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2013 DIGILAW 582 (KAR)

D. Ganesh Shankar v. State of Karnataka

2013-05-21

ANAND BYRAREDDY

body2013
ORDER Anand Byrareddy, J.—Heard the learned counsel for the parties on Interlocutory Application nos. 2 and 3 of 2013, filed by the respondents for vacating the ex-parte order of stay granted as on 26.4.2013. The petitioners are said to be service providers engaged in collection and disposal of solid waste material in the city of Bangalore, on behalf of the Bruhath Bangalore Mahanagara Palike (Hereinafter referred to as the 'BBMP', for brevity), at land fill sites designated by the BBMP. The petitioners are said to have been so engaged by the BBMP for the past 10 years, and some of them for the past 20 years. The petitioners had approached this court earlier in writ petitions in WP 47597-47611/2012, WP 39337-39354/2012 and WP 44763-44777/2012, challenging the government order dated 18.9.2012, cancelling the earlier bid and a proposal made by the Commissioner, BBMP on the same day and duly approved by the Government also on the same day. Those writ petitions were disposed of by a common order dated 26.4.2013, however, the petitioners did not have the benefit of a copy of the order as on the date that the present writ petition was filed and were unaware of the order passed therein. The petitioners have sought the following reliefs: (i) Issue a writ in the nature of certiorari to quash the Government order dated 20.3.2013 bearing No. UDD 793 MNY 2012 as per Annexure-A passed by the first respondent and the Circular dated 19.4.2013 bearing No. Commissioner/P.S.R.(4)/544/13-14 produced as Annexure-B passed by the respondent no. 3 as arbitrary and abuse of the process of the Court and amounts to interference with the course of justice and violative of Article 14 of the Constitution of India. (ii) Forebear the respondents from proceeding with fresh tender process till the election process is over and the entire decision for fresh tender process is taken up only after the newly constituted Government and after the disposal of the various petitions pending before this court? 2. The petitioners have called in question two sets of tenders, the BBMP had issued eight tender notices for the purpose of collection and disposal of solid waste within the city of Bangalore. The said tender notices dated 18.9.2012 were issued in respect of 89 packages. It transpires the BBMP had received responses in respect of 81 packages and had not received any response in respect of 8 packages. The said tender notices dated 18.9.2012 were issued in respect of 89 packages. It transpires the BBMP had received responses in respect of 81 packages and had not received any response in respect of 8 packages. Of the 81 bids received, four were excluded as the same did not qualify. The BBMP had ought approval of the State Government in respect of 77 packages, by its letter dated 31.10.2012. The State Government is said to have accorded its approval in respect of 76 packages, as per its order dated 21.11.2012. The government took note of the fact that in respect of one particular package-its approval was not warranted. In so far as the remaining 12 packages, out of the total of 89) packages, the re-tendering process is said to have been approved by the State Government by its letter dated 3.11.2012. 3. The BBMP is said to have issued a tender notification dated 3.11.2012 in respect of the said 12 packages. The BBMP, however, sent a proposal dated 2.3.2013 to the State Government, seeking approval of the tenders since the bid amount in respect of each contract exceeded Rs. 5 crore. The government granted approval to proceed with the tender in respect of 12 packages, vide government order dated 20.3.2013, pursuant to which a circular dated 19.4.2013 was issued. It is the said government order and circular that are under challenge in this petition. 4. It is contended that the Government having permitted the BBMP to issue tender notifications for 38 packages and the financial approval granted for 12 packages, is violative of the Code of conduct. The Code of Conduct was issued by the Chief Election commission of India, on 20.3.2013, in view of the ensuing assembly elections in the State. The State Government's decision therefore was contrary to the code of conduct and ab initio void. It is also pointed out that the pendency of the matters in the aforesaid proceedings, was not brought to the attention of the Chief Election Commissioner, which in itself evidenced mala fide exercise of power. It is contended that the minimum prices and the minimum norms of three notifications differs regarding the price fixation, the percentage quoted by each of the bidders is more than 15% less than the minimum price fixed by the BBMP which is not in public interest. It is contended that the minimum prices and the minimum norms of three notifications differs regarding the price fixation, the percentage quoted by each of the bidders is more than 15% less than the minimum price fixed by the BBMP which is not in public interest. It is also contended that the BBMP and the State Government had proceeded on the footing that there is no objection to the tender process by the Chief Election Commission. It is asserted that the Election Commission would have no jurisdiction to grant any such permission