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BMM Ispat Ltd a Company Incorporated Under The Provisions of The Companies Vs. State of Karnataka and Another - Court Judgment

LegalCrystal Citation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 27511 of 2016 (GM-TEN)
Judge
AppellantBMM Ispat Ltd a Company Incorporated Under The Provisions of The Companies
RespondentState of Karnataka and Another
Excerpt:
.....documents submitted by petitioner and consider same for evaluation in process of completion of tender process in issue petition disposed of. (paras 14, 15) cases referred: 1. m.k.hegde constructions pvt. ltd vs. karnataka university, dharwad (2002 kar.l.j.581) 2. rashmi metallics ltd and another vs. kolkata metropolitan development authority and others [(2013)10 scc 95] 3. poddar steel corporation vs. ganesh engineering works and others [(1991)3 scc 273] 4. kanniayalal agrawal vs. union of india and others [(2002)6 scc 315] 5. areva tandd india ltd., -vs- the state of karnataka and others (w.p.no.38217-19/2010 dated 22.03.2011) 6. michigan rubber (india) limited -vs- state of karnataka and others [(2012) 8 scc 216] 7. bakshi security and personnel services private limited -vs-..........the communication dated 27.04.2016 impugned at annexure-a to the petition. the second respondent-power company by the said communication has informed the petitioner that the application submitted by the petitioner company is not pre-qualified for participation in the bid stage. the petitioner company therefore claiming to be aggrieved is before this court. 2. the second respondent power company published the request for qualification (rfq) for agreement for procurement of power of 1000 mw capacity under medium term by escoms of karnataka from power station located in southern region under lumpsum tariff option. the petitioner company is a coal based captive electric generating station in its steel plant. the petitioner company accordingly responded to the rfq of the second respondent.....
Judgment:

(Prayer: This Petition is filed under Articles 226 and 227 of The Constitution of India, with A Prayer to Quash The Communication Dt.27.4.2016 issued by The Respondent to The Petitioner informing that The Petitioner is Not Qualified in The Bid Stage Vide Annx-A and Direct The Respondents to issue the Bidding Documents To Participate In The Financial Bid.)

1. The petitioner company is before this Court assailing the communication dated 27.04.2016 impugned at Annexure-A to the petition. The second respondent-power company by the said communication has informed the petitioner that the application submitted by the petitioner company is not pre-qualified for participation in the bid stage. The petitioner company therefore claiming to be aggrieved is before this Court.

2. The second respondent power company published the Request For Qualification (RFQ) for agreement for procurement of power of 1000 MW capacity under medium term by ESCOMs of Karnataka from power station located in southern region under lumpsum tariff option. The petitioner company is a coal based captive electric generating station in its Steel plant. The petitioner company accordingly responded to the RFQ of the second respondent power company. According to the petitioner, all requirements of the RFQ has been satisfied by uploading the necessary documents so as to be eligible for consideration by the second respondent.

3. The second respondent through the objection statement has contended that the petitioner company has not submitted the documents as per the requirement contained in clause 2.12.2(ii), 2.2.3(i) and 2.2.4. In that view it is contended that the certificate of the auditor furnished along with the documents is not in consonance with the form prescribed in Annexure-II to the bid document. Further the power of attorney is incomplete as the common seal of the company was not visible. That apart the Board resolution for execution of the power of attorney was not furnished. The annual report submitted did not indicate the details of the equity share holders. Hence, it is contended that the application of the petitioner was not considered as complete in all respects which in fact was intimated to the petitioner through the impugned communication. As such the petitioner cannot make out any grievance in that regard is the contention.

4. Heard Sri Udaya Holla, learned senior counsel for the petitioner, Sri S.S.Naganand, learned senior counsel for the respondent, Ms. Prathima Honnapura, learned Government Advocate and perused the petition papers.

5. The learned senior counsel for the respondent at the outset contended that the instant petition is not maintainable as the petitioner would have to avail the remedy as provided under Section 86(1)(f) of the Electricity Act, 2003 (the 'Act' for short). At the outset, it is to be noticed that the adjudication to be made by the State Commission as provided therein is with regard to the disputes between the licencees and generating companies. Though certain issues relating to the tariff for supply may arise, it is not in the nature as referred to in Section 63 of the Act. Insofar as the issue on hand, the work is yet to be assigned to the petitioner and the issue herein relates to the pre-qualification criteria in a tender process and not a dispute relating to the tariff to be agreed upon. As such it cannot be considered as an issue to be decided by the Commission. Be that as it may, it is also not necessary to over burden this order with a detailed consideration on that aspect since in any event the nature of the issue raised is open to be considered in a writ petition and this Court having entertained this petition and the pleadings being complete, at this stage the issue of alternate remedy in any event would lose its relevance.

