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Karnataka High Court · body

2008 DIGILAW 712 (KAR)

K. K. Builders v. State Of Karnataka

2008-11-18

N.K.PATIL

body2008
JUDGMENT ( 1. ) PETITIONER in this petition is a registered firm represented by its Managing partner. Petitioner has sought for a direction, directing the respondents to accept the tender of the petitioner without insisting for compliance of the "revised conditions" prescribed in Section 3 of the revised tender form vide Annexure-E and to declare that, it is impermissible to vary the conditions of pre-qualification to the disadvantage of a bidder, after a tender is submitted and the action of the respondents in so altering is illegal and mala fide and consequently to direct the respondents to consider the tender application of the petitioner, without insisting the compliance of Section 3 of the tender application vide annexure-E issued by the third respondent and to accept the bid offers from petitioner treating him as pre-qualified in accordance with law. Further, petitioner has prayed to pass such other order/orders as this Court deems fit to pass, including the order as to costs, in the interest of justice and equity. ( 2. ) THE grievance of the petitioner in the instant writ petition is that, petitioner is a registered firm, having its Office at Peravoor, Konanur district, Kerala State and petitioner is an ISO 9001-2000 certified company and a leading Civil Engineering Contractor in Kerala State and also a registered PWD First Class Contractor in Karnataka and is also the contractor for Southern Railway, Kerala, and other Co-operative Sectors, local bodies etc. The third respondent herein has invited the tenders vide annexure-A for execution of the works of Improvement to Konanur -Makutta Road (SH-91) from 78. 26 Kmts. to 94. 76 Kmts. In Virajpet Taluk, kodagu District. The tender process was completely through 'e'-Procurement' as a licensed certifying agency was appointed for governing 'e-procurement' of tenders. The last date for submission of the tenders through internet was 30th August, 2008 which subsequently came to be extended up to 6th September, 2008. Section 3 of the Tender Documents stipulated the pre qualifications of the tenders and on the last date stipulated for submission of tender through internet, petitioner has deposited the necessary Earnest Money Deposit (EMD) of Rs. 22.50 lakhs and tried to upload the completed tender form in the internet, but could not upload the same. He was asked to come over to Mysore and the petitioner deputed his team of staff for uploading the tender documents. 22.50 lakhs and tried to upload the completed tender form in the internet, but could not upload the same. He was asked to come over to Mysore and the petitioner deputed his team of staff for uploading the tender documents. The E-procurement cell directed the petitioner to meet one Mr. Venkat and Mr. Venkat tried to upload the tender form of the petitioner through internet, but, could not succeed in uploading the same. Petitioner has made all sincere efforts to upload, but could not succeed. Therefore, petitioner was constrained to send a fax message to the third respondent vide Annexure-B. However, at 15:59 Hrs. (3:50 P. M.) on 6th September, 2008, the tender document of the petitioner was uploaded before the machine logged off automatically. In 10th September, 2008, petitioner has sent a representation to third respondent, explaining the ordeal and agony he experienced in uploading the tender documents. Be that as it may. Instead of opening the tender immediately after the last date, an E-mail was received by the petitioner from the third respondent vide Annexure-D, informing that, the tenders have been recalled. The reason given for recalling the tender is stated to be that, the tenders did not submit the complete required documents even though the petitioner had submitted his tender along with all the requisite certificates and documents. When things stood thus, the respondents again, invited fresh tenderers vide Annexure-E, drastically altering the pre qualifications of the tenders to the detriment of the petitioner and other similarly situated tenderers, only to suit certain persons' convenience and benefits who are influential enough with the respondents. It is the case of petitioner that, by virtue of the impugned fresh tender Notification, the petitioner and other similarly situated eligible contractors have been deprived of participating in the tender process. The respondents, intentionally and deliberately, in order to make easy way for the other participants/vested/interested persons, without following the due procedure as envisaged under the relevant provisions of the Karnataka Transparency in Public Procurements Act, 1999 read with Karnataka Transparency in public Procurements Rules, 2000, have proceeded to issue the impugned fresh tender Notification. The said action of the respondents is arbitrary, mala fide and against the known principles of tender contract. The said action of the respondents is arbitrary, mala fide and against the known principles of tender contract. Therefore, the entire proceedings initiated for issuing the impugned fresh Tender notification by the jurisdictional Competent Authority of the respondent is liable to vitiate, in view of not following the due procedure as envisaged under the relevant provisions of the aforesaid Act, and Rules. Therefore, petitioner is constrained to redress his grievances by presenting the instant writ petition, seeking appropriate reliefs, as stated supra. The principal submission canvassed by learned Senior Counsel appearing for petitioner, at the outset are three-fold. Firstly, that the jurisdictional authority of the respondent-Department has not followed