w w w . L a w y e r S e r v i c e s . i n


    W. A. 5380 Of 2004

    Decided On, 15 April 2005

    At, High Court of Karnataka


    For the Appearing Parties: Bhanuprakash, K.G.Raghavan, K.N.Suresh, P.B.Raju, Advocates.

Judgment Text


( 1 ) THE present appeal is preferred against the order of dismissal, dated 13-12-2004 in Anand Transport, Mylapore, Chennai v Karnataka Power corporation Limited, Bangalore and Others, 2005 (1)Kar. L.. 287 : ILR 2005 Kar. 595 : AIR2005 Kant. 183on merits.

( 2 ) THE brief facts as may be relevant for consideration of the present appeal are as follows.- the first respondent-Karnataka Power Corporation Limited ('kpcl' for short), a wholly owned Government of Karnataka undertaking, is engaged in power generation. The said respondent has a Thermal Power station at Raichur. The raw material used in the generation of electricity in the said station is coal. KPCL sources the coal from several collieries including M/s. Mahanadi Coal Fields, Talcher, Orissa. Having regard to the huge quantity and the critical requirement of continuous and timely supply of the coal required by KPCL, for the functioning of the power station, the choice of the entity which is engaged to supply the said coal is made with care and circumspection.

( 3 ) KPCL issued a tender notification bearing No. A1 M1/b3/coal supply in July 2004 for movement, handling, delivery of coal from mahanadi Coal Fields to Thermal Power Station at Raichur (in short, 'rtfs') by rail-sea-rail route. The respondent-KPCL is said to have received six bids for the same including that of the appellant. It transpired that since there were procedural' omissions and since the tender conditions, in the opinion of the KPCL lacked clarity, it took a decision to reject all the tenders and retender after incorporating the conditions to suit its requirements. The tender was requoted by way of newspaper advertisement as on 14-10-2004. The appellant which is said to be experienced in the field of stevedoring, shore handling, transport of cargo, stacking, loading including liaison, had participated by submitting its tender.

( 4 ) KPCL held a pre-bid meeting on 29-10-2004, of all bidders at which the appellant had also been present. KPCL had issued clarifications as regards doubts and queries raised by the parties. KPCL is said to have opened the tenders and upon examination of six bids rejected three on the ground of incomplete and incorrect submission of bids as on 6-11- 2004. The Tender Scrutiny Committee of KPCL has scrutinised the papers of the remaining tenderers and submitted a report as on 16-11-2004. Insofar as the appellant is concerned, the said Committee had intimated that there was an ambiguity in the certificates submitted by the appellant with regard to handling and movement of coal, by rail, by the appellant during the years 1999, 2000 and 2001. The Technical committee of KPCL had taken a decision to authorise its Tender scrutiny Committee to ascertain from the appropriate authorities and entities concerned as to the authenticity of the certificates furnished by the appellant. Accordingly, the Tender Scrutiny Committee of the KPCL have obtained first hand information from one M/s. India Cements limited and the Chennai Port Trust, in respect of the certificates furnished by the appellant. On examination of the information gathered by the Committee, KPCL found that the appellant had not furnished acceptable evidence in support of its experience with regard to loading of coal on rail for the period 1999, 2000 and 2001 and accordingly the technical Committee of the appellant decided to reject the bid of the appellant on 24-11-2004 ostensibly on the ground that the appellant had failed to meet the pre-qualification requirements. A letter of the same date indicated the decision taken by the KPCL, which is produced at annexure-G to the writ petition. This was under challenge by the petitioner while seeking a consequential direction to consider the bid of the appellant along with that of competing bidders.

( 5 ) THE learned Single Judge by his considered order has examined the respective case put forth, by the appellant and KPCL, and has dismissed the petition. The said order is under challenge before us.

