S.S. & COMPANY v. ORISSA MINING CORPORATION LIMITED  INSC 532 (28
H.K.Sema & Aftab Alam [arising out of SLP (C) NO.12003/2007] WITH
CIVIL APPEAL NO. 2228 OF 2008 [@ SLP (C) NO.12008/2007] M/s.Faridabad Gurgaon
Minerals ...Appellant Versus Orissa Mining Corporation Limited ...Respondent
REPORTABLE AFTAB ALAM, J.
Leave granted in both the matters.
These two appeals, taken together for the sake of convenience, question the
validity of two different clauses in the eligibility criteria in a Notice
Inviting Tenders (NIT), issued by the respondent-Orissa Mining Corporation
Limited (hereinafter referred to as the Corporation). The appellants
in the two appeals make a grievance that the two clauses were designed to
exclude them from consideration. They first went to the High Court of Orissa
challenging the validity of the clauses and the rejection of their respective
tenders on that basis. M/s.
S.S. & Company challenged the validity of Clause 8(i) of the NIT in
W.P.(C) No.7001/2007, (giving rise to SLP (C) No.12003/2007). M/s.Faridabad
Gurgaon Minerals challenged Clause 8(vii) of the NIT in W.P. (C) No.7002/2007,
(giving rise to SLP (C) No.12008/2007).
A Division Bench of the High Court by separate judgments, dated July 12,
2007 dismissed both the writ petitions. The judgments of the High Court are
brought in appeal before this Court.
The appellants in each of the two appeals are proprietorship firms owned and
controlled by a father and son duo and the controversy in the two cases relates
to the grant of contract for raising, calibration and transport of iron ores at
Daitari Iron Ore Mines of the respondent-Corporation.
The Corporation issued NIT No.16 on November 11, 2004 for grant of contract
for raising, calibration and transport of iron ore at Daitari mines for a three
year period. Here, it may be noted that in NIT 16 sub-clauses (i) and (vi) of
Clause 8 relating to eligibility criteria were as follows:- 8. The
eligibility criteria of the tenderers shall be as follows:- Only such tenderers
who fulfil the following eligibility criteria shall participate in the tender:-
(i) The agency must have successfully executed similar work (as mentioned in
NIT/raising work(s) of ore/minerals) for a minimum amount of 30% in case of a
single work or 50% in case of two works of the value of work shown in column
No.5 of NIT in any one financial year during the last three years including
(vi) Any agency who is already executing similar and identical work in any
mine will not be allowed to take up the second work in the same mine and such
agency will not be allowed to participate in the tender.
However, if the work of the said agency is due to end within six months of
the date of issue of this NIT and there is no possibility that the work
tendered for and the existing work in hand will operate concurrently, this
restriction will not be applicable to the concerned agency. (The above
quoted clauses in their amended form are now the subject matter of
In response to NIT 16, dated November 11, 2004, M/s.Faridabad Gurgaon
Minerals (FGM) was the successful bidder and by letter, dated January 29, 2005
issued by the Corporation it was awarded the work initially for a period
of one year for a quantity of 12.00 lakh MT. on rates as indicated in that
letter. In that letter, it was further stipulated that the awardee might be
considered for extension for second and third year working subject to
satisfactory performance in the preceding year(s) based on the terms and
conditions mentioned in the tender schedule. The first year period of the
contract commenced from February 25, 2005 and came to end on February 24, 2006.
The parties are also in agreement that the contract was extended for the second
year, i.e., upto February 24, 2007 but as regards the third year, the two sides
are in serious dispute. The Corporation takes the stand that the appellant was
given work for the third year as well and the work period would come to end on
February 24, 2008. The appellant FGM, however, maintains that its work in Daitari
Mines under NIT 16 came to end on June 30, 2007.
Even while the contract awarded to FGM under NIT 16 was subsisting, the
Corporation issued NIT No.65 on July 7, 2006 for grant of another similar
contract for raising, calibration and transport of iron ores from Daitari Iron
Ore Mines. FGM was not eligible to take part in the tender process in view of
the bar of clause 8(vi) but M/s.S.S. & Company (SSC), the other appellant
before the court gave its tender for the work under NIT 65. For some reasons, however,
its tender was not accepted and it took the matter before the Orissa High
Court. During the pendency of the writ petition, the Corporation cancelled NIT
65 and issued NIT 75, dated November 18, 2006 for the same work.
