M/S Sri Siddarameshwar Enterprises vs The State Of Karnataka on 29 April, 2025

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Karnataka High Court

M/S Sri Siddarameshwar Enterprises vs The State Of Karnataka on 29 April, 2025

SRI D.R.RAVISHANKAR, SR. ADVOCATE A/W., SRI K.V.PRABHAKAR GOWDA, ADVOCATE FOR IMPLEADING APPLICANT IN IA 2/2025) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO 1. CALL FOR THE ENTIRE RECORDS FROM THE RESPONDENT NO.2- THE MANAGING DIRECTOR, KARNATAKA STATE MEDICAL SUPPLIES CORPORATION LTD. (KSMSCL), IN RESPECT OF THE TENDER CALLED OUT FOR SUPPLY AND INSTALLATION OF N.S.T MACHINE UNDER MATERNAL HEALTH PROGRAM FOR THE YEAR 2024-2025, VIDE TENDER NOTIFICATION NO. KSMSCL/EQPT/HFW/MH/ NST/TND/22/2024-25 (E-138401), DATED 25-11-2024, WHICH IS AT ANNEXURE B AND 2. QUASHING THE TENDER NOTIFICATION ISSUED BY THE RESPONDENT NO.2 FOR SUPPLY AND INSTALLATION OF N.S.T. MACHINE UNDER MATERNAL HEALTH PROGRAM FOR THE YEAR 2024-25, VIDE TENDER NOTIFICATION NO.KSMSCL/EQPT/HFW/MH/NST/TND/22/2024-25 (E-138401), DATED 25-11-2024, WHICH IS AT ANNEXURE - B AND ETC., THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 18.03.2025, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA CAV ORDER The petitioner calls in question a tender notification dated 25-11-2024 and seeks a consequential mandamus directing the 2nd respondent to call for fresh tender.

2. Heard Sri Harshavardhan, learned counsel appearing for the petitioner, Sri Shamanth Naik, learned High Court Government Pleader appearing for respondent No.1 and Sri D.R. Ravishankar, learned senior counsel appearing for impleading applicant in I.A.2 of 2025.

3. Facts, in brief, germane are as follows:-

The petitioner is said to be partnership firm and is also a dealer running business of supply of medicines and medical equipment's and is said to have supplied pursuant to several tender notifications issued by Government to Government institutions for the last 12 years. The 2nd respondent/Karnataka State Medical Supplies Corporation Limited ('the Corporation' for short) issued a 4 notice inviting tender on 25-11-2024 for supply and installation of NST Machine with ECG Extraction Technology along with Ultrasound based Technology under Maternal Health Programme for the year 2024-25. The petitioner participates in the said tender by submitting all the documents as required under the tender notification. The petitioner is not qualified technically. It is therefore, before this Court in the subject petition. During the pendency of the petition, it appears the impleading applicant has been awarded the contract and, therefore, this Court had directed maintenance of status quo, qua the tender. The matter is heard at that stage.

4. The learned counsel for the petitioner would project contradictory terms in the tender notification qua corrigendum so issued on 26-12-2024. It is his submission that the corrigendum and the tender conditions contradict each other. Therefore, seeks issuance of fresh tender notification with complete clarity.

5. Per contra, the learned High Court Government Pleader would refute the submissions in contending that the petitioner did 5 not qualify to participate in the tender as he did not have CDSCO certificate which is mandatory for any supplier to supply under the particular scheme. It cannot consider itself to be L1 as well as it did not have a turn over of ₹13/- crores as is required. Even if it is considered to be MSME, its annual turnover does not cross ₹6.5 crores, which is necessary for an MSME. He would contend that the petitioner not having the certificate cannot be given any contract of supply, as it runs counter to law.

6. The impleading applicant which has now emerged as the lowest bidder has filed an impleading application. The learned senior counsel Sri D.R.Ravishankar represents the impleading applicant. It is his submission that CDSCO certificate is mandatory under the Medical Devices Rules, 2017 ('the Rules for short). If the notice inviting tender has not incorporated to Rules into the tender document, it would not mean that the notice inviting tender would prevail over the Rules. It is the other way around. It is his submission that contradiction in the tender document has to be answered by the State.

7. The learned counsel for the petitioner would join issue in contending that the corrigendum created confusion. The petitioner represented for clarity. No reply was given to the representation.

He would, therefore, contend that the tender notification should be quashed, as it is contrary to the Rules.

8. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.

