Karnataka High Court
Larsen And Toubro Limited vs Karnataka Power Corporation Limited on 6 March, 2024
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
Reserved on : 04.03.2024
Pronounced on : 06.03.2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 06TH DAY OF MARCH, 2024 R
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.5304 OF 2024 (GM - RES)
BETWEEN:
LARSEN AND TOUBRO LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES
ACT, 1913
BEARING CIN: L99999MH1946PLC004768
HAVING REGISTERED ADDRESS AT
L AND T HOUSE, N.M.MARG
BALLARD ESTATE
MUMBAI - 400 001
REPRSENTED BY POWER OF ATTORNEY
MR. SURESHKUMAR S.,(VICE PRESIDENT).
... PETITIONER
(BY SRI UDAYA HOLLA, SR.ADVOCATE A/W
SRI LOMESH KIRAN N., ADVOCATE)
AND:
KARNATAKA POWER CORPORATION LIMITED
A GOVERNMENT OF KARNATAKA ENTERPRISE
HAVING ITS ADDRESS AT:
NO.3, 1ST FLOOR, GREEN BUILDING
2
DRUG CONTROLLER DEPARTMENT PREMISE
PALACE ROAD
BENGALURU - 560 001.
EMAIL ccedbn gmail.com
... RESPONDENT
(BY SRI K.SHASHIKIRAN SHETTY, AG A/W
SRI AJAY J.NANDALIKE, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO i) DECLARE THAT THE LAST
DATE AND TIME FOR SUBMISSION OF BID DOCUMENT STIPULATED
AS 23RD FEBURARY 2024 UPTO 11.11 HRS. IN CLAUSE 17 OF VIL. I
PART I OF THE NOTICE INVITING TENDER BEARING NUMBER
KPCL/2023-24/OW/OW/WORK.INDENT118 (ANNEXURE-A) AS
MODIFIED BY THE CORRIGENDUM BEARING REFERENCE NUMBER
KPCL/2023-24/OW/WORK.INDENT1185 (ANNEXURE-B) ISSUED ON
17TH FEBRUARY 2024 IS UNREASONABLE, ARBITRARY,
IRRATIONAL, NULL AND VOID AND VIOLATIVE OF ARTICLE 14,
19(1) (g) AND 21 OF THE CONSTITUTION OF INDIA AND SET
ASIDE THE SAME AND ETC.,
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 04.03.2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
3
ORDER
The petitioner is before this Court seeking a declaration to declare that the last date for submission of bid documents stipulated as 23-02-2024 up to 11 hours in the notice inviting tender as modified by corrigendum issued on 17-02-2024 is violative of law. A further writ in the nature of mandamus is sought to direct the respondent to revise/amend/modify Clause 17 of the Notice Inviting Tender and extend the last date for submission of bid documents up to 03-05-2024 or grant such other date which the Court would deem fit.
2. Shorn of unnecessary details, facts in brief are follows:-
The respondent is the Karnataka Power Corporation Limited (hereinafter referred to as 'the Corporation' for short). The Corporation issues a draft notice inviting tender, for Sharavathy Pumped Storage Project calling for applications from eligible and prospective bidders. The project involves civil and hydro-mechanical works to be completed on EPC turnkey basis. The averment in the petition is draft so notified is on 09-01-2024. On 17-01-2024, a 4 subsequent notification comes about granting time of 30 days for preparation and submission of Techno-Commercial bid. This was communicated through electronic mail to all the prospective bidders. The petitioner, by its email dated 17-01-2024 claims to have sought a minimum of 90 days time for preparation and submission of bids for a project of such magnitude and complexity requiring both civil works, electro-mechanical and hydro-mechanical works to be completed on a turnkey basis. The averment in the petition is that the respondent did not respond to the e-mail sent on 17-01-2024. On 02-02-2024 a notice inviting tender in respect of the project was published by the respondent prescribing the date of submission of the techno-commercial bid on 21-02-2024. The petitioner is said to have addressed a letter on 05-02-2024 to the respondent emphasizing that the condition of submission of bid before 21-02-2024 would disable competition and is unreasonable and contrary to the public interest.
3. A pre-bid meeting was notified and held on 14-02-2024. In the pre-bid meeting it was stated that all the prospective bidders 5 sought for time, as the period stipulated was too short for preparedness of the project. On 17-02-2024 responses were issued by the Corporation to the queries raised at the pre-bid meeting and the respondent is said to have, for the first time, provided geotechnical study report and, therefore time from 17-02-2024 should commence is the averment. When things stood thus, by a corrigendum dated 17-02-2024 the timeline for bid submission which was to end on 21-02-2024 is extended up to 23-02-2024, which would be two days more than what was given earlier. It is calling this action in question, the petitioner is before this Court seeking the aforesaid prayer.
4. Heard Sri Udaya Holla, learned senior counsel appearing for the petitioner and Sri K.Shashikiran Shetty, learned Advocate General appearing for the respondent.
