Karnataka High Court
M/S Bannari Constructions vs Karnataka Soaps And Detergents Limited on 13 February, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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WP No. 2400 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 2400 OF 2024 (GM-TEN)
BETWEEN:
1. M/S. BANNARI CONSTRUCTIONS,
NO.4, GIRIDARSHINI LAYOUT,
T. NARASIPURA ROAD,
MYSORE - 570 011.
REPRESENTED BY ITS MANAGING PARTNER,
SRI. RAJU GOWDA,
AGED ABOUT 53 YEARS,
S/O. LATE M.K. CHIKKMARIGOWDA.
2. M/S CHEMIXIL CORPORATION,
NO.109, SHRESHTA BHUMI COMPLEX,
K.R. ROAD,
BENGALURU - 560 004.
REPRESENTED BY ITS MANAGING PARTNER,
Digitally signed by SRI. B.S. GURURAJ,
NAGAVENI AGED ABOUT 72 YEARS,
Location: HIGH
COURT OF S/O LATE M.K. SRINIVAS MURTHY.
KARNATAKA
3. M/S DELICIA CHEMICALS,
NO.19, Ist FLOOR, 5th MAIN, 4th CROSS,
CHAMRAJAPETE,
BENGALURU - 560 018
REPRESENTED BY ITS MANAGING PARTNER,
SRI. T.A. SRINIVASA MURTHY,
AGED ABOUT 76 YEARS,
S/O ASHWATHANARAYAN.
...PETITIONERS
(BY SMT. DEEPASHREE, ADVOCATE)
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WP No. 2400 of 2024
AND:
1. KARNATAKA SOAPS AND DETERGENTS LIMITED,
NO.27 INDUSTRIAL SUBURB,
BENGALURU - PUNE HIGHWAY,
BENGALURU - 560 055.
REPRESENTED BY ITS MANAGING DIRECTOR.
2. THE DEPUTY GENERAL MANAGER,
KARNATAKA SOAPS AND DETERGENTS LIMITED,
NO.27 INDUSTRIAL SUBURB,
BENGALURU-PUNE HIGHWAY,
BENGALURU - 560 055.
...RESPONDENTS
(BY SRI. GANGADHAR R. GURUMATH, SENIOR ADVOCATE A/W
SMT. MANJULA D., ADVOCATE)
THIS WP IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE TERMS OF
TECHNICAL BID AT CLAUSE SLNO.6B IN ANNEXURE-E AND THE
FURTHER AMENDMENT TO THE SAME IN ANNEXURE-H AND
FURTHER AMENDMENT TO THE SAME ANNEXURE-L FOR
TENDERS DATED:13.12.2024 PROCUREMENT NO.S KSDL/2023-
24/IND0099 KSDL/2023-24/IND0100, KSDL/2023-
24/IND0101, KSDL/2023-24/IND0102, KSDL/2023-
24/IND0103, KSDL/2023-24/IND0104, KSDL/2023-24/IN0105,
AND KSDL/2023-24/IND0106 FOR TENDERS
DATED:14.12.2023 PROCUREMENT NUMBERS KSDL/2023-
24/INDO107, KSDL/2023-24/INDO108,KSDL/2023-
24/INDO109, KSDL/2023-24/INDO110, KSDL/2023-
24/INDO111, KSDL/2023-24/INDO112, KSDL/2023-
24/INDO113, KSDL/2023-24/INDO114,KSDL/2023-
24/INDO115, KSDL/2023-24/INDO116, AND KSDL/2023-
24/INDO117, AND ALSO CLAUSE SL NO. 12 OF TECHNICAL
BID PRODUCED AT ANNEXURE-E1 FOR PROCUREMENT OF
SANDALWOOD OIL TENDER PROCUREMENT NUMBER
KSDL/2023-24/IND0310 DATED:03.01.2024 AS
UNREASONABLE ARBITRARY VIOLATIVE OF TRANSPARENCY
LAW AND ALSO VIOLATIVE ARTICLE 14 OF THE CONSTITUTION
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WP No. 2400 of 2024
OF INDIA AND DOES NOT PROVIDE EQUAL OPPORTUNITY AND
ETC.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
The petitioners are before this Court calling in question a Notice Inviting Tender ('the NIT' for short) notified for the purpose of procurement of perfumeries by the respondents-
Karnataka Soaps and Detergent limited (hereinafter referred to as 'the company' for short). The challenge is to the condition stipulated therein.