This rendered the writ petition filed by SSC infructuous and it was
withdrawn. NIT 75 had a similar fate. The tender made by SSC was not accepted.
The dispute was taken to the Orissa High Court but the Corporation cancelled
NIT 75 thus rendering the writ petition infructuous. Here, it may be noted that
both NITs 65 &
75 had clauses 8(i) and 8 (vi) exactly in the same terms as in the earlier
NIT 16, dated November 11, 2004 (which have been reproduced above).
After cancellation of NIT 75, the Corporation issued NIT 85, dated May 25,
2007 which is the subject-matter of the controversy in the two cases. NIT 85
had the two clauses 8 (i) and 8 (vii) in slightly amended forms as follows:-
8.The eligibility criteria of the tenderers shall be as follows:
Only such tenderers who fulfil the following eligibility criteria shall
participate in the tender:- (i) The agency must have successfully executed
similar work (as mentioned in NIT/raising work(s) of ore/minerals excluding
Minor Mineral) for a minimum amount of 30% in case of a single work or 50% in case
of two works of the value of work shown in column No.5 of Sl. No.2 of NIT in
any one financial year during the last three years including 2006-07.
(vii) The agency who is already executing the work in a mine of OMC Ltd.
will not be allowed to take up the second work in the same mine and such Agency
will not be allowed to participate in the tender. It is thus to be seen
that in sub-clause (i) the words excluding Minor Mineral was added to
the portion in parenthesis, making it explicitly clear that raising of Minor
Mineral would not be acceptable as experience in similar work.
Likewise, in sub-clause (vii), the overlapping margin of six months was done
away with and as a result the tenderer was required not to have any
pre-existing work in Daitari Mines on the last date for submission of tender
SSC was hit by sub-clause (i) and FGM that was working in Daitari Mines on
the basis of the previous contract, by sub-clause (vii). Both the appellants
fancied that the two sub-clauses were specially tailored with the sole intent
and purpose to exclude them from consideration. They, accordingly, went to the
High Court making loud protests and alleging mala fide.
FGM filed Writ Petition (C) No.7002 of 2007, before the High Court stating
that the overlapping margin of six months for a pre-existing contract to work
in the same mine was dropped from NIT 85 of 2007 with the mala fide intent to
exclude it from consideration. It was submitted that on May 25, 2007, the date
on which the notice was issued and on June 11, 2007, the last date for
submission of tenders in response to the notice, the appellant alone was
working in Daitari Mines and the sub- clause was only aimed to exclude it from
participating in the tender process. It was also pointed out that previously
three successive notices allowed the margin of six months and there was no
reason to do away with the margin period.
It was further contended that the amendment in the sub-clause, disallowing
anyone with a pre- existing contract in the same mine to participate in the
tender process was arbitrary as it would serve no purposes, much less any
The High Court by a well reasoned judgment and order negatived all
contentions raised by the appellant and dismissed the writ petition. It held and
found that the appellant completely failed to establish any mala fides and in
paragraph 20 of the judgment observed as follows :
Insofar as question of malice or bias is concerned, no case is made out
in the writ petition. Though some vague allegations are scattered in the writ
petition in different paragraphs, there is no serious pleading of malice or
mala fide or bias against the authorities of the Corporation. On merits,
the High Court held that there was a perfectly good reason for doing away with the
six months margin for a pre-existing contract in the same mine.
The High Court also took note of the case of the respondent-Corporation that
by communication, dated February 21, 2007, the period of the appellants
contract was extended upto February 24, 2008. According to the Corporation, the
letter made it clear that the contract was extended for the third year too and
the appellant was awarded the work of raising 20.00 lakh metric tons of Ore
from February 25, 2007 to February 24, 2008 on the terms and conditions as
provided in the agreement.
Since the appellant would be working the mines till February 24, 2008, it
could not take part in the tender process even if the six months margin was
still there. The High Court accepted the case of the respondent-Corporation in
this regard and cited it as one more reason for taking the view that there was
no substance in the appellants grievances.
Mr.Mehta, learned counsel for the appellant FGM, submitted that the letter
dated February 21, 2007 (referred to in the High Court judgment) could not be
taken as extension of the contract for the third year under NIT 16.
