Karnataka High Court
Logwell Forge Ltd vs Bangalore Metro Rail Corporation Ltd on 11 September, 2009
Equivalent citations: 2010 (1) AIR KAR R 90, AIR 2010 (NOC) (SUPP) 1235 (KAR.)
Author: Mohan Shantanagoudar
Bench: Mohan Shantanagoudar
Shanthinagar, Banga1ore~56O 027, Represented by its Managing Director. 2. Vossloh Fastening Systems GmbH Headquarters at : Vossiohstrabe 4 D--587 91 Werdohl P.O.Box 1860 Germany Represented by its Managing Director - Present in India through: M / s Patil Rail Infrastrntcttlre as _ Patil Group of Industries H " Vt ' THE GRAND ' 3rd 8: 4th F1o_or--;;_ 5'3'10~90V/_BV/4' --_ Raj BIp1aVan"P.Ioad, _ * ' Somajiguda . " * Hyderai)ad'--500 089;; " Andhra P"ra_desh,"INDIA V Represented' by its:- ' Managing Director. V .. Respondents
~. , [By Sri Nagananci, Sr.Counse1 for _ Sr"i'IV£;'N."Har1j_sE1, M/s.Harish Associates.
" ._ R'~v1"and.Sri Udaya Holla, Sr.Counse1 For R~2 )' -
V' _ ; ;1"''*l_"1is Writ Petition is filed under Articles 226 8: 227 of the
--ffCo'I:stitt1tion of India praying to direct the respondent No.1 to Vt la'aiter/modify/change/arnend ciauses 9.8.2.1., 9.8.4.1. and _ 5 _ system in the tracks. The Bangalore Metro Rail will have ballasteless tracks. Thus, fastening system suitable for ballasteless tracks for Bangalore Metro is proposed to be used by the 151 respondent. Clause 9.8.2. E, of Document states that " The fastening 336 shall be used for all plain line~'bal1aste4les.s la"-.& also specifies that, depending on tlllle the fasteners with a different of anchor to be used. Definite specifie"ationsl"'are.'jnientionted" under the said clause. Thus, it is clear Document mandate's'b'th'e one kind of fastening system for the 336. Clause 9.8.4.1. states mat the_:fastening""system VOSSLOH 336 shall be I-V.'rused"l'for i,nst'al1ationV"in'Vand adjacent to the washing plant. for the washing plant shall be if corros__ion_.~ protected. Clause 9.8.5.1. reveals that the :bay tracks shall be mounted on steel columns tracks). Vossloh Fastening System 336 shall be if for track fastening in inspection bays. 'VA _ 7 _ From the above, it is clear that the Tender Document mandates that the bidders shall use only one kind of fastening system for the tracks, washing inspection bay tracks viz., VOSSIDH mandates to procure guarantee from suppliers' manufacturing defects in service for-a"period,--iif:t'Wo from the date of the commencement of train"'servic:e.
5. The petitioner, capable of supplying p:i*oduct "fastening system at competitive, _Vfbeii'ig"'~-aggrieved by the impugned conditions 336 fastening system laid the teniderywhas fiied this writ petition. According 'Vite ti1e_petitioner,_ Schwihag AG, with which the petitioner has "an assbj::ifc'::tion, manufactures rail fastening system 'having tension clamp SKL 12, which is similar fastening that of VOSSLOH 336. According to the V':
_ 8 _ petitioner, the fastening system manufactured by Schwihag AG is also the fastening system 336.
