IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22nd DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE B.M.SHYAM PRASAD WRIT PETITION NO.53791 OF 2018 (GM- TEN) BETWEEN:
M/S. LAKSHMI VENKATESHWARA BOREWELLS SHIDLAGHATTA CARRYING ON ITS BUSINESS AT KONDARAJANAHALLI VILLAGE, GANJIGUNTE POST SHIDLAGHATTA TALUK CHIKKABALLAPURA DISTRICT - 562 105. REPRESENTED BY ITS PROPRIETOR SHRI. K. V. SRINATH ...PETITIONER (BY SRI.D.R. RAVISHANKAR, ADVOCATE AND SRI. MUNIRAJA. M, ADVOCATE) AND :
1. STATE OF KARNATAKA SOCIAL WELFARE DEPARTMENT VIKASA SOUDHA DR AMBEDKAR ROAD BENGALURU - 560 001 REPRESENTED BY ITS ADDL. CHIEF SECRETARY.
2. THE MANAGING DIRECTOR DR B.R. AMBEDKAR DEVELOPMENT CORPORATION LTD., V.V. TOWER DR AMBEDKAR ROAD BENGALURU - 560 001.
3. THE MANAGING DIRECTOR KARNATAKA MAHARSHI VALMIKI SCHEDULE TRIBES DEVELOPMENT CORPORATION JASMA BHAVAN ROAD VASANTHNAGAR BENGALURU - 560 052.
4. THE GENERAL MANAGER-DEVELOPMENT AND TENDER INVITING AUTHORITY DR B.R. AMBEDKAR DEVELOPMENT CORPOPRATION LTD., V.V. TOWER DR.AMBEDKAR ROAD BENGALURU-560 001.
5. THE DEPARTMENT OF FINANCE VIDHANA SOUDHA DR.AMBEDKAR ROAD BENGALURU - 560 001.
REPRESENTED BY UNDER SECRETARY TO GOVERNMENT.
6. THE DISTRICT MANAGER DR. AMBEDKAR DEVP. CORPORATION LTD., 3RD CROSS COTTONPET M.G ROAD, KOLAR – 563 101.
... RESPONDENTS (BY SRI. UDAYA HOLLA, ADVOCATE GENERAL ALONG WITH SRI. VIJAYA KUMAR A. PATIL, ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NOS.1 AND 5;
SRI. P. MAHESHA, ADVOCATE FOR RESPONDENT NOS.2, 4 AND 6;
SRI C. JAGADISH, ADVOCATE FOR RESPONDENT 3;
SRI. K. NARAYANA SWAMY, ADVOCATE FOR IMPLEADING APPLICANT) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRYAING TO QUASH THE CONDITION NO.3.2(a) OF THE IMPUGNED NOTIFICATION DATED 09.11.2018 AND PUBLISHED ON 17.11/2018, ISSUED BY THE RESPONDENT NO.4, AS PER ANNEXURE-A AND B AND ISSUE DIRECTION TO RESPONDNET NOS.1 TO 4 TO MODIFY THE PRESENT IMPUGNED NOTIFICATION DATED 09.11.2018 AS PER ANNEUXRE-A AND TO ISSUE FRESH MODIFIED TENDER NTOIFICATION AND PERMIT THE PETITIONER TO PARTICIPATE IN THE PRESENT TENDER 2018-19 BY CONSIDERING THE REPRESENTATIONS DATED 20.11.2018 AS PER ANNEXURE-C RESPECTIVELY, AND ETC.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED ON 15.02.2019 AND COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THIS COURT MADE THE FOLLOWING:
ORDER The petitioner inter alia has sought for quashing of conditions in No.3.2(a), (b) & (c) of the Tender Notification dated 9.11.2018 in No. ADCL/TND/228 (published on 17.11.2018) issued by the General Manager-Development and Tender Inviting Authority, Dr.Ambedkar Development Corporation Ltd., (Respondent No.4) for the purposes of drilling of 165mm dia Borewells on 'No Water No Money Basis' across the state in about 60 packages. The petitioner has also sought for a direction to respondent Nos.1 to 4 to modify the Notification dated 9.11.2018 (for short, 'Tender Notification') and to issue fresh tender notification permitting the petitioner to participate in such fresh tender process. The impugned conditions 3.2(a), (b)&(c) of the Tender Notification read as follows:
“3.2 To qualify for award of this contract, each tenderer in his name should have in the last 5 years i.e., 2013-2014 to 2017-
2018 (a) Achieved in at least TWO financial years minimum financial turnover of `796.48 lakhs in Borewell drilling only (usually not less than 2 times the estimated annual payment under this contract) notarised copies of certificates issued by chartered accountants should be uploaded.