The letter, dated February 21, 2007 was written in response to the
appellants request for renewal/extension of the contract for the third
year and it conveyed the Corporations decision to award the work to the
appellant for the third year extension with effect from February 25, 2007 to
February 24, 2008 under the same terms and conditions of the agreement. This
letter was followed by another letter, dated May 25, 2007 (which according to
Mr.Mehta was overlooked by the High Court). By this letter the Corporation
awarded the work to the apppellant though partly, to be precise from
February 25, 2007 to June 30, 2007 indicating the target (of extraction) to
be achieved and the work value as per the rate under the tender schedule. The
letter was described as the letter of intent and it asked the
appellant to make certain deposits by June 30, 2007 for drawing up the
agreement for the third year period of the contract.
In paragraph 7 of the letter it was clearly stipulated that all other terms
and conditions indicated in the tender schedule would remain unchanged and
would apply mutatis mutandis.
Mr.Mehta submitted that this letter was simply a work order and neither this
letter nor the earlier one of February 21, 2007 could mean the extension of the
contract under NIT 16 for the third year.
Learned counsel referred to Annexures P-8 and P-9 which are copies of
agreement No.4/2005-2006 and agreement No.4/2006-2007 for the periods February
25, 2005 to February 24, 2006 and February 25, 2006 to February 24, 2007
respectively. Learned counsel submitted that unlike the two previous years no
formal agreement was drawn up for the third year of the contract period from
February 25, 2007 to February 24, 2008 and, therefore, the High Court was
clearly in error in accepting the claim of the Corporation that the
appellants contract under NIT 16 was extended for the third year period
and it would be subsisting till February 24, 2008.
In our view, the submission is quite mis- conceived. The materials on record
plainly indicate that the appellant was trying to find ways to get out of the
contract for the third year period because the rates under the tender schedule
were no longer profitable to it. We were shown the Corporations letter,
dated June 29, 2007 by which it was pointed out to the appellant that according
to the terms of the tender the contract was for a period of three years and it
would expire on February 24, 2008. It was further stated in the letter that the
appellant had badly defaulted on the production target for the first quarter of
2007-2008 and in terms of clause
1.8 of the tender schedule it was asked to clarify its final stand and to
indicate its production plan for the remaining tender period i.e. till February
24, 2008. To the Corporations letter, the appellant gave a highly evasive
reply by its letter of July 4, 2007. Alluding to Writ Petition (C) No.7002/2007
it stated that the matter was sub-judice before the High Court and on that plea
it declined to enter into any correspondence on the issue raised by the
Corporation. It is to be noted here that the Writ Petition arose from a
controversy relating to the eligibility clause in NIT 85/2007 and it had nothing
to do with the production targets under NIT 16/2004.
Be that as it may, suffice it to note that on the appellants request
for renewal/extension of the contract the Corporation had taken the decision to
award the work in its favour for the third year extension with effect from
February 25, 2007 to February 24, 2008 (vide letter dated February 21, 2007).
In pursuance of the decision the Corporation further issued the letter dated
May 25, 2007 asking the appellant to make the required deposits by June 30,
2007 for drawing up the agreement for the third year under the contract. It is
thus manifest that, according to the Corporation, the appellant-company had the
right to work the mine till February 24, 2008 and on its own showing it was
actually engaged in working the mine till June 30, 2007.
Here, it is to be noted that sub-clause (vii) of clause 8 is aimed at
preventing the same party from executing two different works in the same mine
at the same time. The clause does not even refer to a formal contract and if
someone should be working the mine, may be on the basis of a work order issued
by the Corporation, that in itself might be sufficient, in certain
circumstances to attract clause 8(vii), even in the absence of a formally drawn
up contract. Seen thus, the whole issue as to whether or not a formal contract
for the third year of the tender period was drawn up in favour of the appellant
would appear to be of no relevance. The fact of the matter is that the
appellant on its own showing was working the mine upto June 30, 2007.
Further, in view of the decision of the Corporation it had the right to be
there upto February 24, 2008.
Therefore, the High Court was not incorrect in observing that the appellant
would have been barred from taking part in the tender process even if the six
months margin was retained in the eligibility clause.
Furthermore, the question whether the appellant had the right to stay in the
mine till February 24, 2008 or its work there came to end on June 30, 2007 has
relevance only on the issue of mala fide. Otherwise, it is always open to the
Corporation to issue a tender notice, at any time, according to its needs, and
to introduce an eligibility clause in the tender notice or to delete from it
any pre-existing one as it might best serve its purpose. Hence, the controversy
with regard to the outer limit of the appellants presence in the mine on
the basis of the earlier contract under NIT 16 has no relevance sans the
allegation of mala fide.
