Karnataka High Court
S.V.B.Borewells vs The State Of Karnataka on 16 July, 2021
Author: H.T.Narendra Prasad
Bench: H.T.Narendra Prasad
1
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 16th DAY OF JULY 2021
BEFORE
THE HON'BLE MR. JUSTICE H.T.NARENDRA PRASAD
WRIT PETITION NO.100450/2021
C/W WRIT PETITION NO.100449/2021 (GM-TEN)
IN WP NO.100450/2021
BETWEEN:
1 . M/S MALAPRABHA INDUSTRIES
C-48, KSSIDC INDUSTRIES ESTATE
ANGOL INDUSTRIAL ESTATE,
UDYAMBAG, BELAGAVI 590008,
REP. BY ITS PROPRIETOR,
SRI. BASAVARAJ R. BALEKUNDARAGI
AGED ABOUT 64 YEARS
2 . INNOVATIVE EQUIPMENTS PVT. LTD.
B 475, INDUSTRIAL ESTATE,
GOKUL ROAD, HUBBALLI 580030
REP. BY ITS PROPRIETOR DIRECTOR,
SRI. KETAN MAHESWARI
AGED ABOUT 57 YEARS
3 . MS. AMRIT ENGINEERING PUMPS PVT. LTD.
NEW 4141, 2ND STAGE, MOTILAL CENTRE,
N. R. DINESH HALL, ASHRAM ROAD,
AHMADABAD 380009, GUJARAT
REP. BY ITS AUTHORIZED SIGNATORY
SRI. VEERABASAPPA V. NAREGAL
AGE. 48 YEARS, R/O. H. NO. 2,
SHAKTI NAGAR,MANJUNATH NAGAR,
GOKUL ROAD, HUBBALLI 580030
DIST. DHARWAD
.. PETITIONERS
(BY SRI. JAYAKUMAR S. PATIL, SR. COUNSEL
FOR SRI. SRINAND A. PACHCHAPURE, ADV.)
2
AND:
1 . THE STATE OF KARNATAKA
REPRESENTED BY ITS CHIEF SECRETARY,
VIDHANA SOUDHA, DR. AMBEDKAR VEEDI,
BENGALURU 560 001
2 . THE UNDER SECRETARY
DEPARTMENT OF SOCIAL WELFARE,
VIKAS SOUDHA, DR. AMBEDKAR VEEDI,
BENGALURU 560001
3 . PRINCIPAL SECRETARY
DEPARTMENT OF FINANCE
VIDHANA SOUDHA, DR. AMBEDKAR VEEDI,
BENGALURU 560001
4 . DR. B. R. AMBEDKAR DEVELOPMENT
CORPORATION LTD.,
BY ITS MANAGING DIRECTOR
9TH AND 10TH FLOOR,
VISHVESHWARIAH MINI TOWER,
DR. AMBEDKAR VEEDI,
BENGALURU 560001
5 . KARNATAKA MAHARSHI VALMIKI SCHEDULED TRIBE
DEVELOPMENT CORPORATION LTD.,
REP. BY ITS MANAGING DIRECTOR,
NO. 10 3RD FLOOR, KHADI BHAVAN,
JASMA BHAVAN ROAD,
GOVINDA CHETTY COLONY,
VASANTH NAGAR, BENGALURU 560051
6 . M/S. KARNATAKA ADIJAMBHAVA DEVELOPMENT
CORPORATION LTD.
REP. BY ITS MANAGING DIRECTOR,
NO. 17/5, OBLONG BLOCK, 2ND FLOOR,
UNITY BUILDING, J. C. ROAD,
BENGALURU 560002
7 . M/S.KARNATAKA BHOVI DEVELOPMENT CORPORATION
REP. BY ITS MANAGING DIRECTOR,
NO. 177/4, 2ND MAIN, 2ND CROSS,
BHOVIPALYA,MAHALAKSHMIPURAM,
BENGALURU 560086
3
8 . M/S. KARNATAKA THANDA DEVELOPMENT
CORPORATION LTD.
REP. BY ITS MANAGING DIRECTOR,
NO. 11, CUNNINGHAM ROAD,
VASANTH NAGAR, BENGALURU 560051
9 . M/S. DR. B. R. AMBEDKAR DEVELOPMENT
CORPORATION LTD.,
REP. BY ITS EXECUTIVE ENGINEER,
TENDER INVITING AUTHORITY
9TH AND 10TH FLOOR,
VISHVESHWARIAH MINI TOWER,
DR. AMBEDKAR VEEDHI,
BENGALURU 560001
10 . KARNATAKA MAHARSHI VALMIKI SCHEDULED TRIBE
DEVELOPMENT CORPORATION LTD.,
REP. BY ITS ASSISTANT GENERAL MANAGER,
TENDER INVITING AUTHORITY,
NO. 10, 3RD FLOOR, KHADI BHAVAN,
JASMA BHAVAN ROAD,
GOVINDA CHETTY COLONY,
VASANTH NAGAR, BENGALURU 560051
11 . M/S. KARNATAKA ADI JAMBHAVA
DEVELOPMENT CORPORATION LTD.
