# CORPORATION LTD. (TANGEDCO) REP. BY ITS CHAIRMAN & MANAGING DIRECTOR AND ANR. ETC v. CSEPDI - TRISHE CONSORTIUM, REP. BY ITS MANAGING '-c DIRECTOR & ANR

- **Citation:** [2016] 7 S.C.R. 495
- **Court:** Supreme Court of India
- **Decided:** 2016-10-18
- **Case number:** Civil Appeal Nos. I 0182-10183 of2016
- **Bench:** Dipak Misra, Sidva Kirti Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/corporation-ltd-tangedco-rep-by-its-chairman-managing-director-and-anr-etc-v-31626
- **Pages:** 28

## Headnote

Tender - Finalization of the bid - Evaluation report by the
Consultant - Judicial review - Held: Jn a complex fiscal evaluation,
the court has to apply the doctrine of restraint - Financial
computation involved, the capacity ana efficiency of the bidder and
the perception of feasibility of completion of the project have to be
left to the wisdom of the financial experts and consultants who have
knowledge and skills in the field - Courts cannot really enter into
the said realm in exercise of power of judicial review - If the courts
would exercise power of judicial review in such a manner it is most
likely to cause confusion and also bring jeopardy in public interest
- Further, an aggrieved party can approach the Court at the
appropriate stage, not when the bids are being considered~ Once
the price bid was opened, a bidder could not have submitted
representations on his own and sought mandamus from the Court to
take certain aspects into consideration - On facts, Consultant
analysed and determined the offers regard being had to the tender
conditions - Documents were called for by the owner from both the
qualifying bidders in a transparent manner and the same were
considered at the time of evaluation by the Consultant - It was
carried out before receipt of any additional document from either
side - Thus, the Division Bench erred in adopting the approach of
an appellate forum or authority and extended the principle of
iudicial review to certain areas - Order of Division Bench set aside
- Tamil Nadu Transparency in Tenders Act, 1998.
Allowing the appeals, the Court
HELD: 1.1 It is manifest that the Corporation in its meeting
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held on 30.1.2014 had decided to open the price bids on both the
bidders and thereafter the supplementary price bids were
obtained from both the parties for the additional implications items
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[2016] 7 S.C.R.
in respect of technical deviation quoted by both parties and
thereafter the price bids were opened on 05.2.2014. As the factual
matrix would reveal, the price bids were evaluated by the
Consultant. The Single Judge has adverted to price evaluation
report submitted by the Consultant. (Para 15) (503-D-F)
1.2 As per the Price Evaluation Report by the Consultant,
the EPC price of the respondent No.1 was Rs.9207.264 crores
and respondent No.2 to whom the contract was awarded was
Rs.7762.977 crores. Thus, the difference between the two EPC
price is Rs.1444.287 crores. The 1st respondent disputed the
Price Evaluation Report by the Consultant on the ground that it
wrongly loaded the sum towards the commitment fee, interest
on management fee during me period; and interest ofguarantee
fee during JDC period in its bid amount which had led to the
evaluation of quoted financial charges with interest to Rs.801.18
crores. (Para 16) (505-C-F)
·
1.3 The issue pertaining to correctness of Consultant's
report has to be adjudged and scrutinized within the scope of
limited power of judicial review in the obtaining factual score.
The Division Bench in the impugned judgment has taken
exception to the process adopted in the identification of Ll. It
has referred to its order dated 19.8.2014 wherein the 1st
respondent was granted the time to submit additional documents.
The impugned order takes note of the fact that at that point of
time, the Corporation had never averred that tender had been
finalized. It has referred to the earlier order of the Division Bench
that representations were to be considered and till then the bid
should not be finalized. It has referred to the letter of the
Chairman-cum-Managing Director of the Corporation dated
20.7.2014 and opined that it appears to be a misstatement of fact.
(Para 21) (509-B-D)
1.4 On interest on management and guarantee fee, the stand
of the Corporation is that the respondent no. 1 quoted Rs.
123.9746 crores as Management fees and Rs. 392.0163 crores
as Guarantee fee in their Price bid. There is no dispute on the
quantum of fe

## Text

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[2016] 7 S.C.R. 495
TAMIL NADU GENERATION AND DISTRIBUTION
A
CORPORATION LTD. (TANGEDCO) REP. BY ITS CHAIRMAN
& MANAGING DIRECTOR AND ANR. ETC.
v.
CSEPDI - TRISHE CONSORTIUM, REP. BY ITS MANAGING
'-c
DIRECTOR & ANR.
B
(Civil Appeal Nos. I 0182-10183 of2016)
OCTOBER 18, 2016
(DIPAK MISRA AND SIDVA KIRTI SINGH, JJ.]
