Karnataka Service Providers ... vs Bharath Electronics Limited
2022 Latest Caselaw 9585 Kant

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 24TH DAY OF JUNE, 2022

                        BEFORE

         THE HON'BLE MR.JUSTICE S.G.PANDIT

         WRIT PETITION No.7980/2022 [GM-TEN]

BETWEEN:
KARNATAKA SERVICE
PROVIDERS ASSOCIATION
REGD. OFFICE: No.2, 2ND FLOOR
1ST MAIN, MUNESHWARA BLOCK
MAHALAKSHMI LAYOUT
BENGALURU-560086.
[REPRESENTED BY ITS PRESIDENT]
                                          ...PETITIONER

        (BY SRI.K.SUBBA RAO, SR. COUNSEL A/W.
    SRI.L.MURALIDHAR PESHWA, ADV. (THROUGH VC))

AND:
BHARATH ELECTRONICS LIMITED
[A GOVERNMENT OF INDIA ENTERPRISES]
JALAHALLI POST, BENGALURU-560013
[REPRESENTED BY ITS
MANAGING DIRECTOR]
                                        ....RESPONDENT

       (BY SRI.SANDESH J. CHOUTA, SR. COUNSEL A/W.
                 SRI.ISMAIL M. MUSBA, ADV.)

                            +++++

       THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING TO [A] A WRIT OF
                               2

MANDAMUS ANY OTHER APPROPRIATE WRIT, DIRECTION
OR   ORDER,   DECLARING       THAT   THE   NOTIFICATION        IN
ANNEXURE-A,     AS    ILLEGAL,       ULTRAVIRES      OF      THE
CONSTITUTION OF INDIA AND IN PARTICULAR ARTICLE 39[b]
OF THE CONSTITUTION AND OTHER VIOLATIONS AND ALSO
VIOLATIVE OF THE CONSTITUTIONAL PRINCIPLES AS THE
NOTIFICATION IN ANNEXURE-A WOULD NOT SUBSERVE
COMON GOOD; AND ETC.,

     THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED      ON     17/06/2022        COMING        ON      FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE
FOLLOWING:


                      ORDER

Petitioner-Association claiming to be registered

under the Societies Registration Act is before this Court

praying for a writ of mandamus declaring the notification

at Annexure-A dated 14.03.2022 bearing

No.03/000014/2022 as illegal and ultravires of the

Constitution of India in particular Article 39[b] and for a

direction to the respondents to follow the tender process

which was existing prior to the tender process as per

Annexure-A.

2. Heard the learned Senior counsel Sri.K.Subba

Rao for Sri.L.Muralidhar Peshwa for petitioner and learned

Senior counsel Sri.Sandesh J. Chouta for Sri.Ismail M.

Musba for respondent. Perused the entire writ petition

papers.

3. Learned Senior counsel Sri.K.Subba Rao would

submit that petitioner-Association of the Karnataka Service

Providers is before this Court challenging the tender

notification dated 14.03.2022 [Annexure-A] issued by the

respondent-Bharat Electronics Limited [for short BEL] by

which the respondent-BEL has invited tenders for work of

Annual Contract for Management Facilities in BEL factory.

The estimated cost of tender is Rs.13,14,48,477/- and

duration of contract period stated therein is two years. It is

submitted that petitioner-Association is formed with sole

intention of protecting rights and interest of Micro, Small

and Medium enterprises who are engaged in providing man

power services to private sector undertaking including

respondent-BEL. Since the interest of members of the

Association are at stake, the Association is before this Court

in this writ petition. Learned Senior counsel particularly

would submit that by virtue of impugned tender notification,

nearly 22 contractors have been affected and their livelihood

is snatched. It is his submission that the said 22

contractors were providing facility for more than 30 years by

participating in the tender process of respondent-BEL. The

work related to inside the factory as well as the estate of

BEL which included maintenance, housekeeping, gardening,

horticulture etc. It is submitted that respondent-BEL under

impugned tender notification consolidated all the works

pertaining to the estate and the factory unit and clubbed

into one tender, though the work involved was of different

types and magnitude. Learned Senior counsel submitted

that for example, the housekeeping, electrical, horticultural,

maintenance, canteen, civil maintenance etc., which were

earlier allotted through different tenders are consolidated

under the impugned order which affects the present

contractors who are carrying on different types of service. In

terms of the impugned tender notification, most of the

contractors who are members of the Association are not

eligible even to apply for the tender because of the

unreasonable financial criteria. It is submitted that the

whole purpose of issuing impugned tender notification is to

award contract to one single contractor instead of various

contractors providing services for various types of works as

per the earlier tender notifications.