REP. BY ITS GENERAL MANAGER AND
TENDER INVITING AUTHORITY,
NO. 17/5, OBLONG BLOCK, 2ND FLOOR,
UNITY BUILDING, J. C. ROAD,
BENGALURU 560002
12 . M/S. KARNATAKA BHOVI
DEVELOPMENT CORPORATION
REP. BY ITS EXECUTIVE ENGINEER
TENDER BY ITS EXECUTIVE ENGINEER,
TENDER INVITING AUTHORITY,
NO. 177/4, 2ND MAIN, 2ND CROSS,
BHOVIPALYA, MAHALAKSHMIPURAM,
BENGALURU 560086.
13. M/S VINAYAK ELECTRICALS
REP. BY ITS PROPRIETOR
SRI. M.D. VEDAMURTHY,
AGED ABOUT 45 YRS., R/AT NO.356
4
MARUTI NILAYA, 6TH CROSS, 2ND BLOCK,
BENGALURU 560 073.
14. B.G. BOREWELLS
REP. BY ITS PROPRIETOR
SRI. BELAGURU SWAMY, S/O T.R. KRISHNAMURTHY
AGED ABOUT 57 YRS., R/AT NO.1-885/17
VENKATESHANAGAR, KALBURGI 585102.
.. RESPONDENTS
(BY SRI. SHIVAPRABHU S. HIREMATH, AGA FOR R1 TO R3.
SRI. UDAY HOLLA, SR. COUSNEL
FOR SRI. S.S. YADRAMI, ADV FOR R4 TO R12.
SRI. HARISH H.V. ADV. FOR R13 AND R14)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT
OF CERTIORRI OR ANY OTHER WRIT QUASHING THE I) TENDER
NOTIFICATION BEARING NO.ADCL/GKS/19-20 AND 20-
21/30/2020-21/ 11041 DATED 15.01.2021 INVITED BY THE 9TH
RESPONDENT, FOR THE YEARS 2019-20 AND 20-21, UPLOADED IN
E-PROCUREMENT PORTAL ON 18.01.2021, IS HEREWITH MARKED
AND PRODUCED AS ANNEXURE-N. II) TENDER NOTIFICATION
BEARING NO.KMVSTDC/TENDER/ GKS/2020-21 DATED 21.01.2021
INVITED BY THE 10TH RESPONDENT FOR THE YEARS 2019-20 AND
2020-21 UPLOADED IN E-PROCUREMENT PORTAL ON 22.01.2021,
IS HEREWITH MARKED AND PRODUCED AS ANNEXURE-N1. III)
TENDER NOTIFICATION BEARING NO.KAJDC/GKS/ TENDER/106-
05/2020-21/390 DATED 22.01.2021 INVITED BY THE 11TH
RESPONDENT, FOR THE YEARS 2020-21 UPLOADED IN E-
PROCUREMENT PORTAL ON 25.01.2021, IS HEREWITH MARKED
AND PRODUCED AS ANNEXURE-N2. IV) TENDER NOTIFICATION
BEARING KBDC/GKS/ TENDER-PKG-7/ BW/2020-21/WORK INDENT
DATED 23.01.2021 INVITED BY THE 12TH RESPONDENT FOR THE
YEARS 2019-20 AND 2020-21, UPLOADED IN E-PROCUREMENT
PORTAL ON 25.01.2021, IS HEREWITH MARKED AND PRODUCED
AS ANNEXURE-N3. 2. ISSUE A WRIT OF CERTIORRI OR ANY OTHER
WRIT QUASHING THE GOVERNMENT ORDER BEARING NO.SAKAE
50 SAMANVAYA OF 2020, BENGALURU DATED 10.11.2020 VIDE
ANNEXURE-L AND GOVERNMENT ORDER BEARING NO.SAKAE 588
S.D.C. 2020 DATED 02.01.2021 VIDE ANNEXURE-M. 3.
ALTERNATIVELY, TO ISSUE A WRIT OF MANDAMUS OR ANY OTHER
WRIT DIRECTING THE RESPONDENTS 9, 10, 11 AND 12 TO PERMIT
THE PETITIONERS/MSMES TO PARTICIPATE IN THE RESPECTIVE
TENDERS VIDE ANNEXURES N, N1, N2 AND N3 RESPECTIVELY. 4.
TO CALL FOR THE EVALUATION REPORT FROM THE RESPONDENT
5
NO.3 WITH RESPECTIVE ACHIEVING TARGETS, EXECUTION AND
COMPLETION OF THE PROJECTS FOR THE YEAR 2016-17 AND
2017-18 UNDER GANGA KALYANA YOJANA SCHEME OF THE
RESPONDENT NO.4 UNDER RESPONDENT NO.2. 5.TO CALL FOR
THE ACTION PLAN DETAILS FOR THE YEAR 2019-20 AND 2020-21
FROM THE 9TH RESPONDENT.
