# 1 S.C.R. 1150 ST ATE OF KERALA v. M/S ZOOM DEVELOPERS PVT. LTD. & ORS - **Citation:** [2009] 1 S.C.R. 1150 - **Court:** Supreme Court of India - **Decided:** 2009-02-10 - **Case number:** Civil Appeal Nos. 841-842 of 2009 - **Bench:** Dr. Arijit Pasayat, S.H. Kapadia - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1-s-c-r-1150-st-ate-of-kerala-v-m-s-zoom-developers-pvt-ltd-ors-25380 - **Pages:** 25 ## Headnote COMPANIES ACT, 1956: c S.212 - Consortium Agreement - Modification of - Whether results in change in the constituents membership - Bid Evaluation Committee rejecting the Bid proposal made by the consortium and excluding the consortium from zone of consideration - High Court holding the decision unjustified, D arbitrary and bad in law - On appeal, Held: The modified consortium agreement is in line with the proposal submitted - There was no change in the membership of the consortium - High Court rightly held that the licence agreement has still to be executed and at that stage the change of joint and E several liability shall be incorporated in the licence agreement- No infirmity in the judgment of High Court - The Technical and Financial proposals submitted by the consortium (Respondent No. 1) to be considered within 15 days. F WORDS & PHRASES: 'Liability', 'responsibility' - Meaning of. The High Court held that the decision of the Bid Evaluation Committee dated 6.5.2008 rejecting the Bid G Proposal made by the Consortium led by the Mis Zoom Developers Pvt. Ltd. (ZDL) as non-admissible in terms of Request for Proposal (RFP) and thus excluding the said consortium from the zone of consideration was unjustified, arbitrary and bad in law. Hence the appeals. H 1150 STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1151 & ORS. On the basis of the contentions advanced, the A following points emerged for consideration by the Court: 1. Whether the modified Consortium Agreement dated 11.3.2008 resulted in a change in the constituents membership of the Consortium led by M/s ZDL. 2. Whether use of the expression "joint and several responsibility" in place of "joint and several liability" would justify rejection of the Bid proposal made by the Consortium led by M/s ZDL as non-responsive/nonadmissible in terms of the RFP. Dismissing the appeals, the Court B c HELD:1.1. On reading the Proposal, it becomes clear that on the date, namely, 31.1.2008, being the cut-off date 0 (when the bids were opened), M/s PMS was the memberconstituent of the consortium led by M/s ZDL. At this stage, one must keep in mind that Section 212 of the Companies Act, 1956 which makes it obligatory on behalf of the holding company to annex to its Balance Sheet the Balance Sheet and P&L account and other financial E particulars of its subsidiary. Section 212 requires the legal relationship of holding company and subsidiary company to be disclosed to all its members. In the world of globalization, we have consortium agreements/ joint venture agreements. It appears from the particulars given F by the consortium led by Mis ZDL that M/s PMS is a part of an international group of companies headed by M/s PPL, UK. The prescribed Form warranted Disclosure giving particulars of the consortium members. The particulars furnished indicate that the Lead Member was G M/s ZDL. It is an Indian company. One of the consortium member was M/s PMS, which is incorporated in UK. It is the 100% subsidiary of M/s PPL, UK. This information also became necessary because the format required the Bidder to disclose "Ownership" of the member-company. H 1152 SUPREME COURT REPORTS [2009] 1 S.C.R. A Therefore, if one reads the Proposal of the Lead Member, >- M/s ZDL, in the form prescribed, which Proposal was of 31.1.2008, one finds that Mis PMS alone on its own was indicated as a member of the consortium and M/s PPL was not shown as the member of the consortium. 8 However, the original consortium/joint venture agreement dated 4.10.2007 signed by the member-constituent of the consortium led by Mis ZDL stood signed by Mis PMS on behalf of M/s PPL, UK. Therefore, on 3.3.2008, IDC (Project Advisor) wrote to M/s ZDL pointing out the defect in the C consortium agreement dated 4.10.2007. Thus, the Project Advisor treated the above irregularity in the execution of the consortium agreement dated 4.10.2007 as a curable defect for which time was given tQ M/s ZDL up to 4.4.2008. Further, the Project Advisor clearly un ## Text _Characters 0–39,805 of 50,804. This is a partial read: ask again with offset=39805 for what follows._ A B [2009) 1 S.C.R. 1150 ST ATE OF KERALA V. M/S ZOOM DEVELOPERS PVT. LTD. & ORS. (Civil Appeal Nos. 841-842 of 2009) FEBRUARY 10, 2009 [DR. ARIJIT PASAYAT AND