Supreme Court of India
NTPC LIMITEDversusANSALDO CALDAIE BOILERS INDIA P. LTD. & ANR.
- Citation
- 2012 INSC 93
- Decided
- 16 February 2012
- Disposal
- Appeal(s) allowed
- Bench
- ALTAMAS KABIR
Holding
The Qualified Steam Generator Manufacturer must design, engineer and manufacture the evaporator itself; outsourcing its manufacture breaches the tender’s qualification requirement, rendering the bid non‑responsive.
Summary
NTPC Ltd invited bids for a super‑critical steam‑generator package and rejected the bid of Ansaldo Caldaie Boilers India Ltd on the ground that its proposed Qualified Steam Generator Manufacturer had not designed and engineered the evaporator, an integral part of the generator, but had outsourced its manufacture to a third party. The respondent challenged the rejection in a writ petition, which the Delhi High Court set aside. The Supreme Court examined the tender documents, particularly Clause 7.1.1, and held that the design and engineering of the entire steam‑generator, including the evaporator, must be performed by the Qualified Manufacturer and cannot be outsourced. Consequently, the respondent’s bid was non‑responsive and the rejection was valid. The Court allowed the appeal and dismissed the writ petition.
Issues considered
- Whether, in a joint‑venture bid, the Qualified Steam Generator Manufacturer must also be the manufacturer of the evaporator.
- Whether the evaporator can be outsourced to a third party without violating the tender’s qualification criteria.
- Whether the respondent’s bid satisfied the qualification requirements of Clause 7.1.1 of the tender documents.
Legislation cited
Subjects
tenderbid rejectionqualified steam generator manufacturerevaporatorjoint venturequalification criteriaprocurementdesign and engineeringvariable pressuresupercritical steam generator
Judgment
[2012] 1 S.C.R. 966
A NTPC LIMITED
v.
ANSALDO CALDAIE BOILERS INDIA P. LTD. & ANR.
(Civil Appeal No. 2134 of 2012)
FEBRUARY 16, 2012
B
[ALTAMAS KABIR AND J. CHELAMESWAR, JJ.]
Contract:
Tender - Bid for installation of Steam Generator Package
C - Rejected - Held: Evaporator being an integral part of Steam
Generator, Qualified steam Generator Manufacturer would
have to be the manufacturer of evaporator itself and could not
have outsourced the manufacture thereof - Evaporator being
offered was one which had been manufactured not by
D Qualified Steam Manufacturer but by a third party, which was
not contemplated in the condition of the tender document -
Rejection of Bid upheld.
The appellant invited bids for supply and installation
E of Steam Generator Package for captive coal based
Thermal Power Projects in different areas. The appellant,
by letter dated 5.1.2011 informed respondent no.1 that its
bid had been rejected as the same did not meet the
minimum qualifying requirement set out in the Bid
F documents and the Qualified Steam Generator
Manufacturer proposed by the respondent did not have
the necessary minimum qualification as was required in
terms of the Bid documents. Respondent no.1 filed a writ
petition. The Division Bench of the High Court quashed
the letter dated 5.1.2011.
G
In the instant appeal filed by the employer NTPC Ltd,
the questions for consideration before the court were: (i)
whether in the case of a joint venture undertaking it was
essential that the Qualified Steam Generator Manufacturer
H 966
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 967
INDIA P. LTD. & ANR.
also had to be the manufacturer of the evaporator or A
whether it could function as a facilitator; and (ii) Whether
the Steam Generator Manufacturer proposed by
respondent no.1 could be said to be a Qualified Steam
Generator Manufacturer within the definition set out in the
Detailed Invitation Bids. B
Allowing the appeal, the Court
HELD: 1.1 Respondent No.1 chose Route 4 of the
qualifying routes while submitting its Tender Bid, in its
capacity as an Indian Joint Venture Company for C
manufacturing Super-Critical Steam Generator in India
between an Indian Company and a Qualified Steam
Generator Manufacturer. The crucial condition for a
Bidder of the said category to be considered, as
contained in Clause 7 .1.1 of the Tender Documents, D
provides that the Bidder should have designed,
engineered, manufactured/got manufactured, erected/
supervised direction, commissioned/supervised
commissioning of at least one Steam Generator having
rated capacity of 1500 Tonnes of Steam per hour or E
above and that it should be provided with an Evaporator
suitable for variable pressure operations for special
category and supercritical pressure ranges. [para 22]
[982-B-D]
