Dismissed¶162

Maha Mineral Mining and Benefication Private Limited v. Karnataka Power Corporation Ltd.

Karnataka HC7 Apr 2025WP/35167/2024

Case brief

AI extract

What is this about?

KPCL coal washery/beneficiation tender 25.11.2024 (24.75 lakh MT, Raichur TPS, Kw4 format) upheld; Clause 3.2.1(b) 12.37 lakh MT (50%) valid per G.O. 19.07.2014; Note 3 direct-Utility experience and Note 4 consortium declarations sustained; KW-4 applicable above Rs. 10 crore per G.O. 14.10.2008; SPTSC exemption per O.M. 11.06.2024; Wednesbury/Tata Cellular deference; Article 226 petitions dismissed.

What did the court decide?

The challenge to Clause 3.2.1(b) fails: the earlier KW-4 Standard Tender Terms were modified by Government Order dated 19.07.2014 (Annexure-R3), which altered Clause 3.2.1(b) and reduced the eligibility criterion from 80% of the estimated contract value to 50%; accordingly the contention that the clause violates the KW-4 Standard Tender Terms is without merit. ¶135

Maha Mineral Mining and Benefication Private Limited… — Company and Corporate | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Dismissed

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Issue for consideration

Whether any interference with the impugned tender is warranted by this Court in the exercise of its writ jurisdiction under Article 226 of the Constitution (framed as the sole issue). +6 more

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Court's answer

In judicial review the Court will not substitute its view for that of the tender-inviting/administrative authority where the impugned decision satisfies Wednesbury reasonableness and is free from arbitrariness, bias or mala fides (relying on Tata Cellular v. Union of India, (1994) 6 SCC 651).

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Ratio / Principle

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Key takeaways

The challenge to Note 3 of Clause 3.2.3 cannot be sustained: KPCL cannot be estopped or mandated to frame tender conditions in pursuance of the governmental policy of a neighbouring State (Maharashtra's nodal-agency framework through MSMC), particularly when the change is supported by cogent reasoning and reflects practice in Gujarat, Rajasthan, Andhra Pradesh and Madhya Pradesh.ratio¶150
The challenge to Note 4 of Clause 3.2.3 fails: the clause does not prevent consortium/joint-venture members from claiming, in future tenders, the scope and value of work done in their individual capacity; it only precludes them from claiming the work done by the bidder as their own experience. The petitioners' apprehension is unfounded and the restriction is neither arbitrary nor discriminatory.ratio¶152

Detailed headnote1 paragraphs

Writ Petitions (Art. 226/227) by three coal washery operators — Maha Mineral Mining and Benefication Pvt Ltd, Rukhmai Infrastructures Pvt Ltd and Indo Unique Flame Ltd — challenging clauses of Karnataka Power Corporation Ltd tender NIT No. KPCL/202425/OW/WORK_INDENT2302 dated 25.11.2024 for beneficiation (washing) of 24.75 lakh MT of raw coal per year from WCL Collieries and rail transportation to Raichur Thermal Power Station (approx. value INR 185.43 crores; three years; Kw4 format). Challenges: (i) Clause 3.2.1(b) experience criterion of 12.37 lakh MT (about 50%) as violating the KW-4 80% norm (19.80 lakh MT) and the Pre-Tender Scrutiny Committee advisory dated 25.08.2024; (ii) Note 3 to Clause 3.2.3 confining experience to contracts bagged directly from the Utility, excluding MAHAGENCO/MSMC nodal-agency experience; (iii) Note 4 restrictions on consortium/JV experience claims; (iv) turnover requirement of INR 123.62 crores (twice the annual payment of INR 61.81 crores, per G.O. dated 14.10.2008); (v) alleged KW-4 inapplicability to works above INR 10 crore; (vi) non-upload on the procurement portal and absence of SPTSC scrutiny contrary to Clause 6(viii) of G.O. dated 13.12.2021. Held, dismissing the petitions: G.O. dated 19.07.2014 (Annexure-R3) altered Clause 3.2.1(b), reducing eligibility from 80% to 50%; a Wednesbury-compliant decision of the tender-inviting authority is not open to substitution in judicial review (Tata Cellular v. Union of India, (1994) 6 SCC 651, relied on); KPCL is not bound by the nodal-agency policy of a neighbouring State, Note 3 mirroring practice in Gujarat, Rajasthan, Andhra Pradesh and Madhya Pradesh; Note 4 leaves members free to claim their own individually performed work; G.O. dated 14.10.2008 extended KW-4 to works of Rs. 10 crore and above, modifying G.O. dated 6.8.2005; O.M. dated 11.06.2024 recorded the expiry of the SPTSC's term and exemption from proposal submission and draft-tender uploading. No statutory violation, arbitrariness, discrimination, favouritism, ambiguity, opacity, public-interest detriment or fundamental-rights breach having been shown, interference was unwarranted. Context: an earlier March 2024 tender (Indent1302 dated 02.03.2024) was withdrawn and W.P. Nos. 9298-9297/2024 were dismissed as infructuous on 22.10.2024; participation in the present tender had been permitted by order dated 20.12.2024.

