AI Structured Summary
Not yet generated for this judgment
Judgment
A.S. Bopanna
The second Respondent is a Government of Karnataka undertaking engaged in the activity of development of fisheries, and the matters related to the said activity. The second Respondent by its tender notification No. 07/2011-12 dated 16.05.2011 invited tenders from reputed firms having experience in setting up freezing plant, cold storage and refrigeration for work on turnkey basis for construction of Modern Sea Food Processing Plant at Hoige Bazar, Mangalore for the value of Rs. 499 lakhs. The further details relating to the terms and conditions were prescribed in the tender documents. The Petitioner which claims to be a. company incorporated under the Companies Act and being engaged in the business of cold chain infrastructure for the last 16 years is interested in responding to the tender. However, the Petitioner being aggrieved by the time limit being prescribed contrary to Rule 17(1)(b) of the Karnataka Transparency in Public Procurements Rules, 2000 (''Rules'' for short); by the pre-qualification of the tenderer which is prescribed in clause 1.6 and also non-consideration of consortium/joint venture etc. are before this Court assailing the same.
This Court, at the first instance, directed notice to the Respondents and granted interim order, since at the outset, the time prescribed was contrary to Rules and the aspects relating to pre-qualification required consideration. The Respondents have appeared and the second Respondent has opposed the petition by filing their objection statement and have also filed application in... Misc. W. 8381/2011 for vacating stay. Though the matter was listed for consideration of the said application, the main matter itself was heard with the consent of the learned Counsel for the parties and is being disposed of by this Order.
At the outset, it is to be noticed that the date which was fixed as 16.07.2011 being the last date for accepting tenders has been extended up to 19.08.2011 and the opening of the same is scheduled on 20.08.2011. Hence, it is acknowledged on behalf of the Petitioner that challenge as to non compliance of Rule 17(1)(b) of the Rules does not survive at this stage and the only question for consideration is with regard to pre-qualification criteria and prohibition of consortium.
Heard Sri T.S. Amarkumar, learned Counsel for the Petitioner. Ms Nagashree, learned Government Advocate and Sri Balachandra, learned Counsel for the second Respondent and perused the writ papers.
In the background of the issue that has been raised for consideration, it is appropriate to notice the pre-qualification that has been prescribed in the tender conditions which reads as hereunder:
Performance Criteria
Documentary Evidence (to be enclosed)
A) Financials
Turnover
Not Less than Rs. 50 chore each year 2008-09. 2009-10 and 2010-11 for last 3 years
Audited. Annual report for the last 3 years
Profitability
Shall Be Profitable In Year 2008-09. 2009-10, 2010-11
Audited Annual Reports
B) Past Experience
Electrical
Valid Certificate For Being Class 1 ELECTRICAL Contractor
A Copy of The Valid Corticated of License
Existence of The Company
Minimum five years setting- gAP of in the Freezing plant, cold storage and refrigeration related projects as on 31.3.2011
Certificate of incorporation or Annual report
Turnkey Contract
Shall have executed minimum 3 freezing plant, cold storage and refrigeration related projects on turnkey basis solely or in association with sister concerns for any government department/PSU/priva the minimum value of such. Projects per year shall be 2 crores.
Copies of work order and job completion certificates
The learned Counsel for the Petitioner would contend that the requirement prescribed In 1.6(A) (2) and (B) (1) above has no nexus to the object to be achieved. In that regard, it is his submission that profitability of the tenderer can never be a consideration. Despite having the required turnover, there can be possibility of suffering loss, during a financial year due to several other factors which need not be relatable to work performance. In the case of Petitioner, they had sustained loss during one year due to fire accident. Therefore, that itself will not determine their capability when they have been in the business for 16 years and have turnover of 50 crores. Further, the requirement to possess Class-I Electrical Contractor''s Certificate is also irrational and arbitrary. When the work involves other disciplines such as civil work for construction and installation of refrigeration. It. is further contended that the prescription of execution of projects worth minimum value of 2 crores in relation to a project worth Rs. 499 lakhs is with the object of favouring a particular tenderer. The prohibition of formation of consortium in a work of present nature is not only unreasonable, but violative of Article 14 of the Constitution. In support of the contentions, reliance is placed on the decisions of the Hon''ble Supreme Court in the case of M/s. Monarch Infrastructure (P) Ltd. Vs. Commissioner, Ulhasnagar Municipal Corporation and Others, and the decision of this Court in the case of M/S Esteco Coal Services Ltd. v. The Karnataka Power Corporation Ltd. and Ors. AIR 1997 KAR 220.