2. Heard Smt. Deepashree, learned counsel appearing for the petitioners and Sri. Gangadhar R. Gurumath, learned Senior counsel appearing for the respondents.
3. Facts in brief, germane, are as follows:
The first petitioner claims to be a partnership concern and in the business of marketing petrochemicals and aromatic essential oils. The second petitioner is also a partnership concern in the same business and a leading importer of aromatic, specialty chemicals for various segments in -4- NC: 2024:KHC:6032 WP No. 2400 of 2024 perfumery houses and the third petitioner also follows suit by describing it to be major distributors for Di-Ethyl Phathalate, a solvent widely used in agarbathis and soap industries and claims to be supplying the same all over the south of the nation.
4. The issue in the lis does not concern the credentials of the petitioners. The first respondent-company issues a NIT for procurement of goods - perfumeries and chemicals. The Tender Inviting Authority is the second respondent. It is a two cover tender in terms of the Karnataka Transparency in Public Procurements Act, 1999 ('the Act' for short). The tender was called for financial year 2024-25. The tender was for the purpose of procurement of perfumery in the A list inter alia.
The petitioners claim to have been supplying perfumeries in the past for the last 25 years. The tender document, for the subject year, undergoes some change after the pre-bid meeting. This change is said to be taking away the right of the petitioners to participate in the tender itself. It is therefore, the petitioners challenge the conditions of tender. This Court, in order to preserve the rights of the petitioners had permitted -5- NC: 2024:KHC:6032 WP No. 2400 of 2024 them to participate in the tender and had restrained the respondent-Company from issuing any work order during the pendency of the petition. The respondent-Company has now preferred an application seeking vacation of the interim order, therefore, with the consent of the parties, the matter is heard.
5. The learned counsel Smt. Deepashree appearing for the petitioners relying on the documents appended to the petition seeks to demonstrate that the tender condition that was subsisting hitherto, as also in the subject tender is sought to be tinkered after the pre-bid meeting. Earlier, if any tenderer would supply one of the items in the tender, he could participate for procurement of any of the items. It is now restricted, as the condition of tender is one should have 5 years experience in procuring and supplying 'A' list of perfumery items and this is made applicable to manufacturers. It is therefore, she would submit that this Court should interfere in such cases where it takes away the participation of all other tenderers on the score that it would be violative of Article 14 of the Constitution of India.
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6. Per contra, the learned Senior counsel Sri. Gangadhar R. Gurumath representing the Company would submit that the Company had to follow the Government Order, that was notified in the year 2020. For the last 2 years, it was a mistake on the part of the Company for not having followed the Government Order and the conditions stipulated therein. He would submit that the tender document and the impugned conditions are strictly in consonance with the Government Order/Circular dated 21.07.2020.
7. Learned senior counsel would further submit that the petitioners in effect is contending that the tender conditions should be made to suit the experience or criteria that the petitioners possess which cannot be done and this Court in exercise of its jurisdiction under Article 226 of the Constitution of India would not interfere qua the tender conditions that are imposed by the tenderer, as it is for the Tender Inviting Authority to impose such condition suiting their requirement.
8. I have given my anxious consideration to the respective submissions made by the learned counsel appearing -7- NC: 2024:KHC:6032 WP No. 2400 of 2024 for the petitioner and the learned Senior counsel appearing for the respondents and have perused the material on record.
9. The afore-narrated facts are not in dispute. Before embarking upon the consideration of the issue projected in the lis, I deem it appropriate to notice the line of law qua interference at the hands of this Court in matters of tender/contract. A three Judge Bench of the Apex Court in the case of TATA CELLULAR v. UNION OF INDIA1 has held as follows:
"94. The principles deducible from the above are:
(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 1 (1994) 6 SCC 651 -8- NC: 2024:KHC:6032 WP No. 2400 of 2024 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.
(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 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.
Based on these principles we will examine the facts of this case since they commend to us as the correct principles.