S.H. KAPADIA, JJ.] COMPANIES ACT, 1956: c S.212 - Consortium Agreement - Modification of - Whether results in change in the constituents membership - Bid Evaluation Committee rejecting the Bid proposal made by the consortium and excluding the consortium from zone of consideration - High Court holding the decision unjustified, D arbitrary and bad in law - On appeal, Held: The modified consortium agreement is in line with the proposal submitted - There was no change in the membership of the consortium - High Court rightly held that the licence agreement has still to be executed and at that stage the change of joint and E several liability shall be incorporated in the licence agreement- No infirmity in the judgment of High Court - The Technical and Financial proposals submitted by the consortium (Respondent No. 1) to be considered within 15 days. F WORDS & PHRASES: 'Liability', 'responsibility' - Meaning of. The High Court held that the decision of the Bid Evaluation Committee dated 6.5.2008 rejecting the Bid G Proposal made by the Consortium led by the Mis Zoom Developers Pvt. Ltd. (ZDL) as non-admissible in terms of Request for Proposal (RFP) and thus excluding the said consortium from the zone of consideration was unjustified, arbitrary and bad in law. Hence the appeals. H 1150 STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1151 & ORS. On the basis of the contentions advanced, the A following points emerged for consideration by the Court: 1. Whether the modified Consortium Agreement dated 11.3.2008 resulted in a change in the constituents membership of the Consortium led by M/s ZDL. 2. Whether use of the expression "joint and several responsibility" in place of "joint and several liability" would justify rejection of the Bid proposal made by the Consortium led by M/s ZDL as non-responsive/nonadmissible in terms of the RFP. Dismissing the appeals, the Court B c HELD:1.1. On reading the Proposal, it becomes clear that on the date, namely, 31.1.2008, being the cut-off date 0 (when the bids were opened), M/s PMS was the memberconstituent of the consortium led by M/s ZDL. At this stage, one must keep in mind that Section 212 of the Companies Act, 1956 which makes it obligatory on behalf of the holding company to annex to its Balance Sheet the Balance Sheet and P&L account and other financial E particulars of its subsidiary. Section 212 requires the legal relationship of holding company and subsidiary company to be disclosed to all its members. In the world of globalization, we have consortium agreements/ joint venture agreements. It appears from the particulars given F by the consortium led by Mis ZDL that M/s PMS is a part of an international group of companies headed by M/s PPL, UK. The prescribed Form warranted Disclosure giving particulars of the consortium members. The particulars furnished indicate that the Lead Member was G M/s ZDL. It is an Indian company. One of the consortium member was M/s PMS, which is incorporated in UK. It is the 100% subsidiary of M/s PPL, UK. This information also became necessary because the format required the Bidder to disclose "Ownership" of the member-company. H 1152 SUPREME COURT REPORTS [2009] 1 S.C.R. A Therefore, if one reads the Proposal of the Lead Member, >- M/s ZDL, in the form prescribed, which Proposal was of 31.1.2008, one finds that Mis PMS alone on its own was indicated as a member of the consortium and M/s PPL was not shown as the member of the consortium. 8 However, the original consortium/joint venture agreement dated 4.10.2007 signed by the member-constituent of the consortium led by Mis ZDL stood signed by Mis PMS on behalf of M/s PPL, UK. Therefore, on 3.3.2008, IDC (Project Advisor) wrote to M/s ZDL pointing out the defect in the C consortium agreement dated 4.10.2007. Thus, the Project Advisor treated the above irregularity in the execution of the consortium agreement dated 4.10.2007 as a curable defect for which time was given tQ M/s ZDL up to 4.4.2008. Further, the Project Advisor clearly understood the Proposal to have had been given by M/s ZDL as the Lead D Member of the Consortium, whose constituent inter alia included M/s PMS and not M/s PPL. By the said letter, the Project Advisor also called for Annual Reports of three financial year of Mis ZDL and Annual Reports of last 3 years of M/s PMS (its own). This query indicates that the E Project Advisor not only treated the above irregularity in the execution of the consortium agreement dated 4.10.2007 as the curable defect but it further shows that even, according to the Project Advisor, M/s PMS alone was the constituent member of the consortium led by M/ F s ZDL and it is for this reason that the Project Advisor called for