( 6 ) THE learned Counsel for the appellant Sri KN. Suresh, primarily urged and endeavoured to demonstrate that the learned Single Judge had failed to appreciate the arbitrary manner in which the KPCL had acted in entertaining doubts with regard to the certificates produced by the appellant in support of its experience as a handling agent, to transport and load coal via the "rail/sea-rail" route. The Counsel would further urge that the disqualification of the appellant by KPCL without assigning any reasons, was highhanded and without application of mind. According to the appellant, the learned Single Judge did not take this into consideration. It is further contended that the learned Single judge failed to appreciate that KPCL was required to seek clarifications if any from the appellant, in the event that KPCL entertained any bona fide doubts as regard the bids and documents furnished by the tenderers, in terms of Rule 23 (3) of the Karnataka Transparency in Public procurements Rules, 2000. On the other hand, KPCL having proceeded to obtain information as regards the appellant and its business transaction without the knowledge of the appellant and having formed an adverse opinion on the basis of such information and having taken a decision, prejudicial to the appellant without hearing the appellant in this regard, was opposed to principles of natural justice.

( 7 ) THE learned Counsel further endeavoured to demonstrate with reference to other circumstances, to contend that there was an unholy nexus between the successful tenderer and KPCL and that the successful tenderer was working in tandem with other bidders, who were a cartel. The learned Counsel also contends that the appellant as seen in retrospect, is the lower bidder and the difference between the successful bidder and the appellant is very huge and this would entail a loss of approximately Rs. 100 Crores per year to the State exchequer. It was also contended that the appellant was a successful bidder in respect of a transportation contract of a similar nature of supply of coal of Mahanadi coal Fields to Rayalseema Thermal Power Project in Andhra Pradesh, which was the subject-matter of writ proceedings before the Andhra pradesh High Court resulting in Writ Appeal No. 194 of 2005, which was brought by an unsuccessful bidder challenging acceptance of bid of the appellant and it is the contention of the appellant that notwithstanding that the appellant was admittedly a sub-contractor and was not directly engaged as an handling agent, did not disqualify the appellant from consideration. The appellant has placed the decision rendered in its favour by the Andhra Pradesh High Court in Writ Appeal No. 194 of 2005, dated 30-3-2005, before us for consideration.

( 8 ) PER contra, Sri B. V. Acharya, learned Senior Counsel appearing on behalf of the respondent 4, sought to demonstrate that the conditions prescribed for pre-qualification could not be said to have been met by the appellant. On a plain examination of the documents on record and the significant admission by the appellant itself in its rejoinder to the statement of objections filed before the learned Single Judge. This leaves no doubt that KPCL has rightly rejected the bid of the appellant, which may not be characterised as being arbitrary or causing prejudice to the appellant.

( 9 ) SRI KG. Raghavan, learned Counsel appearing for the first respondent-KPCL, further elaborated on the same lines and has taken us through the material on record to demonstrate from the sequence of events that there has been no arbitrariness on the part of the KPCL and that the appeal was not maintainable.

( 10 ) WE have given our anxious consideration to the respective contentions and case-law relied upon by the parties and now we proceed to examine the contentions of the parties.

( 11 ) THERE is no dispute that in terms of Clause 2. 0. 0 of the terms and conditions of the tender document, it is specified that the tenderer should have previous experience of at least five years preceding the year 2004 as a handling agent for the movement of coal/coke to a thermal power station or any Industrial unit via any Port in India "for rail-sea or sea-rail mode". In other words, unloading from rail and loading into the ship or vice versa. The tenderer should have handled a minimum of 5 lakh metric tonnes of coal in any one of the Ports in India, in one year during the years 2001, 2002 and 2003 "for rail-sea or sea-rail mode". KPCL has emphasized in terms of sub-clause (b) of Clause 2. 0. 0 that transport by road to destination will not be considered as relevant experience. It is also not in dispute that sub-clause (d) of Clause 2. 0. 0 requires the tenderer to establish substantially and conclusively his experience as a handling agent. The tenderer was required to furnish documentary evidence in the form of certificates issued by the prescribed officer in proof of satisfaction of the requirement prescribed as a pre-qualification requirement. The tenderer was also required to furnish copies of relevant work orders.

