Karnataka High Court
Bengaluru Metropolitan Transport ... vs Luman Industries Limited on 18 November, 2025
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WA No. 308 of 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF NOVEMBER, 2025
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
WRIT APPEAL NO. 308 OF 2025 (GM-TEN)
BETWEEN:
1. BENGALURU METROPOLITAN TRANSPORT
CORPORATION
TRANSPORT CORPORATION
THROUGH ITS MANAGING DIRECTOR CENTRAL
OFFICES, KH ROAD, SHANTHINAGAR, BENGALURU,
KARNATAKA-560 027.
...APPELLANT
(BY SRI. P D SURANA.,ADVOCATE)
AND:
Digitally
signed by
SUMATHY 1. LUMAN INDUSTRIES LIMITED
KANNAN A COMPANY INCORPORATED UNDER
Location:
High Court COMPANIES ACT, 2013,
of Karnataka HAVING ITS REGISTERED OFFICE AT NO.21,
HEMANTA BASU SARANI CENTER POINT,
3RD FLOOR ROOM NO.312,
KOLKATA WEST BENGAL-700 001
ALSO HAVING ITS CORPORATE OFFICE G-10,
UDYOG VIHAR, NEW DELHI-110 041
REPRESENTED BY ITS
AUTHORISED REPRESENTATIVE
MR.DEEN BANDHU TIWARI, EMPLOYEE.
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WA No. 308 of 2025
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2. STATE OF KARNATAKA
THROUGH ITS CHIEF SECRETARY
VIDHANA SOUDHA, DR.AMBEDKAR VEEDHI,
BENGALURU-560 001.
...RESPONDENTS
(BY SRI. ROHAN VEERANNA TIGADI.,ADVOCATE FOR R1,
SMT. NAMITHA MAHESH B.G., AGA FOR R2)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE JUDGMENT
AND ORDER DATED 09.09.2024 MADE IN W.P No. 12793/2024
(GM-TEN), BY THE LEARNED SINGLE JUDGE, AND GRANT
SUCH OTHER RELIEF OR RELIEFS AS THIS HONBLE COURT
DEEMS FIT UNDER THE FACTS AND CIRCUMSTANCES OF
THE CASE.
THIS APPEAL, COMING ON FOR ORDERS, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MR. JUSTICE C.M. POONACHA
ORAL JUDGMENT
(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)
1. For the reasons stated in the application - I.A.No.2/2025, the
same is allowed. The delay of 139 days in filing the appeal is
condoned.
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2. The appellant has filed the present intra-court appeal
impugning an order dated 09.09.2024 passed by the learned Single
Judge in Writ Petition No.12793/2024 (GM-TEN).
3. Respondent No.1 [writ petitioner] had filed the afore-
mentioned writ petition, impugning the pre-qualification criteria for
submitting bids in terms of the Tender Notification dated
15.03.2024 [hereafter the NIT] issued by the appellant. The
respondent's challenge was not only upheld, but the learned Single
Judge also modified the pre-qualification criteria.
4. The appellant [Bengaluru Metropolitan Transport
Corporation] which is inter alia engaged in providing public
transport - had issued the NIT inviting bids for supply of air, oil and
fuel filters [the products] required for the vehicles operated by it.
5. The tender conditions as per the NIT, inter alia, stipulated the
following pre-qualification criteria:
"1. PRE-QUALIFICATION CRITERIA:
Original Equipment Manufacturers
OR
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Suppliers to Original Equipment Manufacturers OR
ASRTU RC with OE status
["If any firm is a supplier to Original Equipment Manufacturer/
Firms under RC with OE status for AIR/OIL/ FUEL Filters for
TATA, Leyland or Eicher vehicles, their quoted rates will be
considered in the respective category of AIR/ OIL/FUEL
Filters Irrespective of OE status]
OR
IATF 16949:2016 (or Latest) certified Manufacturers with
minimum average annual turnover of Rs.100 Crores for
preceding three continuous years (i.e., 2020-21,2021-22 and
2022-23) are eligible to participate.
2. The tenderer should undertake to supply the ordered
quantity as per the delivery schedule provided.
3. The tenderer must fulfill all the statutory requirements.
4. Tenderers who have been blacklisted by any of the
Government Organization / public supplies undertaking for
breach of contract shall not be considered.
5. If the supply and quality performance are not satisfactory
in respect of previous supplies, the offer of such firm will be
disqualified.
6. Only the Original Equipment Manufacturer or Suppliers to
Original Equipment Manufacturers or ASRTU Rate Contract
holders with OE STATUS or Manufacturers has to participate
in the tender using their own digital signature key. The bid
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will be rejected, if the Principal Original Equipment
Manufacturer or Suppliers to Original Equipment
Manufacturers or ASRTU Rate Contract holders with OE
STATUS or Manufacturers authorizes someone else to
participate/quote the rates on behalf of them.
