Karnataka High Court
Zygox Infotech Private Limited vs Bangalore Electricity Supply Company ... on 20 November, 2024
Author: Hemant Chandangoudar
Bench: Hemant Chandangoudar
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NC: 2024:KHC:47103
WP No. 18923 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF NOVEMBER, 2024
BEFORE
THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR
WRIT PETITION NO. 18923 OF 2024 (GM-TEN)
BETWEEN:
ZYGOX INFOTECH PRIVATE LIMITED
A COMPANY REGISTERED UNDER THE
PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
9/1,1ST CROSS, 10TH MAIN, 2ND STAGE,
INDIRANAGAR, BANGALORE 560 038.
REPRESENTED BY ITS MANAGING DIRECTOR
MR. RAVISHANKAR T.,
AGED ABOUT 58 YEARS
SON OF PILLABYRAPPA.
...PETITIONER
(BY SRI. MANU PRABHAKAR KULKARNI., ADVOCATE)
AND:
1. BANGALORE ELECTRICITY SUPPLY COMPANY LIMITED
Digitally signed by B
K
A COMPANY WITHIN THE MEANING
MAHENDRAKUMAR OF THE COMPANIES ACT 2013
Location: HIGH
COURT OF HAVING ITS REGISTERED OFFICE AT
KARNATAKA
K.R. CIRCLE, BANGALORE - 560 001
REPRESENTED BY ITS
MANAGING DIRECTOR
2. IDEA INFINITY IT SOLUTIONS PRIVATE LIMITED
HAVING ITS REGISTERED OFFICE AT
NO. 117, UBIQUITY, INFANTRY ROAD,
SHIVAJI NAGAR, BENGALURU 560 001.
ALSO AT NO. 218, 5TH FLOOR,
JP ROYALE, SAMPIGE ROAD,
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NC: 2024:KHC:47103
WP No. 18923 of 2024
MALLESHWARAM, BANGALORE 560 003
REPRESENTED BY ITS MANAGING DIRECTOR
...RESPONDENTS
(BY SRI. SHASHI KIRAN SHETTY, ADVOCATE GENERAL,
SRI. S S NAGANAND, ADVOCATE AND
SRI. SRIRANGA S, SENIOR COUNSELS FOR
SMT. SUMANA NAGANAND., ADVOCATE FOR R1;
SRI. VIKRAM A HUILGOL, SENIOR COUNSEL FOR
SRI. SYED KHAMRUDDIN, ADVOCATE FOR R2)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO CALLING FOR THE
RECORDS RELATING TO ENQUIRY NO. BESCOM/2023-
24/OW/WORK_INDENT 149/CALL-2 (ANNEXURE-A) DATED
13/06/2024 ISSUED BY THE R1 AND QUASH THE SAME.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR
ORAL ORDER
The petitioner is impugning the pre-qualification tender conditions and seeking a writ in the nature of Certiorari to quash the tender enquiry bearing No. BESCOM/2023- 24/OW/WORK_ INDENT149/CALL-2, dated 13.06.2024, issued by the respondent No.1. In the alternative, the petitioner seeks a writ in the nature of Certiorari to quash the Clauses 33.3, 33.4. 33.5, 33.6, 33.7, 33.8, 33.11 of the said notice inviting tender.
2. The petitioner has been engaged in the business of providing billing and web based total revenue management (TRM) services to various electricity distribution utilities across -3- NC: 2024:KHC:47103 WP No. 18923 of 2024 the country, including to the ESCOMS in the state of Karnataka for the past 17 years.
3. The respondent No. 1 is BESCOM - public sector entity engaged in the supply and distribution of electricity in the state of Karnataka. The respondent No. 1 had invited said tender dated 13.06.2024 for the purpose of providing web based TRM Modules, GIS, BI & Analytical tools and other modules along with the supply of hardware, software and man power, stationeries and consumables on the basis of system as a service (SaaS) and other allied services in the subdivisions and accounting sections of Non-RAPDRP areas in Chitradurga Area Zone (CTAZ) and Bangalore Rural Area Zone (BRAZ). The approximate estimated tender value is to the tune of INR 118.612 crores for a period of two years.
The respondent No. 2 is a rival bidder to the tender.
4. The petitioner is impugning the tender conditions primarily on the grounds that subject tender herein contains pre-qualification conditions tailor made to suit certain bidders such as, inter alia, those stipulating similar work experience of excessive value and such other qualification that have not been stipulated in the similar tenders invited by ESCOMs, resulting in exclusion of all bidders, except respondent No. 2.
