Jaipur Vidyut Vitaran Nigam Ltd. vs JSW Energy Limited

Ajay Rastogi, J.—1. Instant special appeals have been preferred against order of the ld. Single Judge while admitting the writ petitions interim protection in the positive terms has been mandated to the JVVNL under order impugned herein dt. 10.02.2016.

Before we may proceed to examine the matter, we consider it appropriate to quote the operative part of the order impugned dt. 10.02.2016, by which the appellant is aggrieved, which reads ad infra:-

"In the circumstances, I would be inclined to admit the petition.

Admit.

In the interim, it is directed that the bid of the Company for selection as Distribution Franchisee of the respondent-JVVNL in Bharatpur and Kota city be considered on merit without reference to Clause No. 6.1 of RFP. Result be kept in sealed cover. No contract be awarded in pursuance of RFP for Bharatpur and Kota city till further orders."

The brief facts for appreciation of the dispute are that after unbundling of the erstwhile Rajasthan State Electricity Board, it is being converted into five different Companies, namely Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (generation company), Rajasthan Rajya Vidyut Prasaran Nigam Ltd., (transmission company) and three Distribution Companies namely Ajmer Vidyut Vitaran Nigam Ltd. (AVVNL), Jodhpur Vidyut Vitaran Nigam Ltd. (JdVVNL) and Jaipur Vidyut Vitaran Nigam Ltd. (JVVNL), with which we are concerned in the instant matter.

Under the policy of Ministry of Power, Government of India has prescribed Standard Bidding Document for Appointment of Input Based Urban Distribution Franchisee, with an object and endeavour to improve operational efficiency of the distribution system and quality of service to its consumers, the appellant-Company seeks to bring in management expertise through public-private participation, in distribution of electricity and to fulfill the objective, it intends to appoint an Input Based Distribution Franchisee, to be selected through a bidding process and its objectives of appointing a Distribution Franchisee, inter alia, are

"(i) To minimize Aggregate Distribution and Commercial Losses;

(ii) To bring improvement in metering, billing and revenue collection;

(iii) To minimize current assets on account of arrears; and

(iv) To enhance customer satisfaction level by improving quality of service."

and for selection of the franchisee parties, a transparent bidding process under the provisions of the Electricity Act, 2003 has to be adopted.

Keeping in mind, the Standard Bidding Document for Appointment of Input Based Urban Distribution Franchisee, published by the Ministry of Power, Government of India, the appellant-Company came out with a Request For Proposal (RFP) for appointment of ''Input plus Investment'' based Distribution Franchisee for Distribution and Supply of Electricity in Bharatpur & Kota city.

The writ petitioner intended to participate in the bidding process, as one of the bidder but as alleged only such of the bidders could participate unless they fulfill the pre-qualification criteria and the grievance of the writ petitioner before the ld.Single Judge in filing the writ petition is that without fulfilling the pre-qualification criteria of past experience in distribution contained in Cl.6.1 of RFP for Bharatpur & Kota city, the petitioner-Company be considered to be technically qualified and may be permitted to participate in the bidding process and admit the petitioner-Company for consideration of its tender and obviously, if qualified the financial proposal, as referred to u/Cl.6.2 of RFP, the tender be finalized and contract be awarded to the writ petitioner.

Before us, it has been pointed out that the grievance of the writ petitioner is confined to the technical criteria namely Cl.6.1(5) and we consider it appropriate to quote the technical criteria Cl.6.1(5) which has been questioned before us, which reads ad infra:-

"5. The Bidder shall have experience of handling at least 9530 consumers in the activities of distribution of electricity including construction, operation and maintenance of distribution system, metering, billing and revenue collection, continuously for the last five (5) financial years immediately preceding the year in which bidding is done."

The tender RFP document has been placed on record as Ann.11 in S.B. Civil Writ Petition No. 612/2016. Reply to the writ petition has been filed by the appellant (respondent before the ld.Single Judge) justifying the conditions of pre-qualification criteria (6.1) and technical criteria, in particular and the writ petition has been admitted by the ld.Single Judge while granting interim protection to the writ petitioners under order impugned dt. 10.02.2016.