Tender - Finalization of the bid - Evaluation report by the
Consultant - Judicial review - Held: Jn a complex fiscal evaluation,
the court has to apply the doctrine of restraint - Financial
computation involved, the capacity ana efficiency of the bidder and
the perception of feasibility of completion of the project have to be
left to the wisdom of the financial experts and consultants who have
knowledge and skills in the field - Courts cannot really enter into
the said realm in exercise of power of judicial review - If the courts
would exercise power of judicial review in such a manner it is most
likely to cause confusion and also bring jeopardy in public interest
- Further, an aggrieved party can approach the Court at the
appropriate stage, not when the bids are being considered~ Once
the price bid was opened, a bidder could not have submitted
representations on his own and sought mandamus from the Court to
take certain aspects into consideration - On facts, Consultant
analysed and determined the offers regard being had to the tender
conditions - Documents were called for by the owner from both the
qualifying bidders in a transparent manner and the same were
considered at the time of evaluation by the Consultant - It was
carried out before receipt of any additional document from either
side - Thus, the Division Bench erred in adopting the approach of
an appellate forum or authority and extended the principle of
iudicial review to certain areas - Order of Division Bench set aside
- Tamil Nadu Transparency in Tenders Act, 1998.
Allowing the appeals, the Court
HELD: 1.1 It is manifest that the Corporation in its meeting
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held on 30.1.2014 had decided to open the price bids on both the
bidders and thereafter the supplementary price bids were
obtained from both the parties for the additional implications items
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[2016] 7 S.C.R.
in respect of technical deviation quoted by both parties and
thereafter the price bids were opened on 05.2.2014. As the factual
matrix would reveal, the price bids were evaluated by the
Consultant. The Single Judge has adverted to price evaluation
report submitted by the Consultant. (Para 15) (503-D-F)
1.2 As per the Price Evaluation Report by the Consultant,
the EPC price of the respondent No.1 was Rs.9207.264 crores
and respondent No.2 to whom the contract was awarded was
Rs.7762.977 crores. Thus, the difference between the two EPC
price is Rs.1444.287 crores. The 1st respondent disputed the
Price Evaluation Report by the Consultant on the ground that it
wrongly loaded the sum towards the commitment fee, interest
on management fee during me period; and interest ofguarantee
fee during JDC period in its bid amount which had led to the
evaluation of quoted financial charges with interest to Rs.801.18
crores. (Para 16) (505-C-F)
·
1.3 The issue pertaining to correctness of Consultant's
report has to be adjudged and scrutinized within the scope of
limited power of judicial review in the obtaining factual score.
The Division Bench in the impugned judgment has taken
exception to the process adopted in the identification of Ll. It
has referred to its order dated 19.8.2014 wherein the 1st
respondent was granted the time to submit additional documents.
The impugned order takes note of the fact that at that point of
time, the Corporation had never averred that tender had been
finalized. It has referred to the earlier order of the Division Bench
that representations were to be considered and till then the bid
should not be finalized. It has referred to the letter of the
Chairman-cum-Managing Director of the Corporation dated
20.7.2014 and opined that it appears to be a misstatement of fact.
(Para 21) (509-B-D)
1.4 On interest on management and guarantee fee, the stand
of the Corporation is that the respondent no. 1 quoted Rs.
123.9746 crores as Management fees and Rs. 392.0163 crores
as Guarantee fee in their Price bid. There is no dispute on the
quantum of fees. The Consultant during the evaluation have
worked out interest@ 7.2 per annum on the above fees as per
the term sheet of the Industrial and Commercial Bank of China
Limited from the date on which they fall due since the above fees
TAMIL NADU GENERATION AND DISTRIBUTION
CORPORATION LTD. v. CSEPDI - TRISHE CONSORTIUM
form part of the debt to be repaid by the appellant; that it is clear
from the Tender Conditions as well as the Term Sheet provided
by Industrial and Commercial Bank of China Limited and the
clarification dated 21.10.2013 (issued by Industrial and
Commercial Bank of China Limited) that appellant would be bound
to pay the interest on the whole loan amount which would include
the financial charges. [Para 34) [520-C-E}
1.5 It is vivid that the Consultant analysed the offers regard
being had to the tender conditions. Be it ingeminated that the
analysis and determination made by the financial consultant was
carried out before receipt of any additional document from either
side. The documents were called for by the owner from both the
qualifying bidders in a transparent manner and the same were
considered at the _time of evaluation by the Consultant. The
respondent submitted that the evaluation is ex f acie defective
inasmuch as the ConsuUant loaded certain charges as a
consequence of which the price went gone up. The counsel for
BHEL and counsel appearing for the Corporation submitted that
the evaluation is founded on definities leaving nothing to any kind
-of contingency. They referred to the Term Sheet and what was
put up by Industrial and Commercial Bank of China Limited. In a
complex fiscal evaluation the Court has to apply the doctrine of
restraint. Several aspects, clauses, contingencies, etc. have to
be factored. These calculations are best left to experts and those
who have knowledge and skills in the field.· The financial
computation involved, the capacity and efficiency of the bidder
and the perception of feasibility of completion of the project have
to be left to the wisdom of the financial experts and consultants.