7. Any bidder from a country which shares a land border with
India will be eligible to bid in the tender only if the bidder is
registered with the Competent Authority (as detailed at
Annexure-B2). In this regard, a compliance certificate/
declaration to be submitted by the bidder on Rs. 20/- &
above stamp Paper as per the format at Declaration-III
(regarding restrictions on public procurements from bidders
of such country/ countries which shares a Land Border with
India.)"
6. Respondent No.1 [Luman Industries Limited] which is
engaged in the business of manufacturing fuel filters, had filed the
aforesaid writ petition aggrieved by the pre-qualification criteria, in
as much as, it restricts the participation to only those entities, which
had achieved the minimum average annual turnover of ₹100 crores
in the preceding three years [2020-21 to 2022-23]. Since
respondent No.1's turnover was less than the said minimum
threshold, it was excluded from furnishing its bid pursuant to the
tender notification.
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7. Respondent No.1 claims that the stipulation of prescribing a
minimum turnover criteria of ₹100 crores is unreasonable and
arbitrary, as the value of supplies for which bids were invited, was
approximately ₹6.5 crores. It was the respondent No.1's case that
the criteria for minimum turnover, is relevant to ensure that bidders
have the capacity to supply the quantity of goods for which bids
were invited. Respondent No.1 contends that since the total value
of supplies for which bids were invited was only ₹6.5 crores, the
minimum turnover of ₹100 crores - which is equivalent to almost
twenty times the value of the goods to be supplied - was
disproportionately excessive and arbitrary and is, thus, liable to be
set aside.
8. The learned Single Judge accepted the aforesaid contention
and had set aside the pre-qualification criteria of the minimum
average turnover of ₹100 crores and had modified the same to ₹6
crores only.
9. It was the appellant's case that the criteria of a minimum
average annual turnover of more than ₹100 crores was fixed to
ensure that quality materials are procured from large
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manufacturers. It contended that the said criteria had no nexus
with the value of the goods to be procured. The appellant had, in its
statement of objections filed before the learned Single Judge in
W.P.No.12793/2024, specifically pleaded as under:
"16. (d) The value of the procurement has no nexus to the
conditions of turnover. The condition with regard to turnover
is imposed only to procure best of the best materials. The
nexus for imposing such condition is as said above, is to
procure the quality and precision materials.
(e) The contention that the condition imposed is violative
of Article 14 of the Constitution of India and the same is
irrational is untenable contentions raised by the petitioner.
Merely because the petitioner qualify and therefore it cannot
bid, it does not amount to say that the criteria of turnover
prescribed is contrary to the MSME Act and that it prevents
the participant who are micro and small enterprises."
10. Notwithstanding the aforesaid pleadings, the learned Single
Judge had found the pre-qualification turnover criteria as arbitrary
and discriminatory. The learned Single Judge also referred to the
decision of the Supreme Court in the case of Rashbihari Panda,
etc. v. State of Orissa : 1969 (1) SCC 414 where the Supreme
Court had faulted the State for excluding all persons interested in
the trade of Kendu leaves, for not being licencees in the previous
year.
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11. We are unable to concur with the decision of the learned
Single Judge. It is well-settled that in matters relating to
procurements by the State, it has wide discretion in stipulating the
criteria for selecting its suppliers. The Supreme Court has
repeatedly held that Courts are required to exercise restraint while
exercising powers of judicial review in contractual or commercial
matters. Unless the court finds that the decision-making process is
fraught with arbitrariness; the decision is mala fide; or is capricious
or biased, no interference would be called for. Clearly, it would be
erroneous for the Court to evaluate the efficacy of any pre-
condition criteria. Thus, the scope of judicial review is limited to
examining whether the criterion of average annual turnover of
Rupees one hundred crores, is mala fide, has been introduced for
extraneous reasons, or is wholly arbitrary and unreasonable. It is
also relevant to bear in mind that the question of reasonableness is
to be examined on the anvil of the Wednesbury unreasonableness;
that is, the decision is so unreasonable, that no reasonable person
would make it. It is not open for the Courts to evaluate the merits of
the decision in contractual matters and supplant its view in
substitution of the decision of the concerned authorities.