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5. The petitioner further challenges the said tender on the grounds that subject tender contains pre-qualifying conditions similar to the earlier tender bearing enquiry No. BESCOM/2023/24/OW/WORK_ INDENT149, dated 05.03.2024, invited by respondent No. 1 for the same tender works, and terms of which were were impugned by the petitioner herein and others in W.Ps. No. 11025/2024 c/w 11323/2024 and the coordinate Bench of this Court vide order dated 22.04.2024 had stayed the award of tender contract subject to the leave of this Court, whilst recording the submission of the learned counsel for petitioner therein that the impugned tender conditions had an adverse effect of restricting competition by excluding all bidders but the respondent No.2 herein.
Submissions of Petitioner's Counsels
6. Shri Manu Prabhakar Kulkarni, the learned counsel for the petitioner in W.P No. 18923/2024 submitted that the terms and conditions of the subject tender dated 13.06.2024 are similar to the earlier tender dated 05.03.2024, which was the subject matter of question before this Court, wherein the award of tender works was to be made by the leave of this Court. However, the respondent No. 1 have cancelled the earlier tender vide OM dated 12.06.2024 and have reinvited the subject tender, in an attempt to do indirectly what cannot be done directly.
-5-NC: 2024:KHC:47103 WP No. 18923 of 2024 6.1. Additionally, the learned counsel has submitted as follows impugning the following pre-qualification requirements enumerated under Clause 33 of the tender document dated 13.06.2024:
a. Clause 33.3 which stipulates the bidders shall possess the CCMI Institute certified CMMI Level 4 or above Certificate in the name of the tenderer is irrelevant, as the impugned tender also calls for an ISO 9001:2008 or above certification (for quality management systems to ensure consistent quality), ISO 27001:2013 or above (for information security management systems), ISO 20000:2011 or above (for Software/IT related services).
The learned counsel submits that the ISO standards acquire a statutory flavour by virtue of the fact that the national body of the Bureau of Indian Standards (BIS) is a member of the International Standards Organisation, and in contrast, the CMMI appraisals are not recognized by the BIS and therefore, although both certifications are focused on evaluating the best and market leading organization processes, the ISO certification is superior and widely recognised.
b. Furthermore, Clause 33.11 which stipulates that the annual turnover of the bidder in at least two financial years in any of the previous five financial years i.e.,(FY 2018-19, 2019-20, -6- NC: 2024:KHC:47103 WP No. 18923 of 2024 2020-21 & 2021-22) is to be not less than INR 118.612 crores is arbitrary, exorbitant and unprecedented.
The learned counsel submits that the estimated cost of INR 118.62 crores is unreasonable and based on an inflated rate of INR 11.41/- per installation/month, and which is stipulated to ensure that only one particular prospective participant is qualified.
c. The pre-qualifying requirement of past work experience in Clauses 33.4, 33.6 and in 33.7 of tender are tailor made and do not find a place in previous tenders - which may be summarised as follows:
i. Clause 33.4 prescribes the bidder must have the experience of implementing billing and collection software solution or web based total revenue management software; through its own software or through COTS software in at least two government undertaking DISOCMs / ESCOMs in India during the last five years, of which one project should be in any ESCOMs in the state of Karnataka covering at least 34.46 lacs bills/month. It further stipulates that each bidder must have continuous experience of an uninterrupted period of twelve months in each utility and that the project is operational at least in any one utility as on the date of the bid.
The petitioner alleges that while a total of 8 TRM agencies have worked or are working with the -7- NC: 2024:KHC:47103 WP No. 18923 of 2024 ESCOMs in the state of Karnataka, such a condition would result in the qualification of only the respondent No. 2, and the an earlier tender of SBD Urban invited by the respondent No.1 in January which also contained a similar condition, was also awarded to the respondent No. 2.
ii. Clause 33.6 stipulates that the bidder must have satisfactorily completed at least one similar work such as experience of implementing billing and collection software solution or web based total revenue management software solution of value not less than INR 59.31 crores during the last 5 years.
The petitioner alleges that when a tender for work of similar nature in the same areas was invited on an earlier occasion, the tender was not estimated to be of such high value and no explanation is forthcoming as to why such a condition is prescribed. Furthermore, the learned counsel submitted that the clause 33.6 is in contravention of the KW4 format in which the tender is invited, and that when a similar condition was imposed in the past tenders, it had resulted in the tender works being awarded to the respondent No.2.