in respect of a transaction with a commercial flavour. The petitioners have raised other incidental grounds. This court has granted an ex-parte order of stay of the impugned order and circular, aforesaid. On service of notice the private respondents 5, 6, 8 to 11 and 14 as well as respondents 2 and 3 have filed separate statement of objections and have filed IA no. 2 and IA no. 3/2013 seeking that the order of stay be vacated. It is urged on behalf of the BBMP in IA no. 3/2013 that the petitioners had raised the very contentions raised in this writ petition in the earlier batch of writ petitions in WP 39337-39354/2012 (excepting the aspect touching on the election process). The Division Bench of this court, which decided those petitions, has dealt with all the contentions and has declined to grant the reliefs sought for by the petitioners. It is elaborated in the statement of objections by the BBMP that the Government Order dated 20.3.2013 and the Official Memorandum dated 19.4.2013 are nothing but proceedings in continuation of the tender process initiated earlier. It is stated that pursuant to the Government Order dated 20.3.2013, the BBMP had issued letters of acceptance to the successful bidders. The tender process having reached a final stage, the petitioners cannot be allowed to stall or subvert the same on baseless grounds. It is stated that out of the 76 packages for which, the tenders were approved by the State Government, the bidders in respect of 34 packages did not adhere to the time schedule resulting in cancellation of tenders in respect of 34 packages and forfeiture of Earnest Money Deposit (EMD). Thus a need arose for re-tendering in respect of these 34 packages. Thus a need arose for re-tendering in respect of these 34 packages. In addition, in the absence of any interim order in respect of 2 packages forming the subject matter of WP 47510/2012, it became necessary to re-tender these 2 packages also. Further, a need arose in respect of 2 more packages wherein the contract was awarded to one Shri M.N. Sreeramulu in view of the order dated 4.4.2013 passed by the division bench of this court. Thus, in all, re-tendering process became necessary in respect of 38 packages. Under the circumstances, after obtaining the approval from the State Government/Election Commission, the BBMP issued an Official Memorandum bearing No. Commissioner. PSR (4) 544/13-14 dated 19.4.2013 fixing a calendar of events for re-tendering in respect of 12 packages. However, for reasons beyond control, the process of re-tender could not be started. The BBMP has not issued any Tender Notification on 20.4.2013 a first step as enunciated in the Official Memorandum dated 19.4.2013. 5. It is stated that the petitioners, having the full knowledge of the tender process and the developments taking place on a day-to-day basis, have approached this court with ulterior motives. As stated earlier, the tender process in respect of 12 packages has reached an advanced stage and it is not open for the petitioners to seek to challenge the tender process on the grounds alleged in the writ petition or otherwise. The questions raised by the petitioners in the present proceedings have been suitably dealt with by the division bench of this court in its order dated 26.4.2013 passed in WP 39337-39354/2012 (GM-TENDER). The petitioners being parties to the said proceedings, cannot be allowed to re-agitate the very same questions again and again. The petitioners are indulging in abuse of the process of court. The writ petitions are liable to be dismissed with exemplary costs. It is stated that successful bidders, who have been awarded with the contract, are not allowed to take up the work by the petitioners. This has resulted in great hardship to the citizens of Bangalore in as much as the smooth disposal of solid waste generated day-by-day is affected by the conduct of the petitioners, who are habituated in stalling the tender process and the same is contrary to public interest. This has resulted in great hardship to the citizens of Bangalore in as much as the smooth disposal of solid waste generated day-by-day is affected by the conduct of the petitioners, who are habituated in stalling the tender process and the same is contrary to public interest. It is stated that as regards 38 packages for which the BBMP issued Official Memorandum bearing No. Commissioner/PSR (4) 544/13-14 dated 19.4.2013, the BBMP has re-examined the entire issue with reference to the order dated 26.4.2013 passed by the division bench of this court, the Commissioner, BBMP, has withdrawn the said Official Memorandum dated 19.4.2013 by issuing another Official Memorandum bearing No. Commr/PSR(4)/1300/13-14 dated 10.5.2013. A copy of the Official Memorandum dated 10.5.2013 is produced as Annexure R. 5. Hence, the challenge to Official Memorandum dated 19.4.2013 no longer survives for consideration in the present writ proceedings. In view of the withdrawal of the Official Memorandum dated 19.4.2013, these respondents are not elaborating on the merits of the case. In any view of the matter, since the time schedule provided in Official Memorandum dated 19.4.2013 could not be adhered to for reasons beyond the control of the BBMP, the tender process enunciated in the Official Memorandum dated 19.4.2013 requires a revision in the light of the order dated 