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M/s. Aquasub Engineering, Represented by its Deputy General Manager, Rajashekhar Hendi, Bengaluru v/s The Managing Director, Karnataka Maharshi Valmiki Schedule Tribe Development, Bengaluru & Others

    Writ Petition No. 3547 of 2022 (GM-TEN)

    Decided On, 16 March 2022

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE S.G. PANDIT

    For the Petitioner: Uday Holla, Sr. Counsel, Avaneeshnath R. Taranath, D.K. Ravindra, Advocates. For the Respondents: R1, Shishira Amaranth, R2 to R4, K.C. Sudarshan, Deepak S. Shetty, Advocates.



Judgment Text

(Prayer: This Writ petition is filed Under Articles 226 and 227 of the Constitution of India praying to quash the order dated 29.01.2022 passed by the R5, in Appeal vide Annexure-S and Direct the R1 to issue work orders in furtherance of letter of acceptance dated 06.11.2021 vide Annexure-C.)

1. The petitioner, a manufacturing Company, having Captive Electrical Lamination (Stamping) Unit with high speed, high accuracy AIDA, press lines is before this Court under Article 226 of the Constitution of India praying for a writ of certiorari to quash the order dated 29.01.2022 passed by the 5th respondent in Appeal “KANNADA” 2021 vide Annexure-S and for a writ of mandamus directing the first respondent to issue work order in furtherance of Letter of Acceptance dated.06.11.2021 vide Annexure-C.

2. Brief facts of the case are that, the first respondent- Karnataka Maharshi Valmiki Scheduled Tribe Development Corporation Limited, Bengaluru (for short "the Corporation") issued tender notification dated 30.06.2021 (Annexure-B) calling tenders for the work of Supply, Installation and Electrification (Energization) of Irrigation Submersible Pumpsets with Accessories Suitable for 165 mm Dia Borewells under "Ganga Kalyana Scheme" for the year2018-19. The last date for uploading the e-Tender to the Procurement Portal was on 12.07.2021; 07.07.2021 was the date for pre-bid meeting; 14.07.2021 was the date for opening of technical bids. The petitioner as well as respondents No.2 to 4 submitted their tenders pursuant to tender notification dated 30.06.2021. The petitioner's tender being the lowest tender was accepted and Letter of Acceptance was issued on 06.11.2021 as per Annexure-C. The petitioner was asked to deposit security deposit of Rs.168.68 Lakhs and to enter into an agreement with the Corporation. The petitioner is said to have deposited the security deposit and furnished Bank Guarantee for a sum of Rs.21.00 Crores on 27.11.2021.

3. Respondents No.2 to 4 aggrieved by awarding tender in favour of the petitioner and against rejection of their tenders filed an appeal before the 5th respondent. The 5th respondent on consideration of the appeal under the impugned order dated 29.01.2022 (Annexure-S) allowed the appeal and cancelled the tender awarded to the petitioner. The petitionerbeing aggrieved by cancellation of acceptance of tender in his favour is before this Court challenging the appellate order and for a direction to the first respondent to issue work order in furtherance of Letter of Acceptance dated 06.11.2021.

4. Heard the learned Senior Counsel Sri.Udaya Holla for Sriyuths Avaneeshnath and Ravindra D.K., learned counsel for the petitioner, learned counsel Sri.Shishira Amarnath for respondent No.1, learned counsel Sri.K.C.Sudarshan for Sri.Deepak S Shetty, learned counsel for respondents/ Caveators No.2 to 4. Perused the writ petition papers.

5. Learned Senior Counsel Sri.Udaya Holla submits that the petitioner being the lowest tenderer, his tender was accepted and Letter of Acceptance was issued on 06.11.2021 for Supply, Installation and Electrification (Energization) of Irrigation, Submersible Pumpsets with other accessories. Pursuant to the Letter of Acceptance, the petitioner has remitted the security deposit of Rs.168.68 Lakhs as well as Rs.21.00 Crores as Bank Guarantee in favour of the firstrespondent-Corporation. Learned Senior Counsel invites attention of this Court to the impugned appellate order dated 29.01.2022 and submits that the order of the appellate authority is the result of non-application of mind. In that, it is submitted that the appellate authority could not have come to a conclusion that the petitioner has suppressed the material fact of receiving the show cause notice in the affidavit enclosed to the tender documents. Learned Senior counsel elaborating his argument submits that the tender documents were submitted by the petitioner on 12.07.2021, i.e., on the last date for submitting the tender and the affidavit was also filed as on the same day. As on the date of submitting the tender documents and also on the date of filing affidavit, the petitioner was not issued with any show cause notice as reflected in the impugned order. It is his submission that the show cause notice Annexure-H dated 15.07.2021 was received by the petitioner subsequent to submitting the tender documents in the present tender and subsequent to the last date for submitting the tender.Therefore, it is his submission that the question of suppressing the fact of receiving show cause notice in the affidavit filed along with tender document would not arise.

