Karnataka High Court
North West Karnataka Road Transport ... vs Aditi D/O. Umesh Shetty on 7 February, 2024
Author: S G Pandit
Bench: S G Pandit
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W.A.No.100683/2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 7th DAY OF FEBRUARY, 2024
PRESENT
THE HON'BLE MR JUSTICE S G PANDIT
AND
THE HON'BLE MR JUSTICE K V ARAVIND
WRIT APPEAL NO.100683 OF 2023
BETWEEN
KM
SOMASHEKAR 1. NORTH-WEST KARNATAKA ROAD
Digitally signed by
TRANSPORT CORPORATION,
K M SOMASHEKAR
Date: 2024.02.09
10:29:38 +0530
R/BY ITS MANAGING DIRECTOR,
NWKRTC GOKUL ROAD, HUBBALLI,
DIST: DHARWAD-580030.
2. THE DIVISIONAL CONTROLLER,
NORTH-WEST KARNATAKA ROAD,
TRANSPORT CORPORATION,
BELAGAVI DIVISION, BELAGAVI.
...APPELLANTS
(BY SRI. PRASHANT S. HOSAMANI, ADVOCATE)
AND
1. ADITI D/O. UMESH SHETTY,
AGE: 35 YEARS, OCC: BUSINESS,
R/O. NO.275, PARVATI NILAYA,
BUDA SCHEME NO.51, LAXMI TEK,
BELAGAVI, DIST: BELAGAVI-590001.
2. THE STATE OF KARNATAKA,
R/BY SECRETARY PUBLIC TRANSPORT
DEPARTMENT, M. S. BUILDING,
AMBEDKAR VEEDHI, BENGALURU-560001.
...RESPONDENTS
(BY SRI. SHREEVATSA S. HEGDE AND SRI. ABHILASH
HANAMANNAVAR FOR R1,
SRI. G. K. HIREGOUDAR, GOVERNMENT ADVOCATE FOR R2)
THIS WRIT APPEAL IS FILED U/S.4 OF KARNATAKA HIGH COURT
ACT, PRAYING TO, SET ASIDE THE ORDER DATED 09.11.2023 IN WP
NO.106551/2023(GM TEN) PASSED BY THE LEARNED SINGLE JUDGE
FOR THIS HON'BLE COURT AND ALLOW THE SAID WRIT PETITION IN
THE INTEREST OF JUSTICE AND EQUITY.
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W.A.No.100683/2023
THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED ON
25.01.2024 COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS
DAY, S.G. PANDIT, J., DELIVERED THE FOLLOWING:
JUDGMENT
This intra-court appeal under Section 4 of the
Karnataka High Court Act, is presented questioning the
correctness and legality of the order dated 09.11.2023 in
W.P. No.106551/2023 whereby the writ petition is allowed
setting aside the decision of appellant/respondent No.1,
dated 16.10.2023, canceling the tender with a direction to
process the bid of the petitioner as per E-Tender Notice
No.5 of 2023 dated 05.09.2023 and award contract in
respect of Stall No.5 at Central Bus Stand, Belagavi, for
canteen if the petitioner is otherwise found eligible.
2. Parties to the appeal would be referred to as they
stand before the Writ Court. Before the Writ Court, the
appellants were respondents No.1 and 2, respondent No.1
herein was the petitioner.
3. Heard Sri. Prashant S.Hosamani, learned counsel
for the appellants, Sri. Shreevatsa S.Hegde, learned counsel
for respondent No.1, and Sri. G.K.Hiregoudar, learned
Government Advocate for respondent No.2. Perused the
appeal papers.
4. Brief facts of the case, which are relevant, are
that,
(a) The appellants-North West Karnataka Road Transport
Corporation (NWKRTC) issued tender Notice dated
23.03.2023 for leasing Shop No.5 on the first floor of
Central Bus Stand at Belagavi for canteen. The
appellants-NWKRTC received highest bid of
Rs.4,89,009/- which was accepted. However, the
highest bidder failed to come forward to execute the
documents and take possession of the canteen and his
earnest money deposit was forfeited. Thereafter, the
second highest bidder, who had quoted Rs.3,26,786/-
was called and he was asked to match the price
quoted by the highest bidder i.e., Rs.4,89,009/-, but
the second highest bidder refused to increase his bid.