4. Learned Senior counsel Sri.K.Subba Rao

mainly contends that no hearing was provided to the

present contractors who were providing services to the

respondent-BEL. It is submitted that since 22 contractors

were working with the respondent-BEL for more than 25

years, while changing the tender process suddenly, the

respondent-BEL ought to have heard the petitioner whose

members are greatly affected by the action of respondent-

BEL in consolidating the works of the factory and estate

into one work. Since the action of the respondent-BEL in

consolidating various types of work would affect the rights

of the contractors and the action of respondent-BEL is

violative of Articles 14, 19 and 21 of Constitution of India,

the action of the respondent-BEL would deprive the

contractors of their livelihood since they would not be in a

position to submit their tenders as they cannot meet the

standard prescribed by respondent-BEL.

5. Learned Senior counsel also contends that

action of the respondent-BEL in consolidating various

services into one package is violative of Article 39[b] of the

Constitution of India. In that regard, he submits that

Article 39[b] of the Constitution of India postulates that

ownership and control of the material resources of the

community are to be so distributed, so as to best sub-

serve the common good. The impugned notification is so

made that only the big player who has huge material

resources is eligible for the tender as against the existing

contractors who are deprived of the tender process due to

arbitrary pre-qualification criteria. In support of this

contention, learned Senior counsel places reliance on the

judgment of the Hon'ble Apex Court in the case of The

State of Karnataka and Others V/s. Ranganatha

Reddy and Others [AIR 1978 SC 215]. Learned Senior

counsel also relied upon the decision of the Hon'ble Apex

Court in Victorian Granites [P] Ltd., V/s. P.Rama Rao

and Others [(1996) 10 SCC 665] to contend that the

State shall direct its policies towards securing that

ownership and control of the material resources of

community are distributed so as to best sub-serve the

common good.

6. Lastly, learned Senior counsel submitted that

action of the respondent-BEL is totally arbitrary and since

the same is arbitrary, the action has to be interfered with

by this Court. The 22 contractors who are affected by the

impugned notification are service providers for the

respondent-BEL for more than 25 years. The action of the

respondent-BEL monopolizes the work by giving it to one

person. All these years, since from the inception of the

respondent-BEL, several persons were eking out their

livelihood through different contracts and consolidating of

work of those persons who were eking out their livelihood

would deprive of their livelihood. Thus, he prays for

allowing the writ petition.

7. Per contra, learned Senior counsel

Sri.Sandesh J. Chouta raises a preliminary objection with

regard to maintainability of writ petition by an Association

of the Karnataka Service Providers. Learned Senior

counsel taking through the statement of objections filed

on behalf of the respondent-BEL, submits that

respondent-BEL has raised preliminary objection with

regard to maintainability of writ petition itself and

elaborating his arguments, he submits that the petitioner-

Association is not an aggrieved person since the

Association has never participated in the tender process

and now also it is not the case of the petitioner-

Association that Association would be entitled to

participate in the tender process. Further, learned Senior

counsel would submit that petitioner-Association has not

placed on record the resolution authorizing the President

to file present writ petition nor Bylaws of the Association

along with list of members. Association to maintain writ

petition, it would be necessary to disclose the names of

the members who are affected. Petitioner-Association has

no locus standi to stand before this Court. If at all the

contractors are aggrieved by the action of respondent-BEL,

it is for the aggrieved contractors to come before this

Court complaining against the action of respondent-BEL.

It is his submission that since none of the contractors are

aggrieved nor affected; no contractor has come before the

Court complaining against the action of respondent-BEL.

Further, he submits that since no contractor is affected,

the names of the contractors are also not disclosed in the

entire writ petition. Petitioner-Association without

disclosing the contractors who are said to have been

affected by respondent-BEL, writ petition in the present

form would not be maintainable.

8. Learned Senior counsel would submit that the

respondent-BEL is a Public Sector undertaking under the

Ministry of Defence, Government of India, involved in

manufacturing state of art electronic products for the

Indian Army, Navy and Air Force.

9. Learned Senior counsel would submit that

respondent-BEL has about 210 contracts to carry out

their day-to-day work and in order to improve and

innovate its business process, the management has set up

a committee to consolidate and establish a Facility

Management Contract [for short FMC]. On the study by

the Committee, the Committee submitted a detailed report

with recommendation to consolidate the contracts. It is

submitted that they have 2 contracts one for factory and

another for estate. Thus, it is submitted that out of the

210 contract 107 contract works are proposed to be

merged and consolidated into one work, value of which

would be Rs.22.00 Crores per year, whereas still 103

works are individually tendered whose value is more than

Rs.110 crores per year. Therefore, it is submitted that the

members of the petitioner-Association are not affected as

they have secured the contract of 103 works of the

respondent-BEL and that is one of the reason for non-

disclosure of the names of 22 contractors said to have

been affected. Thus, learned Senior counsel would submit

that consolidation of all the works brings in all the

facilities into one umbrella which aids in better resources,

planning, reduction of wastes like duplication of activities,

works, tendering, billing, checking, auditing etc.

