# MIS. S.S. & COMPANY ') v. ORISSA MINING CORPORATION LIMITED

- **Citation:** [2008] 5 S.C.R. 598
- **Court:** Supreme Court of India
- **Decided:** 2008-03-28
- **Case number:** Civil Appeal No. 2227 of 2008
- **Bench:** H.K. Sema, Aftab Alam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-s-s-company-v-orissa-mining-corporation-limited-24469
- **Pages:** 27

## Headnote

Contract - For raising, calibration and transport of. iron
ores from Iron Ore Mines - Notice inviting tenders (NIT) ~
c Amendment in Certain clauses - Exclusion of experience· in
raising of minor minerals by sub-clause (i) - By sub clause
(vii) the overlapping margin of 6 months permissible tC? the
agencies already engaged in the same work in the mine for
applying for the tender, was done away with - Companies hit
D by the amendments challenging the amended clauses
alleging malafide - High Court dismissing their writ petitions
- On appeal, held : There was no malafide in introducing the
•
amendments - Doing away with the six months margin, in the
facts of the case is not arbitrary or unreasonable -Amendment
E
of experience clause also, is not arbitrary -
It is only a
clarification - Since in the facts of the case, the company
concerned is not affected by the experience clause, cannot
challenge the amendment - Mines and Minerals.
Tender- Notice Inviting Tender- Interpretation of - Held
F : It should be read and understood for what it is, and not to be
seen in highly pedantic and legalistic manner.
Respondent-Corporation issued Notice Inviting
).. <
Tender (NIT) No. 16 in November 2004 for grant of contract
for raising, calibration and transport of iron ore at a
G particular time for a period of one year. The contract was
further extended for second year. The Corporation,
pursuant to request of FGM for extention for third year,
granted the same by letter dated 21.2.2008 and the period
-<--
was to subsist till 24.2.2008. While the contract awarded
H
598
MIS. S.S. & COMPANY v. ORISSA MINING
599
CORPORATION LIMITED
·~
to FGM was subsisting Corporation issued NIT No. 65 for A
grant of another similar contract. On cancellation of
thereof, NIT No. 75 was issued which was also later
withdrawn. Appellant-FGM did not participate in the tender
process as it was barred in view of the fact it was already
executing similar and identical work. Appellant-SSC had B
..J..
participated in the process in respect of both the· NITS,
but its tenders were not accepted. The non-acceptance
were challenged, but ultimately withdrawn as infructuous
in view of cancellation of the Nils. Thereafter, Corporation
issued NIT No. 85 dated 25.5.2007. The eligibility clauses c
therein for the tenderers were amended. In clause 8(i)
raising of minor mineral was not to be acceptable as
experience for the work. By amendment in clause 8 (vii)
tenderer was required not to have any pre-existing work
in that mine on the last date for submission of the tender D
(11.6.2008) and the overlapping margin of six moths was
done away with. Appellant-SSC was hit by sub clause (i)
and appellant-FGM was hit by sub-clause (vii). They
challenged the amendment to the sub-clauses alleging
malafide. High Court dismissed the writ petitions. Hence
E
the present appeals.
Dismissing the appeals, the Court
HELD: 1.1 Doing away with the six months. margin
in clause 8 (vii) of Notice Inviting Tender 85 (NIT-85) was
not arbitrary or unreasonable, nor it had any ma/a fide
F
·~
intent. Appellant was hugely in default in respect of its
previous contract and yet it was insisting on taking part
in NIT No.85/2007. In the aforesaid circumstances the
consequences of the appellant getting the contract under
NIT 85/2007 would have been two-fold : one, that it would· G
operate the same mine at the same time under two different
contracts with widely different rates and the other, that it
'
would be charging much higher rates for extraction of
")--
ores that it was obliged to extract at much lower rates
under the previous contract. The Corporation can hardly H
600
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A be faulted for protecting itself against entering into such
~ ·
a bargain with anyone. [Paras 24 and 25] [614-C, D, E]
1.2 Sub-clause (vii) of clause 8 of the tender is aimed
at preventing the same party from executing two different
works in the same mine at the same time. The clause does
B not even refer to a

## Text

_Characters 0–39,903 of 55,397. This is a partial read: ask again with offset=39903 for what follows._

[2008] 5 S.C.R. 598
A
MIS. S.S. & COMPANY
')--.
v.
ORISSA MINING CORPORATION LIMITED
(Civil Appeal No. 2227 of 2008)
B
MARCH 28, 2008
(H.K. SEMA AND AFTAB ALAM, JJ.)
Contract - For raising, calibration and transport of. iron
ores from Iron Ore Mines - Notice inviting tenders (NIT) ~
c Amendment in Certain clauses - Exclusion of experience· in
raising of minor minerals by sub-clause (i) - By sub clause
(vii) the overlapping margin of 6 months permissible tC? the
agencies already engaged in the same work in the mine for
applying for the tender, was done away with - Companies hit
D by the amendments challenging the amended clauses
alleging malafide - High Court dismissing their writ petitions
- On appeal, held : There was no malafide in introducing the
•
amendments - Doing away with the six months margin, in the
facts of the case is not arbitrary or unreasonable -Amendment
E
of experience clause also, is not arbitrary -
It is only a
clarification - Since in the facts of the case, the company
concerned is not affected by the experience clause, cannot
challenge the amendment - Mines and Minerals.
