Karnataka High Court
M/S. South India Corporation Private ... vs The Karnataka Power Corporation Ltd on 2 August, 2014
Author: Ashok B.Hinchigeri
Bench: Ashok B. Hinchigeri
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 2ND DAY OF AUGUST 2014
BEFORE
THE HON'BLE MR. JUSTICE ASHOK B. HINCHIGERI
WRIT PETITION No.30912/2014 (GM-TEN)
BETWEEN:
M/S.SOUTH INDIA CORPORATION PRIVATE LTD
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE AT
RANI SEETHA HALL, 6TH FLOOR, NO.603
ANNA SALAI, CHENNAI
REPRESENTED BY ITS WHOLETIME DIRECTOR
MR.S.V.RAAMASWAMEE. ...PETITIONER
(BY:SRI B.V.ACHARYA, SR. ADVOCATE &
SRI SANDESH J. CHOUTA, ADVOCATE FOR
SRI V.G.BHANUPRAKASH, ADVOCATE)
AND:
1. THE KARNATAKA POWER CORPORATION LTD.
SHAKTHI BHAVAN, NO.82, III FLOOR
BANGALORE 560 001
REPRESENTED BY ITS MANAGING DIRECTOR.
2. KARAMCHAND THAPAR & BROS.,
(COAL SALES) LTD.,
BUX RANKA HOUSE
SRI N.R.SQUARE, OTC ROAD
BANGALORE 560 002.
[amended vide Court order dt.2.7.14] ... RESPONDENTS
(BY:SRI SRINIVAS RAGHAVAN, ADVOCATE FOR
SRI AJAY J.N. & SHRIKARA P.K., ADVOCATES FOR R1
SRI K.M.NATARAJ, SR. ADVOCATE FOR
SRI NAGAPRASANNA, ADVOCATE FOR R2)
2
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
REJECTION ORDER DATED 30.6.2014 ISSUED BY THE RESPONDENT
THROUGH THE E-PROCUREMENT PORTAL TITLED AS
http//eproc.karnataka.gov.in' VIDE ANNEXURE-A AND ETC.
THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
The facts of the case in brief are that the respondent No.1 floated a tender through e-procurement portal for transporting raw coal from Mahanadi Coal Fields Limited, Talcher in Odisha to Raichur Thermal Power Station in Karnataka. Seven parties including the petitioner and the respondent No.2 offered their bids. Their technical bids were opened on 4.6.2014. On 30.6.2014, the petitioner came to know of the rejection of its technical bid, as is evident from the print-out taken from the first respondent's website. The financial bid of the respondent No.2 was opened on the same day (30.6.2014).
2. Sri B.V.Acharya, the learned Senior Counsel appearing for Sriyuts Sandesh J.Chouta, Ismail M.M. and V.G.Banuprakash for the petitioner submits that no reasons whatsoever are assigned for rejecting the petitioner's technical bid. He submits that the difference in the price quoted by the petitioner and the respondent No.2 is in the region of `172.8 crores. 3
3. The learned Senior Counsel submits that the petitioner meets the qualifying criteria. He submits that the opening of the price bid of the respondent No.2 is in violation of the Karnataka Transparency in Public Procurements Act, 1999 and the Karnataka Transparency in Public Procurements Rules, 2000 ('the said Rules' for short). He brings to my notice the provisions contained in Rule 28(4) of the said Rules. They are extracted hereinbelow:
"28. Two Cover Tenders.-
(4) The Tender Inviting Authority shall cause the first cover to be opened first and evaluate the tenderer's capacity on the basis of criteria specified in the tender document and on this basis, prepare a list of qualified tenderers."
4. With regard to the Rules, the provisions of which are extracted hereinabove, it is the submission of the learned Senior Counsel that it is only on the completion of the evaluation of the tenderers' technical bid that a list of qualified tenderers has to be prepared by the Tender Inviting Authority. Thereafter, as per Rule 28(5) of the said Rules, the price or commercial bid of the qualified tenderers has to be opened by the Tender Inviting Authority. In the instant case, no list of qualified tenderers is 4 prepared. He also takes serious exception to the Tender Scrutiny Committee opening the financial bid of the respondent No.2. According to him, Tender Scrutiny Committee is not competent to open the financial bids. He read out what is stated by the respondent No.1 in paragraph No.11 of its counter.
"11. It is respectfully submitted that the present tender follows the two cover system, cover 1 being the technical bid and cover 2 being the price bid. On cover 1 or the technical bid of all the bidders being opened, the tender scrutiny committee found that the bid of the Petitioner did not satisfy the technical eligibility requirements and accordingly proceeded to open the bid of the bidder meeting the eligibility requirement. This has been approved by the Managing Director of the respondent No.1."
