Karnataka High Court
M/S Padmavathi Enterprises vs State Of Karnataka on 11 February, 2025
Author: R Devdas
Bench: R Devdas
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 11TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR.JUSTICE R. DEVDAS
WRIT PETITON NO.33834 OF 2024 (GM-TEN)
C/W
WRIT PETITON NO.34590 OF 2024 (GM-TEN)
WRIT PETITON NO.34687 OF 2024 (GM-TEN)
IN WP 33834/2024
BETWEEN
1 . SRI VEERABHADRESHWARA TRADERS
NO.01, SORABA MAIN ROAD,
SORABA, KARNATAKA-577 429,
REP. BY ITS PROPRIETOR,
SRI. RAMAPPA DHARMAPPA.
2 . SRI SAI TRADERS
BELURU, POST BELURU,
SAGARA TALUK,
SHIVAMOGGA DISTRICT,
KARNATAKA-577 401,
REP. BY ITS PROPRIETRIX
SMT. ASHWINI.
3 . M/S. L. V. TRADERS
W 12-98-30-30-403,
BEHIND CHURCH, JOSEPH NAGAR,
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SAGARA TALUK,
SHIVAMOGGA DISTRICT-577 401,
REP. BY ITS PROPRIETOR
SMT. KRISHNAVENI
AGED ABOUT 46 YEARS.
...PETITIONERS
(BY SRI.P.S.RAJAGOPAL., SR. COUNSEL A/W
SRI. NATARAJA BALLAL., ADVOCATE)
AND
1. STATE OF KARNATAKA
DEPARTMENT FOR SOCIAL WELFARE,
VIKASA SOUDHA, DR. AMBEDKAR VEEDHI,
BENGALURU-560 001,
REP. BY ITS SECRETARY.
2. EXECUTIVE DIRECTOR
KARNATAKA RESIDENTIAL EDUCATIONAL
INSTITUTIONS SOCIETY,
NO. 8, 6TH FLOOR, CUNNINGHAM ROAD,
BENGALURU-560 052.
3. JOINT DIRECTOR (ADMIN)
KARNATAKA RESIDENTIAL EDUCATIONAL
INSTITUTIONS SOCIETY,
NO. 8, 6TH FLOOR, CUNNINGHAM ROAD,
BENGALURU-560 052.
......RESPONDENTS
(BY SRI. MOHAMMED JAFFAR SHAH., AGA FOR R1 SRI. D.L.N. RAO., SR. COUNSELS A/W SRI. SRINIVASA C., ADVOCATE FOR R2 & R3 ) THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ELIGIBILITY CRITERIA NO. 2 SL.NO.2, 3 AND 4 AND NOTE -3- THE KREIS HAS INVITED SIMILAR TENDERS FOR OTHER DISTRICTS OF THE STATE FOR SUPPLY OF FOOD AND VEGETABLE ITEMS WITH THE SIMILAR ELIGIBILITY CRITERIA AND THE EXECUTION OF THE CONTRACT WILL TAKE PLACE SIMULTANEOUSLY FOR THE PURPOSE OF FINANCIAL AND PERFORMANCE CRITERIA AT 2 AND 3 OF ELIGIBILITY CRITERIA THE BIDDER SHOULD MEET THE AGGREGATE VALUE OF THE TURNOVER AND SUPPLY PERFORMANCES IN CASE THEY ARE QUOTING FOR MORE THAN ONE DISTRICT (TOTAL REQUIREMENT OF TURNOVER AND SUPPLY PERFORMANCE OF ALL SUCH DISTRICT FOR WHICH THEY ARE PARTICIPATING) OF THE TENDER ISSUED BY THE R-2 AND 3 AND ETC. IN WP 34590/2024 BETWEEN ASHRAYA ASSOCIATES OFFICE AT NO.38, USA RESIDENCY, J.C.S.T.M., BLOCK, ADICHUNCHANAGIRI MAIN ROAD, KUVEMPUNAGAR, MYSURU 570023.
REPRESENTED BY ITS PROPRIETOR.
SRI. C.Y. SHIVEGOWDA.
SON OF LATE. VYEKUNTEGOWDA, AGED ABOUT 687 YEARS, ...PETITIONER (BY SRI.MADHUKAR M DESHPANDE., ADVOCATE) AND
1. STATE OF KARNATAKA SOCIAL WELFARE DEPARTMENT, M.S.BUILIDING, DR. AMBEDKAR VEEDHI, BENGALURU 560 001.
-4-REPRESENTED BY ITS PRINCIPAL SECRETARY.