6. Learned Senior Counsel nextly contended that the finding of the appellate authority that the petitioner has under-quoted the price and because of under-quoting the price, the Government may incur loss is not proper and correct. The appellate authority has not come to a definite conclusion that, because of under-quoting of the price by the petitioner, the Government would incur loss. Only on the assumptions and conjectures, the appellate authority cannot come to a conclusion that the Government may incur loss. Further, the learned Senior Counsel would submit that no reasons are assigned for allowing the appeal by the appellate authority. In that, he submits that even though the appellate order is not an administrative decision, some reasons are required to be assigned and not elaborate reasons. Thus, he submits that the petitioner being the lowest tenderer in thetender process of respondent No.1/Corporation is entitled for a direction to the first respondent to issue work order in furtherance of letter of acceptance.

7. Per contra, learned counsel for respondent No.1/ Corporation justifies the award of contract to the petitioner. It is his submission that the petitioner being the lowest tenderer, the first respondent issued Letter of Acceptance in favour of the petitioner on 06.11.2021, pursuant to which, the petitioner has remitted the security deposit and furnished Bank Guarantee. Further, he justifies awarding contract in favour of the petitioner.

8. Learned counsel Sri.K.C.Sudarshan appearing for respondents No.2 to 4 vehemently opposes the prayer of the petitioner. Learned counsel would submit that the appellate authority rightly allowed the appeal and cancelled the Letter of Acceptance in favour of the petitioner. Learned counsel would submit that the petitioner had suppressed the fact of issuance of show cause notice by Dr.B.R.AmbedkarDevelopment Corporation Limited wherein he was called upon to explain as to why action should not be initiated for blacklisting alleging irregularity in supply of pumpsets during the year 2016-17. In that regard, he submits that even though the petitioner received the show cause notice subsequent to the last date for submitting the tender, he invites attention of this Court to the reply submitted by the petitioner as at Annexure-J and submits that the petitioner had received short payment from the Dr.B.R.Ambedkar Development Corporation Limited. Unless there was some proceedings against the petitioner, he would not have received short payment which the petitioner failed to disclose in his affidavit enclosed to the tender document. Learned counsel would further submit that the petitioner had under-quoted the price for the material i.e., submersible pumpsets and due to under-quoting of the price, the Government is likely to suffer loss. He invites attention of this Court to clause 3.6.1 of tender conditions wherein it permits disqualification of a tenderer if he misleads or makes false representation.Therefore, when the petitioner under-quoted the price, rightly the appellate authority cancelled the Letter of Acceptance of tender in favour of the petitioner.

9. Lastly, learned counsel contended that the Tender Inviting Authority failed to comply with Rule 26 of the Karnataka Transparency in Public Procurements Rules, 2000 (for short "2000 Rules") particularly Rule 26(2)(b) of the Rules. Learned counsel would submit that the Tender Inviting Authority ought to have uploaded the comparative statement in Karnataka Public Procurements Portal. The comparative statement was never uploaded in the portal and due to non- uploading of comparative statement, mandatory requirement under Rule 26 is not followed. Hence, the entire tender process is vitiated.

10. Learned counsel for respondent No.1/Corporation was directed to file an affidavit as to when the comparative statement was uploaded in the Karnataka Public Procurement Portal. Respondent No.1 filed affidavit of theManaging Director of the first respondent-Corporation dated 16.03.2022, wherein it is stated that on 17.09.2021 i.e., on opening of financial bids, comparative statement which is a self-generated one was uploaded on 19.09.2021 itself.

11. On hearing the learned counsel for the parties and on perusal of the writ petition papers, the only point which falls for consideration is as to whether the order of the appellate authority dated 29.01.2022 (Annexure-S) requires interference by this Court?

12. Answer to the above point is in the affirmative for the following reasons:

Judicial review in the matter of Tender Process is very limited. High Court, underArticle 226of the Constitution of India would not sit as an appellate authority over the decision of the Tender Accepting Authority or Court would not venture to set aside the award of tender to successful bidder ignoring the public interest. The Court should always keep in mind the larger public interest. The Hon'ble Apex Court inJAGDISH MANDAL v/s STATE OF ORISSA AND OTHERS reported in (2007) 14 SCC 517 explained the scope of interference in tender process. Paragraph 22 of the decision reads as follows:

"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound".

When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers withimaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

OR

Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference underArticle 226.Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse(allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."

Keeping in mind the above principles, I would proceed to examine the facts of the case on hand.

13. The first respondent-Corporation by notification dated 30.06.2021 invited tenders from eligible tenderers for the work of Supply, Installation and Electrification (Energization) of Irrigation Submersible Pumpsets with Accessories Suitable for 165 mm Dia Borewells under "Ganga Kalyana Scheme" for the year 2018-19. Last date for submitting the tender was on 12.07.2021; 07.07.2021 was the date for pre bid meeting; 14.07.2021 was the date for opening the technical bid. The petitioner was the lowest tenderer (L-1). As the petitioner was L-1, Tender Accepting Authority/first respondent issued Letter of Acceptance dated 06.11.2021 (Annexure-C). In pursuance of the Letter of Acceptance, the petitioner remitted 3% of the total tender amount towards security deposit i.e.,Rs.168.68 lakhs. In addition, the petitioner is said to have submitted Bank Guarantee for a sum of Rs.21.00 Crores.

