Supreme Court of India
M/S. ELECTRICAL MANUFACTURING COMPANY LTD.versusM/S. POWER GRID CORPORATION OF INDIA LTD. & ANR.
- Citation
- 2009 INSC 130
- Decided
- 9 February 2009
- Disposal
- Dismissed
- Bench
- ALTAMAS KABIR
Holding
The appellant had not satisfactorily completed the requisite transmission line length, so the denial of the contract was justified.
Summary
The appellant, an electrical manufacturing company, challenged the refusal of Power Grid Corporation of India to award it contracts for transmission line packages, alleging that it met the technical experience requirement and was the lowest bidder. The dispute centered on Clause 1.1 of Annexure‑A of the Special Conditions of Contract, which required the bidder to have "satisfactorily completed" a specified length of 345/400 kV double‑circuit transmission lines within the last seven years. The Court examined whether partial work—surveying, tower placement, erection and stringing—constituted satisfactory completion, and held that only a fully laid, tested, and functioning line could satisfy the clause. The appellant had completed only 83 km of lines, short of the 100 km required, and the incomplete lines could not be counted. Consequently, the Court dismissed the appeal, upholding the contract denial.
Issues considered
- Whether the appellant satisfied the technical experience requirement under Clause 1.1 of Annexure‑A of the Special Conditions of Contract.
- Whether the phrase "satisfactorily completed" includes merely surveying, erecting and stringing, or requires full line completion and functional testing.
- Whether partial completion of a transmission line can be aggregated to meet the required cumulative length.
- Whether the denial of the contract was arbitrary or illegal in view of the appellant being the lowest bidder.
Subjects
contract awardtechnical experiencetransmission linessatisfactory completiontender evaluationinterpretation of contract clause
Judgment
[2009] 1 S.C.R. 1101
MIS. ELECTRICAL MANUFACTURING COMPANY LTD. A
-"
v.
M/S. POWER GRID CORPORATION OF INDIA LTD. &
ANR.
(Civil Appeal No. 801 of 2009)
B
FEBRUARY 9, 2009
[ALTAMAS KABIR AND MARKANDEY KATJU, JJ.)
' ~
Contract - For setting up electrical transmission lines -
Denial of - On account of lack of technical experience as c
enumerated under conditions of contract - Held: On facts,
contract rightly denied.
Appellant-an electrical manufacturing company, filed
... writ petition challenging the order of respondent No. 1,
denying to grant the contract for setting up electrical
D
transmission lines to it on account of lack of technical
experience as set out in clause 1.1 of Annexure-A of
Special Condition of Contract. The petition was
dismissed by High Court.
E
In appeal to this Court, appellant contended that the
denial of contract was on erroneous interpretation of
Clause 1.1.
Dismissing the appeal, the Court F
HELD: 1. In the present case, the appellant has not
completed the lines. Unless the entire line is laid and is
found to be functioning satisfactorily, it cannot be said
that there was satisfactory completion of the line. Mere
surveying, optimizing tower locations, erecting and G
stringing with tension stringing equipment the requisite
length of transmission lines will not be enough to give the
necessary technical experience. Completion of a part of
1101 H
1102 SUPREME COURT REPORTS (2009] 1 S.C.R.
A the line will be of no avail and the entire line from one
location to another has to be completed before there can
be said to be satisfactory completion of the line.
Completion of part of the line has to be totally ignored as
a line is one integral whole and cannot be divided into
8 sections. [Paras 19, 21 and 22] [1107-C; 1108-B-C]
2. It is not correct to say that the words 'Satisfactorily
Completed' would not govern sub clause (i) of Clause 1.1 .. -
of Annexure-A to the Special Conditions of Contract. A
C fair reading of the entire Clause 1.1 along with sub clause
(i) clearly indicates that the requisite technical experience
requires satisfactorily completion of the requisite length
of the line. Sub clause (i) is a part of Clause 1.1 and
hence mere surveyance, optimizing tower locations,
erecting and stringing with tension stringing equipment,
0 etc. is not sufficient to give the requisite technical
experience to the bidder unless such work was
••
satisfactorily completed, which means that it was tested
and found to be functioning satisfactorily. The expression
'Satisfactory Completion' govern sub clause (i) of Clause
E 1.1 also. [Paras 20 and 21] [1107-D-H]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 801
of 2009.
F From the Judgment & Order dated 26.5.2008 of the High
Court of Delhi at New Delhi in Writ Petition (C) No. 3668/08
Sudhir Chandra and Rabindra Singh for the Appellants.
K.K. Venugopal, ATM Rangaranujnam, Pawan Upadhyay,
G Shiv Mangal Sharma, Puneet Parishar, Utra Babbar, Sharmila
Upadhyay C.V. Subba Rao and B.K. Prasad Anil Katiyar for
the Respondent.