2. EXECUTIVE DIRECTOR (ADMIN) & TENDER INVITING AUTHORITY, KARNATAKA RESIDENTIAL EDUCATIONAL INSTITUTIONS SOCIETY, (AN ORGANIZATION OF GOVERNMENT OF KARNATAKA), NO. 8, 6TH FLOOR, CUNNINGHAM ROAD, BANGALORE 560 052.
.......RESPONDENTS (BY SRI. MOHAMMED JAFFAR SHAH., AGA FOR R1 SRI. D.L.N. RAO., SR. COUNSELS A/W SRI. SRINIVASA C., ADVOCATE FOR R2) THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT TENDER CONDITIONS AT SL.NO. 2 AND 3 OF THE ELIGIBILITY CRITERIA I.E., CLAUSE 2 OF THE TENDER CONDITIONS INCLUDING THE NOTE CONTAINED THEREIN AND TENDER CONDITIONS AT CLAUSE 3.7(IV) OF THE TENDER CONDITIONS PERTAINING TO TENDER ENQUIRY BEARING NO. KREIS/2024-25/IND0014 DTD. 16.11.2024 (ANNX-A) ISSUED BY THE R-2 ETC. IN WP 34687/2024 BETWEEN M/S PADMAVATHI ENTERPRISES A PROPRIETORSHIP CONCERN HAVING ITS REGISTERED OFFICE AT 11-6-77, BRESTHWARPET RAICHUR, KARNATAKA 584101 REPRESENTED BY ITS PROPRIEOTR MR. MATISAGAR S/O KASTURICHAND -5- AGED ABOUT 50 YEARS ...PETITIONER (BY SRI. AJAY KADKOL., ADVOCATE) AND
1. STATE OF KARNATAKA VIDHANA SOUDHA VIDHANA VEEDHI BANGALORE 560 001
2. DEPARTMENT OF SOCIAL WELFARE GOVERNMENT OF KARNATAKA 5TH FLOOR, MS BUILDING DR B R AMBEDKAR VEEDHI BANGALORE 560 001
3. KARNATAKA RESIDENTIAL EDUCATIONAL INSTITUTIONS SOCIETY NO.8, 6TH FLOOR, CUNNINGHAM ROAD KMF BUILDING, BANGALORE 560 052 REPRESENTED BY ITS EXECUTIVE DIRECTOR
4. EXECUTIVE DIRECTOR KARNATAKA RESIDENTIAL EDUCATIONAL INSTITUTIONS SOCIETY NO.8, 6TH FLOOR, CUNNINGHAM ROAD KMF BUILDING, BANGALORE 560 052 .......RESPONDENTS (BY SRI. MOHAMMED JAFFAR SHAH., AGA FOR R1 SRI. D.L.N. RAO., SR. COUNSELS A/W SRI. SRINIVASA C., ADVOCATE FOR R2 & R3 ) THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH OR SET -6- ASIDE THE REFERRED TENDER NOTIFICATION BEARING NO. KREIS/2024-25/IND0028, DTD 16.11.2024 ISSUED BY THE R-4 ON BEHALF OF THE R-3, WHICH IS PRODUCED AS ANNX-A AND DIRECT R-4 TO ISSUE A FRESH TENDER NOTIFICATION IN COMPLIANCE WITH THE PROVISIONS OF KTTP ACT, ENSURING JUSTICE, FAIRNESS AND EQUALITY OF ALL THE PARTICIPANTS AND ETC. THESE WRIT PETITIONS ARE HAVING BEEN HEARD AND RESERVED ON 06.02.2025 AND COMING ON FOR PRONOUNCEMENT OF ORDERS, THIS DAY, R.DEVDAS. J., MADE THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE R DEVDAS CAV COMMON ORDER (PER: HON'BLE MR JUSTICE R DEVDAS) The petitioners are merchants and traders whose grievances in common are directed towards the impugned tender notification bearing No.KREIS/2024- 25/IND0010, dated 16.11.2024. Therefore, these petitions were clubbed, heard together and are being disposed of by this common order.
