Karnataka High Court
M/S Mic Electronics Limited vs South Western Railway on 31 January, 2023
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 31ST DAY OF JANUARY, 2023
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.744 OF 2023 (GM - TEN)
BETWEEN:
M/S MIC ELECTRONICS LIMITED
REGISTERED OFFICE AT NO.192/B
PHASE - II, CHERLAPALLY
MEDCHAL, MALKAJGIRI
HYDERABAD
TELANGANA STATE - 500 047
REPT. BY ITS MANAGING DIRECTOR
REGD. UNDER COMPANIES ACT, 1956.
... PETITIONER
(BY SRI D.R.RAVISHANKAR, SR.ADVOCATE FOR
SRI SARAVAN S., ADVOCATE)
AND:
1. SOUTH WESTERN RAILWAY
MYSORE DIVISION-S AND -T
2ND FLOOR, DRM BUILDING
IRWIN ROAD, MYSURU
KARNATAKA - 570 001
REPT. BYITS GENERAL MANAGER.
2. SENIOR DIVISIONAL SIGNAL
AND TELECOM ENGINEER
SOUTH WESTERN RAILWAY
MYSURU DIVISION-S AND -T
2
2ND FLOOR, DRM BUILDING
IRWIN ROAD, MYSURU
KARNATAKA - 570 001.
... RESPONDENTS
(BY SRI ABHINAY Y.T., ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT
ACT OF RESPONDENT UNILATERALLY WITHDRAWING THE TENDER
AS PER ANNEXURE-B VIDE NO.13-SNT-MYS-2022, DTD:
14.11.2022, ANNEXURE-B1, DTD 14.11.2022, VIDE NO.13SNT-
MYS-2022, AND ANNEXURE-B2 DTD 28.10.2022, VIDE NO.10-SNT-
MYS-2022-01, ISSUED BY THE R2, AFTER THE PETITIONER BEING
DECLARED AS L1 BIDDER IS UNCONSTITUTIONAL AND ETC.,
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 23.01.2023, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
The petitioner is before this Court calling in question Notification dated 14-11-2022 and all subsequent actions whereby the respondents have re-tendered the tender that was sought to be awarded to the petitioner and has sought a direction by issuance of a writ in the nature of mandamus to take the declaration of the petitioner to be the lowest bidder to its logical conclusion. 3
2. Heard Sri D.R. Ravishankar, learned senior counsel appearing for the petitioner and Sri Y.T. Abhinay, learned counsel appearing for the respondents.
3. Facts adumbrated are as follows:-
The petitioner claims to be a Company incorporated under the provisions of the Companies Act, 1956 having established on 17-05-1988 and further claims that it is in the business of manufacturing, supply, erection and commissioning of LED Graphic, video, text displays, LED lighting solutions, embedded systems, electronic products, telecom software and communication and all other allied products and also entertain annual maintenance contracts at various divisions and zones of the Indian Railways. The 2nd respondent/South Western Railways issues notice inviting tender on 03-10-2022 floating three tenders relating to Passenger Information Systems. The tender was for display of LED graphic screens for the information about the trains in the Railways. The petitioner submitted its bid along with others who were three in number and emerged as a lowest bidder i.e., L1 on 28-11-2022. It was directed that the petitioner should produce all test certificates 4 that would necessitate the tender to be taken further and the approval of those certificates was to be by the RDSO. The certificates and the conditions stipulated in the said communication were to be complied by the petitioner on or before 06-12-2022. A communication is made on 05-12-2022 indicating that the Company has all the infrastructure and capacity in terms of the communications of RDSO or has latest equipments for installations of various IPIS equipments. On 22-12-2022 finding that the petitioner was short falling in the specifications the respondents refloated the very tender in which the petitioner had emerged as the lowest bidder. The petitioner again communicates to the respondents on 23.12.2022 about the unilateral decision being taken with regard to the tender of the petitioner. On 24-12-2022 the tender in which the petitioner had participated was cancelled, EMD amount refunded and the work re-tendered. It is this that drives the petitioner to this court in the subject petition.
4. The learned senior counsel representing the petitioner would contend with vehemence that the petitioner had all the infrastructure. The tender could not have been cancelled mid- 5 stream after declaring the petitioner to be the lowest bidder. The respondent being a State under Article 12 of the Constitution of India could not have acted arbitrarily by cancelling the tender and re-tendering the same work. He would submit that the entire action is in violation of the principles of natural justice as the petitioner is kept in dark on all the events that have happened pursuant to his declaration as the lowest bidder.