5. He also brought to my notice Clause 4.05(c) and 4.06(d) of the tender notification (Annexure-B) containing procedural requirement. They are as follows:
"4.05(c) Only whose tenders are eligible, will only be considered for opening Price Bid (Part-II) through e- procurement portal.
4.06(d) Cover-II (Price bid) of tenders will be opened at the office of the Superintending Engineer (Fuels), Karnataka Power Corporation Limited, No.82, Shakti Bhavan, 3rd Floor, R.C.Road, Bangalore - 560 001. The date of opening of cover II will be intimated separately. 5
6. He submits that the afore-extracted clauses are also violated, because without ascertaining the eligibility of the tenderers on the technical evaluation, the price bid of the respondent No.2 is opened and that too by a Committee, which is not competent or authorized to open the price bid, as per Rule 28(4) of the said Rules and the clauses of the tender notification extracted hereinabove.
7. Per contra Sri Srinivas Raghavan, the learned counsel for the respondent No.1 submits that no cause of action has accrued to the petitioner. The writ petition itself is liable to be rejected as it is premature. He submits that what is shown on the website is only the status of the petitioner's technical bid as given by the Tender Inviting Authority on the recommendations of the Tender Scrutiny Committee. The Tender Accepting Authority as such has not yet passed any order on the petitioner's technical bid.
8. Relying on this Court's decision in the case of TATA PROJECTS LIMITED v. KARNATAKA POWER CORPORATION LIMITED AND OTHERS reported in MANU/KA/015/2013, he would contend that when a decision is yet to be taken by the 6 Tender Accepting Authority, there would be no cause of action and as such the petition is premature. When the tender bulletin is issued, the aggrieved person would be entitled to challenge the same in accordance with law.
9. The learned counsel submits that the evaluation report is placed before the Tender Accepting Authority and in the event of the Tender Accepting Authority accepting it and recommendation therein and passing the order of acceptance of the tender of any other person in accordance with Section 13 of the said Act, then only the petitioner can raise the challenge to the rejection of its bid and the awarding of contract to some other person by way of appeal under Section 16 of the said Act.
10. He submits that the respondent No.1 has been complying with all the requirements of Rule 28(4) of the said Rules.
11. The learned counsel submits that the petitioner's argument with reference to Rule 28 of the said Rules has no foundation in the memorandum of the writ petition. He submits that the opening of the financial bid referred to in paragraph No.11 of the statement of objections is clarified in paragraph 7 Nos.4 and 5 of the affidavit of one Sri T.Ramakrishna Raj, the Assistant General Manager (Law) of the first respondent - Corporation.
12. Sri K.M.Nataraj, the learned Senior Counsel appearing for Sri M.Nagaprasanna for the respondent No.2 submits that all the procedural requirements are complied with in the impugned process. He submits that under Rule 2(c) of the said Rules dealing with the two-cover system, the tenderers are required to simultaneously submit two separate sealed covers, one containing the Earnest Money Deposit and the details of their capability to undertake the tender which will be opened first and the second cover containing the price quotation which will be opened only if the tenderer is found to be qualified to execute the tender. If the second respondent's technical bid is found to be satisfactory, there is no legal impediment in opening the financial bid. If there is only one party whose technical bid is acceptable, then the question of preparing the list of qualified tenderers may not arise. He denies that there is any violation of the requirement of Rule 28(4) of the said Rules. He submits that under Rule 23 of the said Rules, the Tender Inviting Authority is 8 required to maintain the confidentiality of the process of the tender evaluation until the orders on the tenders are passed.
13. The learned Senior Counsel relies on the Apex Court's judgment in the case of JAGDISH MANDAL v. STATE OF ORISSA AND OTHERS reported in (2007) 14 SCC 517 wherein it is held that the purpose of judicial review of administrative action is to check whether the choice or decision is made lawfully and not to check whether the choice or decision is sound. Para 22 of the said decision read out by him in this regard is extracted hereinbelow:
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out.9
The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold."
14. Nextly, the learned Senior Counsel brings to my notice unreported decision of this Court, dated 26.02.2013 passed in W.P.No.2535/2013 c/w. W.P.No.505/2013 in the case of TATA PROJECTS LIMITED v. KARNATAKA POWER CORPORATION LIMITED AND OTHERS to advance the contention that at a stage when there is neither rejection nor acceptance of the tender, the writ petition is premature. This Court cannot be asked to make roving enquiry by seeking the information relating to the evaluation made by the experts. If the tenderers are permitted to pick holes, it is difficult to complete the evaluation process. When nobody's rights are affected, the exercise of sitting in judgment over the wisdom of 10 experts is to be avoided. Even if the judicial review is called for, it can be in appropriate proceedings at appropriate stage.
15. The learned Senior Counsel has also relied on the Madras High Court's judgment, dated 04.02.2011 passed in W.P.No.2475/2011 in the case of M.VASUDEVAN vs. CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY, wherein it is held that the authorities are not obliged in law to inform the rejection of one or other persons at the pre- qualification stage. The reason for rejection of technical bid will be part of the tender bulletin. The petitioner is entitled to challenge at that stage, if so advised. With this reasoning, the Madras High Court dismissed the writ petition as premature.
