L. M. D. Power Works Opc Pvt. Ltd. v. Bangalore Electricity Supply Company Limited
2022-11-14
M.NAGAPRASANNA
body2022
DigiLaw.ai
ORDER : The petitioners, in this petition, call in question all 50 independent tenders termed as independent enquiry numbers forming part of a tender notification dated 28-03-2022 and consequently, seek re-notification of all the 50 tenders afresh in terms of Karnataka Transparency in Public Procurements Act, 1999 (‘the Act’ for short) and Karnataka Transparency in Public Procurements Rules, 2000 (‘the Rules’ for short). 2. Heard Sri Nandakumar.C.K., learned senior counsel appearing for petitioners and Sri.S.Sriranga, learned senior counsel appearing for respondent. 3. Brief facts that lead the petitioners to this court in the subject petition, as borne out from the pleadings, are as follows:- The petitioners claim to be independent proprietorship concerns doing business of repairing and servicing of electrical transformers and claim to be belonging to Scheduled Castes or Scheduled Tribes category. The petitioners further claim that they have rich experience in undertaking all repairs of transformers and re-conditioning work of 11 KV Class single coil/multi coil conventional transformers of various capacities and they possess sufficient manpower. The respondent -Bangalore Electricity Supply Company Limited (‘BESCOM’ for short) issues a notification inviting tenders for 54 independent repair centers on 28-03-2022 and later issued a corrigendum restricting the notification to 50 repair centers. Therefore, throughout the jurisdiction of BESCOM close to 50 tenders were floated terming them as enquiry numbers independent to each repair centers. In terms of the Rules, 10 tenders out of 50 were reserved only for tenderers belonging to either members of Scheduled Castes or members of Scheduled Tribes. 4. The petitioners who belong to either Scheduled Castes or Scheduled Tribes submit their bids only in those reserved tenders, except the 3rd petitioner who submits his bids in both reserved tenders and tenders that were made available to all categories. The reservation of 10 tenders out of 50 became subject matter of Writ Petition No.8492 of 2022. This Court by its order dated 20-04-2022 staying the execution and implementation of the policy of reservation in those 10 tenders, finally allowed the writ petition in terms of its order dated 20-06-2022 quashing 10 tenders reserved to persons belonging to Scheduled Castes or Scheduled Tribes. The respondent/BESCOM challenges the said order of the co-ordinate Bench in Writ Appeal No.667 of 2022. The Division Bench, after hearing the parties, dismissed the appeal by its judgment dated 02-09-2022 thereby affirming the finding of the learned single Judge.
The respondent/BESCOM challenges the said order of the co-ordinate Bench in Writ Appeal No.667 of 2022. The Division Bench, after hearing the parties, dismissed the appeal by its judgment dated 02-09-2022 thereby affirming the finding of the learned single Judge. After the closure of the writ appeal, the respondent/BESCOM notifies tenders afresh not in all of the 50 but only in 10 that were quashed by the co-ordinate Bench. Being aggrieved by the act of BESCOM in notifying only 10 tenders and not the entire 50 tenders afresh, the petitioners have knocked the doors of this Court in the subject petition. 5. The learned senior counsel Sri.C.K.Nandakumar representing the petitioners would vehemently contend that BESCOM ought to have notified all the 50 tenders though the challenge was only of 10 tenders. By not notifying all the 50 tenders, the petitioners are put to prejudice as they lost their opportunity to participate in all the 50 tenders. Hoping that they would be successful had submitted their bids only in the 10 tenders reserved for Scheduled Castes and Scheduled Tribes. The Court having quashed it, it was incumbent upon the BESCOM to have notified all the tenders is his emphatic submission. The further submission is that this Court considering the very same tender document has clearly given a finding that no value is stipulated in the tender which is contrary to the Rules. The said finding has become final. Therefore, the respondent/BESCOM cannot be permitted to continue with the same tender. 6. On the other hand, the learned senior counsel representing the respondent/BESCOM, taking this Court through the statement of objections filed would refute the submissions to contend that the petitioners were not precluded from submitting their bids in all the tenders. Petitioners 1 and 2 chose to submit their bids only in the 10 tenders reserved for either Scheduled Castes or Scheduled Tribes and the 3rd petitioner, notwithstanding him belonging to Scheduled Castes or Scheduled Tribes, submitted his bids in every tender which were for general category and others out of the 40. Therefore, petitioners 1 and 2 remained outside and petitioner No.3 takes chance and does not get qualified for award of any contract. He would, therefore, submit that this Court quashed 10 tenders that were independent tenders and those tenders are notified afresh.