6. Sri K.G.Raghavan, learned Senior ..'Co"u_risel appearing on behalf of the petitioner 9 that the 131 respondent has in coinplete ll provisions of the Karnataka Transparency' -in.' Procurements Act, 1999 ( hei'ei_irIafter.Vrei"e1'red: asvV"ti1e:Act"" 9 for short) and the Rules framed.ilthereunder'-{hereinafter referred to as 'the Rules' imposed the impugned conditions in vDc=cument; that the action ls? 'vspecifiring only a particular brand i.e., VOSSl;Q__H 336 system is against the basic V.princ.ip:lesi'~of the Constitution of India and the AV'V.profv'i»sionVs'«.of.,:the Act and the Rules framed thereunder;
andplhthatltlie clause is inserted only with an intention [to falvioury "the 2nd respondent by preventing fair llfiorripetition. He further submits that respondent No.1 ____"'?has: not afforded an opportunity to the petitioner to W' _ 9 i explain the quality of the fastening system manufactured by Schwihag AG and the capacity of the petitioner to supply identical product, inasmuch as, the respondent No.1 has created monopoly in favour of with regard to the fastening sytsterns. if contended by the learned Counsel"ofoif'_'the the lst respondent being the:"?P1'ocurernent: as"? defined under Section of the 'ist,bound"to.fo1low the provisions of Section 4 of the Rule 1 i(2][a) of the Rules. The..s*tini.anéjl "thgelvargument of the petitioner' that "o_r""eouiValent" should have been found place of the Act as is done by the _ c_once4'1"n ed V _ authorities while implementing Vllvietrlo-politan;'l* Trarisplortv Project (Railways) , Chennai. ' 7Z._ ":VNaganand, learned Senior Counsel appearing onllibehalffthe 1st respondent submitted that the 'P..toVisions';_of the Act and Rules are not applicable to the on hand, inasmuch as, the 1st respondent is not V' >0» W4 the "Procurement Entity" as defined under Section 2 (d) of the Act. He further submits that the detaiied project report (DPR) specifies the product to be used as "VOSSLOH 336" fastening system which is system approved for the use in the Metro India and that the VOSSLOH 336"fastening_,;.systeniis "a, it time tested product and has been Board and whereas, the petit-i.oiier's proc'rue'f: had" never it been tested in India noriaeen Rai1iivay"i3oard. fl'ea1'ned.:"S'enior Counsel appearing on behaif.of.responde_nvt.._:Noi;2 supporting the contentions of the _respon'de_ntw Noistibmitted that, the petitioner has ' no icaet};si..s»tar:cii to filethe Writ petition, inasmuch as, he is iinotjythe the fastening system is one of the product efor the integrated Work of installation, ZR"-__Vtesting,z commissioning of track work and instailation of ejtiiird range system; that the fastening system to be used integrated project is selected as the same is tested it"
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by Research Design and Standards Organisation (RDSO), Lucknow; that the testing of the product before its use by the said organisation is a condition precedent fo1jthe_4tu..se of any system or component or product in _ that there is difference between VQSSLOHl33é.';Vfaste_ningit system and the fastening systern"1«y33'6 Schwihag AG; that the Vosstoii V1336" "fastenieng"':sy'stefn is' V T' suitable for the installation of--Bangalpore Nietro./§Rai1 and consequently, the authoritiesl' in their wisdom have insisted the be used in the project in He further submits that there cannot".be_:any'-compromise in safety matters and that the" terms of the tender are not open to the 3 V' scru'tiny 'they are in the realm of contract. rival contentions of the parties, the following_qt1estAions arise for consideration :
(aj 'v...;Whether the 19¢ respondent is a "Procurement Entity" within the definition V'
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of Section 2(d) of the Act and whether the provisions of the Act and the Rules are applicable?
(b) Whether the action of the 1S' responden'tv---l..:
in imposing the impugned conditi.o_n"i--n Tender Document is in :vliolation..pof.;A:rtic_le in 14 of the Constitution of
9. Re: Question {a} is "ifellevant relevant provisions of the Act rtliex Rulesgl ' Section .2 (CAL : "1?ree.urementl.Entity" means any ._ Czove'rn_1_:nentvi.l_:"'Department, a State GoverninentiUndelrtaking, Local Authority or Bovard .0? Corporation established by or owned or controlled by the and any other body or authority vclontroiled by the Government and A ._as rnavlbe specified by it:
V _ Section 4 : Exceptions to applicability - 'The provisions of Chapter 11 shall not apply to Procurement of goods and services» MM :6 -
[ii] Where the firSt--n1enti0ned company is any other company, holds more than haif in nominal value of its equity share capital; or
(c) the first-mentioned company is a of any company which is that others Section 617 of the Companies» "I X, purposes of [this Act], pVGoVernn1ent means any company not less fifty--one per cent of the share' is held by the centtal. or by any State Government or partly by partly by one or more -- State 'goyernIn;3nts and includes a company . " a subsidiary of a y_(}overnme11t_Vcompany as thus defined.
