Karnataka High Court
M/S Bangalore Metro Rail Corporation ... vs M/S Karnataka Commercial And ... on 25 January, 2023
Bench: Alok Aradhe, S Vishwajith Shetty
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WA No. 1099 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF JANUARY 2023
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR. JUSTICE S VISHWAJITH SHETTY
WRIT APPEAL NO.1099 OF 2021 (GM-TEN)
BETWEEN:
1. M/S BANGALORE METRO RAIL CORPORATION LTD
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANIES ACT 1956
HAVING ITS REGISTERED OFFICE AT III FLOOR
Digitally signed BMTC COMPLEX, K H ROAD
by RUPA V SHANTHINAGAR, BANGALORE 560027
Location: High REP BY ITS MANAGING DIRECTOR.
Court of
Karnataka
2. THE DEPUTY GENERAL
MANAGER H R-1 ( O AND M)
BANGALORE METRO RAIL CORPORATION LTD,
METRO RAIL DEPOT, OLD MADRAS ROAD
BAIYAPPANAHALLI, BANGALORE 560038.
3. THE EXECUTIVE DIRECTOR ( O AND M)
BANGALORE METRO RAIL CORPORATION LTD,
METRO RAIL DEPOT, BAIYAPPANAHALLI
BANGALORE 560038
...APPELLANTS
(BY SRI. S.S. NAGANAND, SR. COUNSEL A/W
SRI. PRADYUMNA K.V. ADV., FOR
SMT. SUMANA NAGANAND, ADV.,)
AND:
1. M/S. KARNATAKA COMMERCIAL
AND INDUSTRIAL CORPORATION PVT LTD
CORPORATE OFFICE AT NO. 24, R K TERMINUS, 2ND
FLOOR, BELLARY ROAD GANGANAGAR, BENGALURU
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WA No. 1099 of 2021
560032, REGISTERD OFFICE AT NO.10, CHURCH
ROAD, BASAVANAGUDI BENGLAURU 560004 REP BY
ITS DIRECTOR.
...RESPONDENT
(BY MR. VIKRAM HUILGOL, SR. COUNSEL FOR
MR. ADITYA NARAYAN, ADV.,)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE COMMON
ORDER DATED 02.07.2021 PASSED BY LEARNED SINGLE
JUDGE IN WP NO.5724/2021 C/W 5783/2021 AND 5830/2021
AND DISMISS THE WRIT PETITINS, IN THE INTEREST OF
JUSTICE AND EQUITY.
THIS WRIT APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 23.01.2023, COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This intra court appeal has been preferred against common order dated 02.07.2021 passed by learned Single Judge in W.P.No.5724/2021 connected with W.P.No.5783/2021 and W.P.No.5830/2021, by which writ petitions preferred by respondent No.1 M/s Karnataka Commercial and Industrial Corporation Private Limited -3- WA No. 1099 of 2021 (hereinafter referred to as 'the Corporation' for short) have been allowed and the endorsement dated 03.02.2021 as well as tender notifications dated 22.02.2021 have been quashed. The Bangalore Metro Rail Corporation Limited (hereinafter referred to as 'the BMRCL' for short) has been directed to re-consider the bid of the Corporation within a period of four weeks in the light of the observations made in the order and if the bid of the corporation is found to be in conformity with invitation to tender, to take such consequential action as is necessary. In order to appreciate the grievance of the BMRCL, relevant facts need mention, which are stated infra.
2. BMRCL is engaged in the business of providing Modern Urban Transportation system viz., Namma Metro in Bengaluru City. The BMRCL has built metro rail report which comprises rail tracks, rail coaches and metro rail stations. BMRCL engages the services of the contractors to provide house keeping services with an object to provide clean and hygiene environment. The scope of work includes -4- WA No. 1099 of 2021 cleaning and house keeping services, collection of garbage, segregation of wastes and removal of garbage by employing modern machineries and equipment, uniform cleaning and house keeping staff.