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12. In Silppi Constructions Contractors v. Union of India :
(2020) 16 SCC 489, the Supreme Court had observed as under:
"19. ..This Court being the guardian of fundamental
rights is duty-bound to interfere when there is arbitrariness,
irrationality, mala fides and bias. However, this Court in all
the aforesaid decisions has cautioned time and again that
courts should exercise a lot of restraint while exercising their
powers of judicial review in contractual or commercial
matters. This Court is normally loathe to interfere in
contractual matters unless a clear-cut case of arbitrariness or
mala fides or bias or irrationality is made out. One must
remember that today many public sector undertakings
compete with the private industry. The contracts entered into
between private parties are not subject to scrutiny under writ
jurisdiction. No doubt, the bodies which are State within the
meaning of Article 12 of the Constitution are bound to act
fairly and are amenable to the writ jurisdiction of superior
courts but this discretionary power must be exercised with a
great deal of restraint and caution. The courts must realise
their limitations and the havoc which needless interference in
commercial matters can cause. In contracts involving
technical issues the courts should be even more reluctant
because most of us in Judges' robes do not have the
necessary expertise to adjudicate upon technical issues
beyond our domain. As laid down in the judgments cited
above the courts should not use a magnifying glass while
scanning the tenders and make every small mistake appear
like a big blunder. In fact, the courts must give "fair play in
the joints" to the government and public sector undertakings
in matters of contract. Courts must also not interfere where
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such interference will cause unnecessary loss to the public
exchequer.
20. The essence of the law laid down in the judgments
referred to above is the exercise of restraint and caution; the
need for overwhelming public interest to justify judicial
intervention in matters of contract involving the State
instrumentalities; the courts should give way to the opinion of
the experts unless the decision is totally arbitrary or
unreasonable; the court does not sit like a court of appeal
over the appropriate authority; the court must realise that the
authority floating the tender is the best judge of its
requirements and, therefore, the court's interference should
be minimal. The authority which floats the contract or tender,
and has authored the tender documents is the best judge as
to how the documents have to be interpreted. If two
interpretations are possible then the interpretation of the
author must be accepted. The courts will only interfere to
prevent arbitrariness, irrationality, bias, mala fides or
perversity. With this approach in mind we shall deal with the
present case."
13. We also consider it apposite to refer to the relevant principles
summarised by the Supreme Court in Tata Cellular v. Union of
India : (1994) 6 SCC 651
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in
administrative action.
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(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct
the administrative decision. If a review of the administrative
decision is permitted it will be substituting its own decision,
without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be
open to judicial scrutiny because the invitation to tender is in
the realm of contract. Normally speaking, the decision to
accept the tender or award the contract is reached by
process of negotiations through several tiers. More often
than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract.
In other words, a fair play in the joints is a necessary
concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the
application of Wednesbury principle of reasonableness
(including its other facts pointed out above) but must be free
from arbitrariness not affected by bias or actuated by mala
fides.
(6) Quashing decisions may impose heavy
administrative burden on the administration and lead to
increased and unbudgeted expenditure.
Based on these principles we will examine the facts of
this case since they commend to us as the correct
principles."
14. In the present case, the appellant had clearly explained that
the object of stipulating a minimum turnover criteria, is to ensure
procurement from entities, which are of a requisite size. The
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turnover criteria would ensure that the bidders are established
manufacturers. The appellant had also furnished the names of the
bidders whose bids were opened and the same clearly indicated
that the entities were well-known entities. We are unable to accept
that stipulating a minimum turnover criteria to ensure that only well-
established manufacturers and large entities participate in the
bidding process, is irrational or unreasonable. It is also contended
by the appellant that the products are critical auto components and
therefore, it was necessary to ensure that the supplier was well
established in the industry for the purpose of assuring proper
quality and service.
15. The learned Single Judge had erred in striking down the
pre-qualification criteria and substituting it with what the learned
Single Judge considered would be more apposite. In our view, the
impugned order is unsustainable.
16. The learned counsel for respondent No.1 submitted that a
similarly placed Transport Corporation namely, Kalyana Karnataka
Road Transport Corporation operating in the Kalyana Karnataka
region, are procuring the same products from manufacturers
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without stipulating any minimum turnover criteria. He also stated
that pending finalisation of the tenders, the appellant has been
procuring the products manufactured by respondent No.1 from
open market. He argued that thus, stipulating a minimum criteria
that excludes respondent No.1 from participating in the bidding
process is clearly unreasonable.
17. The learned counsel for the appellant had submitted that
Kalyana Karnataka Road Transport Corporation had procured
similar products by a procurement process which did not stipulate
minimum turnover. However, it had subsequently cancelled the
contracts on account of certain quality issues.
18. It is not necessary for us to examine the contention whether
any other entity had procured the same product through tender
process without stipulating the pre-qualification criteria as
stipulated in the tender conditions. This is because, it is not open
for this Court to evaluate the decision to provide such a stipulation
on minimum turnover criteria, on merits. As noted above, the
scope of judicial review in such matters, is limited. In the present
case, the pre-qualification criteria as stipulated, is supported by
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reason. Thus, it is not amenable to judicial review in proceedings
under Article 226 of the Constitution of India. The fact that the
procurement department of another Agency (or even the appellant
on another occasion) had procured the same product without such
stipulation, would not render the inclusion of the pre-qualification
criteria as unreasonable or arbitrary.
19. In view of the above, the present appeal is allowed and the
impugned order is set-aside.
Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE
Sd/-
(C.M. POONACHA)
JUDGE
KS
