Karnataka High Court
R Nagaraju vs The State Of Karnataka on 7 February, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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NC: 2024:KHC:5340
WP No. 497 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 497 OF 2024 (GM-TEN)
BETWEEN:
1. R NAGARAJU
S/O RAMEGOWDA,
AGED ABOUT 46 YEARS,
R/A NO.18/A, HOSMALANGI V AND P,
KOLLEGALA TALUK, CHAMARAJANAGARA
DISTRICT - 571442
2. K MALLU
S/O LATE KARAGAIAH,
AGED ABOUT 55 YEARS,
R/A: HOSAPURA, MAGURU HOBBALI,
T NARASIPURA TALUK,
HIRIYURU, MYSORE - 571124
3. C MANTHAPPA
Digitally signed S/O CHINNAPPA
by NAGAVENI AGED ABOUT 61 YEARS,
Location: HIGH R/A: KHP COLONY,
COURT OF T NARASIPURA TOWN,
KARNATAKA TIRUMAKUGALANARASIPURA,
MYSORE - 571124
4. P VENKATAREDDY
S/O P N VENKATAREDDY,
AGED ABOUT 68 YEARS,
R/A NO.144, VIVEKANANDA NAGARA,
NARASIPURA TOWN,
BYRAPUR,
MYSORE 571124
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WP No. 497 of 2024
5. M NANDISH
S/O MARISWAMY
AGED ABOUT 52 YEARS,
R/A VIVEKANANDA NAGARA,
T NARASIPURA TOWN,
BEHIND POLICE COLONY,
BYRAPURA, MYSORE - 571124
6. K SRINIVASA REDDY
S/O K VENKATA SUBBA REDDY,
AGED ABOUT 44 YEARS,
R/A NO.7, REDDY COLONY,
VIVEKANANDA NAGARA,
T NARASIPURA,
MYSORE 571124
7. K S NAGARAJA MURTHY
S/O LATE K B SHIVARUDRAPPA,
AGED ABOUT 62 YEARS,
R/A NO.134, VIVEKANANDA NAGARA ROAD,
REDDY COLONY, T NARASIPURA TOWN,
MYSORE - 571124
8. C POTI REDDY
S/O LATE C RAMI REDDY,
AGED ABOUT 58 YEARS,
R/A: VIVEKANANDA NAGARA,
WARD NO.5, T NARASIPURA TALUK,
MYSORE - 571124
9. V C BASAVANNA
S/O VADAREGOWDA,
AGED ABOUT 51 YEARS,
R/A: ALAHALLI VILLAGE POST,
KOLLEGALA TALUK, CHAMARAJANAGARA
DISTRICT - 571442
...PETITIONERS
(BY SRI. RAKSHITHA D J., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
REPRESENTED BY THE ADDITIONAL SECRETARY,
DEPARTMENT OF WATER RESOURCES,
VIKASA SOUDHA, BANGALORE - 560001
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NC: 2024:KHC:5340
WP No. 497 of 2024
2. CAUVERY NEERAVARI NIGAMA LTD.
REPRESENTED BY ITS MANAGING DIRECTOR,
ANAND RAO CIRLCE, SHESHADRI ROAD,
GANDHI NAGAR, BANGALORE - 560001
(GOVERNMENT COMPANY UNDER THE COMPANIES ACT)
3. EXECUTIVE ENGINEER
CAUVERY NEERAVARI NIGAMA LTD.,
NO.2, VCC DIVISION, MYSORE - 577 701
4. EXECUTIVE ENGINEER
CAUVERY NEERAVARI NIGAMA LTD.,
KABINI CANALS DIVISION,
NANJANGUD, MYSORE DISTRICT - 571 301
5. EXECUTIVE ENGINEER
CAUVERY NEERAVARI NIGAMA LTD.,
KRS DIVISION, KRISHNARAJASAGARA - 571 604
6. EXECUTIVE ENGINEER
CAUVERY NEERAVARI NIGAMA LTD.,
KABINI CANAL DISTRIBUTARY DIVISION,
T NARASIPURA - 571 124
7. THE STATE OF KARNATAKA
REPRESENTED BY THE PRINCIPAL SECRETARY, PUBLIC
WORKS DEPARTMENT
VIKASA SOUDHA,
BANGALORE - 560001
...RESPONDENTS
(BY SRI. SPOORTHY HEGDE, HCGP FOR R1 AND R7;
SRI. SANDESH J. CHOUTA, SENIOR ADV. FOR
SRI. K.S.BHEEMAIAH, ADV. FOR R2 TO R6)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO CALL FOR THE ENTIRE
RECORDS LEADING TO THE NOTIFICATIONS DATED 21/12/2023 AND
a) QUASH i) CCNL NO.2 VCC DIV MYSORE BEARING NO.CNNL/2023-
24/CN/WORK_INDENT575 (ANNEXURE-E). ii) CCNL NO.2 VCC DIV
MYSORE BEARING NO.CNNL/2023-24/CN/WORK_INDENT618
(ANNEXURE-E1). iii) CCNL NO.2 VCC DIV MYSORE BEARING NO.