5. The learned senior counsel Sri Udaya Holla appearing for the petitioner would vehemently contend that the prescription of timelimit of 19 days or even 21 days runs completely contrary to the Karnataka Transparency in Public Procurements Rules, 2000 6 (hereinafter referred to as 'the Rules' for short). The learned senior counsel would take this Court through the documents appended to the petition to demonstrate that there are no reasons indicated for cutting short the minimum period of 30 days for submission of the tender. Tenders of this nature would require minimum 90 days period for preparation. Therefore, the petitioner sought time up to 02-05-2024. The learned senior counsel would further contend that the project is hurried only to favour particular tenderers. By the action of hurry, the petitioner is disabled from participating in the tender. He would submit that extension of time be granted by an order of this Court as sought.
6. Per-contra, the learned Advocate General Sri Shashikiran Shetty appearing for the Corporation would vehemently refute the submissions to contend that the petitioner has not participated in the tender. Even today it has no eligibility to participate in the tender, as it has equipped with civil works and does not have experience in electro-mechanical and hydro-mechanical works. It is now wanting to partner with someone else but no one is coming forward. Therefore the petitioner wants to stall the project. The 7 intention is mala fide. The petitioner, finding it difficult to get preparedness to execute the project, is seeking 90 days time. In the same breath there are three bidders who have already submitted their bids and because of the interim order granted, their bids are not opened. Therefore, he would submit that it is only the petitioner who is ineligible; does not have the capacity to undertake the project and does not participate in the tender but challenges the same on the ground that it is violative of Rule 17 of the Rules. He would further contend that sub-rule (2) of Rule 17 of the Rules permits the tender inviting authority to reduce the minimum period for reasons recorded in writing. He would take this Court through the documents appended to the petition including the note sheet to demonstrate that there are reasons recorded in writing for reduction of the time stipulated under the Rules. He would contend that as on to-ay, when the matter was being heard on 04.03.2024, the time is beyond 30 days. The Corporation has not yet opened the technical bid. Even today if the petitioner submits the bid, the Corporation is ready to accept it. The Advocate General would thus seek dismissal of the petition.
8
7. The learned senior counsel for the petitioner would join issue to contend that the petitioner does not have the eligibility to submit the bid today. But, it will get the eligibility if time is granted, as the magnitude of the project is too huge. He would submit that bidders may have submitted bids but the petitioner is not aware of the contents of those bid documents whether they are capable to doing the work or otherwise. The learned senior counsel would seek to place reliance on certain judgments of this Court interpreting Rule 17 of the Rules which would bear reference in the course of the order qua their relevance.
8. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. In furtherance whereof, the issue that falls for my consideration is, "Whether there is compliance with Rule 17 of the Rules and whether the petitioner having not participated in the tender can seek the prayer that is sought in case at hand?" 9
9. The facts are as aforementioned. Though non-participation of the petitioner in the bidding process would cut at the root of the matter and would be a threshold bar to entertain the petition preferred by the petitioner, since the allegation is that it is contrary to the statutory Rules, I deem it appropriate to examine the Rules and the interpretation of the Rules at the hands of the Division Bench and co-ordinate Bench of this Court.
10. The petitioner claims to be a company, under the Companies Act, 2013 and is a reputed multinational conglomerate operating in over 50 countries worldwide and has its business in engineering, manufacturing, technology and financial services. The issue in the lis is concerning a notice inviting tender for a project called SHARAVATHY PUMPED STORAGE HYDRO ELECTRIC PROJECT (8X250MW) UPPER DAM (SHIMOGA) & LOWER DAM (UTTARA KANNADA) DISTRICT, KARNATAKA and the work to be undertaken by the bidders is as follows:
"......
Design, Engineering, Manufacturing, testing at manufacturer's works before dispatch, Supply, transportation, storage at site, intra-site transportation, 10 insurance (transit, storage cum erection testing & commissioning), erection, testing and commissioning of 8 nos. Vertical Francis Reversible Pump-Turbines and synchronous Motor-Generator sets each of 250MW capacity along with all associated auxiliary and ancillary equipment, 420KV GIS, Pothead yard & Power evacuation Structures including civil works and hydro-mechanical works of Sharavathy Pumped Storage Project on EPC (TURN KEY) basis at Upper dam (Shimoga) & Lower dam (Uttara Kannada) District, Karnataka."
(Emphasis added) There were close to 14 participants in the pre-bid meeting including the petitioner. The document of pre-bid meeting is appended to the statement of objections of the Corporation. After the pre-bid meeting certain queries were raised by the participants in the pre- bid meeting. The Corporation claims to have answered those queries and then issued a notice inviting tender on 02-02-2024. The notice inviting tender so issued on 02-02-2024 has driven the petitioner to this Court in the subject petition. Several submissions are made with regard to technical expertise, geotechnical stamping and all other technicalities that were involved in the project. These are not that are necessary to be considered at this juncture. What is projected as action, contrary to law by the petitioner is, violation of Rule 17 of the Rules. Rule 17 of the Rules reads as follows: 11
"17. Minimum time for submission of tenders:- (1) The Tender Inviting Authority shall ensure that adequate time is provided for the submission of tenders and a minimum time is allowed between date of the publication of the Notice Inviting Tenders in the relevant tender Bulletin the last date for submission of tenders. This minimum period shall be as follows:-
(a) For tender up to rupees two crores in value, fifteen days; and
(b) For tenders in excess of rupees two crores in value thirty days.
(2) Any reduction in the time stipulated under sub-
rule (1) has to be specifically authorized by an authority superior to the Tender Inviting Authority for reasons to be recorded in writing."