the procedure strictly as envisaged under the relevant provisions of the karnataka Transparency in Public Procurements Act, 1999 ('act' for short)and Karnataka Transparency in Public Procurements Rules, 2000 ('rules' for short ). Secondly, he submitted that, in order to make way or suit certain interested/vested persons' convenience and benefits, who are influential enough with the respondents and deprive the eligible contractors to participate in the tender process, the respondents have modified/altered the requirements/pre-qualification owing to infrastructure to see that, the petitioner and other similarly situated contractors would not be eligible to participate in the tender process. Thirdly, he submitted that, the fresh tender Notification issued by the Competent Authority is contrary to Rule 27 of the Rules 2000. Therefore, he submitted that, in view of non compliance of these three basic requirements, the entire proceedings initiated for issuing fresh tender Notification cannot be sustained and hence, it is liable to be quashed at the threshold itself. To substantiate the said submission, he placed reliance on the judgment of the Apex Court reported in (2007) 8 SCC 1 (Reliance Energy Limited and Another Vs. Maharashtra State Road Development Corporation Limited and Others)and drew my specific attention to paragraphs 36 to 39 and submitted that, the grounds upon which, the administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely illegality, irrationality and procedural impropriety and the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. Further, he drew my specific attention to the operative portion of paragraph 39 of the aforesaid judgment of the Apex Court and submitted that, one of the important principles laid down is that, whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear and 'certainty' is an important aspect of the rule of law. ( 3. ) FURTHER, learned Senior Counsel relied on the decision of the learned single Judge of this Court reported in ILR 2006 Kar. 4216 (Sical Logistics limited Vs. The Karnataka Power Corporation Limited and Others) and has taken me through paragraph 31 of the said judgment and pointed out that, the very object and purpose of the Act is to ensure streamlining the procedure of awarding contracts by State and public procurement agencies and the same is regulated by statutory provisions and, unless the procedure is followed strictly in conformity with the Act and Rules, it amounts to violating or giving a go-by to the very object and purpose of streamlining of awarding contracts for procurement of goods and services by public agencies. To further substantiate the principal submission made by learned senior Counsel appearing for petitioner, he submitted that, the earlier tender Notification issued has been cancelled on the ground that, no participants/contractors were found eligible and therefore, they were constrained to re-notify the same, but with certain modifications vide annexure-E. However, while re-notifying the fresh tender Notification, the jurisdictional authority has drastically altered/modified the pre-qualification of the tenders only to see that, the petitioner and other similarly situated contractors are eliminated and just to suit the other vested/rival contractors to participate in the tender proceedings. Further, he submitted that, as per the decision taken in the proceedings of the Government of karnataka, dated 14th October, 2008, the Government has modified certain clauses of the Standard Tender Documents (STD) prescribed in the previous government Order dated 6th August 2005. As per the previous Tender notification issued, the prescribed KW-4 is applicable to more than Rs. 100 lakhs but less than 10 crores. But as per the fresh tender Notification, the tender is called for a sum of Rs. 22. As per the previous Tender notification issued, the prescribed KW-4 is applicable to more than Rs. 100 lakhs but less than 10 crores. But as per the fresh tender Notification, the tender is called for a sum of Rs. 22. 50 crores and this is a glaring error on the part of the Tendering Issuing Authority prescribing the said eligibility. Further, he submitted that, the respondents have drastically altered the pre qualification of the tender notified at clause 3. 3 as follows: existing clause modified clause equipment capacity: each Tenderer should further demonstrate: equipment capacity each tenderer should further demonstrate: (a) Availability by owning the following key and critical equipment for this work (a) Availability by owning at least 50% of the required/ specified key and critical equipment for this work and (b) the remaining 50% can be deployed on lease/hire basis for all works provided the relevant documents (commitment agreements etc.) for availability of this work are furnished. In addition to the above, the respondents have further bifurcated and specified the details of machinery to be owned as Sl. Nos. 1 to 13 and the details of machinery to be deployed on lease/hire basis as Sl. Nos. 1 to 7. But, it is the specific case of petitioner that, when respondents have specifically stated that the tenderer must own at least 50% of the required/ specified key and critical equipments and the remaining 50% to be deployed on lease/hire basis, they must have strictly adhered to 50% of key equipments and 50% of machineries on lease/hire basis plainly and ought not to have bifurcated the machineries required to be owned by tenderer as Sl. Nos. 1 to 13 and Sl. Nos. 1 to 7, resulting in the petitioner and similarly situated contractors being ineligible to participate in the tender process. The further case of petitioner is that, the said modification is made only to eliminate the petitioner and other similar contractors from participating in