Therefore, petitioners 1 and 2 remained outside and petitioner No.3 takes chance and does not get qualified for award of any contract. He would, therefore, submit that this Court quashed 10 tenders that were independent tenders and those tenders are notified afresh. BESCOM was under no obligation to notify all the tenders as this Court had not found fault with any other tenders except 10 tenders reserved for Scheduled Castes or Scheduled Tribes. Insofar as the contention that no value was stipulated in the tender and the co-ordinate Bench has given the said finding, the learned senior counsel would submit that, that was not the issue before the Court at all and therefore, the said finding should not be taken into consideration. He would seek dismissal of the petition. 7. I have given my anxious consideration to the submissions made by the respective learned senior counsel and perused the material on record. 8. The afore-narrated facts are not in dispute. NIT was issued by BESCOM for 54 transformer repair centers. On the very perusal of the notification dated 28-03-2022 it would indicate that every transformer repair center was an independent contract and they were rate contracts. After issuance of the notification on 28-03-2022 which was initially for 54 transformer repair centers they were reduced to 50 by way of a corrigendum. Therefore, finally, the tenders were called for 50 transformer repair centers of different locations coming within the jurisdiction of BESCOM. Out of the 50, claiming to be acting under the Rules, 10 tenders were reserved for either Scheduled Castes or Scheduled Tribes on the ground that transformer repair contracts would amount to a construction contract and, therefore, reservation was available. 9. Reservation of 10 tenders, out of 50 becomes subject matter of writ petition in Writ Petition No. 8492 of 2022. This Court by its order dated 20-06-2022 allowed the petition by the following order: “15. Rule 9 of 2000 Rules prescribes details to be mentioned in the notice inviting tenders. One of the requirements is details with regard to name of the scheme, project or programme for which procurement is to be effected and the amount of EMD payable. The EMD payable would depend on the value of work. Without specifying the value of the work, the respondent-Procurement Entity could not have indicated the EMD to be paid by a participating tenderer.
The EMD payable would depend on the value of work. Without specifying the value of the work, the respondent-Procurement Entity could not have indicated the EMD to be paid by a participating tenderer. Thus, mentioning of tender value is an essential requirement to ensure transparency in public procurement. 16. The respondent-Procurement Entity has raised a preliminary objection in its statement of objections stating that the writ petition would not be maintainable since 199 Act provides alternate remedy. It is true that Section 16 of the Act provides alternate remedy of appeal to any tenderer aggrieved by an order passed by the Tender Accepting Authority. The petitioners-contractors are before this Court challenging the very tender notifications itself, on the ground that the Procurement Entity could not have provided reservation and on the ground that the tender notifications would not indicate the value of the tender work. Moreover, there is no order by the Tender Accepting Authority to avail appeal remedy. In the said circumstances, the contention of the respondent-BESCOM that the petitioners have alternate remedy is liable to be rejected. Reliance on the decision of the Hon’ble Supreme Court in Michigan Rubber (India) Limited (supra) by the learned senior counsel for the respondent would have no application to the facts of the present case. Petitioners are not challenging either the conditions of tender document or awarding of contract to a particular tenderer, but the contention is that tender notification itself is contrary to Section 6 of 1969 Act. 17. I.A.No.3/2022 is filed by one Firm and three proprietary concerns claiming to be in the field of electrical contract to come on record as additional respondents. The impleading applicants claim that they belong to Scheduled Castes and Scheduled Tribes communities and claim that they are entitled for reservation under the impugned tender notification. In pursuance of tender notification dated 28-03-2022, the impleading applicants being eligible to participate, submitted their tender. Since they have submitted their tenders, they claim that they have interest in the present writ petition. As they have interest in the writ petition, they claim that they are necessary parties for adjudication. 18. Having heard the learned counsel for impleading applicants, I am of the view that mere submission of tender in pursuance of tender notification dated 28.03.2022, no right has accrued to the petitioners. The respondent authority which has provided reservation is required to defend its action.
