Crescendo Constructions Private Limited v. Vikram Sarabhai Space Centre and Others

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN THURSDAY, THE 1[ST] DAY OF FEBRUARY 2024 / 12TH MAGHA, 1945 ``` ## **`WP(C) NO. 28565 OF 2023`** ## **`PETITIONER:`** ``` CRESCENDO CONSTRUCTIONS PRIVATE LIMITED TC-17/1684, PILLAR PALACE, THIRUMALA, POOJAPPURA, THIRUVANANTHAPURAM, PIN – 695012 REPRESENTED BY ITS MANAGING DIRECTOR ``` ``` BY ADVS. DEEPU THANKAN UMMUL FIDA LAKSHMI SREEDHAR LEKSHMI P. NAIR NAMITHA K.M. ``` ## **`RESPONDENTS:`** - `1 VIKRAM SARABHAI SPACE CENTRE, CONSTRUCTION AND MAINTENANCE GROUP, THIRUVANANTHAPURAM PIN – 695012, REPRESENTED BY ITS DIRECTOR` - `2 GROUP DIRECTOR, CONSTRUCTION AND MAINTENANCE GROUP, VIKRAM SARABHAI SPACE CENTRE THIRUVANANTHAPURAM, PIN – 695012` - `3 DEPUTY HEAD, CMD (CONTRACTS), CONSTRUCTION AND MAINTENANCE GROUP VIKRAM SARABHAI SPACE CENTRE THIRUVANANTHAPURAM, PIN – 695012` ``` BY ADV MANU S. DSG OF INDIA SRI.SUVIN R. MENON - CGC ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` WPC 28565/23 2 ## JUDGMENT The petitioner is a Company registered under the Companies Act, 2013 and say that they have submitted their bid in response to Ext.P6 Notice issued by the respondents. They explain that they have been constrained to approach this Court because they apprehend that their bid would be disqualified, solely for the reason that the work experience annexed thereto is that of a Firm by name ‘M/s Crescent Construction Company’, and not in their name. 2. Sri.Deepu Thankan – learned counsel for the petitioner, submitted that ‘M/s Crescent Construction Company’ is a Firm, all the partners of which are either Directors or Members of the petitioner-Company. He submitted that, therefore, the credentials of ‘M/s Crescent Construction Company’ with respect to the works completed by them can certainly be taken credit of by his client because, as said above, all its partners are directly involved with the said Company. He relied upon the judgment of the Honourable Supreme Court in New Horizons Limited and Another v. Union of India and Others [(1995) 1 SCC 478] in substantiation. WPC 28565/23 3 3. However, pertinently, in response, Sri.Suvin R. Menon – learned Central Government Counsel, submitted that a counter affidavit has been filed on behalf of the respondents, wherein, they have averred that the afore alone is not the only reason why the petitioner’s bid has been found to be untenable. He pointed out that there are at least three or four other reasons why the same cannot be considered, but conceded that the bid has not been yet rejected because of the interim order passed by this Court on 24.08.2023. He added that, as per the subsequent order of this Court dated 30.10.2023, the financial bids were opened to find that the petitioner’s is the lowest; but that, in spite of this, they cannot be awarded the contract for the reasons that are averred in the counter affidavit. 4. I have considered and evaluated the afore contentions intently. 5. Before I move forward, I deem it necessary to extract the averments of the respondents in paragraphs 5.1, 5.2 and 5.3 of their counter affidavit. 5.1 On the due date, three tender documents were downloaded WPC 28565/23 4 and the offers were submitted by the following tenderers. 1. Sri. B. Sreekantan Nair, Trivandrum 2. M/s. Rubicon Project Management (P), Ltd., Ernakulam 3. M/s. Crescendo Construction Pvt. Ltd., Trivadrum, the Petitioner firm The Techno-Commercial bids were opened on 11.07.2023. On verification of the credentials furnished by the tenderer M/s. Crescendo Constructions Pvt. Ltd., it was observed that the tenderer had submitted the following details against the eligibility criteria required as per Notice Inviting Tender. Eligibility Criteria as Details furnished Observations stipulated in the NIT by the Tenderer a) Should have executed any Completion All completion one of the following during certificated for 5 certificates are issued last 7 years. nos, works of in the name of M/s. i. Three similar works similar nature & Crescent Construction costing not less than Rs. magnitude, each Company. 106.91 Lakhs (40%) or costing 80% of the ii. Two similar works estimated cost. costing not less than Rs. 160.37 Lakhs (60%) or iii. One similar work costing not less than Rs. 213.82 Lakhs (80%) Similar work shall mean Construction of buildings having RCC framed structure with RCC roof. b) The average annualFY 2022-23: Rs. turnover for the last three963.44 Lakhs years ending 31[st] March of preceding year (31.03.2022) should not be less than Rs. 80.18 Lakhs. FY 2022-23: Rs. Since the last date of 963.44 Lakhs financial year mentioned in the NIT is 31.03.2022, FY 2022-23 shall not be taken into account for computing average annual turnover. FY 2021-22: Rs. The profit & loss 12550.46 Lakhs statement along with balance sheet for the FY 2021-22 was not submitted. Instead, a WPC 28565/23 5 turnover summary duly certified by the Chartered Accountant was only submitted. FY 