Karnataka High Court
Prodigy Hydro Power (P) Ltd vs Karnataka Power Corporation Ltd on 9 August, 2012
Author: Mohan Shantanagoudar
Bench: Mohan Shantanagoudar
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 9TH DAY OF AUGUST, 2012
BEFORE
THE HON'BLE MR.JUSTICE MOHAN SHANTANAGOUDAR
WRIT PETITION NO.4375/2011 (GM-TEN)
BETWEEN:
Prodigy Hydro Power (P) Ltd.,
Having its registered address at
No.311, Shahid Udhamsingh Nagar
Jallandhar-144001
Branch Office at
No.32, 28th Cross, Industrial Layout
Banashankari II Stage
Bangalore-560070
Rep by its Director
Mr. Harish Yechreddy. ..Petitioner
(By Sri Jayakumar S. Patil, Sr. Counsel for
Sri Anandarama Prashanth & Vikram, Advs.,)
AND :
1. Karnataka Power Corporation Ltd.,
No.82, Shakti Bhavan, III Floor
Race Course Road
Bangalore-560001
Rep by its Managing Director.
2. The Superintending Engineer
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(Electrical) - RO
Karnataka Power Corporation Ltd.,
No.82, Shakti Bhavan, III Floor
Race Course Road
Bangalore-560 001. ..Respondents
(By Sri Udaya Holla, Senior Counsel
for M/s. Holla & Holla, Advs.,)
This Writ Petition is filed under Articles 226 and 227 of
the Constitution of India praying to issue an appropriate
writ declaring all the proceedings pursuant to the notice
inviting tender by bid notification dated 10.12.2010
(Annexure-A) as arbitrary, discriminatory, and hence
violative of Article 14 of the Constitution of India.
This writ petition coming on for preliminary hearing in
'B' group this day, the Court made the following:-
ORDER
The first respondent-Karnataka Power Corporation Limited issued notice inviting tenders as per Annexure-A, dated 10.12.2010 for taking on lease of Mini Hydel Stations situated at Mallapur, Sirwar, Ganekal and Kalmala for renovation, operation and maintenance. The last date of submission of tenders is 30.12.2010.
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The petitioner feeling aggrieved by some of the prequalification requirements, which according to him are harsh and irrelevant, submitted a representation as per Annexure-B, dated 27.12.2010 before the second respondent herein raising some points for consideration. According to the petitioner, some of the prequalification requirements are outside the scope of the work which is sought to be done. However, the petitioner submitted its tender on 30.12.2010 in response to the notice inviting tenders, along with certain bid documents. The petitioner submitted another representation as per Annexure-C, dated 11.1.2011 before the Managing Director of the first respondent reiterating the points stated in the earlier representation dated 27.12.2010 and requested for reduction of the stipulation of the maximum output in Clause 7.3 of the tender notification from 12MW to 5 MW and also allowing the bidders to collaborate with foreign companies. However, such request of the petitioner is not 4 considered by the respondents and ultimately the petitioner was informed by issuing Annexure-D, dated 13.1.2011 that the petitioner's price bid is returned unopened because the petitioner is not qualified to participate in the tender as per the prequalification requirements. The petitioner has questioned the rejection of its tender as per Annexure-D, dated 13.1.2011 by filing this writ petition. The petitioner has also sought for quashing all the proceedings pursuant to issuance of tender notification dated 10.12.2010 vide Annexure-A as they are arbitrary, discriminatory and violative of Article 14 of the Constitution of India. Consequential reliefs are also sought for.
2. Sri Jayakumar S.Patil, learned senior counsel appearing on behalf of the petitioner submits that four units to be leased are having the power generating capacity of less than 4.5 MW each; Mallapur Unit is having 2 units of 4.5 MW each, Sirwar Unit is having 1 unit of 1 MW, Kalmala Unit is having 1 unit of 0.4 MW and Ganekal Unit is having 5 1 unit of 0.35 MW.; since the power generating capacity of each of the Units is less than 4.5MW, the stipulation relating to maximum output requirements as per Clause 7.4 of prequalification requirements fixed at 12MW is arbitrary. Since the work to be allotted in favour of the successful bidder is of a lesser gravity, the respondents ought not to have fixed the requirement of manufacturing and supplying at least one single hydraulic turbine having rated output of not less than 12 MW. In that connection, it is submitted by the petitioner's counsel that such a requirement of 12MW is prescribed only to see that the work in respect of all the four units should be assigned to one particular bidder.