10. Learned Senior counsel countering the

submission of the learned Senior counsel for petitioner-

Association submits that tenderers who are said to have

been affected by consolidation of work and issuance of

fresh tender notification at Annexure-A are not entitled for

any notice, since it is contract between respondent-BEL

and those tenderers. It is his submission that no tender is

terminated and only after completion of their tenure under

the contract, fresh consolidated tender is invited. If at all

contractors, by the action of respondent-BEL are

aggrieved, they could establish their loss and claim

damages before the appropriate Civil Court. It is

submitted that depending upon the nature of work,

tenders are invited and the lowest tenderer is awarded

work by following the tender process all these years. It is

submitted that the petitioner-Association has no right to

seek for notice nor hearing, since it is not an aggrieved

party. In the entire writ petition, the petitioner-Association

has not disclosed as to who are the aggrieved persons and

whether their tender was terminated prematurely. In the

absence of those affected before the Court, none of the

grounds urged by the petitioner-Association would merit

any consideration. Further, with regard to contention of

the learned Senior counsel for the petitioner-Association

that action of the respondent-BEL is in violation of Article

39[b] of Constitution of India and violative of Articles 14,

19 and 21 of the Constitution of India, learned Senior

counsel for respondent-BEL would submit that no

fundamental rights of petitioner-Association is violated nor

its members rights are violated. Since there is no violation

of fundamental rights, applying the directive principles

under Article 39[b] of Constitution of India would not

come into application. Learned Senior counsel referring to

decisions of the Hon'ble Apex Court in Tata Cellular V/s.

Union of India [(1994) 6 SCC 651; Michigan Rubber

(India) Limited, V/s. State of Karnataka and Others

[(2012) 8 SCC 216; and Silppi Constructions

Contractors V/s. Union of India and Another [(2020)

16 SCC 489], submits that Government must have

freedom of contract and Court could not sit as a Court of

appeal to review the administrative decision of the

tendering authority. It is his submission that the

tendering authority is best person to get the work done

from a person of its choice but it shall not be arbitrary

action. Further, he submits that the judicial review is

confined to decision making process and interference is

permissible only if the decision making process is malafide

or is intended to favour someone. Learned Senior counsel

would submit that even though the learned Senior counsel

for the petitioner-Association contended that action of the

respondent-BEL is arbitrary, failed to submit how the

action of respondent-BEL is arbitrary. It is his submission

that mere consolidating the work would not amount to

arbitrary action and he submits that consolidation of work

is based on the report of the expert committee and as

such the Court need not go into the question of

consolidation of the work.

11. On hearing the learned Senior counsel for the

parties and on going through the writ petition papers, the

only point which falls for consideration is as to,

"Whether the writ petition filed in the present form by Association is maintainable and whether the petitioner-Association has made out a case to interfere with Annexure-A, tender notification dated 14.03.2022?"

12. Answer to the above point would be negative

for the following reasons:

With regard to maintainability of writ petition:

13. Petitioner claims that it is an Association of

Karnataka Service Providers. The writ petition is said to

have been filed on behalf of its members who are

contractors or service providers to the respondent-BEL.

Admittedly, neither list of members of the Association nor

Bylaws of the Association nor authorization by the

Association to the President to file writ petition is placed on

record. Learned Senior counsel for the petitioner-

Association repeatedly submitted that action of the

respondent-BEL has affected 22 contractors. The names

of those 22 contractors are not disclosed and the said 22

contractors are not before this Court aggrieved by any of

the actions of respondent-BEL. It is not the case of the

petitioner-Association that Association is entitled to

participate in the tender process of respondent-BEL. If the

Association is not entitled to participate in the tender

process, the petitioner-Association cannot be called as an

aggrieved person. Unless the contractor comes before the

Court and vents his individual grievance, this Court would

not be in a position to generally examine the grievance of

all the contractors of the Association to say that it is an

individual grievance of the contractor. A contractor may be

eligible to apply for the tender in pursuance to the

impugned tender notification or a contractor may not be

eligible in pursuance to the impugned tender notification.