The courts cannot really enter into the said realm in exercise of
power of judicial review. Suffice it to say, it is neither ex /acie
erroneous nor can be perceived as flawed for being perverse or
absurd. (Para 36} (521-F-H; 522-A-C}
1.6 The respondent, before finalization of the financial bid
submitted series of representations and seeing. the silence of
the owner it knocked at the doors of the writ court which directed
for consideration of the representations. The High Court at that
stage should have exercised caution. If the courts would exercise
power of judicial review in such a manner it is most likely to
cause confusion and also bring jeopardy in public interest. An
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aggrieved party can approach the Court at the appropriate stage,
not when the bids are being considered. It is appreciable the
owner in certain kind of tenders call the bidders for negotiations
to show fairness transparently. But the instant case is not a one
· of such nature. Once the price bid was opened, a bidder could
not have submitted representations on his own and seek a
mandamus from the Court to take certain aspects into
consideration. This aspect is only to highlight the role of the Court
keeping in mind the established principle of restraint. [Para 37]
[522-D-F]
1. 7 The Division Bench through the delineation has adopted
the approach of an appellate forum or authority and extended the
principle of judicial review to certain areas to which it could not
have and, therefore, the judgment and order of the Division Bench
followed the path of error in continuum. [Para 38] [522-G]
Jagdish Manda/ v. State of Orissa 2006 (10) Suppl.
SCR 606: (2007) 14 SCC 517; Star Enterprises v. City
and Industrial Development Corporation of
Maharashtra Ltd. 1990 (2) SCR 826 : (1990) 3 SCC
280 - referred to.
Case Law Reference
2006 (10) Suppl. SCR 606
referred to
Para 11
1990 (2) SCR 826
referred to
Para 11
CIVILAPPELLATE JURISDICTION: Civil Appeal Nos. 1018210183 of2016
. From the Judgment and Order dated 07.09.2015 of the High Court
of Madras in WA No. 712 and 713 of2015
WITH
Civil Appeal No. 10184-10185 of2016.
Mukul Rohatgi, A.G., Parag P. Tripathi, L. Nageshwar Rao,
Subramonium Prasad, Sr. Advs., Atul Shankar Mathur, Ms. Nimita Kaul,
Ms. Sweta Singh, (for Mis. Khaitan & Co.), Mayank Pandey, Ms. Meha
Aggarwal, B. Balaji, Advs. for the Appellants.
Kapil Sibal, Sriram Panchu, Sr. Advs. Gautam Narayan, N.L.
Rajah,ArunAnbumani, Santanam Swaminathan, Gautam Narayan, N.L.
Rajah, Arun Anbumani, Advs. for the Respondents.
The Judgment of the Court was delivered by
TAMIL NADU GENERATION AND DISTRIBUTION
499
CORPORATION LTD. v. CSEPDJ - TRI SHE CONSORTIUM
DIPAK MISRA, J. I. Leave granted.
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2. The appellant, Tamil Nadu Generation and Distribution
Corporation Ltd (for short 'the Corporation') vide notification dated
06.05.2013 floated a tender for setting up of two units of 660 MW Ennore
SEZ Supercricitcal Thermal Power Project at Ash Dyke of NCTPS,
Chennai wherein four bidders including the respondents herein · lJ
participated. However, two bidders out of four were disqualified as they
failed to meet the Bid Qualification Requirements (BQR) as a result of
which bids of Consortium ofTrishe Energy Infrastructure Services Private
Limited (CSEPDJ) and Bharat Heavy Electrical Ltd (BHEL) were taken
up for consideration. Prior to the opening of the price bid, CSEPDJ and
BHEL submitted supplementary price bids on 05.02.2014. Price bids
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were opened on 05.02.2014 by the appellant in the presence of the
representatives of the respondents, the qualified bidders.
3. The uncurtaining of facts would depict that the !."respondent
sent series ofrepresentations dated 16.06.20 I 4, I 7.06.2014, 01.07.20 I 4
and 08.07.2014 to the appellant highlighting various aspects of the bid
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and the relevance of para (viii) of Clause 29.0 of the "Instructions to
Bidders" (ITB) which also deals with the rejection of bids of the tenderer
whose past performance/vendor rating is not satisfactory.
Since the
appellant paid no heed to the request made by the respondent No. I, it
filed W.P. No. 1924 7 of 2014 seeking issue of a writ of mandamus to.
direct the appellant to consider the representations and comply with Tamil
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Nadu Transparency In Tenders Act, 1998 (for short, "the TTIT Act").
An undertaking was given before the learned Single Judge by the learned
Advocate General that post-bid representations submitted by the
respondent No. I will be duly considered while finalizing the tenders and
appropriate orders will be ·passed in accordance with the tender
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specifications and the TTIT Act and rules framed thereunder and in
terms of the said undertaking, learned Single Judge vide order dated
31.07.2014 directed the appellant to consider and pass orders on the
representations of the respondent no. I herein after affording them an
opportunity of personal hearing and directed that till such orders are
passed, the tender should not be finalised.
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4. Being aggrieved by the said order, the appellant filed writ appeal
W.A. No. 1065 of 2014 before the Division Bench which, by judgment
and order dated 19.08.2014, disposed of the writ appeal by modifying
the order of the learned Single Judge only to the extent that affording of
opportunity of personal hearing to the person was impermissible having
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not contemplated under the Rules (for short, "the rules") and further
permitted the respondent No. I to submit additional documents raising
all its objections and the appellant was directed to pass an order and
communicate the same to the respondents, CSEPDf and BHEL.