CNNL/2023-24/CN/WORK_INDENT566 (ANNEXURE-E2). iv)CCNL
NO.2 VCC DIV MYSORE BEARING NO.CNNL/2023-
24/CN/WORK_INDENT621 (ANNEXURE-E3).v) CCNL NO. 2 VCC DIV
MYSORE BEARING NO. CNNL/2023-24/CN/WORK_INDENT573
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WP No. 497 of 2024
(ANNEXURE-E4). vi) CCNL NO. 2 VCC DIV MYSORE BEARING NO.
CNNL/2023-24/CN/WORK_INDENT616 (ANNEXURE-E5). vii) CCNL
NO.2 VCC DIV MYSORE BEARING NO.CNNL/2023-
24/CN/WORK_INDENT617 (ANNEXURE-E6). viii) CCNL KC
DIVNANJUNGUD BEARING NO.CNNL/2023-24/RD/WORK_INDENT702
(ANNEXURE-E7). ix) CCNL KC DIVNANJUNGUD BEARING
NO.CNNL/2023-24/OW/WORK_INDENT622 (ANNEXURE-E8). x) CCNL
KC DIVNANJUNGUD BEARING NO.CNNL/2023-24/OW/WORK_
INDENT620 (ANNEXURE-E9). xi) CCNL KC DIVNANJUNGUD BEARING
NO.CNNL/2023-24/OW/WORK_INDENT623 (ANNEXURE-E10).
xii) CCNL KC DIVNANJUNGUD BEARING NO.CNNL/2023-
24/CN/WORK_INDENT619 (ANNEXURE-E11). xiii)CCNL KC
DIVNANJUNGUD BEARING NO.CNNL/2023-24/OW/WORK_
INDENT614 (ANNEXURE-E12). xiv) CCNL KC DIVNANJUNGUD
BEARING NO.CNNL/2023-24/OW/WORK_INDENT624 (ANNEXURE-
E13). xv) CCNL KC DIVNANJUNGUD BEARING NO.CNNL/2023-
24/OW/WORK_INDENT678 (ANNEXURE-E14). xvi)CCNL KC
DIVNANJUNGUD BEARING NO.CNNL/2023-24/RD/WORK_INDENT651
(ANNEXURE-E10). xvii) CCNL KRS DIV KR SAGAR BEARING NO.
CNNL/2023-24/IW/WORK_INDENT633 (ANNEXURE-E16). xviii) CCNL
KRS DIV KR SAGAR BEARING NO.CNNL/2023-
24/IW/WORK_INDENT632 (ANNEXURE-E17). xix) CCNL KRS DIV KR
SAGAR BEARING NO.CNNL/2023-24/IW/WORK_INDENT630
(ANNEXURE-E18). xx) CCNL KRS DIV KR SAGAR BEARING NO.
CNNL/2023-24/IW/WORK_INDENT641 (ANNEXURE-E19). xxi) CCNL
KRS DIV KR SAGAR BEARING NO.CNNL/2023-
24/IW/WORK_INDENT602 (ANNEXURE-E20). xxii) CCNL KCD DIV T
NARSIPUR BEARING NO.CNNL/2023-24/IW/WORK_INDENT703
(ANNEXURE-E21). xxiii) CCNL KCD DIV T NARSIPUR BEARING NO.
CNNL/2023-24/IW/WORK_INDENT637 (ANNEXURE-E22) AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioners are before this Court calling in question the tender notifications issued in respect of 28 tenders and has sought certain consequential relief.
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2. Heard Smt.Rakshitha D.J., appearing for the petitioners, the learned Senior counsel Sri. Sandesh J. Chouta, representing respondent Nos.2 to 6 and the learned High Court Government Pleader, Sri.Spoorthy Hedge, appearing for respondent Nos.1 and 7.
3. The facts, adumbrated are as follows:
The petitioners claim to be a Class-I license contractors in the business of performing the work, for which the contract is now called. It is the case of the petitioners that the second respondent - Cauvery Neeravari Nigama Limited has notified tender packages on the Karnataka Public Procurement Portal in each division by way of separate notifications. The petitioners have now rushed to this Court calling in question the very act of calling the tender by way of packages, which according to the averments in the petition causes great prejudice to them.
It is the case of the petitioners that the tenders to which the Scheduled Caste and Scheduled Tribe can participate are called individually and the other tenders are called by way of -6- NC: 2024:KHC:5340 WP No. 497 of 2024 packages. It is therefore they have rushed to this Court on the last day of submission of bids on the said tenders.