9. The 2nd respondent/Corporation issued a notice inviting tender for the afore-quoted purpose. The petitioner submits its bid.

A corrigendum comes to be issued on 26-12-2024. The corrigendum reads as follows:

Sl. Document Page Statement Query Change To No. Name Number / Section Name 01 IND 182 39 The company shall The cost of the No Change provide an inbuilt thermal printer thermal printer compare to A4 capable of printing in Sheet is much 110 mm to 150 mm higher and A4 size sheet is easily available and this will also helps maintain the test records for a longer duration of time as thermal paper ink does not stay for long 7 time 02 Appendix 1 38 The entire system shall Changes • Manufacturer/ Specifications be Required-1 Importer: should USFDA/CE/CDSCO/ISO System should have CDSCO Certified have USFDA/ certificate for Notified manufacturing CE/CDSCO and importing the Certificate 2 equipment.

                                                     Entire       system
                                                     should be ISO           •       For
                                                     13485 certified 3       Quality Assurance
                                                     System should be        ISO 13485.
                                                     IEC      60601-1-1
                                                     and IEC 60601-1-        •        Quality
                                                     2 certified Reason      Standards:
                                                     for Changes - The       CE/USFDA/BIS
                                                     changes                 certified."
                                                     emphasize distinct
                                                     regulatory       and
                                                     quality
                                                     requirements
                                                     ensuring         the
                                                     system complies
                                                     with
                                                     USFDA/Notified
                                                     CE/CDSCO
                                                     certifications
                                                     maintains          a
                                                     robust       quality
                                                     management
                                                     system      through
                                                     ISO 13485 and
                                                     adheres to IEC
                                                     60601 standards
                                                     for        electrical
                                                     safety           and
                                                     performance
                                                     addressing        all
                                                     critical safety and
                                                     regulatory needs
                                                     comprehensively
                                      8

Pursuant to the corrigendum one more week's time is granted for submission of bids in terms of the corrigendum. The corrigendum changed a particular clause in the tender. The offending clause is in the eligibility criteria. Clause-9 of the tender document deals with eligibility criteria. It reads as follows:

"Sl. Eligibility Criteria Documents to be furnished by the No. Bidder in support of Eligibility Criteria 1 The bidder should be the Original a) Company / Firm / Equipment Manufacturer (OEM) establishment Registration certificate or an authorized dealer of the OEM for supply of Equipment b) Proof of experience in supply offered by them with supply of Equipment offered for minimum experience of minimum 3 years 3 years (with copy of the Purchase to any of the Private order issued by any of the Organization / Government Government Organization of Department / Organization / state/Central Government / Private undertaking in the India. Organization in India, with Satisfactory Completion Certificate, older than 3 years)

c) Details of the Bidder shall be submitted as per Annexure A In addition to the above documents, in case of:

d) The bidder being OEM shall submit undertaking in their letter head that they are OEM of the product offered in the Tender.

e) The bidder being Dealer, the bidder should furnish the OEM Certification / Manufacturer Authorization Certificate issued by the OEM specific for this tender and tendered item/s, authorizing them for 9 exclusive participation in the current Tender as per Annexure D. Caution: multiple bids submitted with the authorization by single OEM or along with OEM participation for the same equipment will be summarily rejected.

f) The bidder being Manufacturer / Dealer, should furnish the Manufacturing license for the quoted item. The license should be issued from CDSCO.

g) For the imported equipment, the bidder should submit the import license along with CDSCO certification for permitting the sale of the quoted product in India."

(Emphasis added) The eligibility criteria depicts that the bidder being a manufacturer or dealer should furnish the manufacturing licence for the quoted item. The licence should be from CDSCO. For the imported equipment, the bidder should submit an import licence along with CDSCO certification for permitting sale for the quoted product in India. Therefore, the manufacturer or the importer both will have to produce CDSCO certificate. This was clearly in terms of the Rules. 10

10. The Rules that govern issuance of certificate is the one notified by Government of India in the Department of Health and Family Welfare. The Rules are called Medical Devices Rules, 2017 which comes to be amended on 11-02-2020. The amended Rules are called the Medical Devices (Amendment) Rules, 2020. Chapter-

IIIA which was inserted to the principal Rules, insofar as it is germane, reads as follows:

1. (i) These rules may be called the Medical Devices (Amendment) Rules, 2020.

(ii) These rules shall come into force on the 1st day of April, 2020.