1.2 Admittedly, the evaporator is an integral part of F
the Steam Generator. The MOU, while permitting
manufacturing, erection or commissioning of the Steam
Generator, provided that the same could be outsourced,
but the "designing" and "engineering" of the Steam
Generator had to be done by the Bidder himself and if the G
party proposed as Qualified Steam Generator
Manufacturer and the Bidder had not designed and
engineered the Steam Generator itself, it could not be said
that the qualifying requirements for such manufacturer
had been satisfied. [Para 24] [982-G; 983-B-C] H
968 SUPREME COURT REPORTS [2012] 1 S.C.R.
A 1.3 From thP terms and conditions contained in the
MOU, it appears that it was the intention of the appellant
that the Qualified Steam Generator Manufacturer would
have to be the manufacturer of the evaporator itself and
could not have outsourced the manufacture thereof to a
B third party, since the evaporator controlling the pressure
of the Steam generated is a vital and crucial component
of the Steam Generator itself. The appellant, which will be
the ultimate user of the Generator, must be presumed to
be conscious of the competence of the tenderer to
c "provide" the evaporator in keeping with the required
specifications. [Para 25] [983-D-E]
1.4 The importance of the condition is manifested in
the functioning of the Steam Generator which handles
High Pressure Steam for the purpose of turning the
D turbines for generating electricity. The design and
engineering of the evaporator and the boiler itself has to
be such as to withstand the very high temperatures and
pressures generated. The variable pressure operations
is of great importance as far as generation and wastage
E of energy is concerned. The importance of the evaporator
in controlling pressure during operations is to
automatically regulate the flow of water, generation of
pressure and temperature of the steam to the desired
level. The evaporator being offered by respondent no.1
F was one which had been manufactured not by the
Qualified Steam Generator Manufacturer, but by a third
party, which was not contemplated in the condition of the
Tender Documents. [Para 26 and 27] [984-A-D]
G 1.5 Therefore, the Division Bench of the High Court
was not right in quashing the letter dated 5.1.2011 issued
by the appellant informing respondent no.1 that its
Techno-commercial Bid had been rejected on the ground
that it _did not meet the minimum requirement set forth in
item No.4 of Section Ill of the Tender Documents. The
H
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INDIA P. LTD. & ANR.
judgment of the Division Bench of the High Court is set A
aside. The writ petition filed by respondent No.1,
therefore, stands dismissed. [Para 26 and 28] (983-F-G;
984-E]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. B
2134 of 2012.
From the Judgment & Order dated 1.3.2011 of the High
Court of Delhi at New Delhi in Writ Petition No. 296 of 2011.
G.E. Vahanvati, A.G., Parag Tripathi, ASG, Mukul Rohtagi, c
Rajiv Dhawan, Debol Banerjee, Kunal Bahri Swati Sharma,
Bindu Saxena, Shailendra Swarup Devadatt Kamat, K.K.
Patra, Aparijita Swarup, Neha Khattar, Mohit Kumar, Anoopam
Prasad, Prasahant Kumar, Arnab Choudhary, Anurag Sharma,
AP & J Chambers, T.A Khan B.K. Prasad for the appearing D
parties.
The Judgment of the Court was delivered by
ALTAMAS KABIR, J. 1. Leave granted.
E
2. Following international competitive bidding procedures,
the Appellant had invited bids for the supply and installation of
Steam Generator package for captive coal-based Thermal
Power Projects in different areas. The bid of the Respondent
No.1 was rejected by the Appellant by its letter dated 5th
January, 2011, as the same did not meet the minimum
F
qualifying requirements set out in the Bid documents.
