Karnataka High Court
M/S Transasia Bio Medicals Ltd vs Principal Secretary on 12 December, 2022
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF DECEMBER, 2022 R
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.23192 OF 2022 (GM - TEN)
BETWEEN:
M/S TRANSASIA BIO-MEDICALS LTD.,
INCORPORATED UNDER THE COMPANIES ACT, 1956
(NO.1 OF 1956) AND COMPANY LIMITED.
HEAD OFFICE: TRANSASIA HOUSE
8, CHANDIVALI STUDIO ROAD
ANDHERI (E), MUMBAI - 400 072
REP. BY ITS DIVISIONAL
BUSINESS HEAD-SOUTH
P.K.MEGHANANDAN
AGED ABOUT 56 YEARS.
... PETITIONER
(BY SRI NATARAJA BALLAL, ADVOCATE)
AND:
1. PRINCIPAL SECRETARY
DEPARTMENT OF HEALTH AND FAMILY WELFARE
GOVERNMENT OF KARNATAKA
VIKASA SOUDHA
DR.AMBEDKAR VEEDHI
BENGALURU - 560 001.
2. ADDITIONAL DIRECTOR
KARNATAKA STATE DRUG LOGISTICS
AND WAREHOUSING SOCIETY
2
NO 1, SIDDAIAH PURANIK ROAD
KHB COLONY, MAGADI ROAD
BENGALURU - 560 079.
3. M/S AGAPPE DIAGNOSITICS LIMITED
INCORPORATED UNDER THE COMPANIES ACT, 1956
COMPANY LIMITED.,
KERALA.
X283-C, AGAPPE HILLS
CHENGARA
PATTIMATTOM (PO)
ERNAKULAM DISTRICT
KERALA - 683 562.
... RESPONDENTS
(BY SRI B.V.KRISHAN, AGA FOR R1;
SRI GANGADHAR R.GURUMATH, SR.ADVOCATE FOR
SRI RAVIRAJ MALALI, ADVOCATE FOR R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE
RECORDS FROM THE R1 AND R2; QUASH THE ORDER OF THE R1
DATED 09.11.2022 DISMISSING THE APPEAL NO HFW 04 FPR 2021
(ANNEXURE-G) AND ETC.,
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 05.12.2022, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
The petitioner is before this Court calling in question order dated 09-11-2022 by which the Appellate Authority rejects the 3 appeal filed by the petitioner and also calls in question the notice inviting tender dated 23-09-2020.
2. Brief facts that lead the petitioner to this Court in the subject petition, as borne out from the pleadings, are as follows:-
The petitioner is M/s Transasia Bio-Medicals Limited (hereinafter referred to as 'the Company' for short). The Company claims to be incorporated under the provisions of the Companies Act, 1956 and is a leading diagnostic Company since 1985. The Company further claims to be India's largest In-vitro Diagnostic Company offering solutions and products in Biochemistry, Hematology, Coagulation, ESR, Immunology, Urinalysis and other incidental diagnostic tests. It is a Multi-National Company with the brand name 'Erba' which has its footprints in several other countries.
3. A notice inviting tender was issued by the 2nd respondent/Karnataka State Drug Logistics and Warehousing Society which comes within the Department of Health and Family Welfare, Government of Karnataka for procurement of 1201 numbers of semi automated Bio-chemistry analyzer and 171 4 numbers of Fully Automated Biochemistry analyzer on 23-09-2020. It is the allegation of the petitioner that certain technical specifications that were sought in the tenders were not the standard conditions at par with the requirement in the industry. The requirement in the industry, according to the Company, was 200 tests per hour but the tender notification has fixed 220 tests per hour which nowhere in India such machine is installed. It is averred that there was a pre-bid meeting called and all the participants objected to the condition of 220 tests per hour in a particular machine. The Tender Scrutiny Committee did not accede to the objections of the petitioner and went on with the scrutiny of tenders and declared the 3rd respondent to be the successful bidder.
4. On the contract being awarded to the 3rd respondent, the petitioner had immediately knocked at the doors of the Appellate Authority under Section 16 of the Karnataka Transparency in Public Procurements Act, 1999 ('the Act' for short). Though sub-section (3) of Section 16 mandates that appeal be decided within 30 days of its filing, it was not taken up for its consideration which led the petitioner to knock the doors of this 5 Court in Writ Petition No.5387 of 2021. This Court by its order dated 24-03-2021 disposed of the writ petition with a direction to the Appellate Authority to dispose of the appeal. After the said direction, the Appellate Authority has dismissed the appeal by its order dated 09-11-2022 which forms the challenge in the subject petition.
5. Heard Sri Nataraja Ballal, learned counsel appearing for the petitioner, Sri B.V.Krishna, learned Additional Government Advocate appearing for respondent No.1 and Sri Gangadhar R.Gurumath, learned senior counsel appearing for respondent No.3.