5. On the other hand, the learned counsel representing the respondents would vehemently refute the submissions to contend that mere declaration of the petitioner as the lowest bidder would not get him the work order. There were several specifications that were to be met pursuant to declaration of L1 which were concerning infrastructure and capacity of the petitioner to perform the contract as approved by the RDSO. The petitioner failing in the said specifications cannot now contend that the respondents cannot re- tender the same work. It is his contention that the work had to be completed within six months and in this jugglery two months have already passed. He seeks dismissal of the petition. 6
6. The learned senior counsel in reply would seek to place reliance upon the manual of the Central Vigilance Commission insofar as it relates to procurement of goods to buttress his submission that there cannot be a cancellation of procurement process once the bids are opened and, therefore, seeks that the entire action of the respondents/Railways be quashed and the petitioner be issued the work order.
7. I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record.
8. The afore-narrated notice inviting tender floating three tenders relating to Passenger Information System is not in dispute. In the light of the issue springing from the notice inviting tender, certain clauses of the said tender which are germane are necessary to be noticed. The tender contains general instructions and brief scope of work. Clause 3 of the tender document depicts brief scope of work and it reads as follows:-
"3. BRIEF SCOPE OF WORK:7
3.1 This work involves supply and installation/wiring/ fixing/laying of true colour MLDB [outdoor video display (OVD)], power cable, PVC conduit pipe, laying of CAT-6 and 5 pair screened cable, cutting of trench across/on the plat form, 6 KVA on line UPS, trunking of 65mm cover 50x80, 12 fiber FDMS, supply of 12 fiber, RJ 45 connector, Crimping Tool, Ethernet Tester, LAN Tester, advance optical power meter, True RMS digital multi meter, STAN one series high precision clamp meter, handheld true RMS insulation resistance tester and labour-oriented work.
3.2 The scope of the work also involves dismantling, releasing and handed over to existing 5 line display boards and all accessories to SSE/Tele/Stores/MUS. All required labour, transportation shall be arranged by the contractor. 3.3 Product must be confirming to RDSO specification No. RSDO/SPN/TC/108/2019, Ver,-o.o or Latest for True Colour MLDB [(Outdoor Video Display (OVD)] system. 3.4 Installation shall be confirming to RDSO specification No. RSDO/SPN/TC/108/2019, Ver,-o.o or Latest for True Colour MLDB [(Outdoor Video Display (OVD)] system. 3.5 The entire work to be carried out as per instruction of site engineer.
3.6 Transportation of men and materials to the works spot shall be arranged by the Contractor.
3.7 All the above works to be carried out at Mysuru Station. 3.8. All necessary nuts & bolts of various sizes, tools & plats, consumable stores required for execution of works should be supplied by the contractor.
3.9 All works are to be executed under direct supervision of Consignee or his authorized representative. 3.10 All materials required to execute the work are to be carried by the contractor from Consignee's Godown to work site at his own cost.
83.11 Released materials, if any are to be deposited to Consignee's Godown.
3.12 The maintenance period is one year from date of completion of the work.
3.13 Period completion is Six months (06).
3.14 All supply items inspected by RDSO/consignee as per mentioned in technical specification.
3.15 Clarification about the latest policies/practices for execution of work can be received from the Office of the Senior Divisional Signal and Telecommunication Engineer/Mysuru Division, and floor, DRM Building, Irwin Road, South Western Railway, Mysuru-570001.
3.16 OVERALL REQUIREMENT:
a. All the items and equipment's mentioned in this schedule which are available in RDSO vendor directory either in approved list or Development order list shall be procured from those firms only.
b. The display syst4ems shall be suitable for working in AC/DC electrified and non-electrified sections s per clause No.4.22 and clause No.4.2.3 and 3.7 of RDSO's Specification No.RDSO/SPN/TC/108/2019, Ver,-o.o Amd 1.0 It shall be suitable in all sections including where locomotives thyristor controlled single phase or 3 phase induction motors having haul passenger or freight trains and chopper controlled EMU stocks are operated.
c. Onsite training shall be provided to the Railway staff which shall include complete assembly of the system through the use of various modules, integration of hardware with software and complete operation of the system as per clause No.14 of RDSO's Specification No. No.RDSO/SPN/TC/108/2019, Ver,-o.o Amd 1.0. d. Detailed construction diagrams of Cabinet, Multiline Display Board (single sided & double sided), OVD, IVD 9 Platform Display Board (single sided & double sided), and Coach Guidance Display Board etc. shall be submitted as per clause No.15 of RDSO's Specification No. No.RDSO/SPN/TC/108/2019, Ver,-o.o Amd 1.0. SCHEDULE [NON SOR ITEMS] Item No.1:- Supply of True colour MLDB (Outdoor Video display (OVD) 6 Line for Train Arival departure Display Board (TADDB) No. RDSO/SPN/TC/108/ 2019, Ver,-o.o. (Inspection: RDSO) It should be interface with existing CDC/IPIS.