The learned Counsel for the second Respondent with reference to objection statement sought to justify their action. It is pointed out that the work is being undertaken under a scheme sanctioned by the Government as ''Rashtriya Krishi Vikasa Yojana'' (RKVY for short;). The funds allocated under the said scheme has to be utlized before the end of the financial year 2011-12 and also considering that the project is to the tune of 5 crores, the terms and conditions have been prescribed to achieve the object. Further the work is to be in conformity with the European Union Standards as the project is for export of sea. food to other countries in addition to domestic need. Since the work is of installing refrigeration of Rs. 2.82 crores, the civil works is of Rs. 1.645 crore and electrical is of Rs. 0.5 crore and it has to be achieved in a time frame on a turnkey basis, the consortium has not been permitted as it would otherwise delay the work, if there is lack of co�ordination, in that regard, considering that the value of electrical work is of a substantial value, Class-I Electrical Certificate is insisted. The prescription of Rs. 2 crores is only for assessing the financial capacity. It is therefore contended that the domain of prescribing terms arid condition is that of the authorities and judicial review is limited. Reliance is placed on the decision of the Hon''ble Supreme Court in the case of Directorate of Education and Others Vs. Educomp Datamatics Ltd. and Others, .
Having noticed the contentions, it would he appropriate to refer to the legal position as enunciated in the decisions cited supra to determine the extent to which it is permissible for the Courts to interfere. In the decision of this Court in the case of M/S Esteco Coal Services, the work was relating to supply of coal and in that context, the stipulation of previous supply of coal to a particular type of industry and by a particular route was held as arbitrary though it was open to assess the capability by imposing such condition with regard to the earlier supply. Hence, the said decision was in the facts involved therein based on the principle of law, In any event, both the learned Counsel have relied on the subsequent decisions of Hon''ble Supreme Court wherein in the case of Monarch Infrastructure, where a condition of eligibility was deleted after the time-limit so as to award the contract to one of the tenderer who did not satisfy the condition was field as bad and in such situation, it was held that Court''s interference is permissible when the Government action is arbitrary and discriminatory.
In the instant ease, it is not one such case, but a situation where the tender condition prescribe is common to all those who may respond and such condition is assailed as arbitrary unreasonable and having no nexus to the object. In this regard the Hon''ble Supreme Court in the case of Edu Comp Datamatics Ltd. after referring to the earlier decisions including the decision in Monarch Infrastructure (P) Ltd. relied on by the learned Counsel for the Petitioner, has held as hereunder:
This principle was again re-stated by this Court in M/s. Monarch Infrastructure (P) Ltd. Vs. Commissioner, Ulhasnagar Municipal Corporation and Others, . It was held that the terms and conditions in the tender are prescribed by the Government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the Courts to say whether the conditions prescribed in the tender under considerations were better than the one prescribed in the earlier tender invitations.
It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It Is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The Courts can interfere only if the policy decision is orbitrary, discriminatory or mala fide.
From the above, it is clear that the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender and it is not for the Courts as the same is in the realm of contract. The Courts would interfere only if it is arbitrary, discriminatory, malafide or actuated by bias. If these aspects are kept in view, in the instant case, it is seen that the work to be performed should conform to the European Union Standards for the purpose of export of the sea foods and the work is also being undertaken under a Government sanctioned RKVY scheme whereunder there is a target to utilise the funds before the closing of the financial year 2011-12 and as such the second Respondent is racing against time. This has been put forth as the object and reason for imposing certain stringent conditions is to ensure that the contractors who can deliver alone would respond and the public purpose could be achieved on schedule. Keeping in view such object of the second Respondent, the restriction against consortium and joint venture as contained under clause 1.5 and the profitability as contained in clause 1.6(A)(2) cannot be termed as arbitrary, discriminatory or unreasonable though it would appear that even without insisting on profitability, the performance capacity of a contractor could have been assessed by insisting on a particular quantum of turnover. However, by insisting on profitability, the professionalism of a contractor would also be established and therefore in a circumstance where the second Respondent has to complete the work by utilising the Government sanctioned funds, it is also possible that tenderers who satisfy all conditions would undertake the work and merely because the Petitioner would get excluded, it is not necessary for this Court to interfere.
With regard to the requirement of holding a certificate for being Class I Electrical Contractor, the second Respondent has split the volume of different category of work of which the electrical work is worth Rs. 0.5 crore. Though the refrigeration work and civil work is of a higher value and when refrigeration plant is to be commissioned, the electrical work would be of greater importance as the working of the refrigeration unit would depend on proper electrical work. As such the second Respondent with their experience, have in their wisdom thought it fit that for the proper implementation of the work, it should be undertaken by a contractor with an appropriate class of license this Court should be slow to impose its view on the second Respondent and alter the requirement sought by them, in this regard, when the primary requirement as a pre-qualification Is indicated, the qualification stated in 3.2(d) of general condition would net be relevant. For the very reasons stated above, the value of Rs. 2 crores prescribed for earlier executed "projects also cannot be faulted. In any event, the said condition is in addition to the other conditions of past experience in turnkey contracts by which the capability based on past experience can be assessed. Therefore, the pre-qualification criteria fixed in the facts and circumstances of the instant case cannot be considered as. falling within the parameters of interference as permitted. The allegation of the Petitioner that the pre-qualification conditions have been fixed to accommodate a particular tenderer also cannot be accepted merely on apprehension without. material particulars to substantiate the same.
For the above stated reasons, I see no merit in this petition. The same is accordingly dismissed. No order as to costs.
In view of the dismissal of the writ petition, the interim order in any event: would stand vacated. Hence Misc. W. 8381 /2011 also stands, disposed of.