Now, we will proceed to examine the case of the appellant in this regard. On
behalf of the appellant, it is alleged that the overlapping margin of six
months in clause 8(vii) was dropped with the sole intent to keep it out of the
tender process. In support of the allegation three arguments are advanced on
its behalf. One is that on May 25, 2007, (when NIT 85 was issued) and on June
11, 2007 (the last date for submission of tender) the appellant alone was
working the mine. The appellants work in the mine, according to its
assertion would have come to end on June 30, 2007. The eligibility clause was,
therefore, so tailored as to render it disqualified by 19 days. The second
argument is that the change in clause 8(vii) was made for the first time. In
the earlier tender notices the same eligibility clause allowed a margin period
of six months but it was done away with in order to exclude the appellant who
had only 19 days presence left in the mine. The third argument advanced on
behalf of the appellant is that the deletion of the six months margin is otherwise
completely arbitrary and it serves no reasonable purpose.
The first two circumstances are woefully inadequate to bring home the grave
charge of mala fide and the High Court was quite right in holding that the
appellant completely failed to establish its case in that regard. It is
axiomatic that the Corporation is the best judge of its interests and needs and
it is always open to it to suitably modify or change the eligibility criteria
so as to best serve its purposes. Whenever a change is introduced in the
eligibility criteria either by introducing some new conditions or restricting
or altogether doing away with certain previous concessions it might hurt the
interests of someone or the other but for that reason the change(s) made in the
eligibility criteria cannot be labelled as mala fide. The first two arguments
advanced on behalf of the appellant thus completely fail to show any mala fide
and we now proceed to examine the third argument advanced on its behalf.
As noted above, on behalf of the appellant it is contended that dropping
away of the six months margin does not serve any purpose whatsoever but it only
ensured the appellants exclusion.
On the other hand, the Corporation gives a very reasonable and valid
explanation for the change made in the eligibility clause. In paragraph 4 of
counter-affidavit filed by the Corporation it is stated as follows :
That the above condition was included in the Tender Notice because if
an agency which is working at a particular rate in a particular mine is allowed
to operate at a different and higher rate under a different Contract but in the
same mine there is every possibility of the said agency claiming payment in
respect of the work done under the earlier contract at rates stipulated under
the new Contract. In other words, the same agency will operate in the same mine
with two different rates for similar work i.e. Raising, Calibration and
Transportation of Iron Ore and fines and there is every possibility of mixing
up the Ores which would be raised and transported at two different rates.
We find that the explanation given by the Corporation is perfectly reasonable
and if any illustration is needed it is to be found in the facts of the case in
The appellant was given the three years contract under NIT 16 at the
following rates :
ACCEPTED RATE Rate per MT in Rs.
Description of work 1st Year 2nd Year 3rd Year 1.
Drilling, blasting, excavation, transport of ROM to Dry Screening
Screening Plant, crushing and screening of ROM to 10-30/10- 40mm CLO and
67.01 70.00 75.00 2.
Transport of 10-30/10- 40mm CLO and fines from Dry Screening Plant/Crushing
and Screening Plant to a) Baliparbat Stockyard b) Daitari Railway siding 30.80
35.20 31.80 36.20 33.46 39.18 There was no escalation clause in the contract
and from the record it is manifest that the rates on which the appellants
tender was accepted were no longer profitable for it, at least in third year,
and the appellant was not at all interested in carrying on the work for the
third year on the rates given in the tender schedule. In paragraph 2 of the
Corporations counter-affidavit it is stated that the appellant had
completely failed to meet the production target and it was badly in default.
