BHARAT SANCHAR NIGAM LTD. versus TELEPHONE CABLES LTD.

Citation: [2010] 3 S.C.R. 291 · Decided: 22-01-2010 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2010) 3 S.C.R. 291 
BHARAT SANCHAR NIGAM LTD. 
v. 
TELEPHONE CABLES LTD. 
(Civil Appeal No. 868 of 2010) 
JANUARY 22, 2010 
[R.V. RAVEENDRAN AND K.S. RADHAKRISHNAN, JJ.] 
Arbitration and Conciliation Act, 1996: ss. 7 and 11 -
Government contracts - Tender - Allegation of arbitrariness 
A 
B 
in tender process - Aggrieved bidder filed application for C 
referring matter to arbitration - Held: On facts, documents 
show that arbitration clause was applicable only to contract 
awarded by placing a purchase order and not in regard to any 
dispute to the tender or bid or non-placing of purchase order 
- Thus, arbitration clause did not exist in regard to tender D 
stage dispute or pre-contract differences, at a stage when there 
was no privily of contract - Since a purchase order was not 
placed, there was no contract or agreement and the terms of 
arbitration clause did not come into existence - Government 
contracts - Tender. 
E 
Judgment/Order: Observations of courts reserving liberty 
to litigant to seek further remedy - Duty of court while making 
such observations - Held: Courts should take care to ensure 
that reservation of liberty is made only where it is necessary 
- Such reservation should always be subject to a remedy F 
being available in law, and subject to remedy being sought 
in accordance with law - Such liberty should not be allowed 
to be misused by litigants. 
Public undertakings: Problems faced by public G 
undertakings - Discussed. 
On 27.3.2001, the appellant invited bids for supply of 
441 LCKM of cables. The selected bidders were to be 
291 
H 
292 
SUPREME COURT REPORTS 
[2010] 3 S.C.R. 
A 
arranged in the decreasing order ·of 'vendor rating' and 
the bidder with highest Vendor Rating (V-1) was to be 
considered for placing the order for about 30% of the 
tendered quantity and balance quantity was to be 
distributed amongst the remaining selected bidder in ratio 
B 
of their Vendor Rating. 
There were several bidders including the respondent 
and NICCO. Appellant awarded V-1 rating to NICCO. 
Respondent was treated as one of the 'other bidders' and 
was placed order for a quantity of 0.536 · LCKM. 
C 
Respondent filed writ petition alleging that the appellant 
had arbitrarily adjudged NICCO as the person with the 
highest Vendor Rating thereby pushing it down to the 
category of 'other bidders' which adversely affected the 
size of its order. 
D 
On 29.4.2004, High Court allowed the writ petition 
holding that assessment of Vendor Rating done by the 
appellant in regard to NICCO was not proper and directed 
the appellant to redo the Vendor Rating by following the 
E 
formulae laid down in the tender document, as indicated 
in the judgment. When the High Court passed judgment, 
the contracts were already awarded in respect of most 
of the tendered quantity and only a negligible quantity 
remained, therefore, it issued the direction that if on re-
F 
assessment the respondent was rated as V-1, then it 
should be given the benefit in the balance supplies that 
were yet to be made. The High Court then observed that 
if after adjusting the balance amount, the respondent was 
still ~ntitled to further supplies then it would be open to 
G it to pursue its remedies against the appellant for 
compensation/damages as available to it in law. 
H 
The Special Leave Petition filed against the judgment 
of High Court came to be dismissed and thus the 
judgment of High Court attained finality. By the time the 
BHARAT SANCHAR NIGAM LTD. v. TELEPHONE 
293 
CABLES LTD. 
said decision was rendered, appellant as per its policy, A 
had already carried forward the balance quantity of the 
tender dated 27.3.2001 to the next tender issued in 2002 
and had even placed the purchase orders on the 
successful bidders against the said tender issued in 
2002. According to the appellant, no balance quantity was 
B 
available and no order for any further quantity could be 
placed with the respondent, even if the respondent was 
to be given V-1 rating on a re-evaluation. The respondent 
was aggrieved that the appellant did not adjudge it as V-
1 and did not place orders for further quantities, as per C 
the direction of the High Court. According to the 
respondent, on account of failure on the part of appellant 
to adjudge it with V-1 rating, and consequential failure to 
place a purchase order for 30% tendered quantity, it was 
denied the opportunity to manufacture and supply a 0 
quantity of 5.306 LCKM of cables, resulting in a

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