the annual reports of Mis PMS (its own). This defect was cured by M/s PMS within the extended period. [Para 14] [1066-F-H; 1067-A-H; 1068-A-B] 1.2. The question of "authorization" by M/s PPL,UK, G was not raised by the Project Advisor in its letter dated 3.3.2008. That aspect was raised only by the Law Secretary who came to be Invited as a special invitee by the Chief Secretary in the meetings of the EC held on 8.4.2008 and 6.5.2008 (which is after the extended date. H STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1153 & ORS. 4.4.2008). It is not in dispute that Mis PPL, UK is the A holding company of Mis PMS. Mis PMS is a subsidiary company. It is the separate legal entity. This Court is satisfied that at the stage of Submission of Proposal itself and right from the inception, it was Mis PMS, who alone was the constituent member of the consortium. The B question of authorization raised by the Law Secretary is clearly an afterthought. In fact, there is a contradiction in his opinion. If Mis PPL was the member of the consortium, as construed by the Law Secretary, there was no need for Mis PPL to authorize Mis PMS to execute the c consortium agreement. On the other hand, if Mis PMS being the separate legal entity was a member of the consortium it had to sign the consortium agreement in its own capacity. The modified consortium agreement dated 11.3.2008 is supported by a Resolution. The said 0 consortium agreement is in line with the Proposal submitted on 31.1.2008. [Para 14) [1168-B-F] 2. Mis Universal Legal (legal advisor to the Sponsor) cleared the proposal on 4.4.2008 stating that all requisite defects stood cured. It is only after 4.4.2008 that the Law E Secretary came into picture and gave an opinion to the contrary. Moreover, as found by the High Court in the impugned judgment, when the Law Secretary was asked to file his affidavit he came out with the statement that his advice was "off the record" advice. It was not given F through Official Channel. No material has been placed before the High Court as to the reference made by the Chief Secretary to the Law Secretary. The very purpose of routing the query through Official Channel is that the querist formulates the query on which opinion is given. G In this case, there is no formulation of such a query. In the circumstances, the High Court was right in not giving weightage to the "off the record" advice of the Law Secretary. This is one of the circumstances which vitiates the process of decision making by the EC. The bid was H 1154 SUPREME COURT REPORTS [2009) 1 S.C.R. A declared as non-admissible in the IVth meeting of the EC .,.. held on 6.5.2008. The Minutes indicate that, before the EC, there were two Opinions. First opinion was that of Mis Universal Legal and the second opinion was that of the Law Secretary. There is nothing to indicate in the Minutes B as to why the opinion of the legal advisor, Mis Universal Legal, stood rejected. There is no reason given as to why the opinion of the Law Secretary came to be accepted. The modified consortium agreement was between members of the consortium led by Mis ZDL in which the C member was Mis PMS and not Mis PPL, UK, right from 1the inception. Therefore, the entire exercise was to cure the defect. Time was given to Mis ZDL to cure the defect which in fact was cured before 4.4.2008. For the aforestated reasons, it is held that there was no change in the membership of the consortium led by Mis ZDL after D 31.1.2008. In fact, even prior to the IVth meeting the EC did not call upon Mis ZDL/PMS to obtain Letter of Authority from Mis PPL, UK. [Para 15] [1168-G-H; 1169A-H] E 3.1. Under the agreement, duties and responsibilities of each of the members stood carved out. Vide clause 7, members of the consortium were made "jointly and severally responsible" for every stage of implementation of the Project. The only objection raised by the GoK is F that the word "liable" ought to have been used instead of the word "responsible" in clause 7 and since that word has not been used, the Bid Proposal of Mis ZDL needs to be dismissed. As stated above, in the meetings held prior to 8.4.2008, no such objection was ever raised. In fact, no opportunity was given to Mis ZDL to cure this G defect though it was given to the consortium led by Mis Apollo. The important point is that the EC treated the above objection as a curable defect. It is only after the Law Secretary came on the scene that the above objection was raised even after the clearance by M/s H Universal Legal. Therefore, it is clearly an afterthought. STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1155 & ORS. Further under the consortium agreement dated 11.3.2008, A it was