. "9. not infldispute that the Bangaiore Metro Rail is a company incorporated under the _provie-ions ' the Companies Act. The name of the styled as "Bangaiore Metro Rail Corporation "'tBMRCL)", which came into effect from 12"! V"
.. 17 ..
September 2005. Earlier it was known as M / s. Bangalore Mass Rapid Transit System Ltd. (BMRTL). The same was incorporated on 215" September 1994. There any dispute that the 1st respondent is a company as defined under Section 617' nu Act. inasmuch as, the entire share.Vca'pi'tVa1 State Government as well "~GoVernment'~,of All" V the learned advocates... have' al_:so"'-~..fairl3}'"agreed that ' Bangalore Metro Rail Corpoi'a't~i.o1n:' "State" within the meaning of,Article of India.
107, in vvtl"1is.._Vucoriteiit. it is useful to extract the meaning of"--'5c0ntrol_".irorn""z;1ii"ferent dictionaries. , . Black's Law Dictionary. the word '=_"cont.1jo}"_ mpearn-3_ "power or authority to manage, direct, super*interiti_',--._ restrict, regulate, govern, administer or ' Voverseefg' . . 'V at-;'\.
,24, In the case of MYSORE PAPER MILLS LTio"."g~--us-- MYSORE PAPER BHLLS OFFICERS' Amorrmn ( (2902) 2 Supreme Court itzia observed that the concept of the Government is not to be:e4onfin--ed'*-to entitiieis zcréjatedtfl under or which owes its tilstitatute or order but would Combinativon of one or more of relevant_._ fac--1;oiieA, upon the essentiality such factors in power, if need be, piercingthe Ve.1'.t_1\"of__ the entity concerned.
16. 'vreSpoAIiden7t No.1 --company is entrusted pt1blic.«'duties obligating to undertake the "t1fan_S'it,"deVe1opment for social and economic welfare of peoppte, Out of twelve Directors, seven are from Governmveiiat of Karnataka and its departments, appointed concurrence and nomination of the State it .VGof€«'emment. They have adequate siipervision and control \;/5 _ 25 _ over the project. This will go to show that the State Government has deep and pervasive control of respondent No} ----Company and its day--to-day administratioi'1'4«..l_anvd consequently confirm the position that the * Company is nothing but an instmmer1ta1it'yV of uh' the State Government. The respondent"
substantially controlled by the.DS'tate the" l physical form of the Cvoznpany-"is.lyinerely alleloakflor cover for the Government.
definition of f'l3'iroe1i1*eii'1envt__ li',-ntity", inasmuch as, the respondent' No.1 lCoi';:iorati.on which is established under _._the substantially controlled by the A V ' V _ Gove:r;t1me13.t-- Kaxnataka. ._ :"J'Eh_eilV.l':eo'ntention of the learned counsel for the it .respoi1dev:itsv'that the 1st respondent is not controlled by Govefnment of Karnataka is not tenable. The contro} the management signifies the Controlling and directive \/>
- 27 _ of Section 2[d) of the Act. Thus, the provisions of the Act and the Rules made thereunder are attracted.
18. Re--Question (bl : Keeping in mind finding, the contention advanced on behaif ' petitioner that respondent No.1 pyvas not "
shutting the doors to fastening "otherVf*tha,n VOSSLOH 336 has to be considered. it it
19. There cannot""heg.any Section 403) of the Act mentioned supra"re2?eaise.th_at.Vwh'ere the goods are available frornv _Vsing1g"-,..5g1i.rce and no reasonable alternatives--__ or exist, it is open for the ...V.conc€Iir'1eCi~ authority to procure the goods from the said Ahsource. ._AVJhi4ier«.doing so, the authorities concerned shall con.s.titute'the chonimittee of three experts consisting of one 'Vtechnicalirepresentative of the procuring entity, one representative of the Government organisation ___"*c1ea;1ing with similar procurement and one representative xi'?