2020-21: Rs. 0 Since the company was Incorporated only on 15.09.2020, the turnover during the period from 15.09.2020 to 31.03.2021 is found to be 'zero' as certified by the Chartered Accountant. Also, annual turnover for FY 2019-20 does not exist. Hence, the average annual turnover for the last three years ending 31.03.2022 could not be worked out. c) Should not have incurredFY 2022-23: Profit Since the company any loss in more than two(Provisional) was incorporated years during the last fiveFY 2021-22: Not only on 15.09.2020, years ending 31[st] March 2022. submitted last five years FY 2020-21: Profit profit / loss could not be assessed. d) Should have a solvency ofSolvency certificateThe amount is Rs. 106.91 Lakhs. for an amount ofmeeting the NIT Rs. 110.00 Lakhsrequirement. from HDFC Bank, Poojappura Brach, Trivandrum. e) Should have biddingRs. 7.03 Crores capacity more than the total bid value i.e. Rs. 267.28 Lakhs. Since the company was Incorporated only on 15.09.2020, ‘A' value i.e. maximum value of work executed in one year during the last 5 years could WPC 28565/23 6 not be worked out. In the absence of 'A' Value, calculation of bidding capacity is not possible at this stage. 5.2 It is evident from the above table that the Petitioner had furnished all completion certificates pertaining to M/s. Crescent Construction Company as proof of their work experience. Before considering the Technical Evaluation of tenders, a clarification was sought from the Petitioner through e-portal on 17.07.2023 and requested to furnish a clarification in this regard on or before 21.07.2023. Since the Petitioner could not furnish the reply within the stipulated time, the period was extended twice i.e, to 24.07.2023 and then to 26.07.2023. On the repeated reminders, Petitioner vide letter dated 26.07.2023 stated that all the present Directors (3 nos.) are the existing partners of M/s. Crescent Construction Company, which was established in the year 2004. As per the latest reconstituted partnership deed of M/s. Crescent Construction Company available with the Respondent Department, the company is having five partners, whereas only three of them are as the Directors in the Petitioner' company. 5.3 In order to proceed further with the tender process, the case was put up to Technical Evaluation Committee for evaluating the tender submitted by M/s. Crescendo Construction Pvt. Ltd. While scrutinizing the documents submitted by the Petitioner, it was observed that, the Petitioner company was incorporated only on 15.09.2020 and annual turnover date for the last 5 years are not available. In the absence of such details, Average Annual Turnover, profit & Loss and Bidding Capacity as per the Notification Inviting Tender could not be worked out. Since the experience certificates submitted by the Petitioner is in the name of M/s. Crescent Construction company and other required parameters detailed above are not fulfilled by the Petitioner, the Technical Evaluation Committee of the respondent Centre was not in a position to accept the Tender request as such. After deliberations, the Committee advised to the Respondent Office to obtain a legal opinion in this matter since the details furnished by the Petitioner are contrary to the eligibility criteria stipulated in the NIT and there is no specific stipulation in the General Condition of Contract to address the issue. Accordingly, a legal opinion was obtained from Central Government Standing Counsel who was appointed by Law Ministry and the WPC 28565/23 7 Counsel opined that, "The Notice inviting Tender has given to an agency not for individuals. In the present situation M/s. Crescendo Constructions Pvt. Ltd. company is also a party in the bid. The Company incorporated only on 15.09.2020, we cannot consider the partner's experience with regard to his bid. Department should consider the experience of the Company/Agency only. As far as the Petitioner i.e., M/s. Crescendo Construction Pvt Ltd. concerned the company has only 3 years of work experience, the eligibility criteria is not complied and hence company have no legal right to participate in the bid". Further, one of the major mandatory conditions to be fulfilled by the Parties to the bid was that they should have annual financial turnover of not less than 30% of the estimated cost of the work during the last three years ending 31.03.22, i.e., 2021-22, 202021, 2019-2020. In this regard, for the year 2021-2022, instead of P&L statements, the petitioner has submitted only a turnover summary duly certified by the Chartered Accountant. For the year 2019-2020, since the company was incorporated only on 15.09.2020, the turnover during the period from 15.09.2020 to 31.03.2021 is found to be 'zero' as certified by the Chartered Accountant. Also, annual turnover for the Financial Year (FY) 2019-20 did not exist. Hence, the average annual turnover for the last three years ending 31.03.2022 could not be assessed by the Technical Evaluation Committee. One