The Karnataka High Court under Justice M Nagaprasanna in M/s Allengers Medical Systems Ltd And State of Karnataka (Writ petition No. 17634 of 2022) has said that the authority responsible for requesting tender is only permitted to revoke a bid before it has been awarded and before the contract has been executed. Except in cases of tender condition violations, it is illegal to withdraw or cancel the tender once the award has been announced.
The petitioner claims to be a registered Company under the Companies Act, 1956 and is in the business of procurement of medical and allied equipments. The 2nd respondent/ Karnataka State Medical Supplies Corporation Limited (hereinafter referred to as ‘the Corporation’ for short) issues a notice inviting tenders for procurement of 100mA Portable X-ray machines, ICU Cots and Syringe Pump. It was to be a two cover tender, in terms of the Karnataka Transparency in Public Procurement Act, 1999. The issue in the lis concerns only item No.2 in the Tender i.e., 100mA Portable X-ray machines. The petitioner finding itself eligible, submits the tender in terms of the tender along with another tender. On the Tender Scrutiny Committee declaring the petitioner to be the successful bidder, the petitioner was called for negotiations with regard to the final price and the petitioner reduced the price from Rs 19,34,640/- to Rs 18,95,947/- and the award of contract was notified in the favour of petitioner. Pursuant to the notification of 5 award, an agreement was also signed between the parties and thereafter, a demand draft for supply of 165 Portable X-ray machines of 100mA was submitted by the petitioner for issuance of purchase order and a separate agreement for such purchase was also entered into between the parties. In spite of all these, no purchase order was issued as was required, in terms of the tender. It is at that juncture, the petitioner knocked the doors of this court with the present petition. This Court initially directed the learned Additional Government Advocate to secure instructions as to what has become of the tender. After issuance of notice the petitioner is communicated a cancellation of tender order, in terms of its electronic mail communication. It is then this Court has passed a detailed order restraining the respondents from re-tendering and reserved liberty in the respondents to issue purchase order in favour of the petitioner. Therefore, the matter, with the consent of parties, was heard.
The bench said if there are corruption charges against officers of the Tender Scrutiny Committee, it is for the appropriate authority to take action. It cannot result in cancellation of a valid order. “A notice inviting tender can be withdrawn or cancelled only upto a particular stage. Once it crosses the said stage, any unilateral cancellation would be an arbitrary exercise of power.”
Article 14 mandates that every action of the State should pass through the golden thread of Non-Arbitrariness and therefore the Corporation is a satte under Article 12 of the Constitution of India.
The cancellation of Tender would amount to Arbitrary exercise of power and violative of Article 14 of the Constitution of India and therefore Writ Petition is allowed and the communication dated 03-11-2022 of the 2nd respondent stands quashed.
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JUDGEMENT REVIEWED BY VAISHNAVI SINGH