While examining the writ petition as to whether it deserves consideration, the submission was that various representations were made to JVVNL (appellant-Company) pointing out by the petitioner-Company that in terms of scheme of the Electricity Act, 2003, the object is to maximize participation in the generation, transmission and so also distribution of electricity in the country and feature of the bill preceding the Act of 2003 was to allow distribution licensees to be free to undertake generation and generating companies to be free to take up distribution licensees and the basic bone of contention was that Cl.6.1 of RFP is not in conformity with the scheme of the Electricity Act, 2003, which according to the writ petitioner besides being malafide and discriminatory is also arbitrary in conditions of eligibility and which according to them has no nexus with the object sought to be achieved by the order in issue and the condition has been incorporated in the bidding document just to eliminate such companies who are engaged & having experience in generation and transmission of electricity.

Reply has been filed by the appellant-Company, apart from preliminary objections and tried to persuade us that Cl.6.1 of RFP document is in public interest of identifying an experienced franchisee and excluding those who would only seek to learn on the job and potentially obstruct, for lack of experience, seamless supply of electricity to the consumers and every State has different yardsticks & standards in meeting out the requirements and conditions which may serve the purpose for appointment of distribution licensees keeping in view the requirement of model bidding document for appointment of input based urban distribution franchisee, which has been circulated by the Ministry of Power, Government of India.

Counsel submitted that minutes of 243rd meeting of the Board of Directors of appellant-Company was held on 10.12.2015 where the issue of permitting the generating companies to participate in the bidding process was considered and a decision was taken that only applicants with requisite experience in distribution of electricity would be considered eligible.

The ld.Single Judge, after hearing the parties, was prima facie of the view that the question which has been raised in the writ petition deserves consideration and accordingly admitted the writ petitions under order dt. 10.02.2016 but while admitting the writ petitions restrained the appellant-Company and mandated that the bid of the petitioner-Company while initiating the process of selection of Distribution Franchisee for Bharatpur and Kota city be considered on merits without reference to Cl.6.1 of RFP and the result be kept in sealed cover and no contract be awarded pursuant to RFP for Bharatpur and Kota city till further orders.

Counsel for appellant submits that by passing the present interim order dt. 10.02.2016, nothing remains further to be examined in the pending writ petition and the whole bidding process has been put to halt merely on the premise that the ld.Single Judge was prima facie of the view that incorporation of Cl.6.1 of RFP document seems to be arbitrary but that is still to be examined at the stage when the matter is finally heard on merits and the present interim order if allowed to continue, is not in public interest and submits that hearing of the matter will take its own time and it is the public at large who is going to suffer, if the process is not finalized and further submits that if the question of pre-qualification criteria is under challenge, the scope of judicial review is limited and the principles which emerge for consideration have been referred to by the Apex Court in Michigan Rubber (India) Ltd. v. State of Karnataka & Ors. reported in , (2012) 8 SCC 216 which reads ad infra:-

"23. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would legitimate to take into consideration the national priorities;

(b) Fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim a fundamental right to carry on business with the Government.

Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"? and

(ii) Whether the public interest is affected?

If the answers to the above questions are in the negative, then there should be no interference under Article 226."

Counsel further submits that in the matter where interim relief tantamounts to grant of final relief, it has been observed by the Apex Court in Deoraj v. State of Maharashtra & Ors. reported in , (2004) 4 SCC 697 that the court may grant interim order only if satisfied that withholding of it would prick the conscience of the court and do violence to the sense of justice, resulting in injustice being perpetuated through out the hearing and at the end the court would not be able to vindicate the cause of justice and it has to be in rare & exceptional cases accompanied by compelling circumstances, where the injury complained of is immediate and pressing and would cause extreme hardship. The extract of the judgment, relevant for the present purpose, is reproduced ad infra:-