• Inspection: RDSO.
• True colour MLDB (Outdoor Video display (OVD) 6 Line for Train Arrival departure Display Board (TADDB) shall be as per RDSO/SPN/TC/108/2019, Ver,-o.o or latest."
Clause 3.3 mandates that the products must be conforming to RDSO specification. Clause 3.14 depicts that all supply items inspected by RDSO should have the technical specification as necessary. The schedule appended to clause 3.16 depicts what should be the quality. Clause 8 deals with the right of the Railways to deal with tenders and reads as follows:
"8. RIGHT OF RAILWAYS TO DEAL WITH TENDERS:
The authority for the acceptance of the tender will rest with the Railway administration for and on behalf of President of India, who shall not be bound to accept the lowest or any tender or to assign any reason for declining to consider, non-acceptance or rejection of a tender. Railway administration reserves the right to accept any tender in respect of the whole or any portion of the work specified in the tender document or to reduce the scope of the 10 work or to accept any tender for less than the tendered quantities without assigning any reason whatsoever.
Railway administration also reserves the right to cancel any or all tenders at any stage. Railway reserves the right to accept or reject the deviations proposed by the tenderer and Railways' decision thereon shall be final. The deviation quoted by the tenderer will become part of Contract Agreement only to the extent to which they are specifically mentioned as accept4ed in Letter of Acceptance."
Clause 14 deals with inspection of materials and reads as follows:-
"14. INSPECTION OF MATERIALS:
i. Materials to be supplied by Contractor shall be of best quality and shall conform to the relevant specifications, Designs and Drawings. The materials shall be procured by the Contractor/s from manufacturers of repute or their authorized dealers as approved by the Engineer-in-Charge.
ii. The Contractor/s may shall produce test certificates from the Manufacturer, wherever called for by the Engineer-in-charge and should be handed over to Railways.
iii The contractor should procure signaling/ telecom items which appear in the RDSO approved list normally from the Part-I suppliers. The contractor shall take prior approval of the Railways before placing orders on the firms. In case, there are no firms in Part-I list, prior approval of Railways should be obtained before placing order on Part-II firms."
The clause depicting inspection of materials indicates that the Contractor shall supply or produce test certificates from the manufacturer whenever called for by the Engineer-in-charge and 11 the same should be handed over to the Railways. The materials to be supplied by the contractor should be of best quality and conforming to all specifications, designs and drawings. Clause 8 (supra) deals with the power of Railways to deal with the tender. The Railway administration reserves its right to cancel any or all tenders at any stage. Stages are mentioned in the said clause itself. Pursuant to the notice inviting tender and opening of the financial bid submitted by the petitioner, the petitioner emerges as the successful bidder. The communication declaring him to be the successful bidder reads as follows:
"No.Y/SG 191/III/2022/Verification Date: 28.11.2022 M/s MIC Electronics Limited, 192/B, Mint Road IDA, Phase-II, Cherlapally, Medchal Malkajgiri, Hyderabad, Telangana.
--
Please refer to your bid submitted against Tender No. 13- SNT-MYS-2022 Closed on 14-11-2022, invited by Mysore Division of South Western Railway for supply and installation of various IPIS equipment as per RDSO specification No. RDSO/SPN/TC/108/2019, Ver.o.o or latest.
As per clause No.14(ii) of Special Conditions of Contract in Tender Documents "The Contractor/s may shall produce test certificates from the Manufacturer, wherever called for by the Engineer-in-charge and should be handed over to Railways" and 12 As per RDSO approved vendor list, the approval for specification No. RDSO/SPN/TC/108/2019, Ver.o.o or latest is subject to the condition that "Supply (even for field trials, wherever applicable) shall commence only after approval of the prototype by the RDSO."
You are requested to submit following information within seven days from the issue of this letter so that the finalization tender proceedings can be completed at the earliest by railway since the work is urgent in nature as the same is related to passenger amenities.