The Association consists of members who are eligible or

ineligible or persons who are not interested in participating

in tender process. Therefore, it cannot be said that

petitioner-Association has a common interest. It is also

necessary to note that petitioner-Association has not

disclosed the names of members of the Association and the

number of members of the Association. Unless petitioner-

Association discloses the names of members and the

names of aggrieved members, the writ petition in the

present form is not maintainable. Apparently, submission

of the learned Senior counsel for the respondent-BEL that

most of the members of the Association succeeded in the

individual tender work relating to the unconsolidated

works and therefore the names of 22 contractors is not

disclosed, requires to be accepted.

With regard to violation of principles of natural

justice and violation of Article 39[b] of the

Constitution of India:

14. Learned Senior counsel for petitioner-

Association strenuously contended that contractors who

are affected by the action of respondent-BEL in inviting

the impugned tender consolidating the in-house and

estate work, ought to have provided an opportunity of

hearing by issuing a notice, since those contractors were

providing services to the respondent-BEL for more than 25

years. Admittedly, those contractors who are affected by

so called action of the respondent-BEL are not before this

Court. It is also not clear as to whom the respondent-BEL

ought to have issued notice before taking a decision to

consolidate the work. It is an admitted fact that those

contractors said to have been aggrieved by the action of

the respondent-BEL were awarded work in pursuance of

the earlier tender and those contractors as well as the

respondent-BEL is governed by the contract entered into

between them. If there is infringement of any of the

clauses of contract, it is open for those contractors to

approach appropriate Civil Court to claim damages. It is

also not the case of the petitioner-Association that

contracts are terminated prematurely. In those

circumstances, the so called contractors are not entitled

for any notice or hearing.

15. The main grievance of the petitioner-

Association is that action of the respondent-BEL is wholly

arbitrary and unreasonable in consolidating various works

into one package. The respondent-BEL has made it clear

in its statement of objections that consolidation of various

works was taken in pursuance to report submitted by the

expert management committee constituted by the

respondent-BEL. Moreover, it is to be kept in mind that

respondent-BEL is a Public Sector undertaking under the

Ministry of Defence, manufacturing electronic products for

Indian Army, Navy and Air Force. According to the

respondent-BEL, the decision to consolidate 107 out of

210 contracts was taken for a better resources, planning,

reduction of wastes like duplication of activities, works,

billing, checking, auditing etc. It is for the respondent-BEL

to take decision with regard to carrying out its functions

and in that process, it is also for the respondent-BEL to

take administrative decision either to integrate or

disintegrate its functions or facilities. Since the

respondent-BEL manufactures products for the Indian

Army, Navy and Air Force, integration and disintegration

of work is best left to the decision of the respondent-BEL

and it would be the best judge to secure its work done in

its own manner. The Court would not go into the question

of correctness of consolidation and Court would not

possess the requisite expertise to go into such an

administrative decision of the consolidation of several

contracts that too when the respondent-BEL has taken

decision to consolidate several contracts on a report

submitted by the expert committee. The petitioner-

Association has no right to dictate the respondent-BEL to

get its work done in a particular manner as suggested by

the petitioner-Association. It is for the better

administration of respondent-BEL, it has taken a decision

to consolidate several contracts in the best interest of the

respondent-BEL. Moreover, none of the contracts are

terminated before completion of the tenure. Further, it is

to be noted that if any member of the petitioner-

Association qualifies or meets the tender condition, it is

open for such contractors to participate in the tender

process of respondent-BEL. Therefore as contended, the

action of the respondent-BEL is neither arbitrary, nor

unreasonable.

16. Learned Senior counsel for petitioner-

Association contended that action of the respondent-BEL

in consolidating various contracts into one would be

violative of Article 39[b] of Constitution of India and it

monopolizes the work by one person. Article 39[b] of

Constitution of India would state that the State shall, in

particular, direct its policy towards securing, that the

ownership and control of the material resources of the

community are so distributed as best to subserve the

common good. Generally, principles of directive principles

enshrined in part IV of Constitution of India is not

enforceable as an independent right, it is to be read along

with Articles 14 or Article 16 of Constitution of India. If

fundamental right is not violated, the directive principles

would not come into play. Directive principles of State

Policy under Article 39[b] of the Constitution of India

cannot be stretched to challenge to tender matter of the

nature involved in the present writ petition. The decision

on which the learned Senior counsel for petitioner-

Association placed reliance would have no application to

the facts of the present case, more particularly in the

matter of examining the tender process.

17. The Hon'ble Apex Court in the case of Tata

Cellular (supra) has made it clear that Government must

have freedom of contract and terms of the tender cannot

be open to judicial scrutiny because the invitation to

tender is in the realm of contract. Moreover, in catena of

decisions, the Hon'ble Apex Court has made it clear that

no person can claim as fundamental right to carry on

business with the Government.

For the reasons recorded above, there is no merit in

the writ petition. Accordingly, writ petition stands rejected.

Sd/-

JUDGE

NC.