L&T loses battle with Centre over supply of naval ships

Larsen and Turbo (L&T) has lost the battle for a Rs 300 crore tender to supply vessels to the Navy that was floated by the Centre in the aftermath of the Mumbai terror attack to strengthen the Coast Guard.

A Bench of Justices Sanjay Kishan Kaul and Valmiki J Mehta upheld the government's decision to reject L&T's tender on the ground that it did not quote a fixed price.

The court also imposed Rs 6.7 lakh as cost of litigation on L&T which it would pay to the Centre and the Cochin Shipyard.

The government had floated the tender for supply of 20 Fast Navy Vessels (FPVs) to Indian Coastal Guard in 2009 in the aftermath of Mumbai terror attack to overcome the gaps in the coastal surveillance and to sanitise the vast sea area.

The contract was to be performed over a period of six and half years. Further to avoid any escalation in the price, the bid document had made it clear that no escalation would be permitted and the prices would be firm and fixed.

The Centre had rejected L&T's bid on the ground that it contained escalation provision, which meant that the cost of the project would fluctuate with changes in Foreign Exchange Rate.

The company then approached the High Court which dismissed its plea, saying it acted "mala fidely".

"The bid was clearly non-responsive and it was not entitled to the contract. The attitude of the petitioner unfortunately in the facts of this case is wholly unreasonable. It intends to create nuisance value although its bid was rightly rejected," the court said.