26.4.2013 passed by the division bench in WP 39337-39354/2012 (GM-TENDER). Therefore, the contention in relation to the election process and other grounds stated in the writ petition also do not survive for consideration. It is contended that the petitioners cannot be permitted to challenge the tender or re-tender process without participating in the tender process. It is contended that the petitioners cannot be said to belong to a class of "aggrieved persons" and hence the writ petition is not maintainable. It is contended that in view of the conclusion of the tender process in respect of 12 packages by issuance of Letters of Acceptance to successful bidders and in view of the order dated 26.4.2013 passed by the division bench, the said tender processes cannot be interfered with at the instance of the writ petitioners who are indulging in an abuse of the process of court. The BBMP will be put to irreparable loss and hardship if they are not allowed to take further steps in respect of 12 packages pursuant to issuance of Letters of Acceptance in favour of the successful bidders. The BBMP will be put to irreparable loss and hardship if they are not allowed to take further steps in respect of 12 packages pursuant to issuance of Letters of Acceptance in favour of the successful bidders. It is contended that in so far as 38 packages are concerned, the BBMP has withdrawn the Official Memorandum dated 19.4.2013 hence, the prayer in relation to this Official Memorandum has become infructuous. 6. The private respondents have in their pleadings questioned the bona fides of the petitioners. As it is evident, according to the said respondents, that the petitioners' only intention is to stall the tender process as they admittedly have a strangle hold on the garbage removal contracts in Bangalore City for over a decade and would not like the cartel, which they constitute, being dislodged at any cost. It is pointed out that a tenderer aggrieved by the tender process is armed with a remedy of challenging the same by way of an appeal under the provisions of the Karnataka Transparency in Public Procurements Act, 1999. The petitioners not being tenderers are not entitled to challenge the same. When that is the position the petitioners being permitted to stall the legitimate process by recourse to this petition results in an abuse of process It is also pointed out by the respondents that the petitioners have already approached the Election Commission alleging that the tender process is in violation of the Election Code of Conduct. The Commission has negated the complaint, as it would not be applicable to Solid Waste Management. Hence the respondents have sought that the ex-parte order of stay granted by this court be vacated. 7. Shri V. Lakshminarayan, would by way of a vehement reply, reiterate the grounds urged and place reliance on a large number of authorities on the scope and ambit of Article 324 of the Constitution of India. 8. In the light of the above contentions-it is to be noticed that the present writ petition is filed without reference to the Order passed in the earlier batch of Writ Petitions in WP 39337- 354/2012 and connected petitions. As the several grounds raised in the present petition are found to overlap with contentions raised therein it is necessary to take note of the findings and observations of the Division Bench in its order dated 26.4.2013. As the several grounds raised in the present petition are found to overlap with contentions raised therein it is necessary to take note of the findings and observations of the Division Bench in its order dated 26.4.2013. It is to be noticed that the petitioners had filed the earlier writ petition aforesaid on the following grounds: (a) The relaxation/reservation to SC/ST is totally bad in law and ultra vires the powers conferred under the Karnataka Transparency in Public Procurement Act, 1999 and the Rules 2000 made therein under. (b) The tender document and the procedure should be only in accordance with the Government Order dated 6.8.2005 and 14.10.2008 (c) The Minimum normative standards have to be followed to fix the value of the bid amount. (d) Without the administrative approval by the Standing Committee and the BBMP and also approval of the Government in terms of Rule 6 of the Karnataka Municipal Corporation Rules, 1977 the issuance of notification dated 3.11.212 is totally bad in law. (e) The relaxation/concessions which was intended by the Government and extended to the SC/ST societies in terms of the orders passed by the Directorate of Municipal Administration dated 15.1.2005 has been misused and misinterpreted and the contents of the said letter has been wrongly incorporated in the tender as one of the conditions showing relaxation and concessions to SC/ST which is without the authority of law. (f) The rates fixed in terms of the notifications dated 18.9.2012 and 26.9.2012 would not tally with Appendix I and II of the notifications dated 18.9.2012, 26.9.2012 and 3.11.2012, therefore, the same is without the authority of law. On a detailed consideration of the several circumstances and the issues sought to be canvassed the writ petitions have been partly allowed in the following terms: CONCLUSION 88. Now from the facts set out above, there are several irregularities in the tender document as well as the tender process. Equality clause is breached. One person is shown concessions which enabled him to corner 50 out of 81 packages. But to break the cartel, the authorities seem to have made such changes and shown concession. It appears they were successful in their attempt. They are experimenting or trying what one may call trial and error method. Their action should be viewed with greater latitude. 