Karnataka High Court
Hindustan Technologies vs The Union Of India on 3 December, 2024
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NC: 2024:KHC:49821-DB
WP No. 13734 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF DECEMBER, 2024
PRESENT
THE HON'BLE MR. N. V. ANJARIA, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
WRIT PETITION No.13734 OF 2024 (GM-RES)
BETWEEN:
1. HINDUSTAN TECHNOLOGIES,
GST REGISTRATION No.07 GALPB5935C1ZT,
GROUND FLOOR, BLOCK-C,
SHOP No.126
NARAINA INDUSTRIAL PHASE-1,
NEW DELHI,
DELHI-110028.
REP. BY ITS AUTHORISED SIGNATORY,
NIDADAVOLU B. V. R. LINGAM,
S/O NIDADAVOLU NAMASIVAYA,
BLOCK-C, SHOP No.126,
NARAINA INDUSTRIAL PHASE-1,
Digitally signed NEW DELHI,
by VALLI DELHI-110028.
MARIMUTHU AADHAR No.738595381493,
Location: High PAN No.GALPB5935C,
Court of MOB No.-91 7519080398,
Karnataka
[email protected].
...PETITIONER
(BY SRI CHANDAN K., ADVOCATE)
AND:
1. THE UNION OF INDIA,
REP. BY ITS SECRETARY(MINISTRY OF DEFENCE),
109-B, SOUTH BLOCK,
NEW DELHI-110011.
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WP No. 13734 of 2024
2. THE WESTERN NAVAL COMMAND,
KARWAR-581308.
3. THE ADMIRAL SUPERINTENDENT,
NAVAL SHIP REPAIR YARD,
KARWAR-581308.
4. KRASNY DEFENCE TECHNOLOGIES LIMITED,
12TH FLOOR, GREAT EASTERN SUMMIT,
B-WING, PLOT No.66,
SECTOR 15, CBD BELAPUR,
NAVI MUMBAI-400614.
5. M/S SADHAV SHIPPING LIMITED.,
618, LAXMI PLAZA,
NEW LINK ROAD,
ANDHERI(W),
MUMBAI-40053.
...RESPONDENTS
(BY SRI K. ARVIND KAMATH, ASGI A/W
SRI SHANTHI BHUSHAN H., DSGI FOR R1 TO R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECTING
THE RESPONDENTS AUTHORITIES TO STRICTLY ADHERE TO THE
TERMS OF CONDITIONS OF THE TENDER NOTIFICATION 3 YEARS
RRC FOR UNDERTAKING ACOUSTIC EMISSION TESTING OF HP
AIR BOTTLES ONBOARD IN SHIPS/SUBMARINES ISSUED ON
18.12.2023 AND CONSEQUENTLY DIRECT THE RESPONDENT
AUTHORITIES TO TAKE STRINGENT ACTION AGAINST THE 4TH
RESPONDENT IN ORDER TO AVOID THE ARBITRARINESS AND
ILLEGALITY IN FAVORING THE TENDER TO THE 4TH RESPONDENT
WHO MISREPRESENTED/ FRAUD AGAINST THE DEPARTMENT IN
ACCORDANCE WITH LAW.
THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
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NC: 2024:KHC:49821-DB
WP No. 13734 of 2024
CORAM: HON'BLE THE CHIEF JUSTICE MR. JUSTICE
N. V. ANJARIA
and
HON'BLE MR JUSTICE K. V. ARAVIND
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE K. V. ARAVIND) Heard learned advocate Mr. K. Chandan for the petitioner and learned Additional Solicitor General of India Mr. K. Arvind Kamath along with learned Deputy Solicitor General of India Mr. H. Shanthi Bhushan for respondent Nos.1 to 3.
2. This petition is by a sole proprietorship company. This petition is filed styling as public interest litigation with a prayer to direct the respondent-authorities to strictly adhere to the terms and conditions of the tender notification for undertaking acoustic emission testing of HP Air bottles on Board in ships/submarines issued on 18.12.2023 and to direct the respondent-authorities to take stringent action against respondent No.4.