stated that M/s ZDL, PMS and Peter Fraenkel & Partners shall be fully responsible for their individual portions of work. Under the said Agreement, it was further stated that, in case the Project stood awarded to the Consortium, the Consortium commits to hold a minimum B stake of 51% in the SPC. This shows that in the matter of liability, the Consortium Agreement was only a stepin-aide to the formation of SPC. Further, as rightly held by the High Court in the impugned judgment, the apprehension of GoK that in the event of disputes c between members of the consortium or in the event of non-implementation of the Project, GoK would not be in a position to enforce its claim was ill-founded because the licence agreement between the successful bidder and the licensor (GoK) was yet to be entered into in which a 0 provision as to "joint and several liability" had to be made, as mentioned in the RFP. The consortium agreement was only an assurance or a commitment to abide by the licence agreement. Lastly, it may be stated that the word "responsibility" is no doubt different from the word "liability". [Para 19] [1171-B-H; 1172-A-B] E 3.2. In the absence of a prescribed formEtt and in the absence of the definition of the word "respohsibility" vis- ·-vis the word "liability" in the RFP, it cannot be said that the said expression "joint and several liability" was an F objective criteria. It is true that in terms of RFP, the bidder was required to stipulate the words "joint and several liability" in the consortium agreement. But it is equally true that in certain cases objective words can be interpreted subjectively. In the instant case, various bids G were considered by the Project Advisor/Sponsor. They have themselves used the words "liability" and "responsibility" interchangeably. They have treated this defect as a curable defect. They have not rejected the Bid Proposal on 25.2.2008 in the first meeting on the above H 1156 SUPREME COURT REPORTS (2009] 1 S.C.R. A ground because the EC thought that the said defect was a curable defect. [Para 19] [1172-D-H; 1173-A] 3.3. The consortium agreement dated 11.3.2008 spelt out the work allocation and the responsibility of each B member of the consortium. It made the consortium responsible jointly and severally for implementation of the Project. The clause dealing with "relationship of the parties" merely stated that till the formation of the SPC, • each member shall be related to each other on principalc to-principal basis. This is because the consortium is formed to make a bid for this Project only. But once that consortium becomes a successful bidder and commits to hold the minimum equity stake of 51% in the SPC, then the question of joint and several liability would certainly arise. Therefore, the High Court rightly held that D the licence agreement between GoK and the successful bidder (consortium) has still to be executed and it is at that stage that, in any event, the clause of joint and several liability shall stand incorporated in the licence agreement. [Para 20] [1173-D-G] E H. W Wade and Forsyth: 'Administrative Law', 9th edn. pp. 432-435, referred to. 4. The Chart submitted on behalf of Mis Lanco F Kondapalli Power Pvt. Ltd. refers to the Financial Years October, 2003 to September, 2004, October 2004 to September, 2005, October, 2005 to September, 2006 as far as M/s-ZDL is concerned. However, it may be noted that initially the last date for-submitting the bid was 31.10.2007, which was extended to 31.1.2008. The Balance Sheet and G P&L account of M/s ZDL for the year ending 30.9.2007 stood adopted after audit only on 20.3.2008. If the figures for that year are taken into account then the financial t qualification criteria stands satisfied. [Para 21] [1173-H; 1174-A-B] H STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1157 & ORS . .. 5. The Technical and Financial Proposals submitted A by the Consortium (respondent no. 1) are liable to be considered within 15 days from the date of this judgment. [Para 22] [117 4-E] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 841B 842 of 2009. From the Judgment & Order dated 4.1.2008 in R.P. No. 1329/2008 & WA No. 1460/2008 of the High Court of Kerala at Ernakulam. A.Sharan, ASG, K. Prasaran, K.K. Venugopal, T.B. Hood, Pradeep Ranjan Tiwary, R. Satish, P.V. Dinesh, Sindhu T.R., Kamkal Bhundhiraj, Nishant Menon, Manu Seshadri, Sidharth Bawa, Gopal Shankarnarayanan (for M/s. Dua Associates) for c the Appellants. o Arun Jaitely, U.U. Lalit, Maninder Singh, Pratibha, M. Singh, Santosh Mathrew, Gaurav Sharma, Surbhi Mehta, Sumeet Bhatia, Ankit Gupta, Meenakshi Grover, Ramesh Singh, K.S. Rama Rao, Bela Maheshwari and Joydeep Nath for the Respondents. E The Judgment of the Court was delivered by S.H. KAPADIA, J.1. Leave granted. 