Oriental Foundry Pvt Ltd vs Union Of India And Ors

S. Ravindra Bhat, J

The petitioner’s grievance is that it had applied for/furnished its bid pursuant to a tender floated by the respondent-Railways (hereinafter

referred to as ‘Railways’), inviting bids for the manufacture of Railway wagons. The notice inviting tender (NIT) has started operation of the

procurement to be sourced on ‘developmental orders’. These lots were 500 wagons, two out of 500 wagons â€" totalling 1000.

The petitioner claims that its facility was inspected by the Research Designs and Standard Organisation (RDSO) and that in accordance with its

guidelines, it had applied for audit of its facility, that request was pending. The petitioner’s bid under the ‘developmental orders’ category

was opened along with the orders dated 6.9.2017. However, they complain that nothing was heard thereafter. It was never heard from the

respondent-Railways. In the meanwhile, on 17.11.2017 to 30.11.2017, the RDSO sent a team for inspection of the petitioner’s facility and

ultimately, in respect of the tender in question and on 14.12.2017 issued a detailed report in this regard.

It complains that the subsequent information is based on arbitrary directions of the tender condition. Subsequently, it is stated that the petitioners

were never formerly informed about the rejection of the bid.

The Railways in its counter affidavit states that the petitioner’s bid â€" as well as that of 5,000 tenderers who had claimed bid for 5-6 other

tenderers bids for ‘development orders’ were rejected for on account of non-fulfilment with essential legibility character.

It is contended that the petitioners undoubtedly had a registration with the RDSO G-105 (2011). However, their audit had not been completed on the

date the bid was made.

It is submitted that in these circumstances, the bid could not have been accepted. It was urged that the same interpretation was adopted in the case

of other developmental bidders for the development orders.

Learned counsel for the petitioner urges that the rejection of the bid in the present case is arbitrary. He places reliance on Clause 10.0 and eligibility

in respect of powers for development orders, (later portion of Clause 1), the relevant conditions are as follows :-

“Tenderers who have registered for G-105 (2011) approval with RDSO and whose first Audit has been completed successfully shall be eligible for

developmental orders. In this regard, assessment of Railways shall be final. The quantity of a developmental order on an eligible wagon builder would

normally be around 500 wagons subject to their rates being lower than that of L-1 tenderer eligible for regular order.

The total cumulative quantity against all developmental orders in two procurement cycles on any wagon builder would be restricted to maximum 1,000

wagons. However, such tenderers will not be considered for wagon allocation formula till they attain the status of a regular source.â€​

It is argued that in the case of regular orders, a valid G-105 Certificate issued by the RDSO should be provided.

However, the bidder provided a letter from RDSO stating that the concerned is entitled for revalidation of certification. It is urged that the

conditions with respect to bidders for ‘developmental orders’ was received for interpretation.

In other words, counsel urges that the requirement of possessing an audit approval has to be seen at the time of the award of the contract rather

than at the time of bidding in case of those who opted for ‘development orders’ too like in the case of G-105 certificate for regular orders.

Counsel for the Railway however, contested this position and states that the tender classifies bidders into two Clauses i.e. regular bidders and

those proposing to supply under the ‘development orders’. The eligible conditions are clearly defined; in the case of those wishing under the

development orders category, the requirement of possessing an audit, the RDSO audit report is essential.

The requirement in the case of regular bidders for regular orders is entirely different.

If the conditions with respect to regular orders (condition (i) of Clause 1 is contrasted with the condition with respect to ‘development

orders’ (i) in respect of development orders), it is clear that the registration for G-105 approval with RDSO is essential for the latter category. The

second condition i.e. the bidder should have opted a certificate and whose audit has been completed successfully shall be eligible for ‘development

orders’, is categorical.

In the case of those applying for tender/contract under the regular category, a separate treatment is mandated and in that even an expired

certificate of G-105 (2011) is deemed sufficient as long as an application for validation or audit is made.

The rationale for these distinctions is apparent; it is that the those supplying under the regular order category are known and it is a matter which

falls within the ‘tried and tested category’. In the case of those applying under the development orders category, however, the nature of the

facility might be known but the audit of all its machinery is not yet undertaken.

In these circumstances, the interpretation given by the Railways cannot be characterised as unreasonable giving the extremely circumscribed

parameters under Article 226 of the Constitution.

For these reasons, the petition has to fail. Accordingly, the same is dismissed.