6. The learned counsel appearing for the petitioner would seek to contend that the tender is floated with a norm that is not sought anywhere in the country. It is only to benefit the 3rd respondent that the said norm is stipulated, as no tenderer would be able to procure the machine which would run 220 tests per hour. The industry norm is 200 tests per hour. Therefore, he would contend that the tender is vitiated by such mala fide intention, as it is floated only to suit the 3rd respondent. The learned counsel would further submit that the loss to the exchequer with the quotation of 6 the successful bidder is also ignored by the State, as the 3rd respondent has quoted something more than what is available in the market. It is his submission that atleast that should have weighed in the mind of the Tender Scrutiny Committee before awarding the contract in favour of the 3rd respondent. He would allege that the Appellate Authority has not considered any of the contentions raised by the petitioner in the appeal memorandum and, therefore, the said order is vitiated. As a consequence of all these contentions, he would seek a direction to the State Government to re-issue the tender with appropriate specifications.
7. On the other hand, the learned senior counsel appearing for the 3rd respondent would seek to contend that the petitioner in one way or the other has been blocking execution of the contract in favour of the 3rd respondent. Every time when the contract is sought to be signed, the petitioner comes up with a petition and, therefore, public interest suffers, as the contract is for medical diagnostic equipments which are to be procured to the District Hospitals. For the last close to three years, there is no progress in the tender all for the reason of the petitioner raising a challenge to 7 such tender. He would contend that the petitioner himself had offered that he would procure fully automated machine with testing capacity of more than 200 tests per hour in an earlier tender of the same nature. The learned senior counsel would submit for the same tender on an earlier occasion, the petitioner himself had quoted more than what the 3rd respondent has quoted in the impugned tender. Therefore, it is his submission that only for the purpose of blocking execution of contract in favour of the 3rd respondent, the petitioner has filed petitions and the procurement of machines and its delivery has not yet happened.
8. The learned Additional Government Advocate representing the Tender Inviting Authority would contend that the allegation of the petitioner that specifications were suited to favour the 3rd respondent is a figment of imagination as there is no material produced to demonstrate the said allegation. On all other grounds the learned Additional Government Advocate would toe the lines of the learned senior counsel representing the 3rd respondent. 8
9. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.
10. The State Drug Logistics and Warehousing Society of Government of Karnataka issues notices inviting tender on 23-09-2020 for procurement of Semi Automated Biochemistry Analyzer and Fully Automated Biochemistry Analyzer. The procurements were of 1201 units and 171 units respectively. They were two separate tenders and two cover tenders in terms of the Act and the Rules framed thereunder. The tenderers who get qualified in the analysis of the technical bid would become entitled for scrutiny of their respective financial bid. The petitioner and the 3rd respondent along with others participated in the said tender. The contract was awarded in favour of the 3rd respondent herein of both the tenders on 06-02-2021. The moment purchase orders were issued, the petitioner had knocked the doors of the Appellate Authority in an appeal and on the ground that the Appellate Authority had not taken up the appeal for consideration knocked 9 the doors of this court in Writ Petition No.5387 of 2021. This Court disposed of the petition on 24-03-2021 by the following order:
"3. Learned advocates on both sides agree that this petition may be disposed of by permitting all parties to put forth their case before the Appellate Authority subject to the condition that no further purchase orders shall be issued.
4. The said submission is just and appropriate.
5. In the circumstances, this petition is Disposed of with a direction that parties shall be governed by the decision of the Appellate Authority and no further purchase orders shall be issued till disposal of the appeal.
6. As prayed for by Sri Shashikiran Shetty, learned senior Advocate, the advocate on record is permitted toad M/s Sysmex Corporation as respondent No.3.
7. As prayed for by Sri Shashikiran Shetty, respondent No.3 is also permitted to file impleadment application before respondent No.1 and if such an application is made, respondent No.1 shall consider the same and pass orders.
All contentions of parties are kept open."
(Emphasis supplied) The contention before this Court in the said writ petition was that purchase orders have already been issued in terms of the tender and the learned senior counsel for the 3rd respondent had disputed it. Therefore, this Court passed an order that till the Appellate Authority decides the issue, no further purchase orders shall be issued. The said order has become final and no purchase orders were issued in favour of the 3rd respondent herein thereafter. The 10 Appellate Authority by order dated 09-11-2022 dismissed the appeal filed by the petitioner rejecting all the contentions that were advanced. It is this order of the Appellate Authority along with the notice inviting tender that is called in question in the subject petition.