However, the Division Bench did not modify the direction of the learned
Single Judge which was to the effect that till a decision was taken on
representations of the I" respondent, the bid shall not be finalised.
5. After the disposal of the writ appeal, the respondent No. l sent
its representation on 25.08.2014 along with necessary documents which
was rejected by the appellant v.ide its communication dated 27.09.2014.
The legal propriety of the said rejection was cal led in question by way of
writ petition W.P. No. 26762 of 2014 seeking quashment of the same
and further restraining the owner from taking steps to finalise the tender.
During the hearing of the writ petition, a copy ofletter dated 27.09.2014
awarding the contract to BHEL, respondent No. 2 herein, was brought
on record. It was mentioned therein with regard to price negotiation
meetings with the respondent No. 2. The respondent No. I sent a letter
dated I. I 0.2014 to the appellant, highlighting the arbitrariness, anomalies
and inconsistencies in its reasoning and the mala-fide intent in the matter
of evaluation of the bid submitted by it. However, the appellant by letter
dated 10.10.2014, informed the I" respondent that the subject tender
had been finalised and awarded to BHEL.
6. The letter dated 27. 9.2014 awarding the contract to respondent
No. 2 and letter dated I 0.10.20 I 4 were assailed by the respondent No. I
by filing W.P. No. 27529of2014 for annulments of the letters and further
for issue of directions to the Corporation to determine the award of the
tender strictly in terms of the Tender/Bid document and taking into
account the bid of respondent No. I and that of BHEL, the respondent
No. 2 herein.
7. The learned Single Judge dismissed the writ petition primarily
based on the perusal of notes in the files containing the Consultant Report
dated 30.05.2014 and on that basis opined that the conduct of process of
evaluation of the tenders did not appear to be arbitrary, capricious or
unfair; and that price bids of the bidders had been evaluated as per the
parameters indicated in the tender notification by an independent
consultant who was selected as per the Board Resolution that was within
the knowledge of both the bidders. The reasoning of the learned Single
Judge basically hinged on the Consultant's Report that had determined
that the respondent No.2 herein was LI and, therefore, the decision of
T AMILNADU GENERATION AND DISTRJBlITION CORPORATION
50 l
LTD. v. CSEPDI-TRISHE CONSORTIUM [DIPAK MISRA, J.]
the Corporation in treating BHEL as LI and awarding the contract was
neither arbitrary nor malafide.
8. Aggrieved by the order of the learned Single Judge, the
respondent No. I preferred writ appeals before the Division Bench. The
Division Bench took note of the various pleas raised by the respondent
No. I including violation of the statutory provisions, arbitrariness, adoption
of unfair and non-transparent procedure, erroneous delineation of the
consultant's report by the learned Single Judge and non-consideration of
public interest.
9. The Corporation, in its turn, contended before the Division
Bench that there was no violation of procedure and the award of the
contract was not amenable to judicial review in the obtaining factual
matrix and any interference would only delay the execution of the work.
It was also urged that Tender Accepting Authority (TAA) had accepted
the lowest tender and negotiations were held only with lowest bidder;
that Clause 25 .4 of the Instruction to Bidders did not permit the bidder to
change the substance of the bids after the bids were opened; that though
the respondent No. I had offered lower rate on interest, the original interest
rate offered was not in accordance with tender terms, for as per clause
14.0(d)(5) the rate of interest quoted should be fixed, whereas the
CSEPDI had not specified the fixed rate of interest; that there was no
perversity or arbitrariness in the decision taken as per the terms of the
tender, prevalent banking practice and the Term Sheet given by the lender;
that the Consultant was appointed pursuant to the Board Resolution dated
28.01.2012 who participated in all pre-bid and post-bid meetings and the
minutes had been signed by all the parties and the consultant and,
therefore, CSEPDl was very much aware of appointment of the
consultant and the role played by consultant could neither be criticised
nor ignored.
I 0. The 2"d Respondent herein contended that respondent No. I
lacked credibility to make any allegation against it; that design was the
core area of leader of the consortium and they have no experience in
India insofar as supercritical Thermal Power Projects are concerned;
and that the work was under progress and they had expended substantial
amount.
I I. After hearing the rival. contentions, the Division Bench placed
reliance on Jagdisb Manda/ v. State of Orissa1 and observed that the
approach of the owner was unfair in the tendering process. It further
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analysed the scheme of Section I 0 of the TTIT Act and held that the
Tender Accepting Authority (TAA) has a role to cause objective
evaluation of the tenders. Referring to Section I 0( 6) of the TTIT Act, it
held that the Corporation had not complied with the said provision and it
was a case of procedural impropriety, unfair approach and arbitrariness.
The appellate Bench referred to the authority in Star Enterprises v.