-8-NC: 2024:KHC:47103 WP No. 18923 of 2024 iii. Clause 33.7 prescribes that the bidder should have generated at least 413.47 lacs electricity bills in any one year, during the last five years.
The petitioner alleges that such a clause does not find a mention in the previous tenders invited by the respondent No. 1, save for the tender floated for the Bangalore Urban Area (BESCOM Urban TRM Tender), which was awarded to the respondent No. 2.
d. Similarly, the pre-qualifying requirements stipulated in Clauses 33.5 and 33.8 and summarised as follows, are tailor made to ensure restricted competition and do not find a place in previous tenders -
i. Clause 33.5 stipulates that the bidder should be an OEM or authorised dealer of the TRM software solution, and that the same shall have the following modules, which are to have been implemented and successfully under operation for a period of one year in any government undertaking DISCOM/ESCOMs in India. The modules include billing, collection, metering, disconnection & reconnection, energy audit, and new connection.
ii. Clause 33.8 states that the bidder should be an OEM/Supplier of the Android OS based integrated Spot Billing Devices (SBD) and should have past experience in supply and maintaining at leat 1220 -9- NC: 2024:KHC:47103 WP No. 18923 of 2024 numbers SBD to any DISCOMs in India in any one year during the last five years for the purposes of billing, spot collection and other activities.
The petitioner alleges that the above conditions do not find a mention in any immediately past tenders invited by the respondent No.1 or other ESCOMs but was recently featured in a tender invited by Chamundeshwari Electricity Supply Company for the same work but in a different geographical area, and that the said tender contract was awarded yet again to the respondent No.2. The petitioner alleges that except respondent No. 2, none of the other TRM agencies manufacture/assemble any of the SBD as it is not part of the routine work of TRM agencies.
e. Clause 33.10 prohibits the participation of consortium/ joint venture bids and the petitioner alleges that the same has been inserted with an intention to eliminate competition and is contrary to the common business practice of consortium/joint venture bidders jointly servicing the tender works, so as to utilise the collective expertise, speed up works and enhance overall efficiency. Importantly, the petitioner further alleges the on-going BESCOM Rural TRM Contract is also being executed by a consortium.
In support, reliance is placed upon the following:
i. Meerut Development Authority v. Association of Management Studies and Anr. (2009) 6 SCC 171 - Para 26
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NC: 2024:KHC:47103 WP No. 18923 of 2024 ii. Union of India v. Dinesh Engineering Corpn, (2001) 8 SCC 491 - Para 12 iii. Assn. of Registration Plates v. Union of India (2004) 5 SCC 364 - Paras 21 and 22 iv. Raymond Limited v. North Delhi Municipal Corporation (2018) SCC OnLine Del 8855 - Paras 17 and 21 v. Integrated Databases India Ltd. v. Union of India (1996) SCC OnLine Del 162 - Para 6 Submissions of Respondent No.1 's Counsels
7. Per contra, the learned Advocate General Shashi Kiran Shetty, and learned senior counsels Shri SS Naganand and Shri Sriranga S., appearing for the counsel of the respondent No.1, submitted that the earlier tender dated 05.03.2024 was invited by the respondent No.1 upon the approval of the SPTSC vide order bearing No. SPTSC/BESCOM/ Smart Business Management System/F-
243/2022-23/714 dated 23.03.2023 which was further approved in the 128th meeting of Board of Directors held on 20.02.2024. Subsequently, the tender was cancelled by the respondent No.1 vide OM dated 12.06.2024, as only one bid was received and therefore, the cancellation of the earlier tender is in accordance with the circulars bearing No. EL 1066 AH -12/2016, dated 20.03.2017, and No. EL 576 AH-12 2018, dated 22.05.2018, respectively. Consequently, the pending
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NC: 2024:KHC:47103 WP No. 18923 of 2024 challenges in W.Ps. No. 11025/2024 c/w 11323/2024 before this Court were dismissed as infructuous.
7.1. Thereafter, in light of the fact that total revenue management (TRM) services are of great importance in meter reading and in generating the bills payable by consumers against the supply of electricity provided by the ESCOMs in the state, and that any delay in finalisation of the tender for the said service would have deleterious impact in the collection of revenue by the respondent No. 1, and the fact that the earlier tender was cancelled, the existing contract which due to expire on 28.04.2024 was unprecedentedly extended till 28.10.2024.
7.2. Furthermore the learned counsels submitted that the current tender was invited in the Kw 4 standard document format which is prescribed for the procurement of works more than INR 100 lac, but less than INR 10 crores. Clause 2.2 of the Kw 4 format does not accept tenders from joint ventures. Therefore, the contention of the petitioner that Clause 33.10 prohibiting consortium/joint venture bids is contrary to the usual business practice is untenable.