Tender- Notice Inviting Tender- Interpretation of - Held
F : It should be read and understood for what it is, and not to be
seen in highly pedantic and legalistic manner.
Respondent-Corporation issued Notice Inviting
).. <
Tender (NIT) No. 16 in November 2004 for grant of contract
for raising, calibration and transport of iron ore at a
G particular time for a period of one year. The contract was
further extended for second year. The Corporation,
pursuant to request of FGM for extention for third year,
granted the same by letter dated 21.2.2008 and the period
-<--
was to subsist till 24.2.2008. While the contract awarded
H
598
MIS. S.S. & COMPANY v. ORISSA MINING
599
CORPORATION LIMITED
·~
to FGM was subsisting Corporation issued NIT No. 65 for A
grant of another similar contract. On cancellation of
thereof, NIT No. 75 was issued which was also later
withdrawn. Appellant-FGM did not participate in the tender
process as it was barred in view of the fact it was already
executing similar and identical work. Appellant-SSC had B
..J..
participated in the process in respect of both the· NITS,
but its tenders were not accepted. The non-acceptance
were challenged, but ultimately withdrawn as infructuous
in view of cancellation of the Nils. Thereafter, Corporation
issued NIT No. 85 dated 25.5.2007. The eligibility clauses c
therein for the tenderers were amended. In clause 8(i)
raising of minor mineral was not to be acceptable as
experience for the work. By amendment in clause 8 (vii)
tenderer was required not to have any pre-existing work
in that mine on the last date for submission of the tender D
(11.6.2008) and the overlapping margin of six moths was
done away with. Appellant-SSC was hit by sub clause (i)
and appellant-FGM was hit by sub-clause (vii). They
challenged the amendment to the sub-clauses alleging
malafide. High Court dismissed the writ petitions. Hence
E
the present appeals.
Dismissing the appeals, the Court
HELD: 1.1 Doing away with the six months. margin
in clause 8 (vii) of Notice Inviting Tender 85 (NIT-85) was
not arbitrary or unreasonable, nor it had any ma/a fide
F
·~
intent. Appellant was hugely in default in respect of its
previous contract and yet it was insisting on taking part
in NIT No.85/2007. In the aforesaid circumstances the
consequences of the appellant getting the contract under
NIT 85/2007 would have been two-fold : one, that it would· G
operate the same mine at the same time under two different
contracts with widely different rates and the other, that it
'
would be charging much higher rates for extraction of
")--
ores that it was obliged to extract at much lower rates
under the previous contract. The Corporation can hardly H
600
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A be faulted for protecting itself against entering into such
~ ·
a bargain with anyone. [Paras 24 and 25] [614-C, D, E]
1.2 Sub-clause (vii) of clause 8 of the tender is aimed
at preventing the same party from executing two different
works in the same mine at the same time. The clause does
B not even refer to a formal contract and if someone should
be working the mine, may be on the basis of a work order
issued by the Corporation, that in itself might be sufficient,
in certain circumstances to attract clause 8(vii), even in
the absence of a formally drawn up contract. Seen thus,
C the whole issue as to whether or not a formal contract for
the third year of the tender period was drawn up in favour
of the appellant would appear to be of no relevance. The
fact of the matter is that the appellant on its own showing
was working in the mine upto June 30, 2007. Further, in
D view of the decision of the Corporation it had the right to
be there upto February 24, 2008. Therefore, the High Court
was not incorrect in observing that the appellant would
have been barred from taking part in the tender process
even ifthe six months margin was retained in the eligibility
E clause. [Para 18] [610-E, F, G, H; 611-A]
1.3 The question whether the appellant had the right
to stay in the mine till February 24, 2008 or its work there
came to end on June 30, 2007 has relevance only on the
issue of ma/a fide. Otherwise, it is always open to the
F Corporation to issue a tender notice, at any time,
according to its needs, and to introduce an eligibility
clause in the tender notice or to delete from it any preexisting one as it might best serve its purpose. Hence,
the controversy with regard to the outer limit of the
G appellant's presence in the mine on the basis of the earlier
contract under NIT 16 has no relevance sans the allegation
of ma/a fide. [Para 19] [611-A, B, C]
1.4. The circumstances viz. the eligibility clause was
H so tailored as to render the appellant disqualified by 19
...
