of the tender. In
the affidavit filed on behalf of the BSNL, it is indicated that respondent No.4
(NICCO) had invoked the aforesaid force majeure clause 19.1 on 23.9.2000
contained in the previous tender dated 4.2.2001 vide their letter dated
3.10.2000 within 21 days of the occurrence. It is further stated that BSNL
studied the case of the respondent No.4 (NICCO) and granted it extension of
thirty days by their letters dated 1.12.2000 and 19.12.2000. Both the letters
have been placed on record and indicate that the delivery period in respect of
the previous tender had, in point of fact, been extended by thirty days.

12. The extension of the delivery period affects the delivery rating. An example
would clarify the position. Let us assume that an order was placed on "A" for
delivery of 1.00 LCKM by 31.3.2004. Let us further assume that during this
period, the said "A" was only able to supply 0.50 LCKM. It is also assumed
that the short-delivery was on account of force majeure and that the purchaser
extended the period of supply by thirty days, i.e. upto 30.4.2004. In the
extended period it is assumed that "A" supplies a further 0.25 LCKM. Now, if
the original delivery period is taken, the delivery rating of "A" would be much
lower than if he was permitted the benefit of the extended delivery. This is so
because in the latter case, he would have the benefit of supplying a further
0.25 LCKM. Thus, it is clear that the extension of the delivery period has the
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effect of enabling a supplier to increase his delivery rating.

13.In the facts of the present case, it is apparent that much prior to the
issuance of the NIT, the Respondent No.4 (NICCO) had been granted
extension of thirty days under the force majeure clause. As a result of which,
when the delivery rating of the respondent No.4 was to be calculated, the
benefit of the 30 days extension had to be given. As regards granting of
benefit for the 30 days extension, the same is also not controverted by the
petitioner. This would be apparent from paragraph 8 (j) of the Rejoinder
affidavit, which only reveals a grievance that a benefit of 45 days has been
given when it ought to have been only limited to 30 days. The relevant part of
Paragraph 8 (j) reads as under:-

“(j) Furthermore while revising the Delivery Rating of respondent No.4 from
time-to-time, one of the Purchase Orders of respondent No.4 was given the
benefit of 45 days and this data was not corrected to 30 days in spite of the
fact that the extension of only 30 days was granted under the Force Majeure
clause by respondent Nos.1 vide, their letters dated 1.12.2000 and
19.12.2000.”

It is further stated in sub-paragraphs (k) and (m) of the paragraph 8 of the

rejoinder affidavit as under:-

“(k) It is important to mention herein that all other relevant Purchaser Orders of
the respondent No.4 were only considered for extension of 30 days whereas
the Purchase Order No.13-6/CABLE/2000-XP (NICCO) dated 4.9.2000, was
given the extension of 45 days as against 30 days and the

Delivery Rating was calculated accordingly”.

“(m) Thus, the petitioner states that if the Delivery Rating of respondent No.4
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is recalculated on the basis of 30 days extension and data correction in lieu of

the 4 purchase orders as per para 3.2 as mentioned in letter dated 27.7.2001
of respondent No.3 then the correct Delivery Rating would be 0.931621 as
against 0.94760 (sic-should be 0.94763) as arrived by the respondent No.3.”

14. From the aforesaid it is clear that the force majeure clause which was
invoked by the respondent No.4 prior to the issuance of the notice inviting
tender and the opening of the tender related only to extension of the delivery
schedule by thirty days. However, the Advance Purchase Order has been
placed on respondent No.4 on the basis of delivery rating calculated on an
extension of forty five days which was not granted to respondent No.4 prior to
the issuance of the NIT. This would clearly be hit by the said Clause 22 (d)
which provides that any modifications obtained by a supplier on his request
made after the date of NIT which are in the nature of affecting the existing DR
will not be taken into account. It is clear that the modification of expending the
period from 30 to 45 days was done after the date of the NIT. Such
modification had the effect of altering the existing Delivery Rating. Clearly, this
was not to be taken into account. Therefore, the action of the Respondents
and in particular BSNL in altering the Delivery Rating based upon a 45 day
extension period was not at all permissible in law. However, it was permissible
for them to arrive at the calculations of Delivery Rating based on the 30 day
extended period, such extension having already been granted much prior to
the issuance of the NIT. This, as indicated above, is also an admitted position
as clarified in the rejoinder filed by the petitioner.

15.Thus, in the facts and circumstances of the case it does appear that the
Delivery Rating of the Respondent No.4 ought to have been calculated only
on the basis of the 30 day extended period and not on the basis of a 45 day
extension. According to the petitioner, if that were done then the petitioner
would have retained its position as V-1 and would have been entitled to 30%
of the tender quantity. However, we are not going into these calculations which
are required to be done by the respondents following the formulae laid down
in the tender document and giving the benefit of the force majeure clause to
the respondent No.4 (NICCO) limited to the 30 day extension which was
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granted to the respondent No.4 (NICCO) much prior to the issuance of the
notice inviting tender. In this Court’s order dated 9.10.2002 it is recorded that
there are some supplies which are to be made for which no orders have been
placed. On 16.12.2002 it is further recorded that “statement made by the
counsel for the respondents at the Bar that though the requirement is there
but no order will be placed, will continue till the next dated”. There after, this
matter has been adjourned from time-to-time and has been finally heard by
as. From these interim orders, it is clear that there are some supplies which
remain to be made under the tender in question. Orders in respect thereof
shall be placed after the respondents have recalculated the Delivery Rating of
the respondent No.4 (NICCO) as indicated above and consequently the
relative Vendor Ratings of the petitioner and the Respondent No.4 (NICCO). If
the petitioner is rated as V-1 then it shall be given the benefit in the balance
supplies that are yet to be made. If after adjusting the balance amount the
petitioner is still

entitled to further supplies then it will be open to the petitioner to pursue its
remedies against the respondents for compensation/damages that may be
available to it in law.

16. To the aforesaid extent, the writ petition is allowed and is accordingly
disposed of. The petitioners are entitled to costs which are quantified at
Rs.20,000/-.

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