2. A short question which arises for determination in these F civil appeals is - whether the decision of the Bid Evaluation Committee ("EC" for short) dated 6.5.2008 rejecting the Bid Proposal made by the Consortium led by M/s Zoom Developers Pvt. Ltd. as non-admissible in terms of RFP and thus excluding the said Consortium from the zone of consideration was G unjustified, arbitrary and bad in law, as held by the impugned judgment of the Kerala High Court dated 4.12.2008 in Writ Appeal No. 1460/2008. H 1158 SUPREME COURT REPORTS [2009] 1 S.C.R. A Facts: 3. Government of Kerala (GoK) vide G.O. No. 9/07/F&PD dated 9.3.2007 decided to invite bids for the Development of International Deepwater Seaport and Container Transshipment 8 Terminal at Vizhinjam under Public-Private Partnership. Vide G.O. dated 15.6.2007 GoK decided on the key provisions in the Request For Proposal ("RFP" for short) documents for the bidding of the above Project. A competitive bid process was thus initiated by M/s Vizhinjam International Seaport Ltd. ("VSL" for short). VSL was the Sponsor. IL & FS Infrastructure C Development Corporation ("IDC" for short) was the Project Advisor. Accordingly, on 8.8.2007, Press Notification was issued by M/s VSL inviting RFP for the development of the Project. On 23.1.2008 a Bid Opening Committee was constituted vide G.O. of the same date. Thirty-three firms D obtained the RFP documents. Vide G.O. dated 19.2.2008, Bid Evaluation Committee headed by the Chief Secretary was also constituted to Evaluate the Bid Proposals. Ultimately, bids were received from the following five Consortia by 31.1.2008 (which E F G was the last date stipulated for receiving the Bids), they were: (i) Apollo Enterprises led consortium (ii) Nagarjuna Construction Co. led consortium (iii) Videocon Industries Ltd. led consortium (iv) Lanco Kondapalli Power Pvt. Ltd., Hyderabad, led consortium (v) Zoom Developers Pvt. Ltd., Mumbai led consortium. 4. The bidders were required to submit their proposals in four covers, namely, the Outer Cover (containing details of the bidder, power of attorney in favour of the lead member, consortium agreement entered amongst the members of the H consortium, legal opinion, security of Rs. 50 million in the form STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1159 & ORS. [S.H. KAPADIA, J.) of bank guarantee etc.}, Cover-1 (Statement of Qualification}, A Cover-2 (Technical Proposal) and Cover-3 (Financial Proposal). In this case, evaluation was done in three stages. In the first stage, there was evaluation of Outer Cover and Cover-1 to check the admissibility of bids and evaluation of qualifications as stipulated in the RFP. It may be noted that B evaluation of the Technical Proposal had to be done only of those bidders who met the "Qualification Criteria" (vide second stage). The third stage contemplated evaluation of the Technical Proposal. As stated above, only five bids were received. These bids (Outer Cover and Cover-1) were opened on 31.1.2008 by c the Bid Opening Committee. The said firms were found to have satisfied prima facie the requisite requirements. The bids were accepted by the Bid Opening Committee for further scrutiny. The bids submitted were considered at the meeting of the EC on 25.2.2008. In the said meeting it was observed that, with 0 regard to the bid submitted by the consortium led by M/s Zoom Developers Pvt. Ltd. ("ZDL" for short), the Power of Attorney and the Consortium Agreement were unstamped and they needed to be stamped. It was further pointed out by the EC that the lead member in terms of the RFP, namely, M/s ZDL was required to hold a minimum equity of 26% in the Special E Purpose Company ("SPC" for short), which has not been expressly mentioned in the Consortium Agreement. The EC further pointed out to M/s ZDL that one of the consortium member, namely, M/s Portia Management Services Ltd. ("PMS" for short) had signed the consortium agreement on behalf of F Peel Ports Ltd. ("PPL" for short) but M/s PPL is not a member of the consortium. Additional information regarding the financials of M/s PMS (on its own) and of M/s ZDL were also called for. On 25.2.2008, accordingly the EC granted ten days time to remove the above defects. M/s ZDL sought extension G of time. Ultimately, time was extended up to 4.4.2008. In short, meetings of the EC took place on 25.2.2008, 13.3.2008, 8.4.2008 and 6.5.2008. By 2.4.2008, M/s ZDL submitted all the relevant documents duly updated. It may be noted that M/s Universal Legal, Bangalore, were appointed as Legal Advisor H 1160 SUPREME COURT REPORTS [2009] 1 S.C.R. A of the Project