IN WP NO 100449 OF 2021
BETWEEN:
1 . S.V.B.BOREWELLS
M. B NO. 9/7/680/913
B.T. PATIL NAGAR,
KOPPAL, DIST KOPPAL,
REPT BY ITS PROPRIETOR,
SRI. VEERABASAPPA V NEREGAL
AGE 48 YEARS,
2 . JALAVARDINI BOREWELLS
M.B.NO.7-1-1/2, O/D7-2-172,
S.G. GUNJ, KOPPAL,
REP BY ITS PROPRIETOR,
HANUMAPPA S/O BHIMAPPA BIDANAL,
AGE 45 YEARS,
3 . SHARANABASAVESHWAR BOREWELLS,
NO. 362/23, KANDAKOOR,
TAL KUSHTAGI DIST KOPPAL,
REPT BY ITS PROPRETOR,
DEVENDRAPPA S/O BALAPPA PIRADDI
AGE 54 YEARS,
4 . KIRAN BOREWELLS
NEAR TEMPLE, VENKATAGIRI BADAVANE,
GADANKERI CROSS, GADANKERI,
TAL AND DIST BAGALKOT
REPT BY ITS PROPRIETOR,
SRI PUNDAPPA S/O K YADAHALLI
AGE 58 YEARS
..PETITIONERS
(By Sri. JAYAKUMAR S. PATIL, SR. COUNSEL
FOR SRINAND A PACHHAPURE, ADV.)
AND:
1 . THE STATE OF KARNATAKA
6
REPRESENTED BY ITS CHIEF SECRETARY
VIDHANA SOUDHA, DR. AMBEDKAR VEEDI,
BENGALURU- 560 001
2 . THE UNDER SECRETARY
DEPARTMENT OF SOCIAL WELFARE,
VIKAS SOUDHA, DR. AMBEDKAR VEEDI,
BENGALURU-560001
3 . PRINCIPAL SECRETARY
DEPARTMENT OF FINANCE
VIDHANA SOUDHA, DR. AMBEDKAR VEEDI,
BENGALURU-560001
4 . DR. B.R. AMBEDKAR DEVELOPMENT
CORPORATION LTD.,
BY ITS MANAGING DIRECTOR
9TH AND 10TH FLOOR,
VISHVESHWARIAH MINI TOWER,
DR AMBEDKAR BEEDI, BENGALURU 560 001
5 . KARNATAKA MAHARSHI VALMIKI
SCHEDULED TRIBE DEVELOPMENT CORPORATION LTD,
REP. BY ITS MANAGING DIRECTOR,
NO. 10,3RD FLOOR, KHADI BHAVAN,
JASMA BHAVAN ROAD, GOVINDA CHETTY COLONY
VASANTH NAGAR, BENGALURU-560051
6 . M/S KARNATAKA ADIJAMBHAVA DEVELOPMENT
CORPORATION LTD,
REP BY ITS MANAGING DIRECTOR,
NO. 17/5, OBLONG BLOCK, 2ND FLOOR,
UNITY BUILDING J.C ROAD, BENGALURU-560002
7 . M/S KARNATAKA BHOVI DEVELOPMENT CORPORATION
REP BY ITS MANAGING DIRECTOR,
NO. 177/4, 2ND MAIN, 2ND CROSS,
BHOVIPALYA MAHALAKSHMIPURAM,
BENGALURU-560086
8 . M/S KARNATAKA THANDA DEVELOPMENT
CORPORATION LTD,
REP. BY ITS MANAGING DIRECTOR,
NO.11 CUNNINGHAM ROAD,
VASANTH NAGAR, BENGALURU-560051
7
9 . M/S DR. B R AMBEDKAR DEVELOPMENT
CORPORATION LTD.,
REP. BY ITS EXECUTIVE ENGINEER,
TENDER INVITING AUTHORITY,
9TH AND 10TH FLOOR,
VISHVESHWARIAH MINI TOWER,
DR. AMBEDKAR BEEDHI, BENGALURU-560001
10 . KARNATAKA MAHARSHI VALMIKI
SCHEDULED TRIBE DEVELOPMENT
CORPORATION LTD.,
REP. BY ITS ASSISTANT GENERAL MANAGER,
TENDER INVITING AUTHORITY, NO. 10, 3RD FLOOR,
KHADI BHAVAN, JASMA BHAVAN ROAD,
GOVINDA CHETTY COLONY,
VASANTH NAGAR, BENGALURU-560051
11 . M/S KARNATAKA ADIJAMBHAVA
DEVELOPMENT CORPORATION LTD.
REP BY ITS GENERAL MANAGER AND TENDER
INVITING AUTHORITY
NO. 17/5, OBLONG BLOCK 2ND FLOOR,
UNITY BUILDING, J C ROAD,
BENGALURU-560002
12 . M/S KARNATAKA BHOVI
DEVELOPMENT CORPORATION
REP BY ITS EXECUTIVE EINGINEER,
TENDER INVITING AUTHORITY
NO. 177/4,2ND MAIN 2ND CROSS,
BHOVIPALYA MAHALAKSHMIPURAM,
BENGALURU-560086
RESPONDENTS
(By Sri. UDAY HOLLA, SR. COUNSEL
FOR SRI. S.S. YADRAMI, ADV. FOR R4 TO R12.
