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


Megha Engineering & Infrastructures Ltd., Rep. by its Vice President & Duly Authorized Signatory, TV. Sudheer Mohan v/s The State of Karnataka, Rep. by The Secretary to The Government, Bengaluru & Others

    Writ Petition No. 45004 of 2019 (GM-TEN)
    Decided On, 29 May 2020
    At, High Court of Karnataka
    By, THE HONOURABLE MR. JUSTICE R. DEVDAS
    For the Petitioner: Dr. Adithya Sondhi, Senior Counsel, M/s. MD & T Partners, Advocates. For the Respondents: R1, Sridhar N. Hegde, HCGP, R2 & R3, M.R.C. Ravi, R4, S. Sriranga, Advocates.


Judgment Text
(Prayer: This Writ Petition is filed Under Articles 226 & 227 of the Constitution of India praying to quash the decision of the tender scrutiny committee constituted by the R-2 (Vide Annx-K) to open the financial/price bid of the R-4 by treating the Technical Bid of the R-4 as having fulfilled the pre-qualification criteria mandated under the tender notification dated 22.05.2019 (Annx-D) and etc.)1. The petitioner is a tenderer aggrieved by the decision of the second respondent in awarding the contract relating to a portion of the Yettinahole Project that involves providing permanent and dependable source of drinking water to the Districts of Kolar and Chikkaballapur, in favour of the fourth respondent.2. The contentions of the petitioner is that the fourth respondent was an ineligible bidder, having not satisfied the essential pre-qualification criteria and therefore award of the contract to the fourth respondent is wholly illegal and therefore requires interference at the hands of this Court.3. Learned Senior Counsel Dr.Aditya Sondhi, appearing for the petitioner draws the attention of this Court to some of the requirements as essential pre-qualification criteria, as found in the tender document at Annexure 'D'.i) Clause-3 (v) - submission of Income Tax returns of last 5 years.ii) Clause 4.5 - The intending bidder should have, in the last five years achieved in atleast two financial years, a minimum financial turnover of Rs.737.13 crores in all classes of Civil Engineering construction works only. If the bid is submitted as a joint venture, then the pre-qualification requirement of minimum financial turnover should be proportionately satisfied according to the share specified in the JV agreement.4. The learned Senior Counsel submits that the fourth respondent is a Joint Venture as per the JV agreement dated 15.06.2019 comprising of M/s.ADU Infra, a partnership firm and M/s.Shankaranarayana Constructions (P) Ltd. It is submitted that the fourth respondent has not fulfilled the Income Tax criteria, as set out in the bid document. It is submitted that M/s.ADU Infra which holds 90% as the JV partner, was required to satisfy the condition of having minimum turnover to the extent of 90%, as required, but M/s.ADU Infra, having coming into existence only on 27.04.2017, could not produce Income Tax returns for the last five years, as required under the bid document and further, it has not executed any works during 2017-18 and 2018-19. On the other hand, contrary to the required pre-condition, the fourth respondent has produced a certificate issued by its Chartered Accountant certifying the turnover of one M.Y.Kattimani, who is admittedly 10% minority shareholder in M/s.ADU Infra. It is further submitted that since Mr.Kattimani is not the bidder in the tender process, the individual turnover of Mr.M.Y.Kattimani cannot be taken as the turnover of the two JV partners. In this regard, reliance was placed on a decision of the Apex Court in the case of C.I.T. Vs. A.W. Piggies Messrs & Co., And Others reported in AIR 1953 SC 455, to contend that while it is true that, under the law of partnership, a firm has no legal existence apart from its partners and it is nearly a compendious name to describe its partners, the partners of a firm are distinct accessible entities, while the firm as such is a separate and distinct unit for purposes of assessment.5. Moreover, it is submitted that the certificate of Sri M.Y.Kattimani does not clarify that the turnover pertains to all classes of Civil Engineering Construction works, as is the requirement. Further, for the purpose of satisfying the above requirement, the works undertaken by M/s.Shankarnarayana Constructions is relied upon by the fourth respondent.6. As regards the technical experience pertaining to tunneling, it is submitted that the tender document has mandated two independent pre- qualification criteria, at Clause 4.2 and 4.3. Clause 4.2 requires that the intending bidder should have satisfactorily completed atleast one similar nature of work costing not less than Rs.368.57 crores such as - lift irrigation scheme/M.S.Pipeline work/water transmission projects with pumping station which includes M.S.Pipeline work, supply, laying, testing and commission of irrigation/bulk water supply, involving components such as valves, valve chambers, tunnel and other structures, during the last five years i.e., 2014-15 