Central Govt Can't Upset Tenders On Baseless Allegations Made By Unsuccessful Bidders: Karnataka High Court

A single judge bench of Justice Krishna S Dixit, set aside the order dated 15.04.2021, passed by the Central government by which it had constituted a Committee to conduct a detailed investigation into allegation of some irregularities perpetrated in awarding tender to M/S SAPL-GCC JV, by the New Mangalore Port Trust.

The bench issued a mandamus to the port authority to consider awarding of the contract in question to the petitioner, in accordance with law and without brooking any delay.

Case background:

The New Mangalore Port Trust (NMPT) had called for a re-tender for the construction of breakwater, marine structure, dredging & reclamation for fishing harbour at Kulai on EPC basis pursuant to the NMPT Board Resolution, dated 25.11.2019. Four persons including the petitioner were in the fray. The bids were opened on 23.02.2020 and petitioner & another bidder were found to be technically qualified whereas the bid of the other two was rejected. However, the tender was cancelled since the rate quoted by L-1 bidder was 40% above the estimated cost of the project.

Following another resolution by the board it again called for e-tender, adding some more work to the project. Four persons were in the tender fray, including the petitioner & the 5th respondent. Petitioner ultimately was found to be the lowest bidder. However the bid of 5th respondent came to be rejected. This was pursuant to Board Resolution which accepted Tender Committee Recommendations dated 30.03.2021 to open the price bids of qualified bidders and to disqualify the 5th respondent & another.

Following which the 5th respondent (M/S Yojaka India Pvt Ltd) filed a complaint dated 02.04.2021 with the Central Government and others alleging some irregularities perpetrated in the subject tender process by the officials of the NMPT hand in glove with petitioner.

A day before, it also filed petition in high court, essentially laying a challenge to TCE recommendation and the award of tender work; however, petitioner was not made a party thereto. The Central Government vide order dated 15.04.2021, constituted a Committee to conduct a detailed investigation in the matter and to report.

In view of this development, the Port Authority informed the High court in the petition filed by 5th respondent, that further action with regard to tender in question would be taken only after the Central Government would pass the order on the basis of a report of the enquiry committee.

The petitioner who was not a party to the plea filed by respondent 5, approached the court challenging the order of the court and the decision of the Central government.

Court findings:

On going through the record the court noted that nothing prevented the 5th respondent from impleading the petitioner herein as a respondent in all fairness at least after the complaint was made.

"The very nature and scope of the works comprised in the tender in question apparently show the urgency & importance. Thus, there was a kind of sharp & unscrupulous practice adopted by the fifth respondent in obtaining the judgement now in review, keeping both the Co-ordinate Bench and the petitioner in darkness. Such a person who had approached the court with soiled hands cannot be permitted to resist this Writ Petition on merits," the Court held.

It added,

"An argument to the contrary would amount to placing premium on the culpable conduct of a litigant who happened to be a rival business competitor and who had caused interdiction of implementation of the public project resulting into heavy cost escalation and enormous public inconvenience."

The court further observed that in awarding tenders of gigantic value, several factors enter the fray of decision making and such decisions cannot be readily upset by the Central Govt. on some baseless allegations of an unsuccessful business competitor leveled against a successful bidder. 

It also accepted the submission made by the petitioner company that the text of Section 111 of Major Port Trusts Act, 1963 which empowers the Central Govt. to issue direction does not come to the rescue of respondent– Central Government inasmuch as such directions can be issued only on questions of policy and not in specific cases.

The bench observed, "Policy as contemplated under the above provision means general directions for future guidance or regulation on repetitive basis, as of norm applicable to all matters like Dredging Policy, Tariff Policy, etc. and thus they are normative in character which do not get exhausted on their application to a given fact matrix."

Further, it opined that the decisions of an authority that are individual centric and case specific are not considered as matters of policy. It is so even when the authority issuing the direction has the power to evolve the policy. There is difference between what is policy and what is administration/operation of policy.

The court also observed "True policy decisions ordinarily are dictated by the pragmatic considerations such as financial, technical & social factors or constraints. The operational area is concerned with the practical implementation of or carrying out policies that are already formulated. Operational decisions are usually made on the basis of administrative discretion, expert opinion, technical standards and other general standards of reasonableness."

Accordingly, the Court issued a Writ of Certiorari, quashing the order dated 15.4.2021 issued by the Central Government, constituting a Committee to investigate the allegations levelled against the petitioner.

Case Title: M/S SAPL-GCC JV v. GOVERNMENT OF INDIA

Case No: WRIT PETITION NO.11165 OF 2021

Citation: 2022 LiveLaw (Kar) 54

Date of Order: 23RD DAY OF FEBRUARY, 2022

Appearance: Senior Advocate S Naganand, Basavaraj V Sabarad, A/W Advocate H L Pradeep Kumar For Petitioner

Advocate R Yateesh Kumar, For R1;

Advocate R Subramanya, For R2 To R4;

Advocate Anand R Kalli, A/W Advocate M S Venugopal, Advocate For R5

Click Here To Read/Download Order