by the EC. 5. As stated above, on 2.4.2008 M/s ZDL submitted their modified documents. On 4.4.2008 the said M/s Universal Legal furnished their opinion that the Consortium Agreement B submitted by the Consortium led by M/s ZDL had complied with the requirements of the RFP and that they had removed all defects pointed out to them by the EC and accordingly the EC may consider their Bid Proposals. However, in the third meeting held on 8.4.2008, the EC after having considered the documents submitted by the Consortium led by M/s ZDL came C to the conclusion that in the modified consortium agreement dated 11.3.2008, Mis PMS has signed the consortium agreement on its own whereas in its original consortium agreement dated 4.10.2007, M/s PMS has signed the consortium agreement on behalf of Mis PPL. Accordingly, the D opinion of the Law Secretary (Invitee to the Meeting) was sought. The Law Secretary opined that the modified consortium agreement dated 11.3.2008 cannot be treated as a part of the Original Proposal as the modified consortium agreement stood entered into by a new member, namely, M/s PMS, without the E authorization of M/s PPL. According to the Law SP.cretary, there was one more defect. There was no provision in the modified consortium agreement to the effect that the consortium members shall be jointly and severally liable for the execution of the Project and that the only expression used was joint and F several "responsibility", which, according to the Law Secretary, was a concept different from joint and several "liability". This opinion of the Law Secretary was placed before the EC in its meeting held on 6.5.2008 in which meeting the EC concluded that the Bid submitted by the consortium led by Mis ZDL was G "non-responsive"/"non-admissible" in terms of the RFP. Accordingly on 24.5.2008, GoK issued Government Order approving the proposal given by Lanco Kondapalli Power Pvt. Ltd., Hyderabad (hereinafter referred to as "Lanco led Consortium"). Thus, the Bid Proposal of the consortium led by H M/s ZDL came to be rejected. • STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1161 & ORS. [S.H. KAPADIA, J.] "'· 6. Aggrieved by the said decision, M/s ZDL preferred Writ A Petition (C) No. 15570/2008 in the Kerala High Court which came to be dismissed by the learned single Judge on 3.7.2008. It was held by the learned Single Judge that the concept of "liability" was different from "responsibility". It was further held that since the consortium members led by M/s ZDL B had not undertaken "joint and several liability", the EC was right in treating the bid proposal as non-responsive. It was further ... held by the learned single Judge that the original consortium agreement dated 4.10.2007 was signed by M/s PMS on behalf of Mis PPL though no such authorization was found in that c regard. According to the learned single Judge, in the modified consortium agreement dated 11.3.2008, M/s PPL, which was the party to the original consortium agreement, stood deleted and M/s PMS had emerged as a member of consortium for the first time only under the modified consortium agreement dated D 11.3.2008 without explaining under whose authority such change was made and consequently, the EC was right in treating the Bid Proposal made by M/s ZDL as non-responsive. Accordingly, the writ petition stood dismissed. Aggrieved by the said decision, Mis ZDL preferred Writ Appeal No. 1460/ E 2008, which stood allowed by the Division Bench of the Kera la High Court, hence, these civil appeals are filed by the State of Kerala (licensor), M/s Lanco Kondapalli Power Pvt Ltd. and M/s Vizhinjam International Sea Port Ltd. (Sponsors). Contention: F 7. On behalf of State of Kerala, Shri K. Parasaran, learned senior counsel submitted that after 31.1.2008 (the cut-off date) there was a change in M/s ZDL led Consortium which was impermissible in terms of the RFP and, therefore, the Bid G Evaluation Committee was right in treating the Bid submitted by M/s ZDL led Consortium as non-responsive/non-admissible ... in terms of the RFP. In support of his contention, learned senior counsel submitted that as per clause 3.4 of RFP, only the Lead Member could be changed and that too with the written consent H 1162 SUPREME COURT REPORTS [2009] 1 S.C.R. A of Mis VSL (Sponsor). According to the learned counsel, RFP did not permit change of consortium member after the cut-off date. It may be noted that the Proposals of the Bidders were to be submitted on or before 31.1.2008. Learned counsel pointed out that along with the Proposal, Mis ZDL submitted B the Consortium Agreement dated 4.10.2007 in which Mis PMS signed the consortium agreement on behalf of Mis PPL, UK. Therefore, according