(Emphasis supplied) Rule 17 deals with minimum time for submission of tenders. The Rule mandates that the Tender Inviting Authority should ensure that adequate time is provided for submission of tenders and minimum time is allowed between the date of publication of the notice inviting tender and the last date for submission of tenders. The minimum period is also prescribed in the Rules. Rule 17(1)(a) directs that a tender up to `2/- crores in value the period is 15 days and for tenders in excess of `2/- crores in value the period is 30 days. The tender, in the case at hand, is for `8,005/- crores. 12 Therefore, it is beyond `2/- crores and the minimum period stipulated under the Rules is 30 days. The tender is notified on 02-02-2024 and even in terms of the corrigendum the last date for submission is 24-02-2024. Therefore, it is 21 days. Merely because it is less than 30 days, it would not in every circumstance be violative of Rule 17 of the Rules. Sub-rule (2) of Rule 17 assumes significance to be noticed in the case at hand. Sub-rule (2) permits the Tender Inviting Authority to reduce the time stipulated in sub- Rule (1) by an authority superior to the Tender Inviting Authority and only for reasons to be recorded in writing. The reasons recorded in writing need not be, in the notice inviting tender. If the reasons are found in the note sheet or in the decision making process prior to issuance of tender it would suffice. Therefore, it is germane to notice the note sheet appended to the Statement of Objections of the Corporation. The relevant entries in the note sheet are as follows:
"(34) To expedite the implementation of the Sharavathy PSP, it is proposed to invite Short tender by adopting the observations of the SPTSC.
.. .. ...
(36) Under the circumstance explained above, kind approval is requested for the following:13
(i) Administrative approval for taking up the work of "Implementation of 8x250MW Sharavathy Pumped Storage Project in Shivamogga and Uttara Kannada District" at a total estimated cost of Rs.8005 Crores including GST and the draft Memo is placed on the right hand side for kind perusal and approval.
(ii) Approval for inviting Short Term Tender duly following KTPP Act.
(iii) For the Letter addressed to the Chairman, SPTSC communicating the compliance to the advisory.
... ... ... (40)FD: Discussed. Considering the notings in pre-
paras of the Office note, para-36 of the office note may kindly be approved.
(41)MD: Please discuss. Sd/- 2/2/24
Dir(T)(F) - Both.
Discussed with FD & TD
The State is facing severe power crisis this year.
Government has been procuring power from all sources, and has also issued notification under Section 11 to ensure power produced in the State accrues to the State. To achieve self-sufficiency in power for an RE -rich State of Karnataka, we need to kick start this pumped hydro project at the earliest.
The Board has noted earlier on 20-10-2023 that this plant was chalked out more than 5 years back. It could not be pursued thereafter for various reasons, including delay in preparation of technical report and DPR, and delay in getting requisite clearance.
Considering the necessity and importance of the project and to expedite the implementation, the Board has on 01.02.2024 has approved for calling short term tender for 21 days. Hence, para-34 proposal is approved. 14
Sd/-
2/2/24"
(Emphasis added) The reason found in the note sheet is as afore-extracted. Entry (41) is the direction by the Managing Director to discuss the issue with the Director (Technical) and (Finance). The continuity is found in the discussion which is as afore-quoted. The discussion also notices the resolution of the Board on 01-02-2024 for calling a short term tender for 21 days. Therefore, the Director Technical and Finance approved calling for tenders as found in entry-34. The resolution of the Board is also appended to the statement of objections.
11. The minutes of the meeting held in 296th meeting of the Board on 01-02-2024 discusses the entire spectrum of the project right from its inception till calling for tender. It is a detailed deliberation. The deliberation results in the following directions:
"296/10-02 The Board noted/observed as under:
(i) Observations of State Pre-Tender Scrutiny Committee and its compliance by KPCL;15
(ii) Revised amount put to tender amounting to Rs.8005 crore and the revised annual turnover amounting to Rs.3200/- crores.
(iii) Equity infusion to be provided by the government spread for a period of 5 years amounting to Rs.1800/- crore;
(iv) Financial institutions have in-principle sanctioned 80% loan of the project; and
(v) KPCL after reviewing the sub-contracting and retention amount clauses, opined to adopt the provision of KW 4 as per the suggestion of Pre-Tender Scrutiny Committee instead of obtaining Finance Department approval.
296/10.03 Under these circumstances, the Board Resolved that, approval be and hereby accorded for the following:
i. To take on record, the comments and observations of State Pre-Tender Scrutiny Committee and its compliance by KPCL;
ii. To retain tender clauses, for the following, as suggested by State Pre-Tender Scrutiny Committee:
a) for the revised estimate of Rs.8005 Crore, which has been updated as per the UNI-SR of 2023-24.
b) for retention of the Clauses 1.12.1.2 of Technical Criteria, clause 1.45 pertaining to Contract Performance Guarantee and clause 1.24.1 pertaining to Mobilization Advance payment.
iii. To publish the short term (21 days) tender in Karnataka Public Procurement Portal (KPPP portal)."
16The Board which is the superior authority to the Tender Inviting Authority permits publication of short term tender of 21 days and elaborate reasons are recorded. This is carried forward by the Managing Director on 02-02-2024 after deliberations with the Director (Finance) and Director (Technical). Therefore the waterfall of hierarchy is in the aforesaid manner.