3. The case of the petitioner is that the petitioner is a company espousing the public interest for the welfare and benefit of the general public in the name and style of Hindustan Technologies. It is stated that the petitioner Company has no personal interest in -4- NC: 2024:KHC:49821-DB WP No. 13734 of 2024 the litigation and is not guided by self-gain. The business of the petitioner company is stated to provide manpower for marine works, such as welders for ship repairs, cutters and fabricators for the marine repair works. The company further provides manpower in cleaning of ships etc.
4. The petitioner has pleaded further that acoustic emission testing involves testing of higher-pressure air cylinders, which are critical and dangerous equipment on board, and any negligence during operation or testing could result in a fatal accident.
5. It is stated that the tender work awarded in favour of respondent No.4 is in violation of the terms and conditions of the tender. It is the specific contention of the petitioner that the tender participant should have a minimum average turnover of Rs.13,54,500/- annually over the last three financial years as of 31.03.2023, and proof of the same should be enclosed with the technical bid. The second condition is that the tender participant should have executed contracts in the field related to acoustic emission testing during the last seven years. It is the contention that respondent No.4 would not fulfill the above eligibility criteria. The award of a contract in violation of the eligibility conditions or -5- NC: 2024:KHC:49821-DB WP No. 13734 of 2024 the award of a contract in favour of an ineligible person is in violation of the conditions and is illegal and has a greater impact on the public at large.
6. Learned advocate Mr. K. Chandan for the petitioner submits that respondent No.4 is not eligible having no minimum average turnover of Rs.13,54,500/- annually over the last three financial years pending on 31.03.2023. Further, respondent No.4 has not executed a contract related to acoustic emission testing in the last seven years. Learned advocate would further submit that the work orders executed by respondent No.5 are submitted to be work orders executed by respondent No.4 to claim the eligibility, which is accepted by respondent-authorities contravening the tender conditions.
6.1 Learned advocate for the petitioner further submits that respondent No.4, by fraud and misrepresentation, has claimed the work completion certificate in favour of respondent No.5 to seek the eligibility, genuineness of which is not examined by the respondent- authorities.
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 6.2 Learned advocate further submits that the respondent- authorities have prescribed the eligibility conditions to participate in the tender process. However, by ignoring the eligibility conditions, the tender is awarded in favour of respondent No.4, which is arbitrary.
7. Learned Additional Solicitor General of India Mr. K. Arvind Kamath along with learned Deputy Solicitor General of India Mr. H. Shanthi Bhushan on advance service of writ petition, would submit that the petitioner is a company and the company cannot maintain public interest litigation. It is further submitted that the business activity for which the petitioner company is incorporated is not espousing the public interest for the welfare and benefit of the general public.
7.1 Learned Additional Solicitor General of India further submits that the petitioner, a commercial entity engaged in business related to the Ships/vessels, has a conflict of interest. The petition is to derive the individual benefit and suffers from involving any public interest.
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 7.2 Learned Additional Solicitor General of India further submits that though the address of the company is stated to be in New Delhi. The address provided by the authorized person in the affidavit accompanying the writ petition would disclose that he is a resident of Vishakapatnam. The unsuccessful bidder in the tender in question is also from Vishakapatnam, the public interest petition is at the instance and for the benefit of other commercial establishments. In that view, this petition is devoid of public interest.
7.3 Learned Additional Solicitor General of India further submits that the petition is presented on behalf of the company based on the Letter of Authorization at Annexure-A. The authorization is undated and cannot be accepted. It is further submitted that the letter authorizes to file/reply/represent on behalf of M/s. Hindustan Technologies. There is no specific authorization to file a public interest litigation, the present public interest petition cannot be considered as filed by Company.
8. Having considered the submissions of the learned advocates representing both parties, the Court is called upon to deliberate on two key issues, firstly the maintainability of the public interest -8- NC: 2024:KHC:49821-DB WP No. 13734 of 2024 petition and second the extent of judicial review in the tender process.