7.3. Furthermore, rebutting the allegation that stipulated annual turnover in Clause 33.11 of the tender document is exorbitant and arbitrary, the learned counsels submitted that
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NC: 2024:KHC:47103 WP No. 18923 of 2024 the same is in accordance with Clause 3.4 of the Kw4 standard document, which prescribes the minimum financial turnover of at least 2 times the estimated annual payments under the contract for at least two years during the last five years. The learned counsels further submitted that respondent No. 2 has prepared the annual estimated value of the tender to the tune of INR 59.306 crores, based on the prevailing market rates available in the GEM portal and the relevant rules and GOs. Therefore, the requirement of annual turnover of INR 118.612 crores is in accordance with the standard practice. Additionally, the learned counsel emphasised that in light of Clause 6(viii) of the GO bearing No. FD 522 EXP- 12/2021, Bengaluru, dated 13.12.2021 since the present tender is excess of the value of INR 50 crores, no modification of the provisions of the standard document format can be permitted, without the approval of the Government. Besides, the SPTSC had directed the respondent No.2 to issue the present tender.
7.4. The learned counsels further submitted that scope of the tender works involves provision of hardware, software, internet and man power support, and manpower for meter reading and issue of bills at the spot and other activities as desired by the respondent. Therefore, the estimated cost of the works includes both TRM services and manpower, which is based upon the number of consumer installations for which
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NC: 2024:KHC:47103 WP No. 18923 of 2024 services are availed, which has seen an increase since compared the estimates mentioned in previous years.
7.5. In rebutting the challenge to stipulations of prior work experience as contained in Clauses 33.4, 33.6, 33.7 of the tender document, the learned counsels submitted that clause 33.4 requiring bidders to cover 34.46 lacs bills/month in providing the TRM services has been inserted in pursuance of the Kw4 format stipulating bidders to have delivered services to 80% of the total consumer base i..e, 80% of 43.07 lacs - amounting to 34.46 lacs. Furthermore, Kw4 format prescribes that the bidder as the prime contractor should have satisfactorily completed at least one work of 50% of the estimated value, i.e., 50 % of 118.62 crores is 59.31 crores and therefore, clause 33.6 is in pursuance of the standard format. Equally, clause 33.7 has been inserted in pursuance of the Kw4 standard format which stipulates that bidders should have generated electricity bills not less than 80% of the estimated annual bill i.e., 80% of 43.07*12 = INR 413.47 lacs.
7.6. Furthermore, as regards the challenge to Clauses 33.5 and 33.8, the learned counsels submitted that the technical specifications of thetender were approved by the Departmental Technical Advisory Committee (TAC) constituted vide GO No. ENERGY EEB 2022 BENGALURU,
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NC: 2024:KHC:47103 WP No. 18923 of 2024 dated 31.101.2023, and the Kw4 standard document format. As regards clause 33.8., the learned counsels further submitted that the SBDs are a single piece equipment, used to generate bills at the premises of the consumers. The SBDs are a modern technology and are user friendly and have been requested for by the union workers of BESCOM in place of two piece SBDs entailing mobile phone and bluetooth printer. Additionally, a manufacturer authorisation form (MAF) format to accommodate the supplier is made part of the tender as Annexure VIII.
7.7. As regards the challenge to Clause 33.3, disputing the contention of the petitioner that the ISO certification has the effect of force of law, the learned counsels submitted that although ISO standards are international, voluntary and consensus based developed by the International Organisation for Standardisation through collaboration of national bodies, they do not possess the force of law unless explicitly adopted by national legislation. Furthermore, the ISO certification itself is typically issued by accredited certification bodies which may or may not be affiliated with the Bureau of Indian Standards. Insofar as the requirement of CMMI Institute certification, the learned counsel submitted that the Capability Maturity Model Integration (CMMI) is more comprehensive than the rather flexible ISO 9001 and is focussed on specific technical areas
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NC: 2024:KHC:47103 WP No. 18923 of 2024 and is designed to be a framework for continuous process improvement. Conversely, ISO 27001 is concentrated on information security and protection of sensitive data. More important, the learned counsel submitted that it is not uncommon for electricity utilities to call for CMMI and ISO certified bidders to participate in tenders of similar nature and has adduced a list of such tenders, at page no. 10 of the Statement of Objections. A perusal of the list indicates that ESCOMs in the state of Karnataka have been inviting such dual certified bidders since 2019, and in particular the respondent No. 1 herein having prescribed the dual certification in a tender invited on 06.02.2019.