City and Industrial Development Corporation of Maharashtra Ltd."
and declined to accept the stand of the Corporation by opining that
reasons for rejection of I" respondent'sJepresentations could not be
treated as reasons for rejection of its bid and hence, the decision making
process was flawed and in breach of Section l 0(7) of the Act. It further
held that in the "Tender Bulletin", absence ofreasons for acceptance of
tender, no statement of evaluation of tenders and no comparative
statement of tenders.received and, decision thereon was in clear violation
of the requirements of Section 6(1) read with Section IO of the TTIT
Act and Rule 30(3) of the TTIT Rules. On the interest component and
commitment fee, the Division Bench held that the approach was wholly
arbitrary and the intention was to oust the respondent No. I, for the
evaluation process adopted was meant to suit one and reject the other. It
further held that the process adopted 1\11d the decision taken by the owner
was arbitrary, unfair, irrational, biased and mala fide and did not serve
the larger public interest. In view of the said analysis, the Division Bench
allowed the appeals and directed the Corporation to evaluate the price
bid of the respondents in the light of its findings and taking into
consideration all relevant parameters including the representations/
documents submitted by respondent No. I and to record detailed reasons
for the decision and communicate the same to the respondent No. I so
as to comply with the requirement of the provisions of the TTIT Act and
TTIT Rules and various decisions of this Court.
12. Being aggrieved by the aforesaid judgment, the corporation
and the successful bidder, by way of special leave, have preferred separate
appeals.
13. We have heard Mr. Mukul Rohatgi, learned Attorney General
and Mr. Parag P. Tripathi, learned senior counsel for the appellant-SHEL
and Mr. Subramonium Prasad, learned senior counsel for the appellantCorporation, and Mr. Kapil Sibal, learned senior counsel for respondent
No. I and Mr. Sriram Panchu, learned senior counsel for the respondent
No.2.
'(1990) 3 sec 2so
TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION
503
LTD. v. CSEPDI-TRISHE CONSORTIUM [DIPAK MISRA, J.]
14. It is apposite to note that in course of hearing it has been
opined that the singular issue that is required to be addressed is "whether
the Evaluation Report dated 301h May, 2014 by the Consultant, is prima
facie erroneous, requiring interference within the parameters of judicial
. review". Such a singular point was required to be focused as Mr. Mukul
Rohatgi, learned Attorney General appearing for BHEL and Mr.
Subramonium Prasad learned senior counsel appearing for the Corporation
had submitted as the subsequent offers either by BHEL or by the I"
respondent need not be considered. At that juncture, Mr. Kapil Sibal
learned senior counsel appearing for the I" respondent, the contesting
party, had submitted that the Consultant's Report would graphically
exposit that the respondent No. I was entitled to be declared as L-1
even ifit is scrutinized within the limited parameters of the judicial review.
The Court had directed for handing over the Consultant's Report to the
learned counsel appearing forthe l" respondent. In view of the aforesaid
submission, the opinion expressed on other issues by the learned Single
Judge or by the Division Bench need not be adverted to.
15. On a"perusal of the facts brought on record, it is manifest that
the Corporation in its meeting held on 30.1.2014 had decided to open the
price bids on both the bidders and thereafter the supplementary price
bids were obtained from both the parties for the additional implications
items in respect of technical deviation quoted by both parties and
thereafter the price bids were opened on 05.2.2014. As the factual
matrix would reveal, the price bids were evaluated by the Consultant.
The learned Single Judge has adverted to price evaluation report submitted
by the Consultant. Certain paragraphs from the report of the Consultant
that were reproduced by him are as follows:-
"4.0 Evaluation
4.1 BHEL
BHEL has arranged finance from Mis .. Power Finance
Corporation oflndia.
They are arranged to finance 75% of the total cost as debt
at an interest rate of 12.25% p.a.
AttachedAnnexures I to 5 indicate the methodology adopted
in calculating the various components required for evaluation
like !DC-Debt, !DC-Equity, IDC-UF Fess; Debt Repayment
Schedule etc.
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CSEPDI-TRISHE has arranged finance from Mis. ICBC,
China.
They have arranged a finance 85% of the total cost as debt
at an interest rate of7.2% p.a.
Attached Annexures 6 to 12 indicate the methodology
adopted in calculating the various components required for
evaluation like JDC-Debt, JDC-Equity, IDC-UF Fess, Debt
Repayment Schedule etc.
5.0 Evaluated Lower Cost
BHEL
CSEPDITRISHE
All figures in
All figures in
Rs. (Crores)
Rs. (Crores)
Capacity
1320MW
1320 MW
Total EPC cost
7762.977
9207.264
excluding VAT
EPC Debt
75%
5822.233
7826.174
EPC Equity
25%
1940.744
1381.090
!DC Debt
12.25%
1295.079
1228.378
EPC Debt Including
7117.311
9054.552
!DC (B + D)
Upfront Fees
8.925
801.180
Including Interest
Total Debt (E + F)
7126.237
9855.732
Interest on Equity
14%
509.597
. 456.606
Total Equity (C+H)
2450.341
1837.695
Total Project Cost
9576.578
11693.427
(G +I)
Total Cost per MW
7.255
8.859
PV - Debt
7553.364
8464.318
PV - Equity
2809.403
2106.984
Total PV
10362.767
10271.302
PV Cost per MW
7.851
7.781
Loading for
10.287
173.229
Deficiency
Total (N+P)
10373.054
10444.531
Evaluated Bid
7.858
7.913
Price per MW
TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION
505
LTD. v. CSEPDI - TRlSHE CONSORTIUM [DlPAK MISRA, J.]