Furthermore, the Qualified Steam Generator Manufacturer,
Ansaldo Caldaie, Italy, proposed by the said Respondent, did
not have the necessary minimum qualification, as was required
in terms of the Bid documents. G
3. The main issue which arises for consideration in this
Appeal is whether Ansaldo Caldaie, Italy, can be said to be a
Qualified Steam Generator Manufacturer within the definition
set out in the detailed Invitation for Bids. The said invitation for H
970 SUPREME COURT REPORTS [2012] 1 S.C.R.
A bid contained the qualifying requirement for Bidders in Clause
7 of the Tender Document. Clause 7.1.0 provided that the
Bidder should meet the qualifying requirements of any one of
the qualifying routes stipulated under Clause 1.1.0 or 1.2.0 or
1.3.0 or 1.4.0 or 1.5.0. In addition, the Bidder was also required
B to meet the requirements stipulated under Clause 7.6.0 and
7.7.0, together with the requirements stipulated under Section
ITB.
4. Route 1 permits a Qualified Steam Generator
Manufacturer to join the bidding process provided that it should
C meet the qualifying requirements of any of the qualifying routes
indicated in Clause 7 of the tender documents. In Clause 7 of
the tender documents, five different routes have been
enumerated which could be taken by the tenderers, namely :-
D (i) as a Qualified Steam Generator Manufacturer; or
(ii) as an Indian Steam Generator Manufacturer; or
(iii) as an Indian subsidiary company of a Qualified
Steam Generator Manufacturer; or
E
(iv) as an Indian Joint Venture Company for
manufacturing Super Critical Steam Generators in
India between an Indian Company and a Qualified
Steam Generator Manufacturer; or
F (v) as an Indian Joint Venture Promoter holding at least
51 % stake in a Joint Venture Company for
manufacturing Super Critical Steam Generators in
India between an Indian Company and a Qualified
Steam Generator Manufacturer.
G
5. Indisputably, none of the parties which responded to the
invitation adopted Routes 1 or 3. Bharat Heavy Electricals Ltd.
adopted Route 2, while Route 4 found favour with Larsen &
Toubro, MHI and the Appellant, while BGR took recourse to
H Route 5. Route 4 contained in Clause 7.4.0 relates to Indian
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 971
INDIA P. LTD. & ANR. [ALTAMAS KABIR, J.]
Joint Venture Companies for manufacturing of Super Critical A
Steam Generators in India between an Indian Company and a
Qualified Steam Generator Manufacturer. For the sake of
reference, Clauses 7.4.1 and 7.4.2 which formed part of Route
4 are extracted hereinbelow :-
B
"7.4.0 Route 4: Indian Jcint Venture (JV) Company
for manufacturing of Super Critical Steam
Generator in India between an Indian Company
and a Qualified Steam Generator Manufac-turer
7.4.1 The Bidder shall be a Joint Venture (JV) Company C
incorporated in India under the Companies Act
1956 of India, as on the date of tech no-commercial
bid opening, promoted by (i) an Indian Company
registered in India under the Companies Act 1956
of India and (ii) a Qualified Steam Generator D
Manufacturer meeting requirements of clause 7.1.1,
created for the purpose of manufacturing in India
supercritical steam generator sets covering the
type, size and rating specified. If the JV Company
is incorporated as a public limited Company then E
it should have obtained certificate for
Commencement of Business in India as on the date
of techno-commercial bid opening.
The Qualified Steam Generator Manu-facturer shall
maintain a minimum equity participation of 26% in
F
the JV Company for a lock-in period of 7 years from
the date of incorporation of JV Company or up to
the end of defect liability period of the contract
whichever is later.
G
One of the promoters shall be a majority
stakeholder who shall maintain a minimum equity
partici-pation of 51% in the JV Company for a lock
in period of 7 years from the date of incorporation
of JV Company or up to tne end of defect liability H
972 SUPREME COURT REPORTS [2012) 1 S.C.R.
A period of the contract whichever is later.
In the event that the majority stake holder in the JV
Company is an entity other than the Qualified
Steam Generator Manufacturer, it should be an
Indian Company and should have executed, in the
B
last 10 years, large industrial projects on EPC
basis (with or without civil works) in the area of
power, steel, oil & gas, petrochemical, fertilizer and/
or ·any other process industry with the total value of
such projects being Rs.10,000/- million or more. At
c least one of such projects should have a contract
value of Rs.4,000/- million or more. These projects
shall be in successful operation for a period of not
less than one year as on the date of techno-
commercial bid opening.