7.8. Furthermore, the learned counsels submitted the bid of the petitioner cannot be considered to be eligible as the ISO 20000-1 certification of the said petitioner expired on 05.09.2023 and therefore, any challenge to the tender conditions ought to be rejected at threshold.
7.9. Finally, the contention of the petitioner that the conditions impugned in the present tender have not found a place in the earlier tenders is unacceptable as the tender inviting authority has complete autonomy to invite tenders in a manner expedient and suitable to the employer.
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NC: 2024:KHC:47103 WP No. 18923 of 2024 In support, reliance is placed upon the following:
i. Michigan Rubber (India) Ltd v. State of Karnataka (2012) 8 SCC 216 - Paras 11-24 and 35 ii. Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd (2016) 16 SCC 818 - Paras 11-14 and 15 iii. NG Projects Limited v. Vinod Kumar Jain (2022) 6 SCC 127- Para 10-17 and 23 iv. Ulfex Limited v. Government of Tamil Nadu (2022) 1 SCC 165 - Paras 42 and 47 v. National High Speed Rail Corporation Ltd. v. Montecarlo Ltd. (2022) 6 SCC 401 - Paras 28 and 29 vi. Tata Motors Limited v. The BrihanMumbai Electric Supply and Transport Undertaking (BEST) and Ors. (2023) LiveLaw SC 467 - Paras 52-54 vii. Chhattisgarh Power and Coal Beneficiation Ltd. v. State of Rajasthan Civil W.P. No. 11804/2016 - Para 62 viii. M/s Malaprabha Industries v. State of Karnataka W.P. No. 100450/2021 c/w W.P. No. 100449/2021.
Issues
8. Heard the learned counsels and perused the material on record. The issues that arise for consideration is whether interference with the impugned tender dated 13.06.2024 by this Court in its writ jurisdiction under Articles 226 and 227 of the Indian Constitution is warranted?
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NC: 2024:KHC:47103 WP No. 18923 of 2024 Discussion and Analysis
9. The earlier paragraphs clearly explain the petitioner's challenge to the tender conditions and respondent No.1 - BESCOM's defense, and therefore no further details are needed.
10. However, the facts relevant in the disposal of these petitions are recorded as hereunder:
i. The present tender bearing No. No. BESCOM/2023-24/OW/WORK_ INDENT149/CALL-2, was invited by the respondent No. 1 on 13.06.2024.
ii. The last date of submission of bids was on or before 27.06.2024 at 13.30 hours and the date of opening the techno-commercial bid (pre- qualifying/including of bid validity) was 28.06.2024 @ 14.45 hours.
iii. The present tender is the 2nd call for the same scope of work as in the 1st call i.e., web based TRM Modules, GIS, BI & Analytical tools and other modules along with the supply of hardware, software and man power, stationeries and consumables for the purpose of billing and meter reading in the Chitradurga Area Zone (CTAZ) and Bangalore Rural Area Zone (BRAZ).
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NC: 2024:KHC:47103 WP No. 18923 of 2024 iv. The 1st call for work of similar nature was cancelled vide OM dated 12.06.2024 as although three bidders had participated, the respondent No. 2 was the only bidder who fulfilled all the qualifying requirements, resulting in a single bid. Consequently, the 1st call was cancelled in accordance with circular bearing No. DE 576 AH -12 2018, dated 22.05.2018.
v. The respondents rightfully contend that although the coordinate Bench of this Court in W.P. No. 11025/2024 and in connected matter vide order dated 22.04.2024, had stayed the award of tender works of the 1st call - subject to the leave of this Court, this Court had not passed any order in adjudication upon merits of the contentions of the tender being tailor made to suit a particular bidder, and therefore, the respondent No.1 is not barred from floating the 2nd call identical in terms to the 1st call. Moreover, the 1st call was invited in pursuance of having obtained a clearance from the SPTSC vide order dated 23.03.2023 which was further approved in the 128th meeting of Board of Directors held on 20.02.2024.
vi. The approximate estimated value of the present tender is to the tune of INR 118.612 crores for the duration of two years, and the contract period commences from the date of issue of the detailed
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NC: 2024:KHC:47103 WP No. 18923 of 2024 contract award or go live of the project at all accounting units.
vii. The petitioner is aggrieved by the pre-qualifying prior work and financial requirements contained in Clause 33 of the present tender document and have preferred the instant petition. Additionally, the petitioner contends that prohibition of consortium/joint venture bids is against normal business practice and therefore, arbitrary.
viii. The contention of the respondent No.1 that the ISO 20000-1 certification of the petitioner is expired is repelled by the petitioner adducing evidence to the contrary.
ix. The relevant points of contention in determining the issue at hand is whether the estimated value of the present tender is exorbitantly high and arbitrary and therefore, the pre-qualifying work and financial requirements prescribed under Clauses 33.4, 33.6, 33.7, and 33.11, are rendered unsustainable. Additionally, whether the prescription of CMMI certification under Clause 33.3 in the present tender, in addition to the ISO standards is excessive and unsustainable.