1. Please confirm whether your manufactured IPIS products as per RSDO specification No. RDSO/SPN/TC/108/2019, Ver,-o.o or latest have already been tested and accepted in RDSO laboratory/Lucknow or not.
2. Please confirm whether final approval for IPIS products as per RDSO specification No. RDSO/SPN/TC/108/2019, Ver,-o.o or latest has been issued by RDSO/LKO or not. Status in this regard may please be communicated to this office.
3. Are you in a position to deliver the IPIS products, manufactured by your company, as per RDSO specification No. RDSO/SPN/TC/ 108/2019, Ver,- o.o or latest duly inspected by RDSO or not.
4. The above documents shall be submitted on or before 6-12-2022 or else your offer will be rejected. Please treat the matter is urgent and do the needful as requested above."
The declaration of L1 and the communication further directed further documents to be submitted on or before 06-12-2022. The documents were with regard to confirmation whether the 13 manufactured IPIS products are as per RDSO and the capacity of the petitioner to deliver the products as per RDSO and the final approval of the documents by the RDSO. With these conditions he was declared to be the lowest bidder. The petitioner replies to the said communication on 05-12-2022 contending that it has undertaken the same work at several other places and is having experience of installation and maintenance. No response was received at the hands of the Railways to the said communication. It then comes about that the respondents have re-tendered the work so allotted to the petitioner, cancelled the earlier tender and refunded the EMD deposited by the petitioner. The justification of the respondents is that the specification submitted by the petitioner was not in conformity with what the RDSO specified.
9. The learned counsel for the respondents has placed on record the conditions of such e-procurement which clearly indicates that the tenderer should have the specification of RDSO and the petitioner was required to supply materials as per clauses 3.3, 3.14 and 14 (iii) and 14(ix). It is the contention of the learned counsel that the petitioner gave his reply on 05-12-2022 that he was in the 14 process of getting approval of the RDSO. As the project was to be implemented with immediate effect and approvals had not yet come about, the respondents exercising their right under Clause 8 have issued a re-tender. It is based upon the recommendation of the RDSO itself and the recommendation reads as follows:
"5.0 RECOMMENDATIONS 5.1 The Convener certified that in the RDSO Approved Vendor list 2022 and it has been observed by TC that,
1. Presently Seventeen Vendors are available in RDSO website placed at R/1314-1317, but all these are Developmental Vendors only. However, out of Seventeen Vendors, Nine Vendors got final approval from RDSO, and remaining Vendors had only conditional approval from RDSO.
2. Vide RDSO letter dated 25-11-2022 "M/s MIC Electronics Limited, Hyderabad has been placed in the list of developmental vendors on conditional basis for the item IP Based Integrated Passenger Information Systems (Item ID:3100083) for 24 months subject to Technical Clearance of Prototype Test sample and can supply the material only after the technical clearance (approval of the prototype sample by the RDSO) placed at F/1313.
3. However, the L1 tenderer M/s MIC Electronics Limited, Hyderabad is under conditionally approved subject to prototype approval by RDSO. Hence, supply of IPIS by M/s MIC Electronics Limited, Hyderabad (even for field trials, wherever applicable) shall commence only after approval of the prototype by the RDSO placed at F/1314-1317.15
4. The convener certified that the passenger information system is related to passenger amenities. Any delay or poor service, or bad service will result in adverse remarks by passengers in social media and passengers get inconvenience during the journey.
5. Hence, there is an ambiguity in supply of materials by M/s MIC Electronics Limited, Hyderabad within the targeted time.
In view of the above, Tender committee is recommended to discharge the tender and re-float the tender duly incorporating the following conditions for supplying of IPIS.
• The firms should supply or procure IPIS items as per RDSO/SPN/TC/108/2019, Ver.-o-o or latest with appear in the RDSO approved list normally from the final approved suppliers. The contractor shall take prior approval of the Railways before placing orders on the firms. In case, there are no firms in the final approved vendor list, prior approval of Railways should be obtained before placing order on conditional approved vendors.
• The firms shall submit the final approval certificate from RDSO."