The Judgment of the Court was delivered by
H
ELECTRICAL MANUFACTURING COMPANY LTD. v. POWER 1103
GRID CORPN. OF INDIA LTD. & ANR.
, "' MARKANDEY KATJU, J. 1. Leave granted. A
2. This appeal has been filed against the impugned
judgment dated 26.5.2008 of the Delhi High Court in Writ
Petition (Civil) No.3668 of 2008.
3. Heard Shri Sudhir Chandra, learned senior counsel for B
the appellant, and Shri K.K. Venugopal, learned senior counsel
for the respondent and perused the record.
4. The appellant Electrical Manufacturing Company Ltd.,
(hereinafter as ·EMC') has alleged that it is a leading modern c
power system company in India and is the first ISO 9001
certified company in India in Transmission Line Projects. It was
established in 1951 and carries out such projects in India as
well as overseas. It filed a writ petition in the Delhi High Court
with the following prayer:- D
• 1
"To quash the decision taken by the Board of
Directors in its meeting held on 06.5.2008 with respect to
not awarding of contract to the petitioner with respect to
Package A 1, A2 & A7 in spite of the fact that it is L1,
technically qualified as per the requirement and more so E
its bid is Rs.16.34 crores less than L2 bidders."
5. The respondent no.1, the Power Grid Corporation of
India Ltd. ((hereinafter as 'PGCIL') is a Public Sector
Undertaking of the Government of India working under the F
Ministry of Power. The petitioner has been carrying out the
contract of respondent no.1 for a long time.
6. On 5.11.2007, a Notice inviting tender with respect to
Package A1 and A2 was made by respondent no.1 PGCIL. On
8.11.2007, Notice inviting tender with respect to Package A7 G
was made by respondent no.1. These tenders were for setting
up electrical transmission lines.
7. On 8.1.2008 and 9.1.2008, bids were opened for the
above mentioned packages, respectively. In both the petitioner H
1104 SUPREME COURT REPORTS [2009] 1 S.C.R.
A was declared the Lowest Quoted Bidder (L 1). ""' -.
8. On 16.4.2008 the petitioner made representations to the
respondent no.1 with respect to Package A1, A2 and A7,
explaining as to how the petitioner was fully qualified and met
the requirements of technical experience stipulated in Clause
B
1.1 of Annexure 'A' of Special Condition of Contract.
9. On 6.5.2008, the respondent no.1, decided not to award ...
the contract for the above mentioned packages to the petitioner
as it was of the opinion that the appellant did not have the
c requisite technical experience as set out in Clause 1.1 of
Annexure 'A' of the Special Condition of Contract.
10. The appellant has alleged that the above refusal by
respondent no.1 to award the contract for the above mentioned
packages was arbitrary and illegal since the appellant's bid was
D
the lowest among all the bidders. " .
11. Shri Sudhir Chandra, learned senior counsel for the
appellant has submitted that the appellant has been denied the
contract in question on an erroneous interpretation of Clause
E 1.1 of Annexure 'A' of the Special Conditions of Contract. The
aforesaid Clause 1.1 states :
"1.1 Technical Experience
The bidder shall have satisfactorily completed as a prime "
F
contractor or as a sub-contractor or as a member in a Joint
Venture, 345/400 KV Double Circuit or higher voltage
class transmission line(s) within the last seven (7) years
as on date of bid opening. The bidder's experience should
include the following :
G
(i) The bidder should have surveyed, optimized tower
locations, erected and strung with tension stringing
equipment, not less than following cumulative route length
of transmission lines of 345/400 KV Double Circuit or
H higher voltage class involving bundle conductor.
ELECTRICAL MANUFACTURING COMPANY LTD. v. POWER 1105
GRID CORPN. OF INDIA LTD. & ANR. [MARKANDEY KATJU, J.]
/ 'f
Package - A 7 : 100 Kms A
Package - AB : 100 Kms"
12. Learned counsel for the appellant submitted that the
appellant fully satisfied the requirements mentioned in Clause
B
1.1 namely that the petitioner has surveyed, optimized tower
.. locations, erected and strung with tension stringing equipment,
not less than following cumulative route length of transmission
lines of 345/400 KV Double Circuit or higher voltage class
involving bundle conductor, which in so far as the petitioner is
concerned is 100 Kms. for package A1 and A? and 200 Kms. c
for package AB. Hence learned counsel submits that the
appellant should have been given the contract in question.
13. On the other hand Shri K.K. Venugopal, learned senior
... .; counsel for respondent submitted that sub-clause (i) of Clause D
1.1 has to be read along with the main clause 1.1 which
stipulates that the bidder should have satisfactorily completed
the requisite length of 100 Kms. He submitted that the petitioner
has only satisfactorily completed 83 Kms. of transmission line
as on 9.1.2008 and therefore, did not fulfill the technical E
experience required by Clause 1.1.