18. Having heard the learned counsel for impleading applicants, I am of the view that mere submission of tender in pursuance of tender notification dated 28.03.2022, no right has accrued to the petitioners. The respondent authority which has provided reservation is required to defend its action. Hence, I am of the view that impleading applicants have no right to come on record and accordingly I.A.No.3/2022 is rejected.” (Emphasis supplied) BESCOM challenges the said order before the Division Bench in Writ Appeal No.667 of 2022 and connected cases. The Division Bench by its order dated 2-09-2022, dismisses the writ appeal affirming the order passed by the co-ordinate Bench. 10. Therefore, two circumstances would emerge from what the co-ordinate Bench had held and its affirmation by the Division Bench. One was that 10 tenders that were reserved either for Scheduled Castes or Scheduled Tribes were contrary to law and the tender notified without specifying its value which would leave the demand of EMD being vague. The finding at paragraph 15 of the order of the co-ordinate Bench supra becoming final would tilt the table against the respondent/BESCOM. It becomes germane to notice Rule 9 of the Rules, The Karnataka Transparency in Public Procurements Rules, 2000, in the light of the finding of the coordinate Bench being affirmed by the Division Bench. Rule 9 of the rules reads as follows: “9. Details to be mentioned in notice inviting tenders:-The Notice inviting Tenders shall be published on the Karnataka Public Procurement Portal and shall contain the following details, namely, - (a) The name and address of the procuring entity and the designation and address of the Tender Inviting Authority; (b) Name of the scheme, project or programme for which the procurement is to be effected; (c) The date and time up to which, and from where the tender documents can be assessed; (d) The amount of earnest money deposit payable; (e) The last date and time for receipt of tenders; (f) The date and time for opening of tenders received; and (g) Any other information which the Tender Inviting Authority considers relevant.” (Emphasis supplied) Rule 9 deals with details to be mentioned in the notice inviting tender.
It should contain the name and address of the procuring authority; the designation of the Tender Inviting Authority; name of the scheme, project or programme for which the procurement is to be effected; the amount of earnest money deposit payable; and the last date and time for receipt of tender. Therefore, for a tender to be valid in the eye of law i.e., the Rules, the amount of earnest money deposit payable should be indicated. It is common parlance that earnest money deposit would be of certain percentage and that percentage would depend upon value of the tender. If the value of the tender itself is not notified, the demand of earnest money deposit would be at the whim and fancy of the Tender Inviting Authority. If a tender document does not contain its value, it would be, on the face of it, nebulous. The value of tender being notified when a notice inviting tender is issued is a judicially recognized principle as well. The Apex Court in the case of TATA CELLULAR v. UNION OF INDIA, (1994) 6 SCC 651 which judgment has been reiterated till recent time, holds that the tender must be of full amount failing which it would become amenable to judicial review. The Apex Court has, in the said judgment, held as follows: “1. Scope of Judicial Review 69. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated, the following are the requisites of a valid tender: 1. It must be unconditional. 2. Must be made at the proper place. 3. Must conform to the terms of obligation. 4. Must be made at the proper time. 5. Must be made in the proper form. 6. The person by whom the tender is made must be able and willing to perform his obligations. 7. There must be reasonable opportunity for inspection. 8. Tender must be made to the proper person. 9. It must be of full amount. 70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State.
However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. 71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review. (Emphasis supplied) Therefore, in the light of the finding of the co-ordinate Bench and the judgment rendered by the 3 Judge Bench of the Apex Court in the case of Tata Cellular the tender document that is now sought to be given effect to is contrary to law. It is also germane to notice that hitherto BESCOM for the very same work to be performed by the tenderers had clearly specified the value of tender. The clauses that are germane of the earlier tender reads as follows: 1.0 Bid Enquiry BESCOM/CGM(OP)/DGM(Op-1)/2019-20/02 2.0 Name of the work “For Repairs and Reconditioning of Failed Distribution Transformers of various Capacities of 15/16, 25, 63, 100, 200, 250, 300, 500, 750 & 990/1000 KVA 11KV class since Coil/Multi Coil Conventional (Aluminium/Copper Wound Star Rated 15/16, 25, 63, 100, 250 KVA and Conversion CSP to Conventional bolt & nut type on Item Wise, % rate. Total Material, Labour and Salvage RC Basis at Transformation repair centre of Tiptur Division in Chikkanayakanahalli Taluk” xxxx xxxxxx Xxxx 8.0 Amount put to Tender Approximately Rs.3,51,00,000/- 8.1 EMD a). The Bidders shall pay EMD of Rs.3,51,000/@@ 1% of Amount put to tender through any of the payment modes mentioned in the e@procurement portal. b).