SRI. SHIVAPRABHU. S. HIREMATH, AGA FOR R1 TO R3. )
THIS WP IS FILED PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY OTHER WRIT QUASHNG THE I.TENDER
NOTIFICATION BEARING NO.ADCL/GKS/19-20 AND 20-
21/30/2020-21/11041 DATED 15.01.2021 INVITED BY THE 9TH
RESPONDENT, FOR THE YEARS 2019-20 AND 2020-21 UPLOADED
IN E-PROCUREMENT PORTAL ON 18.01.2021, IS HEREWITH
MARKED AND PRODUCED AS ANNEXURE-N. ii.TENDER
NOTIFICATION BEARING NO.KMVSTDC/TENDER/GKS/2020-21
DATED 21.01.2021 INVITED BY THE 10TH RESPONDENT FOR THE
8
YEARS 2019-20 AND 2020-21 UPLOADED IN E-PROCUREMENT
PORTAL ON 22.01.2021, IS HEREWITH MARKED AND PRODUCED
AS ANNEXURE-N1. iii. TENDER NOTIFICATION BEARING
NO.KAJDC/GKS/TENDER/106-P5/2020-21/390 DATED 22.01.2021
INVITED BY THE 11TH RESPONDENT, FOR THE YEAR 2020-21
UPLOADED IN E-PROCUREMENT PORTAL ON 25.01.2021, IS
HEREWITH MARKED AND PRODUCED AS ANNEXURE-N2. IV.TENDER
NOTIFICATION BEARING NO.KBDC/GKS/TENDER-PKG-7/BW/2020-
21/WORK-INDENT DATED 23.01.20201 INVITED BY THE 12TH
RESPONDENT FOR THE YEAR 2019-20 AND 2020-21 UPLOADED IN
E-PROCUREMENT PORTAL ON 25.01.2021, IS HEREWITH MARKED
AND PRODUCED AS ANNEXURE-N3. 2.ISSUE A WRIT OF
CERTIORARI OR ANY OTHER WRIT QUASHING THE GOVERNMENT
ORDERS BEARING NO.SAKAE 50 SAMANVAYA OF 2020,
BENGALURU DATED 10.11.2020 VIDE ANNEXURE-L AND
GOVERNMENT ORDER BEARING NO.SAKAE 588 S.D.C. 2020 DATED
2.01.2021 VIDE ANNEXURE-M.. 3.ALTERNATIVELY TO ISSUE WRIT
OF MANDAMUS OR ANY OTHER WRIT DIRECTING THE
RESPONDENTS 9, 10, 11, AND 12 TO PERMIT THE
PETITIONERS/MSMES TO PARTICIPATE IN THE RESPECTIVE
TENDERS VIDE ANNEXURES-N, N1, N2 AND N3 RESPECTIVELY.
4.TO CALL FOR THE EVALUATION REPORT FROM THE RESPONDENT
NO.3 WITH RESPECTIVE ACHIEVING TARGETS, EXECUTION AND
COMPLETION OF THE PROJECTIONS FOR THE YEAR 2016-17 AND
2017-18 UNDER GANGA KALYANA YOJANA SCHEME OF THE
RESPONDENT NO.4 UNDER RESPONDENT NO.2. 5.TO CALL FOR
THE ACTION PLAN DETAILS FOR THE YEAR 2019-20 AND 2020-021
FROM THE 9TH RESPONDENT.
THESE WRIT PETITIONS HAVING BEEN HEARD ON
24.06.2021 AND COMING ON FOR ON FOR PRONOUNCEMENT, THIS
DAY, THE COURT MADE THE FOLLOWING:
ORDER
Petitioners inter alia have sought for quashing condition, Clause Nos.2.2., 3.2.3 and 3.2.4 of the tender notification dated 15.01.2021 issued by respondent Nos.4 to 12 for the purpose of Drilling of Irrigation borewells of 165 MM DIA on "No Water No Money Basis" and Supply, Installation and 9 Electrification (Energization) of Irrigation Submersible Pump Sets with accessories suitable for 165MM DIA Borewells under "Ganga Kalyana Scheme" for the year 2019-20 and 2020-21 produced as Annexue-N series and also the petitioners have sought for quashing of the order dated 10.11.2020 and 02.01.2021 vide Annexures-L and M respectively issued by respondent Nos.1 to 3.
2. The case of the petitioners in W.P. No.100450/2021 is that they are the duly registered Small Scale Industries having their establishments since long time under the Micro, Small and Medium Enterprises Act, 2006(hereinafter referred to as the 'MSME's', for short). The petitioners are the only four MSMEs in the North Karnataka involved in manufacturing process of submersible pumps. The petitioners are duly registered and recognized by the Director of Industries and Commerce (SSI Certificates) State of Karnataka. The petitioners in W.P. No.100449/2021 are proprietors of Borewell Enterprises. The Government of Karnataka, in order to implement various socio-economic beneficial scheme to the backward community as well as the downtrodden communities in rural areas to install and supply 10 of water for irrigation under 'Ganga Kalyana Scheme', has called for tender as per Annexure-N series. Pursuant to the Government Orders Annexures-L and M, they have incorporated impugned conditions in the tender notification. Being aggrieved by the same, the petitioners are before this Court.