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NC: 2025:KHC:14917 WP No. 35167 of 2024 C/W WP No. 34794 of 2024 WP No. 35279 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 7^TH DAY OF APRIL, 2025

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BEFORE

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THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR

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WRIT PETITION NO. 35167 OF 2024 (GM-RES) C/W WRIT PETITION NO. 34794 OF 2024 (GM-TEN) WRIT PETITION NO. 35279 OF 2024 (GM-TEN)

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IN WP No. 35167/2024

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BETWEEN:

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MAHA MINERAL MINING AND BENEFICATION PRIVATE LIMITED REP BY ITS AUTHORIZED SIGNATOURY MR ABISHEK VERMA HAVING ITS OFFICE AT 7TH FLOOR B WING, SHARIRAM SHYATM TOWER NEAR NIT, KINGSWAY NAGPUR 440001.

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…PETITIONER

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(BY SRI. BHARATH M., ADVOCATE)

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AND:

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Digitally signed by R HEMALATHA Location: High Court of Karnataka

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KARNATAKA POWER CORPORATION LTD., THROUGH SUPERINTENDIENG ENGINEER (MINES) HAIVNG OFFICE AT NO 82 SHAKTI BHAVAN, 3RD FLOOR RACE COURSE ROAD BENGALURU 560001.

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…RESPONDENT (BY SRI. AJAJ J NANDALIKE., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO HOLD AND DECLARE THAT THE REDUCTION OF EXPERIENCE REQUIREMENT TO 12.37 LAKH MT UNDER CLAUSE 3.2.1 (B) OF THE TENDER DOCUMENT IS IN DIRECT VIOLATION OF KW-4

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FORMAT WHICH MANDATES MINIMUM EXPERIENCE OF 19.80 LAKH MT (BEING 80 PERCENT OF ANNUAL REQUIREMENT) ANNEXURE B.

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IN WP NO. 34794/2024

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BETWEEN:

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RUKHMAI INFRASTRUCTURES PVT LTD HAVING ITS OFFICE AT HAVING ITS OFFICE AT PLOT NO.163, SUGANDH 1ST FLOOR, NEAR LENDRA PARK RAMDASPET NAGPUR-440010 THROUGH ITS AUTHORIZED SIGNATORY / MANAGER (CO ORDINATION) PRASHANT JAYNARAYAN SHUKLA (UNDER REGISTRATION CORPORATION ACT 1956)

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...PETITIONER

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(BY SRI. SUNDARA RAMAN M V.,ADVOCATE)

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AND:

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KARNATAKA POWER CORPORATION LTD THROUGH SUPERINTENDING ENGINEER (MINES) HAVING OFFICE AT NO.82 SHAKTI BHAVAN 3RD FLOOR, RACE COURSE ROAD BENGALURU-560001. (UNDER REGISTERED COMPANY ACT 1956)

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...RESPONDENT

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(BY SRI. AJAJ NANDALIKE., ADVOCATE FOR C/R)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE TENDER NOTIFICATION NO. KPCL/202425/OW/WORK_INDENT2302 DATED 25/11/2024 VIDE ANNEXURE A.

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IN WP NO. 35279/2024

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BETWEEN:

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M/S INDO UNIQUE FLAME LTD (FORMERLY KNOWN AS INDO UNIQUE FLAMES PVT LTD.,)

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A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, 301, KOTHARI BUILDING NEAR SUDAMA CINEMA WEST HIGH COURT ROAD DHARAMPETH, NAGPUR - 440 010 REPRESENTED BY ITS MANAGING DIRECTOR MR. VIPUL CHOUDHARY.