D
7.4.2 The Bidder shall furnish a DJU executed by him, the
Qualified Steam Generator Manufacturer and other
JV promoter having 25% or higher equity
participation in the JV Company, in which all the
E executants of DJU shall be jointly and severally liable
to the Employer for successful performance of
contract as per the format enclosed in the bidding
documents. The joint deed of undertaking shall be
submitted along with techno-commercial bid, failing
F which the Bidder shall be disqualified and his bid
shall be rejected.
In case of award, each promo:er having 25% or
higher equity participation in the JV Company will
be required to furnish an on demand bank
G guarantee for an amount of 0.5% of the total contract
price of the Steam Generator Package in addition
to the contract performance security to be furnished
by the Bidder."
H 6. As mentioned hereinbefore, the bid filed by the
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 973
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Respondent No.1 was rejected by the Appellant by its letter A
dated 5th January, 2011, as the same did not fulfil the qualifying
requirements of Route 4, extracted hereinabove.
7. Appearing tor the Appellant. the learned Attorney
General, Mr. Goolam E. Vahanvati, submi'cted that Clause 7.1.1 B
prescribes the basic qualifying requirements for a Qualified
Steam Generator Manufacturer and the same is applicable to
all the routes permitted under the bidding documents,
irrespective of the rouie which the Bidder would opt for, for
seeking qualification. For the sake of convenience, Clause C
7.1.1 is reproduced hereinbelow :-
"7 .1.1 The Bidder should have designed, engineered,
manufactured/got manufactured, erected/supervised
erection, commissioned/ supervised commissioning of at
least one (1) number of coal fired supercritical Steam D
Generator having rated capacity of 1500 tonnes of steam
per hour or above. Further, such Steam generator should
be of the type specified, i.e. single pass (tower type) or
two pass type using either spiral wound (inclined) or vertical
plain or vertical rifled type water wall tubing, and should be E
in successful operation for a period of not less than one
(1) year as on the date of Techno-commercial bid opening.
In addition, the above Steam Generator should have been
provided with evaporator suitable for variable pressure
operation (sub-critical and supercritical pressure ranges). F
The Bidder shall offer only the type of Steam Generator
and type of water wall tubing for which he is qualified."
8. The learned Attorney General submitted that Clause
7.1.1 is identical to Clause 1.1.2 of Item No.4 of Section Ill of
the Tender Documents and under Clause 1.4.1 it has been G
clearly mentioned that the requirements of Clause 1.1.1 had to
be met. The learned Attorney General urged that in view of
Clause 7 .1.1, the Bidder must have "designed" and
"engineered" the entire Steam Generator himself and the same
could not be outsourced. Accordingly, once it is submitted that H
974 SUPREME COURT REPORTS [2012] 1 S. C.R.
A a Steam Generator is to be designed by the Qualified Steam
Generator Manufacturer itself, all the integral parts of the Steam
Generator like the furnace (evaporator), Superheaters 1, 2 and
3, Reheaters 1 and 2, connecting piping etc., have to be
designed and engineered by the said manufacturer himself. The
B learned Attorney General also urged that Clause 7 .1.1,
however, permitted the manufacture, erection or commissioning
to be outsourced by the Qualified Steam Generator
Manufacturer, in view of the expressions used, such as, "got
manufactured", "supervised erection" and "supervised
C commissioning".
9. The learned Attorney General also contended that
Clause 7.1.1 also categorically states that the Steam Generator
would have to be provided with an evaporator suitable for
variable pressure operation (emphasis added). It was
D submitted that an evaporator is an integral and one of the most
critical parts of any Supercritical Steam Generator. It was further
urged that if the evaporator was not designed for variable
pressure operation, conditions in Note 5 of the Notes in Clause
1.0.0 of the Bid documents would have to be complied with.
E For the sake of reference, Note 5 is reproduced hereinbelow:-
"Steam Generator Manufacturer with Technology Tie-up
for Variable Pressure Design
In case a supercritical Steam Generator manufacturer
F meets all the requirements as specified in clause no. 1.1.1
above except that the evaporator in the reference steam
generator is not designed for variable pressure operation·
and is designed for constant pressure (Universal Pressure)
operation only, in such case, the Supercritical Steam
G Generator Manufacturer has an ongoing license
agreement (which covers technology transfer), as on the
date of Techno-commercial bid opening, with the original
Technology Owner (Licensor) for design, manufacture, sell,
use, service of once through variable pressure supercritical
H
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 975
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steam generator technology (with evaporator suitable for A
variable pressure operation in sub-critical pressure
ranges).
