REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 801 OF 2009 [Arising out of Special Leave Petition (Civil) No.14858 of 2008]

M/s. Electrical Manufacturing Company Ltd. ..          Appellant

-versus-

M/s. Power Grid Corporation of India Ltd. & Anr. ..      Respondents

J U D G M E N T

MARKANDEY KATJU, J.

1. Leave granted.

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.

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3. Heard Shri Sudhir Chandra, learned senior counsel for 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 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 :-

“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 A1, A2 & A7 in spite of the fact that it is L1, technically qualified as per the requirement and more so 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  Ministry of  Power.   The petitioner has  been

carrying out the contract of respondent no.1 for a long time.

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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 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  was  declared  the  Lowest

Quoted Bidder (L1).

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 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 requisite technical experience as set out

in  Clause 1.1 of Annexure `A’ of the Special Condition of Contract.

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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 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  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 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 :

(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  higher  voltage  class  involving  bundle conductor.

Package – A7 :  100 Kms

Package – A8 :  100 Kms”  

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12. Learned counsel  for the appellant submitted that the appellant fully

satisfied  the  requirements  mentioned  in  Clause  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 A7 and 200 Kms. for package A8.  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 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  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.

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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 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:

Transmission Line

Extent  completed by  petitioner  as  on 8/9.1.2008  

Total  extent  of the  line  in question

Lines Satisfactorily Completed  by petitioner

Meerut- Mandola

60 km (on 29.9.03) 60 km 60 km

Bhadrawati- Chandrapur

23 km (on 13.4.06) 23 km 23 km

Trivenveli- Udmalpet

134  km  (on 8/9.1.08;  2  km incomplete)

136 km

TAPP- Kankaroli

87 km (on 8/9.1.08; 10.3  km incomplete)

97.3 km

Total 304 km 83 km

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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 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 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 completion may not  necessary mean

commissioning of the line but it  certainly means completion of the entire

length of the line 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.

18. For instance, if an electrical line is laid inside 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

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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 said to be

satisfactory completion of the electrical line.

19. In the present case, as can be seen from the chart set 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  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 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,

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.

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21. If the  bidder  has  surveyed,  optimized tower  locations,  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 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

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 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.

23.     Thus there is no force in this appeal and it is dismissed.  No costs.

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…………………………J. (Altamas Kabir)

……………………… …J.

(Markandey Katju)

New Delhi; February 09, 2009

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