(b) Satisfactory completion as a prime contractor for at least one similar work with any government Department/under taking organisation of value not less than Rs. 199.12 lakhs (50% of the cost of the work) (certificate issued by the employer not below the rank of executive engineer shall be uploaded) (c) Executed in any one year out of the last 5 years a minimum number of Borewells of not less than 80% of the estimated numbers in any package (certificate issued by the employer not below the rank of executive engineer shall be uploaded).”
2. Sri D. R. Ravi Shankar, the learned counsel for the petitioner, positioned his legal submissions in support of the prayer/s in the writ petition on the basis of the following assertions. The Tender Notification is issued for the purpose of providing Free Borewells to persons from the Scheduled Castes and Scheduled Tribes in their own lands to help them tide over water difficulties during summer. The authorities had issued tenders for similar purposes during the previous years, but the respondent No.4-the tendering authority insofar as the Tender Notification has deviated from the previous tenders on two significant counts viz, (i) in enlarging the size of each package and (ii) in prescribing the qualification for the tenderers to participate.
3. On previous occasions, the tenders were divided into smaller packages, and in fact, multiple packages with about 30 Borewells per package were prescribed for each assembly constituency. But in the present Tender Notification, two or more assembly constituencies have been combined into one package with each package involving drilling of approximately 350-400 Borewells. As regards the eligibility, as in previous tender notifications, the Tender Inviting Authority has prescribed that every tenderer/contractor should own a Borewell Drilling Rig and should have minimum two Borewell Drilling Rigs on lease with all the three Borewell Drilling Rigs being registered with Karnataka Groundwater Authority. However, as regards the qualification, there are material differences, and when seen in juxtaposition, the differences will be as follows:
Condition Number 3.2 (a) The Present Tender Notification Achieved in at least TWO financial years.
In Borewell drilling only.
A minimum financial turn over, usually not less than 2 times the estimated annual payment under this contract The Previous Tender Notifications Achieved in at least ONE financial year.
A minimum financial turnover, usually not less than the estimated annual payment under this contract Satisfactory 3.2 (b) Satisfactory completion as a prime contractor for at least one similar work with completion as a prime contractor for at least one work of a value not less than 3.2 (c) any government Department/under taking organization of value not less than 50% of the cost of the work Executed in any one year out of the last 5 years a minimum number of Borewells of not less than 80% of the estimated numbers in any package (certificate issued by the employer not below the rank of executive engineer shall be uploaded).
25% of the cost of the work Executed in any one year out of the last 5 years a minimum number of Borewells of not less than 25% of the estimated numbers in any package (certificate issued by the employer not below the rank of executive engineer shall be uploaded).
Thus, the concerned authorities in the previous tender notifications had prescribed that a tenderer, in at least one financial year out of the last 5 preceding financial years, should have achieved a minimum financial turnover of `50 lakhs (usually not less than the estimated annual payment under the contract). But, in the present Tender Notification, the respondent No.4 has prescribed that a tenderer, in at least two financial years out of the last five preceding financial years, only from drilling Borewells should have achieved a minimum financial turnover of an amount not less than two times the estimated annual payment under the contract. The estimated annual payment under the contract is in the range of `350 lakhs to `400 lakhs. Therefore, a tenderer, to qualify under the Tender Notification, should have achieved a financial turnover of `700 lakhs to `800 lakhs in two years, as against `50 lakhs in the earlier tenders. The learned counsel for the petitioner contends that by this enlargement of the package and increase in the threshold to qualify to participate in the tender, while retaining the same eligibility criteria, the respondent No.4 has rendered the terms of the Tender Notification onerous. The learned counsel made the following legal submissions:
3.1 The objective of issuing tenders is to enable wider participation to ensure that there is equal opportunity for every citizen to participate in government largess and to promote level playing field for a competitive participation with undeniable benefits therefrom even to the tendering authority. A tenderer, with three Borewells Drilling rigs, would not be in a position to have a financial turnover as stipulated even if all the three rigs are operated simultaneously and consecutively. The respondent No.4, in imposing the impugned condition, has ensured that only a certain category of persons can participate in the tender and thereby defeat the very purpose of issuing tenders in matters of issuing contracts for public works.
