Once a tender is awarded, the authority may cancel it based on statutory grounds; cancellation is justified due to incompatibility and changed procurement needs.

JUDGMENT :

K.V. ARAVIND, J.

Heard learned advocate Smt. M. Sumana Baliga appearing for appellant, learned Senior advocate Mr. M.S. Bhagwat for learned advocate Mr. K. Sathish for respondent No.1 and learned Special Government Advocate Mr. S. H. Prashanth for respondent Nos.2 to 5 in Writ Appeal No.361 of 2023.

Learned Senior advocate Mr. M.S. Bhagwat for learned advocate Mr. K. Sathish for complainant and learned advocate Smt. M. Sumana Baliga appearing for respondent in CCC No.266 of 2023.

2. This is an intra-court appeal under Section 4 of the Karnataka High Court Act, 1961, by respondent No.2 in writ petition No.17634 of 2022, aggrieved by the judgment and order dated 25.01.2023. By the impugned judgment and order, the petition was allowed, the communication dated 03.11.2022 issued by the Karnataka State Medical Supplies Corporation Limited-respondent No.2 is quashed. A mandamus came to be issued to respondent No.2 to issue purchase order in favour of the petitioner-respondent herein, pursuant to Tender Notification dated 27.10.2021 and awarded the tender contract in favour of the petitioner.

3. The appellant is a Government Institution engaged in procurement of drugs and equipment for Government Health Sector Institutions. The appellant issued a Re-tender Notification dated 27.10.2021 inviting tenders for the supply of 100mA Portable X-ray Machines. The Tender Notification deals with other items, however, this appeal concerns X-ray Machines. The Tender Scrutiny Committee of the appellant declared respondent No.1 as a technically qualified and successful bidder. The final price was negotiated by the appellant and respondent No.1. Contract for supply of equipment was awarded by the appellant in favour of respondent No.1 by Notification dated 02.03.2022. Under the Notification, respondent No.1 was directed to deposit performance security, which was deposited. As per the Notification of Award, the per unit price was negotiated at Rs.18,95,947/-.

4. The appellant failed to proceed further in issuing a supply order. Respondent No.1 preferred writ petition No.17634 of 2022. In the writ petition, it is prayed to direct the Tendering Authority to release the purchase order in terms of Notification of Award at Annexure-G and the consequential reliefs.

5. Learned Single Judge held that once the award is notified, it is impermissible to withdraw or cancel the tender and issued mandamus to the appellant to issue a purchase order.

Submissions:

6. Learned advocate Smt. M. Sumana Baliga, appearing for the appellant, submits that the appellant is only a procuring agency on behalf of the Government Department/Institutions. The State Government, under an order dated 17.12.2020, placed an order to procure various equipment to support 2025 ventilators provided by the Union of India under the PM Care Scheme to treat COVID-19 infected patients. The State Government, considering the requirement, has estimated the cost of accessories to the ventilators. The State recommended/estimated unit price at Rs.1,50,000/- insofar as 100 mA Portable X-ray Equipments.

6.1 The procuring agency committed an error in issuing a tender at Rs.18,95,947/- per unit without considering the requirement of the X-ray equipment and the estimated cost per unit. The X-ray equipment tendered was high-handed and not compatible with the ventilators, thus defeating the very purpose of procuring. The X-ray Machines were required to use as ancillary to ventilators.

6.2 It is submitted that the complaints were received by the Principal Secretary, Health and Family Welfare on irregularities in procuring X-ray equipment, one such complaint was the higher rate agreed than as permitted by Government. The State Government has conducted an enquiry and cancelled the procurement order. The appellant is merely a procuring agency on behalf of the State and its Departments/Institutions; the tender could not be taken further. The appellant was justified in cancelling the tender, which is a consequence