to 2018-19.7. Clause 4.3 provides that the intending bidder should have executed, in any one financial year, the minimum quantities of work in the previous five years - length of tunnel - 110 mtrs.8. Insofar as the requirement under clause 4.2 that the intending bidder should have satisfactorily completed atleast one similar nature of work, it was pointed out that the fourth respondent had sought a clarification as to whether the similar nature of work should include tunnel work also. It is submitted that the second respondent replied to the said query that 'bid stipulation stands', thereby implying that the above listed four components in Clause 4.2 are to be read conjunctively and not disjunctively.9. The learned Senior Counsel therefore contends that the fourth respondent had not complied with the condition in Clause 4.2 and on the other hand has attempted to conflate the two independent tender requirements, relying upon a certificate which would demonstrate stand alone tunneling experience. It is further contended that while evaluating the bid, the second respondent has rejected the objection raised by the petitioner by holding that, of lift irrigation scheme/MS Pipeline work/water transmission projects with pumping station which includes MS Pipeline work etc., including supply, laying, testing and commissioning of irrigation/bulk water supply pipe involving components such as valves, valve chambers, special tunnel and other structures with all arrangements, it is sufficient if the bidders were to satisfy any one of the works. It is therefore contended that the second respondent has committed an error, ignoring the pre- qualification criteria and holding that any one of the work ought to have been done by the bidder.10. Statement of objections have been filed by the tender inviting authority, respondents No.2 and 3 and respondent No.4 separately. On the question of IT returns, respondent No.2 has submitted that the fourth respondent has submitted IT returns of M/s.Shankarnarayana Constructions Pvt. Ltd., for the last five years and also the income tax returns of Sri M.Y.Kattimani, one of the partners of M/s.A.D.U.Infra. It is submitted that the tender scrutiny committee has noticed Clause 3 (iii) of the Partnership Deed of M/s.A.D.U.Infra, which provides as follows:(iii) to take over asssets and assume liabilities of running contract business held in the individual name and style of 'M.Y.Kattimani' and to undertake all unfinished and ongoing contract business held in this name.Further, as per Clause 10(e)-(e) No partner shall take Government contract works in their individual names the experience and the expertise of the party of the second part shall be transferred to the firm by way of an application to the public works department of Government of Karnataka and all other States.11. In the light of the above, the decision of the tender scrutiny Committee in accepting the technical bid of the fourth respondent is sought to be justified. It is submitted that the fourth respondent-Firm has taken over the running business of its partner, Sri M.Y.Kattimani with all its assets and liabilities, the fourth respondent-Firm has become the successor- in-interest of the business of Sri M.Y.Kattimani. It is further submitted that the fourth respondent is registered as Class-I Contractor with Public Works Department and consequently the Firm has been empanelled as Category-I Contractor with the second respondent-Nigam. It is therefore submitted that the fourth respondent having taken over the business of Sri M.Y.Kattimani, with assets and liabilities as a going concern, having become successor-in-interest, the IT returns submitted by one of the partners i.e., Sri M.Y.Kattimani, has been taken into consideration for the purpose of satisfying the criteria stipulated under Clause-3 of the tender notification document.12. The learned Counsel for respondents No.2 and 3 would submit that it is settled law that a Firm is merely an association of individuals and Firm name is only a collective name of those individuals who constitute the Firm. It is a compendium which has to carry on the business. The Firm has no personality of its own apart from the partners. In view of the said legal position, since the Firm has no personality of its own, the constituents of the Firm i.e., the partners being the real representatives of the firm, the experience of the partners can be treated as the experience of the Firm.13. On the question of Clause 4.2 of the tender conditions, it is submitted that the fourth respondent has submitted work done certificate of its JV Partner, M/s.Shankaranarayana Constructions Pvt. Ltd., pertaining to Karnataka Neeravari Nigam Limited, HBC Division, Athani with regard to survey, investigation, design, supply, installation, testing and commissioning of balance head works including all appurtenant structures, pipeline, motors with pumps and electro mechanical works including five year operation and maintenance under 'Tubchi- Bableshwar LIS' on