The issue now is whether the respondent/Railways could have cancelled the tender and issued a re-tender for the very same tender in which the petitioner had emerged as the lowest bidder. Clauses of the tender and the declaration of the petitioner as L1 would clearly indicate that mere declaration of L1 would not result in contract being awarded or work order being issued to the petitioner. It was subject to several documents and approvals. As 16 the petitioner had not submitted the approval through his communication dated 05-12-2022, the Railways have taken a decision to cancel the tender and re-tender the same work that was earlier notified. Since no work order was issued to the petitioner, no right of the petitioner is taken away, as declaration of L1 and the offer made to the petitioner was hedged with certain conditions coupled with the right of the Railways to cancel the tender.
10. It is trite law that the Tender Inviting Authority can up to a particular stage cancel or re-tender for reasons to be recorded in writing. If work order had been issued to the petitioner or a contract being signed pursuant to issuance of such work order, the right of the petitioner would get crystallized to contend that the respondent/Tender Inviting Authority could not have gone back on the tender. That stage was yet to arrive. Therefore, the right of the petitioner was still inchoate for the petitioner to contend that the respondents could not have withdrawn or cancelled the earlier tender and re-notified the tender and the submission of the learned senior counsel for the petitioner sans substance. 17
11. It is the further submission of the learned senior counsel that the respondent/Railways ought to have issued notice at least that the tender of the petitioner is to be cancelled and the work would be re-tendered on account of certain deficiencies. Non- issuance of notice to the petitioner, in the peculiar facts of this case, has not vitiated the impugned process, in the light of the observations made hereinabove that the petitioner had no right that was existing for it to be taken away by issuance of a notice. The submission of the learned senior counsel that once the tenderer is declared to be the lowest bidder, the tender cannot be withdrawn or cancelled basing his submission on the manual notified by the Central Vigilance Commission, is neither here nor there. Much emphasis is placed on clause 7.5.11 of the said Manual which reads as follows:
"7.5.11 - Cancellation of Procurement Process/ Rejection of All Bids/Re-tender [Rule 173 (xix) of GFR 201]
i) The Procuring Entity may cancel the process of procurement or rejecting all bids at any time before intimating acceptance of successful bid under circumstances mentioned below. In case where responsive bids are available, the aim should be to finalise the tender by taking mitigating measures even in the conditions described below. If it is decided to rebid 18 the tender, the justification should balance the perceived risks in finalization of tender (marginally higher rates) against the certainty of resultant delays, cost escalations, loss of transparency in re-invited tender. After such decision, all participating bidders would be informed and bids if not opened would not be opened and in case of manual tenders be returned unopened:
(a) If the quantity and quality of requirements have changed substantially or there is an un-rectifiable infirmity in the bidding process;
(b) When none of the tenders is substantially responsive to the requirements of the Procurement Documents;
(c) None of the technical proposals meets the minimum technical qualifying score;
(d) If effective competition is lacking. However, lack of competition shall not be determined solely on the basis of the number of bidders. (please refer to para above also regarding receipt of a single offer).
(e) The Bids'/Proposals' prices are substantially higher than the updated cost estimate or available budget.
(f) If the bidder, whose bid has been found to be the lowest evaluated bid withdraws or whose bid has been accepted, fails to sign the procurement contract as may be required or fails to provide the security as may be required for the performance of the contract or otherwise withdraws from the procurement process, the Procuring Entity shall re-
tender the case.
ii) Approval for re-tendering should be accorded by the CA after recording the reasons/proper justification in writing. The decision of the procuring entity to cancel the procurement and reasons for such a decision shall be immediately communicated to all bidders that participated in the procurement process. Before re-tendering the procuring entity is first to check whether, while 19 floating/issuing the enquiry, all necessary requirements and formalities such as standard conditions, industry friendly qualification criteria, and technical and commercial terms, vide publicity, sufficient time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies." The Manual records that the procuring authority may cancel the process of procurement or reject all bids at any time before intimating acceptance of such successful bid under certain circumstances. The circumstances indicated in Clauses (a) to (f), according to the learned senior counsel, are not present in the case at hand and, therefore, it could not have been withdrawn. This again is unacceptable as sub-clause (b) of Clause 7.5.11 clearly indicates that when none of the tenders is substantially responsive to the requirements of the procurement documents, it can be withdrawn in terms of what is narrated hereinabove. The petitioner failed to be responsive to the requirements of procurement documents. Therefore, the submission of the learned senior counsel that the cancellation is contrary to the Central Vigilance Commission Manual is unacceptable. Finding no right of the petitioner being taken away and no merit in the petition, the petition would necessarily meet its dismissal. 20
12. In the result, the petition lacking in merit, is accordingly dismissed.
Sd/-
JUDGE bkp CT:MJ