14. The appellate authority under the impugned order allowed the appeal of respondents No.2 to 4 on the ground of

(a) non-disclosure of issuance of show-cause notice for irregularity in supply of pumpsets to Dr.B.R.Ambedkar Development Corporation Limited; (b) the petitioner has under-quoted the price i.e, freak rates which may lead to incurring loss by the State Government.

15. With regard to non-disclosure or suppression of material fact in respect of the action initiated by Dr.B.R.Ambedkar Development Corporation for irregularity in supply of pumpsets, it is seen from the records that the show cause notice in that regard was issued to the petitioner only on 15.07.2021 as evidenced by Annexure-H show cause notice. The last date for submitting the tender document was 12.07.2021. As on the date of submitting the tender documents, the petitioner was not in receipt of show causenotice dated 15.07.2021 and there was no occasion for the petitioner to mention the same in the affidavit filed along with tender documents. Learned counsel for respondents No.2 to 4 invited attention of this Court to reply submitted by the petitioner to show cause notice at Annexure-J dated 06.12.2021 and submitted that the petitioner was aware of the receipt of short payment from the Dr.B.R.Ambedkar Development Corporation Limited. All short payments would not be the result of any action against such Contractor. If a tenderer receives any short payment in an earlier tender work, he need not mention receipt of short payment in the affidavit. But, if there is any adverse order or if the proceedings are pending for irregularity in performance or blacklisting, then it would be necessary to mention the same in the affidavit. In the instant case, prior to receiving the show-cause notice dated 15.07.2021, it cannot be said that the petitioner was aware of any such action being contemplated by Dr.B.R.Ambedkar Development Corporation Limited. It is also to be noted here itself as pointed out by thelearned Senior Counsel, that Dr.B.R.Ambedkar Development Corporation subsequently awarded 5 contracts to the petitioner, which means, the action initiated by issuing show cause notice dated 15.07.2021 is closed by accepting the explanation submitted by the petitioner. Therefore, in the facts and circumstances of the present case, there was no reason for the appellate authority to come to a conclusion that the petitioner has suppressed or not disclosed the material fact of receiving show-cause notice.

16. The next ground on which the appellate authority allowed the appeal is that the petitioner has under-quoted the price or quoted freak rates in respect of pumpsets that are required to be supplied. In that regard, the appellate authority has not come to a definite conclusion of loss being caused to the Government. The appellate authority has only observed that the Government may incur loss as the petitioner has under-quoted the price. Suppose, if the petitioner has quoted less price, it is the responsibility of thetenderer to supply pumpsets at the price agreed upon without compromise in quality and with the specifications as required by the Tendering authority. Once tender is accepted, it is the responsibility of the tenderer to supply the tendered item, failing which, he would face the consequences.

In that process, even before execution of the tender work, the appellate authority could not have come to a conclusion that the Government may incur loss. Moreover, respondent Nos.2 to 4 have failed to demonstrate how under-quoting the price would result in loss to Procuring entity. Respondent No.1-Tender Accepting Authority has not raised any such objection, and on the other hand, it has accepted petitioner's tender being L-1.

17. With regard t

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o non-compliance of Rule 26 of 2000 Rules, it is to be noted that learned counsel for respondent No.1 has filed an affidavit dated 16.03.2022. Paragraphs 5 to 9 of the said affidavit reads as follows: "(5) I state that upon scrutiny of all the documents submitted by the tenderers was 06.09.2021 technical scrutiny committee finalized the technical bids. (6) I state that on 17.09.2021 financial bids of the technical qualified ten derers/bidders were opened. I state that the comparative statement which is self- generated by the system is reflected to the participants from 17.09.2021 onwards. (7) I state that after the scrutiny and finalization by the system on 21.10.2021, L-1 is formally declared by this authority and in this case the Petitioner has been declared as L-1 by system and accordingly we have issued the letter of acceptance to the Petitioner on 06.11.2021. (8) I state that to prevent the frustration of the contract corporation has taken the bank guarantee and other documents from the L-1/Petitioner herein in accordance with law. (9) I state that the preparation of manual comparative statement has become redundant for quite a long time now, in lieu of automation of the entire tender process, which again is in consonance with Rule 26(2) of KTTP Rules." A reading of the above affidavit indicates that the Tender Inviting Authority finalized the technical bid on 06.09.2021. On 17.09.2021, financial bid was opened and the comparativestatement which is self-generated one was uploaded on the same day itself. At this stage, it is not open for respondents No.2 to 4 to dispute the same. 18. For the reasons recorded above, the writ petition is allowed. The impugned appellate order bearing “KANNADA” 2021 vide Annexure-S dated 29.01.2022 is quashed. Respondent No.1 is directed to issue work order to the petitioner.
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