Therefore, the appellants-NWKRTC took a decision to
call for fresh tender and accordingly, issued E-Tender
Notice No.5 of 2023 dated 05.09.2023 in respect of
Shop No.5 at Central Bus Stand of Belagavi for
canteen. The E-Tender Notice would indicate that
reserve price fixed was Rs.2,18,261/-. In pursuance of
E-Tender Notice dated 05.09.2023, two bidders
participated in the tender process. The petitioner was
the highest bidder at Rs.2,55,154/-. The appellants-
NWKRTC was of the opinion that the highest bid
received in pursuance of E-Tender Notice dated
23.03.2023 was lesser than the earlier highest bid and
hence, it decided to reject the offer and to invite fresh
tender. Accordingly, on its website, the appellants-
NWKRTC in respect of the petitioner's tender had
indicated rejection of his tender. Questioning the said
rejection, the petitioner filed W.P. No.106551/2023
contending that the petitioner was qualified to
participate in the tender process and he was the
highest bidder quoting substantially more price than
the reserve price.
(b) The respondents-NWKRTC placing reliance on Section
14 of the Karnataka Transparency in Public
Procurements Act, 1999 (for short, 'the 1999 Act'),
defended cancellation and also on the ground that it
had not received anticipated financial bid. The learned
Single Judge under impugned order, dated
09.11.2023, holding that fixing minimum reserve price
was the prerogative of respondent No.1; nothing
prevented respondent No.1 from fixing highest amount
as minimum reserve price; and having fixed the
minimum reserve price of Rs.2,18,261/- per month,
respondent No.1 is bound to lease the premises for a
bid higher than the reserve price, allowed the writ
petition setting aside the cancellation and directed
respondent No.1 to process the bid of the petitioner
and to award contract, if the petitioner is otherwise
found eligible.
5. Learned counsel Sri. Prashant S.Hosamani, for
the appellants would contend that the learned Single Judge
committed a grave error in allowing the writ petition
directing the first respondent to process the bid of the
petitioner and to award contract in respect of Stall No.5 if
the petitioner is otherwise found eligible. He submits that
though the petitioner quoted price more than the reserve
price, respondents-NWKRTC, the appellants herein, had not
received the anticipated price, i.e., it was lesser than the
price of the highest bidder under the first tender Notice for
Rs.4,89,009/-. Learned counsel referring to Section 14 of
the 1999 Act would contend that respondent-appellant
could cancel tenders at any time before passing order of
acceptance on failure of anticipated financial resources, and
since respondent No.1-appellant had not received the
anticipated bid, respondent No.1-appellant, in its wisdom,
thought it fit to invite fresh tender so as to get highest bid
amount for Shop No.5 i.e., canteen. Further, learned
counsel would invite attention of this Court to special
instructions of E-Tender Notice dated 05.09.2023 and
submits that the Tender Inviting Authority has reserved its
right to reject the tender without assigning any reason.
6. Learned counsel, Sri Prashanth Hosamani would
further contend that since the petitioner's tender is not
accepted, the petitioner has not acquired any right.
Therefore, the petitioner is not entitled for any relief.
Moreover, he submits that it is open for the petitioner to
participate in the fresh tender that would be floated by the
respondents-NWKRTC. When the Tender Inviting Authority
is of the opinion that the highest bid received is not
financially viable, normally, in commercial decision, the
Courts shall not interfere. Thus, he prays for allowing the
writ appeal.
7. Per contra, learned counsel Sri. Shreevatsa
S.Hegde, for the petitioner would support the order
impugned and submits that it is not open for the
respondents-NWKRTC to contend that it is not financially
viable since bid of the petitioner is much more than the
reserve price. It is submitted that reserve price fixed by the
respondents-NWKRTC is Rs.2,18,261/- whereas the
petitioner has quoted his bid at Rs.2,55,154/-. Further, the
learned counsel would contend that the price or the highest
bid received in pursuance to the first tender notice dated
23.02.2023 at Rs.4,89,009/- was an inflated one and
hence, the tenderer, who had quoted the said price, had not
come forward to enter into a contract with respondents-
NWKRTC. The learned counsel would submit that the action
of the respondents-NWKRTC is arbitrary and the fact that
petitioner's bid is less than what respondent No.1 had got
for the same stall in previous tender cannot be a reason to
reject the petitioner's offer. Thus, he prays for dismissal of
the writ appeal.
8. Having heard the learned counsels for the parties
and on perusal of the entire writ appeal papers, the only
point which falls for consideration in this appeal is,
Whether the impugned order passed by the
learned Single Judge requires interference?
9. The answer to the above point would be in the
affirmative for the following reasons:
(a) The jurisdiction of the High Court under Article 226 of
the Constitution in the matter of tender is very limited.
Under Article 226 of the Constitution, Courts would
examine the decision making process and would not
interfere with the decision itself. Moreover, in
commercial transactions, where the 'State' deals with
matter which involves financial implications, the
Courts shall be slow in interfering with the decisions of
the State; and unless it is shown that the action of the
State is arbitrary, malafide or suffers from
unreasonableness, the Court would not interfere.