16. He has also relied on an un-reported decision of this Court, dated 14.10.2011 passed in W.P.Nos.38423- 424/2011 in the case of M/s.SANJAY MARKETING & PUBLICITY SERVICES vs. STATE OF KARNATAKA AND OTHERS which came to be disposed of as the party aggrieved by the order rejecting his technical bid has the statutory remedy of filing an appeal.
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17. The submissions of the learned counsel have received my anxious consideration. I am not persuaded to reject this petition as premature. Because serious processual and procedural violations are discernible.
18. The first departure from the procedure prescribed by Rule 28(4) of the said Rules is that without passing the order on petitioner's bid by the Tender Inviting Authority, the financial bid of the respondent No.2 is opened. The requirement of the said Rule is that the Tender Inviting Authority shall evaluate the technical bids and thereafter make a list of all the qualified tenderers. In the instant case, no orders are passed by the Tender Inviting Authority on whether or not the petitioner is qualified. Without taking any final decision on accepting or rejecting the petitioner's technical bid, the respondent No.1 has proceeded to open the financial bid of the second respondent. This is clearly illegal and hence impermissible.
19. The respondent No.1 can not be content saying that the Tender Scrutiny Committee has recommended the rejection of the petitioner's technical bid but the Tender Inviting Authority has not taken any decision in the matter. What is not merely 12 irregular but unlawful is the opening the financial bid of the respondent No.2, pending the decision on the technical bid of the petitioner. There can not be any leap-frogging in the matter by skipping the sequential requirements.
20. I also notice with concern what is stated in paragraph No.11 of the statement of objections filed on behalf of the respondent No.1. The sum and substance of what is stated therein is that the Tender Scrutiny Committee found that the bid of the petitioner did not satisfy the technical eligibility requirements and accordingly proceeded to open the bid of the respondent No.2 meeting the eligibility requirement. The Tender Scrutiny Committee can at the most hold the initial examination for determining the substantial responsiveness, for which purpose it is constituted under Rule 20 of the said Rules. But such Tender Scrutiny Committee is not clothed with the power to reject the technical bid of any party; its power to scrutinise and evaluate the technical bid cannot be equated with the Tender Accepting Authority's power to reject the technical bid itself. The Tender Scrutiny Committee can carry out the preliminary examination and detailed evaluation of the tenders received and prepare the evaluation report for the consideration of the Tender 13 Accepting Authority. The Tender Scrutiny Committee cannot go beyond what is permitted by Rule 24 of the said Rules, which read as follows:
"24. Initial examination to determine substantial responsiveness - (1) The Tender Inviting Authority shall cause an initial examination of the tenders submitted to be carried out in order to determine their substantial responsiveness.
(2) During the initial examination the following factors shall be considered, namely -
(a) Whether the tenderers meets the eligibility criteria laid down in the tender documents;
(b) Whether the crucial documents have been duly signed;
(c) Whether the requisite earnest money deposit has been furnished;
(d) Whether the tender is substantially responsive to the technical specifications set out in the bidding documents including the testing of samples where required.
(3) Tenders which on initial examination are found not to be substantially responsive under any of the clauses under sub-rule (2) may be rejected by the Tender Accepting Authority."14
21. If it is found on scrutiny that the tender is validly submitted, the evaluation of the tender has to take place as per the provisions contained in Rules 26 and 27 of the said Rules.
22. In paragraph No.5 of the affidavit, it is clarified that the price bid is opened by the Tender Inviting Authority. Such a clarification is in conflict with what is stated in paragraph No.11 of the first respondent's counter. Be it as it may, suffice to state the requirement of law that the price bid is to be opened by the Tender Inviting Authority.
23. In the result, I allow this petition by passing the following order:
(i) The impugned order, dated 30.6.2014 need not be quashed, as the same is said to be only in the nature of recommendation. Ultimately it is for the Tender Inviting Authority to take a decision.
(ii) The Tender Inviting Authority is directed to take a decision on the technical bids of all the parties. It shall thereafter prepare a list of qualified tenderers. 15
(iii) On the preparation of the list of qualified tenderers, the Tender Inviting Authority shall open the price bids of the qualified tenderers.
(iv) The opening of the financial bids shall also be strictly following the procedure in the said Rules and the conditions set out in the tender notification (Annexure-B).
(v) Though serious flaws and lapses are clearly found, it is not necessary to invalidate the entire tender process and order for the initiation of the fresh tender process. The ends of justice would be met by my directing the first respondent to resume the process and re-do the things from the stage at which the infirmities are noticed, that is from the technical evaluation stage.
Sd/-
JUDGE MD/Cm/VGR