M/S. L.M.D. Power Works Opc Pvt Ltd vs Bangalore Electricity Supply ...
2022 Latest Caselaw 12978 Kant

                           1



      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 14TH DAY OF NOVEMBER , 2022

                          BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

         WRIT PETITION No.21543 OF 2022 (GM - TEN)

BETWEEN:

1.   M/S. L.M.D. POWER WORKS OPC PVT. LTD.,
     A PROPRIETORSHIP CONCERN
     REPRESENTED BY ITS PROPRIETOR
     SRI. HARISH
     S/O LINGARAJU
     AGED ABOUT 37 YEARS
     HAVING OFFICE AT OLD NO.13,
     NEW NO. 567, 2ND CROSS ,
     PATEL NANJUNDAPPA ROAD,
     R.S. PALYA
     KAMMANAHALLI MAIN ROAD,
     BENGALURU - 560 033.

2.   M/S S.V. ENTERPRISES
     A PROPRIETORSHIP CONCERN
     REPRESENTED BY ITS PROPRIETOR
     SRI. SUDHAKAR
     S/O LAKSHMANA
     AGED ABOUT 47 YEARS
     HAVING OFFICE AT 1ST CROSS
     SUJIMALLESHARANAGARA
     BELLARY ROAD, CHALLAKERE
     CHITRADURGA.

3.   M/S G.K. ELECTRICALS
     A PROPRIETORSHIP CONCERN
                              2



    REPRESENTED BY ITS PROPRIETOR
    SRI. SHIVAKUMAR
    S/O MUNIRAJU
    AGED ABOUT 36 YEARS
    HAVING OFFICE AT BHOVI COLONY
    B.M. ROAD, KRS AGRAHARA
    KUNIGAL, TUMAKURU - 572 130.
                                               ... PETITIONERS

(BY SRI NANDAKUMAR C.K., SR.ADVOCATE FOR
    SRI SANDEEP LAHIRI, ADVOCATE)

AND:

BANGALORE ELECTRICITY SUPPLY COMPANY LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE COMPANIES ACT, 1956
HAVING ITS CORPROATE OFFICE AT
KAVERI BHAVAN, K.G.ROAD
BENGALURU - 560 009
REPRESENTED BY ITS
DEPUTY GENERAL MANAGER (ELE),
OPERATIONS-1.
                                          ... RESPONDENT
(BY SRI S.SRIRANGA, SR.ADVOCATE FOR
    SMT.SUMANA NAGANAND, ADVOCATE)

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR
ENTIRE RECORD LEADING TO THE TENDER NOTIFICATIONS
DTD.28.3.2022; QUASH THE ALL TENDER NOTIFICATIONS
DTD.28.3.2022 VIDE ANNEXURE-D TO H, J TO T, V W, X, Y, Z, AA,
AB, AC, AD, AE, AF, AG, AH, AJ, AK, AL, AM, AN, AP, AQ, AR, AS,
AT, AV AW RESPECTIVELY; DIRECT THE RESPONDENT TO NOTIFY
ALL 50 TENDERS AFRESH IN COMPLIANCE OF THE KTPP ACT AND
RULES.
                                        3



     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 07.11.2022, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
                                       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. 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. 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. 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. 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 Rules1 in the light of the finding of the co-

ordinate 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;

The Karnataka Transparency in Public Procurements Rules, 2000

(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 INDIA2 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. 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

(1994) 6 SCC 651

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 "For Repairs and Reconditioning of Failed work 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       Approximately Rs.3,51,00,000/-
       put to
       Tender
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. 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.

Sd/-

JUDGE bkp/CT:MJ