The relevant extract from paragraph 2 of the affidavit is as follows :
However, the respondent (sic) could not achieve the target under said
contract as indicated hereunder :
Period Target Achieved Quantity Quantity (Quantity in MT) 1st Year 12.00
lakh 03.75 lakh 2nd Year 20.00 lakh 13.05 lakh 3rd Year 09.22 lakh 01.16 lakh
(Upto 19th July, 07) Since 19th July, 2007, the Petitioner has virtually
stopped the work on the ground that the rates are low even though there is no
escalation clause in the Contract and the Petitioner is bound to complete the
contract at the contracted rates. The non-achievement of the target by the
Petitioner has resulted in a loss in terms of sales revenue to the tune of
Rs.115.90 crore. In its rejoinder affidavit the appellant has sought to
give explanation for not being able to meet the targets during the first and
the second year of the contract period. It has not given any explanation for
the third year and has gone on to compare its performance with another
contender M/s.Arun Udyog. Any comparison with M/s.Arun Udyog is besides the
issue. What is relevant here is that the appellant was hugely in default and
yet it was insisting on taking part in NIT No.85/2007. In the aforesaid
circumstances the consequences of the appellant getting the contract under NIT
85/2007 would have been two-fold : one, that it would operate the same mine at
the same time under two different contracts with widely different rates and the
other, that it would be charging much higher rates for extraction of ores that
it was obliged to extract at much lower rates under the previous contract. The
Corporation can hardly be faulted for protecting itself against entering into
such a bargain with anyone.
Thus, on a careful consideration, we are fully satisfied that doing away
with the six months margin in clause 8(vii) was not arbitrary or unreasonable,
nor it had any mala fide intent.
For the reasons discussed above, we find no merit in the appellants
(FGMs) case.The High Court has taken a perfectly correct view of the
matter and it warrants no interference by this Court.
M/s. S.S.& Company (SSC) Mr. R.F. Nariman, learned senior counsel
appearing for the SSC also began his submissions by alleging, that the
amendment in clause 8(i) of NIT 85 by insertion of the words excluding
minor minerals was mala fide: its sole purpose was to exclude SSC and to
unduly favour another bidder, namely, M/s. Arun Udyog Ltd. In support of the
plea of mala fide Mr. Nariman advanced three arguments. Learned counsel stated
that though being the lowest bidder in response to the earlier two NITs 65 and
75, SSC was not awarded the work because the concerned officials in the
Corporation wanted to give it to Arun Udyog whose bids were much higher than
the appellant. When the appellant took the matter arising from NITs 65 and 75
to the High Court, on each occasion the bid process was aborted in the middle
and finally NIT 85 was issued with the offending amendment. He next submitted
that the amendment made in the clause was a one time exclusionary measure: it
was not there in the earlier NITs and it is unlikely to find place in the
future NITs. He also submitted that the impugned amendment in clause 8(i) of
NIT 85 was made at the instance of the Managing Director and without the prior
approval of the Corporations Board of Directors.
The Corporation strongly denied that the object of the amendment in clause
8(i) of the NIT was to disqualify the appellant and thereby help Arun Udyog in
securing the contract. In the counter affidavit filed in the High Court on its
behalf it was pointed out that the appellants technical bid in response to
NIT75 was rejected because it had no past experience of similar work as
required under the NIT. Thereafter the price bid of the technically qualified
tenderer, i.e., M/s. Arun Udyog Ltd. was opened on 18.11.2006. But the
Corporation decided to cancel NIT75 and to issue a fresh NIT so that it may
have more competitive bids for consideration.
M/s. Arun Udyog Ltd. was not given the work under NIT75 even though the
appellant was out of reckoning.
However, the High Court, even without referring to the averments made in the
Corporations affidavit, declined to entertain the appellants
allegation that M/s. Arun Udyog Ltd.
was being shown undue favour and the appellant was sought to be ousted to
favour that company observing as follows:
In paragraph 17 of the writ petition there are some allegations that
the opposite party wants to favour and award the tender to one M/s.Arun Udyog
Since M/s.Arun Udyog Limited is not impleaded in this writ petition the
allegations against it cannot be taken into consideration. The second and
the third allegations in support of the plea of mala fide were also rebutted by
the Corporation by filing before the High Court an affidavit sworn by the Addl.
General Manager (Mining). The High Court took note of the averments made in
that affidavit in paragraph 8 of its judgment as follows:
Another affidavit dated 2.7.2007 was also filed by the Additional
General Manager (Mining) of the Corporation. It has been stated therein that
the Corporation in a year floats about 120 nos. of tenders to undertake mining
and related activities in different minerals with widely varying conditions and
the Board of Directors lays down the general guidelines for preparing the
special terms and conditions for different types of words. In this connection,
the broad guidelines of special terms and conditions were approved by the Board
of Directors on 11.6.2007. It has been stated in the said affidavit that the
same is general guidelines and incorporation of any other condition appropriate
for different work can be made. It has also been stated in the said affidavit
that in future in the eligibility criteria the word excluding minor
mineral will be included while floating NIT if the nature of work demands
for the same. It was also stated in the affidavit filed by the Managing
Director that Tender Notice No.85 dated 25.5.2007 was issued after its clauses
were recommended by the Managing Director of the Corporation vide notes dated
15.5.2007 were duly approved by the Chairman of OMC. The High Court thus
brushed aside the plea of mala fide raised by the appellant.