i. The licensor should have experience of providing
such variable pressure design steam generator
B
technology for at lease one (1) no. of coal fired
supercritical steam generator for a 1500 T/hr or
higher capacity using either spiral wound (inclined)
or vertical plain or vertical rifled type water wall
tubing with the evaporator suitable for variable
pressure operation in sub-critical and super-critical
c
pressure ranges and which should be in successful
operation for a period of not less than one (1) year
as on the date of bid opening.
ii. The Bidder shall offer only the type of steam D
generator i.e. single pass (tower type) or two pass
type for which the Bidder is qualified and shall offer
only the type of water wall tubing (either spiral
wound (inclined) or vertical plain or vertical rifled
type) for which his licensor is qualified. E
iii. In such an event, the Bidder shall furnish a Deed of
Joint Undertaking executed between the Bidder and
the supercritical steam generator manufac-turer (as
the case may be) and its Technology Owner
(Licensor), as per the format enclosed in the
F
Bidding Documents towards the Bidder and the
licensor being jointly and severally liable to the
Employer for successful performance of the Steam
Generator along with an extended warranty of at
least one (1) year over and above what is required G
as per tender documents .
.,
iv. In case of award, Technology Owner (Licensor) will
be required to furnish an on demand bank
guarantee for an amount of 0.1 % of the total contract H
976 SUPREME COURT REPORTS [2012] 1 S.C.R.
A price of the Steam Generator Package in addition
to the contract perfor-mance security to be furnished
by the Bidder."
10. In addition to the above, the learned Attorney General
B submitted that in the event the provisions of Note 5 were to be
followed, it would be necessary for the Bidder to provide a
Deed of Joint Undertaking to be executed between the Bidder,
the proposed Qualified Steam Generator Manufacturer, who
possessed the experience of designing and engineering a
Steam Generator with evaporator suitable for constant pressure
C operation. The very reason for the furnishing of a Deed of Joint
Undertaking was to make the technology owner responsible for
the successful operation of the plant along with the Bidder. It
was submitted that only when such an undertaking was given
by the licensor and the Qualified Steam Generator Manufacturer
D that the Bidder would be eligible for being considered as being
qualified to participate in the bidding process. The learned
Attorney General submitted that despite the fact that the
Respondent No.1 had taken recourse to Note No.5 and the bid
of the Respondent was non-responsive, no Deed of Joint
E Undertaking had been furnished by the Respondent. On the
other hand, in the bid submitted by the Respondent No.1, it had
been mentioned in Clause 1.2.0 that the evaporator in the
reference Steam Generator, which was supplied to Enel, was
for variable pressure operation. The Respondent claimed to
F have designed and engineered the reference Steam Generator,
but when it came to the actual confirmation in reference to the
experience, it was indicated as follows :-
1.5.0 We, confirm that M/s ANSALDO CALDAIE S.p.A.
(Qualified Steam Generator Manufacturer) meets
G
all the requirement as per 1.1.1 of BOS except
that the evaporator indicated in the reference
steam generator is not designed for variable
pressure operation and is designed for constant
pressure (Universal Pressure) operation only and
H
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 977
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seeking qualification along with the original A
technology owner (Licensor) from which he has an
ongoing license agreement (which covers
technology transfer}, as on the date of Techno-
commercial bid opening, for design, manufacture,
sell, use, service of once through variable pressure B
supercritical steam generator technology (with
evaporator suitable for variable pressure operation
in sub-critical and supercritical pressure ranges).
Further we confirm that original technology owner
(Licensor) had experience of providing variable pressure C
design steam generator technology for at least one (1) no.
of coal fired supercritical steam generator technology for
at least one (1) no. of coal fired supercritical steam
generator for a 1500 T/hr or higher capacity using either
spiral wound (inclined) or vertical plain or vertical rifled D
typed water wall tubing with the evaporator suitable for
variable pressure operation in sub-critical and super-
critical pressure ranges and which should be in successful
operation for a period of not less than one (1) year as on
the date of techno commercial bid opening. The detail of E
Licensor and his experience detail are as follows:"
11. The learned Attorney General submitted that it was,
therefore, clear that the evaporator for the Steam Generator,
which the Respondent No.1 had agreed to provide, had not F
been designed for variable pressure operation and,
accordingly, the experience of the licensor was relied upon.