89. But to break the cartel, the authorities seem to have made such changes and shown concession. It appears they were successful in their attempt. They are experimenting or trying what one may call trial and error method. Their action should be viewed with greater latitude. 89. The concession shown to persons belonging to SC/ST has resulted in 10 packages going to persons belonging to the said community. On that score, the valid contracts entered into with others cannot be annulled by quashing the tender document. The fact that 10 persons belonging to SC/ST were able to get the contract by competing with the others shows that they are economically sound. The termination of those contracts may hurt public interest. Therefore, instead of setting aside the said contract, the proper thing to do in the circumstances is to validate the said contract by withdrawing the concession and directing them to pay the remaining 90% of the EMD amount and also furnish a fresh solvency certificate for Rs. 25 lakhs. That would meet the ends of justice. 90. The beneficiary of 50 packages was unable to take advantage of the largesse conferred on him. He wants to surrender 30 packages to the authorities which can be again tendered giving an opportunity to the unsuccessful tenderers including the petitioners who did not participate in the tender process to participate and be successful in getting the contracts. 91. Garbage though it is stinking, has a market value and is in great demand. It can be converted into fertilizer, used in tarring the roads, producing electricity and could be recycled. After the waste is collected from house hold it is segregated into dry waster and wet waste. Dry waste is also recycled. Therefore, in the tender document before addendum, the entire Municipal waste belonged to the Corporation. However, in the addendum a right is conferred on the contractors to dispose of the dry waste to benefit them. That is objected to as it results in loss of avenue to the corporation. It is estimated that 1/3 of the waste generated is dry waste. If the cost of dry waste is evaluated and is taken into consideration in deciding the commercial terms of the contract, there cannot be any objection. Otherwise, it results in loss to the Corporation. It has to be avoided. 92. It is estimated that 1/3 of the waste generated is dry waste. If the cost of dry waste is evaluated and is taken into consideration in deciding the commercial terms of the contract, there cannot be any objection. Otherwise, it results in loss to the Corporation. It has to be avoided. 92. The Municipal Solid Waste (Management and Handling) Rules, 2000, casts an obligation on the Municipal authority the responsibility for the implementation of the provision of the said rules and for instructure, development for collection, storage, segregation, transportation, processing and disposal of municipal solid wastes. The Secretary incharge of the Department of Urban Development in the State having overall responsibility for the enforcement of the provisions of these rules in the metropolitan cities. State Pollution Control Board shall monitor the compliance of the standards regarding ground water, ambient air leach ate quality and the compost quality including incineration standards as specified in schedules II, III and IV. The rules provide for the management of Municipal solid waste generated in the city. In spite of these rules which came into force more than a decade back, all the authorities have not bestowed sufficient attention and importance in the management and handling of municipal solid waste in the city in terms of the rules. Roughly in about 1/3 of the wards in the city of Bangalore, the municipal solid waste is handled by the Corporation directly and only in the remaining tenders are called for the management and handling of the waste. A competition between the Governmental agency and private agency, should have enured to the benefit of the public at large. But it has not' happened. On the contrary, it has resulted in cartel and vested interests. From the material on record, the submissions made at the bar and the material on record in the connected public interest litigation, what emerges is the unholy alliance between the contractors, corporators, elected representatives and the Corporation officials. The Government seems to be helpless. Judicial intervention by way of interim orders has added to the misery. In the result, the Bangalore ''the Garden City of India" has become a "Garbage City". Roughly, about Rs. 1,200 crores is spent annually towards collection, segregation and transportation of this municipal solid waste. Therefore, it is a big business. Naturally every one concerned would like to have their share of cake. In the result, the Bangalore ''the Garden City of India" has become a "Garbage City". Roughly, about Rs. 1,200 crores is spent annually towards collection, segregation and transportation of this municipal solid waste. Therefore, it is