M/S. S.S. & COMPANY v. ORISSA MINING
601
CORPORATION LIMITED
-~
days and that the change in clause 8(vii) was made for A
the first time, are inadequate to bring home the grave
charge of ma/a fide and the High Court was quite right in
holding that the appellant completely failed to establish
its case in that regard. It is axiomatic that the Corporation
is the best judge of its interests and needs and it is always B
open to it to suitably modify or change the eligibility criteria
-4so as to best serve its purposes. Whenever a change is
introduced in the eligibility criteria either by introducing
some new conditions or restricting or altogether doing
away with certain previous concessions it might hurt the c
interests of someone or the other but for that reason the
change(s) made in the eligibility criteria cannot be labelled
as ma/a fide. [Para 21] [611-E, G; 612-A, B]
2.1 It is not correct to say that any distinction between
minor and major minerals was illusory and the amendment D
in clause (i) to NIT-85, based on the distinction between
....
the two, was arbitrary and did not serve any purpose .
There is no error much less any unreasonableness in the
view taken by the Technical Committee and in rejecting
the appellant's tender on that basis. It does not require
E
much imagination to hold that the work of lifting of sand
from a riverbed or a sand quarry is not similar in nature to
the work of raising, calibration and transport of iron ore.
[Paras 38 and 42] [621-C, D; 624-A, B]
2.2 It would be truism to say that the Corporation
F
knows best the exact nature of its work and it is tl:te best
. ;. ~
judge to say what is and what is not comparable to it. The
expression "excluding minor minerals" used in the
eligibility must, therefore, be viewed as commonly
understood in the mining/industrial and commercial G
world. What the clause intends to convey is that the
extraction of iron ore requires certain degree of technical
expertise and competence and in order to have the
">
required degree of competence the bidder must have
)-
some past experience of similar kind of work, clarifying
H
602
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A further that working of minor minerals would not be
~·
accepted as qualifying experience/sufficient expertise for
the purpose of the NIT. The distinction between minor and
major minerals is well-known to the mining/industrial and
..
commercial world and anyone engaged in the business
B would know what the eligibility clause in the NIT demands
without referring to the statute and case law and any
abstruse arguments based thereon. [Para 39] [621-H; 622A, B, C, DJ
2.3 In the context of the case, an elaborate analysis
c of the provisions of the Mines and Minerals (Regulation
and Development Act, 1957) and Mineral Concession
Rules to bring out the distinction between minor and major
minerals is quite misconceived. It would be a mistake to
see the NIT through the prism of the Act and the Rules.
D The NIT should not be viewed in the highly pedantic and
legalistic manner, but it is a notice issued by the
Corporation which is engaged in the business of mining.
"'
[Para 39] [621-E, F, G]
2.4 A grievance against the amendment, either based
E on the plea of mala fide or dn the substance of the
amendment can only be raised by someone whose
position gets adversely affected by the amendment.
Appellant-SSC did not satisfy the eligibility criteria with
regard to past experience even in terms of the unamended
F clause 8(i). Had the appellant been qualified in terms of
the unamended clause and faced exclusion only as a
result of the amendment in the criterion it might have been
A. • '
open to it to assail the introduction of the amendment.
[Paras 40 and 44] [622-D, 624-D, E]
G
D. K. Trivedi and Sons and Ors. vs. State of Gujarat and
Ors. 1996 Suppl. SCC 20 - referred to.
2.5 The Board of Directors is the apex policy making
body. It may lay down broad guidelines but it is impossible
{"'
to conceive that all the NITs (over a hundred in number)
~
H issued by the Corporation for different purposes evety
M/S. S.S. & COMPANY v. ORISSA MINING
603
CORPORATION LIMITED [AFTAB ALAM, J.]
year should come before it for consideration and approval A
of their respective clauses or any amendment proposed
in any clause in any of the NITs. The normal work of any
organization or government department would be
seriously hampered if every tendering party would claim
the right to raise objection that one or the other clause in
B
a NIT or any amendment introduced in any of its clauses
did .not have the prior sanction of the highest policy
making body of the organization. In this case
particularly there is no occasion to go into that question
as there is neither any m~terial to suggest, even c
remotely, that the Managing Director harboured any
malice against the appellant nor is the Managing director
made a party to this case in his personal capacity.
[Para 31] [617-8, C, D, E]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. D
2227 of 2008.
From the final Judgment and Order dated 12.07.2007 of
the High Court of Orissa.at Cuttack in Writ Petition (C) No. 7001
of2007.
·
WITH
Civil Appeal No. 2228 of 2008.
E
R.F. Nariman, P.P. Rao and Dr. Rajiv Dhawan, Dhruv Mehta,
Yashraj Singh Deora, Harshvardhan Jha (for M/s. K.L. Mehta & F
Co.), Saket Sikri, Madhu Sikri, Raj Kumar Mehta, Suman Kukrety,
Purushottam S.T., Anshuman Ashok, Abhishek Gupta, Sahar
Bakht, Feb in A.K. and Jana Kalyan Das for the appearing parties.
The Judgment of the Court was delivered by
AFTAB ALAM, J. Leave granted in both the matters.
2. These two appeals, taken together for the sake of
)-
convenience, question the validity of two different clauses in the
eligibility criteria in a Notice Inviting Tenders (NIT), issued by
G
the respondent-Orissa Mining Corporation Limited (hereinafter H
604
SUPREME COURT REPORTS
[2008] 5 S.C.R.