4. The learned counsel appearing for the petitioners would contend in vehemence that the second respondent has practiced discrimination, as those tenders which are meant for Scheduled caste and Scheduled Tribe are called individually or they are individual tenders and the other tenders are package system. She would submit that the State Contractors Association has explained by way of plethora of representations, as to why the package system will kill the small tenderers like the petitioners. It is the further case that the State Government is also of the opinion that the package system should be abolished. It is the contention that the package system notified for the subject tender has denied participation of these petitioners in the tender.
5. Per contra, the learned Senior counsel Sri.Sandesh J. Chouta would refute the submissions of the learned counsel for the petitioners contending that all the contentions that the petitioners seek to urge cannot be -7- NC: 2024:KHC:5340 WP No. 497 of 2024 considered, as the petitioners have not participated in the tender. Not participating in the tender, the petitioners cannot challenge any condition of the tender. The learned Senior counsel would place reliance upon several judgment of this Court, which would bear consideration during the course of the order. He would further contend that it is for the tender inviting Authority to choose its method of calling for tenders and not for the petitioners to seek the conditions to be in the manner that it would suite their need.
6. The learned counsel appearing for the petitioners would again contend that if the petitioners participate in the tender, they cannot turn around and challenge and if it is that, they does not participate in the tender, they cannot challenge, will leave them high and dry, as they are estopped from challenging. If they participate, cannot challenge, if they does not, will give arbitrary power to the tender inviting Authority to keep out few tenderers.
7. I have given my anxious consideration to the contentions of respective learned counsel and have perused the material on record.
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8. The afore-narrated facts are not in dispute. The threshold issue that falls for consideration is whether the petitioners can raise a challenge to the conditions of the tender having stayed outside the tender, which would mean whether the petitioners have locus to challenge to tender. The facts are afore-narrated. The issue lies in a narrow compass, which need not detain this Court for long or delve deep into the matter, as this has been considered by this Court, in the Apex Court and several other Courts.
This Court in the case of M/s Sri Nanjundeshwara Traders vs. Karnataka Food and Civil Supplies Corporation Limited1, has held as follows:
9. The Apex Court in the case of NATIONAL HIGHWAYS AUTHORITY OF INDIA v. GWALIOR JHANSI EXPRESSWAY LIMITED reported in (2018) 8 SCC 243 considering this issue, has held as follows:
"20. While considering the relief claimed by the respondent (claimant), the same should have been tested on the touchstone of the principle governing the tender process, especially when the validity of the tender document has not been put in issue or 1 W.P.No.28465/2023 DD.05.01.2024 -9- NC: 2024:KHC:5340 WP No. 497 of 2024 challenged before any competent forum. Going by the terms and conditions in the tender documents, as already alluded to in para 10 above, there is no title of doubt that the right of the claimant (respondent) to match the bid of L-1 or to exercise ROFR would come into play only if the respondent was to participate in the tender process pursuant to the notice inviting tenders from the interested parties. The objective of tender process is not only to adhere to a transparent mechanism but to encourage competition and give equal opportunity to all tenderers with the end result of getting a fair offer or value for money. The plain wording of the eligibility clause in the tender documents and the incidental stipulations make it explicit that the respondent was required to participate in the tender process by submitting its sealed bid (technical and financial). The fact that a deeming clause has been provided in the tender document that if the respondent was to participate in the bidding process, it shall be deemed to fulfill all the requirements of the tender Clauses 3 to 6 of RFP, being the existing concessionaire of the project, does not exempt the respondent from participating in the tender process; rather the tenor of the terms of the documents made it obligatory for the respondent to participate in the tender process to be considered as a responsive bidder, along with others. Having failed to participate in the tender process and, more so, despite the express terms in the tender documents, validity whereof has not been challenged, the respondent cannot be heard to contend that it had acquired any right whatsoever. Only the entities who participate in the tender process pursuant to a tender notice can be allowed to make grievances about the non-fulfillment or breach of any of the terms and conditions of the tender documents concerned. The respondent who chose to stay away from the tender process, cannot be heard to whittle down, in any manner, the rights of the eligible bidders who had participated in the tender process on the basis of the written and express terms and conditions. At the
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NC: 2024:KHC:5340 WP No. 497 of 2024 culmination of the tender process, if the respondent had not participated, in law, the offer submitted by the eligible bidders is required to be considered on the basis of the stated terms and conditions. Thus, if the claim of the respondent was to be strictly adjudged on the basis of the terms and conditions specified in the subject tender document, the respondent has no case whatsoever."