( 12 ) THE controversy, insofar as the appellant is concerned, pertains to two documents furnished by the appellant in compliances with Clause 2. 0. 0 of the tender condition, to evidence its experience in having been engaged as a handling agent during the years 1999, 2000 and 2001. Annexure-L, dated 23-8-2004 and Annexure-M, dated 28-12-1998, the first of which is a certificate issued by M/s. The India Cements Limited, reads as follows.-"the INDIA CEMENTS LIMITED august 23, 2004 to WHOMSOEVER IT MAY CONCERN m/s. Anand Transport, No. 1, 9th Street, Dr. Radhakrishnan salai, Chennai-600 004, one of our stevedoring and handling contractors for import coal have handled the following quantities of coal at Chennai Port: calendar Year. . . Quantity (MT) 1999 37,709 2000 34,802 2001 35,898 as a stevedore and handling contractor, their services including loading operations of coal into railway wagons/trucks were found to be satisfactory. For THE INDIA CEMENTS LIMITED sd/- (K. Rajendran) general Manager (MATLS.)"and Annexure-M, which is a letter addressed by M/s. The India Cements limited to the appellant informing that it is being engaged for stevedore and shore handling of imported coal at Chennai Port, reads as follows.-"the INDIA CEMENTS LIMITED august 23, 2004 cd/coal m/s. Anand Transport, no. 1, 9th Street, dr. Radhakrishnan Salai, chennai-600 004 dear Sirs, sub: Import Coal at Chennai Port stevedoring, shore handling and loading of coal into wagons/trucks - Regarding. Ref: Your Letter No. MGM/at/gmo/icl, dated 6-4-1998. With reference to your letter cited above, we are pleased to release this order for stevedoring and shore handling of import coal at chennai Port: scope of Work: 1. Unloading the cargo from the vessel as a stevedore and as a shore handling contractor, clearing the cargo from the whereby. . . port transportation to our plot. 2. While handling, you should ensure the rate of discharge for the vessel should not be less than 9000 MT per WWD SHEX uu. If used actual time used to count. 3. Demurrage if any is to your account. Dispatch earned to be shared at 50:50 between us. 4. To high stake coal at plot and load wagons/trucks for onward despatch to our factory site by arranging rakes by proper indemnity railway as per our instructions. 5. You should ensure proper loading of the wagons to avoid over loading or under loading. Dead freight if any will be to your account. 6. To take appropriate care to suppress dust at wharn road and plots. 7. Shortage allowance is 0. 5% between B/l quantity and despatch ED quantity. This will be calculated on ship to ship basis. Payment.-For all the above composite operation, you will be paid Rs. 85/- per MT on the manifest quantity. Contract Period.-The contract is valid for the period of 4 years. We reserve the right to terminate the contract by issuing 3 months notice. Thanking you, yours faithfully, for THE INDIA CEMENTS LIMITED, sd/- (K. Rajendran) general Manager (MATLS.)". It may be noticed that there is a mention of loading operation of coal into railway wagons/trucks. This apparent ambiguity and having due regard to the specific requirement of KPCL that the experience required of the tenderer was in loading wagons and movement by rail and experience of movement by road or loading of trucks, was not relevant, prompted KPCL in seeking further information from M/s. The India cements Limited, under its letter dated 18-11-2004 calling upon the said Company to confirm whether the appellant is one of the authorised handling contractors engaged by it and that coal unloaded at port has been moved through rail to destination, in full or in part. Similar letters were also addressed to the Traffic Manager, Chennai Port Trust, dated 18-11-2004 and 19-11-2004, respectively. In response, the Deputy Traffic manager, Railways of Chennai Port Trust, has replied vide letter dated 20-11-2004 to inform that the appellant had not placed any indent for wagons for loading of coal on behalf of any consignment including India cements during the relevant period, namely, 1999, 2000 and 2001. The said authority has furnished documentary evidence as regards indents placed by other firms on behalf of M/s. India Cements, during the relevant period. There is no indication, however, of any response from India Cements Limited, in this regard, though KPCL, in its pleadings, states that it held discussions with authorities of India Cements limited.

( 13 ) BE that as it may, on the basis of the information gathered, the tender Scrutiny Committee submitted its report to the Technical committee of the Board of Directors of KPCL and the said Board has taken a decision that the appellant was not pre-qualified to be considered for opening the price bid.