3. Sri. Jayakumar S. Patil, learned Senior Counsel appearing for the petitioners has contended that the Tender Conditions at Clause 2.2 states "tenders from joint ventures are not acceptable", is incorporated with an intention to exclude the petitioners from participating in the tender and allow drillers of borewell to supplying pump sets through dealers. When dealer steps into the shoes of manufacturer, it prima facie shows that all manufacturers are excluded. This is being done to favour the contractor of KBJNL who has experience of doing drilling of borewells and supply the pump set together. A driller can purchase pump set in open market by making MOU with a dealer and with the Electrical contractor. If the petitioners want to do the same work by joint venture, the same is prohibited. So apparent that the authorities have decided to restrict the open competition so as 11 to grant contract in favour of the tenderers of their choice. He further contended that the Government vide Annexure-M dated 02.01.2021 has deleted the word "consortium" with an object to exclude the petitioners from participating in the tender. As per Government Circular vide Annexures-Q, R and S, the Government has to purchase the pump sets from MSMEs. To avoid the same, the Government, by issuing the impugned order Annexure-M has removed the word "Consortium" to see that the contractor can purchase the pump set from open market. This action of the Government is contrary to the Government Circulars Q, R and S. He further submits that, there is no nexus between the object sought to be achieved by imposing such a conditions. Therefore, the same is in violation of the right guaranteed to the petitioners under Articles 14 and 21 of the Constitution of India. Therefore, he contended that condition No.2.2 is arbitrary, unreasonable and vitiate by legal malice. In support of his contentions, he has relied on the decision in the case of Jagruti Welfare Organization, Bhubaneswar v. State of Odisha and another reported in AIR 2017 (NOC) 958 Orissa and referred to para 32 of the said judgment. 12
4. So far as the impugned condition Nos.3.2.3 and 3.2.4, he contended that these conditions are imposed to help only such of the contractors worked for Government and Government undertaking. By doing this, the respondents are restricting the open competition. This is against the public policy and the Transparency Act. It had no nexus to the object that has to be achieved. It restricted the large number of class to participate in the tender. These conditions are contrary to Article 19(1)(g) of the Constitution of India. He further contended that the Kaveri Neeravari Nigam and KBJNL contract, Class I and Class II contractors were eligible to participate in the tender. Here, the joint venture has been excluded and thereby the petitioners have been denied to participate in the tender and that the persons who has worked under Government and Government undertaking that too person who has worked under KBJNL and Minor Irrigation Department only such contractors has been allowed to participate. This amounts to discrimination and denying the right of the petitioners under Articles 14 and 19(1)(g) of the Constitution of India. He further contended that earlier, the tender has been called on Turnkey basis. Since there was no 13 proper response, by Government order dated 28.01.2010, the same has been withdrawn and joint venture has been permitted by order dated 28.01.2010. Without application of mind and no material has been placed to show that there is changed circumstance for the Government to exclude the joint venture. It appears, to favour some of such contractors, the impugned orders Annexues-L and M have been issued. Therefore, these conditions are contrary, unreasonable and vitiate by legal malice. In support of his contentions, he has relied on the judgment of the Apex Court in the case of Rasbihari Panda v. State of Orissa reported in 1969(3) SCC 374 referred to paras 16 and 17 of the said judgment and in the case of Tata Cellular v. Union of India reported in (1994) 6 SCC 651 referred to paragraph 81 of the said judgment. Hence, he sought for allowing the writ petitions.
5. Sri. H.V. Harish, learned counsel appearing for respondent Nos.13 and 14 has adopted the arguments of the learned Senior Counsel Sri. Jayakumar S. Patil.
6. Sri. Udaya Holla, learned Senior Counsel appearing for respondent Nos.6 to 12 contended that condition No.2.2 was incorporated in the tender notification 14 after the matter had been discussed in the High Level meeting under the Chairmanship of Hon'ble the Deputy Chief Minister, Minister for PWD and Social Welfare and other Directors of the Board and Corporation. After considering previous experience, in a meeting held on 21.09.2020, it was decided to incorporate all these conditions. He further contended that, earlier for the similar purpose of installation of pump set drilling borewell, they had called for separate tender and has produced Annexure R1-the statement showing loss incurred by the Corporation and the Board. Considering the previous experience and in the public interest, in the meeting, it has been decided that the joint venture has to be excluded. Since the Government has taken a policy decision in the public interest, the same is not arbitrary or vitiate by legal malice. In support of his contention he has relied on the judgment of the Apex Court in the case of Fasih Chaudhary v. Director General, Doordarshan and others reported in (1981) 1 SCC 89 and referred to para 6 of the said judgment, in the case of AIR India Ltd. v. Cochin International Airport Ltd and others reported in (2000) 2 SCC 617 and referred to para 7 of the said judgment and in the case of Shimnit Utsch India Private Limited and Another v. West Bengal Transport Infrastructure 15 Development Corporation Limited and others reported in (2010) 6 SCC 303 and referred to para 52 of the said judgment.
7. So far as condition Nos.3.2.3 is concerned, he contended that the effect of implementation of Turnkey basis by the single tenderer who has undertaken the work under government Department and Government undertaking, has been allowed to participate since similar project has been successful in the Government undertaking. Therefore, that condition has been imposed. He further contended that there is no bar for the tenderer to purchase the pump set from MSMEs the petitioners. They have prescribed certain quality. If the petitioners maintain the same quality, the contractor can purchase the same from the petitioners. Therefore, the contention of the petitioners that, to exclude the petitioners and benefit a particular contractor, the conditions have been imposed, is not correct. In support of his contentions he has relied on the decisions of the Apex Court in the case of Michigan Rubber (India) Limited v. State of Karnataka and Others reported in (2012) 8 SCC 216 and referred to paragraph 23 of the said judgment and in the case of Bakshi 16 Security and Personnel Services Private Limited v. Devkishan Computed Private Limited and Others reported in (2016) 8 SCC 446 and referred to paragraph 19 of the said judgment.