6. Having noticed the contentions, it is seen that the requirement in the instant case relates to the clause 2.2.3(ii) which is the certificate of the statutory auditor to be issued as per Appendix-I which is at Annexure-II to the RFQ document. The certificate is required to state with regard to the equity share holder in the project company and the holding thereof. The fact that the petitioner has submitted a certificate of the auditor is not in dispute, but the respondent power company contends that the same is not in the format as prescribed in Appendix-I. A copy of the certificate produced is available along with the petition which indicates that it contains details relating to the net worth of the company, the paid up equity share capital as also the reserves and surplus. In that light, if looked at from the angle for which such certificate is expected by the second respondent, it would be clear that the same is to assess the financial capacity of a supplier company who is either a Generator or a Trader. This is also evident from the details indicated in Sub-clause (ii) of Clause 2.2.3. That apart as indicated in the objection statement of the respondent, the annual reports for the years 2012-13 to 2014-15 were available along with the documents though the respondents contend that it did not reveal the equity share holding details. However, when the petitioner company itself was responding to the RFQ and the auditor's report providing the details was available with modification to the format in Appendix-I since the petitioner was not a equity shareholder in the project company, a hyper technical consideration in the nature as made would not be appropriate. Certainly, on the other hand if consideration was with regard to the documents produced to indicate the technical qualification relating to the generating capacity of the petitioner and in that regard if the document provided was not in strict compliance, the evaluation to that effect no doubt would have been justified.

7. The further objection is with regard to the common seal of the company not being visible in the power of attorney submitted along with the documents. A copy of the power of attorney as submitted is available along with the petition papers. A perusal of the same would disclose that in the said power of attorney, a provision has been made and the space is shown for the affixation of the common seal and in order to attest the same, the Managing Director who has signed at the bottom of the power of attorney authorising the person to represent the company has also made the attestation at that place. It is in that light contended before this Court by making available the original of the same to point out that the impression is available in the original, but that is not reflected in the photocopy due to its faintness. The learned senior counsel for the respondent would no doubt contend that the common seal should be available and visible in the document which was submitted as otherwise it could be disputed as to whether it has been affixed subsequently.

8. While taking note of the said contention, what is also to be kept in view is that the petitioner which is a company certainly would have a common seal and there is no reason for it to have deliberately not affixed it. Hence, considering the nature of the transaction for which the application was submitted and there would be competitive bidding, exclusion of a bidder on such reasons would not be justified more particularly when the document produced along with the petition indicates that the petitioner and the second respondent have had business transaction earlier. It is further pointed out by the rejoinder statement of the petitioner that even the resolution from the Board of Directors dated 10.02.2016 was available resolving therein that Mr.Rajesh Tukaram Naik, General Manager is authorized to be a power of attorney holder for the company. In that light, a reference is also made to the note-2 in Appendix-II that it only provides that wherever required the resolution was to be provided and in any event since the objection with regard to all the three requirements relate to the production of document which were already available with the petitioner and copies were submitted, that cannot be considered as a disqualification.

9. In the above background, what is also to be kept in perspective is that, despite the impugned communication dated 27.04.2016 at Annexure-A whereby the documents were not provided to the petitioner to participate in the bid stage, since the petitioner was before this Court, the absolute stay which had been granted earlier was modified on 19.05.2016 and the second respondent power company was directed to issue the bid documents to the petitioner so as to enable the petitioner to participate in the bidding process and submit the financial offer. Pursuant thereto, the petitioner has participated in the process and there is no serious dispute to the fact that the petitioner is L1 and there is a substantial difference between price quoted by the petitioner and the other bidders, on the whole. Hence, it is contended by the learned senior counsel for the petitioner that even in public interest the petitioner's bid is required to be considered. This in my opinion is a strong reason to be taken note of at this stage in a matter of the present nature of pre-qualification which is in issue.