We are in complete agreement with the view taken by the High Court. As a
matter of fact, for rejecting the allegation that the impugned amendment was
introduced in clause 8(i) of the NIT at the instance of the Managing Director,
without obtaining prior approval of the Board of Directors we need not even go
to the rebuttal affidavit filed by the Addl. General Manager. The Board of
Directors is the apex policy making body. It may lay down broad guidelines but
it is impossible to conceive that all the NITs (over a hundred in number)
issued by the Corporation for different purposes every year should come before
it for consideration and approval of their respective clauses or any amendment
proposed in any clause in any of the NITs. [We fail to see any good reason why
the matter should not be finalized by the Managing Director or, depending upon
the nature of the contract, even at some lower level]. The normal work of any
organization or government department would be seriously hampered if every
tendering party would claim the right to raise objection that one or the other
clause in a NIT or any amendment introduced in any of its clauses did not have
the prior sanction of the highest policy making body of the organization. In
this case particularly there is no occasion to go into that question as there
is neither any material to suggest, even remotely, that the Managing Director
harboured any malice against the appellant nor is the Managing director made a
party to this case in his personal capacity.
This brings us to consider Mr.Narimans submissions on the substance of
the amendment in the clause in question. Here we may observe, in fairness to
the counsel, that though raising the allegation of mala fide with some
vehemence in the beginning, as he proceeded with the submissions, he completely
shifted the focus and argued mainly on the merits of the change introduced in
clause 8 (i) of the NIT. He assailed it as wholly unreasonable, arbitrary and
as serving no purpose. Mr. Nariman contended that the distinction between minor
and major minerals was illusory and hence, the exclusion of any past experience
of working any minor minerals was quite unreasonable and arbitrary and it had
no relation to the object that was claimed to be achieved. Learned counsel
elaborately referred to various provisions of the Mines and
Minerals (Regulation and Development) Act, 1957
and the Mineral Concession Rules, 1960.
He referred to the long title, the preamble and section 2 of the Act and
submitted that from the latter provisions of the Act it would be evident that
the control of the Union over the regulation of mines and minerals was cent per
cent. He then referred to section 3 clauses (a) and (e), sections 4 to 13, 14,
15 and sub-section 3 of Section 15 of the Act. He also referred to rule 17 of
the Rules that provides that sand was not to be treated as minor mineral when
used for certain specified purposes. In light of the provisions of the Act and
the Rules, learned counsel submitted that the distinction between major and
minor minerals did not depend upon hardness or softness or the technology of
excavation. Illustrating the point learned counsel submitted that quartz and
granite though, minor minerals being so notified under Section 3(e) of the Act,
are very hard substances and on the other hand gypsum, talc and china clay,
though major minerals are relatively much softer substances. Further referring
to rule 17, learned counsel submitted that whether a substance was major
mineral or minor mineral depended on its end user. In case, sand was used for
any of the purposes specified in rule 17 of the Mineral Concessions Rules it
would qualify as major mineral and in that event any past experience in
excavating/lifting sand would not be hit by the impugned exclusionary amendment
in clause 8(i) of the NIT.
Mr. Nariman also referred to the decision of of Gujarat & Ors. [1996
Suppl. SCC 20 paras 29 and 30]. He submitted that in view of the statutory
scheme of the Act as explained in the decision in D.K.Trivedi the distinction
sought to be made between major and minor minerals and the exclusion of any
past experience in the excavation of minor mineral was wholly untenable and
Mr. Nariman also cited before us some decisions dealing with the scope of
judicial review in matters of grant of contract by public bodies but we see no
need to mention those decisions here.
Mr. P.P.Rao and Dr. R.Dhawan, senior advocates appearing for the Corporation
in the two cases strongly refuted the submissions made on behalf of the
appellant. Mr. Rao submitted that in light of the past experience the
Corporation felt the need to introduce the amendment as a measure of quality
control. He referred to the Corporations affidavit filed before the High
Court where it is stated:
Iron ore being too hard, drilling and blasting and strict quality
control measures will be essential which cannot be compared with mining of
minor minerals. To bring required expertise for undertaking efficient
iron ore mining, the above change in eligibility criteria has been made. Mr.