(Emphasis supplied) The judgment of the Apex Court has been followed by the Division Bench of the High Court of Calcutta in the case of SUBIR GHOSH v. STATE OF WEST BENGAL AND OTHERS reported in 2020 SCC OnLine Cal 2213. The Division Bench of the High Court of Calcutta also considers the fact that a tenderer who participates in the pre-bid meeting ought to have submitted his tender along with the documents to raise a challenge to the tender or the tender conditions at the later point in time. "
The Apex Court, in the later judgment, in the case of Airport Authority of India vs. Centre for Aviation Policy, Safety & Research (CAPSR) & Others, has held as follows:
25. We have heard learned counsel for the respective parties at length.
26. At the outset, it is required to be noted that respondent No. 1 claiming to be a non-profit organisation carrying out research, advisory and advocacy in the field of civil aviation had filed a writ
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NC: 2024:KHC:5340 WP No. 497 of 2024 petition challenging the tender conditions in the respective RFPs. It is required to be noted that none of the GHAs who participated in the tender process and/or could have participated in the tender process have challenged the tender conditions. It is required to be noted that the writ petition before the High Court was not in the nature of Public Interest Litigation. In that view of the matter, it is not appreciable how respondent No. 1 - original writ petitioner being an NGO would have any locus standi to maintain the writ petition challenging the tender conditions in the respective RFPs. Respondent No. 1 cannot be said to be an "aggrieved party". Therefore, in the present case, the High Court has erred in entertaining the writ petition at the instance of respondent No. 1, challenging the eligibility criteria/tender conditions mentioned in the respective RFPs. The High Court ought to have dismissed the writ petition on the ground of locus standi of respondent No. 1 - original writ petitioner to maintain the writ petition.
27. Even otherwise, even on merits also, the High Court has erred in quashing and setting aside the eligibility criteria/tender conditions mentioned in the respective RFPs, while exercising the powers under Article 226 of the Constitution of India. As per the settled position of law, the terms and conditions of the Invitation to Tender are within the domain of the tenderer/tender making authority and are not open to judicial scrutiny, unless they are arbitrary, discriminatory or mala fide. As per the settled position of law, the terms of the Invitation to Tender are not open to judicial scrutiny, the same being in the realm of contract. The Government/tenderer/tender making authority must have a free hand in setting the terms of the tender."
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NC: 2024:KHC:5340 WP No. 497 of 2024 This Court, in the case of Mahalakshmi Engineering Works vs. Bangalore Electricity Supply Company Limited2, has followed the aforesaid judgment of the Apex Court and that of the Calcutta High Court and has held that a tenderer, who stays outside the tender cannot challenge the conditions of tender.
9. The other contention of the learned counsel for the petitioners is that the packaging system forms the tender only to suite certain tenderers or is tailor made to help certain tenderers. The contention is again unacceptable. As unless the petitioners demonstrate arbitrariness in the action of the respondent qua the tender conditions, entertainment of such submission under Article 226 of the Constitution of India, becomes unacceptable. It becomes opposite to refer to the three judge Bench Judgment of the Apex Court in the case of Tata Motors Limited vs. Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others3, wherein it has held has follows:
48. This Court being the guardian of fundamental rights is duty-bound to interfere when 2 W.P.No.17266/2022 DD.09.11.2022 3 2023 SCC Online SC 671
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NC: 2024:KHC:5340 WP No. 497 of 2024 there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. (See: Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489).
...... ...... ......
51. We are of the view that the High Court should have been a bit slow and circumspect in reversing the action of BEST permitting EVEY to submit a revised Annexure Y. We are of the view that the BEST committed no error or cannot be held guilty of
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NC: 2024:KHC:5340 WP No. 497 of 2024 favoritism, etc. in allowing EVEY to submit a revised Annexure Y as the earlier one was incorrect on account of a clerical error. This exercise itself was not sufficient to declare the entire bid offered by EVEY as unlawful or illegal.
52. Ordinarily, a writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out. The court ordinarily should not interfere in matters relating to tender or contract. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh tender notice, should be one of the guiding factors that the Court should keep in mind. This is evident from a three-Judge Bench decision of this Court in Association of Registration Plates v. Union of India, reported in (2005) 1 SCC 679.
53. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617 and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that 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
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NC: 2024:KHC:5340 WP No. 497 of 2024 exercise its discretionary powers 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 interfere.
54. As observed by this Court in Jagdish Mandal v. State of Orissa, reported in (2007) 14 SCC 517, that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes."
10. The Apex Court in the afore-extracted judgment considers the entire spectrum of the law with regard to interference in tender/contractual matters. The Apex Court holds that the tender inviting Authority is at liberty to choose its own method and the only permissible judicial review would be in the decision making process. The decision making process in the case at hand cannot be challenged by the
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NC: 2024:KHC:5340 WP No. 497 of 2024 petitioners, as the petitioners have not even participated in the tender. Despite the vehement efforts and submission of the learned counsel for the petitioners, the petition is sans entertainment.
11. For the aforesaid reasons, the writ petition stands rejected.
Sd/-
JUDGE KG List No.: 1 Sl No.: 45