He further contended that similar conditions like 3.2.3 and 3.2.4 were imposed in the tender called by Dr. Ambedkar Development Corporation Limited and the same has been challenged before this Court in Writ Petition No.53791/2018. This Court by order dated 22.02.2019 has dismissed the petition and held that the conditions are neither erroneous nor unreasonable or vitiated by legal malice. He further contended that the contention of the petitioner in respect of condition No.3.2.4 that it excluded the sizable section of the tenderer from participating, is not correct. The petitioners are only 4 petitioners before this Court. Pursuant to the tender notification, 43 bidders have submitted 343 bids. Therefore, his contention is unsustainable. Hence, he sought for dismissal of the writ petitions.
8. Heard Sri Jayakumar S. Patil, learned senior counsel for the petitionerA, Sri. Udaya Holla learned counsel appearing for respondent Nos.4 to 12, Sri Shivaprabhu S. Hiremath, AGA for respondent Nos.1 to 3 and Sri. H.V. Harish, 17 learned counsel for respondent No.13 and 14. Perused the writ papers.
9. Detail narration of facts and contents would not call for reiteration. The petitioners are duly registered small scale industries governed under the Micro, Small And Medium Enterprises Act 2006. There are only four MSMEs in North Karnataka area involved in the manufacturing process of submersible pump. They are duly registered and recognized by the Director of Industries and Commerce State of Karnataka. The other petitioners are the Proprietors of Boewell enterprises.
10. The State of Karnataka, in order to implement various socio-economic beneficial scheme to the backward communities as well as other downtrodden communities in the rural area to install and supply of water for irrigation under Ganga Kalyana scheme proposed to dig a borewell, supplying, installation and electrification of irrigation submersible pumpset. They called tender by Notification dated 15.01.2021 produced as Annexure-N. The petitioners have challenged the condition Nos.2.2 and 3.2.3 and 3.2.4 of the tender Notification on the ground that these conditions are 18 arbitrary, unreasonable and mala fide and against the right guaranteed under Article 19(1)(g) of the Constitution of India.
11. It is settled law that writ courts do not sit in judgment over a tender process or the conditions imposed by the tendering authority as a court of appeal. But writ courts merely review the manner in which the decision is made. Further the writ court do not review administrative decision in issuing the tender or formatting the tender terms except on specific grounds. It is also settled law that writ courts must exercise restraint and interfere only when it is able to conclude that decision making process or the decision taken by an administrative authority is vitiated by mala fides or arbitrariness or perversity (including legal malice) or the authorities intend to favour some one. This proposition have been repeatedly reiterated by Hon'ble Supreme Court not only its decision in case of Tata Cellur (supra) but also in the recent decision in the case of Municipal Corporation, Ujjain and Another v. BVG India Limited and others reported in 2018 SCC 462.
12. In the background of this principles, the present case has to be examined. In respect of condition No.2.2 19 "tender from joint ventures not acceptable". The respondent by order dated 16.07.2019 had called a tender on turn key basis. Since there was no proper response from the tenderer, The Government by Order dated 28.01.2010 has modified that earlier order and directed the authorities to call a tender separately for drilling the borewell, supplying the pumps set and electrification. The respondent has filed statement of objections explaining their past experience when the tender was called separately. They have filed Annexure R1-chart explaining the loss incurred to the Government due to tender which was called separately which is extracted as under:
qÁ.©.Dgï.CA¨ÉÃqÀÌgï C©üªÀÈ¢Ý ¤UÀªÀÄ ¤AiÀÄ«ÄvÀ, ¨ÉAUÀ¼ÀÆgÀÄ UÀAUÁ PÀ Áåt AiÉÆÃd£ÉAiÀÄr 2015-16, 2016-17, 2017-18 ªÀÄvÀÄÛ 2018-19£Éà ¸Á°£À UÀÄjAiÀÄ°è PÉÆgÉzÀ PÉƼÀªÉ¨Á«UÀ¼À, ¸ÀgÀ§gÁdÄ ªÀiÁrPÀ ¥ÀA¥ï¸ÉmïUÀ¼À «ªÀgÀ (¢£ÁAPÀ:18.02.2021gÀ ªÀgÉUÉ) PÀæ. ªÀµÀð PÉƼÀªÉ¨Á« PÉÆgÉAiÀÄ«PÉ ¥ÀA¥ï¸Émï ¸ÀgÀ§gÁdÄ «zÀÄå¢ÝÃPÀgÀt ¸ÀA.