-33- from a reputed Academic or Research Institution or Non- Cominerciai Institution having expertise in such line to examine and declare that the goods or serv.ice:s._d'are available from a single source. Rule 11 (2) d states that unbiased technical bed prepared by observing the various; safeg'uardvs,--. avoiding the use of brand and."catalogue"~--rifin1bers.i"
However, if it is inevitable iii"-brand "riaxiijes and catalogue numbers, ::'theii':b.V"brand name the expression "or _eqiiiv*aIei1t" 5s1f1aii,i5e'_ja.dde:=:i.' In this matter, the word "'V'io'ru 'added after the words "vossLoH it :,,,this._conte§it';d reference may be made to the Apex Court in the case of MASTER E sisavicasw (P) LTD., ~vs~ MIETCALFE & ~ jv»-v'«.___fIODGKBVSON (P) LTD., AND ANOTHER ( (2005) 6 sec 133), vvhereiii it is held thus :
_ _ an unrestricted discretion. On matters affecting policy and requiring technical expertise, the Court would leave the matter for,':'''-., decision of those who are qualified to the issues. Unless the policy or action ll".
inconsistent with the Constitution and "the: '- _ or arbitrary or irrational or X, , Court will not interfere with such " "
From the above, it is clear there is any grave miscarriage of ju-stiice ;_flagrant~,violation of law calling for interV.ention,,~-- Court under Articles 226 to interfere.
20. The that Delhi Metro Rail Corporation '(hereinafter "referred to as the "DMRC" for sliortj' V. ~,_entr1isted with the planning, design, operation of Delhi Metro project. The _successfi.;l' planning and implementation of Delhi Metro :'"v4.4"----project encouraged the Government of Karnataka to avail expertise for the planning, investigation and V'
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preparation of a detailed project report for metro lines in Bangalore city. The Government of Karnataka "letter No.UDD 144 PR} 2002 dated 19.9.2002 consent to DMRC to take up the.;preparzttiori'*tof 'Au project report and based on the the said letter, M / s.Banga1ore-Mares Rapid .TranL;.i.t"'System"' V Limited [BMRTLJ placedan erde.%p;-with'_ oMRe viide letter dated 31.10.2002 for The DMRC thereafter tool; and identified two corridorsd Sclleared in principle by it carried out the topographical with the assistance of M/s.R_ITVES.dd'"who~.,assisted DMRC in drawing up the project report'. During the preparation of the detailed report, the DMRC had constant ' inteAra__ctio:t1~ Government of Karnataka and Various governmental and locai agencies. Various other _invVe~st.igations were carried out with the assistance of .:'_"eA¢:thorities, such as Torsteel Research Foundation, V' -33- Department of Environmental Sciences, Bangalore University, National Council for Applied Economic Research etc., After due consultation with_."~v,ario1is Governmental Agencies, a detailed project_.'4"i=eport'f"l prepared and submitted in May 2003_by l."It4_'_:aisoll"
contains all technical paraIrieterSi"l construction and operation rMpetro" Rail The" V detailed project report,» i.nter',.raii:fi_:*«deals v\}ith..b'ai1ast1ess track on main lines (tfiaunder Clause 7.2 .3. which re_ao'e A it is proposed to adopt_ pl,inth._. A 'bailastless track structure with guards integrated with in Fig.7.2]. In tunnels, track structure is to be adopted ian~':''Fig.7.3" & 7.4). Further, it is to adopt Voss1oh--336 Fastenings Systeni (shown in Fig 7.5) on both types of it 'l'b,aiiast1ess track structures, with a base--plate base--plate spacing of 65 cm on viaducts and 70 cm in tunnels. Most of the R"
_ 33 _ components of VOSSLOH 336 Fastening system are now indigenously available. The toe load design for the clips is to be finalisedg'p"."'--.g at the detail design stage." ll