(Emphasis supplied) In a subsequent judgment, the Apex court in the case of MICHIGAN RUBBER v. STATE OF KARNATAKA2 has held as follows:
"23. From the above decisions, the following principles emerge:
(a) The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence 2 (2012) 8 SCC 216 -9- NC: 2024:KHC:6032 WP No. 2400 of 2024 and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) Fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited;
(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted;
(d) 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; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government.
24. 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
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NC: 2024:KHC:6032 WP No. 2400 of 2024 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"? and
(ii) Whether the public interest is affected?
If the answers to the above questions are in the negative, then there should be no interference under Article 226."
(Emphasis supplied) Both the aforesaid judgments of the Apex Court lay down the parameters of interference in contractual and commercial activities of the State. The Apex Court, in TATA CELLULAR holds that it is only in the circumstances, as obtaining in the aforesaid paragraphs, remains the domain of judicial review on administrative action qua contract or commercial wisdom. The Apex Court holds that the Court does not have the expertise to correct any administrative decision, unless it is suffering from the vice of arbitrariness, bias or action that is mala fide. The Apex Court in the case of MICHIGAN RUBBER reiterated those principles in the afore-quoted paragraphs of the said judgment. The Apex Court holds that fixation value, commercial decisions pre-conditions or qualification for tenderers should not be interfered with, unless it is palpably or demonstrably
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NC: 2024:KHC:6032 WP No. 2400 of 2024 arbitrary. The principles laid down in the aforesaid judgments are again reiterated by the Apex Court, in two of its later judgments. The Apex Court in TATA MOTORS LIMITED v.
BRIHAN MUMBAI ELECTRIC SUPPLY AND TRANSPORT UNDERTAKING3 has held as follows:
"48. This Court being the guardian of fundamental rights is duty-bound to interfere when 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 3 2023 SCC OnLine SC 671
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NC: 2024:KHC:6032 WP No. 2400 of 2024 to the public exchequer. (See : Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489)
49. It is not in dispute that the first and the foremost requirement of the Tender was the prescribed operating range of the single decker buses which would operate for around and average of 200 Kms in a single charge in "actual conditions" with 80% SoC without any interruption. Then materials on record would indicate that the TATA Motors in its bid deviated from this requirement and had informed BEST that it could carry the operating range in the "standard test conditions" which was not in accordance with the Tender conditions. The High Court has rightly observed in its impugned judgment that the bid of the TATA Motors failed to comply with the said clause. TATA Motors deviated from the material and the essential term of the Tender. It may not be out of place to state at this stage that it is only TATA Motors who deviated from the condition referred to above. However, we are of the view that the High Court having once declared TATA Motors as "non-responsive" and having stood disqualified from the Tender process should not have entered into the fray of investigating into the decision of BEST to declare EVEY as the eligible bidder. We are saying so because the High Court was not exercising its writ jurisdiction in public interest. The High Court looked into a petition filed by a party trying to assert its own rights. As held by this Court in Raunaq International Ltd. (supra), that grant of judicial relief at the instance of a party which does not fulfil the requisite criteria is something which could be termed as misplaced. In Raunaq International Ltd. (supra), this Court observed as under:
"27. In the present case, however, the relaxation was permissible under the terms of the tender. The relaxation which the Board has granted to M/s. Raunaq International Ltd. is on valid principles looking to the expertise of the tenderer and his past experience although it does not exactly tally with the prescribed criteria. What is more relevant, M/s. I.V.R. Construction Ltd. who have challenged this award of tender themselves do not fulfil the requisite criteria. They do not possess the prescribed experience qualification. Therefore, any judicial relief at
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NC: 2024:KHC:6032 WP No. 2400 of 2024 the instance of a party which does not fulfil the requisite criteria seems to be misplaced. Even if the criteria can be relaxed both for M/s. Raunaq International Ltd. and M/s. I.V.R. Construction Ltd., it is clear that the offer of M/s. Raunaq International Ltd. is lower and it is on this ground that the Board has accepted the offer of M/s. Raunaq International Ltd. We fail to see how the award of tender can be stayed at the instance of a party which does not fulfil the requisite criteria itself and whose offer is higher than the offer which has been accepted. It is also obvious that by stopping the performance of the contract so awarded, there is a major detriment to the public because the construction of two thermal power units, each of 210 MW, is held up on account of this dispute. Shortages of power have become notorious. They also seriously affect industrial development and the resulting job opportunities for a large number of people. In the present case, there is no overwhelming public interest in stopping the project. There is no allegation whatsoever of any mala fides or collateral reasons for granting the contract to M/s. Raunaq International Ltd."