3. The BMRCL floated three tenders vide notification dated 23.03.2020 inviting bids from licenced agencies for providing house keeping services for stations via duct, track and trains etc particularly in reaches Nos.3 and 3A, 4 and 4A and UG-1 and UG-2. The last date for submission of tender was 04.05.2020 for reach Nos.3, 3A, 05.05.2020 for UG-1 and UG-2 and 06.05.2020 for reach Nos.4 and 4A. However, on account of prevalent pandemic situation the tenders were not received on the scheduled dates. Therefore, BMRCL rescheduled the tenders and new dates of submission and opening of the bid were fixed.
4. The tenders were opened on 26.06.2020, 27.06.2020 and 29.06.2020 at 3.00 p.m. by the tender opening Committee. The evaluation of tenders was done in two stages viz., qualification and technical stage and -5- WA No. 1099 of 2021 financial stage. The technical packages were forwarded to the Technical Evaluation Committee and financial packages were kept in sealed cover and were sent to finance section for safe custody. Five bidders participated in the tender, whose technical bids were opened and three of them were found technically qualified in respect of all the Reaches and financial bids of aforesaid 3 bidders were opened by the Tender Opening Committee on 05.11.2020.
5. The Tender Evaluation Committee evaluated the bids and found the Corporation to be the lowest bidder and declared it so. On comparison between the bids of the Corporation and other bidders in respect of Reach No.4 and 4A, it was noticed that the rates quoted by the Corporation for service charge and consumables were on the higher side. Therefore, the Technical Evaluation Committee recommended negotiations with the Corporation with regard to the price quoted by it. The matter was thereupon placed before the Executive Director, BMRCL, who found that -6- WA No. 1099 of 2021 service charge quoted by Corporation is very high at 14% when current charges were in the range of 0.01% to 3%. An approval was sought from the competent authority viz., Managing Director for negotiation with the Corporation. The competent authority on 15.12.2020 noted that staff wages quoted by one of the bidders was higher than other bidders. 3 other queries were also raised. The matter was thereupon referred to an independent Contract Expert.
6. The aforesaid Expert expressed his view in the note dated 18.01.2021, in which it was pointed out that tender of one of the bidders viz., M/s VAR is not as per clause 3.3 and 3.5 of Instructions to the tenderers. It was further found that after corrections in accordance with clause 6.4 of the bid documents, the bid amount of M/s VAR would be Rs.12,23,43, 637.19/- as against the amount of Rs.12,55,98,160.39/- quoted by it. Thus, in fact, M/s VAR is the lowest bidder and since, the validity of the bid was expiring on 23.12.2020 on completion of period of 180 days, suitable decision in the matter had to be taken. Similar -7- WA No. 1099 of 2021 decisions were taken in respect of Reach No.3 and 3A and UG-1 and UG-2.
7. The Tender Evaluation Committee re-examined the matter and agreed with the view expressed by the independent Contract Expert. However, the committee was of the opinion that the rate quoted by M/s VAR cannot be changed. The Director of BMRCL noted that the approach of the Tender Evaluation Committee was casual and the validity of the tenders has not been extended before the period of expiry and therefore, the tenders are no longer valid. Accordingly, a decision was taken to issue a fresh tender and an endorsement dated 03.02.2021 was issued to all the 3 bidders refunding the Earnest Money Deposit tendered by them. Thereafter, a re-tender notification dated 22.02.2021 was issued. The aforesaid endorsement dated 03.02.2021 and re-tender notifications dated 22.02.2021 were assailed by the Corporation in three separate writ petitions.
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8. The learned Single Judge by a common order dated 02.07.2021 has quashed the endorsement dated 03.02.2021 as well as tender notification dated 22.02.2021 and has directed the BMRCL to consider the bid of the Corporation within a period of four weeks in the light of observations made in the order and has further directed that if the bid is found to be in conformity with invitation to tender, the Corporation has to take further consequential action as is necessary. In the aforesaid factual background, this appeal has been filed.
9. Learned Senior counsel for the BMRCL submitted that tender evaluation process has passed through different layers in the management and most appropriate decision has been taken to withdraw the tender and to invite fresh tenders. It is further submitted that cancellation of a tender is a matter within the exclusive purview of the tender inviting authority and same is not open for judicial review. It is also urged that scope of judicial review in the matter of -9- WA No. 1099 of 2021 contract and its implementation is also outside judicial review. It is contended that exercise of evaluation of the bids was considered in accordance with the terms of the contract and learned Single Judge ought to have appreciated that validity of tenders has expired on 23.12.2020 and therefore, it was not possible to award the contract after 23.12.2020. It is further submitted that learned Single Judge has drawn unwarranted inferences which are not justified.