,,.._ .
A
referred to as 'the Corporation'). The appellants in the two
appeals make a grievance that the two clauses were designed
to exclude them from consideration. They first went to the High
Court of Orissa challenging the validity of the clauses and the
rejection of their respective tenders on that basis. M/s. S.S. &
B Company challenged the validity of Clause 8(i) of the NIT in
W.P.(C) No.7001/2007, (giving rise to SLP (C) No.12003/2007).
M/s.Faridabad Gurgaon Minerals challenged Clause 8(\1\i) of
the NIT in W.P. (C) No.7002/2007, (giving rise to SLP (C)
No.12008/2007). A Division Bench of the High Court by
c separate judgments, dated July 12, 2007 dismissed both the
writ petitions. The judgments of the High Court are brought in
appeal before this Court.
3. The appellants in each of the two appeals are
proprietorship firms owned and controlled by a father and son
D duo and the controversy in the two cases relates to the grant of
contract for raising, calibration and transport of iron ores at
Daitari Iron Ore Mines of the respondent-Corporation.
4. The Corporation issued NIT No.16 on November 11,
E
2004 for grant of contract for raising, calibration and transport
of iron ore at Daitari mines for a three year period. Here, it may
be noted that in NIT 16 sub-clauses (i) and (vi) of Clause 8 relating
to eligibility criteria were as follows:-
"8. The eligibility criteria of the tenderers shall be as
F
follows:-
Only such tenderers who fulfil the following eligibility criteria
,.....
shall participate in the tender:-
(i)
The agency must have successfully executed similar
G
work (as mentioned in NIT/raising work(s) of ore/
minerals) for a minimum amount of 30% in case of
a single work or 50% in case of two works of the
value of work shown in column No.5 of NIT in any one
financial year during the last three years including
~
H
2003-04.
M/S. S.S. & COMPANY v. ORISSA MINING
605
CORPORATION LIMITED [AFTAB ALAM, J.]
"'1'
(vi)
Any agency who is already executing similar and A
identical work in any mine will not be allowed to take
up the second work in the same mine and such
agency will not be allowed to participate in the tender.
However, if the work of the said agency is due to
end within six months of the date of issue of this B
NIT and there is no possibility that the work tendered
for and the existing work in hand will operate
concurrently, this restriction will not be applicable
to the concerned agency."
(The above quoted clauses in their amended form are c
now the subject matter of controversy).
5. In response to NIT 16, dated November 11, 2004, M/
s.Faridabad Gurgaon Minerals (FGM) was the successful bidder
and by letter, dated January 29, 2005 issued by the Corporation D
it was awarded the work 'initially for a period of one year for a
quantity of 12.00 lakh MT.' on rates as indicated in that letter. In
that letter, it was further stipulated that the awardee might be
considered for extension for second and third year working
subject to satisfactory performance in the preceding year(s)
E
based on the terms and conditions mentioned in the tender
schedule. The first year period of the contract commenced from
February 25, 2005 and came to end on February 24, 2006. The
parties are also in agreement that the contract was extended
for the second year, i.e., upto February 24, 2007 but as regards
the third year, the two sides are in serious dispute. The
F
f Al
Corporation takes the stand that the appellant was given work
for the third year as well and the work period would come to end
on February 24, 2008. The appellant FGM, however, maintains
that its work in Daitari Mines under NIT 16 came to end on June
30, 2007.
G
6. Even while the contract awarded to FGM under NIT 16
;
was subsisting, the Corporation issued NIT No.65 on July 7,
~
2006 for grant of another similar contract for raising, calibration
and transport of iron ores from Daitari Iron Ore Mines. FGM
H
606
SUPREME COURT REPORTS
(2008] 5 S.C.R.
A was not eligible to take part :n the tender process in view of the
~·
bar of clause 8(vi) but M/s.S.S. & Company (SSC), the other
appellant before the court gave its tender for the work under NIT
65. For some reasons, however, its tender was not accepted
and it took the matter before the Orissa High Court. During the
B pendency of the writ petition, the Corporation cancelled NIT 65
and issued NIT 75, dated November 18, 2006 for the same
work. This rendered the writ petition filed by SSC infructuous
and it was withdrawn. NIT 75 had a similar fate. The tender made
by SSC was not accepted. The dispute was taken to the Orissa
c High Court but the Corporation cancelled NIT 75 thus rendering
the writ petition infructuous. Here, it may be noted that both NITs
65 & 75 had clauses 8(i) and 8 (vi) exactly in the same terms as
in the earlier NIT 16, dated November 11, 2004 (which have
been reproduced above).
D
7. After cancellation of NIT 75, the Corporation issued NIT
85, dated May 25, 2007 which is the subject-matter of the
controversy in the two cases. NIT 85 had the two clauses 8 (i)
and 8 (vii) in slightly amended forms as follows:-
E
"8.-m.e eligibility criteria of the tenderers shall be as
follows:
Only such tenderers who fulfil the following eligibility criteria
shall participate in the tender:-
(i)
The agency must have successfully executed similar
F
work (as mentioned in NIT/raising work(s) of ore/
minerals excluding Minor Minera0 for a minimum
.... '
amount of 30% in case of a single work or 50% in
case of two works of the value of work shown in
column No.5 of SI. No.2 of NIT in any one financial
G
year during the last three years including 2006-07.
