*IN THE HIGH COURT OF DELHI AT NEW DELHI. % Judgment Reserved on: 18 th November, 2015 Judgment Delivered on: 02 nd February, 2016

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1 *IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment Reserved on: 18 th November, 2015 Judgment Delivered on: 02 nd February, WP(C) 10240/2015 & CM No /2015 M/S BHARAT POWER CONTROL SYSTEMS... PETITIONER VERSUS GOVT. OF NCT OF DELHI & ORS.... RESPONDENTS Advocates who appeared in this case: For the Petitioner: For the Respondent: Mr M.K. Ghosh, Ms Tina Garg and Mr Rohit Dutta, Advocates. Mr V.K. Garg, Sr. Advocate with Mr Karunesh Tandon, Ms Noopur Dubey and Mr Harsh Singhal, Advocates for R-4. CORAM: HON'BLE MR. JUSTICE BADAR DURREZ AHMED HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJEEV SACHDEVA, J JUDGMENT 1. The petitioner has filed the present petition seeking quashing of the decision taken by the respondents no. 1 to 3 on of disqualifying the petitioner from the bidding process and for a mandamus to respondents no. 1 to 3 to re-conduct the tender process by allowing the petitioner to take part in the bidding/tender process. WP (C) 10240/2015 Page 1 of 11

2 2. It is contended that the petitioner is a sole proprietorship concern of Shri Bharat Bhushan Bali. As per the petitioner, Shri Bharat Bhushan Bali along with the sole proprietor of respondent no. 4, Shri G.S. Bakshi, had entered into a partnership on and the partnership deed dated was executed between the two. The business of the partnership was carried on under the name and style of M/s Labotek. As per the said partnership deed, both the partners were working partners and had 50% share in the losses and profits. It is contended that as per the partnership deed both the partners were to contribute equally towards the working of the said partnership firm. It is contended that both the partners, in fact, till the dissolution carried on the firm and contributed equally to the functioning of the said firm. 3. It is contended that the partnership was dissolved by deed of dissolution dated and Shri G.S. Bakshi took over the business as well as the goodwill of the erstwhile partnership and continued the business in the same name as its sole proprietor. Shri Bharat Bhushan Bali carried on the same business as a sole proprietor under the name and style of the petitioner Bharat Power Control Systems. 4. Respondent nos. 1 to 3 issued a notice inviting tender for Providing, Installation, Testing & Commissioning of 3 x 100 KVA UPS System (hereinafter referred to as the subject tender). The WP (C) 10240/2015 Page 2 of 11

3 respondent invited online item rate tender from specialized firms in the field of UPS system works fulfilling the said eligibility criteria in a two-bid system. The eligibility criteria as laid down by the NIT is as under: - 1. Contractors who fulfill the following requirements shall be eligible to apply. Joint ventures are not accepted. (a) Should have satisfactorily completed the works as mentioned below during the last Seven years ending previous day of last date of submission of bids. (Modified vide CM No. DG/MAN/293 dated ) (i) Or Or Three similar works each costing not less than 40% of the estimated cost put to tender two similar works each costing not less than 60% of the estimated cost put to tender one similar work costing not less than 80% of the estimated cost put to tender Similar work shall mean works of : Providing, Installation, Testing and Commissioning of UPS System with minimum capacity of single UPS as 80 KVA. The value of executed works shall be brought to current costing level by enhancing the actual value of work at simple rate of 7% per annum; calculated from the date of completion to last date of receipt of applications for bids. WP (C) 10240/2015 Page 3 of 11

4 5. The Petitioner, Respondent nos. 4 and 5 as also other bidders submitted their bids. The petitioner in its bid claimed benefit of the experience gained from M/s Labotek, the erstwhile partnership while being its partner as per the Clause of the CPWD Manual. 6. On , the petitioner asserted its claim of benefit of the experience gained from the erstwhile partnership firm being its partner. On , respondent no. 3 sought an explanation from the petitioner as to how Clause of the CPWD Manual was applicable. The petitioner again reiterated its stand by letter dated No further correspondence took place between the parties. 7. On , the respondents disqualified the petitioner from the bidding process. Aggrieved by the said decision disqualifying the petitioner from the bidding process, the present petition has been filed. 8. It is contended by the petitioner that the petitioner being an active partner of the erstwhile firm was entitled to claim benefit of the said experience gained and as such was not liable to be disqualified. Reliance is placed on the decision of the Supreme Court in New Horizons Limited Vs. Union of India (1995) 1 SCC The respondent nos. 1 to 3 and also respondent no. 4 have opposed the petitioner and have filed their written submissions. WP (C) 10240/2015 Page 4 of 11