3.2 The eligibility to participate in the tender is that the tenderer should own a Borewell Drilling Rig and possess two additional Borewell Drilling Rigs on lease. This eligibility is common to both earlier tender notifications and the present Tender Notification though the prescribed qualifications are different. Under the previous tender, a tenderer was qualified to bid for packages if there was an annual turnover of `50 lakhs in any one year during the last 5 preceding financial years, but under the Tender Notification, the same tenderer cannot participate unless the tenderer has a higher turnover viz., an annual turnover of `700 lakhs to `800 lakhs in any two financial years of the preceding five financial years only from borewell drilling. This condition and the other impugned conditions, which are exclusionary, are onerous and unreasonable. Further, the Hon'ble Supreme Court in the reported decision in Omprakash Sharma vs Ramesh Chand Prashar and others reported in (2016) 12 SCC page 632 has conclusively held that the requirement of satisfying a particular annual turnover is not mandatory.
3.3 The respondent No. 1 has issued a Government Order dated 25.10.2008 modifying the Standard Tender Document terms. In terms thereof, if the value of a tender is less than Rs. one crore, the terms as regards financial turnover as notified during the previous tenders are prescribed, and however, if the value of the tender is more than Rs. One crore, the terms as regards financial turnover as notified in the present Tender Notification are prescribed. Though the Tender Notification is apparently in compliance with the Government Order dated 25.10.2008 because the value of the tender is more than Rupees One crore, the inclusion of the impugned conditions in the Tender Notification is vitiated by legal malice inasmuch as the Tender Notification is issued consciously to defeat the very purpose of inviting tenders. The learned counsel in support of this submission relied upon the decision of the Hon'ble Supreme Court in Kalabharati Advertising vs Hemant Vimalnath Narichania and others reported in (2010) 9 SCC 437.
3.4 The respondent No.4 is obliged in terms of stipulation under Section 27A of the Karnataka Transparency in Public Procurement Act, 2001 to give preference to persons belonging to the Scheduled Castes and Scheduled Tribes in construction works and therefore, the respondent No.4 had provided for such preference to persons hailing from the Scheduled Castes and Scheduled Tribes in the previous tenders for drilling borewells. The respondent No. 5 - the Department of Finance, has also issued Circular dated 12.10.2017 stipulating that such preference should be accorded to tenderers who hail from the Scheduled Castes and Scheduled Tribes. However, the respondent No.4 has not provided for the same in the Tender Notification in compliance with both the provisions of section 27A of the Karnataka Transparency in Public Procurement Act, 2001 and the Circular dated 12.10.2017. Therefore, the respondent No. 4 will have to reissue tender.
3.5 Lastly, the learned counsel for the petitioner contended that if for any reason, this Court is of the considered opinion that the petitioner is unable to make out any ground for interference with the Tender Notification, the petitioner may be permitted to participate in the tender by enlarging the time prescribed by the Tendering Authority - the respondent No.4.
4. Sri Uday Holla, the learned Advocate General, countered the submissions by the learned counsel for the petitioner contending that the Tender Notification is issued to provide, free of cost, approximately 17650 Borewells across the State to persons from Scheduled Caste and Scheduled Tribes, and this is intended to alleviate the hardship faced by the beneficiaries because of the difficult water situation during summer. Therefore, the respondent No.4, with the hindsight advantage of executing Project during the previous years through earlier tenders, and for administrative exigencies, has issued the Tender Notification with the current stipulations.