the tender proceedings and the reason behind altering the clauses is just to suit the vested/interested persons. The said modification is impermissible and contrary to the very decision taken in the standing committee meeting held on 2nd August, 2008 produced at Annexure-H along with the rejoinder filed by petitioner to the objections filed by respondents. The said modification is impermissible and contrary to the very decision taken in the standing committee meeting held on 2nd August, 2008 produced at Annexure-H along with the rejoinder filed by petitioner to the objections filed by respondents. Therefore, the said gross alternation/modification made in the impugned fresh Tender Notification is impermissible and is contrary to their own decision taken by the highest and apex body of the Department and it is applicable uniformly throughout the State. He further submitted that, if at all, the respondents want to re-notify the tender, by making certain modifications, the same should be made strictly in compliance of rule 27 of the Rules, 2000. Therefore, he submitted that, taking into consideration the totality of the case on hand, the proceedings initiated for issuing fresh tender Notification cannot be sustained and hence it is liable to be set aside, as stated above. ( 4. ) PER contra, learned Government pleader appearing for respondents has filed the statement of objections and vehemently substantiated the fresh tender Notification issued by the Competent Authority stating that, the said decision taken is strictly in accordance with the relevant provisions of the Act and Rules and the same is in consonance with the proceedings of the Apex body, as referred above. Further, he submitted that, the contention of the learned Senior Counsel appearing for petitioner that, there is drastic/gross alteration/modification in the pre qualification of the tenderers and the same are made only to suit the beneficiary or the vested persons to participate in the tender proceeidngs, is incorrect for the reason that, the said alteration/bifurcation/modification is made in the good interest of the tenderers themselves, who want to participate and it is a relaxation given to them. Further he vehemently submitted that, petitioner does not fulfill the requirement stipulated in both the earlier as well as the modified fresh tender Notifications. In the earlier tender Notification, petitioner had applied for the same, but his request was not considered on the ground that, he was not duly qualified. Therefore, since no eligible tenderers could be found, a fresh tender Notification, with certain modifications, in the interest of tenderers, has been issued. In the earlier tender Notification, petitioner had applied for the same, but his request was not considered on the ground that, he was not duly qualified. Therefore, since no eligible tenderers could be found, a fresh tender Notification, with certain modifications, in the interest of tenderers, has been issued. Petitioner, having been unsuccessful in the earlier tender Notification and ineligible to fulfill the pre-qualification criteria of the fresh tender Notification, does not have any locus standi to question the correctness or otherwise of the present tender Notification issued by the jurisdictional authority. Further, learned Government Pleader appearing for respondents vehemently submitted that, the eligibility criteria prescribed in the tender notification is not open to judicial scrutiny because the invitation to tender is in the realm of contract. To substantiate the said submission, he relied upon the judgment of the Division Bench of this Court reported in 2002 kar. P. 3038 (South India Corporation Limited Vs. The Karnataka Power corporation Limited and Others) and submitted that, there is no arbitrariness in modifying the pre-qualification in the tender Notification and there is a definite nexus sought to be achieved between the aforesaid modification and the object sought to be achieved. Further, he submitted that, it is not the case of petitioner that, there are any allegations of mala fide against the authorities. The impugned fresh Notification issued is more competitive and is made to enable more number of tenderers/bidders and the tenderers with lower qualification to participate in the tender proceedings. Therefore, the impugned fresh Notification issued is in accordance with the procedure prescribed and in the good interest of tenders/bidders. Therefore, he submitted that, petitioner cannot take the ground that, due procedure has not been followed especially, when petitioner is neither eligible nor qualified to participate either in the earlier notification or in the fresh tender proceedings. Further, he submitted that, due to urgency in the matter, immediately after cancelling the earlier tender notification, the impugned fresh Notification has been issued, calling for tenders from duly eligible contractors to participate in the tender proceedings. Therefore, petitioner is not entitled to seek the reliefs, as sought for in the instant writ petition. Hence, the writ petition filed by petitioner is liable to be dismissed as devoid of merits. ( 5. Therefore, petitioner is not entitled to seek the reliefs, as sought for in the instant writ petition. Hence, the writ petition filed by petitioner is liable to be dismissed as devoid of merits. ( 5. ) AFTER hearing learned Senior Counsel appearing for petitioner, learned Government Pleader appearing for respondents and after considering the rival contentions urged by the respective Counsel appearing for the parties, it emerges that, the previous tender Notification issued has been cancelled on 25th September, 2008 and the instant fresh tender notification has been issued on 26th September, 2008. After perusal of