21. From the above, it is clear that A conceived contemplated use of ll system. The Detailed Project Rep'ort7..'prepareVd has been accepted in its elritirety and p.;foject..l'is"'Efieing"'V implemented in accordaifice w"ith"p_'the-»t,same.'"-As" per the Detailed Project Report, to be used is If any other fastening system ilsyto. be place of VOSSLOH 336, it would lead alterir1g'orinodii'ying the integrated Detailed F<,e.poirt already approved and based on lwhlic-hi,' already being carried out. fastening system is important in critical ii' safety mechanism. The track items being c.c1'iticai=lf0r passenger safety, the same are to be tested and W _ 34 _ approved by Railway Board after field trials. Only after successful performance in the filed, they will be approved for their adoptation. As could be seen from 2', the Railway Board has approved the use 3 336 fastening system for ballestlessetrack if if The Railway Board obviously of VOSSLOH 336 fastening only after: "'su'bj'e'cting"' f the said system to valtioits tests;' -.l-3a.ngalorel Metro is being implemented on similar 'l[_}.eVl'ii.'.i Metro. As aforementioned, « lthel Detailed Project Report is executing it as an integrated. project; integrated project, one of the. _ corrfpone»r1t'*-- fastening system cannot be Asp onflthisfday, there is nothing on record to 'show fastening system is approved by the concerned ~aujthority for use in Metro Rail projects in India. gpetitidner also has not disputed that his product is A einot'-approved by the Railway Board or by the RDSO, '=Lu-eknow. if it is so, the petitioner cannot insist that the V"
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distributors of fastening system 336 manufactured by Schwihag AG should also be given a chance to in the bid in pursuance to the tender . Annexu.re~'K'. V p Chapter 17 of Detailed Project i a Metro Phase--I deals with irr1piementati.on ; institutional arrangements and cover; ~ relevant portions of implementation:"strategj asjrfound in Chapter- 17 of the Detailed Project: it " aplproyach has not so far been rail based urban transport country. Attempts rr1a'(i'ei..to tI'f,J_DthiS V" approach for high speed i it A trarnisin' early nineties in Delhi and recently d_ Bangalore have not succeeded.
. " felt that conditions are still not ¢cndi1¢i»~e in our country to try the r Concessionaire approach for metro rail in v systems. it is therefore recommended that the implementation of Bangalore Metre should be V'
- 36 _ done by BMRC on the lines DMRC is implementing Delhi Metro.
Xxxx xxx xxx Metro projects cannot be executed;'tiiej~...',,:it way Government agencies execute projects i"
this country. Each day's delay-«is *'like1\ye.'IafQ if enhance the cost of the pi=ojetc_ti~ lakhs. Therefore, timeijz -completion important to safeguard thelftnancialf' viability; Since BMRC wni gnfdft'hfavielfvthi:fequired manpower to check anclgII1oI'1itofir'the"C;i4enerai Consultants, it may be neceslsafryfftjo" proof Consultants fromgthée" xfe1jy*..v'startV"kivho will do this job on of -------- ~£)elhi Metro Rail Corporation ' 'cari-vbetcolnsidered for being appointed as Proof ._ BMR A Frort:iA:'the above, it is clear that the conditions are conducive in our country to try the V5 -37- Concessionaire approach for metro rail systems. Therefore, the authorities must have decided to have Bangalore Metro on the lines of Delhi Metro. words, the policy makers do not want to take ' particularly in respect of the safety
22. During the course of is conceded by the learned counsellor the'--.res.po_nderit" No.1 that, as and when other*"fastenirig* ir1cl'uding that of petitioner get approval Board, such systems can alse..Vp:y.'be ¥__incorpo«rate_'d.___ir1 future tender documents if ,V suitable for Metro Rail projects. Nobody that the products which are not uvndergone rigor.ou_s_safety tests cannot be used in the v"ir11teAr"es.t of public as Well as safety of the p entir.e"'VrailW'ay_ system. The public interest cannot be ' jeopardised. at the instance of a manufacturer who claims similar product. The commercial interest of the fiiangufacturer should yield to the greater public interest. \{\/T') _ 33 _ Ultimately, the safety of the public is important. Therefore, even if the petitioners product is used in German Railways, the same cannot be a ground_""for allowing this writ petition, more particularly _ nothing on record to show that project of if 'v similar to that of Bangalore Metro.