UÀÄj PÉÆgÉzÀ PÉÆgÉAiÀÄ®Ä PÉÆgÉzÀ ¸ÀgÀ§gÁdÄ ¸ÀgÀ§gÁfUÉ «zÀÄå¢ÝÃPÀgÀtPÉÌ ¤UÀªÀÄ ªÀ¸ÁÌA
PÉƼÀªÉ¨Á« ¨ÁQ PÉƼÀªÉ¨Á« ªÀiÁrzÀ ¨ÁQ ¨ÁQ ºÀAvÀzÀ°è ºÀAvÀzÀ°è
¸ÀASÉå ¸ÀASÉå ¸ÀASÉå
1 2015-16 11229 10810 419 10810 10375 435 17 0 17
2 2016-17 10889 10265 624 10265 9861 404 236 0 236
3 2017-18 10802 10160 642 10161 9261 900 1194 3 1191
4 2018-19 10164 6640 3524 6640 0 6640 3843 947 2896
MlÄÖ 43084 37875 5209 37876 29497 8379 5290 950 4340
20
13. Taking into consideration their past experience for the year 2015-16, 2016-17, 2017-18 and 2018-19, they have called High Level Meeting headed by the Hon'ble Deputy Chief Minister, Minister for PWD and Social Welfare and Directors of Board and Corporation. In the meeting held on 29.01.2020 they have taken a decision that the tender has to be called on turn key basis. Accordingly, the Government has issued Orders Annexures-L and M excluding tenderers from joint venture. Therefore, it is very clear from the above material that the Government has taken a policy decision after due deliberation in the interest of public.
14. The Hon'ble Apex Court in Fasih Chaudhary's case (supra) at paragraph 6 has held as under:
6. While, as mentioned hereinbefore, fair-play in action in matters like the present one is an essential requirement, similarly, however, free play in the joints' is also a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-
administrative sphere as the present one. Judged from that stand point of view, though all the proposals might not have been considered strictly in accordance with order of precedence, it appears that these were considered fairly, reasonably, objectively and without any malice or ill-will.
and in AIR India Limited case (supra) at paragraph 7 has held as under:
21
7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in R.D. Shetty v. International Airport Authority, 1979 (3) SCC 488; Fertilizer Corporation Kamgar Union v. Union of India, ; Asstt. Collector, Central Excise v. Dunlop India Ltd, , Tata Cellular v. Union of India, ;. Ramniklal N. Bhutta v. State of Maharashtra, and Raunaq International Ltd. v. I.V.R. Construction Ltd., . The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it.
Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene. It is very clear from the above judgment that in arriving at a commercial decision the State can choose is own method 22 to arrive at a decision. It can fix own terms of invitation to tender and it is not open to judicial scrutiny. Therefore, this Court is of the considered opinion that this Court cannot conclude that the condition No.2.2 is arbitrary unreasonable or vitiate by legal malice.
15. In respect of condition Nos.3.2.3. and 3.2.4, same is extracted below:
3.2.3 Satisfactorily completed in any one year, at least one similar drilling of borewell along with supply, installation and Electrification (Energization) of pumpsets work, with any government department/government undertaking, of value not less than 50% of amount put to the tender. Certificate issued by the employer not below the rank of Executive Engineer shall be uploaded. The Value of the completed works shall be given a weight of 10% per year to bring them to the price level of the financial year in which the tenders are invited.
3.2.4 Executed in any one year, minimum 80% quantities of drilling of borewell along with supply, installation and Electrification (Energization) of pumpsets work, with any government department/government undertaking. Certificate issued by the employer not below the rank of Executive Engineer shall be uploaded.
The contention of the petitioners that these conditions are incorporated to exclude sizeable section of the tender from participating in the tender to favour the person who has worked under Karnataka Kaveri Neeravari Nigam and KBJNL 23 only to exclude the petitioners from participating in the tender. He further contended that, there is no nexus between the object sought to be achieved by imposing the conditions. It is contrary to rights guaranteed to the petitioners under Article 19(1)(g) of the Constitution of India. In response to the same, the respondent has filed a detailed statement of objection and contended that the similar scheme has been successfully implemented by KBJNL, CNNL, KNNL, BWSSB and Minor Irrigation Department. Further they have categorically contended that pursuant to the tender notification issued by the 5 Corporations for 78 packages, 43 bidders have submitted 343 bids. The Apex Court in a series of decisions considered similar conditions incorporated in the tender documents and also the scope of judicial review of administrative actions. In the case of Michigan Rubber (India) Limited (supra) at paragraph 19 to 22, the Hon'ble Apex Court has considered the earlier judgment as follows:
" 19. While considering the above submissions, the three-Judge Bench held as under: (Assn. of Registration Plates case [(2005) 1 SCC 679] , SCC pp. 698-701, paras 38-40 & 43-44) "38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State 24 authorities. Unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of the class of intending tenderers under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and the State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep indigenous manufacturers out of the field. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by the Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long-term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates.
39. The notice inviting tender is open to response by all and even if one single manufacturer is ultimately selected for a region or State, it cannot be said that the State has created a monopoly of business in favour of a private party. Rule 50 permits the RTOs concerned themselves to implement the policy or to get it implemented through a selected approved manufacturer.
40. Selecting one manufacturer through a process of open competition is not creation of any monopoly, as contended, in violation of Article 19(1)(g) of the Constitution read with clause (6) of the said article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing stations within the premises of the RTO. He has to maintain the data of each plate which he would be getting from his main unit. It has to be cross-checked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs in each State and thereon linked to the whole nation. Maintenance of the record by one and supervision over its activity would be simpler for the State if there is one manufacturer instead of multi-25
manufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multi-manufacturers are involved. That would also seriously impair the high security concept in affixation of new plates on the vehicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular population and less volume of business. Multi- manufacturers might concentrate only on urban areas with higher vehicular population.