5 10. The respondent nos. 1 to 3 have contended that the reliance placed by the petitioner on Clause was misplaced as the Clause was applicable only for normal works and the present tender was in respect of specialized works which was covered by Section 16 of the said manual which did not have any such condition. Respondent no. 4 in addition, took up the plea that since the entire goodwill of the erstwhile partnership was taken over by the Shri G.S. Bakshi. The work experience was also assigned to Shri G.S. Bakshi thus Shri Bharat Bhushan Bali could not claim any experience of the said firm. 11. Reference may be had to Clause which has been relied upon by the petitioner. The said clause reads as under: Past experience of work executed: A non-cpwd Contractor shall be eligible to tender for works based on the past experience gained from the works executed by the earlier firm (partnership firm) in the same proportion of share of the applicant in that partnership firm where the applicant was a partner earlier. (Modified vide OM DG/MAN/282 dt ) 12. Section 15 of the CPWD Works Manual 2014 of which is a part relates to normal works. Clause 15.8 of the said section refers to specialized works but notes that for specialized works section 16 be referred to. 13. Section 16 deals with tenders for specialized works and annual WP (C) 10240/2015 Page 5 of 11

6 rate contract system for maintenance and minor works. Section lists out the several specialized items/jobs for Civil/Electrical/Horticulture works and the entry at serial 40 of Annexure-II to the said section in respect of Supply and installation of UPS System and Servo Voltage stabilizers. 14. A reading of Section 16 clearly shows that the subject tender is in respect of specialized works covered under Section 16. Since the subject tender is covered in Section 16, clause would clearly not be applicable. 15. The question that arises now for consideration is whether the petitioner can de hors clause , claim benefit of the work experience gained as a partner of the erstwhile partnership firm. 16. To settle the controversy the difference in Section 15 and Section 16 vis-à-vis eligibility of bidders is to be considered. Section stipulates that tender documents for works costing upto Rs. 20 crores shall be invited only from contractors registered in the CPWD in the appropriate category and clause. However, sub-clauses 2, 3 and 4 of Clause grant power to the competent authority to relax the said condition and invite tenders from certain other categories of contractors. A reading of Section 15 clearly shows that for normal works the tender is to be invited from contractors registered in CPWD in the appropriate category and in certain situations from non CPWD WP (C) 10240/2015 Page 6 of 11

7 contractors. It is only in case the tender is invited from a non CPWD contractor that Clause is made applicable. In the present case, that is not the situation. 17. In contrast, under Section 16, which deals with specialized items of works, it is not necessary that specialized agencies who tender for work should be registered with Central or State Government engineering department. The requirements of experience and expertise are applicable to all the intending tenderers i.e., specialized firms as well as registered contractors. Tender papers are to be issued only after ascertaining from them, about their experience and expertise in the specialized field concerned. Section 16 further stipulates that the NIT shall specify the eligibility criteria as mentioned therein. 18. In the present case, the petitioner has been disqualified merely on the basis that the petitioner cannot claim experience from his earlier dissolved partnership. 19. It is not the case of the respondents that the petitioner s sole partnership firm is not a specialized firm, which deals in specialized items of works for which the tenders are invited. The only contention is that the petitioner cannot make use of the experience of the erstwhile partnership firm. 20. This contention of the respondents is squarely covered against WP (C) 10240/2015 Page 7 of 11