(Emphasis supplied)
50. We take notice of the fact that Annexure Y was originally required to be submitted by the "Successful Bidder"
after the evaluation of the bid and the same did not figure in the list of documents and annexures to be included in the technical submissions, as provided under Clause 5.1.1 of Schedule II of the Tender. Further the format provided for Annexure Y in the Tender documents in its heading states that the "Successful Bidders shall upload a Letter of Undertaking on their letter head as below". Therefore, we are of the view that the restriction on revision of documents under Clause 16 of Schedule I, which states, "No addition/correction, submission of documents will be allowed after opening of technical bid," is only limited to the documents necessary to be included in the technical bid and would not be applicable to any such document which does not form a part of the technical bid.
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
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NC: 2024:KHC:6032 WP No. 2400 of 2024 held guilty of 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 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.
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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."
(Emphasis supplied) Subsequent to the said judgment, the Apex Court in JAIPUR VIDYUT VITRAN NIGAM LIMITED v. M.B.POWER (MADHYA PRADESH) LIMITED4 has held as follows:
"144. In any case, we find that the High Court was not justified in issuing the mandamus in the nature which it has issued. This Court in the case of Air India Ltd. v. Cochin International Airport Ltd. has observed thus:
"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 Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489], Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India [(1981) 1 SCC 568], CCE v. Dunlop India Ltd. [(1985) 1 SCC 260 : 1985 SCC (Tax) 75], Tata Cellular v. Union of India [(1994) 6 SCC 651], Ramniklal N. Bhutta v. State of Maharashtra [(1997) 1 SCC 134] and Raunaq International Ltd. v. I.V.R. Construction Ltd. [(1999) 1 SCC 492] The award of 4 2024 SCC OnLine SC 26
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NC: 2024:KHC:6032 WP No. 2400 of 2024 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 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."
145. It could thus be seen that this Court has held that 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 paramount are commercial considerations. It has been held that the
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NC: 2024:KHC:6032 WP No. 2400 of 2024 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 has further been held that the State can enter into negotiations before finally deciding to accept one of the offers made to it. It has further been held that, price need not always be the sole criterion for awarding a contract. It has been held that the State may not accept the offer even though it happens to be the highest or the lowest. However, 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. It has further been held that even when some defect has been 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.
146. As has been held by this Court in the case of Tata Cellular (supra), the Court is not only concerned with the merits of the decision but also with the decision- making process. Unless the Court finds that the decision- making process is vitiated by arbitrariness, mala fides, irrationality, it will not be permissible for the Court to interfere with the same.
147. In the present case, the decision-making process, as adopted by the BEC was totally in conformity with the principles laid down by this Court from time to time. The BEC after considering the competitive rates offered in the bidding process in various States came to a conclusion that the rates quoted by SKS Power (L-5 bidder) were not market aligned. The said decision has been approved by the State Commission. Since the decision- making process adopted by the BEC, which has been
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NC: 2024:KHC:6032 WP No. 2400 of 2024 approved by the State Commission, was in accordance with the law laid down by this Court, the same ought not to have been interfered with by the learned APTEL.
148. In any case, the High Court, by the impugned judgment and order, could not have issued a mandamus to the instrumentalities of the State to enter into a contract, which was totally harmful to the public interest. Inasmuch as, if the power/electricity is to be procured by the procurers at the rates quoted by the respondent No. 1-MB Power, which is even higher than the rates quoted by the SKS Power (L-5 bidder), then the State would have been required to bear financial burden in thousands of crore rupees, which would have, in turn, passed on to the consumers. As such, we are of the considered view that the mandamus issued by the Court is issued by failing to take into consideration the larger consumers' interest and the consequential public interest. We are, therefore, of the view that the impugned judgment and order passed by the High Court is not sustainable in law and deserves to be quashed and set aside."