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...PETITIONER

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(BY SRI. CHINTAN CHINNAPPA M., ADVOCATE)

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AND:

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STATE OF KARNATAKA REPRESENTED BY THE ADDL. CHIEF SECRETARY DEPARTMENT OF ENERGY VIKASA SOUDHA, VIDHAANA VEEDHI BENGALURU - 560001.

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M/S KARNATAKA POWER CORPORATION LTD A COMPANY REGISTERED UNDER THE COMPANIES ACT 1956 AND STATE GOVERNMENT UNDERTAKING HAVING ITS REGISTERED AND CORPORATE OFFICE SHAKTI BHAVAN 82, RACE COURSE ROAD, BENGALURU - 562 201.

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...RESPONDENTS

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(BY SRI. M R PATIL, HCGP FOR R1;

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SRI. AJAJ J NANDALIKE, ADVOCATE FOR C/R2)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE IMPUGNED CONDITIONS BEARING CLAUSE 3.2.1 (i), CLAUSE 3.2.1(i)(a), CLAUSE 3.2.1(i)(b), CLAUSE 3.2.2 (i), OF THE TENDER DOCUMENT NIT NO. KPCL/2024-25/OW/WORK-INDENT2302 DTD. 25.11.2024 PART-I ISSUED BY THE RESPONDENT IS ARBITRARY, UNREASONABLE, DISCRIMINATORY AND VIOLATIVE OF

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ARTICLE 14 OF THE CONSTITUTION OF INDIA (ANNX-A).

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THESE PETITIONS, COMING ON FOR FURTHER DICTATION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR

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ORAL ORDER

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The facts involved in W.P. Nos. 34794/2024, W.P. No. 35167/2024 and W.P. No. 35279/2024 are common and, hence, are considered together and disposed of accordingly.

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The petitioners, who are coal washery operators, seek a writ in the nature of Certiorari to quash the tender notification bearing No. KPCL/202425/OW/WORK_INDENT2302 dated 25.11.2024. They also seek a declaration that the conditions stipulated in Clause 3.2.1(i)(a), Clause 3.2.3, Note 3, and Note 3 of the said tender are arbitrary, unreasonable, and violative of Article 14 of the Constitution of India.

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2.1. The respondent, Karnataka Power Corporation Limited (KPCL), issued the impugned tender for the beneficiation (washing) of 24.75 lakh MT of raw coal per year from WCL Collieries and its transportation to the Raichur Thermal Power Station by rail.

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The petitioners were permitted to participate in the bidding for the impugned tender pursuant to an order passed by this Court on 20.12.2024. The respondent-KPCL had earlier invited a tender for the same coal beneficiation and transportation work in March 2024. That earlier tender was contested by the petitioner-bidders in W.P. Nos. 9298/2024 and 9297/2024 before this Court. However, the respondent-KPCL subsequently withdrew the earlier tender, and as a result, the above writ petitions were dismissed as infructuous by a common order dated 22.10.2024. Thereafter, the present tender was issued on 25.11.2024.

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Submissions

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Shri Arun Kumar, learned senior counsel appearing on behalf of the petitioner in W.P. No. 34794/2024, and Shri Udaya Holla, learned senior counsel appearing on behalf of the petitioner in W.P. No. 35167/2024, argued that despite possessing the requisite technical capability, operational experience, and financial strength to execute the project, the petitioners have been effectively excluded from participation due to the arbitrariness of the impugned conditions. They further contended that the conditions appear to be deliberately designed to favor certain bidders while eliminating competition from otherwise qualified operators.

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4.1. Shri Arun Kumar submitted that the petitioner in W.P. No. 34794/2024 is a washery operator with a capacity of 3.7 MMTPA and an additional capacity of 1.5 MMTPA. He further submitted that the petitioner is currently executing a contract awarded by the Maharashtra State Power Generation Company Ltd. (MAHAGENCO) to meet the requirements of MAHAGENCO’s Thermal Power Stations (TPS) for a quantity of 20,00,000 MT. Additionally, the petitioner possesses a spare capacity of 3.23 MMTPA.

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4.2. Shri Uday Holla submitted that the petitioner in W.P. No. 35167/2024 owns and operates six coal washeries with a combined capacity exceeding 14.6 MTPA. The petitioner has been executing similar tender works in a joint venture awarded by the Maharashtra State Power Generation Company Ltd. (MAHAGENCO) for the supply of 6.4 MTPA of ROM (Run-of-Mine) coal sourced from WCL areas to various MAHAGENCO thermal power stations since March 2021. The petitioner handled 1.60 crore tonnes of ROM coal and supplied 1.33 crore tonnes of washed coal from its operational washeries, generating net revenue of INR 458.64 crores in the financial year 202324.