to the learned counsel, Mis PMS singed the Consortium Agreement dated 4.10.2007 as an agent of Ml ... s PPL, UK. According to the learned counsel, in the Consortium c Agreement dated 4.10.2007, Mis ZDL did not stipulate that as a Lead Member it would hold a minimum equity of 26% in the SPC. The Consortium Agreement dated 4.10.2007 was not notarized and stamped. That apart, the said consortium did not submit documents from Mis PPL, UK authorizing Mis PMS to 0 sign the Consortium Agreement on behalf of Mis PPL, UK. According to the learned counsel, all the above circumstances came to be considered by the EC in its meeting held on 25.2.2008. The EC, according to the learned counsel, recorded in its Minutes that since Mis PPL was the member of the Consortium in terms of Consortium Agreement dated E 4.10.2007, but, since Mis PPL was not shown in the Outer Cover, therefore, a query was raised by the EC in its letter dated 3.3.2008 to the effect that although Mis PMS has signed the Consortium Agreement on behalf of Mis PPL, the latter was not a member of the Consortium. According to the learned counsel, F in the said letter dated 3.3.2008, there was no direction from the EC to Mis ZDL to delete the words "on behalf of Mis PPL" and consequently, after the cut-off date, it was not open to Mis ZDL led Consortium to submit a fresh Consortium Agreement dated 11.3.2008 deleting the words "on behalf of Mis PPL". G According to the learned counsel, therefore, there was a change in the membership of the Consortium led by Mis ZDL and that too after 31.1.2008. Therefore, according to the learned counsel, it was not a case of curing of defect. According to the learned counsel, change of consortium membership after the H cut-off date made the Proposal of Mis ZDL led Consortium STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1163 & ORS. [S.H. KAPADIA, J.) non-admissible in terms of the RFP. A 8. Shri K. Parasaran, learned senior counsel, next contended that vide clause 3.5 of the RFP, all members of the Consortium were "jointly and severally liable" for execution of the Project in terms of the Licence Agreement and a statement B to that effect was required to be stated in the consortium agreement, which statement was not incorporated in T consortium agreement dated 4.10.2007 nor in the consortium agreement dated 11.3.2008. According to the learned senior counsel, the two words, namely, "liabilities" and "responsibilities" c are not interchangeable. They are distinct and different concepts. According to the learned counsel, RFP required a statement regarding "joint and several liability" to be incorporated in the consortium agreement because the word "liability" represented an objective criteria, which criteria has not D been satisfied despite opportunity being given to M/s ZDL led Consortium to incorporate such a statementin the consortium agreement. Learned counsel submitted that despite opportunity being given to Mis ZDL led Consortium, even in the fresh Agreement dated 11.3.2008, M/s ZDL led Consortium had insisted on using the words "joint and several liabilities" in E support of the words "joint and several responsibilities". Therefore, for non-compliance of the said criteria, the EC was right in treating the Bid Proposal of M/s ZDL led Consortium , as non-admissible/non-responsive in terms of RFP. ---+ 9. In short, on two of the aforestated grounds, namely, F change of consortium membership and non incorporation of joint and several liability Clause in the consortium agreement, learned counsel for the State of Kerala submitted that the EC was right in treating the Bid Proposal of M/s ZDL as nonG responsive. 9A. Shri A. Sharan, learned Additional Solicitor General appearing on behalf of Mis VSL substantially adopts the contentions advanced by Shri K. Parasaran, learned senior counsel for the State of Kerala. H 1164 SUPREME COURT REPORTS [2009] 1 S.C.R. A 10. Shri K.K. Venugopal, learned senior counsel appearing on behalf of Mis Lanco led Consortium submitted in addition to the above contentions that, in any event, the figures submitted by M/s ZDL led Consortium indicated that, on its own M/s PMS did not fulfill the financial parameters of net worth, total turnover B and cash accruals and that Mis PMS was solely dependent upon the financials of M/s PPL, UK, consequently, the Bid Proposal of M/s ZDL led Consortium was not admissible in terms of RFP. Learned senior counsel further submitted that in the Consortium Agreement dated 4.10.2007, there was a c clause under the caption "Relationship of Parties". Reading of that clause, according to the learned counsel, indicated that the consortium members were to act on principal-to-principal basis and despite opportunity, even in the fresh Consortium Agreement dated 11.3.2008, the said clause stood retained. 