(vii) The agency who is already executing the work in a
mine of OMC Ltd. will not be allowed to take up the
second work in the same mine and such Agency will
....-
H
not be allowed to participate in the tender."
M/S. S.S. & COMPANY v. ORISSA MINING
607
CORPORATION LIMITED [AFTAB ALAM, J.]
' --f'°
8. It is thus to be seen that in sub-clause (i) the words
A
'excluding Minor Mineral' was added to the portion in
parenthesis, making it explicitly clear that raising of Minor
Mineral would not be acceptable as experience in 'similar work'.
Likewise, in sub-clause (vii), the overlapping margin of six
months was done away with and as a result the tenderer was
B
+
required not to have any pre-existing work in Daitari Mines on
the last date for submission of tender (11.06.2007).
9. SSC was hit by sub-clause (i) and FGM that was working
in Daitari Mines on the basis of the previous contract, by subclause (vii). Both the appellants fancied that the two sub-clauses c
were specially tailored with the sole intent and purpose to
exclude them from c.c;msideration. They, accordingly, went to the
High Court making loud protests and alleging mala fide.
10. FGM filed Writ Petition (C) No.7002 of 2007, before
D
the High Court stating that the overlapping margin of six months
-t
for a pre-existing contract to work in the same mine was dropped
from NIT 85 of 2007 with the mala fide intent to exclude it from
consideration. It was submitted that on May 25, 2007, the date
on which the notice was issued and on June 11, 2007, the last
E
date for submission of tenders in response to the notice, the
appellant alone was working in Daitari Mines and the sub-clause
was only aimed to exclude it from participating in the tender
process. It was also pointed out that previously three successive
notices allowed the margin of six months and there was no
reason to do away with the margin period. It was further
F
'
contended that the amendment in the sub-clause, disallowing
' A.
anyone with a pre-existing contract in the same mine to
participate in the tender process was arbitrary as it would serve
no purposes, much less any reasonable one.
11. The High Court by a well reasoned judgment and order G
negatived all contentions raised by the appellant and dismissed
the writ petition. It held and found that the appellant completely
)'-
failed to establish any mala fides and in paragraph 20 of the
judgment observed as follows :
H
608
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A
"Insofar as question of malice or bias is concerned, no
~.
case is made out in the writ petition. Though some vague
allegations are scattered in the writ petition in different
paragraphs, there is no serious pleading of malice or mala
fide or bias against the authorities of the Corporation."
B
On merits, the High Court held that there was a perfectly
good reason for doing away with the six months' margin
for a pre-existing contract in the same mine.
12. The High Court also took note of the case of the
c respondent-Corporation that by communication, dated February
21, 2007, the period of the appellant's contract was extended
upto February 24, 2008. According to the Corporation, the letter
made it clear that the contract was extended for the third year
too and the appellant was awarded the work of raising 20.00
D lakh metric tons of Ore from February 25, 2007 to February 24,
2008 on the terms and conditions as provided in the agreement.
Since the appellant would be working the mines till February
24, 2008, it could not take part in the tender process even if the
six months margin was still there. The High Court accepted the
E
case of the respondent-Corporation in this regard and cited it
as one more reason for taking the view that there was no
substance in the appellant's grievances.
13. Mr.Mehta, learned counsel for the appellant FGM,
submitted that the letter dated February 21, 2007 (referred to in
F the High Court judgment) could not be taken as extension of the
contract for the third year under NIT 16.
;...
14. The letter, dated February 21, 2007 was written in
response to the appellant's request for renewal/extension ofihe
contract for the third year and it conveyed the Corporation's
G decision to award the work to the appellant for the third year
extension with effect from February 25, 2007 to February 24,
2008 under the same terms and conditions of the agreement.
This letter was followed by another letter, dated May 25, 2007
-<
(which according to Mr. Mehta was overlooked by the High Court).
H By this letter the Corporation awarded the work to the apppellant
M/S. S.S. & COMPANY v. ORISSA MINING
609
CORPORATION LIMITED [AFTAB ALAM, J.]
. """(
'though partly, to be precise from February 25, 2007 to June
A
30, 2007' indicating the target (of extraction) to be achieved
and the work value as per the rate under the tender schedule.
The letter was described as the 'letter of intent' and it asked the
appellant to make certain deposits by June 30, 2007 for drawing
up the agreement for the third year period of the contract. In
B
+
paragraph 7 of the letter it was clearly stipulated that all other
terms and conditions indicated in the tender schedule would
remain unchanged and would apply mutatis mutandis.