Furthermore, the Deed of Joint Undertaking referred to in
Clause 1.01.00 was left blank, and Clause 1.6.0 which included
the reference to the Deed of Joint Undertaking was expressly G
and consciously scored off. It was submitted that the failure to
furnish the said undertaking made the bid of the Respondent
No.1 completely non-responsive.
12. In support of his aforesaid submissions, the learned
Attorney General submitted that the crucial aspects of the case H
978 SUPREME COURT REPORTS [2012] 1 S.C.R.
A are:-
(i) Did the tender contemplate that the Evaporator is
something separate from the Steam Generator?
(ii) Is the Evaporator not an integral part of the Steam
B Generator?
(iii) Could the Evaporator, if the tender contemplated
that the Evaporator could be manufactured by a
third party, be manufactured by a third party?
c (iv) Did Ansaldo Caldaie indicate that the Evaporator
would be supplied by it after having it manufactured
by a third party?
13. The learned Attorney General submitted that as far as
D the first two questions are concerned, the Evaporator was very
much an integral part of the Steam Generator and as far as the
third and fourth questions are concerned, the Attorney General
submitted that the answer was in the negative.
E 14. Learned Attorney General contended that the
Respondent No.1 wa& ineligible to compete in the bid, since it
did not satisfy one of the critical conditions of the tender
document. It was submitted that in order to be eligible, a Bidder
had to satisfy the conditions contained in Clause 7.1.1 of the
Memorandum of Understanding, hereinafter referred to as
F 'MOU'. Although, manufacturing, erection or commissioning of
the Steam Generator could be outsourced, the "designing" and
"engineering" of the Steam Generator had to be done by the
Bidder himself. The learned Attorney General submitted that if
the party proposed as Qualified Steam Generator Manufacturer
G by the Bidder had not designed or engineered the Steam
Generator himself, he could not be said to have met the
qualifying requirements stipulated for a Qualified Steam
Generator Manufacturer and consequently, the Bidder could not
also be said to have fulfilled the requirements relating to
H meeting the minimum qualification requirements for his bid to
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 979
INDIA P. LTD. & ANR. [ALTAMAS KABIR, J.]
be accepted. The learned Attorney General submitted that the A
evidence on record clearly indicated that the Respondent No.1
had not designed or engineered the entire Steam Generator
and that it transpired that in response to queries raised by the
Appellant to Enel, the reference station owner had indicated
that the work had been split up between the Respondent No.1 B
and BHK, but executed the contract for the reference station
as part of a consortium. The detailed break-up which was
provided, indicated that the Respondent No.1 had not done the
designing and engineering of the boiler walls furnace. It was
submitted that the failure to design and/or engineer the critical c
parts of the Steam Generator was fatal for qualification as a
Qualified Steam Generator Manufacturer and hence the bid
submitted by the Respondent No.1 had to be rejected.
15. The learned Attorney General submitted that there
were various contradictions and inconsistencies in the bid D
Sllbmitted by the Respondent No.1 and while, on the one hand,
it was mentioned that the reference Steam Generator was
provided with evaporator suitable for variable pressure
operation within sub-critical and super critical pressure ranges,
it was also indicated in another part of the Tender Documents E
that the evaporator indicated in the reference Steam Generator
was not designed for variable pressure operation, but for
constant pressure operation. It was submitted that the said
condition being one of the fundamental conditions of the bid, it
could not be held to be substantially responsive. F
16. The learned Attorney General submitted that the High
Court had not applied itself to these aspects of the matter, which
were essential in nature and had proceeded on the assumption
that the bid of the Respondent No.1 was in order and that the G
rejection of the bid of the Respondent No.1 was liable to be
quashed.