23. The petitioner has reli_e'd.upon thedocuinent at Annexure--'E' written by petitioner to contend that the tensi0n"cla1ripV.S,KLJ .roanufactured by sehwihag"AG 'iSw.31:JVS€tIi?:lVVI'1 faet_enieg"eystem 336 and that the same SKIf12isValso"tised--~.iii'i7ifOSSLOH 336. But, the very letter reveals that difference between fastening system and Schwihag AG is the anchor bolt and in some 3 cases,"-~..an,___v'additional insulting plate which is used for 34 :''ele'ctrica.l stray current insulation. Which means, there is 4'_'c.er't,a.i1'1fdifference between the VOSSDOH 336 fastening 33 and Schwihag AG fastening system 336. Under V' _ 39 -
such circumstances, it cannot be said that the product of Schwihag AG is exactly similar to the product of vossLoH 336 fastening system. Be that as it Court cannot substitute its opinion to the experts'v ' in the field. It is for the concerr1'ed-..autl1ot;'$ities .of4.'.the».. it Railway Board to find out as to fastening system 336 can "'*app1topriateI'y for it Bangalore Metro Rail syvstexm o=r"f1ot;: u'As._ has lbeeliéheld by the Apex Court In the case mus» UNION OF INDIA ( (1994) 6StgpremeIicoart.'Casésj_65_1);Vf'it is held by the Apex :
" let} u the invitation to tender cannot' open, tojadicial scrutiny because the 'tender is in the realm of contract. '..ll1orrnal1.t;A"«speaking, the decision to accept the the contract is reached by 'A J negotiations through several tiers. Mo.re}_often than not, such decisions are made " ' qualitatively by experts."
'N' 140% It is also relevant to refer to the judgment of the Apex Court in the case of DIRECTORATE OF EDUCATION AND OTHERS --vs-- EDUCOMP DATAMATICS LTp;,.]' OTHERS ( AIR 2004 Supreme Court Cases 1962}; * it is held that the terms of the invitation toltelriderj not it it open to judicial scrutiny the contract. That the Governmelnttniiitst have in C' setting the terms of the z-tender?" have-reajsonable play in its joints as all _.lc'oricomitant for an administrative bOdyj.in {an é;dm:i'nisa~ative sphere. The Courts rvould--..:interi:ere_"'Igvith the administrative policy decision onlyéif it 'arbitrary...-'discriminatory, mala fide or actuated by it is"'en'titled to pragmatic adjustments be..called""for by the particular circumstances. 'lIl'h.elll strike down the terms of the tender 2 presc1*i}:)edv'byl?the Government because it feels that some other terrris. in the tender would have been fair, Wiser or 1ogic'ai.~:'l'i'he Courts can interfere only if the policy decision isarbitrary, discriminatory or mala fide. V'
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project also in order to avoid any sort of problem and in the interest of safety of users of metro rail. Before using fastening system VOSSLOH 333 for Delhi Metro. product was tested by the RDSO, ' aforementioned, as there is nothingwonreco-rd tyolshoyv .that.. any fastening system of similar 'lapprm/~eVd«. Railway Board or by the 'concerned. the it authorities must have t'l1Q11g11'i"'it" tofiusellthe "iastening system VOSSLOH 333, isssmseh .the'_v__sarrie is time tested system. Si«nce the fFender"'IJ_'o.ci;ijnent is issued in pursuant 'p.r_oject_'urepVort, the tender inviting authorityxieouldl gone beyond the detaiied project report,» --. Undeesuch circumstances, this Court does not iiridp "thafs":eth'ere iséwariy violation of Article 14 of the Constiti;1ti.on iofilpinidia.
A View the above, the Court is unable to accept the _._f'.j'jV»-V'eipcntentionili' of the petitioner that the decision of the it No.1 arbitrary and malafde. No malafides Vt/=7 -43- can be attached to the isi respondent in insisting the intending bidders to use VOSSLOH 336 fastening only. It cannot be said that the action of the to have the impugned conditions inmthe te_nder'::jdoCl1i¥nenf is purely discriminatory or f Court refuses to interfere in tlie"--action-..of respondentg No. i. , V * The larger public interest and implementation of Bangalore should not be scuttled or uncalled for.
Law should the larger public interest!
Therefore, in'spite'«of"-some procedural lapses of non- observance of"p_roviso to Section 4[b) of the Act, this Court of""t-tl1e1"cleiar opinion that no relief can be granted in of petitioner in this writ petition.
A 'i'hlellproject should be implemented keeping in the-* safety of public at large. It is brought to the of the Court that already time is fixed for the V'