Paragraphs 4.0 and 5.0 of the "Price Evaluation Report" submitted by
the Consultant, which I have extracted above, show that the Consultant
took into account only the interest rate of 12.25% per annum for the
debt component arranged by BHEL from the Power Finance Corporation
of India. The Consultant did not take note of the reduced rate namely
12.15, subsequently offered by BHEL, for arriving at the conclusion that
the "Evaluated Bid Price" ofBHEL was the lowest."
16. There is no dispute that as per the Price Evaluation Report by
the Consultant, the EPC price of the respondent No. 1 was Rs.9207 .264
crores and respondent No.2 to whom the contract was awarded was
Rs.7762.977 crores. Thus, the difference between the two EPC price
is Rs.1444.287 crores. The 1" respondent disputed the Price Evaluation
Report by the Consultant on the ground that it wrongly loaded the sum
towards (a) the commitment fee, (b) interest on management fee during
JDC period; and ( c) interest of guarantee fee during IDC period in its
bid amount which had led to the evaluation of quoted financial charges
with interest to Rs.80 l .18 crores.
17. As regards the commitment fee, learned counsel for the
appellant submits that the contention of the respondent No. I that since
commitment fee was the fee to be charged on the unutilised amount of
the loan meaning thereby ifthe appellant failed to draw the loan amount
as undertaken, then only the commitment fee would be charged and,
therefore, the detennination after addition of the same was without any
rationale as the respondent No. I had quoted in the 'Calculation Sheet
for Financial Cost' in the supplementary bid commitment fee to the tune
of Rs.164.72 crores which was to be charged @ l o/o p.a. on accrued
drawals and if no commitment fee was required to be paid, the respondent
No.I should have mentioned the same to be nil or z.ero. To show that
the commitment fee is a part of the financial charges, learned senior
counsel has drawn our attention to clause 14(d) 6 of the Instruction to
Bidders under the tender, which reads as follows:-
"6. Financing Charges : All financing charges of any
nomenclature relating to financing of the project including
but not limited to Finders Fees, Commitment Fees,
Arrangement Fees, Management Fees, Up Front Fees,
Syndication Fees, Service Charges, Guarantee Charges,
Other Fees and Taxes, if any should be clearly outlined in
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the Financing Term Sheet. No variation in Financing
Charges is permitted during the tenor of loan.
3.37 "Financing Cost" means all financing charges of any
nomenclature relating to financing of the project including
but not limited to Finders Fees, Arranger's Fees,
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Commitment Fees, Management Fees, Up Front Fees,
Syndication Fees, Service Charges, Guarantee Charges,
Other Fees and Taxes, if any."
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18: At this juncture we may also refer to clause 3.37 of Section 2
that deals with the General Terms and Conditions of the Contract. It
defines the "Financing Cost" as follows:-
"Financing Cost" means all financing charges of any
nomenclature relating to financing of the project including
but not limited to Finders Fees, Arranger's Fees,
Commitment Fees, Management Fees, Up Front Fees,
Syndication Fees, Service Charges, Guarantee Charges,
Other Fees and Taxes, if any".
19. Clause 14 that deals with the conditions for a Binding Debt
Financing Term Sheet, which needs to be reproduced in entirety. It
reads as follows:-
"14.0 Conditions for a Binding Debt Financing Term
Sheet
Bidder shall enter into a Memorandum of Understanding
(MoU) with the Lender for the Debt Financing agreeing to
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provide Financing for the Project and making payments
directly to the Bidder based on bills certified by
TANGEDCO as per the terms of payment Clause.
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The MoU shall be submitted by the Bidder along with their
offer for signing of the loan agreement.
The Bidder shall be responsible for arranging the required
financing and achieving Financial Closure of the project
within 4 (Four months) from the date of Letter of Intent·
(Loi).
a. The Bidder and Lender shall furnish a joint undertaking
TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION
507
LTD. v. CSEPDI-TRISHE CONSORTIUM [DIPAK MISRA, J.]
to fulfill the commitment made in the offer for Debt
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Financing arrangement from the Lender subject to due
diligence.
TANGEDCO will furnish the following documents to the
lender for processing of Debt Financing to the successful
bidder.
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I. Profile ofTANGEDCO
2. Audited Balance Sheet ofTANGEDCO for the last three
financial years
3. MOU entered between TANGEDCO & MMTC for long
term supply of coal of this project.
4. Tariff order for sale of power.
5. Copy of DPR
b. It shall be understood that the Financing Term Sheet shall
be based on preliminary appraisal of the project jointly by
the Bidder and the Lender satisfying themselves on the
project financial viability.
c. It shall be understood that the Award of Contract to the
Bidder is contingent upon successful financial Closure based
on the Terms and Conditions provided in the Financing Term
Sheet and in the event onhe Financial Closure does not
materialize due to reasons attributable to the Bidder or the
Lender or in the event of withdrawal by the Lender from
the Project, the Bidder will forfeitthe security deposit.
d. The Term Sheet should be full and complete with all
material terms of financing including but not limited to:
I. Loan Amount : At least 75% of the Total EPC Cost +
100% of Interest during construction and Financing Cost.