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4.3. The learned counsel for the petitioner in W.P. No. 35279/2024 submitted that the petitioner has one coal washery, of capacity of 2.4 MTPA, located at MIDC Wani, and has executed beneficiation works of around 20 lakhs MTPA of raw coal in the last nine years.

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The learned counsels have commonly contended as follows:

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i. The present tender dated 25.11.2024 was invited after canceling the earlier tender from March 2024 for similar works. Unlike the earlier tender, this tender was not uploaded on the Karnataka Public Procurement Portal, stakeholders were not given an opportunity to provide suggestions, and the PreTender Scrutiny Committee was not consulted. This process is arbitrary and violates the Government Order (G.O.) dated 13.12.2021.

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ii. Shri Arun Kumar, learned counsel, argued that sub-clause (a) of Clause 3.2.1(i), which outlines the technical criteria, requires bidders to directly own, or own through wholly-owned subsidiaries, a single beneficiation plant located in the WCL area with a spare capacity of 1.237 MTPA. This condition contradicts Clause 1.03 of the tender document,

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which allows the use of leased washeries after the tender is awarded, creating an inconsistency.

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iii. Additionally, the learned counsel for the petitioner in W.P. No. 35279/2024 contended in respect of the stipulated quantity requirement that the impugned tender has been issued in violation of clause 6(viii) of the Government Order dated 13.12.2021 as the quantity requirement of beneficiated coal has been increased to only 12.37 MT instead of the recommended 19.80 lakh Mt. Therefore, any deviation from the recommendations of the advisory of Pre-Tender Scrutiny Committee, dated - 25.08.2024, without recording reasons in writing or communicating the same to the committee is arbitrary. Such selective implementation of the recommendations is without justification and designed to favour certain pre-identified entities.

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iv. The learned senior counsels further argued that sub-clause (b) of Clause 3.2.1(i), which requires that the tenderer (on its own or through its 100% owned subsidiaries) must have executed work involving the lifting or beneficiation of at least 12.37 lakh MTPA of raw coal, unfairly disregards experience gained through legitimate business arrangements. This

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criterion is unreasonably restrictive and arbitrary. Additionally, as per the KW4 tender format, bidders are required to have handled a minimum quantity of 80% of the estimated tender contract, which is 19.80 lakh MTPA. Any reduction in this quantity requirement, without providing written justification, violates Clause 6(viii) of the G.O. dated 13.12.2021 and is patently unreasonable.

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v. Clause 3.2.2 pertains to the financial criteria, and sub-clause (i) requires bidders to have a minimum turnover of INR 123.62 crores in at least two of the last five financial years (2019-20, 2020-21, 2021-22, 2022-23, and 2023-24). The learned counsel argued that this requirement is excessively high, constituting 66% of the estimated tender value of INR 185.43 crores. Such a condition is overly restrictive, limiting participation by otherwise eligible operators, and is therefore arbitrary.

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vi. The learned counsel also challenged the experience requirements under Clause 3.2.3. Specifically, Note 3 states that only experience gained directly by the bidder through contracts with the utility for which the coal is transported or handled will be considered for pre-qualification. This

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requirement disregards the significant experience of the petitioner in similar tender works awarded by the Maharashtra State Mining Corporation Limited, which acts as the nodal agency for Mahagenco’s thermal power stations.

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vii. The counsels further argued that no power utility in the WCL areas has directly issued tenders for similar works in the past five years, as such contracts have been processed only through nodal agencies. This makes the condition impossible to fulfill and therefore, it is arbitrary and should be quashed.

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viii. The learned counsels also challenge Note 4 under Clause 3.2.3, which requires that a bidder’s experience as part of a consortium or joint venture will not be considered unless the bidder provides declarations from all consortium members. These declarations must specify the exact scope and value of work completed by the bidder and confirm that the other consortium members will not lay a claim to the same scope and value of work as part of their experience in future tenders. The counsels argue that this requirement is overly restrictive and impractical.

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In response, Shri Shashikiran Shetty, the learned senior counsel appearing for the respondent’s counsel, argued that it is within the exclusive domain of the respondent to set out tender conditions which deem to be appropriate. He made the following submissions:

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5.1. The present tender involves multiple tasks, including coordinating with collieries and railways, arranging to lift 2 lakh metric tonnes of coal per month (or more) by road, using tippers, weighing coal on electronic weighbridges to prevent diversion, delivering coal to a specific washery, beneficiating it, transporting it to a railway siding, and ensuring delivery to KPCL’s power station by rail.

