Coal news and updates

The Supreme Court on Tuesday upheld the NTPC decision to reject Montecarlo’s techno-commercial bid for development and operation of three coal mines — Dulanga coal block, Chatti Bariatu and Talaipalli in Odisha.

A bench headed by Justice Dipak Misra, while rejecting Montecarlo’s appeal, endorsed the Delhi High Court’s September 30 ruling that upheld the PSU’s decision to reject the private firm’s bid on the grounds that there would be loss of public revenue if a coal block is not operated properly.

The apex court said the highly complex technical projects require multi-pronged complex approach, including “understanding and appreciation of the nature of work and the purpose it is going to serve”. “This ensures objectivity. Bidder’s expertise and technical capability and capacity must be assessed by the experts…its aim is to achieve high degree of perfection in execution and adherence to the time schedule,” the judgment stated.

Justice Misra further said where a decision is taken that is “manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint”.

“Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints,” according to the top court.

Montecarlo had challenged its rejection on the ground that the NTPC’s August 29, 2016, communication rejecting its techno-commercial bid was “arbitrary,” “unreasonable” and contrary to the terms of tender document.

Senior counsel P Chidambaram, representing Montecarlo, had claimed that the private company engaged in the business of mining of coal and lignite possessed all the required experience in drilling, but NTPC rejected its proposal on the ground that it did not meet the qualifying requirements in this regard.

He further alleged that in the tender document, the qualifying requirement was about bidder’s experience only in drilling, excavation and hauling, and not blasting or drilling for blasting purposes as claimed by NTPC.

However, senior counsel Vikas Singh, appearing for NTPC, had argued that the PSU’s decision was in conformity with larger public interest of selecting the most suitable operator on the basis of competitive bidding. The reason for arriving at the conclusion was that the company did not have necessary experience of drilling for blasting purposes.

Source: Financial Express