4.1 The Learned Advocate General relied upon the Government Order dated 20.7.2018 (filed along with a memo during the hearing on 15.2.2019) to explain the circumstances under which the Government had decided to resort to issuing the Tender Notification for drilling Borewells across the state in about 60 packages as against the earlier tender notifications issued for district-wise tenders for smaller packages with about 30 Borewells per package. The respondent No.4 vide its Communication dated 30.5.2018 informed the Government that there was delay in execution of the Project and the beneficiaries could not have the use of Borewells during the previous years 2016-17 and 2017-
18. The delay in execution of the project was because the finalization of prices and appointment of agencies were taking a minimum of 4 to 7 months. There were difficulties in monitoring finalization of the tenders at the district level. Therefore, the Government vide its Order dated 20.7.2018 constituted the Tender Inviting Authority, Tender Inspecting Authority and Tender Accepting Authority for issuance of the Tender Notification across the State in 60 packages. The Tender Notification with the impugned conditions is issued to ensure that the beneficiaries namely, persons from Scheduled Castes and Scheduled Tribe have the timely benefit of a Borewell in their own land free of cost. As such, the learned Advocate General contended that the canvass against the impugned conditions in the Tender Notification on the grounds of legal malice were unfounded and unjustified.
4.2 Further, the learned Advocate General contended that the impugned stipulation cannot be examined qua the earlier terms and conditions, which have been modified to effectively implement the Project, and canvassed that whether the revised terms and conditions of the tender process were better than the earlier ones, could be best decided by the authority calling for the tenders and not by the Courts. He relied upon the decision of the Hon'ble Supreme Court in Monarch Infrastructure (P) Ltd. vs Commissioner, Ullahasnagar Municipal Corporation reported in (2000) 5 SCC Page 287 in support of this contention.
4.3 Furthermore, the learned Advocate General submitted that the argument that the qualification vide the impugned conditions of the Tender Notification is onerous and unreasonable is unfounded. Every person, who is able to establish requisite eligibility and possessed the prescribed qualification, could participate in the tender. There is no bias in favour any particular person. The stipulation as regards achieving financial turnover of twice the estimated annual payment under the contract from Borewell drilling in any two financial years of the last five preceding financial years is to ensure that the tenderers have the necessary expertise and financial wherewithal to execute the tendered work which is essentially on the condition that no payments will be made for drilling unless there is water yield. The obligation to drill without being paid, unless there is water yield, requires a greater financial wherewithal, and is therefore essential for execution of the tendered work in a timely manner to facilitate the purpose of the project. Therefore, the qualifying stipulation as regards achieving the prescribed annual turnover is justified and integral to the tender.
4.4 Insofar as the compliance with the provisions of Section 27A of the Karnataka Transparency in Public Procurement Act, 2001, and the Circular dated 12.10.2017, the learned Advocate General submitted that preference to persons from Scheduled Caste and Scheduled Tribe, as stipulated under the aforesaid provision/circular, is only in respect of 'Construction Works' as defined under the provisions of the Karnataka Transparency in Public Procurement Act, 2001. As drilling of Borewells will not come within the sweep of 'Construction Works' as contemplated under the aforesaid Act, the petitioner cannot complain of any infraction with the provisions thereof. Further, the learned Advocate General, contended that merely because the respondent No. 4 had, on the previous occasion, chosen to extend preference to persons from Scheduled Castes and Scheduled Tribes, the petitioner cannot impugn the Tender Notification and call upon this court to direct the respondent No. 4 to issue fresh tender notification, especially when in law the respondent No. 4 is not obliged to accord such preference. The learned Advocate General emphasised that the entire Project is envisaged, and is being executed by the State, for the benefit of persons from Scheduled Castes and Scheduled Tribe, free of cost, to ensure that they do not suffer financial crisis for want of water during summer with time being the essence. However, the very purpose of the Project was being defeated as the beneficiaries could not get the benefit of borewell free of cost because of the delay ensuing from issuing tenders at the district level and lack of expertise. Therefore, the contention on behalf the petitioner that the rights of the Scheduled Castes and Scheduled Tribe persons is abridged is wholly superfluous.