2. It is the contention of the petitioners that there are certain conditions in the impugned tender notification which are arbitrary, unreasonable and -7- impossible to comply with and therefore, the petitioners seek to quash such Eligibility Criteria at Sl.Nos.2, 3 and 4, found in the tender notification.
3. For easy reference, the said eligibility criteria are extracted hereinbelow:
Sl. CRITERIA MANDATORY
No. SUPPORTING
DOCUMENTS
1. xxxxxxxxxxx xxxxxxxxxxxxx
2. Towards financial
All the below
capability, the bidder
documents:
should have Average
a) Audited Statement of
Annual turnover equalAccounts viz. Balance
to the value of the bid
Sheet, Trading/Profit and
amount during preceding
Loss Account
3 financial years i.e.,
b) IT Returns file
2021-22, 2022-23 and c) GST Returns file 2023-24. d) CA Certified - Online submitted 3CA/3CB/3CD should compulsory be downloaded from Income -
Tax Department software and each document must have a unique number.
e) Certificate issued by the
CA with UDIN number as
per Annexure B
f) Manual reports issued by
the CA will not be
considered.
3. Should have executed All the below
supply of Food and documents:
Vegetable items a) Furnish the details as
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(Perishable & Non per format in Annexure
Perishable) with a C1.
Average Annual work b) Copies of the
value not less than Purchase/work orders.
70% of the bid amount c) Satisfactory completion
as a single or Multiple certificate issued by the
order to any of the State/ Client as per the format at
Central Government Annexure D (Must tally
Departments/ with the work orders
organisation in India, furnished and duly certified
during preceding three by Competent Authority).
financial years i.e., 2021- d) Work order should
22, 2022-23 and 2023- contain list of items
24. (The Bidder shall have mentioned in section IV -
work order and supplied Appendix-1.
80% Vegetable items
(Perishable items) and
80% Food items (Non
Perishable items)
exclusively mentioned in
section IV.)
4. The tenderer should have All the below
supplied vegetable & food documents:
items to any of a) Furnish the details as
State/Central Government per format in Annexure
Department/Organisations C2.
in India at least 80% of b) Copies of the
the requirement of the Purchase/work orders in
quantity mentioned in quantity.
the Tender Document c) Work order should
in any one of the last 3 contain list of items
financial years i.e., mentioned in section IV -
2021-22, 2022-23 and Appendix-1
2023- 24.
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4. Attention of this Court was also drawn to the Note below the tender conditions which reads as follows:
"Note: The KREIS has invited similar tenders for other districts of the State for supply of Food & vegetable Items with the similar eligibility criteria and the execution of the contract will take place simultaneously.
For the purpose of Financial and
performance criteria at 2 and 3 of
"eligibility criteria", the bidder should meet the aggregate value of turnover and supply performances in case they are quoting for more than one district (Total requirement of turnover and supply performance of all such Districts for which they are participating). For awarding tender with respect to district ,ascending order of the indent number will be considered (i.e., Indent will be created in the alphabetical order of the district name and first come first basis of indent number will be considered)".-10-
5. Learned Senior Counsel Sri.P.S.Rajagopal, leading the arguments for the petitioners submitted that the State Government, through the Department of Social Welfare, issued a Government Order on 30.10.2024 in order to set right the anomaly that gave rise to several petitions being filed before this Court, more particularly, regarding the varying conditions sought to be imposed in the tender notification while calling for supply of foodgrains, grocery and vegetables to the schools and hostels maintained by the Government throughout the State. It was pointed out from the Annexure appended to the Government Order dated 30.10.2024 under the broad heading at Sl.No.6D, that the tenderer should have annual turnover in any of the two preceding years out of five, which would be more than the value of the tender called for in respect of the same product. It was therefore submitted that the conditions imposed -11- in the impugned tender is contrary to the Government Order dated 30.10.2024.
6. Having regard to the Preamble contained in the Government Order dated 30.10.2024, where it is clearly mentioned that in order to bring uniformity in the prescription of the conditions in tender notification, calling for supply of food grains, grocery and vegetables, while superseding all the earlier Government Orders, the Social Welfare Department issued the Government Order dated 30.10.2024.