( 14 ) THE short question that needs to be considered is whether the above sequence of events indicates any arbitrary action on the part of kpcl and whether there is a breach of any statutory provision in not affording a hearing and an opportunity to the appellant to substantiate its claim regarding its eligibility and compliance with pre-qualification requirements or whether there was otherwise a violation of principles of natural justice.

( 15 ) THE appellant has not brought to our attention any term or condition under the tender document, which requires that the tenderer ought to have been heard and given an opportunity before a decision adverse to its interest, was taken by KPCL. The reference to Rule 23 (3) of the Karnataka Transparency in Public Procurements Rules, 2000 ('ktpp Rules' for short) also does not advance the petitioner's case. In that, the Rule requires strict confidentiality being maintained by the authority in the tendering process and places an embargo on the tenderers from approaching or seeking to bring pressure on the tendering authority. Rule 23 (3) of the KTPP Rules, relaxes the rigour of the said Rule by enabling the authority to seek clarifications from tenderers, if it so desires. The option is entirely of the authority. This cannot be construed as offering the tenderer a right of hearing in respect of any discrepancies or information that may be at the disposal of the tendering authority or which may have been obtained from other sources. On the other hand, the appellant does not dispute the fact that annexures-L and M, are the only documents produced, which conclusively establish that the said appellant had acted as a handling agent for the relevant years and had executed works of the magnitude envisaged under the pre-qualification requirements of the tender document. The appellant has conceded in its counter to the Statement of objections before the learned Single Judge that he did not, in fact, act directly as a handling agent, as sought to be made out by the production of Annexures-L and M, but had been engaged as a sub-contractor, which is the reason that though the works were actually executed by the appellant, it was only the contractor's name which had been reflected in the records that had been furnished by the Chennai Port Trust in response to the queries by the KPCL with regard to Annexures-L and M. This very circumstance, does not augur well for the bona fides of the appellant and it is a circumstance which did not apparently require any further enquiry nor clarification and certainly not a personal hearing of the appellant in KPCL proceeding to reject the bid of the appellant.

( 16 ) AS authoritatively laid down by the Hon'ble Supreme Court in the case of Tata Cellular v Union of India, AIR 1996 SC 11 : (1994)6 SCC 651 which has been relied upon and followed in Raunaq International Limited v. V. R. Construction Limited and Others, AIR 1999 SC 393 : (1999)1 SCC 492 and Anil Kumar Srivastava v State of Uttar Pradesh and another, AIR2004 SC 4299 : (2004)8

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SCC 671 : 2004 (7) Supreme 446 while discussing the scope of judicial review has laid down that Courts do not sit in appeal; that the Courts merely review the manner in which the administrative decision was made. The duty of the court is to confine itself to the question of legality. Its concern should be (a) whether the decision making authority exceeded its powers? (b) committed an error of law; (c) committed a breach of the Rules of natural justice; (d) reached a decision which no reasonable Tribunal would have reached ; or (e) abused its power. Further, the Hon'ble Court has adopted the test that should be applied in all such cases, which is that the Court should consider whether something has gone wrong of the nature and degree which requires its intervention. ( 17 ) IN our opinion, it cannot be said that KPCL has acted in violation of any statutory provision or principles of natural justice in arriving at its decision, which is impugned in this proceedings. ( 18 ) THE decision of the Andhra Pradesh High Court cited by the appellant rests on a different factual matrix and the circumstance that the authority concerned in that matter did not proceed to enquire into the bona fides of the present appellant in respect of the tender submitted by it, ought not be treated as a precedent by KPCL to accept the claim of the appellant. The said judgment, is therefore, not relevant for consideration of the present appeal. The other contentions as regards the competing bidders having formed a cartel and the allegations of a complicity on the part of KPCL in accommodating them and awarding the contract in favour of the successful bidder cannot be gone into in these proceedings on the basis of the material on record. ( 19 ) IN this view of the matter, we do not find any merit in the present appeal and is accordingly dismissed. No costs.