LexSTATE OF KERALA versus M/S ZOOM DEVELOPERS PVT. LTD. & ORS.
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A B [2009) 1 S.C.R. 1150 ST ATE OF KERALA V. M/S ZOOM DEVELOPERS PVT. LTD. & ORS. (Civil Appeal Nos. 841-842 of 2009) FEBRUARY 10, 2009 [DR. ARIJIT PASAYAT AND S.H. KAPADIA, JJ.] COMPANIES ACT, 1956: c S.212 - Consortium Agreement - Modification of - Whether results in change in the constituents membership - Bid Evaluation Committee rejecting the Bid proposal made by the consortium and excluding the consortium from zone of consideration - High Court holding the decision unjustified, D arbitrary and bad in law - On appeal, Held: The modified consortium agreement is in line with the proposal submitted - There was no change in the membership of the consortium - High Court rightly held that the licence agreement has still to be executed and at that stage the change of joint and E several liability shall be incorporated in the licence agreement- No infirmity in the judgment of High Court - The Technical and Financial proposals submitted by the consortium (Respondent No. 1) to be considered within 15 days. F WORDS & PHRASES: 'Liability', 'responsibility' - Meaning of. The High Court held that the decision of the Bid Evaluation Committee dated 6.5.2008 rejecting the Bid G Proposal made by the Consortium led by the Mis Zoom Developers Pvt. Ltd. (ZDL) as non-admissible in terms of Request for Proposal (RFP) and thus excluding the said consortium from the zone of consideration was unjustified, arbitrary and bad in law. Hence the appeals. H 1150 STATE OF KERALA v. ZOOM DEVELOPERS PVT. LTD. 1151 & ORS. On the basis of the contentions advanced, the A following points emerged for consideration by the Court: 1. Whether the modified Consortium Agreement dated 11.3.2008 resulted in a change in the constituents membership of the Consortium led by M/s ZDL. 2. Whether use of the expression "joint and several responsibility" in place of "joint and several liability" would justify rejection of the Bid proposal made by the Consortium led by M/s ZDL as non-responsive/non- admissible in terms of the RFP. Dismissing the appeals, the Court B c HELD:1.1. On reading the Proposal, it becomes clear that on the date, namely, 31.1.2008, being the cut-off date 0 (when the bids were opened), M/s PMS was the member- constituent of the consortium led by M/s ZDL. At this stage, one must keep in mind that Section 212 of the Companies Act, 1956 which makes it obligatory on behalf of the holding company to annex to its Balance Sheet the Balance Sheet and P&L account and other financial E particulars of its subsidiary. Section 212 requires the legal relationship of holding company and subsidiary company to be disclosed to all its members. In the world of globalization, we have consortium agreements/ joint venture agreements. It appears from the particulars given F by the consortium led by Mis ZDL that M/s PMS is a part of an international group of companies headed by M/s PPL, UK. The prescribed Form warranted Disclosure giving particulars of the consortium members. The particulars furnished indicate that the Lead Member was G M/s ZDL. It is an Indian company. One of the consortium member was M/s PMS, which is incorporated in UK. It is the 100% subsidiary of M/s PPL, UK. This information also became necessary because the format required the Bidder to disclose "Ownership" of the member-company. H 1152 SUPREME COURT REPORTS [2009] 1 S.C.R. A Therefore, if one reads the Proposal of the Lead Member, >- M/s ZDL, in the form prescribed, which Proposal was of 31.1.2008, one finds that Mis PMS alone on its own was indicated as a member of the consortium and M/s PPL was not shown as the member of the consortium. 8 However, the original consortium/joint venture agreement dated 4.10.2007 signed by the member-constituent of the consortium led by Mis ZDL stood signed by Mis PMS on behalf of M/s PPL, UK. Therefore, on 3.3.2008, IDC (Project Advisor) wrote to M/s ZDL pointing out the defect in the C consortium agreement dated 4.10.2007. Thus, the Project Advisor treated the above irregularity in the execution of the consortium agreement dated 4.10.2007 as a curable defect for which time was given tQ M/s ZDL up to 4.4.2008. Further, the Project Advisor clearly understood the Proposal to have had been given by M/s ZDL as the Lead D Member of the Consortium, whose constituent inter alia included M/s PMS and not M/s PPL. By the said letter, the Project Advisor also called for Annual
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