***
43. Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. Undisputedly, the legal position which has been firmly established from various decisions of this Court, cited at the Bar is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on the Government in its dealings with tenderers and contractors.
44. The grievance that the terms of notice inviting tenders in the present case virtually create a monopoly in favour of parties having foreign collaborations, is without substance. Selection of a competent contractor for assigning job of supply of a sophisticated article through an open-tender procedure, is not an act of creating monopoly, as is sought to be suggested on behalf of the petitioners. What has been argued is that the terms of the notices inviting tenders deliberately exclude domestic manufacturers and new entrepreneurs in the field. In the absence of any indication from the record that the terms and conditions were tailor-made to promote parties with foreign collaborations and to exclude indigenous manufacturers, judicial interference is uncalled for."
After observing so, this Court dismissed all the writ petitions directly filed in this Court and transferred to this Court from the High Courts.
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20. In Reliance Airport Developers (P) Ltd. v. Airports Authority of India [(2006) 10 SCC 1] this Court held that while judicial review cannot be denied in contractual matters or matters in which the Government exercises its contractual powers, such review is intended to prevent arbitrariness and must be exercised in larger public interest.
21. In Jagdish Mandal v. State of Orissa [(2007) 14 SCC 517] the following conclusion is relevant: (SCC pp. 531-32, para 22) "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 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 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: 27
(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 the 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 licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
22. The same principles have been reiterated in a recent decision of this Court in Tejas Constructions & Infrastructure (P) Ltd. v. Municipal Council, Sendhwa [(2012) 6 SCC 464] ."
In the above judgment, the Apex Court has held that certain conditions or qualifications for tenderers have to be laid down to ensure that the contractor has the capacity and resources to successfully execute the work and further held that selection of a competent contractor through a open tender process is not an act of creating a monopoly.
In the case on hand, the respondents have filed a counter and contended that the tender process involves estimation of more than 400 crores. Hence, the financial 28 stability and capacity of the tenderer is a basic requirement for effective implementation of the project by the capable tender and also the tenderer who has undertaken the work under State Government and State Government undertaking in the similar projects have successfully completed the project. Therefore, in the public interest, the respondent has incorporated such conditions in the tender notification. It is further stated that 5 Corporations have invited a tender for 78 packages. For that 43 bidders have submitted 343 bids. It is clear that it is an open-Tender procedure. It is not an act of creating monopoly. Therefore, the contention of the petitioners that the large number of tenderers has been excluded is not correct. The petitioners in W.P. No.100450/2021 are the only 4 tenderers who have registered under MSMEs and it is also very clear from the tender conditions that there is no restriction for the tenderer to purchase the pump set from the petitioners and it is only that the manufacturer has to maintain certain standard as specified in the tender condition. Therefore, the conditions incorporated by the respondent is not unreasonable or arbitrary or vitiated by legal malice. Even the similar tender 29 notification issued by Dr. Ambedkar Development Corporation was challenged before this Court in WP No.53791/2018 disposed on 22.02.2019 wherein this Court has held that the conditions are not either onerous or unreasonable or vitiate by legal malice and rejected the writ petition.
In respect of the Government Order at Annexure-Q is concerned, the Government by order dated 21.07.2020 has relaxed the condition of prior turnover and prior experience for Micro and Small enterprises for procurement of goods and equipments.
In this case, tender has been called for procuring goods, service and civil works. The definition of "Construction works, Goods and Services" as defined under Section 2 of the Karnataka Transparency in Public Procurements Act, 1999 is as under:
2. Definitions.-In this Act, unless the context otherwise requires.-
(a) "Construction Works" means putting up, demolishing, repairs or renovation of buildings, roads, bridges or other structures including fabrication of steel structures and all other civil works;
(b) "Goods" means machinery, motor vehicles, equipment, furniture, articles of stationery, 30 textiles raw materials, drugs scientific instruments, chemicals food grains, oil and oilseeds or other commodity required for consumption, use or distribution by a procurement entity in discharge of its public duties;
(f) "Services" means the action of serving, attending upon, helping or benefiting a procurement entity in the course of discharging its public duties and includes construction works;
The tender notifications Annexure-N is issued for "the work of Drilling of Irrigation Bore wells of 165MM DIA on "No Water No Money Basis" and supply, installation and Electrification (Energization) of Irrigation Submersible Pumpsets with Accessories suitable for 165MM DIA borewells under "Ganga Kalyana Scheme" for the years 2019-20 and 2020-21".
It is very clear from the tender documents that, drilling borewell and supplying, installation pump sets are covered under definition of "Goods and Service". The electrification is a civil work. As per the definition of KTPP Act "Construction Work" it includes all "civil works". The definition of "Service" means it includes construction works. Hence, the Government Order dated 21.07.2020 is applicable only to the tender for procurement to goods and equipment. 31
Under the facts and circumstances of the case, this Court finds no arbitrariness or legal malice in the incorporation of the impugned tender conditions in tender documents.
Accordingly, writ petitions are dismissed.
Sd/-
JUDGE kmv