It is further contended that it is also harsh on the part of the respondents fixing that the technical collaborative company should be a hydraulic turbine company from India and not other foreign countries; there are only three hydraulic manufacturers in India viz., M/s.Andritz, and M/s.Boving Fouress Private Limited and BHEL in India; the 6 two collaborators have already collaboration with the other bidders inasmuch as they are having exclusive agreement with such bidders; it is impossible for the petitioner to get the collaboration with BHEL which is having capacity of manufacturing 12MW hydraulic turbine, as BHEL will not collaborate with the bidder companies for such small works; hence other companies including petitioner will not have assistance of any technical collaborative company having capacity to manufacturing and supplying hydraulic turbine having rated output of not less than 12 MW.
The third contention of the petitioner's counsel is that time to submit the tenders was restricted to 20 days only though the tender work to be assigned is worth Rs.227 lakhs i.e., more than 2 crores. Rule 17 of the Karnataka Transparency in Public Procurements Rules, 2000 ('Rules' for short) requires that minimum of 60 days should have been the time for submitting such tenders having work more than rupees 2 crores.
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Lastly, he contended that totally six bidders have participated including the petitioner. All the other five companies/tenderers are having common Directors. In other words, according to the petitioner, they are nothing but one company with different names. The intention of the respondents is only to help any one of such five companies. Virtually, if the tenders submitted by other five bidders are considered, the respondents will be considering the bids of one company. Since the requirements set out in the tender notification are included with an intention of eliminating the petitioner, it can be said that prequalification requirements are arbitrary.
3. The writ petition is opposed by the respondents by filing the statement of objections. Sri Holla, learned senior advocate appearing on behalf of the respondents submitted that the petitioner is estopped from contending that certain prequalification requirements are harsh and unreasonable in 8 view of the fact that the petitioner has participated in the tender process by submitting its tender; there are totally six companies in India, who have capacity to manufacture hydraulic turbines having rated output of not less then 12MW, namely:-
a) Boving Fouress Private Limited,
Hoskote, Bangalore.
b) Flovel Energy Private Limited, Mathura Road, Faridabad, Haryana.
c) Bharat Heavy Electricals Limited,
Bhopal.
d) Alstom India Projects Limited,
Vadodara, Gujarat.
e) Andritz Hydro Private Limited, Prithla, Haryana.
f) Voith Hydro Private Limited, Noida, NCR.
Thus, according to him, there was no hurdle for the petitioner to collaborate with any one of the aforementioned six companies. He further submits that there is nothing on record to show that M/s.B.Fouress Private Limited and M/s.Andritz have exclusive agreement with other five 9 tenderers for the purpose of collaboration. He further points out that the petitioner's bid was rejected not only on the ground that the petitioner is not having collaboration with the company which manufactures hydraulic turbine having rated output of not less than 12MW, but also on the ground that the petitioner did not have Rs.150 crores turn over as required under the prequalfiication requirements. It is further contended by Sri Holla, learned senior counsel that the tender conditions are not normally interfered with by the Courts if such conditions are not arbitrary.
Lastly, he submitted that if the respondents are satisfied about the fraud allegedly committed by the other tenderers, the tenders of such tenderers may be rejected by the respondents.
4. The four units in question viz., Mallapur Unit, Sirwar Unit, Kalmala Unit and Ganekal Unit though were started between 1990 and 1993 as pilot projects to promote the 10 development of mini hydel schemes, due to various technical problems the projects could not be run by the respondents at the optimum level. The aforementioned Units are not working as of now. Having regard to the enormous expenditure which would have to be incurred in making the four Units operational, the respondents seem to have decided to give the projects on lease with a condition that the lessee renovates, operates and maintains the said projects during the lease period. Thus it is clear that the respondents want to renovate the aforementioned projects and thereafter operate the same and consequently maintain the same in an orderly manner so as to overcome the shortage of electricity at least to certain extent which is being faced by the State. Thus it is, but natural for the respondents to lease the project in favour of eligible lessees who can renovate, maintain and operate the project during the lease period. The bidder was also permitted to take 11 assistance of technical collaborator company if bidder company so chooses.