0 Therefore, according to the learned counsel, the criteria of joint and several liability was not satisfied by M/s ZDL led Consortium. 11. On the other hand, it was submitted on behalf of M/s ZDL led Consortium that the interpretation given by the E Sponsor/Advisor on various terms and conditions of the RFP should be read as a standard to evaluate the admissibility of the bids. According to Shri Harish N. Salve, learned senior counsel appearing on behalf of M/s ZDL, the Minutes of the EC held on 25.2.2008 indicated that the words "responsibility" and F "liability" were used interchangeably. That, it is only after the Law Secretary gave his opinion that the question of the connotation - of the two words "liability" and "responsibility" were made an issue, which was clearly an afterthought. According to the learned counsel, the said hair-splitting exercise was undertaken G as an afterthought only after the Law Secretary gave his opinion, which opinion was "off the record" advice (which expression is used by the Law Secretary in his affidavit). " According to the learned counsel, there was no change in the membership of the Consortium led by Mis ZDL because right H from the inception, at the time of submitting the Proposals, it STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1165 & ORS. [S.H. KAPADIA, J.] was made clear that M/s PMS would be the member of M/s A ZDL led Consortium. It was submitted that M/s PMS was the subsidiary of Mis PPL, UK, and the words "on behalf of were used in the Consortium Agreement dated 4.10.2007 only to indicate the relationship between M/s PMS and M/s PPL, UK. This position, according to the learned counsel, is indicated by B the Bid documents submitted on 31.1.2008, Power of Attorney dated 18.10.2007, Notary Certificate, Covering letter dated 31.1.2008 and annexures to the Bid documents submitted by M/s ZDL. 12. On the question of financials, Shri Arun Jaitley, learned c senior counsel for M/s ZDL, submitted that the Chart submitted before this Court by the learned counsel for M/s Lance led Consortium was defective because the Financials for FY 20062007 has not been projected. In this connection, it was pointed D out that M/s ZDL had submitted the details for FY October, 2003 to September, 2004, October, 2004 to September, 2005 and . October, 2005 to September, 2006 as on 31.1.2008. It was pointed out that, M/s ZDL was following the Accounting Year from October to September. It was submitted that the last date for submission of Bids was 31.10.2007 initially, which stood E ,,... extended later on till 31.1.2008. Acccrding to the learned ~ counsel, the Balance Sheet for FY 2006-2007 was in the process of being prepared when the Bid documents were _,, submitted on 31.1.2008 and consequently, the Balance Sheet for FY 2006-2007 could not be submitted. According to the F .. learned counsel, if the Financials for the year including FY 2006-2007 are taken into account; then M/s ZDL lead Consortium satisfies all the financial parameters of net worth, turnover and cash accruals. 13. Points for Consideration: G (A) Whether the modified Consortium Agreement dated 11.3.2008 resulted in a change in the constituents membership of the Consortium led by M/s ZDL. H 1166 SUPREME COURT REPORTS [2009] 1 S.C.R. A (B) Whether use of the expression "joint and several ..--'---- responsibility" in place of "joint and several liability" --...,...... would justify rejection of the Bid Proposal made by the Consortium led by M/s ZDL as non-responsive/ non-admissible in terms of the RFP. - B Findings on Point No. (A): 14. As per the scheme of RFP, at the stage of Submission ... of Proposals, the bidders were required to furnish the names of the Lead Member and other members of the consortium. In c this case, one of the members of the consortium was Mis PMS. ' ? While furnishing "Details of Bidders", the name of the consortium member was shown as PMS. Similarly, against the column "Brief Description of the Company", the name of M/s PMS was mentioned as the international arm of M/s PPL. D Therefore, at the stage of Submission of Proposals, M/s ZDL had stated that M/s PMS was the member of its Consortium. There was one more column which was required to be filled-in by the bidders, namely, "Ownership of the Organisation". In this column, M/s ZDL indicated that M/s PMS was a consortium E member which was the wholly subsidiary company of M/s PPL, UK. It may be noted that, under the Scheme of RFP, the bidders ,- .., had to offer a firm commitment to form SPC to implement and ~· operate the above Project in i