10. It is contended that observation relating to opportunity of hearing to the Corporation or any other bidder is contrary to law as bidder has no such right when the tender inviting authority decides to re-invite the bids after expiry of the validity of the bids. It is further contended that learned Single Judge has issued a direction to the BMRCL to enter into contract, which is not permissible in law. It is argued that courts should refrain itself from imposing its decision over the decision of the employer and should be reluctant in interfering with the contracts involving technical issues. In support of aforesaid
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WA No. 1099 of 2021submissions, reliance has been placed on decisions in 'RISHI KIRAN LOGISTICS (P) LTD. VS. KANDLA PORT TRUST', (2015) 13 SCC 233, 'SHIMNIT UTSCH INDIA (P) LTD. VS. W.B.TRANSPORT INFRASTRUCTURE DEVELOPMENT CORPN. LTD.,', (2010) 6 SCC 303, 'SOUTH DELHI MUNICIPAL CORPN. VS. RAVINDER KUMAR', (2015) 15 SCC 545, 'MICHIGAN RUBBER (INDIA) LTD. VS. STATE OF KARNATAKA', (2012) 8 SCC 216, 'STATE OF JHARKHAND VS. CWE-SOMA CONSORTIUM', (2016) 14 SCC 172, 'STATE OF W.B. VS. SUBHAS KUMAR CHATTERJEE', (2010) 11 SCC 694, and 'N.G.PROJECTS LIMITED VS. VINOD KUMAR JAIN AND OTHERS', (2022) 6 SCC 127.
11. On the other hand, learned Senior counsel for the Corporation submitted that 3 tenders were invited for housekeeping services of 3 Reaches viz., Reaches No.3, 3A, 4, 4A, UG-1 and UG-2 for a period of 3 years. It is submitted that the Corporation was declared the lowest bidder.
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WA No. 1099 of 2021However, the BMRCL grossly erred in taking recourse to clause 6.4 of the notice inviting tenders and in re-evaluating the tender of M/s VAR. It is further submitted that the aforesaid exercise taken by BMRCL is outside the scope of clause 6.4. It is urged that even if recourse is taken to clause 6.4 of the tender document, the Corporation still remains the lowest bidder in respect of Reach Nos.3 and 3A, whereas, no comparison of the bids have been made in case of Reach No.UG-1 and UG-2. The decision taken by the BMRCL is arbitrary. Reference has also been made to Rule 22(2) of the Karnataka Transparency in Public Procurement Rules, 2000 and it has been submitted that the aforesaid Rule has been enacted for the benefit of the tenderers. It is also urged that Corporation is ready to match M/s VAR's bid in respect of Reach Nos.4 and 4A. It is also urged that allowing cancellation of tender and calling for fresh tender will have a huge adverse public impact in the form of wastage of public funds.
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WA No. 1099 of 2021
12. We have considered the submissions made on both sides and have perused the record. A division bench of this court by an order dated 25.10.2021 had directed that till disposal of the appeal, operation of the order passed by learned Single Judge insofar as it directs the BMRCL to re- consider the bid of the Corporation shall remain stayed. In the celebrated case of 'TATA CELLULAR VS. UNION OF INDIA (1994) 6 SCC 651: (AIR 1996 SC 11), the Supreme Court while dealing with the scope of judicial power of review held that it would apply to exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. It has been held that the ground upon which the administrative action is subject to control by judicial review is on the grounds of illegality, irrationality and procedural impropriety. It has further been held that terms of the invitation to tender are not open to judicial scrutiny because invitation to tender is in the realm of contract and more often than not, such decision are made qualitatively by experts. It has further been held that the Government must
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WA No. 1099 of 2021have 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 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 but must be free from arbitrariness not affected by bias or actuated by mala fides. The aforesaid principles have been reiterated by Hon'ble Supreme Court in UFLEX LIMITED VS. GOVERNMENT OF TAMIL NADU AND OTHERS', (2022) 1 SCC 165.