17. On behalf of the Respondent No.1 it was submitted by
Mr. Mukul Rohatgi, learned Senior Advocate, that the
Respondent No.1 Company is an Indian Company jointly H
980 SUPREME COURT REPORTS [2012] 1 S.C.R.
A promoted by Gammon India Limited and Ansaldo Caldaie
S.p.A., Italy, who has been in the business of manufacturing,
designing, erecting and commissioning of boilers since 1853
and is a world leader in the manufacture of Supercritical Steam
Generators and had engineered, designed and manufactured
s 24 Supercritical boilers with capacity of 1500 Tonnes of Steam
per hour and above. Mr. Rohatgi submitted that the Respondent
No.1 Company had installed boilers of various types all over
the world and it also has a significant presence in India since
1960. Included amongst its major projects within India, are:-
c (i) 3 x 200 MW for NTPC at Ramagundam, Andhra
Pradesh, which was installed in 1980 and has been
operating successfully since its installation;
(ii) 2 x 500 MW for NTPC, Farakkha in West Bengal,
D which has been in operation since 1992;
(iii) 230 MW at Smalkot for BSES, which was
commissioned in 1999; and
(iv) 2 x 210 MW at Neyvelli Lignite Corporation at Tamil
E Nadu, which was the first of its kind in the State.
It was submitted that the consortium, of which the
Respondent No.1 was a part, has the distinction of being the
second largest company involved in the installation of boilers
F in India after Bharat Heavy Electricals Ltd. (SHEL).
18. Mr. Rohatgi submitted that the Respondent No.1 has
vast experience in working with Steam Generators and was fully
eligible to compete in the bids relating to Clause 7.4 of the
detailed information for bids, which stipulated that the
G qualification of the Qualified Steam Generator Manufacturer
would be considered if it owned at least 26% of the equity of
the Bidder as per Clause 7.1.1. Accordingly, Respondent No.1
submitted its performance certificate. Mr. Rohatgi submitted
that the Respondent No.1 submitted the Performance
H Certificate issued to Ansaldo Caldaie by Anel Tower for
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 981
INDIA P LTD. & ANR. [ALTAMAS KABIR, J.)
Torranvaldaliga Nord Power Plant, to the Appellant to support A
its eligibility for participating in the Bid.
19. Mr. Rohatgi submitted that there were four Bidders,
including the Respondent No.1, but ultimately on 5th January,
2011, the Respondent No.1 was informed that his technical bid B
had been rejected on the ground that it did not meet the
qualification criteria. The Bank Guarantee furnished by the
Respondent No.1 was returned to him. In tha meantime, the Writ
Petition filed by the Respondent, (WP (C) No.296 of 2011),
came up for hearing on 17th January, 2011, when it was C
withdrawn with liberty to file a fresh petition based on the fact
that the Respondent No.1 had in the interregnum period
received the rejection letter dated 5th January, 2011, issued
by the Appellant.
20. Mr. Rohatgi submitted that Clause 7.1.1 and Clause D
7.4 clearly reflected the mind of the Bidder. Learned counsel
urged that the use of the expression "provided" in dealing with
the capability of the Bidder to deal with variable pressures
merely indicated that the Steam Generator Manufacturer would
have to provide technical tie-up for variable pressure design E
and in the absence of the same, the bid submitted would still
qualify for being considered. It was urged that the use of the
expression "provided" would have to be read along with the
phrase "designed, engineered, manufactured/got
manufactured" etc. The further usage of the words "in addition" F
indicated that the stipulation regarding the provision of an
evaporator suitable for variable pressure operation was an
additional, ancillary and peripheral requirement and not integral
to the type of Steam Generator contemplated. Mr. Rohatgi
urged that the submission made on behalf of the Appellant to G
the contrary was incorrect since it had been in no uncertain
terms submitted that in the bid document and in the pleadings
before the High Court and this Court noted that the evaporator
provided with the Steam Generator at the reference plant at TNP
was suitable for variable pressure operation.
H
982 SUPREME COURT REPORTS [2012] 1 S.C.R.
A 21. It was submitted that the entire basis of the case made
out by the Appellant was, therefore, non-est and the High Court
did not commit any error in allowing the Writ Petition filed by
the Respondents.
B 22. There is no dispute that the Respondent No.1 chose
Route 4 while submittin~ its Tender Bid, in its capacity as an
Indian Joint Venture Company for manufacturing Super-Critical
Steam Generato.r in India between an Indian Company and a
Qualified Steam Generator Manufacturer. The crucial condition
C for a Bidder of the said category to be considered is contained
in Clause 7.1.1 of the Tender Documents, which has been
extracted hereinbefore and provides that the Bidder should
have designed, engineered, manufactured/got manufactured,
erected/ supervised direction, commissioned/supervised
commissioning of at least one Steam Generator having rated
D capacity of 1500 Tonnes of Steam per hour or above and that
it should be provided with an Evaporator suitable for variable
pressure operations for special category and supercritical
pressure· ranges.
