A word in SC judgment adds confusion to the contentious coal saga
The Power and Energy Ministry will seek the Attorney General’s opinion on how to interpret a Supreme Court judgment calling for the cancellation of a controversial multibillion rupee coal tender.
“I have advised the Secretary to the Ministry to forward the judgment to the Attorney General next week for advice,” Power and Energy Minister Ranjith Siyambalapitiya told the Sunday Times. In last week’s ruling, Chief Justice K. Sripavan held that some events which took place in the award of the coal tender to Swiss Singapore Overseas Enterprises Pte Ltd “shocks the conscience of the Court”. Justices Priyasath Dep and U. Abeyrathne agreed. But differences of opinion have now emerged owing to a single word employed in the judgment. It rules that the third respondent, Lanka Coal Company Ltd (LCC), “may” terminate the contract entered into with Swiss Singapore for the supply of coal to the Lakvijaya coal power plant in Norochcholai; and that LCC may then call for fresh bids following competitive bidding procedure.
The use of "may" has caused uncertainty about how to construe the order, with some legal counsel remarking that the Supreme Court order has left its interpretation open. This opinion appears to be shared by key officials in the Power and Energy Ministry who have so far not acted on the Supreme Court direction.
Other lawyers say, however, that the word ‘may’ could not be taken in isolation. “The direction of the Supreme Court cannot be read independent of its findings regarding the grievous conduct of some of the parties,” he asserted, also requesting anonymity. “The Supreme Court is not going to issue directions in vain. They must be complied with or it would be contempt of Court.”
The judgment is another step in a long and contentious saga to buy coal for Lakvijaya. For half a decade, coal procurement has been dogged by allegations of corruption and bid rigging. The last contract—for two million tons of coal— was awarded to Swiss Singapore by a Standing Cabinet Appointed Procurement Committee (SCAPC). But confidential documents which found their way into the public domain demonstrated that Swiss Singapore had secured the deal by directly and illegally interfering with SCAPC’s evaluation process. This raised the hackles of another company, Noble Resources International Pte Ltd, which had initially been told it had won the bid on the basis of lowest price. Several of the bidders contested the granting of the tender to Swiss Singapore before the Procurement Appeals Board (PAB). It eventually recom- mended that the tender be cancelled and fresh bids be called. But Cabinet nevertheless approved the contract being given to Swiss Singapore. The company has so far supplied one million tons of coal. The matter ended up in the Supreme Court after two unsuccessful bidders, Noble Resources and SUEK AG, filed fundamental rights petitions.
In considering Noble’s case, the Court rejected the argument of the Attorney General’s Department that the company lacked the locus standi to invoke the jurisdiction of the Court. No one—neither the State nor the SCAPC—shall act contrary to the bid documents and Government Procurement Guidelines which provide safeguards to all bidders and ensure transparency, justice and equality of treatment in evaluating bids, the judgment states. “It is of utmost importance that all the necessary safeguards laid down therein should be complied with fully and strictly and any departure from them make the evaluation process void,” it reads. “Procedural safeguards which are so often imposed for the benefit of persons affected by the exercise of administrative powers are normally regarded as mandatory so that it is fatal to disregard them.” However, the SCAPC had failed to fulfil the aforesaid requirements and its decision to award the tender to Swiss Singapore “cannot stand valid in the eye of the law,” the judgment continues.
“Having given my anxious consideration to the contentions raised on behalf of the parties, I consider the act or decision made by the SCAPC was outside its jurisdiction and therefore becomes null and void for all purposes,” Justice Sripavan asserts. He also faults the PAB for not having granted Noble Resources a hearing, saying, “…it would make it unfair or inconsistent with good administration to deny the Petitioner such a hearing”. “When specific provisions are laid down in the Government Procurement Guidelines-2006 and in the bid documents, the rule of law will imply that the requirements of those provisions are not violated,” the judgment also holds. “The power of the State is conferred on the members of the SCAPC and the PAB to be held in trust for the benefit of the public. The Supreme Court being the protector and guarantor of the fundamental rights cannot refuse to entertain an application seeking protection against infringement of such rights.” The Court must regard it as its solemn duty to protect the fundamental rights jealously and vigilantly,” it states. “It has an important role to play not only preventing or remedying the wrong or illegal exercise of power by the authority but has a duty to protect the nation in directing it to act within the framework of the law and the Constitution.”