Karnataka High Court
M/S Surabhi Enterprises vs The Bharat Sanchar Nigam Ltd (Bsnl) on 13 December, 2018
Bench: Chief Justice, S.Sujatha
W.A.No.2269/2018
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF DECEMBER, 2018
PRESENT
HON'BLE MR.JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE
AND
HON'BLE MRS.JUSTICE S.SUJATHA
WRIT APPEAL NO.2269 OF 2018 (GM-TEN)
BETWEEN:
M/S SURABHI ENTERPRISES
A PROPRIETARY CONCERN
BY ITS PROPRIETOR
MR. VISHWANATH K J
S/O K G JAYANNA
R/AT M H ROAD,
OPP. TO FIRE STATION,
VASAVI COLONY,
CHITRADURGA - 577 502
... PETITIONER
(BY SRI SANGAMESH R.B., ADVOCATE)
AND:
THE BHARAT SANCHAR NIGAM LTD. (BSNL)
OFFICE OF THE GENERAL MANAGER
69, 1ST CROSS, TEMPLE ROAD,
JAYALAKSHMIPURAM
MYSURU - 12
... RESPONDENT
(BY SRI Y. HARIPRASAD, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO i) ALLOW THE ABOVE APPEAL
ii)SET ASIDE THE IMPUGNED ORDER DATED 5/7/2018 PASSED
BY THE LEARNED SINGLE JUDGE IN W.P.NO.23599/2018 AND
ETC.
THIS APPEAL COMING ON FOR PRELIMINARY HEARING
THIS DAY, CHIEF JUSTICE DELIVERED THE FOLLOWING:
W.A.No.2269/2018
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JUDGMENT
This intra-Court appeal is directed against the order dated 05.07.2018, as passed by the learned Single Judge in W.P.No.23599/2018, refusing to interfere with the tender conditions.
Put in brief, the relevant background aspects of the matter are that the petitioner-appellant, said to be engaged in the business as a labour contractor and commission agent, and having participated in tender process "For Supply of Up-keep and Allied Works/Services in Mysore Rural Area" under the notice inviting tender dated 24.04.2018 issued by the respondent - Bharat Sanchar Nigam Limited, preferred the writ petition aforesaid seeking to question the condition Nos.3 and 5 relating to financial/price bid, which read as under:
"Condition 3: The tenderer has to fill up profit margin in column no. 6. The Profit Margin quoted should be reasonable and justifiable. Hence should not be Negative. Minimum of 2.5% of basic + VDA Wages is considered reasonable profit margin and Establishment charges put together.
Condition No. 5: In case of more than 3 bidders quoting the same L1 Rates, then average Financial Turn Over of the bidders will be considered for evaluation. The Bidders with highest turnover during the Financial Year 2015- 16, 2016-17 & 2017-18 will be considered."W.A.No.2269/2018 -3-
The said conditions were questioned by the petitioner on the ground that the same were opposed to law as the tender calling authority had no powers to fix the profit margin of the bidders and further, that no such condition as the aforesaid condition No.5 was incorporated in the earlier tender process; and such a condition practically shows that the tender calling authority has predetermined to award the tender in favour of a particular person, who is having the highest turnover for the previous three years. It was also submitted that such condition was even otherwise opposed to law for the reason that the evaluation was proposed on the basis of turnover without looking into the experience of the bidder.
The learned Single Judge examined the matter in sufficient detail; and while indicating the limitations of judicial review in such matters and while finding nothing unreasonable in the conditions aforesaid, proceeded to dismiss the writ petition by the impugned order dated 05.07.2018. The relevant part of the order impugned reads as under:
"11. Keeping these sound principles in mind, when the facts on hand are examined, though petition at the threshold, can be rejected on the ground that conditions imposed by the respondent would not call for judicial review, yet on merits also it is being examined. The conditions imposed under W.A.No.2269/2018 -4- impugned tender which is the subject matter of challenge in the present writ petition when perused would clearly establish that with a laudable object of ensuring that there is no unfair labour practice by the tenderers, particularly, in the background of tender in question relates to up-keeping and allied services by providing unskilled, semiskilled and skilled workers for the rural areas, the tender inviting authority has taken into consideration the basic minimum wages required to be paid and has already fixed in Column Nos.1 to 5 of financial/price bid the wages + variable dearness allowance (VDA) and other administrative charges which has to be offered by the bidders, which is minimum waged. However, in so far as item No.6 is concerned which relates to profit margin of the bidder it is categorized as "Maintenance and Establishment Charges per month in Percentage on (Basic + VDA) only". However, profit margin has been left to the discretion of bidders and at the same time, it is notified that it should be reasonable and justifiable and should not be negative. It is further indicated that minimum of 2.5% basic+VDA wages will be considered as reasonable profit margin and establishment chargers put together. The arguments of Sri.Sangamesh, learned counsel appearing for petitioner would have been susceptible to accept if the cap of upper profit margin had been fixed by the tender inviting authority. That is not the case in the instant petition. It is the minimum profit which has been fixed as 2.5% of (Basic + VDA) wages which clearly goes to show all the tenderers would be placed evenly and they would be free to quote the upper price. In that view of the matter, condition No.3 imposed under impugned tender notification on facts cannot be held as being onerous or defeating the very purpose of inviting tenders from the bidders.W.A.No.2269/2018 -5-
12. Insofar as clause No.5 is concerned it clearly goes to show that in case of more than 3 bidders who quote L1 rates, the average financial turn over of bidders will be considered for evaluation based on the sound principle that such bidder would be able to provide better services and it is specifically pleaded that on earlier occasions where there were more than one L1 bidders, same having been distributed equally amongst them was found to be not feasible since, it resulted in delay. It is not for the Courts to decide as to what should be the condition to be imposed by a tender inviting authority as already observed herein above. The financial capacity or the solvency of a bidder based on average turn over cannot be said as a condition, which would erode the competition among the bidders. Thus, tender inviting authority keeping in mind the prevailing labour laws and its earlier experience has imposed the subject conditions to meet such eventualities and it cannot be held either irrational, arbitrary or illegal. In that view of the matter, this Court finds no merit in this writ petition. Hence, writ petition is hereby rejected."