With these things in background, the pre-qualification requirements are fixed in the tender notification. The relevant pre-qualification requirements are as under:
"7.1 The bidder company and/or the technical collaborator company shall have an average annual turnover of Rs.150 crores during the financial years 2007-08, 2008-09 and 2009-10;
7.3 the bidder company and/or the technical collaborator company should be a hydro turbine manufacturer from India and should have their own manufacturing facilities in India.
7.4 The bidder company and/or the
technical collaborator company should
have manufactured & supplied at least one
single hydraulic turbine having rated
output of not less than 12 MW which
should be in satisfactory operation for at least one year."12
5. Rule-17 of the Rules prescribes minimum time for submission of tenders. Sub-rule (1b) of Rule-17 of the Rules further clarifies that minimum period for submission of tenders shall be sixty days in respect of tenders in excess of rupees two crores in value. In the matter on hand, undisputedly, the value of the tender work to be assigned is rupees 227 lakhs, which is more than Rs.2 crores. Thus in the normal course, the time to be prescribed is 60 days for the purpose of submission of tenders. However, sub-rule (2) of Rule-17 of the Rules empowers the Tender Inviting Authority for reduction of time stipulated as stated above after being authorised specifically in that regard by an authority superior to Tender Inviting Authority for the reasons to be recorded in writing. The office note/proceedings sheet maintained by the 1st respondent in respect of the tender process is produced before this Court alongwith the Memo dated 9.8.2012 by Shri Holla. The said office notice/proceedings 13 sheet discloses that calendar of events, right from issue of notice inviting tenders upto opening of bids is notified and the same is affirmed not only by the Tender Inviting Authority but also by the superior authority i.e. the Managing Director of the 1st respondent - Corporation. But absolutely no reason is assigned for reduction of prescribed time. It is no doubt true that in the statement of objections, the respondents have assigned reason to the effect that since there is only six months time to renovate the projects by the successful bidder/lessee and since the entire project works should be completed before the onset of the Monsoon, in view of the urgency, the respondents decided to go in for a tender and accordingly reduced the period within which the bids were to be submitted. It is well settled that any amount of explanation offered by the respondents in the statement of objections cannot be accepted, if no such reason is found in the relevant documents. The law requires that the document relating 14 to reduction of time for submission of tenders should specify the reasons in writing for such reduction. Since the reduction in time is made in respect of submission of tenders without there being any reason muchless valid reason in writing, in my considered opinion such reduction of time is illegal. Rule-17 of the Rules mandates the tender inviting authority to ensure that adequate time is provided for submission of tenders. The very provision also prescribes minimum of sixty days for submission of tenders in excess of rupees two crores. Exception can be made in case of urgency, but such urgency shall have to be brought on record by the tender inviting authority with the approval of the superior authority at the time of reduction of time. Thus the reduction of minimum time prescribed under Rule-17 of the Rules in the matter on hand is illegal.
6. The contention of the petitioner's counsel that the tenderer ought to have given option to have collaboration with the foreign companies cannot be accepted. It is for 15 the tender inviting authority to prescribe any reasonable condition. If any tenderer is allowed to have collaboration with the foreign company which is having capacity of manufacturing hydraulic turbines having rated output of not less than 12 MW and in case if such foreign company raises a dispute either with the successful tenderer with whom it has collaborated or with the respondents subsequently, the respondents will land up in trouble inasmuch as the time will have to be spent only in litigation and the object for which tenders are called for will not be fulfilled. On the other hand if Indian collaborator is helping the bidder, such collaborator would immediately replace spare parts etc., and will rectify the defects, if any found in the Units. The State cannot wait till a foreign collaborator comes from a foreign country for repairing the Units. Under such circumstances, pre-tender condition might have been imposed to the effect that an intending 16 tenderer may have technical collaboration with Indian company only.