11. The contentions advanced, by the learned counsel for the petitioner, inter alia is that, specifications in the tender have been so made only to suit the 3rd respondent, the successful tenderer. According to him, no procurement entity could ever prescribe a specification to the effect that there should be 220 tests per hour in a semi automated biochemistry analyzer. This statement is belied by the 3rd respondent in its statement of objections wherein it is averred that there are 12 brands of machines in India with range of 220 to 300 tests per hour. Those brands and tests that they can undertake are as follows:
Company Brand Name Throughput
IRIS healthcare iCHem 200 225 Tests/hour
IRIS healthcare CS-T240 240 Tests/hour
IRIS healthcare Autolyser 250 Tests/hour
Tulip BT 1500 250 Tests/hour
Mindray BS 240 pro 240 Tests/hour
Randox Daytona Plus 270 Tests/hour
Sysmex BX 3010 270 Tests/hour
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Mindray BS 390 Upto 300 Tests/hour
Aspen Chem 300 Upto 300 Tests/hour
Trivitron Nano Lab 500 Upto 300 Tests/hour
Horiba Pentra C400 300 Tests/hour
Therefore, the contention that the prescription of 220 tests per hour is contrary to the industry norm and standard condition of prescription of tests in such tenders is unacceptable. The chart (supra) clearly indicates that there are several machines in India with a range from 220 to 300 tests per hour. Even if it is contrary to industry norm, the petitioner has participated in the said tender knowingly full well that it was contrary to the industry norm. Having participated in the tender, by accepting the conditions of tender, the petitioner cannot later on turn around and contend that specification of 220 tests per hour is contrary to law. It is for the Tender Inviting Authority to assess the need and issue tender with conditions that would suit the Tender Inviting Authority and the purpose for which such procurement is sought. The petitioner cannot contend that the norm that was prevailing in certain circulars should alone govern the conditions of tender. This very statement is belied in the statement of objections so filed by the 3rd respondent.
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12. The other contention is that the 1st respondent has erred in not considering the exorbitant price quoted by the 3rd respondent and the said quotation resulting in loss to the exchequer. There is a huge price difference from what is available in the market and what is projected by the 3rd respondent. The learned counsel for the petitioner would contend that this factor at least should have weighed in the mind of the Tender Inviting Authority not to accept the bid of the 3rd respondent as it was resulting in loss to the State exchequer. It is his contention that the 3rd respondent has quoted Rs.86,000/- per equipment when the same equipment was purchased at Rs.59,900/- in the year 2018-19. This is again belied in the statement of objections filed by the 3rd respondent. The petitioner had knocked at the doors of this court in Writ Petition No.41685 of 2017 calling in question a tender for similar procurement. In the said tender the quote of the petitioner for fully automated biochemistry analyzer was Rs.14.50 lakhs when the market rate was Rs.10 lakhs for 83 equipments which would work out even more than what the petitioner is now seeking to contend. The table reads as follows:
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Equipment Quantity Estimated Single Revised Market approved Cost Bid Bid Rate Rs. Rs. Rs. Rs.
3-Part 2652 1.8 lakh 3.03 lakh 3.47 lakh 2.41 lakh Haematology Analyzer Fully 83 12 lakh 14.50 lakh 16.21 lakh 10 lakh Automatic Biochemistry Analyzer Semi 2147 0.80 lakh 0.72 lakh 0.82 lakh 0.64 lakh Automatic Biochemistry
If this is the bid that the petitioner had submitted for a similar tender earlier, it is not open for him to contend that the price quoted by the 3rd respondent is so exorbitant that it would result in loss to the exchequer. Thus, no rejoinder is filed by the petitioner to the aforesaid contentions. Both the grounds urged by the learned counsel for the petitioner - one contending that the specification of 220 tests per hour is contrary to law and the price quoted by the 3rd respondent is so exorbitant that it would result in loss to the exchequer tumbles down. Therefore, the challenge so made to the tender is rendered unacceptable.
13. The tender notification was issued on 23-09-2020. It appears that the 3rd respondent was chosen to be the successful bidder and work orders were sought to be issued in the year 2021. 14 The procurement was for supply of these machines to diagnostic centres in the hospitals of Government. Though close to 2 years and six months have passed by, the procurement is not complete. The petitioner knowing full well that the grounds that it has urged are all untenable as it was aware of the fact that the industry norm is not 200 tests per hour but there are several machines which can bring about more tests per hour and the price that it had quoted earlier was more than the price now quoted by the 3rd respondent, has stonewalled execution of contract in favour of the 3rd respondent. In the peculiar facts where such procurement is sought to be made in public interest for distribution of medical equipments to the diagnostic centres in Government hospitals, public interest would be paramount, unless the tender is shrouded with mala fides or is contrary to law. None of those factors exist. Even then, the petitioner is successful in stonewalling execution of contract. Therefore, it is a case where the petition deserves to be rejected imposing exemplary cost upon the petitioner.