(b) In the case on hand, at the first instance, under
E-Tender notice dated 23.03.2023, respondents-
NWKRTC invited tender for leasing Shop No.5 at
Central Bus Stand, Belagavi, for canteen on lease, and
it received highest bid of Rs.4,89,009/- and the
second highest bid of Rs.3,26,786/-. Both the bidders
backed out and never came forward to enter into a
contract with the respondents-NWKRTC. Admittedly,
the reserve price fixed by respondent No.1-NWKRTC
under E-Tender notice dated 05.09.2023 is
Rs.2,18,261/-. The bid received in pursuance of the
first tender Notice is more than double the reserve
price of the second tender notice dated 05.09.2023. In
pursuance of the second e-tender notice dated
05.09.2023 inviting fresh tender, the petitioner is the
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highest bidder with bid price of Rs.2,55,154/-. No
doubt, the petitioner's bid is more than the reserve
price, but respondent No.1-NWKRTC, on consideration
of the entire tender process, has taken a decision to
invite fresh tender as the petitioner's bid would not
match with the bid received in pursuance of the first
tender Notice or the petitioner's bid is not nearer to
the highest bid received in pursuance of the first
tender Notice dated 23.03.2023. The decision of
respondent No.1-NWKRTC is a commercial decision.
When a decision is taken to invite fresh tenders to
secure more price or price higher than the price
received, the said decision cannot be called as a
arbitrary decision. The said decision by the NWKRTC is
in the interest of the institution. We do not find any
infirmity in the decision making process. Moreover,
only two bidders had participated in pursuance of the
tender Notice dated 05.09.2023.
(c) Section 14 of the 1999 Act reads as follows:
"14. General rejection of tenders.- (1)
The Tender Accepting Authority may at any
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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 report the same to the
Procurement Entity.
(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."
The Tender Accepting Authority could reject all the
tenders at any time before passing an order of
acceptance on the grounds stated in the above
provision. One of the grounds for rejection could be
failure to receive the anticipated financial resource. As
the cancellation of tender is before acceptance, no
right is acquired by the petitioner. Moreover, in terms
of the tender Notice, the Senior Divisional Controller,
NWKRTC reserves its right to reject the tender without
assigning any reason.
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(d) In the case on hand, if the respondents-NWKRTC
expects more than the price quoted by the petitioner,
the same cannot be called as irrationale or
unreasonable. The Hon'ble Apex Court in the case of
State of Punjab and Others Vs. Mehar Din1, in almost
identical fact-situation has held that under the limited
scope of judicial review under Article 226 of the
Constitution, the High Court was not supposed to
interfere in the opinion of the executive who were
dealing on the subject, and particularly in the matters,
where authorities are competent of floating the tender
is best judge of its requirements, therefore, the
interference otherwise has to be very minimal. The
facts of the above stated decision are that, the
Tahsidlar, Sales, Malerkotla conducted public auction
on 04.06.1993 and the respondent Mehar Din was the
highest bidder which was provisionally accepted
subject to confirmation by the Sales Commissioner.
The Sales Commissioner was of the view that the
(2022)5 SCC 648
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public property has not been put to proper publicity
and the bid is inadequate and cancelled the bid with a
further direction to re-auction. The said order of the
Sales Commissioner was the subject matter before the
Chief Sales Commissioner who confirmed the order of
the Sales Commissioner canceling the bid. The said
order of the Chief Sales Commissioner was challenged
before the Divisional Commissioner who recorded a
finding that no opportunity was afforded to the bidder
and set aside the cancellation order. The said order of
the Divisional Commissioner was the subject matter
before the Financial Commissioner Revenue, who, by
order dated 24.08.2006, set aside the order of the
Divisional Commissioner and confirmed the order of
the Sales Commissioner and held that land is to be re-
auctioned after proper publicity. The said order of the
Financial Commissioner was challenged before the
High Court under Articles 226 and 227 of the
Constitution of India. The High Court proceeded to set
aside the order on the premise that once the auction
purchaser's bid was higher than the reserve price
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which was notified at site and more than half the price
of the last auction and in the absence of any illegality
being committed in the auction proceedings, there was
no reason for vitiating the auction process, set aside
the order of the Financial Commissioner and directed
the competent authority to confirm the sale and to
complete other formalities. While setting aside the
order of the High Court, the Hon'ble Apex Court, at
paragraphs 19, 20, 22, 25, 26, 27, and 28 has
observed as follows:
"19. This Court has examined right of the
highest bidder at public auctions in umpteen
number of cases and it was repeatedly pointed out
that the State or authority which can be held to be
State within the meaning of Article 12 of the
Constitution, is not bound to accept the highest
tender of bid. The acceptance of the highest bid or
highest bidder is always subject to conditions of
holding public auction and the right of the highest
bidder is always provisional to be examined in the
context in different conditions in which the auction
has been held. In the present case, no right had
accrued to the respondent even on the basis of
statutory provisions as being contemplated under
Rule 8(1)(h) of Chapter III of the Scheme of the
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1976 Rules, and in terms of the conditions of
auction notice notified for public auction.