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5.1.2. The learned counsel argued that these tasks require multiple points of contact and close coordination. Allowing multiple service providers could lead to chaos, shortages in coal supply, and power generation disruptions. Past instances of grade slippage further justify the decision to limit participation to single bidders. Furthermore, the tender is a single, indivisible contract with four components, and that dividing responsibilities is impractical.

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5.1.3. He also stated that KPCL has consistently prohibited joint ventures in similar tenders for coal transportation, and the Kw4 tender format explicitly disallows consortium or joint venture bidders, making the petitioners’ contention unsustainable.

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5.2. The learned counsel submitted that Clause 1.03 of the tender document has been amended through an addendum, which has removed the clause permitting the leasing of washeries. As such, there is no conflict with the requirement for bidders to own a single beneficiation plant with a 2.475 MTPA capacity. This capacity aligns with the annual supply requirement under the fuel supply agreement.

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5.3. The learned counsel clarified that the requirement for bidders to have contracts with utilities does not limit them to the WCL area. It can include subsidiaries of Coal India Limited and SCCL. The clause ensures that bidders have independently executed the exact scope of work required under this tender. Subcontracting experience is excluded to avoid ambiguity about the bidder’s actual scope of work and to ensure that bidders can independently complete the tender work without risking coal supply shortfalls to KPCL.

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5.3.1. He emphasized that this is a standard business practice and similar tenders have been issued in states like Gujarat, Rajasthan, Andhra Pradesh, and Madhya Pradesh. The reliance on nodal agencies, as argued by the petitioners, is an exception rather than the norm.

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5.4. Addressing the challenge to the reduction in minimum work quantity requirements, the learned counsel argued that the reduction to 50% of the estimated tender work (12.37 lakh MTPA) complies with the Government Order dated 19.07.2024, issued pursuant to the Procurement Reforms Standing Committee meeting on 20.05.2014.

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5.5. The learned senior counsel defended Note 4, which requires consortium members to declare the scope and value of past work performed individually. This ensures no overlapping claims over the same work are made in future tenders. He clarified that bidders only need to declare the work they wish to count as prior experience for this tender. The requirement does not force consortium members to give up their credentials but ensures a clear assessment of experience and prevents duplicate claims.

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5.6. In response to the challenge that the stipulated annual financial turnover of INR 123.62 crores is arbitrarily high, the learned counsel explained that tenders in the KW4 format require bidders to meet specific turnover criteria. As per the Government Order dated 14.10.2008, bidders must have achieved an annual turnover of at least twice the estimated annual payments under the tender contract in the last two of the preceding five years.

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5.6.1. In this case, the total estimated value of the tender works is INR 185.43 crores for three years. This amounts to an annual payment of INR 61.81 crores. Accordingly, the minimum financial turnover requirement of INR 123.62 crores is justified and in line with the prescribed criteria.

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5.7. Regarding the claim that the draft tender was not uploaded on the Karnataka Public Procurement Portal and was not scrutinized by the State Pre-Tender Scrutiny Committee (SPTSC), the learned counsel clarified that the SPTSC had completed its tenure and was no longer functional. Moreover, tender proposals were exempted from submission to the SPTSC as per the Office Memorandum dated 11.06.2024.

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5.7.1. The learned senior counsel concluded by stating that the petitioners have failed to establish any mala fides on the part of respondents. As such, the tender document is valid and should not be interfered with.

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Issues

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After reviewing the arguments of the learned counsel for the parties, the sole issue that arises for consideration is whether any interference with the impugned tender is warranted by this Court in the exercise of its writ jurisdiction under Article 226 of the Constitution.

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Discussion/Analysis

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The submissions of the learned counsels recorded above adequately captures the facts of the matter at hand and requires no further elaboration.

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The respondent-KPCL invited the impugned tender on 25.11.2024 for the beneficiation (washing) of 24.75 lakh MT of raw coal per year from WCL Collieries and its transportation to the Raichur Thermal Power Station by rail. The last date for submitting bids was 24.12.2024, and the technical bids were scheduled to be opened on 26.12.2024. The approximate value of the tender works is

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INR 185.43 crores, and the contract duration is three years. The tender was invited in the Kw4 format.