E 23. The controversy which led to the rejection of the
Technical Bid of the Respondent No.1 was with regard to the
question as to whether in the case of a Joint Venture
Undertaking it was essential that the Qualified Steam Generator
Manufacturer also had to be the manufacturer of the evaporator
F or whether it could function as a facilitator. Furthermore, what
appears to have weighed with the Appellant in rejecting the
Technical Bid of the Respondent No.1 was that the Steam
Generator had been designed for constant pressure and not
variable pressure, as required by the Appellant.
G 24. Admittedly, the evaporator is an integral part of the
Steam Generator. The question is whether the same could not
be manufactured by a third party and supplied to the Qualified
Steam Generator Manufacturer for use in the boiler. Although,
the said proposition has been hotly contested on behalf of the
H Respondent, an attempt was also made to show that the
NTPC LIMITED v. ANSALDO CALDAIE BOILERS 983
INDIA P. LTD. & ANR. [ALTAMAS KABIR, J.]
evaporator was in fact designed for variable pressure, but such A
a submission was contrary to the confirmation given by the
Respondent No.1 which indicated that the evaporator had been
designed for Constant Pressure (Universal Pressure) operation
only. The MOU, while permitting manufacturing, erection or
commissioning of the Steam Generator, provided that the same B
could be outsourced, but the "designing" and "engineering" of
the Steam Generator had to be done by the Bidder himself and
if the party proposed as Qualified Steam Generator
Manufacturer and the Bidder had not designed and engineered
the Steam Generator itself, it could not be said that the qualifying c
requirements for such manufacturer had been satisfied.
25. From the terms and conditions contained in the MOU,
it appears to us that it was the intention of the Appellant that
the Qualified Steam Generator Manufacturer would have to be
the manufacturer of the evaporator itself and could not have D
outsourced the manufacture thereof to a third party, since the
evaporator controlling the pressure of the Steam generated is
a vital and crucial component of the Steam Generator itself.
The Appellant, which will be the ultimate user of the Generator,
must be presumed to be conscious of the competence of the E
tenderer to "provide" the evaporator in keeping with the
required specifications.
I
26. In the aforesaid context, we are unable to uphold the
decision of the Division Bench of the Delhi High Court quashing F
the letter dated 5th January, 2011, issued by the Appellant
herein, informing the Respondent No.1 that its Techno-
commercial Bid had been rejected on the ground that it did not
meet the minimum requirement set forth in item No.4 of Section
Ill of the Tender Documents. The High Court while interpreting G
the provisions of Clause 7.1.1 of the Tender Documents was
influenced by the use of the phrase "manufactured/got
manufactured" while considering the fact that although, Ansaldo
Caldaie, Italy, was being projected as the Qualified Steam
Generator Manufacturer, Siemens A.G. was shown as the
H
984 SUPREME COURT REPORTS [2012] 1 S.C.R.
A technology owner/licensor of the evaporator which was offered
by the Respondent No.1. In other words, the evaporator being
offered by the Respondent No.1 was one which had been
manufactured not by the Qualified Steam Generator
Manufacturer, but by a third party, which was not contemplated
B in the aforesaid condition of the Tender Documents.
27. The importance of the above condition is manifested
in the functioning of the Steam Generator which handles High
Pressure Steam for the purpose of turning the turbines for
C generating electricity. The design and engineering of the
evaporator and the boiler itself has to be such as to withstand
the very high temperatures and pressures generated. The
importance of the variable pressure operations is of great
Importance as far as generation and wastage of energy is
concerned. The importance of the evaporator in controlling
D pressure during operations is to automatically regulate the flow
of water, generation of pressure and temperature of the steam
to the desired level.
28. In that view of the matter, we allow the Appeal and set
E aside the impugned judgment of the Division Bench of the High
Court allowing the Writ Petition filed by the Respondent No.1.
The Writ Petition filed by the Respondent No.1, therefore,
stands dismissed.
29. There shall, however, be no order as to costs.
F
R.P. Appeal allowed.
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