20. The scope of judicial review in the matters of
tenders/public auction has been explored in depth
by this Court in a catena of cases. Plausible
decisions need not be overturned and, at the same
time, latitude ought to be granted to the State in
exercise of its executive power. However,
allegations of illegality, irrationality and procedural
impropriety would be enough grounds for courts to
assume jurisdiction and remedy such ills.
22. The exposition of law on the subject has been
consistently followed by this Court even in the
later decisions holding that superior courts should
not interfere in the matters of tenders, unless
substantial public interest was involved or the
transaction was mala fide. It was consistently
stressed by this Court that the need for
overwhelming public interest should always be
kept in mind to justify judicial intervention in
contracts involving the State and its
instrumentalities and while exercising power of
judicial review in relation to contracts, the courts
should consider primarily the question whether
there has been any infirmity in the decision-
making process.
25. The law on the subject is settled that the
courts being the custodian of fundamental rights
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are under an obligation to interfere where there is
arbitrariness, irrationality, unreasonableness, mala
fides and bias, if any, but at the same time, the
courts should exercise the power of judicial review
with a lot of restraint, particularly in contractual
and commercial matters.
26. Undisputedly, the provisional bid, in the
instant case, was not confirmed by the competent
authority (Sales Commissioner) and not being
accepted after recording its due satisfaction by an
order dated 2-7-1993 and the decision of the
authority in passing the order of cancellation of
the auction bid was scrutinised/examined by the
appellate/revisional authority and the discretion
exercised by the competent authority in taking
decision of cancellation was upheld at later stages.
27. This being a settled law that the highest
bidder has no vested right to have the auction
concluded in his favour and in the given
circumstances under the limited scope of judicial
review under Article 226 of the Constitution, the
High Court was not supposed to interfere in the
opinion of the executive who were dealing on the
subject, unless the decision is totally arbitrary or
unreasonable, and it was not open for the High
Court to sit like a court of appeal over the decision
of the competent authority and particularly in the
matters where the authority competent of floating
the tender is the best judge of its requirements,
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therefore, the interference otherwise has to be
very minimal.
28. To the contrary, the limited scope of judicial
review for which interference could have been
permissible to prevent arbitrariness, irrationality,
bias, mala fides or perversity, if any, in the
approach of the authority while dealing with the
auction proceedings, was never the case of the
respondent at any stage. The High Court has
recorded a finding to the contrary that the
appellants have failed to show any irregularity or
illegality in the auction proceedings and in the
absence whereof, the auction proceedings could
not be held to be vitiated. The premise on which
the High Court has proceeded in recording a
finding, particularly, in the matters of auction of
public properties is unsustainable in law and that
apart, it is also not in conformity with the scheme
of auction of public properties as defined under
Chapter III of the 1976 Rules."
10. Before concluding, it would be necessary to
observe that all is not well with respondent No.1-NWKRTC.
The learned counsel for the appellant admitted that the
1999 Act is applicable to NWKRTC and, in fact, it is the
contention of the appellant-respondent No.1 that
cancellation of tender and decision to go for fresh tender is
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in terms of Section 14 of the 1999 Act. When the Court,
during the course of hearing, directed the appellant-
NWKRTC through its learned counsel to place on record the
Notification issued under Section 9 of the 1999 Act notifying
the Tender Inviting Authority and Tender Accepting
Authority. The NWKRTC has failed to make available the
Notification issued under Section 9 of the 1999 Act. But, the
NWKRTC has made available the General Standing Order
No.10/2022 dated 07.03.2022 wherein directions are issued
for conducting commercial transactions. From the General
Standing Orders, it is pointed out that where the monthly
licence fee is Rs.1,00,000/- to Rs.2,99,999/-, Chief Traffic
Manager would be the authority to take a decision. That
would not suffice or would comply the provisions of the
1999 Act. When the 1999 Act applies to a procurement
entity, it shall follow the procedure prescribed under the
1999 Act as well as the Rules made thereudner. The
appellant-NWKRTC shall issue Notification under Section 9
specifying the Tender Inviting Authority as well as the
Tender Accepting Authority, if not already issued, and
proceed further to call for fresh tenders.
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11. For the reasons recorded above, the following:
ORDER
i) The writ appeal is allowed.
ii) The impugned order dated 09.11.2023 passed in
W.P. No.106551/2023 is set aside.
iii) The appellants-NWKRTC shall proceed to issue fresh
E-Tender Notice and finalise in respect of Shop No.5
at Belagavi Central Bus Stand strictly in terms of the
provisions of the 1999 Act and the Rules made
thereunder.
Sd/-
JUDGE
Sd/-
JUDGE
KMS