10. Learned senior counsel for the petitioner has in that regard relied on the decision in the case ofM.K.Hegde Constructions Pvt. Ltd vs. Karnataka University, Dharwad (2002 Kar.L.J.581) wherein the rejection of bid only for failure to submit two covers in terms of the letter was held not justified and a direction was issued to consider the case of the petitioner therein in accordance with law. The case of Rashmi Metallics Ltd and another vs. Kolkata Metropolitan Development Authority and others [(2013)10 SCC 95] is relied upon wherein the Hon'ble Supreme Court has observed as hereunder:

"18. We think that the Income Tax Return would have assumed the character of an essential term if one of the qualifications was either the gross income or the net income on which tax was attracted. In many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. This feature being absent, we think that the filing of the latest Income Tax Return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the Appellant-company and if even thereafter no rectification had been carried out, the position may have been appreciably different. It has been asserted on behalf of the Appellant-company, and not denied by the learned counsel for the Respondent-Authority, that the financial bid of the Appellant-company is substantially lower than that of the others, and, therefore, pecuniarily preferable."

11. That apart the decision in the case of Poddar Steel Corporation vs. Ganesh Engineering Works and others [(1991)3 SCC 273] is relied on to point out that the Hon'ble Supreme Court had therein noted that the requirements in a tender notice can be classified into two categories, those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the case of essential condition, the authority issuing the tender may be required to enforce them rigidly but, in the other case it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. To the same effect, the decision in the case of Kanniayalal Agrawal vs. Union of India and others [(2002)6 SCC 315] is relied on where it is held that the Court will normally be reluctant to intervene in the matter of entering into contract by the Government but, among others unreasonableness will have to be rectified without hesitation. In the said case also, it was held that if an essential condition of the tender is not complied with, it is open to the person inviting the tender to reject the same. As to whether the condition is essential or collateral could be ascertained by reference to the consequence of non-compliance thereto.

12. Learned senior counsel for the respondent on the other hand has relied on the decision in the case of Areva TandD India Ltd., -vs- The State of Karnataka and others (W.P.No.38217-19/2010 dated 22.03.2011) wherein the position relating to the submission of documents contrary to the requirement was considered and the action of the respondents therein in cancelling the tender in which the petitioner succeeded and retendering which was questioned, was upheld. A detailed perusal of the decision will indicate that it is not in similar circumstance. In that case the Power of Attorney based on which the petitioner therein participated in the tender process was invalid keeping in view the date of the document and the date indicated in the stamp paper and it was found to be a material defect which would have affected the interest of the respondents for whose benefit the gas insulated switch gear sub-station on turnkey basis with all equipments and materials, erection, testing and commissioning was conceived. In that circumstance it was not treated as minor infirmity or irregularity but was material deviation. The discussion contained above relating to the facts herein will disclose that it is not so in the instant case.

13. The learned senior counsel for the second respondent has referred to the decision in the case ofMichigan Rubber (India) Limited -vs- State of Karnataka and others [(2012) 8 SCC 216] wherein the limited power of judicial review is reiterated by the Hon'ble Supreme Court and it is held that the Court before interfering with the tender process or contractual matters should pose the question to itself; whether the process or decision is malafide, arbitrary, irrational and whether the decision is such that no responsible authority acting reasonably could have reached and also whether the public interest is affected. In the instant case, as seen from the facts arising herein and the reasons for which the rejection was made as also, presently when the commercial bid is also noticed, the action will have to be considered as unreasonable and against public interest limited to the facts arising herein though interference is not permissible as a general proposition. Further, the decision in the case of Bakshi Security and Personnel Services Private Limited -vs- Devkishan Computed Private Limited and others [(2016) 8 SCC 446] relied on by the learned senior counsel for the respondents will also not be of assistance. In that case, the strict conformation to Annexure 2 under condition 2.5.5 was expected as the format provided was with regard to commercial bid which certainly will have to be considered as an essential condition and if the minimum wage as required was not quoted it would materially alter the tender process which is not the case herein.

14. Therefore, in the backdrop of the legal position, if the present facts are noticed, it cannot be said that the petitioner had not complied with the material requirements for pre qualification more so when the petitioner having participated in the bidding process, though at the intervention of this Court, has qualified in all other respects. This case in fact is a case where this Court had to iron out the creases so as to aid the completion of the process in a more meaningful manner by enabling appropriate competition from competent bidders and such intervention herein has not hindered the process.

15. In the facts peculiar to the instant case, the following, ORDER i. The communication dated 27.04.2016 at Annexure-A is quashed.

ii. The second respondent is directed to include the bidding documents submitted by the petitioner and consider the same for evaluation in the process of the completion of the tender process in issue.

iii. The writ petition is disposed of in the above terms, with no order as to costs.


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