7. So also this Court does not find any substance in the argument of the petitioner that prescription of having technical collaborator company which has manufactured and supplied at least one hydraulic turbine having rated output of not less than 12 MW is arbitrary. It is for the authority to set the terms of the tender. The Courts would not interfere with the terms of the tender unless it is shown to be either arbitrary or discriminatory or actuated by malice. The terms of invitation of tender are not open to judicial scrutiny, the same being in the realm of contract. The Government/Authority must have a free hand in setting the terms of the tender {see the judgment in (2004)4 SCC 19 }. Award of contract is essentially a commercial transaction. In arriving at a commercial decision, the State can choose its own method to arrive at a decision and fix its own terms of invitation to tender and 17 that it is not open to judicial scrutiny unless the tender conditions are either arbitrary or discriminatory {see the judgment in (2000)2 SCC 617 }. In the matter on hand, this Court does not find any arbitrariness in prescribing the criterion of having technical collaborator company which has manufactured and supplied at least one single hydraulic turbine having rated output of not less than 12 MW. According to the respondents, the requirement of 12 MW is because the total capacity of all the proposed four mini hydel project comes to about 10.75 MW and with normal 10% overload capacity, the required turbine capacity comes to about 11.82%. Hence the respondents have rounded off to 12 MW and prescribed the same under the notice inviting tenders. It is no doubt true that the Unit will have to be run individually. But having higher qualification or higher expertise in running the turbine and the Unit may be useful in the interest of the State. Merely because the petitioner does not qualify to submit the 18 tender, not being in a position to satisfy the terms and conditions laid down, the tender conditions cannot be held to be discriminatory. In the absence of any indication from the records that the terms and conditions were tailor made to promote one particular company and to exclude the other company, interference is not called for.
8. The contention of the petitioner that there are only three companies in India which manufacture hydraulic turbines having rated output of not less than 12 MW cannot be accepted. As could be seen from the statement of objections, there are six companies in India which manufacture hydraulic turbines having rated output of not less than 12 MW. The names of such companies are already listed above. Therefore the petitioner was free to choose any of such companies to have technical collaboration. However, the petitioner has not collaborated with any of such six companies. Even leaving apart the two companies viz., (a) Bouving Fouress Private 19 Limited and (b) Andritz Hydro Private Limited, with whom the other tenderers have collaboration, the petitioner could have collaborated with rest of the companies from among the aforementioned list of six companies.
Be that as it may, at the time of submitting the tender, nobody knows as to which company is collaborating with which technical collaborator. Since it is open for the petitioner to have collaboration with any one of the six collaborators for technical expertise, it is not open for the petitioner to submit before this Court that the pre-tender conditions are imposed only for the purpose of helping one company.
9. The records produced alongwith the Memo dated 13.6.2011 filed before this Court by the petitioner clearly reveals that 5 other tenderers who have submitted the bids are almost having the same Directors and same share holders. In this context, the petitioner is justified in 20 arguing that all such 5 companies have formed a single cartel, but the same cannot be the ground for setting the aside the pre-qualification requirements as found in the notice inviting tenders. It is open for the respondents to reject any bid if ultimately respondents find that the fraud is being played by five such companies by forming a cartel. It is also open for the respondent No.1 to find out as to whether these companies have the same Directors and the same shareholders and that virtually such five companies are one and the same. It is for the respondents to take decision in future based on the facts and circumstances of this case. At this stage, the pre-qualification requirements cannot be quashed on that ground.
10. Be that as it may, since this Court has found that the respondents have not followed the mandatory provisions of Rule-17 of the Rules in not assigning any reason in writing while reducing the minimum time prescribed for submission of tenders, the respondents need 21 to be directed to call for fresh tenders as per law. In the absence of any reasons found in the records maintained by the respondents while reducing the minimum time for submission of tenders, this Court cannot visualise as to what was in the mind of the respondents while reducing the mandatory minimum time prescribed under the rules. The proceedings sheets maintained by the respondent - tender inviting authority should specify the reasons as to why the mandatory time stipulated under sub-rule (1) of Rule-17 of the Rules is reduced. In the absence of any reasons, this Court is of the opinion that the notice inviting tender is liable to be quashed. Had sufficient time been granted to the intending bidders, sufficient number of bidders may have participated. The object of Rule-17 of the Rules is to have ample opportunity for the intending bidders to participate in the tender process so as to enable the tender inviting authority to accept the best bidder. Only if there is competition, the best can be selected. In 22 view of the reduction of minimum time prescribed for submission of the tenders by the 1st respondent, many persons including the petitioner must not have either participated or might not have produced the relevant records. Hence practically there is no competition at all. Hence the writ petition is entitled to be allowed.
Accordingly, the writ petition is allowed. All the proceedings pursuant to the notice inviting tender by the bid notification dated 10.12.2010 vide Annexure-A stands quashed.
Sd/-
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