2. Currency of Loan: INR/USD/Euro or a combination
thereof.
3. Tenor of the Loan: From the date of first drawal of the
Loan upto 6 months from COD of the I" or 2nd unit
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whichever is later and 15 years thereafter.
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4. Rate of Interest.
5. Fixed Rate oflnterest till the entire tenor of the loan
after taking into account the hedged cost.
6. Financing Charges : All financing charges of any
nomenclature relating to financing of the project including
but not limited to Finders Fees, Commitment Fees,
Arrangement Fees, Management Fees, Up Front Fees,
Syndication Fees, Service Charges, Guarantee Charges,
Other Fees and Taxes, if any should be clearly outlined in
the Financing Term Sheet. No variation in Financing Charges
is permitted during the tenor ofloan.
7. Terms and conditions for draw down schedule.
8. Moratorium for Repayment of Installment, Interest and
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Financing Charges: All cash outflow obligation of
TANGEDCO towards repayment of Installment, Interest
and Financing Charges should be in INR (fully hedged) for
the entire tenure of the loan and the repayment will
commence only after 6months from the date of COD of
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later unit.
9. Repayment Period: 15 years post IDC and moratorium
in 60 equated quarterly installments
I 0. Project Cash Flows and Installment Repayments
statement should be submitted and will form part of the
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Financing proposal. The Bidder shall indicate Draw Down
Schedule of finance to match the supply and erection
schedule of project activities.
11. Equity requirements and related covenants.
12. Security: Against Security the following can be made
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available by TANGEDCO
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a. Hypothecation of all I 00% Project Assets
b. Government Guarantee for the repayment of loan
13. Validity period of the Term Sheet will be co-terminus
with the validity of the bid."
TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION
LTD. v. CSEPDI-TRISHE CONSORTIUM [DIPAK MISRA, J.]
20. The stand of the respondent as regards the interpretation of
Clause 14(d) 6 is that it only outlines all fees, but it does not mean that
every such fee is to be loaded for evaluating the bid to determine L l and
no commitment fee can be loaded for such evaluation. It is also put
forth that there can be no question of loading interest on commitment
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21. As has been stated earlier, the issue pertaining to correctness
of Consultant's report has to be adjudged and scrutinized within the scope
of limited power of judicial review in the obtaining factual score. The
Division Bench in the impugned judgment has taken exception to the
process adopted in the identification of L l. It has referred to its order
dated 19.8.2014 wherein the l" respondent was granted the time to
submit additional documents. The impugned order takes note of the fact
that at that point of time, the Corporation had never averred that tender
had been finalized. It has referred to the earlier order of the Division
Bench that representations were to be considered and till then the bid
should not be finalized. It has referred to the letter of the Chairmancum-Managing Director of the Corporation dated 20. 7.2014 and opined
that it appears to be a misstatement of fact.
22, Be it stated that the Division Bench has posed two questions:-
"(i) Whether interest offered by appellant is vague; and
(ii) Whether the reduction of interest from 7.2% to 6.2%
should be accepted."
23. While dealing with the said issue, the Division Bench has
referred to the publication in the tender bulletin stating about the decision
on tender:-
" l. Name of the Tender: Chief Engineer/Civil/Projects &
Environment, Inviting Officer, J•d Floor, NPKRR Maal igai,
144, Anna Salai, Chennai - 600 002.
2. a) Name of the Project/Detail of Purchase & Works:
Establishment of coal based 2 x 660 MW Ennore SEZ
Supercritical Thermal Power Project in the ash dyke of
existing NCTPS under Single EPC cum Debt Finance basis.
Vayalurvillage, Thiruvallur District, Tamil Nadu.
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SI.
Details
No
Tender Value
Decision on Tender
2
Mis.
Bharat 7840.087
Out of four bids received
Heavy
Electricals
Limited, BHEL
House, Sirifort,
New Delhi -
110 049
Crores
& for this work and among
Lender: Powe1 the -qualified two bidders,
Finance
negotiation was called for
Corporation
& held with the lowest
Limited
bidder viz M/s.BHEL.
Rate of
After negotiation, tender
Interest:
value of Rs. 7788 Crores, ·
12.25%
Rate oflnterest at 12.15%
Consortium
o; 9716.5974
Central Southern Crores &
China
Electric Lender:
Power Design - Industrial &
Ms. Trishe, 668, Commerce
Minz
Road, Bank of China
Ughan, China - Rate of
430 071
Interest; 7.2%
(USD@Rs.
59.26 at SBI
Bill selling
rate)
was
accepted by the
Chief Engineer/Projects
and order for acceptance
of the tender issued vide
this
office
issue
Lr.No.CE/P/SE/M/EE1 O/E/File.
2x660MW
Ennore
SEZ
STPP/D.No.60/dt.27.09.2
014
Finally, M/s. BHEL/New Delhi offered bid for Rs. 7788 Crores was
accepted by thtl Chief Engineer/Projects/Chennai and order for
acceptance of the tender was issued vide this officer Lr.No.CE/P/SE/
M/EE-10/ E/File.2x660MW Ennore SEZ STPP/D.No.60/dt. 27.09.2014."