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NC: 2024:KHC:47103 WP No. 18923 of 2024
11. It remains undisputed that the 1st call for the tender works was issued only upon obtaining the approval of the SPTSC vide order dated 23.03.2023 which was further approved in the 128th meeting of Board of Directors held on 20.02.2024. Therefore, the identical terms contained in the 2nd call therefore, have been inserted by the respondent No.1 and approved by the SPTSC having regard to the scope of the work involved. It is a settled principle that judicial review under Articles 226 and 227 cannot substitute the informed opinion of the expert committee constituted by the tender issuing authority.
12. Furthermore, the respondent No. 1 has produced the revised estimate for the present tender approved in the 128th Meeting of the Board of Directors of BESCOM, vide resolution 20.02.2024, delineating the estimated costs in respect of manpower, hardware/software stationery, and the costs incurred towards deployment of meter readers. The broad classification of the estimated costs for the tender works as produced by the respondent No.1 is as follows:
Sr. No. Particulars Amounting Rs. Crores
1. Cost of Supply & Maintenance of Web- 83.38 based Total revenue Management Software and other modules, integrated SBD, meter data management, Server setup, Support Manpower, Stationeries, & etc. complete on the basis of System as a Service (SaaS) as stipulated in the specification.
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NC: 2024:KHC:47103 WP No. 18923 of 2024
2. Availing Man Power for Meter Reading 35.23.
activity and issue of Bills at the Sport and other activities as desired by BESCOM Per Installation Per Month for two years (50% of estimated amount)
3. Total Amount Put to Tender (in Rs. Crores) 118.62
4. Provision towards third party inspection/ 1.19 certification
5. Total Cost of the Project 119.80
13. As regards the challenge against the prohibition of consortium/joint venture bids, the respondent No.1 has invited the present tender in accordance with the Kw4 standard document format, which clearly states at Clause 2.2. therein that "tenders from joint ventures are not acceptable". It is the specific contention of the petitioner that since the existing contract for generating bills and meter reading is being serviced in a joint venture, prohibition of the same in the present tender for similar works is arbitrary.
14. A perusal of the resolution passed at the 130th Meeting of the Board of Directors of BESCOM, dated 22.08.2024 reveals that the existing or immediately prior contract awarded to the petitioner herein in before the issue of the 2nd call was 29.04.2016 and was for a period of 5 years, and extendable for a further period of three years, and of which a period of two years had already expired on
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NC: 2024:KHC:47103 WP No. 18923 of 2024 28.04.2023. The contract thereafter had been further extended till 28.04.2024, and finally again till 28.07.2024. However, the duration of the present tender is for a period of two years only, which can be extended for a further period of one year on such terms as are mutually agreeable.
15. Paragraph No. (4) at pages no. 4-5 of the said resolution specify in detail the issues sought to be addressed in the existing Web based TRM solutions by inviting the present tender. It suffices to observe here that the existing TRM solution hardwares is outdated and is 8 years old and needs to be replaced. The present tender calls for modern single piece integrated equipment for meter reading and that the existing technology poses a health hazard. The resolution further details 10 modules newer ranging from customer indexing, identity access management, systems security, and prepaid functionalities that are sought to be included in the TRM solutions at par with other DISCOMs. It may be relevant to observe that Chamundeshwari Electricity Supply Corporation (CESC) has already invited and awarded the tender works inclusive of the same set of 10 modules.
16. Therefore, it may be reasonably concluded that the scope of the present tender works although similar in nature to the existing contract awarded by the respondent No. 1 is
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NC: 2024:KHC:47103 WP No. 18923 of 2024 vastly distinct in its need for specific services for data accumulation and data correction, in the pursuit of efficient use of technological and human resource, and to prevent generation of bogus and inaccurate bills. Furthermore, the duration of the present tender is only two years, extendable by a further period of one year as opposed to five plus 3 years in the existing tender contract, which only indicates that the tender inviting authority recognises the need to update its TRM software and hardware solutions at shorter intervals due to the breakneck pace of technological advancements.