2. In the Medical Devices Rules, 2017 (hereinafter to be referred as said rules), after CHAPER III, the following CHAPTER IIIA shall be inserted, namely:― "CHAPTER IIIA REGISTRATION OF CERTAIN MEDICAL DEVICES 19A. (1) This Chapter shall be applicable to all devices notified under clause (b) of section 3 of the Act except the medical devices and devices specified in the Annexure of Eighth Schedule of these rules.

(2) The Medical devices referred in sub-rule (1) shall be registered with the Central Licensing Authority through an identified online portal established by the Central Drugs Standard Control Organisation for this purpose:

           ...                 ...                  ..."
                                              (Emphasis supplied)
                                    11

The medical devices referred to in sub-rule (1) supra should be registered with the Central Licensing Authority through an identified online portal established by the Central Drugs Standard Control Organization (CDSCO). The Drugs Controller General of Government of India has issued a notice indicating that the aforesaid CDSCO certification is mandatory in every equipment. At Sl.No.106 is the present proforma equipment. It reads as follows:

"Sl.No. 106

      Device name:               Foetal Doppler system
      Intended use:              Active non-invasive device to detect
                                 foetal    heart     beats      using
                                 ultrasound/Doppler technology.

      Risk Class                 C"
                                                      (Emphasis supplied)

A further circular is issued by Government of India on 16-05-2024 clarifying that the notification i.e., amended Rules should be scrupulously followed. The circular reads as follows:

"16 MAY 2024 CIRCULAR Subject: Regulation of all Class C & D Medical Devices under Licensing regime, w.e.f 01.10.2023, as per G.S.R. 102(E) dt 11.02.2020-Regarding.

The Ministry of Health & Family Welfare (MoHFW) has published notification vide S.O. 648 (E) dated 11.02.2020 specifying all medical devices under sub-clause (iv) of clause (b) 12 of section 3 of the Drugs and Cosmetics Act, 1940, which is effective from 01.04 2020.

In order to regulate all the medical devices, MoHFW has published G.S.R. 102 (E) dated 11.02.2020 for regulation of such devices in phase wise manner. As per the said notification the Class C & D medical devices will be under licensing regime from 01.10.2023.

In the meantime, representations from various Associations and Stakeholders have been received by this office, requesting that the business continuity should not be disrupted due to the implementation of licensing regime w.e.f. 01.10.2023 for Class C & D medical devices.

In view of the above, it has been decided that, in case, if an existing importer/ manufacturer who is already importing/ manufacturing any of the above said Class C or Class D Medical Devices, has submitted application on or before 30.09.2023 to Central Licensing Authority, for grant of import /manufacturing licence in respect of the said device(s) under the provisions of Medical Devices Rules, 2017, the said application shall be deemed valid and the importer/manufacturer can continue to import/manufacture the said device(s) up to three months from the date of issue of this order or till the time, the Central Licensing Authority, takes a decision on the said application, whichever is earlier."

11. Therefore, the Rules are in place. Any person who is wanting to supply should necessarily be having CDSCO certificate.

The issue is, whether the petitioner has the said certificate. The petitioner relies on Clause-8 of the eligibility criteria to contend that it was not mandatory to submit CDSCO certificate. The clauses on which the petitioner places heavy reliance upon read as follows:

"(a) ISO13485/CDSCO/CE/USFDA/BIS Certificate (submitting any one of this document is mandatory).

(b) If the firm does not have the valid CDSCO certificate, they should Upload the acknowledgment of the application submitted for obtaining/renewal of CDSCO certificate before the issue of award of contract."

(Emphasis supplied) Clause-8 depicted that either of the 5 kinds of certificates should be mandatorily submitted along with the tender document. Clause (b) supra indicates that if the firm does not have a valid CDSCO certificate, they should upload the acknowledgment of the application submitted for obtaining or renewal of the said certificate. Therefore, production of CDSCO certificate is mandatory.

The Tender Inviting Authority has created obfuscation by permitting five kinds of certificates.

12. It would have been an all together different circumstance if the Rules would necessitate submission of any kind of certificate.

The tender, in the case at hand, is for medical supply, medical equipment or otherwise. For medical supply the Rules are governed. The rule is quoted supra. The rule clearly indicates existence of CDSCO certificate for any medical supply. Therefore, the confusion created in the tender document cannot override the 14 Rule. The rule would override any such confusion. The petitioner admittedly does not have the CDSCO certificate. The mandatoriness was steer cleared by warding of the confusion in the corrigendum.