8 the respondents by the decision of the Supreme Court in New Horizon Limited case (Supra). Paragraph 23 of New Horizon Limited reads as under: 23. Even if it be assumed that the requirement regarding experience as set out in the advertisement dated inviting tenders is a condition about eligibility for consideration of the tender, though we find no basis for the same, the said requirement regarding experience cannot be construed to mean that the said experience should be of the tenderer in his name only. It is possible to visualize a situation where a person having past experience has entered into a partnership and the tender has been submitted in the name of the partnership firm, which may not have any past experience in its own name. That does not mean that the earlier experience of one of the partners of the firm cannot be taken into consideration. Similarly, a company incorporated under the Companies Act having past experience may undergo reorganization as a result of merger or amalgamation with another company, which may have no such past experience, and the tender is submitted in the name of the reorganized company. It could not be the purport of the requirement about experience that the experience of the company, which has merged into the reorganized company, cannot be taken into consideration because the tender has not been submitted in its name and has been submitted in the name of the reorganized company, which does not have experience in its name. Conversely, there may be a split in a company and persons looking after a particular field of the business of the company form a new company after leaving it. The new company, though having persons with experience in the field, has no experience in its name while the original company having experience in its name lacks persons with WP (C) 10240/2015 Page 8 of 11

9 experience. The requirement regarding experience does not mean that the offer of the original company must be considered because it has experience in its name though it does not have experienced persons with it and ignore the offer of the new company because it does not have experience in its name though it has persons having experience in the field. While considering the requirement regarding experience it has to be borne in mind that the said requirement is contained in a document inviting offers for a commercial transaction. The terms and conditions of such a document have to be construed from the standpoint of a prudent businessman. When a businessman enters into a contract where under some work is to be performed he seeks to assure himself about the credentials of the person who is to be entrusted with the performance of the work. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a company he will look into the background of the company and the persons who are in control of the same and their capacity to execute the work. He would go not by the name of the company but by the persons behind the company. While keeping in view the past experience he would also take note of the present state of affairs and the equipment and resources at the disposal of the company. (underlining supplied) 21. It is clear from the above, that the Supreme Court had held that the requirement regarding experience could not be construed to mean that the experience should be in the name of the tenderer only. The Supreme Court has also considered the situation where there is a split WP (C) 10240/2015 Page 9 of 11

10 in the company and persons looking after a particular field of the business form a new company after leaving it. The new company, though having persons with experience in the field, has no experience in its name, while the original company having experience in its name lacks persons with experience. The requirement regarding experience does not mean that the offer of the original company must be considered because it has experience in its name though it does not have experienced persons with it and ignore the offer of the new company because it does not have experience in its name though it has persons having experience in the field. 22. Applying the law as laid down by the Supreme Court to the facts of the present case, it is clear that Shri Bharat Bhushan Bali who was an active partner in the erstwhile partnership firm would be entitled to make use of the experience gained therein. The experience of Shri Bharat Bhushan Bali is accordingly liable to be considered by the respondent nos. 1 to The contention of the respondent no. 4 that since Shri Bharat Bhushan Bali assigned the goodwill and business to Shri G.S. Bakshi, proprietor of respondent no. 4, the experience also stood assigned, holds no merit. No person can assign experience. Experience is gained by individuals on account of their personal work and labour. Sale of goodwill only entails sale of name and reputation. Sale of goodwill does not tantamount to sales/transfer of experience. The experience of WP (C) 10240/2015 Page 10 of 11

11 Shri Bharat Bhushan Bali could not and cannot be deemed to have been assigned. 24. Since the experience of Shri Bharat Bhushan Bali gained by him as a partner of the erstwhile firm is liable to be taken into account, the rejection solely on the ground that as per the dissolution deed of the partnership, the business of the firm was agreed to be continued as a proprietorship by Shri G.S. Bakshi and all business including the goodwill were transferred to respondent no. 4, is not sustainable and liable to be set aside. 25. In view of the above, the rejection of the petitioner is held to be illegal and is set aside. The impugned decision dated disqualifying the petitioner from the bidding process is quashed. The respondent nos. 1 to 3 are directed to re-consider the bid of the petitioner by taking into account the experience gained by the petitioner as a partner of the erstwhile firm and to continue the tender process thereafter. The petition is allowed in the above terms leaving the parties to bear their own costs. SANJEEV SACHDEVA, J. FEBRUARY 02, 2016 BADAR DURREZ AHMED, J. rs WP (C) 10240/2015 Page 11 of 11