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2008 Supreme(Kar) 461
2008 (4) KLO 2739
THE HIGH COURT OF KARNATAKA
N. Kumar, .J
Writ Petition No. 3381 of 2008 (GM-TEN)
M/s. NSoft (India) Service Pvt Ltd., - Petitioner
Vs.
M/s. BESCOM Ltd., & Others - Respondents
Decided on 23-7-2008
Petitioner:Sri. H.N. Sashidhara, Advocate for M/s. Kesvy & Co., Advs.
Respondents: Sri. N. Krishnananda Gupta, Sri B. Veerappa AGA, Smt. Shobha Bhavikatti, Advs.
Result: Writ Petition allowed.
Headnote:(A) Karnataka Transparency in Public Procurements Act, 1999 - Section 4(b) - Exception under - When applicable - If applicable, procedure to be followed - Failure to follow set procedure - Award of contract would be illegal - Failure to follow set procedure deprecated.
Held: Where the goods or services are available from a single source or where a particular supplier or contractor has exclusive rights in respect of the goods or services or construction work and no reasonable altemativesi or substitutes exist. Then it is not necessary to follow the procedure prescribed under the Act. There is no obligation to procure such services and goods by inviting tenders. But, before this provision could be invoked, there should be a finding by a competent authority that the goods or services are available only from a single source or a particular supplier or a contractor who has exclusive rights in respect ofthe goods or services. For that purpose the statute provides for constitution of a Committee of three experts.
The said experts have to be drawn from three different sources as mentioned in the provision. The significance of the same is, that two of them are not under the control of the procurement entity. That is how the public interest is protected and transparency is achieved, even in exceptional cases. Therefore, all the aforesaid persons, i.e. technical persons, must be experts in the field. It is the committee consisting of these three experts alone which on consideration of the goods and services which are placed before it, can declare that the goods or services are available from a single source. It is after such certification by the committee of experts in the field, the procurement entity could place orders for supply of service and goods from such single source. Therefore, the Legislature has taken pains to meticulously provide in the Act itself for the constitution of the committee of experts and for their decision before the regular procedure is dispensed with. As Section 4 is an exception to the general rule, the said provision has to be strictly construed.
The said committee committed an error in referring the matter to a an expert in the field for which they had no power under the Act. It is, the procurement entity which has to constitute a three member expert committee to consider the services rendered by the second respondent and then to find out whether he is the only person who has got exclusive control of the said service. That has not been done. After the matter was referred to Professor Sadagopan obviously he was not aware of the provisions of this Act. He has not certified that the petitioner is the only source from which this service could be procured. The recommendation made by him is very general in nature. It does not satisfy the requirement contemplated under proviso to sub-section (b) of Section 4. In the letter addressed by him to the first respondent, he has not declared that the goods or services are available from a single source or that the second respondent has exclusive rights in respect of the goods and service. The third error committed was without properly understanding the contents of the said letter, the first respondent has proceeded on the assumption that Sri Sadagopan is of the view that the second respondent is the only single source from whom the said service could be procured and they have awarded the contract to the second respondent on the basis of the said letter.
From the aforesaid facts, it is clear that there is total non application of mind by the first respondent in the constitution of the expert committee, in making reference to an expert and also in not understanding what the expert has stated by way of his opinion. Therefore, the first respondent committed a serious illegality in awarding the contract to the second respondent.
When the whole machinery of an instrumentality of the State is directed towards preferring a particular individual or a company in preference to other persons who are similarly placed and the anxiety shown by the statutory authority in awarding contract, in utter violation of the provisions of the Act clearly demonstrates that the authorities are acting in violation of the rule of law. In fact the way tender is worded also gives an impression that from the inception they have kept in mind the interest of the second respondent and not the authority. When these facts are brought to the notice of this Court, this Court cannot be a silent spectator. It is not a mere issue of a writ to quash an illegal action. A duty is cast on the Court to see in future such illegalities do not occur. (Para 24,25,26,27)
(B) Karnataka Transparency in Public Procurements Act, 1999 - Sections 9 and 16 - Qualifying experience - Bid document prescribing three years experience - Experience relied upon by bidder - A contract dtd. 3.12.2004 - Present tender notification dtd. 19.11.2006 - Held, bidder did not have three years experience - Award of contract ex facie illegal.