14. The dispute thus in this case is whether the appellant
~
has the requisite technical experience mentioned in Clause 1.1
of the Special Conditions of Contract.
F
15. Shri K.K. Venugopal, learned senior counsel for
respondent submitted that the appellant has satisfactorily
completed only 83 Kms. of transmission lines as on the date
of the opening i.e. 8/9.1.2008 instead of the requisite 100 Kms.
He submitted that the appellant had in addition laid various G
incomplete transmissions lines, but these cannot be added to
~
the lines satisfactorily completed because they are incomplete.
The chart showing the work done by the appellant is as follows:
H
•
1106 SUPREME COURT REPORTS [2009] 1 S.C.R.
A
Transmission Extent completed Total extent Lines
Line by petitioner as on of the line Satisfactorill
8/9.1.2008 in question Completed
by petitioner
B Meerut- 60 km (on 29.9.03) 60 km 60 km
Mandala
Bhadrawati- 23 km (on 13.4.06) 23 km 23 km
Chandrapur
Trivenveli- 134 km (on 136 km
c Udmalpet 8/9.1.08; 2 km
incomplete)
TAPP- 87 km (on 8/9.1.08; 97.3 km
Kankaroli 10.3 km
incomplete)
D Total 304 km 83 km
16. A perusal of the above chart shows that the appellant
has only satisfactorily completed 83 Kms. of transmissions lines.
The line Trivenveli-Udmalet in Tamil Nadu was incomplete
E because only 134 Kms. out of the total extent of the line of 136
Kms. had been completed by the appellant. Hence this
transmission line could not be treated to be satisfactorily
completed. Similarly the line Tapp-Kankaroli was also
incomplete as it was only laid for 87 Kms. but the entire line
F had to be 97.3 Kms.
17. Shri Sudhir Chandra, learned senior counsel for the
appellant has submitted that the view taken by the High Court
that satisfactorily completing the line means commissioning the
line is not correct. We are of the opinion that even if satisfactory
G completion may not necessary mean commissioning of the line
but it certainly means completion of the entire length of the line f ·
and thereafter testing the line to find out whether it is functioning
satisfactorily. Without testing it how can one be sure that it has
been completed satisfactorily.
H
ELECTRICAL MANUFACTURING COMPANY LTD. v. POWER 1107
GRID CORPN. OF INDIA LTD. & ANR. [MARKANDEY KATJU, J.]
18. For instance, if an electrical line is laid inside a A
person's house, the only way to find out whether the electrical
line has been laid satisfactorily is to find out by pressing the
switch and seeing whether the bulb in the house is lighted or
the fan starts running. Merely putting wires dangling inside the •
house but which do not light the bulb or turn the fan cannot be B
said to be satisfactory completion of the electrical line.
19. In the present case, as can be seen from the chart set
-. i out above the appellant has not completed the lines from
' Trivenveli to Udmalet nor from Tapp to Kankaroli. Unless the
entire line is laid and is found to be functioning satisfactorily, it C
cannot be said that there was satisfactory completion of the line.
20. As regards the interpretation of Clause 1.1 we cannot
agree with Shri Sudhir Chandra that the words 'Satisfactorily
Completed' would not govern sub clause (i) of Clause 1.1. A D
-· fair reading of the entire Clause 1.1 along with sub clause (i)
clearly indicates that the requisite technical experience requires
satisfactorily completion of the requisite length of the line. Sub
clause (i) is a part of Clause 1.1 and hence mere surveyance,
optimizing tower locations, erecting and stringing with tension E
stringing equipment, etc. is not sufficient to give the requisite
technical experience to the bidder unless such work was
satisfactorily completed, which means that it was tested and
found to be functioning satisfactorily.
21. If the bidder has surveyed, optimized tower locations,
F
erected and strung with tension stringing equipment. the
requisite length of transmission lines, but these transmission
lines do not function, surely it cannot be said there was
satisfactory completion of these transmission lines. In our
opinion the expression ·Satisfactory Completion' govern sub G
clause (i) of Clause 1.1 also. Hence mere surveying, optimizing
tower locations, erecting and stringing with tension stringing
equipment the requisite length of transmission lines will not be
enough to give the necessary technical experience because it
is possible that even after doing the above work the H
1108 SUPREME COURT REPORTS [2009] 1 S.C.R.
A transmission lines may not function. Unless after doing the
above works the line is tested and found to be successfully "' ~
functioning it surely cannot be said that there was satisfactory
completion of the transmission lines.
22'. Apart from the above, completion of a part of the line
8
will be of no avail and the entire line from one location to another
has to be completed before there can be said to be satisfactory
completion of the line. Completion of part of the line has to be
totally ignored as a line is one integral whole and cannot be • -
divided into sections.
c
23. Thus there is no force in this appeal and it is dismissed.
No costs.
K.K.T. Appeal dismissed.
D
.-
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