Rao further submitted that the amendment was fully in accord with the
guidelines laid down by the Board of Directors and it was wrong to say that it
was introduced at the instance of the Managing Director. In support of the
submission he referred to several documents but it is not necessary to advert
to them in view of the discussions made above.
Mr. Rao also submitted that the appellants turn over for the past years
was far below the requirement of the NIT and on that score also the appellant
was not eligible to take part in the bid.
Dr. Dhawan submitted that as in the case of FGM, once the plea of mala fide
is held to be unfounded, practically nothing remains of the appellants
challenge to the substance of the amendment. Learned counsel controverted the
submission made on behalf of the appellant and contended that the distinction
between minor and major minerals is a statutory distinction of far reaching
significance. He submitted that both the Statute and case law recognized the
differences between minor and major minerals. He referred to paragraph 22 of
the decision in D.K. Trivedi where it was observed as follows:
..It is pertinent to note that the term minor minerals came
to be defined in a statute for the first time by clause (e) of Section 3 of the
1957 Act. In addition to the minor minerals mentioned in the said clause (e),
boulder; shingle; chalcedony pebbles used for ball mill purposes only;
limeshell, kankar and limestone used in kilns for manufacture of lime used
as building material; murrum; brick-earth;
Fullers earth; bentonite; road metal; reh- matti; slate and shale when
used as, building material; marble; stone used for making household utensils;
quartzite and sandstone when used for purposes of building or for making road
metal and household utensils; and saltpetre, have been declared to be minor
minerals by various notifications issued by the Central Government.. He
also referred to paragraph 33 of the decision where it was observed as follows:
..As seen from the definition of minor minerals given in clause (e) of
Section 3, they are minerals which are mostly used in local areas and for local
purposes while minerals other than minor minerals are those which are necessary
for industrial development on a national scale and for the economy of the
country. That is why matters relating to minor minerals have been left by
Parliament to the State Governments while reserving matters relating to
minerals other than minor minerals to the Central Government.
Sections 13, 14 and 15 fall in the group of sections which is headed
Rules for regulating the grant of prospecting licenses and mining
leases. These three sections have to be read together. (Emphasis
added) In light of the above, Dr. Dhawan submitted that there is a fundamental
difference between minor and major minerals in regard to their use. Minor
minerals like sand were extracted and consumed locally. On the other hand,
major minerals were essential for the industrial development and the economic
growth of the country. This vast difference in their purpose and use was
naturally reflected in their relative importance and the nature of mining.
Learned counsel submitted that the importance of iron ore could not be
over-stated. The production and consumption of steel (the source of which is
iron ore) is one of the indices of economic growth of a country. Iron ore,
apart from being required for production of iron and steel at the national
level, was also exported to international markets. Its extraction, therefore,
apart from other things, requires to be carried out under far stricter quality
control measures. It would be, therefore, wholly inappropriate to compare the
mining of iron ore with the lifting and excavation of sand or other minor
We find substance in Dr. Dhawans submission and we are unable to accept
the arguments advanced on behalf of the appellant that any distinction between
minor and major minerals was illusory and the amendment in the clause in
question, based on the distinction between the two, was arbitrary and did not
serve any purpose.
We have noted the submissions of the two sides and have also said that on
the issue whether there are any differences between minor and major minerals we
are inclined to accept the position taken by Dr. Dhawan. But we think that in
the context of the case an elaborate analysis of the provisions of the MM
(R&D) Act and Mineral Concession Rules to bring out the distinction between
minor and major minerals is quite misconceived. We think it would be a mistake
to see the NIT through the prism of the Act and the Rules.
The NIT should not be viewed in the highly pedantic and legalistic manner as
suggested by Mr. Nariman but it should be read and understood for what it is.