12. Prior to the notice inviting tender as obtaining under sub- rule (2) of Rule 17 of the Rules, the Board deliberates upon issuance of short term tender by giving time of 21 days. This is at the top of the hierarchy. After the Board resolves on 01-02-2024, it is placed before the Managing Director on 02-02-2024. The Managing Director discussed with the concerned i.e., the Tender Inviting Authority. The Tender Inviting Authority, in terms of the resolution of the Board and for reasons recorded, further issues notice inviting tender on 02-02-2024 for 21 days. The issue is whether the reasons so rendered can be scrutinized by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India and the answer would be an unequivocal and an emphatic 'No'. Unless the reasons are so arbitrary and that such arbitrariness 17 would be palpable and demonstrable, it is the discretion of the Tender Inviting Authority to reduce the minimum period, the only rider is that it requires reasons to be recorded in writing. The reasons are extracted hereinabove. The reasons need not be elaborate, but should bear application of mind. The reason quoted supra does bear application of mind and in tune with law as laid down by the Division Bench and the co-ordinate Bench of this Court, in the very judgments relied on by the learned senior counsel for the petitioner. The Division Bench of this Court in the judgment reported in KARNATAKA POWER CORPORATION LIMITED v. PRODIGY HYDRO POWER (P) LIMITED1, has held as follows:
"9. Learned counsel appearing for the respondent/writ petitioner contends that the tender was invited for lease which contains renovation, operation and maintenance which includes services and also amounts to construction as the meaning of the word 'consideration' includes alternation and additions and it also involves the services as the successful tenderers is required to renovate the plant and machinery and building so also procurement of the goods, materials which are required for renovation, alteration and maintenance. He further submits that the contention of KPCL that the Managing Director has approved the tender notification amounts to an order passed under Sub- rule (2) of Rule 17 cannot be accepted because even if the managing director is empowered to reduce the time, he is required to pass an order in writing giving reasons for reduction 1 2015 SCC OnLine Kar 1388 18 of the time. Therefore, he contends that such an order is not passed by the Managing Director recording the reasons for reduction of the time stipulation under Rule 17(1). In the circumstances, he requests this Court to dismiss the appeal.
10. Having heard the learned counsel for the parties, the only point to be considered in these appeals is, "Whether learned Single Judge has committed an error in allowing the writ petition quashing the tender notification holding that the same is contrary to Rule 17 of the rules.
11. Facts in these appeals are not disputed as stated above, we have to consider only two points:
(1) Whether the rules are applicable to the facts of this case as contended by learned Sr. counsel Mr. Jagadeesh (2) If the rules are applicable, whether there is an order passed under Sub-rule (2) of Rule 17 by the superior officer to the tender inviting authority recording the reasons for reduction of the time.
12. So far as the first point is concerned, admittedly the four units consists of plant and machinery and building. KPCL has invited tenders not only to lease the land, building, plant and machinery but also for maintenance and operation of the four units. The word used "construction" has to be considered as it includes renovation and alteration. Similarly supply of goods and services includes procurement of machineries for maintenance and operation. These facts are not in dispute. If really transparency in public procurement rules are not applicable, there was no necessity for the KPCL to invite tenders following the procedure. It is not the case of the KPCL the tender inviting authority that these rules are not applicable to them. When KPCL and tender inviting authority admits that these rules are made applicable to the tender in question, in view of the meaning of "construction" and word "supply of goods and services", the contention of Mr. Jagadeesh has to be rejected. Accordingly, we hold point no. 1 against the appellant in the second appeal.
19
13. So far as the second point is concerned, the original records produced by the KPCL is verified by us. The Managing Director has only signed the tender notification as if he is approving the same. But he has not assigned any reasons to reduce the time. When there is no order passed by the Managing Director recording the reasons for reduction of time in the usual course, if he has only approved the notification, it cannot be contended by KPCL or by the other appellant that there is an order in writing by the Managing Director for reduction of time as contemplated under Sub-rule (2) of Rule 17 of the Rules. Accordingly, we hold point no. 2 also against the appellant.
14. When the learned Single Judge has given a categorical finding that the tender inviting authority has committed an error in not following the procedure as contemplated under Rule 17 and if a direction is issued to the KPCL to invite tenders afresh, this Court cannot find fault with the order of the learned Single Judge."
(Emphasis supplied) The Division Bench was interpreting this very rule i.e., Rule 17. At paragraph 13 of the judgment, the Division Bench after perusal of original records, observes that the Managing Director has only signed the tender notification as if he has approved the same, but has not assigned any reasons to reduce the time. When there are no reasons recorded, it would be violative of sub-rule (2) of Rule
17. The issue before the Division Bench was that there were no reasons recorded at all. This fact was confirmed on perusal of the 20 original file. In the case at hand, there are elaborate reasons that are recoded which are quoted hereinabove. They are found in the note sheet. Therefore, the said judgment would not become applicable to the facts of the case.