7. At that juncture, learned Senior Counsel Sri.D.L.N.Rao, appearing for the contesting respondent-Karnataka Residential Educational Institutions Society (for short 'KREIS') pointed out that the Government Order dated 30.10.2024 bearing No.SaKaEe.738 PaKaVi 2024, Bengaluru, was applicable in respect of Dr.B.R.Ambedkar Residential Schools, Pre-metric and Metric Schools and Hostels -12- and the same is not applicable to KREIS. It was pointed out that insofar as KREIS is concerned, it is a Society established by the State Government for establishment and management of KREIS Residential Schools throughout the State and there are 821 such Residential Schools established and maintained by KREIS. Therefore, separate set of Government Orders have been issued, though by the Social Welfare Department, governing the Residential Schools run by KREIS viz., Government Orders bearing Nos.SaKaE MDS 425/2022, Bengaluru, dated 18.09.2024 and SaKaEe MDS 425/2022, Bengaluru dated 30.10.2024.
8. It was pointed out from the Government Order Nos.SWD 532 SEW 96, Bangalore dated 06.10.1999, SaKaEe 320 MDS 2022, Bengaluru dated 19.08.2022 and SaKaEe 320 MDS 2022, Bengaluru dated 04.11.2022 that KREIS is managed by a Directorate at the State level and all policy decisions -13- are taken by the Directorate. It was submitted that at present, there are nearly 2,40,000 children residing and studying in the Schools run by KREIS. Therefore, Government Order dated 30.10.2024 pertaining to Dr.B.R.Ambedkar Schools etc., are not applicable to KREIS.
9. In fact, this Court by order 23.01.2025 directed the learned Additional Government Advocate to secure instructions from the Principal Secretary, Department of Social Welfare, as to whether Government Order dated 30.10.2024 would apply to KREIS. The learned Additional Government Advocate submitted on 28.01.2025 a memo containing clarification issued by the Principal Secretary, that the said Government Order issued in respect of Dr.B.R.Ambedkar Schools and Hostels which are about 68 in number are not applicable to KREIS. -14-
10. Thereafter, learned Senior Counsel Sri.P.S.Rajagopal submitted that Eligibility Criteria at Sl.No.2 requires a bidder to have a financial capacity of having average annual turnover equal to the value of the bid amount during preceding three financial years. It was submitted that the year 2021-22 was stricken by COVID-19 and therefore, it would be impossible to comply with such requirement. Further, while pointing out to Eligibility Criteria Sl.No.3, it was submitted that the bidder should have supplied food and vegetable items with an average annual work value not less than 70% of the bid amount to any State/Central Government Departments/Organisations in India during the preceding three financial years. Again at Sl.No.4, it requires that the tenderer should have supplied vegetable and food items to any State/Central Government Department/Organisations in India at least 80% of the requirement of the -15- quantity mentioned in the tender document in any one of the last three financial years. Learned Senior Counsel submitted that these conditions are unreasonable and cannot be met by the bidders. Learned Senior Counsel placed reliance on Subodh Kumar Singh Rathour Vs. Chief Executive Officer and Others, 2024 SCC OnLine SC 1682 to contend that the earlier position of law has been altered by the Apex Court stating that although writ jurisdiction is a public law remedy, yet a relief would still lie under it if it is sought against an arbitrary action or inaction of the State, even if they arise from a non-statutory contract. It was pointed out that the Apex Court has held that an action under a writ will lie even at the stage prior to the award of a contract by the State wherever such award of contract is imbued with procedural impropriety, arbitrariness, favouritism or without any application of mind.
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11. Learned Counsel Sri.Madhukar M.Deshpande, appearing for some of the petitioners pointed out to Eligibility Criteria at Sl.No.5 which requires the tenderer to have liquid assets consisting of cash in hand plus cash at Bank plus term deposits/liquid funds with bank plus availability of fund based credit facility in any Nationalised or Scheduled Commercial Bank. In that regard, the tenderer was required to furnish Bankers Certificate. Learned Counsel submitted that such conditions are arbitrary and it gives scope to rich traders while keeping away honest and genuine traders.
12. Learned Counsel Sri.Ajay Kadkol, appearing for the petitioner in W.P.No.34687/2024 submitted that the impugned tender notification does not prescribe the term of the tender. It is submitted that in Section II of the terms of the contract at paragraph No.12 regarding 'Security Deposit', it is mentioned -17- that the successful bidder shall furnish performance security having validity for the entire period of contract i.e., two years from the date of issue of work order or the extended period thereof. Other than that, the term of the Tender is not specific. It is submitted that there is scope for extending the period of contract which would be illegal.