14. It is also germane to notice, that this Court is flooded with cases seeking a direction by issuance of a writ in the nature of 15 mandamus directing the Appellate Authority to decide the appeal within a time frame, as allegations galore that the Appellate Authority does not take up appeals and decide the same. The present case forms one such illustration. The tender was invited on 23-09-2020. Even according to the order of the Appellate Authority, award of contract was made in favour of the 3rd respondent on 06-02-2021. The appeal preferred by the petitioner herein before the Appellate Authority was on 25-02-2021. Statement of objections of the 3rd respondent was filed before the Appellate Authority on 03-04-2021. The appeal was not taken up for its consideration. That drives the petitioner to this Court in Writ Petition No.5387 of 2021 seeking a direction to expedite the disposal of the appeal. This direction comes about on 24.03.2021. The Appellate authority decides the appeal on 09.11.2022, which is one year and eight months after filing of the appeal.
15. The Appellate Authority is created under the statute i.e., KTPP Act. The powers and functions of the Appellate Authority are also ascribed under the Act i.e., in terms of Section 16 of the Act. Section 16 of the Act reads as follows:
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"16. Appeal.- 1. Any tenderer aggrieved by an order passed by the Tender Accepting Authority other than the Government under section 13 may appeal to the prescribed authority within thirty days from the date of receipt of the order:
Provided that the prescribed authority may, in its discretion allow further time not exceeding thirty days for preferring any such appeal, if it is satisfied that the appellant had sufficient cause for not preferring the appeal in time.
2. The prescribed authority may after giving opportunity of being heard to both the parties pass such order thereon as it deems fit and such order shall be final.
3. The prescribed authority shall as far as possible dispose of the appeal within thirty days from the date of filing thereof."
(Emphasis supplied) Sub-section (1) of Section 16 gives liberty to the aggrieved tenderer other than the Government to prefer an appeal before the Appellate Authority within 30 days from the date of receipt of the order i.e., issuance of work order. Discretion vested is 30 days more for preferring the appeal on sufficient cause being shown. Therefore, the appeal has to be preferred within 60 days of issuance of work order. Sub-section (2) directs that the Appellate Authority after giving opportunity of being heard would pass appropriate orders and sub-section (3) directs the Appellate Authority to decide the appeal within 30 days. The rider is, as far as 17 possible. Therefore, the Appellate Authority shall endeavour to conclude the appeal within 30 days. The prescription under sub- section (3) is that the oprescribed authority, shall as far as possible dispose of the appeal within 30 days. Thugh, it cannot but be held to be mandatory, the Appellate Authority should endeavour to conclude the appeal within a certain time frame, if not 30 days, a definite time frame. It is in public interest as well, that the Appellate Authority decides the appeal within a time frame.
16. This Court is not oblivious to the fact that the Appellate Authority, would have manifold responsibilities and functions, to be performed apart from deciding the appeal under the Act. Therefore, in public interest, the Appellate Authority shall henceforth, endeavour to conclude the appeal at an outer limit of 90 days, if not 30 days, as prescribed under the statute. Beyond 90 days, if the appeal is kept pending, it would be contrary to public interest and the Authority shall record reasons in writing for not concluding the appeal within an outer limit of 90 days. It is needless to observe that the parties to the lis before the Appellate Authority shall always cooperate with such proceedings. 18
17. The case at hand forms a classic illustration, where public interest has suffered due to the Appellate Authority keeping the appeal for its decision from 01-03-2021 up to 09-11-2022, for 21 months contrary to the prescription in the statute for a disposal in 30 days. Not for nothing that the statute prescribes that the appeal be decided in 30 days of its filing. There can be no justification whatsoever to keep the appeal pending for 630 days as against 30 days. The Appellate Authority appears to be swayed by the statute depicting disposal of the appeal in 30 days to be as far as possible. The words 'as far as possible' cannot be taken as 'so far as possible', so as to defeat the object of the statute qua limitation. Such appeals filed within the time frame under Section 16(1) of the Act shall be decided under Section 16(3) of the Act, within 90 days from its filing. The Appellate Authority shall draw up and regulate the procedure for such disposal by limiting the time for filing the objections or the rejoinder to the objections that would be filed. Compliance with the aforesaid directions would be in public interest and public interest in any action of the State is paramount. 19
18. For the aforesaid reasons, I pass the following:
ORDER
(i) The Writ Petition is dismissed with costs of Rs.25,000/-
(Rupees twenty five thousand only) payable by the petitioner to the Karnataka State Legal Services Authority, within 12 weeks from the date of receipt of a copy of this order and filing an acknowledgment thereto before the Registry of this Court.
(ii) If the execution of contract is stalled due to the pendency of these proceedings with the dismissal of the petition, the State would be at liberty to proceed with the matter.
Sd/-
JUDGE bkp CT:MJ