Maintainability
9. The Court is of the view that the petitioner cannot maintain public interest litigation for the reasons stated below:
(i) The petitioner is stated to be sole proprietorship company. The core business of the company is to provide manpower for marine works, welders for ship repairs, cutters and fabricators for marine repair works, manpower to clean ships, etc. The espousing the public interest by filing public interest petitions is not the business or the activity for which the company is established.
ii) The company/petitioner is engaged in the supply of manpower to works related to ships either for cleaning or repair. The tender is to carry on certain activities in specific undertaking acoustic emission testing of HP Air bottles on board in ships/submarines. The business activity of the petitioner and the work involved in the tender process is either directly or indirectly connected with the business of the -9- NC: 2024:KHC:49821-DB WP No. 13734 of 2024 petitioner. In that view, involvement of individual grievance behind the public interest litigation can be rejected outright.
10. It is specifically contended that the authorized representative filing this petition resides in Visakhapatnam, while the unsuccessful bidder in the tender is also from Visakhapatnam. This raises an allegation that the petition has been filed at the behest of the unsuccessful bidder. Given the facts of the case, this contention cannot be dismissed outright. Furthermore, while the petitioner company is stated to operate from New Delhi, as per the address provided in the petition, the authorized person filing the petition is based in Visakhapatnam. Under these circumstances, the possibility that the petition is being pursued to further the commercial interests of other parties cannot be ruled out. This warrants stricter and closer scrutiny by the Court.
11. The petitioner company has filed this petition through its authorized representative. However, the letter of authorization submitted is notably vague and undated. An important observation is that the authorization merely permits filing, replying, or representing on behalf of the company. It is conspicuously silent regarding any specific authority granted to the representative to file
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 a public interest litigation to advocate for public causes. Additionally, the authorization does not mention responsibility for bearing the litigation costs or compliance with any conditions that the court may impose. These omissions raise significant concerns about the scope and legitimacy of the authorization provided.
12. As held by the Hon'ble Supreme Court in Ashok Kumar Pandey vs. State of West Bengal (2004) 3 SCC 349, the locus standi of the public interest litigant is mandatory and that in that regard the Court must exercise care. The personal grievance being brought under public interest litigation is to be carefully seen by the Court by lifting the veil. Further when a public interest litigation challenging the award of a contract to a particular tenderer is brought before the Court, the bona fide of the party on public good behind the petition is to be satisfied by the Court. Further the public interest litigation should not be allowed to reach the private ends of a third party.
13. In light of the above, it cannot be held that the bona fides of the petitioner do not suffer from either conflict of interest and has bona fide public good.
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 Judicial Review
14. Notwithstanding the above aspect made clear in course of the hearing, since the petition was argued also for its merits of subject matter, the same is dealt with.
15. In Tata Cellular Vs. Union of India, [(1994) 6 SCC 651], the Hon'ble Supreme Court has laid down the principles regarding limitations as to the scope of judicial review of administrative decisions and exercise of powers awarding contracts. The following principles deduced, "(1) The modern trend points to judicial restraint in administrative action.
(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.
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(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 [Associated Provincial Picture Houses Ltd. V. Wednesbury Corpn., (1948) 1 KB 223: (1947) 2 All ER 680 (CA)] 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." (para 94)
16. In Jagdish Mandal vs. State of Orissa and others, [(2007) 14 SCC 517], the Hon'ble Supreme Court has held as, " When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance." (para 22) " If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. ..."
(para 22) " ... Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. ..."
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17. This Court in Writ Appeal No. 381 of 2024 (DB), DD on 25.04.2024, while dealing with the scope of judicial review in tender contracts has held as, " Thus, it was highlighted that the State is free to choose its own selection methods and stipulated conditions to invite offers from the prospective bidders is the exclusive domain of the Tender Inviting Authority. It's right to decide as to upon what terms and conditions it would prefer to enter into contractual obligation and to issue work order for any tender based project, the freedom and the space-in-the-joint in prescribing the conditions of tender is necessary to be accorded to the tendering authority. "
18. While considering Public Interest Litigations related to the award of contracts, courts must exercise caution and reluctance to interfere, given the potential consequences such as price escalation, increased project costs, delays in commissioning, and the technical nature of the work involved in the contract. In cases where compliance with tender conditions is examined, if any relaxation has been granted for bona fide and legitimate reasons, the Court should refrain from intervening. When the evaluation process is conducted by a committee of experts, their specialized knowledge plays a pivotal role in assessing and finalizing the contract. The court should avoid substituting its judgment for that of
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 the expert committee unless there is evidence of arbitrariness or unreasonableness. Judicial intervention is unwarranted when administrative authorities exercise flexibility in decision-making, provided their decisions are fair, logical, and within the bounds of reasonableness.