a big business. Naturally every one concerned would like to have their share of cake. Even after having their share, the city is not clean and the public are at the receiving end. This money is squandered, cartels are thriving. It has become an additional source of income to others who are partners in this enterprise. In fact this situation has led to the connected public interest litigation. Therefore, this case cannot be viewed in isolation, and it is not a simple case of enquiring into the legality of tender documents and its conditions. On the touch stone of the law laid down by the Apex Court, the Court also has to take note of the effort made by the authorities to break the cartel, and the consequences flowing therefrom and the mistakes which have occurred in the process. The Court ahs to uphold the rule of law and keep in mind the public interest and balance the competing interests. 93. We make it clear that this Court is not approving the terms and conditions modified by way of addendum. Now the subsequent events have shown that the modification requires reconsideration in the light of the experience gained. The authorities are at liberty to adopt such form and such conditions which in their opinion is suitable in executing the contract keeping in mind the requirements stipulated in the Municipal Solid Wastes (Management and Handling) rules, 2000. 94. The petitioners herein in spite of opportunities being given they have not submitted their bid. They have chosen to remain outside the tender process and went on challenging the tender process. In the facts of this case, the problem which the City of Bangalore is facing is because of their conduct. Their conduct is not bona fide and, at their instance, the tender process cannot be interfered by this Court. In view of the peculiar facts and circumstances of the present case, we do not think it would be a sound exercise of discretion on our part to upset the decision and void the contract. Their conduct is not bona fide and, at their instance, the tender process cannot be interfered by this Court. In view of the peculiar facts and circumstances of the present case, we do not think it would be a sound exercise of discretion on our part to upset the decision and void the contract. Therefore this is not a fit case in which we should interfere and grant relief to the petitioners in the exercise of our discretion under Article 226 of the Constitution of India. However, in order to see that in future such mistakes do not occur, it is appropriate to issue the following directions - (i) The tender notification should specify the exact area, showing the area by means of a sketch of each package. (ii) A person is entitled to bid for all the packages. But, he shall not be awarded more than five packages of his choice. (iii) Benami contracts and name lending should be strictly prohibited. If a person to whom a contract is awarded is found to be a benamidar, or name lender of the officials of the Corporation or the Corporators, including nominated members, or other elected members, the said contract is liable to be terminated. (iv) there shall be no sub-contract or introduction of a new agency or clandestine arrangement for providing service. If the contract is assigned in any such manner, the contract is liable to termination. (v) Specifications of the vehicles must be strictly in 'accordance with schedule II SL. No. 4 of the Municipal Solid Wastes (Management and Handling Rules), 2000. Vehicles used for transportation of wastes shall be covered. Waste should not be visible to public, nor exposed to open environment preventing their scattering. (vi) The technical evaluation must be strictly through e-portal and not through department/officials so that intervention of the authorities or outside agencies can be curbed. vii) The mobilization of men and material as stipulated in clause 15.9.3 of the tender document should be done in the presence of RTO, the BBMP, vehicle supervisor, representatives of "Residents Welfare Association" and "Suchi Mitra". (viii) No objection certificate from representatives of "Residents Welfare Association" and "Suchi Mitra" is to be obtained before release of payment on the monthly bills. (viii) No objection certificate from representatives of "Residents Welfare Association" and "Suchi Mitra" is to be obtained before release of payment on the monthly bills. (ix) Once the contract is entered into, the particulars such as the name of the contractor with father's name, the address, the phone numbers, the number of vehicles employed with registration numbers and the make, number of persons employed shall be displayed in the website of the Corporation for-the information of the general public. (x) The tender notification shall be issued at least 120 days before the existing contract expires so that new contract can be awarded immediately after the expiry of the previous contract. 