(Emphasis supplied) What would unmistakably emerge from the law elucidated by the Apex Court is, that this Court would not interfere in any contract/tender unless it is palpably or demonstrably arbitrary.
It is on the touchstone of the aforesaid principles the facts in the case at hand are required to be noticed.
10. The tender notification comes about on 13.12.2023 and 14.12.2023. A pre-bid meeting is called with the intending tenderers on 28.12.2023. After the pre-bid meeting, certain
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NC: 2024:KHC:6032 WP No. 2400 of 2024 clauses of the tender undergo a change. The justification is, that the change had to be undertaken to bring the tender in tune with a Government Order dated 21.07.2020. It therefore becomes necessary to notice the technical bid format and it reads as follows:
Technical Bid Format Sl.No. Particulars Information to be furnished
6. A. The average annual financial turnover of the tenderer should be usually not less than estimated cost of the quantity in the tender document (It will be 50% of the estimated cost of the quantity with respect to Micro & Small Enterprises) during the last 3 preceding financial years (last 2 preceding financial years with respect to Micro & Small Enterprises) ending on the relevant financial year.
B. As per GO circular dated
21.07.2020, the bidder as a
manufacturer should have supplied the quantity usually not less than 80% of the requirement i.e.26,400 Kgs of the quantity in any one of the last preceeding 3 years and 40% in respect of MSE in any one of the preceding two years i.e., 13200 Kgs in case of MSE.
As per KG 2 the tenderer, as Authorized representative must have supplied satisfactorily at least average 30% (9900 Kgs) of the quantity similar to the type specified in the Schedule of requirements in preceeding last three years.
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NC: 2024:KHC:6032 WP No. 2400 of 2024 Sub-Clause B of Clause 6 supra is what has become the bone of contention. This is said to be in tune with Government Circular dated 21.07.2020. It mandates that a manufacturer should have supplied the quantity not less than 40% of the requirement of the particular quantityfor the last 3 years. After the pre-bid meeting an amendment comes about to the aforesaid condition. The amendment reads as follows:
"4. For Perfumery 'A' Class Items, the quantity supplies are relaxed for up to 5 years instead of 3 years for Traders/Authorized representatives and the same is maintained for Manufacturer and MSE as well."
The altered condition is that for perfumery-A class items, the quantity supplies are relaxed upto 5 years instead of 3 years. This was not restricted to suppliers but even to manufacturers and MSME as well. This is a tender condition that the tender inviting authority wants as per their requirement. Perfumery 'A' class items is said to be niche products and therefore, the ingredients to such products is wanting to be of good quality. It is ununderstandable as to how this demand for quality can be termed to be arbitrary or
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NC: 2024:KHC:6032 WP No. 2400 of 2024 wanting to suit particular tenderers. If the petitioners are not eligible in terms of the tender conditions, it cannot be said that the tender conditions are bad.
11. The defence of the learned senior counsel for the respondents become completely acceptanble as they are now wanting to follow the Government Order as the Government Order dated 21.07.2020 directs that the order should be followed in every tender invited for procurement of goods and equipments. Therefore, they are standard tender clauses to be present in any tender. The relevant clause of the Government Order reads as follows:
"Government Order No.FD 908 Exp-12/2019 Bengaluru Dated:21-07-2020 Under the circumstances explained in the preamble, for the tender invited for the procurement of Goods and Equipments, the following clauses of the Standard Tender Documents for procurement of Goods and Equipments as prescribed in Government Order Dated:06-08-2005 are modified to the extent noted below:"
12. It is not even the case of the petitioners that the Government Orders notified from time to time are not applicable to the petitioners, they are applicable, as it is a
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NC: 2024:KHC:6032 WP No. 2400 of 2024 Government Company. It is trite that a tenderer cannot seek the conditions of tender to suit their eligibility.
13. Finding no merit in the petition, the petition stands rejected.
Interim order of any kind granted and subsisting as on date shall stands dissolved.
Sd/-
JUDGE SJK List No.: 1 Sl No.: 24 CTT:SNN