The Sunday Leader

Fresh Tenders For Coal Supply

  • Ground-breaking Supreme Court judgment safeguards public monies and rights of the people

by Ifham Nizam

The Supreme Court

The Supreme Court last week delivered judgment on an application involving the largest tender ever awarded by the government to supply coal to the first coal-fired power plant complex, Lakvijaya Power Plant, in Norochcholai.

Delivering judgement on an application that Noble Resources (Pvt.) Limited of Singapore filed, the Court directed Lanka Coal Company to terminate the contract entered into with Swiss Singapore Overseas with reasonable notice and to call for fresh tenders as per law.

In the application, Noble resources claims that the Technical Evaluation Committee (TEC), after evaluating all the bids as per terms and conditions of the tender, had initially recommended to award the tender to Noble Resources. Thereafter, Swiss Singapore had directly written to the Standing Cabinet Appointed Procurement Committee (SCAPC) chaired by Dr. Suren Batagoda – the Secretary, Ministry of Power and Renewable Energy – requesting him to remove two conditions from the tender. On the very same day, the SCAPC had convened TEC and directed them to evaluate the bids removing the two conditions requested by Swiss Singapore and thereafter it was recommended to award the tender to Swiss Singapore.

The Court observed that the SCAPC had changed the tender conditions after the closure of the bids on the request of Swiss Singapore and had recommended to award the tender to Noble Resources. Therefore, the Court determined that this conduct of Swiss Singapore where they directly contacted the SCAPC had violated the procurement guidelines and therefore the bid submitted by Swiss Singapore should have been rejected on this count. Instead, the SCAPC had evaluated bids taking into consideration the letter and request made by Swiss Singapore and recommended to award the tender to Swiss Singapore.

Although the Court dismissed the application on a technical ground that Noble Resources being a Singapore incorporated company had no locus standi to invoke the fundamental rights jurisdiction of the Supreme Court, it was observed by Chief Justice Sripavan, “It will be a travesty of justice, if having found as a fact that a fundamental right has been infringed or is threatened to be infringed, the court yet dismisses the application on a preliminary objection raised by the respondents.”

It was observed by the Chief Justice that the Court decided to go into the merits of the case as some events that took place in the award of the tender to Swiss Singapore “shocks the conscience of the Court, especially when the awarding of the tender involves public funds.”

The Supreme Court having held that the Court cannot close its eyes where an organ of the State has acted outside the powers and limits of its duty, specifically held that the tender had been awarded violating the law and that the decision made by the SCAPC to award the tender to Swiss Singapore was in excess and an abuse of the power granted to it and therefore the decision of SCAPC was null and void.

Therefore, the Court directed Lanka Coal Company to terminate the agreement entered into with Swiss Singapore and call for fresh bids as per law.

This is a ground-breaking judgment where the Supreme Court has intervened to safeguard the public monies and the rights of the people regardless that the Court had dismissed the application of the petitioner based on locus standi. However, taking into consideration the overriding public interest element, the Court proceeded to make far-reaching orders against the government and its officials as the tender was found to have been awarded in excess and abuse of powers.

During the course of the hearing, it transpired that the Chairman of Lanka Coal Company, Attorney-at-Law, Maithri Gunaratne, had in writing highlighted the irregularities in the award to the Secretary, the Ministry of Power and Energy, who was also the chairman of the SCAPC that recommended the award of this tender to Swiss Singapore. However, these concerns had not been heeded by the SCAPC.

It also transpired that Dr. Batagoda had threatened and sought steps to remove Chairman, Lanka Coal Company for not “falling in line” with the decision of the SCAPC and for highlighting these irregularities.

The petition filed by Noble Resources strongly alleges that Dr. Batagoda had been instrumental in manipulating the entire tender process in favour of Swiss Singapore and that the entire conduct of these public officials reeks of corruption.

The Supreme Court specifically observed that the Cabinet Memorandum presented by the Minister of Power and Energy to the Cabinet of Ministers had misled the ministers and the decision to award the tender to Swiss Singapore had been obtained by misleading the Cabinet.

President’s Counsel Romesh de Silva  along with Maithri Wikremesinghe P.C., Sugath Caldera, and Suren de Silva appeared for the petitioner, Noble Resources. Sanjay Rajaratnam P.C., Additional Solicitor General with Yuresha de Silva, and Dr. Avanthi Perera, Senior State Counsel, appeared for Dr. S. Batagoda and the other member of the SCAPC. Faiz Mustapha P.C. with Faizar Markar and Thushani Machado appeared for the CEB and the member of the TEC. Sanjeeva Jayawardene P.C. with Rajiv Amarasuriya appeared for Lanka Coal Company.

Rienzie Arsecularatne P.C. with Riad Ameen appeared for Swiss Singapore while Ikram Mohamed P.C. with Dilshan Hettiarchchi appeared for the members of the Procurement Appeals Board.

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