Total Material, Labour and Salvage RC Basis at Transformation repair centre of Tiptur Division in Chikkanayakanahalli Taluk” xxxx xxxxxx Xxxx 8.0 Amount put to Tender Approximately Rs.3,51,00,000/- 8.1 EMD a). The Bidders shall pay EMD of Rs.3,51,000/@@ 1% of Amount put to tender through any of the payment modes mentioned in the e@procurement portal. b). Government/Quasi Government/Public Sector undertaking are not exempted from payment of EMD. The EMD shall be furnished along with the bids. c). Bids received without accompanying the requisite EMD and not accepted and liable for rejection. (Emphasis added) If the value of tender could be specified for the same work in the preceding year/s albeit approximately, it would become inexplicable as to why the same does not find a place in the impugned NIT even to its approximation. 11. The contention of the learned senior counsel representing the respondent that it is a rate contract and tender value cannot be specified in a rate contract as it is the tenderers who will have to submit their value along with the bids and not the other way round, would have become acceptable, if BESCOM had not suffered a finding qua paragraph-15 in the earlier lis concerning the very same NIT. The said finding of the co-ordinate Bench becoming final by the dismissal of the writ appeal would stare at those contentions of the learned senior counsel for the respondent/BESCOM. The further submission that it was not the issue before the co-ordinate Bench but it has been noticed erroneously will place BESCOM, neither here nor there, as it is BESCOM which had challenged the order passed by the co-ordinate Bench and suffered a finding to that effect by the writ appeal getting dismissed. Therefore, it has now become a part of the judgment rendered by the co-ordinate Bench. This Court, being bound by the findings rendered by the co-ordinate Bench, more so in the light of the fact that it is affirmed by the Division Bench, cannot hold otherwise on the submission of the learned senior counsel for the respondent. Therefore, non-indication of total amount in the tender would by itself become a vitiating factor as it is contrary to the Rules, the law laid down by the Apex Court in the case of TATA CELLULAR (supra)and the finding rendered by the co-ordinate Bench in Writ Petition No.8492 of 2022 (supra). 12.
Therefore, non-indication of total amount in the tender would by itself become a vitiating factor as it is contrary to the Rules, the law laid down by the Apex Court in the case of TATA CELLULAR (supra)and the finding rendered by the co-ordinate Bench in Writ Petition No.8492 of 2022 (supra). 12. Yet another circumstance that would border upon arbitrariness qua continuation of the impugned tender document would be that, the co-ordinate Bench in Writ Petition No.8492 of 2022 has quashed those 10 tenders which were reserved for persons belonging to Scheduled Castes and Scheduled Tribes. When the tenders were notified, the contractors belonging to Scheduled Castes or Scheduled Tribes though had a choice of participating in all the tenders, since option was given or reservation was made, they participated in only those 10 tenders, as they naturally opted to apply only under those tenders without applying in those tenders which were open to all. 13. In the light of quashment of reservation of 10 tenders by the co-ordinate Bench, the contractors belonging to Scheduled Castes and Scheduled Tribes who have had an opportunity to participate in all the tenders, now their choice is restricted only to those reserved tenders for which every person is entitled to participate but not the vice-versa as those 40 tenders have already been finalized. This, in the considered view of this Court takes away the right of the reserved category contractors to participate along with all others and merely because they belong to reserved category, they cannot be shown the short end of the stick by restricting their tender only to 10, yet again. In the reservation their restriction was only to 10 tenders. After the reservation is quashed, again the restriction is only to 10 tenders. This, on the face of it, is contrary to the concept of level playing field in a tender process. 14. Insofar the judgments relied on by the learned senior counsel representing the respondent in the cases of SILPPI CONSTRUCTIONS CONTRACTORS v. UNION OF INDIA AND ANOTHER – (2020) 16 SCC 489 , N.G. PROJECTS LIMITED v. VINODKUMAR JAIN AND OTHERS – (2022) 6 SCC 127 both of which followed MICHIGAN RUBBER (INDIA) LIMITED v. STATE OF KARNATAKA AND OTHERS – (2012) 8 SCC 216 are concerned, there can be no qualm about the principles laid down by the Apex Court therein.
They are all judgments which are not applicable to the facts of the case at hand as the facts, as narrated hereinabove, would clearly make those judgments of the Apex Court distinguishable without much ado. 15. On the aforesaid dual grounds, that the tender document was itself nebulous which could not have been floated as there was no value of tender even notified and there is no justification for the BESCOM to have deviated from the earlier tenders, where value of tender was notified, this becomes the first vitiating factor and the tender being continued in its original form taking away the right of the petitioners belonging to reserved category to participate in all the tenders, would become the second vitiating factor as it abhors the concept of “level playing field”. 16. For the aforesaid reasons, I pass the following: ORDER : (i) The Writ Petition is allowed. (ii) The Notification Inviting Tender dated 28-03-2022 is annihilated. (iii) The respondent/BESCOM is at liberty to re-notify the tender, bearing in mind the observations made in the course of this order.