the material. available on file, it can be seen that, the learned Government pleader has not produced any relevant documents to substantiate that, the authorities have complied with Rule 27 of the Rules regarding pre qualification. Rule 27 stipulate that, the tender Notifying Authority shall for reasons to be recorded in writing provide for pre qualification of tenders on the basis of experience and past performance, capabilities of the tenderer and the financial status and capacity. Therefore, it is not proper on the part of the authority to state that, the entire proceedings will be processed through "e-procurement" basis. It is significant to note here itself that, as per the reliance placed by the learned Senior Counsel appearing for petitioner on the Government Order dated 6th August, 2005 vide annexure-G, which is the proceedings of the Government of Karnataka, regarding procurement of works - Use of Standard Tender Documents (STD) in respect of the prescribed form No. K/w-4, the procurement of works by inviting open tenders (Item Rate) - Two Cover Tender System with Price Adjustment (Annexure-IV), the value of contract is mentioned as "more than Rs. 100 lakhs but less than Rs. 10 crores (threshold for pre-qualification ). But the said modification is not at all applicable to the issue in dispute since the value of contract in respect of Form No. K/w-4 is for nearly 22. 50 crores. Further, as per the proceedings of the standing committee meeting held on 2nd August, 2008 vide Annexure-H, at item no. 7 internal page. 6, it is modified in respect of clause 3. 3. 50 crores. Further, as per the proceedings of the standing committee meeting held on 2nd August, 2008 vide Annexure-H, at item no. 7 internal page. 6, it is modified in respect of clause 3. 3. that, the equipment capacity that each tenderer should further demonstrate is (a)Availability by owning at least 50% of the required/specified key and critical equipment for this work and (b) the remaining 50% can be deployed on lease/hire basis for all works provided the relevant documents (commitment agreements etc.) for availability of this work are furnished. Instead of sticking on to the said modification made as per the standing committee meeting as, any 50% of the required/specified key and critical equipments and any 50% to be deployed on lease/hire basis, the authority has further bifurcated and categorically restricted the said 50% as, Sl. Nos. 1 to 13 -the details of machinery to be owned and Sl. Nos. 1 to 7 the details of machinery to be deployed on lease/hire basis. It is the specific case of petitioner that, the said bifurcation made is contrary to their own decision taken in the standing Committee meeting and is made only to keep away the petitioner and other similar person out of the contention for the contract. Further, petitioner has specifically stated that, this has been done wantonly by the respondents after they came to know of the pre-qualification of the petitioner in pursuance of his participation in the earlier tender Notification wherein, petitioner has spelt out the details of machineries owned and to be hired by him. Therefore, the respondents have intentionally and deliberately made further bifurcation of the machineries to be owned and deployed on hire/lease basis to eliminate the petitioner from qualifying to participate in the tender proceedings. The respondents after coming to know that, petitioner does not own item No. 6 in the details of machinery to be owned, viz. Pugmill-1 No., have deliberately altered the pre-qualification and made compulsion for owning the said machinery and this is down only to suit certain interested persons. ( 6. The respondents after coming to know that, petitioner does not own item No. 6 in the details of machinery to be owned, viz. Pugmill-1 No., have deliberately altered the pre-qualification and made compulsion for owning the said machinery and this is down only to suit certain interested persons. ( 6. ) FURTHER, it can be seen that, the said drastic alteration in the pre-qualification is made by the tender Issuing Authority, without obtaining necessary approval from the jurisdictional Competent Authority, nor the learned Government Pleader appearing on behalf of respondents has produced an iota of document to establish that, such permission has been obtained before making further bifurcation with regard to pre-qualification. However, learned Government Pleader appearing for respondents justified the said action of respondents by stating that, in pursuance of the notification/government Order dated 21st March, 2007, it is the prerogative of the tender issuing authority to set down the ground rules for participation in the tender and the said authority is entitled to change, modify or amend the tender documents to suit their needs from 1st April, 2007 and the said provision supersedes the provisions contained in the codes, Manuals or any other orders in this regard. Further, it emerges from the records that are available on file that, the manner in which the concerned jurisdictional authority has proceeded and issued the tender Notification calling for tenders from the eligible contractors, shows that, the said authority has slipped into an error by further altering/bifurcating the pre-qualification without obtaining necessary approval from the Competent Authority and has proceed on pick and choose basis, to suit certain vested contractors, who have got the capacity to satisfy the altered/modified pre qualification of the tenderers. The said 'authority, in a very systematic and scientific manner has altered 50% of machineries to be owned as machineries specified from Sl. Nos. 1 to 13 and 50% of machineries to be deployed on hire/lease basis as machineries specified from Sl. Nos. 1 to 7 only to eliminate the other qualified contractors, particularly the petitioner from participating in the tender proceedings and proceeded to bring in such a drastic alteration throwing into air the very aim, object and the purpose for which the statute has been brought into force under the Karnataka Transparency in Public procurements Act, 1999 and its Rules, 2000. 