13. The other judgment relied on by the learned senior counsel for petitioner is in the case of CHAMUNDI MOTORS v. PRINCIPAL SECRETARY TO GOVERNMENT OF KARNATAKA2. A co-ordinate Bench again interpreted Rule 17. The co-ordinate Bench has held as follows:
"32. Insofar as third contention with regard to infraction of Rule 17 is concerned, it would be necessary to extract the said Rule for immediate reference and it reads:
"17. Minimum time for submission of tenders. -
(1) The Tender Inviting Authority shall ensure that adequate time is provided for the submission of tenders and a minimum time is allowed between date of publication of the Notice Inviting Tenders in the relevant Tender Bulletin the last date for submission of tenders. This minimum period shall be as follows.-
(a) for tenders upto rupees two crores in value, thirty days; and
(b) for tenders in excess of rupees two crores in value, sixty days.2
W.P.No.5608 of 2018 and connected cases decided on 2nd August 2018 21 (2) Any reduction in the time stipulated under sub- rule (1) has to be specifically authorized by an authority superior to the Tender Inviting Authority for reasons to be recorded in writing."
33. A bare reading of Rule 17 would clearly indicate that tender inviting authority should ensure that adequate time is provided to the bidders for submission of their tender and the minimum time to be allowed between the date of publication and notice inviting tender while publishing the same either in the bulletin or in the e-portal. Clause (a) of sub-rule(1) of Rule 17 would prescribe 30 days as the minimum time for tenders value up to two crores and tenders in excess of two crores, the time prescribed is 60 days. However, sub-rule (2) enables the authority superior to the tender inviting authority to reduce the time stipulated under sub-rule (1) and while undertaking such an exercise, the tender inviting authority has to record reasons in writing. Sub-rule (2) of Rule 17 does not indicate that reasons by the superior authority should be elaborate. In other words, if the order or the noting in the file would disclose that there is due application of mind by the superior authority for reducing the time stipulated under sub-rule (1), it would meet the test prescribed under sub- rule (2). Thus, there cannot be any straight jacket formula prescribed for the manner in which the reasons are to be recorded by the superior authority to reduce the time prescribed under sub-rule (1) of Rule 17. There might be complex situations and myriad circumstances under which the superior authority exercise the power for reducing the time. By way of illustrations, the following examples can illuminate as to why such direction has been given:
Illustrations:
(a) In case, a water channel being required to be built on emergent basis due to floods or excessive rise of water where the life and property are at stake, the superior authority in such circumstances, though the value of tender is more than what is prescribed under (a) and (b) of sub-rule (1) of Rule 17, can exercise the power to reduce the prescribed time.
(b) Whereas an electric transformer gets burnt down due to nature out burst either at a hospital, Railway Station or any public place is located, it may require urgent attention and in such 22 circumstances, where the value of such procurement being more than the value prescribed under (a) and (b) of sub-rule (1) of Rule 17, the superior authority would be empowered to reduce the time prescribed under sub-rule (1) in exercise of its power under sub-
rule (2) by recording the reasons in brief. In such circumstances, the decision so arrived at by the superior authority cannot be found fault with.
34. Keeping the aforestated illustrations in mind, when facts on hand are examined, as noticed herein above, records would disclose that saga of inviting the subject tender relates back to the year 2016. As noticed herein above, the Government order dated 12.08.2016 and 03.11.2016, would disclose that a sum of Rs.30.60 crores was ear-marked for purchase of auto-tipper (four-wheeler) for the purpose of disposal of solid waste, namely, 600 auto-tippers. Since there was a scheme for implementing the solid waste management between BBMP and Social Welfare/NGO organizations in the ratio of 75:25, the BBMP was required to procure 555 vehicles for disposal of solid waste in the city of Bengaluru. In this regard, a proposal was put-up way back in the year 2016 for purchase of said vehicles in the financial year 2016-17 and 2017-18 for a sum of Rs.1530 lakhs in each year, by ear- marking the said amount to be utilized for the purpose of purchase of 555 vehicles. Though the proposal has been put-up and on 09.03.2017, there was no indication with regard to floating of the tender since it was resolved to purchase the said vehicle from a single window agency, same was not accepted by the appropriate Government and in this regard, the Principal Secretary, Urban Development Department by communication dated 26.04.2017, called upon the Commissioner, BBMP to submit a fresh proposal and it is thereafter, a fresh proposal came to be put-up and it was resolved to procure the said auto- tipper vehicles at a cost of Rs.28.13 crores and for the first time, a note was put up by the Assistant Executive Engineer, Solid waste Management and Environmental Engineer of BBMP to call for short term tender. The note relating to the same has been perused by this Court by scrutinizing the original file and reason/noting at paragraphs 10 to 15 when read meticulously together, it does not disclose as to the reason that has been assigned for reducing the time. Infact first respondent herein by communication dated 19.08.2017 addressed to Commissioner - 23 BBMP has passed following query amongst other queries and it reads:
1 xxxx 2 xxxx 3 xxxx 4 xxxx
5. mÉAqÀgï PÀgÉzÀgÉ PÀrªÉÄ zÀgÀzÀ°è ¹UÀĪÀ ¸ÁzsÀåvÉ §UÉÎ AiÉÆÃa¸À¯ÁVzÉAiÉÄÃ?