17. Therefore, the estimated value of the tender is inclusive of variegated and enhanced scope of work than initially envisaged in the past tender. Moreover, due to dearth of meter readers in the event of promotion/transfer/retirement, the present tender has envisaged supply of manpower for meter reading, issuing of bills, to follow revenue collection/disconnection etc. activities in the scope of work, and the remuneration for the same is conceived on the basis of unit rate for the services availed by the respondent No. 2. It is common knowledge that the population of the relevant areas has seen a manifold increase in the last decade, and therefore, the consumer base of the employer-BESCOM is going to increase. The learned counsel for the respondents has submitted that the consumer base of the areas for which
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NC: 2024:KHC:47103 WP No. 18923 of 2024 the tender is invited is 43.07 lacs, which is not challenged by the petitioner in this petition. Besides, this Court cannot entertain a disputed question of fact in exercising its writ jurisdiction.
18. Furthermore, the estimated value of the tender works is composed of two separate services - TRM solutions, and Manpower for meter reading and spot billing and other services as may be prescribed by the respondent No.1.
19. As regards the question of the tender conditions being tailor made to suit the case of the respondent No.2, and that award of this tender shall have adverse impact on the competition, a perusal of the resolution dated 22.08.2024 reveals that the technical bids of the petitioner and respondent No. 2 (a total of only three bids were submitted) were opened on 12.07.2024 and that the petitioner had made bald declarations of meeting qualifying stipulated requirements but had not uploaded the supporting proof/valid documents/performance certificates issued by the end users. Consequently, the Tender Scrutiny Committee (TSC) in its meeting dated 16.07.2024 authorised the general manager (competent authority) to obtain clarifications from the bidders on or before 20.07.2024. It is relevant to note that the instant petition was filed was on 16.07.2024.
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NC: 2024:KHC:47103 WP No. 18923 of 2024
20. A bare perusal of paragraph (v) at page no. 13 of the said resolution reveals that the petitioner has fallen short of 10 qualifying requirements [technical requirements stipulated against Sl. Nos. QR (2) to QR(8) and the financial requirements stipulated against Sl. Nos. QR(11) to QR (13) and also does not fulfil the requirement stipulated for EMD]. Subsequently, the bid of the petitioner was concluded to be non-responsive, resulting in the bid of respondent No. 2 becoming the single bid. As the existing contract for TRM solutions awarded by the respondent No.1 had expired on 28.04.2024 and the same was extended till 28.07.2024, and since the entire revenue activity of respondent No. 1 was dependent upon the TRM services, it was deemed expedient that the financial/price bid of the respondent No. 2 be opened.
21. It may be further concluded that the final price offered by the respondent No. 2 in the 2nd round of negotiation rates of Price Evaluation Index Total for servicing the tender works was INR 130.23 crores, which was 9.80% excess over the amount put to tender of INR 118.612 crores. The initial price offered by respondent No. 2 was however 13.58% in excess of the floated tender value.
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22. However, in light of the fact the the existing awarded contract for the TRM services and manpower for meter reading and spot billing had expired on 28.04.2024, and to reap the benefits of modern integrated SBD with OCR technology and additional latest modules on par with other ESCOMs, the Board of the respondent No. 1 has resolved in its 130th Meeting to award the present tender to the respondent No. 2, - subject to the leave of this Court, at following rates:
1) Supply of hardware, software and internet and other incidental provisions on a system as a service (SaaS) basis model at the rate of INR 9.37 (9.82% in excess over the estimated rate) per active installation per month.
2) Supply of manpower for meter reading and issuing energy bills at the spot, as per the employer at the rate of INR 16.75 (9.73 % in excess over the estimated rate) per active bill per month issued by the Firm's meter reader.
23. A perusal of the resolution also indicates that the respondent No. 1 has resolved to award the present tender to the respondent No.2 - bidder, upon due consideration of the explanation given by the respondent No. 2, as recorded at paragraph no. (xii) of page no. 17 of the said resolution, dated
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NC: 2024:KHC:47103 WP No. 18923 of 2024 22.08.2024. Therefore, the respondent No.1 vide this resolution has given a reasoned justification to resolve to award the present tender at a rate of more than 5% of the estimated rate, in accordance with the mandate of the Circular No. dated 10.05.2022.