19. As observed by the Hon'ble Supreme Court in Tata Cellular (supra), the Court does not function as an appellate authority in matters of administrative decision-making. Its role is limited to reviewing the decision-making process rather than the decision itself. The evaluation of tenders and the awarding of contracts are inherently commercial functions, and judicial interference is unwarranted even if procedural irregularities, errors in assessment, or claims of prejudice to a tenderer are alleged, provided the decision is not arbitrary, unreasonable, or tainted with mala fides.
20. It is the reiterated contention of the petitioner that the minimum eligibility conditions are not fulfilled by respondent No.4.
Further contention that the documents in support of the eligibility produced with the tender document are fraudulent, the awarding of contract in favour of respondent No.4 is in arbitrary exercise or
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 evaluation of the tender and with a motive to favour respondent No.4.
21. Learned Additional Solicitor General of India was explicit in his submission that as there were no bidders on the conditions of eligibility, considering the nature and the importance of the work, the conditions were revised and the tenders have been evaluated based on the revised conditions and respondent No.4 satisfies the eligibility conditions on all aspects. This submission is not countered by learned advocate for the petitioner. Be as it may, in view of the limited scope permissible to review the acceptance and award of contract to the Court, the said aspects are not dealt by the Court.
22. The nature of the work outlined in the tender involves highly technical and specialized skills. The tenders have been evaluated by a panel of experts who assessed the eligibility of the bidders, including their financial capacity. Based on this thorough evaluation and assessment, a decision has been made by the expert body. This expert-driven process is critical to ensuring that the contract is awarded to the most suitable candidate, considering the complexity and technical requirements of the work.
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23. The petitioner alleges that the eligibility of respondent No. 4 is questionable due to the documents provided to prove their experience. However, there is no material before the Court to substantiate the claim that the documents submitted are fabricated or engineered. In the absence of concrete evidence to this effect, it cannot be presumed that the authorities did not thoroughly examine the authenticity of the documents submitted with the tender before awarding the contract to respondent No. 4.
24. The decision-making process by the authorities cannot be questioned or interfered with merely based on unsubstantiated allegations of fraudulent documents. If the Court were to intervene on such allegations, it could have serious repercussions, not only disrupting commercial transactions but also adversely affecting public interest. Any interference by the Court could lead to additional financial burdens on the public exchequer due to increased expenditure and escalation of costs, as well as the significant loss of time, which would ultimately undermine the efficiency of the process.
25. The careful examination of the contentions urged in accordance with the legal principles established in the referred
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 judgments, it is clear that there is no compelling evidence to support the claim that the acceptance of the tender was tainted by arbitrariness or favoritism towards respondent No. 4. The judgments referred to in the petition outline the legal standards for evaluating tenders, ensuring that the process remains transparent, fair, and free from any improper influence. The petitioner has not demonstrated any concrete instance of arbitrariness or bias in the tender evaluation process.
26. Furthermore, the petitioner's allegations of favoritism towards respondent No. 4 are unsubstantiated. There is no material evidence on record to hold that the authorities involved in the tendering process were not impartial. There is no evidence suggesting that the decision to award the contract to respondent No. 4 was driven by motives other than the legitimate and fair evaluation of their eligibility and capabilities. Thus, no case has been made to show that the acceptance of the tender was arbitrary, nor that it was intended to favor any specific bidder.
27. For the reasons stated above, no valid case has been made to establish the locus standi of the petitioner to file a public interest petition. Furthermore, there is no evidence of an arbitrary exercise
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NC: 2024:KHC:49821-DB WP No. 13734 of 2024 of the decision-making process, nor can any mala fides be found with respect to favoring any particular bidder.
28. Therefore, the petition lacks merit and does not warrant further consideration.
29. Accordingly, writ petition is dismissed.
In view of dismissal of main petition, pending interlocutory application also stand disposed of.
Sd/-
(N. V. ANJARIA) CHIEF JUSTICE Sd/-
(K. V. ARAVIND) JUDGE MV List No.: 1 Sl No.: 119