15. Mr.Mehta submitted that this letter was simply a work
order and neither this letter nor the earlier one of February 21, c
2007 could mean the extension of the contract under NIT 16 for
the third year. Learned counsel referred to Annexures P-8 and
P-9 which are copies of agreement No.4/2005-2006 and
agreement No.4/2006-2007 for the periods February 25, 2005
to February 24, 2006 and February 25, 2006 to February 24, D
+
2007 respectively. Learned counsel submitted that unlike the
two previous years no formal agreement was drawn up for the
third year of the contract period from February 25, 2007 to
February 24, 2008 and, therefore, the High Court was clearly in
error in accepting the claim of the Corporation that the E
appellant's contract under NIT 16 was extended for the third
year period and it would be subsisting till February 24, 2008.
16. In our view, the submission is quite mis-conceived. The
materials on record plainly indicate that the appellant was trying
to find ways to get out of the contract for the third year period
F
t~
because the rates under the tender schedule were no longer
profitable to it. We were shown the Corporation's letter, dated
June 29, 2007 by which it was pointed out to the appellant that
according to the terms of the tender the contract was for a period
of three years and it would expire on February 24, 2008. It was G
further stated in the letter that the appellant had badly defaulted
on the production target for the first quarter of 2007c2008 and
)-
in terms of clause 1.8 of the tender schedule it was asked to
clarify its final stand and to indicate its production plan for the
remaining tender period i.e. till February 24, 2008. To the
H
610
SUPREME COURT REPORTS
[2008) 5 S.C.R.
A
Corporation's letter, the appellant gave a highly evasive reply
by its letter of July 4, 2007. Alluding to Writ Petition (C) No.7002/
2007 it stated that the matter was sub-judice before the High
Court and on that plea it declined to enter into any
correspondence on the issue raised by the Corporation. It is to
B be noted here that the Writ Petition arose from a controversy
relating to the eligibility clause in NIT 85/2007 and it had nothing
to do with the production targets under NIT 16/2004.
17. Be that as it may, suffice it to note that on the appellant's
request for renewal/extension of the contract the Corporation
C had taken the decision to award the work in its favour for tha
third year extension with effect from February 25, 2007 to
February 24, 2008 (vide letter dated February 21, 2007). In
pursuance of the decision the Corporation further issued the
letter dated May 25, 2007 asking the appellant to make the
D required deposits by June 30, 2007 for drawing up the
agreement for the third year under the contract. It is thus manifest
that, according to the Corporation, the appellant-company had
the right to work the mine till February 24, 2008 and on its own
showing it was actually engaged in working the mine till June
E 30, 2007.
18. Here, it is to be noted that sub-clause (vii) of clause 8
is aimed at preventing the same party from executing two
different works in the same mine at the same time. The clause
does not even refer to a formal contract and if someone should
F be working the mine, may be on the basis of a work order issued
by the Corporation, that in itself might be sufficient, in certain
circumstances to attract clause 8(vii), even in the absence of a
formally drawn up contract. Seen thus, the whole issue as to
whether or not a formal contract for the third year of the tender
G period was drawn up in favour of the appellant would appear to
be of no relevance. The fact of the matter is that the appellant
on its own showing was working the mine upto June 30, 2007.
Further, in view of the decision of the Corporation it had the
right to be there upto February 24, 2008. Therefore, the High
H Court was not incorrect in observing that the appellant would
M/S. S.S. & COMPANY v. ORISSA MINING
611
CORPORATION LIMITED [AFTAB ALAM, J.]
. \'
have been barred from taking part in the tender process even if A
the six months margin was retained in the eligibility clause.
19. Furthermore, the question whether the' appellant had
the right to stay in the mine till February 24, 2008 or its work
there came to end on June 30, 2007 has relevance only on the
B
. issue of mala fide. Otherwise, it is always open to the Corporation
+
to issue a tender notice, at any time, according to its needs,
and to introduce an eligibility clause in the tender notice or to
delete from it any pre-existing one as it might best serve its
purpose. Hence, the controversy with regard to the outer limit of
the appellant's presence in the mine on the basis of the earlier c
contract under NIT 16 has no relevance sans the allegation of
mala fide.
20. Now, we will proceed to examine the case of the
appellant in this regard. On behalf of the appellant, it is alleged
D
that the overlapping margin of six months in clause 8(vii) was
+
dropped with the sole intent to keep it out of the tender process.
In support of the allegation three arguments are advanced on
its behalf. One is that on May 25, 2007, (when NIT 85 was issued)
and on June 11, 2007 (the last date for submission of tender)
the appellant alone was working the mine. The appellant's work
E
in the mine, according to its assertion would have come to end
on June 30, 2007. The eligibility clause was, therefore, so
tailored as to render it disqualified by 19 days. The second
argument is that the change in clause 8(vii) was made for the
first time. In the earlier tender notices the same eligibility clause
F
f ,,l,
allowed a margin period of six months but it was done away
with in order to exclude the appellant who had only 19 days
presence left in the mine. The third argument advanced on behalf
of the appellant is that the deletion of the six months margin is
otherwise completely arbitrary and it serves no reasonable purpose.
