SC dismisses L&T plea in Rs 1,300 cr tender dispute

The Supreme Court today dismissed construction major Larsen & Toubro's petition challenging the rejection of its bid against a Rs 1,300 crore tender floated by the government to construct 20 offshore patrol vessels.

A bench headed by Justice Altamas Kabir upheld the order of the Delhi High Court, which had in September, 2010, dismissed L&T's plea.

"We have chosen not to interfere in the judgement of the high court. The petition is dismissed," the bench said.

The Ministry of Defence had floated the tender for 20 offshore patrol vessels to strengthen the maritime security of the country in the wake of the Mumbai terror attack.

L&T, Cochin Shipyard and three other companies had bids for the tender, which was finally awarded to Cochin Shipyard.

L&T had passed the technical bidding stage, but its bid was rejected at the second stage, i.e. Commercial bidding.

L&T challenged the rejection of its bid, claiming that it was wrongly rejected as non-responsive for the reason of having a Foreign Exchange Variation (FERV) clause.

According to the company, foreign exchange content in the bid of Rs 1,296 crore was only Rs 432 crore.

L&T also alleged gross discrimination, saying the other bids also had similar clauses.

The government and Cochin Shipyard, on the other hand, claimed that the presence of a FERV clause in L&T's bid document made it impossible to calculate "by any means on earth" their bid amount.

They further said that L&T withdrew the clause of FERV four days after the bid documents of all bidders was made public, which they claim could not be permitted.