1 to 7 only to eliminate the other qualified contractors, particularly the petitioner from participating in the tender proceedings and proceeded to bring in such a drastic alteration throwing into air the very aim, object and the purpose for which the statute has been brought into force under the Karnataka Transparency in Public procurements Act, 1999 and its Rules, 2000. The aim, object and reasons of the enactment of the aforesaid Act and Rules is explicitly crystal-clear as per the amended Act No. 29 of 2000. It is enacted, after noticing in the recent past, the irregularities in the processing of tenders occurred in the various Government Departments, Public Sector Undertakings, Statutory boards, etc., due to inadequate publicity of tenders, restricted supply of tender documents and resulting in lack of transparency in evaluation and acceptance of tenders, in order to prevent the recurrence of such irregularities, it has been decided to bring about a legislation to provide for transparency in the tender processes and to regulate the procedure in inviting, processing and accepting tenders. But in the instant case, after critical evaluation of the material available on record, it emerges that, the very purpose of the enactment has been defeated and the concerned authority has not made any sincere effort to achieve the aim and object of the very enactment and is lacking bona fide in following the due procedure of law as envisaged under the relevant provisions of the Act and Rules, referred above. Therefore, in view of not following the procedure as envisaged under the relevant provisions of Act and Rules and not taking prior permission for altering/modifying/bifurcating the pre-qualification of the tender requirement, from the Competent Authority, I have no hesitation in stating that, the authorities have to re-do the whole thing. It is relevant to note that, in spite of giving sufficient opportunity, the learned government Pleader has failed to make available any relevant records to convince the Court and establish that, tender Inviting Authority has recorded the reasons in writing for drastically altering the pre-qualification requirement of the tenderers. Except making the submission on instruction from the responsible Officer of the respondent - Department, viz., the executive Engineer that, since the tenders are called for on 'e-procurement' basis, there is no need to record the reasons in writing for issuing fresh tender Notification, no valid material is placed before the Court. Except making the submission on instruction from the responsible Officer of the respondent - Department, viz., the executive Engineer that, since the tenders are called for on 'e-procurement' basis, there is no need to record the reasons in writing for issuing fresh tender Notification, no valid material is placed before the Court. The said stand taken by him cannot be accepted nor the same is justified. Therefore, having regard to the facts and circumstances of the case and taking into account the factual and legal aspects of the matter, as stated supra, I am of the considered view that, the impugned fresh tender notification dated 26th September, 2008 vide Annexure-E in respect of the works of improvement to Konanur-Makutta Road (SH-91) from 78. 26 kmts. to 94. 76 Knits, in Virajpet Taluk, Kodagu District bearing tender reference No. KPWD/2008-2009/work-Indent 155 cannot be sustained and is therefore, liable to be set aside, at the threshold. ( 7. ) AS rightly pointed out. by learned Senior Counsel appearing for petitioner, regarding the well-settled law laid down by the Apex Court and this Court in host of judgments, specifically with reference to the case of Reliance Energy Limited, (2007) 8 SCC 1 (supra), what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is m9re easily visualised than precisely defined. A basic and obvious test to apply is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness. The meaning and true import and concept of arbitrariness is m9re easily visualised than precisely defined. A basic and obvious test to apply is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness. As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of the rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely illegality, irrationality and procedural impropriety. If the ratio of law laid down in the case of Reliance energy Limited is applied to the case on hand, then, this Court has to record that, the authorities have utterly failed in the said test of reasonableness. Therefore, I do not have any hesitation in declaring the impugned Notification issued by the respondents by way of fresh tender notification as referred above as illegal and hence, the same is liable to vitiate. ( 8. ) IN the light of the facts and circumstances of the case, as stated above, the writ petition filed by petitioner is disposed of as follows: I. The writ petition filed by petitioner succeeds; ii. The impugned Notification dated 26th September, 2008 bearing tender reference No. KPWD/2008 - 20091 Work-Indent 155 vide Annexure E, issued by respondents is hereby set aside; iii. Respondents 1 to 3 herein are directed to issue fresh tender notification calling for tenders for the works of improvements to Konanur - Makutta Road (SH-91) from 78. 26 Kmts. to 94. 76 kmts. in Virajpet Taluk Kodagu district, in accordance with the relevant provisions of the act and Rules, immediately.