Research › Search › Judgment

Karnataka High Court · body

2015 DIGILAW 432 (KAR)

Maregowda v. Bruhat Bengaluru Mahangara Palike

2015-04-15

ASHOK B.HINCHIGERI

body2015
ORDER : Ashok B. Hinchigeri, J. 1. Both the writ petitions are filed by the same party, who is the proprietor of Janaki Travel Agency, Bangalore. The said Agency is in the business of providing vehicles on rental basis to the government agencies and local bodies. The petitioner claims to have been rendering blemish less services to the respondents for the last 14 years. The respondents issued the tender notification, dated 9.10.2014 (Annexure-A) inviting the Item Rate tenders for hiring of light commercial vehicles to Bruhat Bangalore Mahanagara Palike (BBMP) officials. The petitioner responded to the said tender notification. His technical bid, on scrutiny, was held to have been acceptable. The financial bid was opened on 10.12.2014. He claims to be the L1 bidder. It is his case that the respondents blacklisted him, as he has emerged L1 bidder. 2. W.P. No. 1758/2015 is filed raising the challenge to the blacklisting order, dated 12.01.2015 (Annexure-G). W.P. No. 2709/2015 is filed challenging the issuance of fresh tender notification. 3. Sri B.K. Manjunath, the learned counsel for the petitioner submits that it is the respondents who have committed the default in the payment of the hire charges. He brings to my notice a number of dishonoured cheques in support of his submissions. He submits that no opportunity of hearing was given to the petitioner before passing the impugned blacklisting order, which in effect is the civil death for the petitioner. He submits that the blacklisting order is without the authority of law. Under the tender notification, the blacklisting can be done, only if the accepted tenderer commits any violation of the terms contained in the tender notification, agreement or in the work order. In the instant case, even before the petitioner's tender is accepted, they have passed the blacklisting order invoking the clauses of the earlier notifications, which have already spent themselves. 4. He submits that the petitioner has been providing the vehicles to the respondents for the last 14 years. The respondents have issued umpteen number of appreciation certificates from 2001 to 2014. Some of them are produced as Annexures-L to S. Now to hold that the petitioner's services have not been satisfactory is the height of arbitrariness, so contends the learned counsel. 5. The respondents have issued umpteen number of appreciation certificates from 2001 to 2014. Some of them are produced as Annexures-L to S. Now to hold that the petitioner's services have not been satisfactory is the height of arbitrariness, so contends the learned counsel. 5. Sri N.R. Jagadeeswara, the learned counsel appearing for the respondents submits that Clauses 3 and 4 in Section-V of the tender notification clearly enable the respondents to pass the impugned blacklisting orders. They read as follows: "3. BBMP reserves the right to disqualify such bidders who have a record of not meeting contractual obligations against earlier contract entered in the BBMP. 4. BBMP reserves the right to black list a bidder for a suitable period in case he fails to honor his bid without sufficient ground." 6. The learned counsel submits that the petitioner's services are full of deficiencies. He was not sending the vehicles on time. Some of the vehicles were not in good condition. He was not providing the stand-by vehicles in case of break-down of the vehicles sent. He submits that such complaints were received by a large number of officials of BBMP. He submits that some of the officials expressed their difficulty in discharging their duties due to non-reporting of the vehicles on time. 7. He brings to my notice the letter, dated 18.11.2014 (Annexure-R3) sent by the Executive Engineer to the petitioner, which lists out the deficiencies on the part of the petitioner and requires him to give the explanation within three days. It contains further ultimatum that if the petitioner fails, the matter would be reported to the Commissioner for blacklisting the petitioner. 8. The learned counsel submits that the petitioner has not replied to the show-cause notice, dated 16.12.2014. He submits that the petitioner has also suppressed the material fact of receiving the show-cause notice in the memorandum of the writ petition. He submits that on earlier occasions, the respondents had passed the orders imposing the penalty on the petitioner. He submits that the Karnataka Power Transmission Corporation Limited has also passed the blacklisting order against the petitioner, as is evident from Annexure-6, dated 21.12.2013. He denies that any of the cheques, given by the respondents, are dishonoured by the respondent's bankers. 9. The following questions fall for my consideration:-- "i. Whether the respondents are justified in passing the blacklisting order, dated 12.1.2015 (Annexure-G)? ii. He denies that any of the cheques, given by the respondents, are dishonoured by the respondent's bankers. 9. The following questions fall for my consideration:-- "i. Whether the respondents are justified in passing the blacklisting order, dated 12.1.2015 (Annexure-G)? ii. Whether the respondents are justified in issuing the fresh tender notification?" 10. Going by Clauses 3 and 4 of Section-V of the tender notification, extracted hereinabove, it cannot be said that the respondents do not have the power of blacklisting a tenderer. But the question is whether the respondents have taken the relevant materials into consideration. The reply tendered by the petitioner to the show-cause notice is not considered by the respondents. Particularly, the certificates at Annexures-L to S have been excluded from consideration. The last sentence in all the said certificates reads as follows:-- "This service of the above agency is satisfactory and deserves all encouragement and given as per our records." For the reason of non-consideration of the petitioner's reply, the impugned order becomes unsupportable and unsustainable. 