95. In the light of the above discussion, we pass the following:- ORDER (a) Writ Petitions are partly allowed. (b) The tender condition prescribing concession to SC/ST individual both in respect of E.M.D. amount and solvency is hereby quashed. However, those SC/ST individuals who have secured the contract, in the event of their making good the shortfall namely 90% within two months from today, their contracts shall not be cancelled. (c) The BBMP shall initiate steps to award contracts in respect of 30 packages which is awarded to B.V.G. India which they have offered to surrender. (d) The contract awarded to B.V.G. India in respect of (9+3) 12 packages, where they are functioning shall not be disturbed. (e) in respect of 8 packages awarded to B.V.G. India where breach is alleged, the BBMP shall take steps immediately to resolve the, dispute, and in the event the said contracts are terminated, in respect of the same also the tender process shall begin immediately. f) While framing the tender conditions the Corporation shall bear in mind the observations and directions issued in this order supra and also the orders passed from time to time in the connected public interest litigation and the steps taken and commitment, received by the Corporation from the bulk generators of garbage, as well as industrial houses and group housing associations. g) The terms and conditions of tender shall be in conformity with the municipal Solid Waste (Management and Handling) Rules, 2000. h) Parties to bear their own costs. But the division bench has taken a dim view of the bona fides of the petitioners as seen from the following observations: 77. In the instant case, the petitioners have not submitted their bids at all. h) Parties to bear their own costs. But the division bench has taken a dim view of the bona fides of the petitioners as seen from the following observations: 77. In the instant case, the petitioners have not submitted their bids at all. These petitioners are the existing contractors for several years. They are fully aware of the terms of the tender. In fact, even before the expiry of the period of deadline and even before the issue of addendum they were before this Court by filing a Writ Petition. After the addendum was issued when so many terms and conditions were relaxed they still had the time of submit their tenders. They also had the opportunity to seek clarification. They did not attempt at any of these things. The benefit of all the changes which were effected was available to them also. Their contention that these changes were brought about to benefit one tenderer even if true the said benefit was available to all of them. Inspite of the same, they did not choose to offer their bids. But, chose to file one more Writ Petition challenging the addendum and after the approval of the said bids they chose to file one more set of Writ Petitions challenging the approval and after award of contracts they filed one more batch of Writ Petitions challenging the award of contracts. Therefore, it is clear as existing contractors their term having come to an end in 2010, by filing Writ Petitions after Writ Petitions challenging the tender process at every stage they have managed to continue to work under the contracts which had come to an end in 2000 itself. The petitioners who did not take advantage of the relaxed terms, did not participate in the tender process, who are lest content in obstructing the tender process, cannot complain of discrimination or arbitrariness. The above observation is reiterated at paragraph 94 above. 9. In the above back ground the present petition having been filed on the further allegations that the respondents have acted in further violation of the law in having committed a breach of the election Code of Conduct-when the earlier writ petition was reserved for orders, is no longer a tenable contention, in so far as the grounds and circumstances already considered and decided upon by the Division Bench. 10. 10. The learned counsel Shri Lakshminarayan has seriously disputed the contention of the respondents that there is prior approval of the Chief Election Commission. The correspondence issued by the Deputy Chief Electoral Officer, it is contended could not be construed as an order of approval of the tender process by the Chief Election Commission. It is also disputed that Annexure R-2 dated 15-4-2013 is a government order. Or that it could be treated as concurrence of approval by the Chief Election Commission of India. As already pointed out the challenge in the present writ petition now stands reduced to marginal issues with reference to the acts of the respondents vis-à-vis the election Code of Conduct. Notice having been ordered to respondent no. 4, service of the same is awaited. Having regard to the timing of the filing of the writ petition-this court having readily granted an ex parte order of stay no longer seems warranted given the changed circumstances and especially at the instance of the petitioners, whose bona fides have come in for scathing observations by the Division Bench of this court. In any event, the semblance of a ground that is sought to be canvassed can be considered after the appearance and after hearing Respondent no. 4. In the result the interim order of stay granted by this court would further delay the much required fillip and expedition in addressing the major crisis of solid waste management that the city of Bangalore is facing. Ironically, it is to be noticed that the petitioners are even now at liberty to participate in the tender process, no prejudice whatsoever would be caused to the petitioners if the ex-parte order of stay granted by this court is vacated. Ordered accordingly. IA 2/2013 and IA 3/2013- are allowed. Issue Rule. Post for hearing in the usual course.