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The respondent had previously invited a similar tender in March 2024, bearing No. A1 M1 B3 /WCL/ - BENEFICIATION (WASHING) of COAL/MARCH 2024/KPCL/2023-24/OW/ WORK/_INDENT1302, dated 02.03.2024. The Pre-Tender Scrutiny Committee recommended, in its advisory dated 25.08.2024, that the experience criteria be increased to bidders who have previously performed similar tender works of up to 19.80 lakh MT, i.e., 80% of the annual requirement of 24.75 lakh MT, in accordance with the KW4 standard. However, the respondent issued the earlier tender without providing any written justification as required under Clause 6(viii) of the Government Order dated 13.12.2021. The earlier tender was subsequently withdrawn, and the present tender was issued on 25.11.2024 after the cancellation of the first tender.

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The impugned clauses of the tender document are as follows:

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Clause 3.2.1(b)

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The tenderer on its own and/or its subsidiaries (100%) wholly owned by the tenderer) shall have satisfactorily executed the work of lifting and beneficiation of at least 12.37 lakh MT of raw Coal

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& contract value not less than Rs.30.92 crore, from subsidiaries of Coal India Limited and/or Singareni Collieries Company Limited (SCCL), to any thermal power station in any one (1) financial year during the preceding five (5) financial years (i.e., 2019-2020, 2020-2021, 2021-2022 and 2022-23, 2023-24) and also the work executed in the last 12 months from the date of NIT shall also be considered.

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Note 3 to Clause 3.2.3.

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Experience in the main contract shall only be considered for satisfying the experience criteria specified in PQR. The contracts should have been bagged from the Utility for whom the Washed Coal is transported/handled and executed by the agency in its own name.

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Note 4 to Clause 3.2.3

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Experience as Consortium member/Joint Venture shall not be considered for qualifying the experience criteria specified in Pre-Qualification Requirement unless the following conditions are satisfied:

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i) The bidder shall obtain a certificate from the Utility clearly indicating the exact scope of work

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and value of work done by such a bidder and the scope of work and value of work done by Other Members of the Consortium/Joint Venture under the Contract.

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ii) The bidder shall also obtain a declaration from Other Members of the Consortium/Joint Venture (if more than one member of the Consortium/Joint Venture, then, from all the members) confirming the exact scope of work done and value of work done in the past by such a bidder and that Other Members of the Consortium/Joint Venture are not claiming the scope of work and the value of work done by the said bidder as part of their own experience certificate in any other Tender in the future.

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Challenge to Clause 3.2.1(b)

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The respondent has filed a statement of objections asserting that the tender document issued complies with the KW-4 Format. The petitioners contend that this Clause violates the KW-4 Standard Tender Terms mandated by the Government. Clause 3.2(c) of the KW-4 Format explicitly stipulates that the minimum quantity of work executed in any given year must not be less than 80% of the annual requirement for such projects. Therefore, 80% of the annual requirement of 24.75 MT

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under the tender document amounts to 19.80 Lakh MT. However, the impugned Clause requires the tenderer to have satisfactorily executed the work of lifting and beneficiation of at least 12.37 Lakh MT, with a contract value of less than 30.92 Crore, which constitutes about 50% of the annual requirement for the project. This, therefore, violates the KW-4 Standard Tender Terms.

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The earlier KW-4 Standard Tender Terms were modified following a Government Order dated 19.07.2014, as per Annexure-R3 to the Statement of Objections. This modification altered Clause 3.2.1(b) of the KW-4 Format, reducing the eligibility criteria for satisfactorily executing the work from 80% of the estimated contract value to 50%. Consequently, the petitioners’ contention that Clause 3.2.1(b) violates the KW-4 Standard Tender Terms is without merit.

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Challenge to Note 3 of Clause 3.2.3

¶137

The petitioners contend that the condition is restrictive and has an adverse effect on the elimination of the competition by rendering any valuable experience acquired by the petitioners in carrying out similar tender works and services for various other thermal power station viz. MAHAGENCO TPS, which however contracts with another government entity viz. Maharashtra State Mining

¶138

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Corporation (MSMC) to serve as the nodal agency to facilitate the entire process of coal beneficiation, handling, transportation, etc. to the power stations. The lack of contractual privity between the bidders and the end user utility is essentially an outcome of the policy framework adopted by the government itself by designating government nodal agencies for such projects. Therefore, any stipulation invalidating bona fide experience acquired by tender participants in pursuance thereto, is unfair and reasonable.