4.5 On the request by the learned counsel for the petitioner for enlargement of time to the petitioner to participate in the tender proceedings, in the event this court concluded that no interference is called for with the tender process vide the Tender Notification, the learned Advocate General, had initially submitted that the respondents would not have any objection if this court were to allow 10 (ten) days. But later, affidavit dated 21.1.2019, is filed in support of retraction of such willingness to extend time. It is stated in the affidavit that, initially, the last date for uploading the bid was 10.12.2018, but for administrative reasons, the last date was extended to 20.12.2018. The extension of the last date to 20.12.2018 is made before the initial last date viz., 10.12.2018. Technically, after the closure of the last date in e-portal, the last date cannot be extended. In response to the rejoinder submission made by the learned counsel for the petitioner that the reason now offered is only a ruse as the respondents have implemented a similar order by this court in W.P.No.200700/2019 (Gulbarga Bench), it is submitted by the respondents that they have not implemented the order and necessary steps are being taken to file appropriate application in such WP No.200700/2019.
5. It is settled law that writ courts do not sit in judgment over a tender process, or the conditions imposed by the tendering authority, as a court of appeal, but writ courts merely review the manner in which the decision is made. Further, the writ courts do not review administrative decisions in issuing tenders or formulating tender terms except on specific grounds, lest the Courts, which are susceptible to be fallible for want of requisite expertise, substitute its less efficacious decision for the decision taken by administrative authorities with the advantage of expertise as well as hindsight. It is also settled that the writ courts must exercise restraint and interfere only when it is able to conclude that the decision making process, or the decision taken by an administrative authority is vitiated by mala fides, or arbitrariness, or perversity (including legal malice), or the authority/ies intends to favour someone. These propositions have been repeatedly reiterated by the Hon'ble Supreme Court, not only in its decision in Tata Cellular vs Union of India - (1994) 6 SCC Page 651, but also in its recent decision in Municipal Corporation, Ujjain vs BVG India Ltd. - (2018) SCC Page 462, and in every decision in the interregnum.
6. The canvass by the learned counsel for the petitioner that the impugned conditions which, in contradiction with terms in the earlier tender notification, stipulate higher financial turnover only from drilling Borewells in any two financial years in the last preceding five financial years, execution of similar work for government departments/organisations and 80% of the estimated numbers of Borewells in a package, are onerous, unreasonable and vitiated by legal malice. Further, these terms are not mandatory and therefore, the respondents could be directed to modify the Tender Notification and issue fresh tender notification.
7. As regards the impugned conditions being onerous and unreasonable, it is contended that it would be indisputable that a tenderer, with three Borewell Drilling Rigs would not be in a position to have a financial turnover as stipulated even if all the three rigs are operated simultaneously and consecutively round the year. Further, it is also contended that without the support of any empirical data, the packages for drilling Borewells have been redesigned into larger packages with minimum 300-400 Borewells per package ostensibly on the grounds of administrative exigency. But, the decision is taken without due regard to the consequences that would inevitably ensue as the smaller players, who qualified to participate in tenders for smaller packages, are eliminated and thus, defeat the very purpose of issuing tenders. However, these submissions are countered on behalf of the respondents contending that when earlier tender notifications were issued on district-wise basis, the finalisation of the tenders was taking a minimum of 4 to 7 months and thereby delaying the entire process resulting in denial of timely benefit of the Project to the beneficiaries. For these reasons, and the other administrative difficulties, the present Tender Notification is issued with the impugned conditions. These counter submissions on behalf of the respondents not only belie the petitioner's case, but also put the impugned conditions beyond the accepted touchstone for judicial review. This court is of the considered opinion that this Court cannot conclude that the impugned conditions are arbitrary or onerous or vitiated by legal malice in the facts and circumstances of the case, and if the respondent No.1, with the hindsight advantage as well as administrative expertise, has continued the eligibility condition with the impugned conditions requiring a certain financial turnover, to ensure (as emphasised by the learned Advocate General) the necessary financial wherewithal for timely execution of the tender work of drilling Borewells on the condition that bills will be paid only if the Borewells yield water.