of the major conditions that, the bidding parties to the tender should not have incurred any loss in more than two years during the last five years ending 31.03.2022. In this regard, since the company was incorporated only on 15.09.2020, the last five years profit/loss could not be assessed. All the factors detailed above were considered in the Technical Evaluation Committee of the Department and the committee prima facie not considered for evaluation and not recommended for opening the price bid. In the meantime, the Petitioners filed this Writ Petition No.28565 of 2023 before the Hon'ble High Court of Kerala with an interim relief to consider the tender submitted by the Petitioner in response to the Exhibit-P6 Notice Inviting Tender for the work of Extension of TERLS canteen at VSSC, Thumba. The Hon'ble High Court vide Order dated 24.08.2023 has directed the respondent not to reject the bid of the Petitioner till next posting date of the subject case if it was not rejected till that date. As directed by the Hon'ble Court, the decision of the Committee regarding non consideration of the Petitioner in the tender process has not communicated.” 6. As evident from the afore averments, contrary to the WPC 28565/23 8 submissions of the petitioner, the tender has been found unqualified by the respondents for various other reasons, than merely that their Experience Certificate is not in their own name. Obviously, therefore, it would not be necessary for this Court to answer this contention on its merits because, even if the same is found in their favour, the respondents may still disqualify their bid for the other reasons, as are stated in the counter affidavit. 7. However, since the petitioner has raised this contention, I deem it necessary to deal with it, but only peripherally for the reasons that I have said above. 8. The singular contention of Sri.Deepu Thankan is that the credentials of ‘M/s Crescent Construction Company’ ought to be allowed to be used by the petitioner-Company because the partners of the former are all Directors or members of the latter. The reliance of the petitioner on New Horizons (supra) is to the extent that, in a Joint Venture, a Company having no experience can always rely on the credentials of the partnership firm, which is intrinsically linked with it. 9. However, in the case at hand, it is expressly conceded WPC 28565/23 9 that the partnership Firm and the Company have no direct relationship at all, except that the partners of the former are either Directors or members of the latter. Therefore, even if the arguments of Sri.Deepu Thankan is accepted, it can only mean that the experience projected is that of a Firm, which has no connection with the company, except for the commonality of the individuals managing them. Prima facie, I am not sure if this would obtain any benefit to the petitioner as claimed for by them, even going by New Horizons (supra). 10. I do not propose to say anything further, because finally, it is for the respondents to deal with the bid of the petitioner in terms of law; and this is more so because, of the averments in their counter affidavit extracted above. In the afore circumstances, without entering into the merits of any of the rival contentions and leaving them all open, I close this Writ Petition. I, however, clarify that the above observations regarding the credentials of the Company have been only stated in a nonconclusive manner and that it is for the petitioner to prove WPC 28565/23 10 otherwise when their bids are considered, or when they are called for any further evaluation. Of course, the factum of the petitioner now having been disclosed to be the lowest tenderer, will also be kept in mind by the Authorities, while completing further action. ``` Sd/- ``` RR ``` DEVAN RAMACHANDRAN ``` ``` JUDGE ``` WPC 28565/23 11 ## **`APPENDIX OF WP(C) 28565/2023`** ``` PETITIONER EXHIBITS Exhibit P-1TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE PETITIONER COMPANY DATED 29/01/2021 ``` - `Exhibit P-2 TRUE COPY OF THE MASTER DATA OF THE PETITIONER COMPANY` - `Exhibit P-3 TRUE COPY OF THE PARTNERSHIP RECONSTITUTION DEED OF THE M/S. CRESCENT CONSTRUCTION COMPANY DATED 17/08/2022` - `Exhibit P-4 TRUE COPY OF AN UNDERTAKING BY ALL THE PARTNERS OF M/S. CRESCENT CONSTRUCTION COMPANY DATED NIL` - `Exhibit P-5 TRUE COPY OF THE CERTIFICATE ISSUED BY A CERTIFIED CHARTERED ACCOUNTANT DATED 25/05/2023` - `Exhibit P-6 TRUE COPY OF THE NOTICE INVITING TENDER ISSUED BY THE SECOND RESPONDENT DATED 06/06/2023` - `Exhibit P-7 TRUE COPY OF THE EXTENSION OF E-TENDER ISSUED BY THE SECOND RESPONDENT DATED NIL` - `Exhibit P-8 TRUE COPY OF THE COMMUNICATION ISSUED BY THE THIRD RESPONDENT DATED 17/07/2023` - `Exhibit P-9 TRUE COPY OF THE REPLY GIVEN BY THE PETITIONER DATED 25/07/2023` - `RESPONDENT EXHIBITS` ``` Exhibit R1(a)True copy of the presidential notification dated 18.07.1997 PETITIONER EXHIBITS Exhibit P-10A true copy of the details of the shareholders to the petitioner company ```