G
21. The first two circumstances are woefully inadequate
to bring home the grave charge of mala fide and the High Court
r
was quite right in holding that the appellant completely failed to
establish its case in that regard. It is axiomatic that the
Corporation is the best judge of its interests and needs and it is
H
612
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A always open to it to suitably modify or change the eligibility
~·
criteria so as to best serve its purposes. Whenever a change is
introduced in the eligibility criteria either by introducing some
new conditions or restricting or altogether doing away with
certain previous concessions it might hurt the interests of
B someone or the other but for that reason the change(s) made in
the eligibility criteria cannot be labelled as mala fide. The first
+
two arguments advanced on behalf of the appellant thus
completely fail to show any mala fide and we now proceed to
examine the third argument advanced on its behalf.
c
22. As noted above, on behalf of the appellant it is
contended that dropping away of the six months margin does
not serve any purpose whatsoever but it only ensured the
appellant's exclusion.
D
23. On the other hand, the Corporation gives a very
reasonable and valid explanation for the change made in the
eligibility clause. In paragraph 4 of counter-affidavit filed by the
Corporation it is stated as follows :
'That the above condition was included in the Tender Notice
E
because if an agency which is working at a particular rate
in a particular mine is allowed to operate at a different and
higher rate under a different Contract but in the same
mine there is every possibility of the said agency claiming
payment in respect of the work done under the earlier
F
contract at rates stipulated under the new Contract. In
other words, the same agency will operate in the same
mine with two different rates for similar work i.e. Raising,
A'
Calibration and Transportation of Iron Ore and fines and
there is every possibility of mixing up the Ores which
would be raised and transporled at two different rates."
G
We find that the explanation given by the Corporation is
perfectly reasonable and if any illustration is needed it is to be
found in the facts of the case in hand itself.
-
The appellant was given the three years' contract under
-'(
H NIT 16 at the following rates:
M/S. S.S. & COMPANY v. ORISSA MINING
613
CORPORATION LIMITED [AFTAB ALAM, J.]
"ACCEPTED RATE
A
Rate per MT in Rs.
s.
Description of work
1st
2nd
3rd
No.
Year
Year
Year
1.
Drilling, blasting, excavation,
67.01
70.00 75.00
B
transport of ROM to Dry
(
Screening Plant/Crushing &
Screening Plant, crushing and
screening of ROM to 10-30/
10-40mm CLO and 10mm fines.
c
2.
Transport of 10-30/10-40 mm
CLO and fines from Dry
Screening Plant/Crushing and
Screening Plant to
a) Baliparbat Stockyard
30.80
31.80
33.46
D
b) Daitari Railway siding
35.20
36.20
39.18
There was no escalation clause in the contract and from
the record it is manifest that the rates on which the appellant's
tender was accepted were no longer profitable for it, at least in
E
third year, and the appellant was not at all interested in carrying
on the work for the third year on the rates given in the tender
schedule. In paragraph 2 of the Corporation's counter-affidavit
it is stated that the appellant had completely failed to meet the
production target and it was badly in default. The relevant extract
F
> .)...
from paragraph 2 of the affidavit is as follows :
"However, the respondent (sic) could not achieve the target
under said contract as indicated hereunder :
Period
1st Year
2nd Year
3rd Year
Target Quantity
Achieved Quantity
G
(Quantity in MT)
12.00 lakh
03.75 lakh
20.00 lakh
13.05 lakh.
09.22 lakh
01.16 lakh
(Upto 19th July, 07)
H
614
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A
Since 19th July, 2007, the Petitioner has virtually stopped
y
the work on the ground that the rates are low even though there
is no escalation clause in the Contract and the Petitioner is
bound to complete the contract at the contracted rates. The nonachievement of the target by the Petitioner has resulted in a
B loss in terms of sales revenue to the tune of Rs.115.90 crore."
24. In its rejoinder affidavit the appellant has sought to give
explanation for not being able to meet the targets during the
first and the second year of the contract period. It has not given
any explanation for the third year and has gone on to compare
c its performance with another contender M/s.Arun Udyog. Any
comparison with M/s.Arun Udyog is besides the issue. What is
relevant here is that the appellant was hugely in default and yet
it was insisting on taking part in NIT No.85/2007. In the aforesaid
circumstances the consequences of the appellant getting the
D contract under NIT 85/2007 would have been two-fold : one,
that it would operate the same mine at the same time under two
different contracts with widely different rates and the other, that
it would be charging much higher rates for extraction of ores
that it was obliged to extract at much lower rates under the
E previous contract. The Corporation can hardly be faulted for
protecting itself against entering into such a bargain with anyone.
25. Thus, on a careful consideration, we are fully satisfied
that doing away with the six months margin in clause 8(vii) was
not arbitrary or unreasonable, nor it had any mala fide intent.
F
26. For the reasons discussed above, we find no merit in
the appellant's (FGM's) case.The High Court has taken a
A.
'
perfectly correct view of the matter and it warrants no
interference by this Court.