24. Thereafter, the Division Bench has recorded as follows:-
"31.3 While it is the plea of the appellant that fixed rate of
7 .2-7 .5% per annum or LIBOR floating rate has been
quoted by them, it is the case of the learned Advocate
General that Clause 12.1 of the Instructions to Bidders
stated that interest is to be quoted at fixed rate and it is not
subject to change, and since the interest quoted is variable,
it is not possible to evaluate the bid.
TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION
511
LTD. v, CSEPDI - TRISHE CONSORTIUM [DIPAK MISRA, J.]
31.4 It is seen from the records, that subsequently, based
on a query from the first respondent, the appellant had
confirmed that it would be fixed rate of interest at 7.2%.
the same was also confirmed in the Repayment Schedule
and the same rate of interest was taken into consideration
by the Consultant in his report dated 30.5.2014. He did not
find fault with the rate of interest. It is to be noted that the
Term Sheet was submitted during July, 2013 and tender
was evalu11ted in" the year 2014. The contention of
vagueness in rate of interest does not appeal to us. When
the Consultant's report dated 30.5.2014 is accepted by
TANGEDCO for the purpose of evaluation, it has to be
accepted for all purposes, though we have reservation on
the Consultant's report dated 30.5.2014. There is; therefore,
no vagueness in the rate of interest quoted at 7.2%.
31.5 The second issue relates to the reduction of rate of
interest. It is not in dispute that various meetings were held
between the appellant and the TANGEDCO. The learned
Advocate General states that the Consultant was appointed
based on the 21" Board Meeting on 28.1.2012 and the
Consultant participated in all pre-bid and post-bid meetings
and minutes were signed by all parties, including BHEL
and the appellant. He stated that the appellant was aware
of the Consultant's appointment and his role. This only
fortifies the fact that there have been series of consultation
between both the bidders. The finding of the learned Single
Judge that the appellant acted on inside information is
demolished by the stand of the learned Advocate General
as above. The insinuation has no basis.
31.6 Coming to the issue of reduction of rate of interest,
taking into consideration the prevailing market rate, the
appellant offered to reduce the-rate of interest from 7 .2%
to 6.2% on 5.6.2014, even prior to any form of litigation.
When such an offer was given by the appellant the tender
was not accepted in terms of Section 10(6) of the Act. To
recapitulate, what has happened earlier is that the writ
petition in W.P. No. 19247 of2014 was filed on 17. 7.2014,
subsequent to the offer made on 5.6.2014. The first interim
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order was passed on I 8. 7 .20 I 4. The second interim order
was passed on 31.7.2014. The Division Bench passed an
order on I 9.8.2014. At that point of time, there was never
a statement by the TANGEDCO that LI was identified
and discussion was going on. We have also clearly stated
that the statement of the Chairman-cum-Managing Director
of TANGEDCO that the representations of the appellant
will be duly considered by the Board of Directors while
finalizing the tender and appropriate orders will be passed
strictly in accordance with the tender specifications and by
following the provisions ofTTIT Act and TTIT Rules.
31. 7 Therefore, the issue relating to reduction of rate of
interest should have been considered. This reasoning of
ours is also based on the fact that we have clearly held that
the third respondent could not be ascertained as LI on
2.6.2014 as per the statement of TANGEDCO or on
30.5.2014 as per the finding of the learned Single Judge.
Once there is no identification of Lt, TANGEDCO is bound
to consider the reduction in rate of interest of both the
appellant in their offer dated 5.6.2014 aiid that of the third
respondent dated 27.6.2014, reducing the rate of interest
from I 2.25% to 12. I 5%.
3 I .8 Even otherwise, by virtue of the power under Clause
25 .3 of the Instructions to bidders, which states that "The
Purchaser reserves the right to relax or waive any of the
conditions of this Specification in the best interests ofthe
TANGEDCO", the TANGEDCO could have considered
such reduced rate of interest offered by the appellant and
the third respondent."
25. With regard to commitment fee, the analysis of the Division
Bench is worth referring to:-
"It clearly states that Commitment Fee is only on the
cancelled portion of the loan. That apart, even as per the
Drawdown Schedule, the fee is to be paid only if the loan
amount is not drawn by the I 81h, 30th and 42"d month.
Moreover, the appellant in the letters dated
13.6.2014, 16.6.20 I 4 and 17.6.2014, clarified that
T AMJL NADU GENERATION AND DISTRIBUTION CORPORATION
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LTD. v. CSEPDI-TRISHE CONSORTIUM [DIPAK MISRA, J.]
Commitment Fee is only on the unused credit line and that
there shall be no Commitment Fee if the loan amount is
fully utilized as per the Drawdown Schedule. All these
representations sent by the appellant were not considered
by TANGEDCO, despite there being a specific direction
by the Division Bench of this Court to consider the same.
It is a clear case of arbitrariness in approach and intended
to oust the appellant. This act of the TANGEDCO is nothing
but a case of malafide in evaluation process to suit one and
reject the other."
26. While dealing with the consultant's report, the Division Bench
has proceeded to state thus:-
"33.3 Even as per the Consultant's Report the difference
between the bid of the appellant and the third respondent is
around Rs. 71 Crores.