13. The courts can interfere only if the policy decision is arbitrary, discriminatory or actuated by malice. In 'SIEMENS AKTIENGESELEISCHAFT AND SEIMENS LIMITED VS. DELHI AND SEIMENS LIMITED VS. DELHI METRO RAIL CORPORATION LIMITED AND OTEHRS', (2014) 11 SCC 288 : (AIR 2014 SC 1483), it was held that tenders floated by the Government are amenable to judicial review only in order to prevent arbitrariness and favoritism
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WA No. 1099 of 2021and protect the financial interest of the State and the public interest. Thus, the scope of judicial review is confined as to whether there was any illegality, irrationality or procedural impropriety committed by the decision making authority. It has further been held that the court cannot sit in appeal over the soundness of the decision made by the competent authority and the Court can only examined whether the decision making process is fair, reasonable, transparent and bonafide with no perceptible injury to public interest. In 'CENTRE FOR PUBLIC INTEREST LITIGATION VS. UNION OF INDIA', (2016) 6 SCC 408; (AIR 2016 SC 1777) has held minimal interference is called for by the Court of Judicial Review with a decision taken by the technical experts after due deliberations inasmuch as the Courts are not well equipped to fathom into such domain which is left to the discretion of the executive. It has further been held that primary and secondary purpose of review is to ensure that administrative bodies act in efficient, transparent, fair, unbiased manner and keep in forefront public interest.
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WA No. 1099 of 2021Similar view has been taken in 'TANGEDCO VS. CSEPDI - TRISHE CONSORTIUM', (2017) 4 SCC 318: (AIR 2016 SC 4879) AND SAM BUILT WELL (P) LTD. VS. DEEPAK BUILDERS (2018) 2 SCC 176: (AIR 2018 SC 44).
14. In 'SANJAY KUMAR SHUKLA VS. BHARAT PETROLEUM CORPN. LTD.', (2014) 3 SCC 493: (AIR 2014 SC 3778), it has been held that the Court should be vigilant against agitation of private disputes under the writ jurisdiction when there is no improper exercise of power on the part of public authority. It has further been held that power of judicial review has to be exercised only when justified by public interest having due regard to the fact situation of the case. In 'BAKSHI SECURITY AND PERSONNNEL SERVICES (P) LTD. VS. DEV KISHAN COMPUTED (P) LTD.', (2016) 8 SCC 446: (AIR 2016 SC 3585), the Supreme Court summarized the principles with regard to interference in contractual matters and it was held that power of judicial review cannot be invoked to protect
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WA No. 1099 of 2021the private interest over the public interest or to decide contractual disputes. It has been further held that before exercising the power of judicial review, the Court must pose to itself the questions, namely, whether process adopted or decision made is mala fide or intended to favour someone, whether process adopted or decision made is so arbitrary and irrational that no responsible authority acting reasonably in accordance with law could have reached such a decision and whether public interest is affected.
15. In the light of aforesaid legal principles, we may advert to the facts of the case in hand. From perusal of the record, it is evident that notices inviting tenders were issued on 23.03.2020 to provide for housekeeping services for a period of 36 months in respect of 3 Reaches. The bid submitted by the Corporation was assessed by the Tender Evaluation Committee and it was declared to be the lowest bidder. The file was thereafter placed before the Executive Director, BMRCL who found that service charge quoted by the Corporation was on the higher side. Therefore, approval
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WA No. 1099 of 2021was sought from the competent authority for negotiation with the Corporation.
16. The Managing Director viz., the competent authority noted that staff wages quoted by one of the bidders viz., M/s VAR Limited was higher than the other bidders. The matter was therefore, referred to an Independent Contract Expert who vide his note dated 29.01.2021 opined that the bid of M/s VAR Limited is lowest and since, the validity of the bid is expiring on 23.12.2020, suitable decision should be taken. The Tender Evaluation Committee thereupon re-examined the matter and agreed with the Expert that modification of the wages was in accordance with the provisions of the Tender. However, the Tender Evaluation Committee was of the opinion that rates quoted by M/s VAR Limited cannot be changed. Thereupon the Director took a decision to invite fresh tenders as the validity of the bids had expired, therefore, the bid submitted by the tenderers are no longer valid and M/s VAR was the lowest bidders. Thereafter, an endorsement dated 03.02.2021 was
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WA No. 1099 of 2021issued to all the three bidders refunding the Earnest Money Deposit tendered by them. Thereafter a re-tender notification dated 22.02.2021 was issued.
