Karnataka High Court
M/S Surabhi Enterprises vs The Bharat Sanchar Nigam Limited (Bsnl) on 5 July, 2018
Author: Aravind Kumar
Bench: Aravind Kumar
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF JULY, 2018
BEFORE
THE HON'BLE MR.JUSTICE ARAVIND KUMAR
WRIT PETITION NO.23599/2018(GM-TEN)
Between:
M/s Surabhi Enterprises,
a proprietary concern by
Vishwanath K.J
S/o K.G.Jayanna,
Aged about 39 years,
At.M.H.Road,
Opp. to Fire Station,
Vasavi Colony,
Chitradurga - 577 502.
...Petitioner
(By Mr.Sangamesh R B ,Advocate)
And:
The Bharat Sanchar Nigam Limited (BSNL)
Office of the General Manager,
No.69, 1st cross, Temple road,
Jayalakshmipuram,
Mysuru - 12
Represented by Deputy General Manager.
... Respondent
(By Mr.Y.Hariprsad, Advocate)
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This writ petition is filed under Articles 226 and
227 of Constitution of India, praying to quash the
tender document dated 24.4.2018 issued by respondent
at Annexure-A and etc.
This writ petition coming on for Preliminary
Hearing this day, the court made the following:
ORDER
Though matter is listed for preliminary hearing, by consent of learned Advocates appearing for both parties, it is taken up for final disposal.
2. Tender for upkeep and allied services by providing Labour Service Personnel came to be floated by the respondent - Bharath Sanchar Nigam Limited Mysore Telecom District, Mysuru (for short 'BSNL') in Mysuru Rural Area by tender notification at Annexure- A.
3. Said tender came to be floated by way of e- tender and last date for submission of the bids had been fixed as 23.05.2018. A perusal of the tender documents would disclose that it was two stage bid or 3 in other words, two-tier of bid namely, (i) technical bid; and (ii) financial bid.
4. Petitioner, being one of the bidders for the said tender is assailing condition Nos.3 and 5 imposed or indicated in the tender documents under the head financial/prices bid. The conditions so imposed by the Tender Inviting Authority reads as under:
"Condition No.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."4
5. I have heard the arguments of Sri.R.B. Sangamesh, learned counsel appearing for the petitioner and Sri. Y. Hariprasad, learned counsel appearing for respondent - BSNL.
6. Learned counsel for the petitioner contends that condition No.3 in the tender document is an unreasonable condition, since Tender Inviting Authority is usurping power of the bidders or in other words, he would contend that Tender Inviting Authority has no right or authority to fix the profit margin of the bidders and by undertaking such an exercise, the object of the tender itself is defeated. He would also elaborate his submissions by contending that minimum rate fixed by the tenderer to be filled by all the bidders is also onerous since rate quoted by bidder higher than the minimum rate would automatically be rejected. He would further contend that under this condition, the tenderer or the bidder is compelled to quote or bid with 5 the basic profit margin at 2.5% and with the apprehension of loosing the tender no other tenderer would quote more than 2.5% as the basic profit margin.
7. He would also submit that condition No.5 imposed under the tender conditions with regard to awarding tender to the tenderer having highest turnover during previous three years in case of all the tenderers being equally placed is also opposed to law and liable to be set aside, since a conjoint reading of condition Nos.3 and 5 would show that tender calling authority has pre- determined to award the tender in favour of a particular person who is having highest turnover for previous 3 years which would have been disclosed by the bidder in the details furnished under the technical bid and thereby, tender inviting authority has given a complete go-by to the experience of the bidders who have tendered similar work for earlier years and without considering their claim of past experience, condition 6 No.5 cannot be imposed in favour of a particular tenderer. He would also submit that under similar circumstances, in the earlier years, condition No.5 was not imposed and where it was found that all the tenderers were equally placed, the work order was being equally distributed among all L1 tenderers and same practice ought to be continued. Hence, he prays for quashing of above referred two conditions imposed under the impugned tender notification.
8. Per contra, learned standing counsel Sri.Y.Hariprasad, appearing for BSNL, by re-iterating the grounds urged in the statement of objections and the affidavit filed in support of the application for vacating the stay, would contend that conditions imposed by the respondent particularly, condition No.3 is to make the bidder not to quote negative or 0 % profit which would result in unfair labour practice and with this laudable object, minimum profit has been fixed and 7 there is no cap fixed for the maximum profit. He would also submit that conditions to be imposed is the domain of the tender inviting authority and the scope of judicial review of administrative action in this aspect is limited, he prays for this Court not to interfere with the tender process. Hence, he seeks for rejection of the petition.
9. Having heard the learned counsel appearing for both parties and on perusal of records, it would be appropriate to notice that while examining challenge made to a tender notification, the scope of judicial review is limited. It is not the decision which is arrived at by the tender inviting authority which will be looked into/examined/scrutinized by the Court in exercise of the power of judicial review, but the decision making process, which would be looked into and if on facts, it is found to be flawed, this Court would exercise the power of judicial review as otherwise not. For this proposition, judgment of the Hon'ble Apex Court in the 8 case of TATA CELLULAR VS. UNION OF INDIA reported in AIR 1996 SC 11 and STERLING COMPUTERS LIMITED ETC. VS. M & N PUBLICATIONS LIMITED AND ORS reported in AIR 1996 SC 51 can be looked up. The judicial review of an administrative action is intended to prevent arbitrary, irregularity, unreasonable, bias and malafides. The Hon'ble Apex Court in the case of JAGDISH MANDAL VS. STATE OF ORISSA & ORS. reported in 2007 14 SCC 517 having noticed catena of judgments has delineated the scope of judicial review in the matter of award of contracts and has held:
22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be 9 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. 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. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court.
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. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the 10 project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";
(ii) Whether public interest is affected. If the answers are in negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licenses, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
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10. Thus, the scope of judicial review being limited, the only examination which this Court can undertake would be to ascertain whether there is a material irregularity in the decision making process or whether the decision of the tender inviting authority is so unreasonable and arbitrary which would strike the conscious of the Court. The conditions imposed in a tender, whether a condition is essential or collateral, could be ascertained by reference to the consequence of non-compliance of it. If non-fulfillment of the requirement results in rejection of tender, then it would be an essential part of the tender otherwise, it is only a collateral term as held by the Hon'ble Apex Court in the case of KANHAIYA LAL AGRAWAL VS UNION OF INDIA & ORS reported in 2002 6 SCC 315 vide paragraph No.6. The essential tender terms are contractual and it is the right of the tender inviting authority which invites the tenders to impose such conditions in the tender as it deems fit. Courts do not have the jurisdiction to judge 12 as to how the tender terms should be framed. The Court is not competent to ascertain or to examine the wisdom of tender inviting authority. It requires to be left to the experts who, on evaluation of the factual necessity, impose certain conditions in the tender depending on their requirement. In that view of the matter, this Court would not be in a position to decide as to whether said condition is onerous or otherwise. For this proposition, the judgment of the Hon'ble Apex Court in the case of PURVANKARA PROJECTS LTD. VS. HOTEL VENUS INTERNATIONAL AND OTHERS reported in 2007 10 SCC 33 vide paragraph 29 and 30 can be looked up.
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 impugned tender which 13 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 14 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.
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 15 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. 16
In view of disposal of main petition, I.A.No.1/2018 for vacating stay does not survive for consideration and same stands rejected.
SD/-
JUDGE dn/-