(C) Karnataka Transparency in Public Procurements Act, 1999 - Preamble - Object of Act - Stated.
Held: The Act was enacted be the Karnataka State Legislature to provide for ensuring transparency in public procurement of goods and services by streamlining the procedure in inviting, processing and acceptance of tenders by Procurement Entities, and for matters related thereto.
After coming into force of the Act, inviting tenders for procuring the goods and services is the rule and the said procurement should be in accordance with the procedure prescribed under the Act. However, the Act makes two exceptions. Firstly, as contemplated under Section 3 the provisions of the Act are not made applicable to the projects funded by international financial agencies or projects covered under international agreements.
(Para 21,22)
Kumar, J.
The petitioner has challenged in this Writ Petition two contracts awarded to the second respondent and sought for quashing ofthe same. The first contract is in respect of spot billing and collection in BESCOM Sub-Divisions. Second contract refers to maintenance of billing software.
2. The first respondent floated a tender inviting bids for Total Revenue Management of Billing and Collection of BESCOM Sub-Divisions in respect of 4 lots. The common qualifying requirements were stipulated for all the Lots. The petitioner was one such bidder and so also the second respondent. Petitioner’s bid was not accepted whereas the second respondent’s bid was accepted. The grievance ofthe petitioner is that the second respondent did not possess the requisite qualification, namely three years experience of providing similar services in any electricity supply utility in India. The second respondent contended that they do possess the three years qualification. The first respondent has not categorically stated in the statement of objections that the second respondent do possess the requisite qualification of three years experience. But, they rely on the observations of the appellate authority who has held that the second respondent has three years experience. Therefore, they contend that the petitioner’s contention is baseless.
3. The petitioner preferred a statutory appeal against the order passed by the tender accepting authority under Section 16 of the Karnataka Transparency in Public Procurements Act, 1999 for short hereinafter referred to as ‘the Act’. The Appellate Authority after considering the rival contentions, at paragraph 4 of the order, dealt with the matter and held, according to R-1 the requirement as’ stated in the bid document, is only work of similar nature. Since there is no specific definition in the tender document on what constitutes work of similar nature, the decision of the tender inviting authority in. detennining this was accepted and accordingly it dismissed the appeal. Aggrieved by the said orders the petitioner is before this Court.
4. Learned Counsel for the petitioner assailing the aforesaid findings contended that the crucial date for computing three years experience is 19.11.2006 the date of the tender Notification. The material on record discloses that for the first time the second respondent supplied spot billing machines only on 3.12.2004. If the period is computed from the said date, as on 19.11.2006, the second respondent did not have the prescribed qualification. Therefore, the findings recorded by the prdcurement etitity as well as the Appellate Authority is on the face of it illegal and therefore, is liable to be quashed.
5. Per contra, the learned Counsel appearing for the first respondent contended that, it is on 5.5.2003 as per Annexure-R13 the second respondent was awarded the previous contract and the period so computed from the said date, makes it clear that the second respondent had the three years experience and, therefore, there is no substance in the contention of the petitioner. Learned Counsel for the second respondent reiterated the aforesaid stand.
6. Annexure-H is the modified notice inviting tenders issued by the first respondent which is the subject matter of this Writ Petition. In the Notification the first respondent invited tender through e-tendering from the eligible bidders for spot billing and collection in BESCOM sub-divisions of the lots mentioned therein for a period of three years and renewable for a further period of two years on annual basis, subject to the discretion of BESCOM and mutually agreed terms and conditions. The circles to which the said tender related to was Bangalore Rural, Turnkur, Davanagere and Kolar. Clause 7.0 deals with the requirement of the procuring entity. It reads as under:
“Requirements:
The operational requirements:
i) The billing application software, the operating system, the database and the interface and the application software, for