13. This Court has looked into the impugned tender notification and it finds at Section I, Information to Bidders, in Clause 1.2 the contract period is clearly mentioned as two years from the date of issue of letter of intimation or entering into contract or for the extended period, as ordered by the Tender Inviting Authority.
14. Learned Senior Counsel Sri.D.L.N.Rao appearing for the respondent-KREIS submitted that although the prescription in terms of Government Order bearing No.SaKaEe-MBS/425/2022, Bengaluru, -18- dated 18.09.2024, applicable to KREIS is that the average annual financial turnover of the bidder should be twice the estimated cost of the quantity mentioned in the tender document, by corrigendum order bearing no.SaKaEe-MBS/425/2022 dated 30.10.2024 the requirement is reduced to one year, which is the same as the condition applicable to tenders invited by Dr.B.R.Ambedkar Schools and Hostels. Further, though the requirement in terms of G.O. dated 18.09.2024 is 80% of the requirement of the quantity mentioned in the tender document, the same is reduced to 70%, in the impugned tender notification.
15. Learned Senior Counsel Sri.D.L.N.Rao submitted that in the matter of public tenders, the prescription and conditions are not normally interfered by Courts. The settled of position of law is that the Tender Inviting Authority is empowered to use its discretion to impose conditions to suit the objective of -19- the tender. Such expert opinion should not ordinarily be interfered with. It is submitted that the Principal Secretary of the Department of Social Welfare has clarified to this Court that the standard tender conditions applicable to Dr.B.R.Ambedkar Schools and Hostels are not applicable to the Residential Schools run by KREIS. All policy decisions in respect of the residential schools are taken by the Directorate, at the State level. Moreover, the residential students amounting to 2,40,000 cannot be compared with Dr.B.R.Ambedkar Schools and Hostels, which are only 68 in number. Therefore, even if there are some minor differences in the tender conditions applicable to those schools, when compared to the residential schools of KREIS, that by itself does not call for interference at the hands of this Court. The learned Senior Counsel also pointed out that some of the petitioners had earlier filed writ petitions and withdrew -20- the petitions without seeking liberty to file a fresh petition.
16. Heard learned Senior Counsel Sri.P.S.Rajagopal, appearing for the petitioners, learned Counsels Sri.Madhukar M.Deshpande, Sri. Ajay Kadakol for petitioners, learned Senior Counsel Sri.D.L.N.Rao, for the contesting respondents and learned Additional Government Advocate for the respondent-State and perused the petition papers.
17. In Subodh Kumar (supra), the Hon'ble Apex Court has held that an action under a writ will lie even at the stage prior to the award of a contract by the State, wherever such award of contract is imbued with procedural impropriety, arbitrariness, favouritism or without any application of mind. However, it is also cautioned that Courts may set aside the decision which is found to be vitiated for the reasons stated -21- above, but Courts cannot substitute the same with its own decision. It is also held that even after the contract comes into existence, an action may lie by way of a writ to either obviate an arbitrary or unreasonable action on part of the State or to call upon it to honour its obligations unless there is a serious or genuine dispute as regards the liability of the State from honouring such obligation. When we consider the grounds raised in these writ petitions, viz., that certain conditions are arbitrary, unreasonable and impossible to comply, this Court is not impressed with such contentions, raised at the hands of the petitioners. The impugned conditions are not such that they are designed to favour a few tenderers and keep away a few. Such tender condition are uniformly made applicable in all the districts of the State. It is also not possible to hold that the conditions are impossible to comply with. If -22- COVID-19 has caused disruption in the business of the petitioners, it would be the same even in respect of other bidders also. During the course of the argument, this Court was apprised of the fact that more than 92 bids were received by the respondents and because of the interim orders of stay passed by this Court, the respondents are not able to proceed with the tender process. This Court is dealing with tenders pertaining to supply of food grains and vegetables to the children residing and studying in the Schools established by KREIS which are about 821 in number. Any further delay in the conclusion of the tender process will seriously impact the children studying in the Schools. Merely because the petitioners contend that they may have some difficulty in complying with the conditions, it will not call for interference and direct amendment to the tender conditions.
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18. For the reasons stated above, this Court is of the considered opinion that there is no merit in the writ petitions.
19. Accordingly, these writ petitions stand dismissed.
20. Pending I.As., if any, stand disposed of.
Sd/-
(R DEVDAS) JUDGE JT CT: JL