Heard learned counsel for the parties and perused the material placed on record.
The submission of learned counsel for the appellant is that the impugned condition No.5 practically nullifies the entire tender process because the award of contract would be assured only in relation to the chosen one, who might be having the highest turnover in the previous financial years and thereby, excluding all other bona fide tenderers. W.A.No.2269/2018 -6-
Learned counsel would further argue that the aforesaid condition Nos.3 and 5, when applied together, take away the very basic competitiveness of the tender process and it is as good as awarding the contract to a person having the highest turnover, even without calling for a tender.
Having given thoughtful consideration to the submissions made by learned counsel for the appellant and having examined the record with reference to the law applicable, we find no reason to consider interference in this matter as the submissions on the part of the appellant are bereft of substance and even logic.
It remains trite that the scope of judicial review in the administrative action pertaining to award of contract is limited and is confined only to the decision making process on the questions of illegality, irrationality or procedural impropriety.
In the case of Tata Cellular v. Union of India, (1994) 6 SCC 651, the Hon'ble Supreme Court has delineated such principles as follows:
"77. The duty of the court is to confine itself to the question of legality. Its concern should be:
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of law, W.A.No.2269/2018 -7-
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii)Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, "consider whether something has gone wrong of a nature and degree which requires its intervention".
In the present case, it has appeared that the tender process for the same work for the previous year also carried the said condition No.3 in the same form and the petitioner/appellant had been one of the successful tenderers W.A.No.2269/2018 -8- therein. It is, of course, pointed out that in the said process, the award of contract was bifurcated amongst the bidders, who had quoted the same lowest rates and thus, stood at par.
As noticed, the petitioner/appellant had been one of the beneficiaries of such a process, where a part of the period of contract was assigned to him too. As a matter of fact, the petitioner/appellant was assigned the last part of the said period and has, thereby, continued to operate.
It is also noticed that the petitioner has been continuously the bidder in such previous tender processes taken up by the respondent and has placed his bid in the present tender process too.
Even if the aforesaid equitable aspects as also the principles of estoppel are left aside for a moment, we are clearly of the view that the aforesaid condition No.3 is neither irrational nor unreasonable and the tender process with the said condition cannot be considered suffering from any vice that may call for interference in the writ jurisdiction.
The respondent while inviting the offers for work in question were definitely entitled to provide for such stipulations, which would guard against any unfair labour practice and thereby, would ensure the payment of minimum wages to the W.A.No.2269/2018 -9- persons to be engaged by the contractor. Looking to the nature of the work and the purpose for the tender, in our view, the condition No.3, remain reasonable and unexceptionable.
It is the condition No.5, employed for the first time in this tender process, that has been assailed by the appellant while suggesting that by such a condition, the favoured one would be picked up by the respondent. The contention remains bereft of substance.
A close look at such condition makes it clear that in the eventuality of more than 3 bidders quoting the same lowest rate, it is provided that the bidders with the highest financial turnover during the preceding 3 years, would be considered. In the eventuality of more than one being the lowest offer at par, some mechanism is definitely required, whereby, the contract could be awarded in a fair manner. As noticed, in the past, in such eventuality, the period of the contract itself was being divided amongst the offerers standing at the lowest and at par. We are not pronouncing on the correctness or otherwise of such a mechanism, but it appears that having gained the experience over the years, the respondent has found it appropriate to provide for such a mechanism, whereby the bidder standing at more higher financial capability and larger W.A.No.2269/2018
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volume of experience (which would be reflected in the turnover) be chosen in preference to the other bidder having lesser financial soundness and lesser volume of work experience. It is difficult to find any traces of unreasonableness or irrationality in such a stipulation.
Significant it is to notice that even the stipulation as contained in condition No.5 comes in operation only when more than 3 bidders have quoted the same lowest rates. Obviously, in case of number of bidders quoting the lowest rates being not more than three, the said condition does not come into operation.
Having examined the purpose and purport of the said condition No.5, we are clearly of the view that the contentions urged on behalf of the petitioner/appellant do not carry any substance. This is apart from the fact that the principal like the present respondent has the right to provide for any such stipulation that is conducive to fair awarding of the contract as also execution of the contract work.
Learned Single Judge, in our view, has examined the matter in the correct perspective and has rightly dismissed the baseless writ petition filed by the petitioner/appellant. W.A.No.2269/2018
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Accordingly, and in view of the above, this appeal fails and is, therefore, dismissed.
Sd/-
CHIEF JUSTICE Sd/-
JUDGE AHB