35. Whether chances of getting vehicles in question for a lesser price is there, if tender is called for?
36. By reply dated 11.09.2017, second respondent has intimated first respondent that it was already resolved by technical committee to purchase vehicles by quotation and four (4) persons have quoted the prices of vehicles and for outer- model, tender would be called for. No direct answer is given to the query raised by first respondent. Infact, at paragraph No.15(4) of the noting while seeking approval of letter being forwarded to first respondent, officers of second respondent have stated to the following effect:
"4. EvÀgÉà CUÀvÀå ªÀiÁ¥ÁðqÀÄUÀ½UÉ (¨Ár/gÀZÀ£ÉAiÀÄ£ÀÄß ¤«Äð¸À®Ä, zsÀé¤ ªÀzÀsðPÀ ªÀåªÀ¸ÉÜ ºÁUÀÆ ¹ÖPÀjAUï PÁAiÀÄð) ªÀiÁvÀæ C¯ÁàªÀ¢ü mÉAqÀgï PÀgÉAiÀÄ®Ä C£ÀĪÉÆÃzÀ£É."
37. When this proposal was sent to the appropriate government, it was not approved or in other words, by communication dated 15.09.2017, the Principal Secretary addressed a letter to the Commissioner BBMP that issue had been placed before expert committee which examined this issue and it was resolved to issue a direction to the Commissioner to refer the same to the technical committee of BBMP and to furnish details with regard to purchase of the said vehicles under The Karnataka Transparency in Public Procurements Act, 1999. The resolution of expert committee has been extracted by the Principal Secretary, Urban Development Department in the said communication dated 15.09.2017 and it reads as under:
¤tðAiÀÄ: "DAiÀÄÄPÀÛgÀÄ, ©.©.JA.¦. gÀªÀgÀ ¥Àæ¸ÁÛªÀ£ÉAiÀÄ §UÉÎ C¢üPÁgÀAiÀÄÄPÀÛ ¸À«Äw ¸À¨sÉAiÀÄ°è PÀÆ®APÀĵÀªÁV ZÀað¹ CAwªÀĪÁV PÉ.n.¦.¦. PÁAiÉÄÝAiÀÄ »£É߯ÉAiÀÄ°è 565 DmÉÆà n¥ÀàgïUÀ¼À CªÀ±ÀåPÀvÉ, DmÉÆà n¥ÀàgïUÀ¼À ¤ªÀðºÀuÉ ºÁUÀÆ ¸ÀPÁðgÀªÀÅ PÉÆÃjgÀĪÀ E¤ßvÀgÉ ªÀiÁ»wUÀ¼À §UÉÎ WÀ£ÀvÁådå 24 ¤ªÀðºÀuÉAiÀÄ dAn DAiÀÄÄPÀÛgÀÄ ºÁUÀÆ ªÀÄÄRå C©üAiÀÄAvÀgÀgÀÄ ¥ÀÆt𠫪ÀgÀUÀ¼ÉÆA¢UÉ ªÀÄÄA¢£À C¢üPÁgÀAiÀÄÄPÀÛ ¸À«Äw ¸À¨ÉsAiÀÄ°è «µÀAiÀĪÀ£ÄÀ ß ªÀÄAr¸À®Ä ©.©.JA.¦.UÉ ¸ÀÆa¹ «µÀAiÀĪÀ£ÀÄß ªÀÄÄAzÀÆqÀ¯Á¬ÄvÀÄ (Deffered)".
38. On receipt of said communication, office of respondent No.2 has put a note for approval to call for short term tender i.e., 15 days vide paragraphs 25 to 28 of note sheet and it reads:
"3. WÀ£À ¸ÀPÁðgÀªÀÅ 2016-17 ªÀÄvÀÄÛ 2017-18£Éà ¸Á°UÉ ¥Á°PÉAiÀÄ WÀ£ÀvÁådå ¤ªÀðºÀuÉUÁV MzÀV¹gÀĪÀ C£ÀÄzÁ£ÀªÀ£ÀÄß ªÀiÁZïð-2018 gÉƼÀUÉ ¸ÀzÀâ¼ÀPÉ ªÀiÁrPÉƼÀî¨ÉÃPÁVgÀĪÀÅzÀjAzÀ ¸ÀPÁðgÀzÀ DqÀ½vÁvÀäPÀ C£ÀĪÉÆÃzÀ£É ¤jÃQë¹ 15 ¢£ÀUÀ¼À ¥ÀæZÁgÀ CªÀ¢ü ¤Ãr C¯ÁàªÀ¢ü mÉAqÀgï DºÁ餸À®Ä C£ÀĪÉÆÃzÀ£É."
39. Above note has been approved by Superintendent Engineer, Chief Engineer and Joint Commissioner and Commissioner on 28.12.2017. Though, approval to call for short term tender was to be accorded by Government, same has not been obtained.