11. Blacklisting visits the concerned person with serious civil consequences. It is the therefore necessary that a party, whose name is proposed to be blacklisted, has to be given the opportunity of hearing in the matter. In the instant case, the petitioner is blacklisted without affording opportunity of hearing to him. In its decision in the case of RAGHUNATH THAKUR v. STATE OF BIHAR AND OTHERS reported in 1989 (1) SCC 229, the Hon'ble Supreme Court has held that it is an elementary principle of natural justice that a party against whom the blacklisting order is proposed to be passed should have the right of being heard, even if the rules do not expressly provide for it. 12. It is also helpful to refer to an unreported decision of this Court in the case of M/s. QUEST LABORATORIES P. LTD. v. THE ADDL. DIRECTOR, KARNATAKA STATE DRUGS LOGISTIC & WAREHOUSING SOCIETY in W.P. No. 4617/2013 disposed of on 18.9.2013, wherein it is held that the action of blacklisting cannot be done without affording an opportunity of hearing to the party, who is going to be affected. This Court, while quashing the impugned blacklisting order, reserved the liberty to the respondent to issue the appropriate show cause notice, obtain justification from the petitioner and thereafter pass an appropriate order in accordance with law. 13. This Court, while quashing the impugned blacklisting order, reserved the liberty to the respondent to issue the appropriate show cause notice, obtain justification from the petitioner and thereafter pass an appropriate order in accordance with law. 13. The timing chosen by the respondents for passing the impugned order also cannot be glossed over. Admittedly, the official note in respect of the deficiencies in his service dates back to 18.12.2013, as is evident from Annexure-R2. However, the respondents do not initiate any blacklisting proceedings till 16.12.2014. The respondents wait for nearly one year. Further, the respondents allow the petitioner to submit his tender for the next year (2015-2016), evaluate his tender and accept his technical bid on 12.11.2014. Thereafter they open the financial bid on 10.12.2014 and find that the petitioner is L1 bidder. Within four days thereafter, that is, on 16.12.2014 the respondents issue the show-cause notice for blacklisting the petitioner. On accepting the petitioner's technical bid and finding that he is the L1 bidder, they have resorted to blacklisting him. This sequence of events shows that what the respondents have done falls far short of fairness. 14. For all the aforesaid reasons, I hold that the impugned blacklisting order is liable to be quashed and accordingly it is quashed. 15. To answer the second question, it is necessary to refer to the provisions contained in Section 14 of the Karnataka Transparency in Public Procurements Act, 1999 ('the said Act' for short), which provides for the general rejection of tenders on the enumerated grounds. Unless the rejection of the earlier tender is on one or the other grounds enumerated in Section 14 of the said Act, the respondents cannot resort to the general rejection of tenders. Section 14 of the said Act reads as follows:-- "14. General rejection of tenders.--(1) The Tender Accepting Authority may at any time before passing an order of acceptance under Section 13 reject all the tenders on the ground of changes in the scope of procurement, failure of anticipated financial resource, accidents, calamities or any other ground as may be prescribed which would render the procurement unnecessary or impossible and (2) The Procurement Entity shall thereafter communicate the fact of the rejection under this section to all the Tenderers and also cause the same to be published in the Tender Bulletin." 16. The reasons for rejecting the tenders are found in paragraph Nos. The reasons for rejecting the tenders are found in paragraph Nos. 42, 43 and 44 of the noting sheets. They are extracted herein below:-- 17. The prime reason is that for the subsequent year, the petitioner has quoted the higher rate. The second reason is that the respondents now propose to call for tenders in packages 1 and 2 simultaneously. 18. I am afraid the reasons stated do not constitute the grounds or circumstances for which the general rejection of tenders as provided under Section 14 of the said Act. Further, on being asked as to who are the members of the tender accepting authority, it is submitted by the respondents' learned advocate that the Additional Commissioner, Deputy Commissioner, Engineer in Chief, Chief Accounts Officer constitute the Committee. If they indeed constitute the Committee, they have to take a final decision in the matter. They cannot take the tentative decision and seek the approval of the Commissioner. Even assuming that the Commissioner is competent to accord his approval to the rejection of the tenders, he has not indicated whether he has approved or disapproved the proposal to cancel the tenders. He merely signs it on 26.12.2014. 19. It is not very clear whether the general rejection of the tenders has indeed taken place, because under Section 14(2) of the said Act, the rejection order is to be communicated to all the tenderers and it has to be published in the Tender Bulletin. On being asked specifically asked, the learned counsel for the respondents submits, on instructions, that the rejection is not communicated to the tenderers and that it is not published in the Tender Bulletin. However, he submits that the tenderers can open e-procurement online for the purpose of ascertaining the status of their tender application. But this submission does not validate the non-compliance with the requirements of Section 14(2) of the said Act. 20. For the aforesaid reasons, I allow W.P. No. 2709/2015 and quash the fresh tender notification, dated 16.1.2015 (Annexure-W). However, the quashing of the blacklisting order and the fresh tender notification does not mean that the respondents are required to avail of the transport services of the petitioner perennially. The respondents are directed to afford an opportunity of hearing to the petitioner in the matter of blacklisting and thereafter take an informed decision. 21. However, the quashing of the blacklisting order and the fresh tender notification does not mean that the respondents are required to avail of the transport services of the petitioner perennially. The respondents are directed to afford an opportunity of hearing to the petitioner in the matter of blacklisting and thereafter take an informed decision. 21. Similarly, the quashing of the fresh tender notification does not mean that the petitioner is permitted to provide his vehicles to the respondents perennially. If the respondents propose to terminate the tender process initiated pursuant to the earlier tender notification (Annexure-A in W.P. No. 1758/2015), they can do so for the grounds enumerated in Section 14(1) and in the manner prescribed by Section 14(2) of the said Act. If the petitioner has any grievance over the orders to be passed by the Tender Accepting Authority, his recourse would be to file an appeal invoking Section 16 of the said Act. 22. Both the writ petitions are allowed, but to the extent indicated hereinabove. No order as to costs.