24. It has been settled in the case Michigan Rubber (supra) by the Hon'ble Supreme Court that Courts cannot interfere in terms of the tender prescribed by the employer, unless the same are arbitrary, discriminatory, mala fide or actuated by bias. Furthermore, Courts cannot in judicial review substitute the terms of the tender because it feels that some terms in the tender could have been fairer. Furthermore, in the case of Afcons Infrastructure Ltd. (supra), the Apex Court opined that the employer is the best person to understand and appreciate its requirements and interpret its documents. In the case of NG Projects Limited (supra), the Apex court opined that Courts must exercise restraint from interfering with contracts involving technical issues as there is requirement of necessary expertise to adjudicate upon them. In the case of Uflex Ltd. (supra), the Apex court reiterated that Courts cannot sit in judgement on the issue of what should be turnover required for an entity to participate or on the certain technological or turnover qualifying requirements. In the case of National High Speed Rail Corporation Ltd. v.
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NC: 2024:KHC:47103 WP No. 18923 of 2024 MonteCarlo Ltd. (supra), the Apex Court held that the grounds for seeking judicial review in contractual matters should be restricted to whether the decision making process was so arbitrary and irrational that no authority acting reasonably in accordance with the relevant law could have reached and that whether public interest is affected. More recently, in the case of Tata Motors Limited v. The Brihan Mumbai Electric Supply and Transport Undertaking (supra), the Apex Court concluded that matters of equity and natural justice stay at a distance in contractual matters and the judicial review cannot be invoked to protect private interest at the cost of public interest or to decide contractual disputes.
24.1. Furthermore, this Court in the case of M/s. Malaprabha Industries (supra) has opined that writ courts do no sit in judgment over a tender process or the conditions imposed by tendering authority as a court of appeal,, and that State can choose its own methods to arrive at a commercial decisions and that the terms of invitation cannot be open to judicial scrutiny.
24.2. A division Bench of the High Court of Rajasthan in Chhattisgarh Power and Coal Beneficiation Ltd v. State of Rajasthan (supra) has opined that conditions to determine
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NC: 2024:KHC:47103 WP No. 18923 of 2024 capacity and capability of the bidder cannot be appraised by the Court.
25. The precedents relied upon by the petitioner enunciate the ratio to the effect that where upon due consideration of relevant factors, the Court concludes such impugned conditions to be unreasonable or discriminatory or impose new entry level barriers so as to eliminate competition in the bidding process, judicial review must be invoked to set aside such arbitrary and discriminatory tenders.
26. In the case at hand, the respondent No.1 has provided a detailed reasoning justifying the increased estimated value of the tender services due to corresponding increase in the scope of work, and the precarious situation it found its revenue generation capacity by the expiry of extended period of the existing contractor, and the need to co- opt modern technological equipment and ensure efficient use of human resource. As such, the pre-qualifying requirements in present tender had been substantially changed to cater to adoption of efficient modus operandi of revenue generation and more so, at shorter intervals of a maximum of three years only.
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27. Therefore, the precedents relied upon by the petitioners are not applicable to the matter at hand, as the respondent No.1 - employer is best situated to critically analyse its requirements and prescribe such qualifications, including those not stipulated earlier such as the CMMI Institute certified Level 4 Certificate, coupled with ISO certification. Participants cannot be permitted to seek relaxations on the basis of equity.
28. Further, the award of the present tender at the rates higher than the estimated value also indicates that the initial estimate of approximate value of INR 118 cores was not wholly unreasonable. The respondent No. 2 had justified its price bid in light of average annual increase of 3.25% in wages, fluctuating dollar, and inflation in purchasing cost of raw materials since 2019. The respondent No. 2 had further expressed uncertainty on the prospective ROI in light of the rolling out of the Integrated Power Development System - Phase II, which would again require contractors to provide TRM solutions by adapting to the newer technological software and hardware standards, leading to increased costs.
29. In conclusion, the contention of the petitioners that the estimated value of the subject tender is unreasonably exorbitant and arbitrary and therefore, that pre-qualifying work
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NC: 2024:KHC:47103 WP No. 18923 of 2024 and financial requirements are equally arbitrary cannot be sustained. Furthermore, the contention that since the present tender has stipulated conditions that have not found a place in earlier tenders and are therefore unsustainable, is untenable as the newer conditions cannot be interfered with unless they are shown to be patently unreasonable or have been stipulated with a mala fide intention.
30. In view of the above, the impugned conditions are not found to be arbitrary, excessive or irrational and therefore, instant petitions stand dismissed.
Sd/-
(HEMANT CHANDANGOUDAR) JUDGE BKM