40. In this background, the purported approval of superior authority to call for short-term tender by Notice Inviting Authority namely, the Executive engineer, Superintendent engineer, Joint Commissioner and Commissioner would recede to the background. Even otherwise, as already discussed herein above, reasons for reduction of time need not be elaborate or detailed reason is required to be given by superior authority. Even reasons recorded in brief for reduction of time would suffice as noticed herein above. The notice inviting authority may in certain circumstances explain the reasons in the note sheet giving elaborate reasons or reasons in brief as to what is the necessity for calling for a short-term tender or in other words, as to why the time prescribed under sub-rule (1) of Rule 17 is to be reduced by the superior authority. If such reasons are assigned in the note put-up by the Notice Inviting Authority for being approved by the superior authority and in such circumstances, if the superior authority exercise the power and approves such note though not with elaborate reasons, it would definitely meet the criteria prescribed under sub-rule (2) of Rule 17. However, in the instant 25 case as noticed herein above, neither the note put-up by the Notice Inviting Authority nor the approval by superior authority to the Notice Inviting Authority would disclose such exercise having been undertaken. In fact, the reason assigned in paragraph No.15(4) calling for short term tender, if perused, the only irresistible conclusion which can be drawn is, it is no reason at all inasmuch as it is stated for purpose of specifying the technical details with regard to body building of the vehicle, fixing of sound system and skickering work, tender is to be called for by way of short term and not for purchase of the vehicles in question at all. That apart, the superior authority which has approved the note of Notice Inviting Authority is for approving the project. In fact, that is to call for procurement of the vehicles for being used in disposal of solid waste management. There is no reason whatsoever forthcoming from the file, either the Notice Inviting Authority having specified the reasons or assigned the reasons for calling for short-term tender or the superior authority having applied its mind to reduce the time. The exception cannot become a rule. The superior authority has no doubt power to reduce the time. There should be application of mind for reduction of time. The expression "application of mind" and "reasons to be assigned" may vary from case to case and would also take its colour and texture depending upon the terrain in which the circumstances may travel or arise."
(Emphasis supplied) The coordinate Bench holds that the approval of the superior authority to call for short tender should be with reasons recorded in writing, if it is reduction of time. The Court holds that reasons recorded need not be elaborate or detailed by the superior authority. Even reasons recorded in brief for reduction of time would suffice. Again perusing the file, the Court holds that there is 26 no reason whatsoever forthcoming from the file either of the Tender Inviting Authority or the superior authority to reduce the time. The Court holds that exception cannot become a rule. The superior authority has no doubt the power to reduce the time but it should be after due application of mind. The Court further holds that it could vary from case to case. Again, if the law laid down by the co- ordinate Bench is considered qua the facts in the case at hand, the issue is in consonance with what the co-ordinate Bench has held. The reasons are quoted hereinabove and they do bear application of mind. As held by the coordinate Bench, the reasons need not be elaborate. The reasons in the case at hand are in fact elaborate. All other judgments relied on are to the same effect. On a perusal at the note sheet and the decision of the Tender Inviting Authority or the superior authority i.e., the Board, this Court is of the considered view that it is in complete compliance with sub-rule (2) of Rule 17 of the Rules. Therefore, there is no statutory aberration in the case at hand.
14. It is an admitted fact that the petitioner has not participated in the tender. It is not that no tenderer has participated 27 pursuant to the notice inviting tender. There are three bidders, all three of them have submitted their bids. The three companies are as follows:
(i) Mega Engineering India Limited (MEIL);
(ii) Hindustan Construction Company (HCC)
(iii) GVPR Engineers Limited (GVPR).
If three can participate in the bid by submitting necessary bid documents, the petitioner's claim that it needs time to get prepared to participate in the bid cannot be accepted. If the petitioner is ineligible even according the averments in the petition, it cannot be said that the Tender Inviting Authority has to holds its hand, wait till the petitioner becomes eligible and then notify the tender. If the petitioner has sat outside the tender by not participating in it, it cannot challenge any clause in the tender, as several submissions are made with regard to technicalities, merit or conditions of tender stipulated. All that cannot be entertained at the instance of a tenderer who does not participate in the tender, stays outside and wants to throw a spanner into the spoke of the tender. The issue whether the tenderer not participating in the tender, can call the conditions in tender in question, is no longer res integra. The Apex 28 Court in the case of NATIONAL HIGHWAYS AUTHORITY OF INDIA v. GWALIOR-JHANSI EXPRESSWAY LIMITED3, in considering this issue, has held as follows:
"20. While considering the relief claimed by the respondent (claimant), the same should have been tested on the touchstone of the principle governing the tender process, especially when the validity of the tender document has not been put in issue or challenged before any competent forum. Going by the terms and conditions in the tender documents, as already alluded to in para 10 above, there is no title of doubt that the right of the claimant (respondent) to match the bid of L-1 or to exercise ROFR would come into play only if the respondent was to participate in the tender process pursuant to the notice inviting tenders from the interested parties. The objective of tender process is not only to adhere to a transparent mechanism but to encourage competition and give equal opportunity to all tenderers with the end result of getting a fair offer or value for money. The plain wording of the eligibility clause in the tender documents and the incidental stipulations make it explicit that the respondent was required to participate in the tender process by submitting its sealed bid (technical and financial). The fact that a deeming clause has been provided in the tender document that if the respondent was to participate in the bidding process, it shall be deemed to fulfill all the requirements of the tender Clauses 3 to 6 of RFP, being the existing concessionaire of the project, does not exempt the respondent from participating in the tender process; rather the tenor of the terms of the documents made it obligatory for the respondent to participate in the tender process to be considered as a responsive bidder, along with others. Having failed to 3 (2018) 8 SCC 243 29 participate in the tender process and, more so, despite the express terms in the tender documents, validity whereof has not been challenged, the respondent cannot be heard to contend that it had acquired any right whatsoever. Only the entities who participate in the tender process pursuant to a tender notice can be allowed to make grievances about the non-fulfillment or breach of any of the terms and conditions of the tender documents concerned. The respondent who chose to stay away from the tender process, cannot be heard to whittle down, in any manner, the rights of the eligible bidders who had participated in the tender process on the basis of the written and express terms and conditions. At the culmination of the tender process, if the respondent had not participated, in law, the offer submitted by the eligible bidders is required to be considered on the basis of the stated terms and conditions. Thus, if the claim of the respondent was to be strictly adjudged on the basis of the terms and conditions specified in the subject tender document, the respondent has no case whatsoever."