17. From careful scrutiny of the material available on record, it is evident that decision to re-tender has been taken mainly on the ground that M/s VAR Limited is the lowest bidder instead of the Corporation and the validity of the bids has expired. The purpose of judicial review is to ascertain whether choice of decision was made lawfully and not to ascertain whether choice of decision is sound. The matter of evaluation of bids has to be governed by principles of commercial jurisprudence. The principles of equity and natural justice have to stay at a distance [See: UFLEX LIMITED supra]. The decision taken by BMRCL does not suffer from any illegality, irrationality or procedural impropriety. The decision to re-tender has been taken on the basis of a recommendation made by an Expert and the decision if tested by application of Wednesbury principle of reasonableness cannot be said to be either arbitrary or
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WA No. 1099 of 2021actuated by malafides. This court cannot sit in appeal over the decision taken by BMRCL on the basis of recommendations made by an Independent Contract Expert.
18. For yet another reason, no interference is called for in the matter. The BMRCL had issued fresh notices inviting tenders on 22.02.2021. The Corporation in pursuance of the fresh notice inviting tenders participated in the tenders and submitted the bid. Thereafter, it appears that writ petitions were filed on 17.03.2022. This court by an order dated 29.06.2022 taking into account the fact that the contract awarded to the corporation is due to expire on 30.06.2022 permitted BMRCL to finalize the tender process which was made subject to result of the appeal.
19. Learned Senior counsel for BMRCL has submitted that in pursuance of the aforesaid liberty granted to BMRCL vide order dated 29.06.2022, the bids have been evaluated and the Corporation is not found to be the lowest bidder in any of the tenders. In paragraph 6 of statement of
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WA No. 1099 of 2021objections filed to I.A. seeking modification of the order dated 29.06.2022, following statements have been made:
6. In view of the order dated 29.06.2022 passed by this Hon'ble Court, the Tender Evaluation Committee evaluated the bids submitted. Though the respondent had participated in all the three tenders invited by the appellants, the respondent was not the successful bidder in any of them. M/s Aries Corporate Services Private Limited was the L-1 tenderer in respect of Reach 3 and 3A, M/s Service Master Clean Limited was the L-1 tenderer in respect of Reach 4 and 4A and M/s Creative Integrated Services Private Limited was the L-1 tenderer in respect of Underground 1 and Underground 2 sections. Thereafter, appellant No.1 issued the Letter of Acceptance to M/s Aries Corporate Services Private Limited on 27.12.2022. A copy of the Letter of Acceptance dated 27.12.2022 issued to M/s Aries Corporate Services Private Limited is produced herewith as Annexure-A. Appellant No.1 issued the Letter of Acceptance to M/s Service Master Clean Limited on 09.12.2022. A copy of the letter of acceptance date 09.12.2022 issued to M/s Service Master Clean Limited is produced
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herewith as Annexure-B. Appellant No.1 issued the Letter of Acceptance to M/s Creative Integrated Services Private Limited on 27.12.2022. A copy of the Integrated Services Private Limited is produced herewith as Annexure-C.
7. The respective L-1 tenderers were required to furnish a performance security in the form of bank guarantee, execute the contract agreement, deploy trained personnel and furnish necessary documents within the time prescribed. The Letter of Acceptance categorically states that the award of contract is subject to outcome of the appeals pending before this Hon'ble Court. The Letter of Acceptance also states that the services shall be effective from 15.01.2023 in respect of Reach 3 and 3A and Underground 1 and Underground 2 sections and from 01.01.2023 in respect of Reach 4 and 4A.
20. In view of aforesaid subsequent developments as well as in view of the fact that decision taken by BMRCL can neither said to be arbitrary nor actuated by malafides and is a plausible one as well as the fact that the validity of bids
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WA No. 1099 of 2021have expired, the order dated 02.07.2021 passed by learned Single Judge is set aside.
In the result, appeal is allowed. However, there shall be no order as to costs.
Sd/-
JUDGE Sd/-
JUDGE SS