It is a notice issued by the Corporation which is engaged in the business of
mining. The Corporation owns a number of mines and wishes to give the work of
raising, calibration and transport of iron ores from its mines on contract to
an outside agency. It would be truism to say that the Corporation knows best
the exact nature of its work and it is the best judge to say what is and what
is not comparable to it. The expression excluding minor minerals used
in the eligibility must, therefore, be viewed as commonly understood in the
mining/industrial and commercial world. What the clause intends to convey is
that the extraction of iron ore requires certain degree of technical expertise
and competence and in order to have the required degree of competence the
bidder must have some past experience of similar kind of work, clarifying
further that working of minor minerals would not be accepted as qualifying
experience/sufficient expertise for the purpose of the NIT. The distinction
between minor and major minerals is well-known to the mining/industrial and
commercial world and anyone engaged in the business would know what the
eligibility clause in the NIT demands without referring to the statute and case
law and any abstruse arguments based thereon.
There is yet another reason, weightier than the previous ones, for rejecting
the appellants challenge to the amendment made in the eligibility clause.
A grievance against the amendment, either based on the plea of mala fide or on
the substance of the amendment can only be raised by someone whose position
gets adversely affected by the amendment.
The basic question therefore is how far the appellant can be said to be
affected by the amendment in actual terms. Clause 8(i) is simply the well known
and the well established experience clause. In its unamended form as contained
in NITs 65 and 75 it required the bidder to have some past experience of the
work under contract. In other words, the bidder was required to have
successfully executed in the past some work similar in nature to the one being
the subject matter of the contract. In NIT 85, which is for raising,
calibration and transport of iron ore the clause in question stipulated that
the tenderer must have past experience of similar work and made it further
clear that working of minor mineral would not be accepted as similar in nature
to the work under the NIT. It is thus manifest that the insertion of the words
exclude mine and mineral does not bring about any alteration or
change in the basic experience clause. It simply makes it clear and explicit
that the working of any minor mineral is not the same as raising, calibration
and transport of iron ore at Daitari Mines. It may be noted here that in the
affidavit filed before the High Court on behalf of the Corporation it was
stated as follows:
Some changes in the eligibility criteria of NIT No.85 in comparison to
NIT No.75 have been approved. In clause 3(i) excluding minor minerals
has been added in the 2nd line of the clause after the word minerals. Iron ore
being too hard, drilling and blasting and strict quality control measures will
be essential which cannot be compared with mining of minor minerals.
To bring required expertise for undertaking efficient iron ore mining, the
above change in eligibility criteria has been made. Let us now examine how
far the petitioner SSC can feel aggrieved by what it describes as amendment in
the clause in question. The appellants own statement in regard to its
experience is to be found at Annexure P-1 in which it gives description of five
different kinds of work.
The works at Sl.Nos.1 and 2 are described as follows:
Drilling, Blasting, Excavation, Loading and transportation of Sand and
Lumps deploying HEMM from the leasehold area of Faridabad Yamuna Sand Mines of
S.S. & Company (M/s. SSC).
The other three works related to handling of materials like Rock Phosphate,
Gypsum, Copper Concentrate, flux, slag and material handling work at Zinc
On the basis of the appellants own statement submitted along with the
tender documents, the Technical Committee in its report dated June 11, 2007,
noted as follows :
M/s.S.S.& Co. has submitted experience certificate for working in
Yamuna Sand Quarry in the district of Faridabad and other minor minerals
including handling in the Plant. As per the eligibility criteria of NIT under
clause 8(i) the experience of the agency is not at par with the eligibility of
NIT. We are unable to see any error much less any unreasonableness in the
view taken by the Technical Committee and in rejecting the appellants
tender on that basis. It does not require much imagination to hold that the
work of lifting of sand from a riverbed or a sand quarry is not similar in
nature to the work of raising, calibration and transport of iron ore.
It is significant to note here that the appellants tender in response
to NIT75 that did not contain the expressions excluding minor mineral
was also rejected at the stage of technical bid since it did not satisfy the
eligibility clause of having previously done some work similar in nature to the
work under contract.
It is thus evident to us that the appellant-SSC did not satisfy the
eligibility criteria with regard to past experience even in terms of the
unamended clause 8(i). Had the appellant been qualified in terms of the
unamended clause and faced exclusion only as a result of the amendment in the
criterion it might have been open to it to assail the introduction of the
amendment. But that is not the case here. As noted above, the appellant was
liable to be excluded, and was in fact excluded, even under the unamended clause
8(i) and, therefore, all arguments either based on mala fide or on the
substance of the amendment lose all their relevance.
Thus on a careful consideration of all the materials produced before the
court and the submissions advanced by the two sides we find no merit in the
case of SSC either.
Both the appeals are accordingly rejected but with no order as to costs.