IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF AUGUST 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NOS.33344 OF 2019 & 34044 2019 (GM-TEN) BETWEEN:
1. SRINIDHI PACKAGING INDUSTRIES REPRESENTED BY ITS PROPRIETRIX SMT R ASHA W/O KESHAVA REDDY AGED 40 YEARS SITUATED AT SY. NO 27/3 BODANAHOSAHALLI ANUGONDANAHALLI HOBLI HOSAKOTE TALUK BENGALURU RURAL DISTRICT BENGALURU – 560 067 2. AKSHAYA PACK REPRESENTED BY ITS PROPRIETOR SRI NAGARAJ SEENAPPA S/O SEENAPPA AGED 45 YEARS NO 194 2ND FLOOR KSRTC LAYOUT 2ND PHASE J P NAGAR BENGALURU – 560 078 … PETITIONERS (BY MR.SADASHIVAIAH K G, ADV.) AND:
1. THE KARNATAKA MILK FEDERATION REPRESENTED BY ITS MANAGING DIRECTOR KMF BUILDING BANNERGHATTA ROAD DAIRY CIRCLE H M MARIGOWDA ROAD BENGALURU – 560 029 2. KOLAR CHIKKABALLAPURA DISTRICT CO-OPERATIVE MILK PRODUCERS SOCIETIES UNION LTD KOLAR REPRESENTED BY MANAGING DIRECTOR NH-4 (NH-75) HUTHUR POST KOLAR – 563 102.
3. THE KOLAR CHIKKABALLAPURA MILK UNION LTD KOLAR REPRESENTED BY ITS MANAGING DIRECTOR N H -75 HUTHUR POST KOLAR – 563 102 … RESPONDENTS (BY MR.Y R SADASIVA REDDY, SR. COUNSEL FOR MR.RAHUL S REDDY, ADV. FOR R2 & 3, R1 – SERVED AND UNREPRESENTED) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE CONDITIONS AS PER SECTION VII OF THE SECTION VII (1) AND (2) OF THE E-PROCUREMENT SHORT TERM TENDER NOTIFICATION 2019-20 (QUALIFICATION CRITERIA) VIDE NOTIFICATION DATED 20TH JULY, 2019 AND TENDER NOTIFICATION DATED 20.07.2019 AS PER ANNEXURES-A & B RESPECTIVELY; AND ETC.
THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Mr.Sadashivaiah K.G., Learned counsel for the petitioner.
Mr.Y.R. Sadasiva Reddy, learned Senior Counsel for Mr.Rahul S.Reddy, learned counsel for respondent Nos.2 and 3.
The writ petitions are admitted for hearing. With consent of the learned counsel for the parties, the same are heard finally.
2. In these petition, the petitioner inter alia seeks quashment of tender conditions contained in Section VII (1) & (2) of e-procurement Short Term Tender notifications dated 20.07.2019. The petitioner also seeks a writ of mandamus directing the respondents not to impose the condition which prevents small-scale semi-automated manufacturers from participating in the tender process. The petitioner also seeks a writ in the nature of mandamus directing respondent No.3 to consider the representation dated 01.08.2019 submitted by the petitioners.
2. Facts giving rise to filing of the petition briefly stated are that the petitioners have established small-scale industries and are the manufacturers of corrugated boxes for the purpose of packing of finished goods of respondent Nos.2 and 3 and supplied the same as per previous tender specifications. It is the case of the petitioners that they have semi automated manufacturing units. However, the respondents have issued tender notifications on 20.07.2019, by which condition has been incorporated that the tenderer should be a manufacturer having fully automated corrugated boxes manufacturing facilities, and the proof of the same shall be produced. It has further been prescribed that tenderers should be a manufacturer who might have tested and supplied goods/ materials similar to the type specified in schedule of requirements upto atleast 80% of the quantity or should have minimum turnover of 80% of the tendered value in corrugated boxes manufactured products required in any of the last three years. The petitioners being aggrieved of the aforesaid tender conditions, have approached this court.
3. Learned counsel for the petitioner submitted that the impugned conditions contained in the e-tender notifications are contrary to law as well as notification issued by Government of India contained in Annexure-J. It is further submitted that in the previous notifications no such conditions were ever included and on account of inclusions of such conditions, the petitioners have been deprived of their rights to participate in the process of tender.