"12. Situations emerge where the granting of an interim relief would tantamount to granting the final relief itself. And then there may be converse cases where withholding of an interim relief would tantamount to dismissal of main petition itself; for, by the time the main matter comes up for hearing there would be nothing left to be allowed as relief to the petitioner though all the findings may be in his favour. In such cases the availability of a very strong prima facie case - of a standard much higher than just prima facie case, the considerations of balance of convenience and irreparable injury forcefully tilting the balance of the case totally in favour of the applicant may persuade the Court to grant an interim relief though it amounts to granting the final relief itself. Of course, such would be rare and exceptional cases. The Court would grant such an interim relief only if satisfied that withholding of it would prick the conscience of the Court and do violence to the sense of justice, resulting in injustice being perpetuated throughout the hearing, and at the end the Court would not be able to vindicate the cause of justice. Obviously such would be rare cases accompanied by compelling circumstances, where the injury complained of is immediate and pressing and would cause extreme hardship. The conduct of the parties shall also have to be seen and the Court may put the parties on such terms as may be prudent."

Counsel submits that in the instant case, the ld.Single Judge in its order impugned has expressed as regards prima facie case which the writ petitioner has been able to make out but for the grant of interim relief, the standard is much higher than just prima facie case, at the same time balance of convenience and irreparable injury must forcefully tilt the balance of the case totally in favour of the writ petitioner which may persuade the court to grant an interim relief, though it amounts to granting of final relief, as prayed for.

Counsel submits that in the instant case, the interim relief has been granted by the ld.Single Judge but the petitioner was not able to justify the court in regard to irreparable loss and balance of convenience which could tilt the balance of the case and persuade the ld.Single Judge to grant relief in favour of the writ petitioner under order impugned and in these facts & circumstances, the interim protection which has been granted to the writ petitioner requires interference by this court.

Counsel for the respondent Mr. Ashok Gaur, Senior Advocate while supporting the interim order impugned passed by the ld.Single Judge submits that if the appellants are permitted to complete the process initiated pursuant to the bidding process, nothing would remain further to be examined in the writ petition and what is being contended in the writ petition will become infructuous and not going to serve any purpose and submits that in the given circumstances if interim protection, if not allowed to continue, it will frustrate the very purpose of filing of the writ petition and while balancing the interest of the parties, in particular and avoiding third party rights if created in the intervening period may not be in the interest of the parties and further submits that what is being contended is always open to be examined when the matter is heard on merits by the ld.Single Judge and the parties are at liberty to make their submissions and submits that he has no objection if the matter is listed before the ld.Single Judge for final hearing of the matter.

We have heard counsel for the parties.

Ordinarily, the interim order passed by the ld.Single Judge is not to be interfered with in the intra-court appeal but after we have taken note of the principles of law applicable to the process of judicial review, which we have taken note of supra, and the fact that by the interim protection which has been granted by the ld.Single Judge under order impugned, the whole process initiated for selection as Distribution Franchisee by the appellant for Bharatpur & Kota city has been put to a complete halt and result of the bidding process has been kept in sealed cover and no contract can be awarded pursuant to RFP document for Bharatpur & Kota city till further orders and taking note of the submissions made, we could not be able to persuade ourselves to continue the interim order dt. 10.02.2016 any further but while keeping the interest of the parties into consideration, we consider it appropriate to observe that let the appellant may be permitted to complete the process of selection of Distribution Franchisee pursuant to the bidding process initiated dt. 15.10.2015 in terms of the existing bidding document but that will remain subject to final decision of the writ petition.

Consequently, both the special appeals succeed and are hereby allowed. The order impugned passed by the ld.Single Judge dt. 10.02.2016, as regards granting interim protection to the writ petitioner is concerned, is quashed and set aside and without expressing any opinion on the merits of the case, as the matter is still pending before the ld.Single Judge, we consider it appropriate to further observe that the bidding process which the appellant-Company has initiated for selection of Distribution Franchisee for Bharatpur & Kota city shall remain subject to final outcome of the writ petition and the participants/bidders may participate at their own risk and no right shall be conferred and will remain subject to the final decision of the writ petition.

We make it clear that what is being observed by us supra is only for the purpose of disposal of the instant special appeals and may not prejudice the inter-se rights of either party and the parties are at liberty to make submissions before the ld.Single Judge on merits which may be examined independently on the basis of the pleadings on record in the pending proceedings before the ld.Single Judge.