8. As regards the submission that the impugned conditions are not mandatory and therefore, the respondents could be directed to modify the tender notification in these regards, the same is based on the assertion that such terms are not essential. Reliance is also placed on the decision of the Hon'ble Supreme Court in Omprakash Sharma's case supra asserting that the Hon'ble Supreme Court while considering the question whether a requirement to furnish annual turnover and net worth was mandatory, has concluded that such stipulation is not mandatory. But, the petitioner cannot avail advantage of any conclusions in this regard in the facts and circumstances of this case. A tenderer will have to, if successful in the bid/tender, execute drilling of Borewells without expecting payment for such efforts unless the Borewells yield water. As such, a certain financial wherewithal becomes necessary for effective implementation of the project and therefore, it cannot be concluded that the impugned condition as regards qualification is only collateral. Even in the decision relied upon by the learned counsel for the appellant in Omprakash Sharma's case (supra), the Hon'ble Supreme Court has concluded that the requirement of furnishing annual turnover/network was not mandatory because the object of the tender there was to ensure sale with prompt payment and the tender did not contemplate a continuing relationship. But, in the case on hand, the successful tenderer, subject to conditional payments, will have to execute the tender work over a sustained period of 18 months.
9. The phrase 'construction works' is defined under the provisions of Section 2(a) of the Karnataka Transparency in Public Procurement Act, 2001. The definition reads thus:
“Construction Works’ means putting up, demolishing, repairs or renovation of buildings, roads, bridges or other structures including fabrication of steel structures and all other civil works;”
The tender work involves drilling of Borewells, and as is obvious from the aforesaid provision, the work of drilling Borewells cannot be construed as 'construction works'. The learned counsel for the petitioner has not been able to place any material to persuade this Court to conclude that even drilling Borewells would come within the sweep of 'Construction Works' as contemplated under the provisions of Section 2(a) of the Karnataka Transparency in Public Procurement Act, 2001.
10. The drilling of Borewells is intended to secure the benefit of water during summer for persons from the Scheduled castes and Scheduled Tribe. Admittedly this project is undertaken even during the preceding years, and the project is executed issuing tenders district-wise with smaller packages. The Government Order dated 20.12.2018 bespeaks of delay in execution of the Project during the preceding years, and the reason for such delay, as assessed by the concerned, is because of the delay in finalisation the tender and issuance of work orders as well as the difficulties in monitoring. The consequence of such delay is denial of the benefit to persons from the Scheduled Castes and Scheduled Tribe. If to achieve the object of the Project, the authorities have issued the Tender Notification with larger packages and without preference, preference not being a requirement under the statute, it cannot be held that the Tender Notification is vitiated because preference extended earlier is not extended. Therefore, the petitioner will have to fail even on this count.
11. The petitioner has specifically averred in para 7 of the writ petition that he is unable to participate in the present tender because of the impugned conditions in terms of which he would not qualify. The question of petitioner participating in the present tender would arise only if the impugned conditions are quashed, and as the impugned conditions are not being interfered with by this court, the petitioner would continue to fail to qualify. Further, it is undisputed that the initial last date for uploading the tender was extended from 10.12.2018 to 20.12.2018. An affidavit is filed stating that technically the last date for uploading cannot be extended on the e- portal after the expiry of the last date. In the aforesaid circumstances, the petitioner's prayer for extension of the last date for uploading cannot be granted. Though certain impleading applications have been filed, contending that because of the interim orders granted by this court staying the tender process, the last date must be extended, for the reason that one extension from 10.12.2018 to 20.12.2018 is already granted, and the applicants cannot join the lis belatedly and seek relief, those applications are also liable to be rejected.
Thus, in the totality of the facts and circumstances of this case, this court is of the considered opinion that the petitioner is unable to establish that the impugned conditions are either onerous or unreasonable or vitiated by legal malice, and that this court can direct the respondents to modify the Notification dated 9.11.2018 in No. ADCL/TND/228 (published on 17.11.2018). Further, there are no justifiable reasons for this court to direct the respondents to extend the last date for uploading the tender in terms of the Notification dated 9.11.2018 in No. ADCL/TND/228. Accordingly, the writ petition, and all the pending applications, are rejected. No costs.
SD/- JUDGE nv