4. On the other hand, learned Senior counsel for respondent Nos.2 and 3 while inviting the attention of this court to statement of objections filed on behalf of respondent Nos.2 and 3 submitted that the respondents require 40,000 to 50,000 corrugated boxes per day because of their improved business and the petitioners who are having semi-automated machineries cannot supply more than 5000 boxes per day and during rainy season they cannot even supply a single box because the corrugated boxes are required to be dried in hot weather. It is further submitted that estimated value of the boxes at Kolar Diary is Rs.22,70,00,000/- whereas, in Chikkaballapur Diary, the same is Rs.4,00,00,000/-.
The petitioners are unable to fulfill even the second condition. Therefore, taking into account the requirement of the respondent Nos.2 and 3, the conditions with regard to eligibility have been prescribed.
5. I have considered the rival submissions and have perused the record. ‘TATA CELLULAR VS. UNION OF INDIA (1994) 6 SCC 651: (AIR 1996 SC 11), the Supreme Court while dealing with the scope of judicial power of review held that it would apply to exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. It has been held that the ground upon which the administrative action is subject to control by judicial review is on the grounds of illegality, irrationality and procedural impropriety. It has further been held that terms of the invitation to tender are not open to judicial scrutiny because invitation to tender is in the realm of contract and more often than not, such decision are made qualitatively by experts. It has further been held that the Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative body functioning in an administrative sphere or quasi- administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness but must be free from arbitrariness not affected by bias or actuated by mala fides.
6. The principles regarding award of contract were again reiterated by the Supreme Court in ‘IN DIRECTOR OF EDUCATION VS. EDUCOMP DATAMATICS LIMITED’, (2004) 4 SCC 19: (AIR 2004 SC 1962) and it was held that Government must have a free had in setting the terms of tender and the Courts cannot strike down the terms of tender prescribed by the Government because it feels that some other terms in the tender would have been fairer, wiser or more logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or actuated by malice. In ‘SHAMNIT UTSCH INDIA PRIVATE LIMITED VS. WEST BENGAL TRANSPORT INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED’, (2010) 6 SCC 303: (2010 AIR SCW 3974), the Supreme Court while taking note of the law laid down in ASSN. OF REGISTRATION PLATES VS. UNION OF INDIA’, (2005) 1 SCC 679: (AIR 2005 SC 469), reiterated that State Government has the right to get the right and most competent person and in the matter of formulating conditions of tender documents, unless the action of tendering authority is found to be malicious and is a misuse of statutory powers, the tender conditions are unassailable. In ‘SIEMENS AKTIENGESELEISCHAFT AND SEIMENS LIMITED VS. DELHI AND SEIMENS LIMITED VS. DELHI METRO RAIL CORPORATION LIMITED AND OTEHRS’, (2014) 11 SCC 288 : (AIR 2014 SC 1483), it was held that tenders floated by the Government are amenable to judicial review only in order to prevent arbitrariness and favoritism and protect the financial interest of the State and the public interest.
7. In the backdrop of aforesaid well settled legal principles, the fact in the case on hand may be examined. The terms and conditions which pertain to qualification criteria read as under:
1. Tenderer should be a manufacturer having fully automated corrugated boxes manufacturing facilities, proof of the same shall be produced.
2. The tenderer should be a manufacturer who must have manufactured, tested and supplied the goods/material (s) similar to the type specified in the ‘Schedule of Requirements’ up to at least 80% of the quantity or should have minimum turnover of 80% of the tendered value in corrugated boxes manufacturing products, required in any one of the last 3 years.
8. The aforesaid tender conditions pertain to eligibility of a tenderer. The object of incorporation of conditions pertaining to eligibility of tenderer is to ensure successful completion of the contract. Taking into account the requirement of corrugated boxes and the number of boxes required per day by respondent Nos.2 and 3, the aforesaid eligibility conditions have been incorporated by respondent Nos.2 and 3. The terms of the invitation to tender are not open to judicial scrutiny because invitation to tender is in the realm of contract and more often than not, such decision are made qualitatively by experts. This court in exercise of powers of judicial review cannot sit on appeal over the decision taken by experts while formulating the eligibility conditions of a tenderer. The object of the impugned tender conditions is to ensure a smooth completion of the contract and looking to the requirement of the respondent Nos.2 and 3 the petitioners do not have the capacity to produce 5000 nos. of corrugated boxes per day. Even otherwise, the tender conditions pertaining to eligibility criteria are treated to be mandatory. The aforesaid tender conditions cannot be said to be either arbitrary or irrational.
In the result, I do not find any merit in the petitions. The same fails and are hereby dismissed.
Sd/- JUDGE SS