The corrigendum is quoted supra. The corrigendum brings the tender document in tune with the Rules. As observed hereinabove, the petitioner does not admittedly have CDSCO certificate, whereas the impleading applicant has. If the petitioner does not have the said certificate, he cannot claim that he should be awarded the contract, if he is found eligible on all other counts.

13. Contract can be awarded for medical supply or medical equipment supplies only in terms of the Rules. The Rules are as quoted hereinabove. Not for nothing the Rules are brought into force, particularly for supply of medical equipment. A person with no such certificate cannot be awarded the contract. It is plain and simple. This Court, in exercise of its jurisdiction under Article 226 of the Constitution, would not sit in arm chair of experts to accept the submission of the petitioner that there was confusion created in the tender document initially and, therefore, the tender itself should be shelved and a fresh tender should be issued. It would be 15 stepping into the shoes of the Tender Inviting Authority or the Tender Scrutiny Committee. It is trite that Rules would prevail over any mistake in the tender document. The mistake is also corrected by the corrigendum. Issuance of corrigendum is a permissible exercise in law, as prior to the opening of technical bid any corrigendum modifying the tender can be issued by the Tender Inviting Authority. This is the purport of Rule 14 of the Karnataka Transparency in Public Procurement Rules, 2000.

14. The Apex Court in the case of BAKSHI SECURITY AND PERSONNEL SERVICES PRIVATE LIMITED v. DEVKISHAN COMPUTED PRIVATE LIMITED1 has held as follows:

".... .... ....

14. The law is settled that an essential condition of a tender has to be strictly complied with. In Poddar Steel Corpn. v. Ganesh Engg. Works [Poddar Steel Corpn. v. Ganesh Engg. Works, (1991) 3 SCC 273] this Court held as under: (SCC p. 276, para 6) "6. ... The requirements in a tender notice can be classified into two categories--those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to 1 (2016) 8 SCC 446 16 deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases."

15. Similarly in B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. [B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd., (2006) 11 SCC 548] this Court held as under: (SCC pp. 571-72, para 66) "(i) if there are essential conditions, the same must be adhered to;

(ii) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;

(iii) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing;

(iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction;

(v) when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with;..."

16. We also agree with the contention of Shri Raval that the writ jurisdiction cannot be utilised to make a fresh bargain between parties.

17. In General Assurance Society Ltd. v. Chandmull Jain [General Assurance Society Ltd. v. Chandmull Jain, (1966) 3 SCR 500 : AIR 1966 SC 1644] , this Court in a slightly 17 different context stated: (SCR pp. 509-10, AIR p. 1649, para

11) "11. ... In other respects there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the company in case of ambiguity or doubt. A contract is formed when there is an unqualified acceptance of the proposal. Acceptance may be expressed in writing or it may even be implied if the insurer accepts the premium and retains it. In the case of the assured, a positive act on his part by which he recognises or seeks to enforce the policy amounts to an affirmation of it. This position was clearly recognised by the assured himself, because he wrote, close upon the expiry of the time of the cover notes that either a policy should be issued to him before that period had expired or the cover, note extended in time. In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone, etc. had come into being."

18. In the light of the aforesaid judgment, the High Court was not correct in treating Respondent 1's offer as matching with the revised minimum wage calculation, as that would make a new contract between the parties that the parties have not made themselves.

19. It is also well to remember the admonition given by this Court in Michigan Rubber (India) Ltd. v. State of Karnataka [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216] in cases like the present, as under: (SCC p. 228, para 21) "21. In Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] , the following conclusion is relevant: (SCC p. 531, para 22) 18 '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:

(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 19 licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.'"

The Apex Court holds that eligibility in a tender would be of two categories, one that laid down essential conditions of eligibility and the other is ancillary. The one that laid down eligibility conditions cannot be interfered with, as it is necessary that tenderers should scrupulously follow those essential conditions and the Tender Inviting Authority must ensure strict compliance. Eligibility, in the case at hand, is the possession of CDSCO certificate. The corrigendum has made it clear that it is an essential condition. The petitioner does not possess it. Therefore, there can be no question of interference with the tender, in a petition preferred by a person who does not possess the requisite certificate.

15. Finding no merit in the petition, the petition stands rejected. Interim order, if any operating, shall stand dissolved.

Pending applications if any, also stand disposed.

SD/-

(M.NAGAPRASANNA) JUDGE Bkp/CT:SS

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