turnkey basis amounting to Rs.480.35 crores in the year 2017-2018 to 2019- 2020. It is further submitted that the fourth respondent-JV Partner, M/s.Shankarnayarayana Constructions Pvt. Ltd. has carried out tunnel work of 2.32 kms. as against the requirement of carrying out tunnel of length of minimum 110 mtrs., in any one financial year, as per addendum dated 15.06.2019. In view of the above, it is submitted that the tender evaluation committee has rightly held that the fourth respondent is qualified and experienced in carrying out the required works.14. On behalf of the tender inviting authority, it is contended that the authority has complied with the requirements of law and the tender conditions. It is submitted that in normal circumstances, this Court does not interfere with Government contracts, unless the entire decision making process is malicious and guided by extraneous considerations. By meeting the averments made by the petitioner herein, the tender inviting authority has substantiated before this Court that the fourth respondent has complied with all the requirements and therefore its bid was declared as responsive.15. Similarly, the fourth respondent seeks to justify the decision of the second and third respondents-tender inviting authority, in accepting the technical bid and declaring the fourth respondent as the lowest tenderer, there being a difference of more than Rs.48 crores, between the petitioner and the fourth respondent. While reiterating the submissions made by respondents No.2 and 3, as regards the fulfillment of conditions of IT returns and the other technical issues raised by the petitioner, it is submitted that this writ petition does not raise any public interest, while it is in fact adverse to public interest. It is submitted that the subject tender work forms part of Yethinahole project which aims to provide safe drinking water to the drought prone areas of Kolar, Chikkaballapur, Hassan, Ramanagara, Bangalore Rural, Tumakuru etc. The scope of the works includes construction of Gowribidanur gravity feeder comprising of supply, installation, testing and commissioning of gravity MS Pipe, including structures under Yethinahole project. It is further submitted that consequent to the tender inviting authority declaring the fourth respondent as the successful bidder and entering into a contract, all necessary steps have been taken by the fourth respondent, including vendor approvals, necessary permissions from authorities which are time bound, placing of orders from manufacturers etc., for the completion of the tender works. It is submitted that the fourth respondent has incurred huge financial expenditure to carry out the tender works.16. Heard the learned Senior Counsel Dr.Adithya Sondhi, for the petitioner, Sri Ramachandran, learned Counsel for Sri M.R.C.Ravi, for respondents No.2 and 3, Sri S.Sriranga, learned Counsel for respondent No.4 and Sri Sridhar N.Hegde, learned HCGP for respondent No.1-State of Karnataka.17. Initially, when objections were raised by the respondents on the ground of availability of alternative remedy to the petitioner, under the provisions of The Karnataka Transparency in Public Procurements Act, 1999, this Court while declining to grant stay or direction to the respondents not to proceed with the works pursuant to award of tender, by order dated 24.09.2019, directed that any action taken by respondents No.2 and 3 in pursuance of the impugned tender notification in favour of the fourth respondent shall be subject to the outcome of this writ petition. It is well settled that availability of alternative remedy is not a total bar of invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Moreover, as noted above, since this Court directed that the action taken by respondents No.2 and 3 in pursuance of the impugned tender notification in favour of the fourth respondent shall be subject to the outcome of this writ petition, at this juncture it would not be prudent to reject the petition on the ground of availability of alternative remedy.18. On the question of the IT returns of one of the partners (Sri M.Y.Kattimani) being taken into consideration as the IT returns of the JV Partner, the learned Senior Counsel for the petitioner placed reliance on a decision of the Apex Court in the case of C.I.T Vs. A.W.Piggies Messrs and Co., AIR 1953 SC 455, which was also relied upon by the learned Counsel for respondents No.2 and 3. The learned Counsel for respondents No.2 and 3 also placed reliance on another decision of the Apex Court in the case of New Horizons Ltd., and Another Vs. Union of India and Others, (1995) 1 SCC 478. It has been held that even if it be assumed that the requirement regarding experience as set out in the advertisement inviting tenders was a condition about eligibility for consideration of the tender, the said requirement regarding experience cannot be construed to mean that the said experience should be of the tenderer in his name only. It was held that the terms and conditions of the tender document have to be construed from the stand point of a prudent businessman. When a businessman enters into a contract whereunder some work is to be performed he seeks to assure himself about the credentials of the person who is to be entrusted with the performance of the work. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a Company he will look into the background of the Company and the persons who are in control of the same and their capacity to execute the work. He would go not by the name of the Company but by the persons behind the Company. It was further held that the expression 'joint venture' is more frequently used in the United States. It connotes a legal entity in the nature of partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of persons or Companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and losses. A joint venture can take the form of a Corporation wherein two or more persons or Companies may join together. A Joint Venture Corporation has been defined as a Corporation which has joined with other individuals or Corporations within the corporate framework in some specific undertaking. While concluding, it was held that for the purpose of considering whether the tenderer had experience as contemplated by the advertisement for inviting tenders, the experience of the constituents of the tenderer had to be taken into consideration.19. This in fact is a reiteration of the ratio laid down in A.W.Piggies (supra), where it was held that a Firm is merely an association of individuals and Firm name is only a collective name of those individuals who constitute the Firm. It is a compendium which has to carry on the business. The Firm has no personality of its own apart from the partners. In view of the said legal position, since the Firm has no personality of its own, the constituents of the Firm i.e., the partners being the real representatives of the firm, the experience of the partners can be treated as the experience of the Firm. Therefore, the contentions raised by the petitioner in this regard, does not hold any water.20. Dr.Adithya Sondhi, learned Senior Counsel, appearing for the petitioner, had placed reliance on the decision of the Apex Court in the case of B.S.N.Joshi and Sons Limited Vs. Nair Coal Services Ltd., and Others, (2006) 11 SCC 548, to contend that the specific tender condition in Clauses-4.2 and 4.3, are essential conditions for pre-qualification bid. There can be no doubt that the tender condition in Clauses 4.2 and 4.3 of the tender inviting notification forms essential conditions. However, it is the assessment of the scrutiny committee that is being found fault with by the petitioner.21. As could be seen from Clause 4.2, it provides that the intending bidder should have satisfactorily completed atleast one similar nature of work costing not less than Rs.368.57 crores, during the last five years i.e., 2014-2015 to 2018-2019. In the statement o

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f objections filed by respondents No.2 & 3 and 4, the details of the information provided by the fourth respondent in this regard has been elaborated. In paragraph-19 of the statement of objections of respondents No.2 and 3, it is specifically stated that the work done certificate of the JV partner M/s.Shankaranarayana Constructions Pvt. Ltd. pertaining to Karnataka Neeravari Nigam Limited, HBC Division, Athani with regard to survey, investigation, design, supply, installation, testing and commissioning of balance head works including all appurtenant structures, pipeline, motors with pumps and electro mechanical works including five year operation and maintenance under 'Tubchi- Bableshwar LIS' on turnkey basis amounting to Rs.480.35 crores in the year 2017-2018 to 2019- 2020. Further, as regards sub-clause (4) of Clause 4.3 viz., minimum tunnel length of 110 mtrs., it is stated that the JV partner has carried out tunnel work of 2.32 kms. Therefore, having regard to the ratio laid down in the decisions of the Apex Court referred supra, a JV partner, having placed on record the works undertaken which would comply with the conditions stipulated in the tender document, the scrutiny committee has rightly come to a conclusion that the conditions are fulfilled by the fourth respondent.22. In view of the foregoing, this Court is of the considered opinion that no fault could be found in the decision making process of the second and third respondents, while assessing the technical bid of the fourth respondent. It is also an undisputed fact that the bid of the fourth respondent is much lower than that of the petitioner. Moreover, the petitioner has not alleged any mala fides on the respondents. In that view of the matter, no interference is called for at the hands of this Court.23. The writ petition is accordingly dismissed. No order as to costs. In view of the above I.A. No.1/2020 does not survive for consideration and accordingly the same stands disposed of.
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