(Emphasis supplied) The judgment of the Apex Court has been followed by the Division Bench of High Court of Calcutta in the case of SUBIR GHOSH v. STATE OF WEST BENGAL AND OTHERS4 wherein the Division Bench of the High Court of Calcutta also considers the fact that a tenderer who participates in the pre-bid meeting ought to have submitted his tender along with the documents to 4 2020 SCC OnLine Cal 2213 30 raise a challenge to the tender or the tender conditions at the later point in time. The Division Bench of High Court of Calcutta holds as follows:
"...... ..... .....
4. The more important factor is that the tender process in this case opened sometime in March, 2019 and the closing date for submitting online bids was April 1, 2019. The writ petition was filed in January, 2020. Though it is submitted on behalf of the writ petitioner that the time to submit the bids was extended, no specific date in such regard is indicated. What is apparent is that the writ petitioner did not participate in the bidding process and yet chose to challenge the same.
5. It is possible that a prospective bidder finds the terms of the tender documents to be unfair or illegal and challenges the same; but such challenge has to be before the time to put in the bids is closed. At any rate, if a bid is made and the bid is thrown out on an illegal or unfair ground contained in the tender documents, even then, a challenge can be fashioned. But a person who has not participated in the bidding process at all cannot challenge the tender conditions on any ground whatsoever. This admitted aspect of the matter escaped the attention of the Single Bench while passing the impugned order of January 15, 2020.
6. For the reasons aforesaid, the order dated January 15, 2020 cannot be sustained and the same is set aside. Since the best arguable case of the writ petitioner will not result in any of the tender terms being altered as the writ petitioner did not participate in the process at all, the writ petition itself is dismissed. Nothing in this order will be construed to be an approval of the terms and conditions of the tender document and in an 31 appropriate challenge, the same may be considered in accordance with law."
(Emphasis supplied) The Apex Court, in the later judgment, in the case of AIRPORT AUTHORITY OF INDIA VS. CENTRE FOR AVIATION POLICY, SAFETY & RESEARCH (CAPSR) & OTHERS5, has held as follows:
".... .... ....
25. We have heard learned counsel for the respective parties at length.
26. At the outset, it is required to be noted that respondent No. 1 claiming to be a non-profit organisation carrying out research, advisory and advocacy in the field of civil aviation had filed a writ petition challenging the tender conditions in the respective RFPs. It is required to be noted that none of the GHAs who participated in the tender process and/or could have participated in the tender process have challenged the tender conditions. It is required to be noted that the writ petition before the High Court was not in the nature of Public Interest Litigation. In that view of the matter, it is not appreciable how respondent No. 1 - original writ petitioner being an NGO would have any locus standi to maintain the writ petition challenging the tender conditions in the respective RFPs. Respondent No. 1 cannot be said to be an "aggrieved party". Therefore, in the present case, the High Court has erred in entertaining the writ petition at the instance of respondent No. 1, challenging the eligibility criteria/tender conditions mentioned in the respective RFPs. The High Court ought to have dismissed the writ petition on the 5 2022 SCC OnLine SC 1334 32 ground of locus standi of respondent No. 1 - original writ petitioner to maintain the writ petition.
27. Even otherwise, even on merits also, the High Court has erred in quashing and setting aside the eligibility criteria/tender conditions mentioned in the respective RFPs, while exercising the powers under Article 226 of the Constitution of India. As per the settled position of law, the terms and conditions of the Invitation to Tender are within the domain of the tenderer/tender making authority and are not open to judicial scrutiny, unless they are arbitrary, discriminatory or mala fide. As per the settled position of law, the terms of the Invitation to Tender are not open to judicial scrutiny, the same being in the realm of contract. The Government/tenderer/tender making authority must have a free hand in setting the terms of the tender."
(Emphasis supplied) The Apex Court holds that the tender inviting Authority is at liberty to choose its own method and the only permissible judicial review would be in the decision making process. The decision making process in the case at hand cannot be challenged by the petitioners, as the petitioners have not even participated in the tender."
15. In the light of the preceding analysis, the petition does not deserve entertainment. The examination of projection of a statutory aberration by petitioner fails, as it is in tune with the 33 mandate of sub-rule (2) of Rule 17 of the Rules and above all, the petitioner having not participated in the tender, cannot challenge any conditions of tender. No Tender Inviting Authority can be directed to hold the tender, till the tenderer meets eligibility or prepares for participation in the tender. If he is ineligible; he is ineligible, and if he has not participated, he would lose locus to challenge.
16. For the aforesaid reasons, the following:
ORDER
(i) The petition lacking in merit stands rejected. Interim order, if any subsisting, stands dissolved.
(ii) It is open to the petitioner to avail of such remedy as is available in law, at the relevant point in time, if available in law.
(iii) The Tender Inviting Authority is at liberty to take the tender to its logical conclusion.
Sd/-
JUDGE Bkp/CT:MJ