¶141

However, it is settled law that tender inviting authority is the competent authority equipped with proper expertise to appraise the terms and conditions of the invited tender and the bids submitted by the participants. The courts are not empowered to substitute in judicial review the decisions of administrative or tender inviting authorities, when the impugned decisions cut muster with the Wednesbury’s principles of reasonableness, and are free from arbitrariness, bias, or mala fides (See, Tata Cellular v. Union of India, (1994) 6 SCC 651).

¶142

Admittedly, the experience acquired in servicing coal beneficiation and transportation thereof, as by the petitioner in W.P. No. 34794/2024 is in relation to the tenders invited in pursuance of the policy of another state viz. Maharashtra and not by the respondent herein.

¶143

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¶145

Therefore, although the petitioners herein may have acquired the technical expertise and financial qualifications, and practical experience of the core nature of work of the tender impugned, the respondent-KPCL cannot be estopped from inviting tenders with conditions negating any experience acquired by the bidders with specialised or nodal agencies, merely on the grounds of conflicting government policies. The respondent-KPCL cannot be mandated to invite tenders in pursuance with the government policy of its neighboring states, particularly, when the impugned change in the tender condition is supported with cogent reasoning.

¶146

The learned senior counsel for the respondent has submitted that Note 3 was inserted in the tender document with a view to ensure that bidders have independently executed the exact scope of work required under this tender and that any subcontracting experience is excluded so to avoid any ambiguity about the bidder’s actual scope of work-experience, and to ensure that bidders can independently complete the tender work without risking a shortfall in the supply of coal to KPCL. Furthermore, the learned counsel emphasised that Note 3 was not an aberrational change in the policy but that has been commonplace in the tenders invited in by the States

¶147

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¶149

of Gujarat, Rajasthan, Andhra Pradesh, and Madhya Pradesh.

¶150

As such, the challenge posed by the petitioners to allegedly restrictive conditions contained in Note 3 of the impugned tender cannot be sustained.

¶151

Challenge to Note 4 of Clause 3.2.3

¶152

The petitioners express concern that a restriction is imposed on consortium members or joint venture partners from claiming the same experience in any future tender. They argue that such a provision is ultra vires and beyond the legitimate scope of the tender conditions. Clause (ii) of Note 4 of the tender document stipulates that members of the consortium or joint venture shall not claim the scope of work and value of the work done by the bidder in the past as part of their own experience certificate in any other tender in the future. However, this Clause does not prevent the members of the consortium or joint venture from claiming the scope of work and value of the work done in their individual capacity in any future tender. It merely precludes them from claiming the work done by the bidder as part of their own experience. Therefore, the petitioners’ apprehension is unfounded and without any merit. Such a restriction cannot be deemed to be arbitrary or discriminatory, and cannot be interfered

¶153

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with unless it suffers from gross illegality, irrationality, or procedural irregularity.

¶156

Furthermore, the petitioners argue that the estimated value of the tender exceeds INR 10 Crores, and therefore, the issuance of the tender document as per the KW-4 Standard Tender Terms lacks authority, as KW-4 is applicable only to procurement involving amounts less than INR 10 Crore. However, the Government Order dated 14.10.2008, annexed to the Statement of Objections at Annexure-R4, modified the earlier Government Order dated 6.8.2005 by stipulating that KW-4 Standard Tender Terms apply to works costing Rs. 10 Crore and above. The modification does not pertain to Clause 4 of the Government Order dated 6.8.2005, as contended by the petitioners.

¶157

The petitioners further argue that the Pre-Tender Scrutiny Committee had recommended that the tenderer must have satisfactorily executed 90% of the contract value. In accordance with this recommendation, the respondent initially issued a tender document, which was subsequently withdrawn. The present tender document, however, requires the tenderer to have completed 50% of the contract value. The petitioners claim that this deviation, without prior approval from the State PreTender Scrutiny Committee, vitiates the entire tender

¶158

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process. However, the official memorandum dated 11.06.2024, issued by the Secretary, Finance Department, Government of Karnataka, and annexed to the Statement of Objections at Annexure-R5, indicates that the term of the State Pre-Tender Scrutiny Committee had expired, and that exemption from submitting proposals to the Committee and uploading the draft tender was granted.

¶161

It is well-settled law that tender conditions can only be altered or interfered with if they violate statutory provisions, Government guidelines, or are arbitrary, discriminatory, or designed to favour a particular entity. Tender conditions may also be interfered with if they are ambiguous, lack transparency, or are detrimental to public interest, or breach fundamental rights. In the present case, the petitioners have not established any of the above grounds to interfere with the impugned tender conditions. Therefore, the petitions lack merit and ought to be dismissed.