G
M/s. S.S.& Company (SSC)
27. Mr. R.F. Nariman, learned senior counsel appearing
for the SSC also began his submissions by alleging, that the
amendment in clause 8(i) of NIT 85 by insertion of the words
~
H "excluding minor minerals" was mala fide: its sole purpose was
M/S. S.S. & COMPANY v. ORISSA MINING
615
CORPORATION LIMITED.[AFTABALAM, J.]
.. \
to exclude SSC and to unduly favour another bidder, namely, M/ A
s. Arun Udyog Ltd. In support of the plea of mala fide Mr. Nariman
advanced three arguments: Learned counsel stated that though
being the lowest bidder in response to the earlier two NITs 65
and 75, SSC was not awarded the work because the concerned
officials in the Corporation wanted to give it toArun Udyog whose
B
bids were much higher than the appellant. When the appellant
took the matter arising from NITs 65 and 75 to the High Court,
on each occasion the bid process was aborted in the middle
and finally NIT 85 was issued with the offending amendment.
He next submitted that the amendment made in the clause was c
a one time exclusionary measure: it was not there in the earlier
NITs and it is unlikely to find place in the future NITs. He also
submitted that the impugned amendment in clause 8(i) of NIT
85 was made at the instance of the Managing Director and
without the prior approval of the Corporation's Board of D
'
Directors.
+
28. The Corporation strongly denied that the object of the
amendment in clause 8(i) of the NIT was to disqualify the
appellant and thereby help Arun Udyog in securing the contract.
In the counter affidavit filed in the High Court on its behalf it was
E
pointed out that the appellant's technical bid in response to
NIT75 was rejected because it had no past experience of similar
work as required under the NIT. Thereafter the price bid of the
technically qualified tenderer, i.e., M/s. Arun Udyog Ltd: was
opened on 18.11.2006. But the Corporation decided to cancel
F
NIT75 and to issue a fresh NIT so that it may have more
~ .}..
competitive bids for consideration. Mis. Arun Udyog Ltd. was
not given the work under NIT75 even though the appellant was
out of reckoning.
29. However, the High Court, even without referring to the G
averments made in the Corporation's affidavit, declined to
entertain the appellant's allegation that M/s. Arun Udyog Ltd.
"r
was being shown undue favour and the appellant was sought to
be ousted to favour that company observing as follows:
H
616
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A
"In paragraph 17 of the writ petition there are some
~ ~
allegations that the opposite party wants to favour and
award the tender to one M/s.Arun Udyog Limited. Since
M/s.Arun Udyog Limited is not imp/eaded in this writ
petition the allegations against it cannot be taken into
B
consideration."
30. The second and the third allegations in support of the
plea of mala fide were also rebutted by the Corporation by filing
before the High Court an affidavit sworn by the Addi. General
Manager (Mining). The High Court took note of the averments
c made in that affidavit in paragraph 8 of its judgment as follows:
"Another affidavit dated 2.7.2007 was also filed by the
Additional General Manager (Mining) of the Corporation.
It has been stated therein that the Corporation in a year
D
floats about 120 nos. of tenders to undertake mining and
related activities in different minerals with widely varying
conditions and the Board of Directors lays down the
'
general guidelines for preparing the special terms and
-+
conditions for different types of words. In this connection,
E
the broad guidelines of special terms and conditions were
approved by the Board of Directors on 11.6.2007. It has
been stated in the said affidavit that the same is general
guidelines and incorporation of any oth~r condition
appropriate for different work. can be made. It has also
been stated in the said affidavit that in future in the eligibility
F
criteria the word 'excluding minor mineral' will be included
while floating NIT if the nature of work demands for the
same. It was also stated in the affidavit filed by the
...
\
Managing Director that Tender Notice No.85 dated
25.5.2007 was issued after its clauses were recommended
G
by the Managing Director of the Corporation vide notes
dated 15.5.2007 were duly approved by the Chairman of
OMC."
The High Court thus brushed aside the plea of mala fide
..y
H raised by the appellant.
M/S. S.S. & COMPANY v. ORISSA MINING
617
CORPORATION LIMITED [AFTAB ALAM, J.]
-y
31. We are in complete agreement with the view taken by A
the High Court. As a matter of fact, for rejecting the allegation .
that the impugned amendment was introduced in clause 8(i) of
the NIT at the instance of the Managing Director, without
obtaining prior approval of the Board of Directors we need not
even go to the rebuttal affidavit filed by the Addi. General B
-iManager. The Board of Directors is the apex policy making body.
It may lay down broad guidelines but it is impossible to conceive
that all the NITs (over a hundred in number) issued by the
Corporation for different purposes every year should come
before it for consideration and approval of their respective c
clauses or any amendment propose.d in any clause in any of the
NITs. [We fail to see any good reason why the matter should not
be finalized by the Managing Director or, depending upon the
nature of the contract, even at some lower level]. The normal
work of any organization or government department would be D
seriously han:ipered if every tendering party would claim the right
~>-
to raise objection that one or the other clause in a NIT or any
amendment introduced in any of its clauses did not have the
prior sanction of the highest policy making body of the
organization.