¶162

Accordingly, the petitions are dismissed.

¶163

Sd/- (HEMANT CHANDANGOUDAR) JUDGE

¶164

BKM, List No.: 1 Sl No.: 3

Issues for consideration

7 issues framed by the court

AI extract

1.
Whether any interference with the impugned tender is warranted by this Court in the exercise of its writ jurisdiction under Article 226 of the Constitution (framed as the sole issue).¶107
The court held
In judicial review the Court will not substitute its view for that of the tender-inviting/administrative authority where the impugned decision satisfies Wednesbury reasonableness and is free from arbitrariness, bias or mala fides (relying on Tata Cellular v. Union of India, (1994) 6 SCC 651).ratio¶141
2.
Whether Clause 3.2.1(b), requiring execution of lifting and beneficiation of at least 12.37 lakh MT of raw coal (about 50% of the annual requirement), violates the KW-4 Standard Tender Terms which mandate a minimum of 80% (19.80 lakh MT) of the annual requirement.¶134
The court held
The challenge to Clause 3.2.1(b) fails: the earlier KW-4 Standard Tender Terms were modified by Government Order dated 19.07.2014 (Annexure-R3), which altered Clause 3.2.1(b) and reduced the eligibility criterion from 80% of the estimated contract value to 50%; accordingly the contention that the clause violates the KW-4 Standard Tender Terms is without merit.ratio¶135
3.
Whether Note 3 to Clause 3.2.3, confining qualifying experience to contracts bagged directly from the Utility in the Utility's own name (thereby excluding experience gained through nodal agencies such as MSMC for MAHAGENCO), is restrictive and arbitrary.¶137
The court held
The challenge to Note 3 of Clause 3.2.3 cannot be sustained: KPCL cannot be estopped or mandated to frame tender conditions in pursuance of the governmental policy of a neighbouring State (Maharashtra's nodal-agency framework through MSMC), particularly when the change is supported by cogent reasoning and reflects practice in Gujarat, Rajasthan, Andhra Pradesh and Madhya Pradesh.ratio¶150
4.
Whether Note 4 to Clause 3.2.3, disqualifying consortium/joint-venture experience unless certificates and mutual declarations are obtained (including a declaration that other members will not claim the same scope and value of work in future tenders), is ultra vires, overly restrictive or impractical.¶124
The court held
The challenge to Note 4 of Clause 3.2.3 fails: the clause does not prevent consortium/joint-venture members from claiming, in future tenders, the scope and value of work done in their individual capacity; it only precludes them from claiming the work done by the bidder as their own experience. The petitioners' apprehension is unfounded and the restriction is neither arbitrary nor discriminatory.ratio¶152
5.
Whether the KW-4 Standard Tender Terms could govern the impugned tender at all, given the petitioners' contention that KW-4 applies only to procurement below INR 10 Crore while the estimated value exceeds that figure.¶156
The court held
KW-4 Standard Tender Terms validly apply to the impugned tender: the Government Order dated 14.10.2008 (Annexure-R4) modified the earlier Government Order dated 6.8.2005 and extended KW-4 to works costing Rs. 10 Crore and above, contrary to the petitioners' contention that KW-4 is confined to procurements below INR 10 Crore.ratio¶156
6.
Whether the tender process stands vitiated by non-upload on the Karnataka Public Procurement Portal, non-consultation of the Pre-Tender Scrutiny Committee contrary to G.O. dated 13.12.2021, and deviation from the Committee-recommended quantity (90% of contract value) to 50% without prior approval.¶66
The court held
The objection founded on non-scrutiny by the State Pre-Tender Scrutiny Committee and non-deviation approval fails: the official memorandum dated 11.06.2024 (Annexure-R5) shows the Committee's term had expired and exemption was granted from submitting proposals to it and from uploading the draft tender.ratio¶160
7.
Whether the minimum annual turnover requirement of INR 123.62 crores (constituting about 66% of the estimated tender value of INR 185.43 crores) is excessively high and arbitrary.¶76

Maha Mineral Mining and Benefication Private Limited v. Karnataka Power Corporation Ltd.

Case brief

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Maha Mineral Mining and Benefication Private Limited v. Karnataka Power Corporation Ltd.

Case brief

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What the court decided

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