Hi-Tech Audio Systems Private Limited v Union of India & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** ## **TUESDAY ,THE 05TH DAY OF FEBRUARY 2019 / 16TH MAGHA, 1940** ## **WP(C).No. 40550 of 2018** **PETITIONER/S: HI-TECH AUDIO SYSTEMS PRIVATE LIMITED, HAVING ITS REGISTERED OFFICE AT F-12,OKHLA INDUSTRIAL AREA,PHASE-I,NEW DELHI-110020. THROUGH ITS AUTHORIZED REPRESENTATIVEMR.PRAVEEN KUMAR. BY ADVS. SRI.P.A.AUGUSTIAN MANAV GUPTA SAHIL GARG RESPONDENT/S: 1 UNION OF INDIA, THROUGH SECRETARY,MINISTRY OF HUMAN RESOURCE DEVELOPMENT 1,WEST BLOCK, R.K.PURAM,NEW DELHI-110066. 2 STATE OF KERALA REPRESENTED BY THE SECRETARY TO GOVERNMENT, GENERAL EDUCATION DEPARTMENT,GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM-695001. 3 INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE,KUNNAMANGALAM,KERALA-673571. 4 M/S GODREJ AND BOYCE MFG.CO.LTD INTERO DIVISION,PLANT 14 P,PIROJSHA NAGAR, VIKHROLI,MUMBAI-400079.AVSOLNS @ GODREJ.COM BY ADVS. MR.T.A.UNNIKRISHNAN, CGC SRI.M.GOPIKRISHNAN NAMBIAR SRI.M.SREEKUMAR SMT.NAYANPALLY RAMOLA SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM OTHER PRESENT: SR.ADV.P.GOPINATHA MENON FOR R3** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 40550 of 2018** **2** ## **JUDGMENT** This writ petition is filed by the petitioner who claims to be one of the bidders in pursuance to Ext.P6 notice inviting tender, challenging Exts.P1 and P1(2) intimations of the 3[rd] respondent dated 30.11.2018 and 3.12.2018 respectively. By the said intimations, the petitioner was informed that the petitioner's bid stands rejected and that purchase order has been issued to the successful bidder. The petitioner's request for demonstrating the Proof of Concept (POC) stands rejected by the intimation dated 3.12.2018. It is informed that since the petitioner had failed to submit the OEM authorization and warranty support from the OEM in respect of Item A-1.1, as stipulated in clause Nos. 4.6, 7.3 and 11.1 of Ext.P6, the petitioner's request could not be considered. 2. Heard Sri. Manav Gupta and Sahil Garg, the learned counsel for the petitioner, Sri.P Gopinatha Menon, learned Senior Counsel appearing for the 3[rd] respondent, Sri. M.Sreekumar, learned counsel **WP(C).No. 40550 of 2018** **3** appearing for the 4[th] respondent as well as the learned Central Government Counsel and the learned Government Pleader. 3. The learned counsel for the petitioner would contend that the petitioner Company is the largest Indian distributor and system integration Company dealing with audio/video products and has impeccable reputation and has provided digital conference systems to the Indian Parliament, 8 State Assemblies, several IITs and NITs as well as the Rashtrapati Bhavan. It is stated that the petitioner has several awards to its credit as mentioned in the writ petition and has a total sales turn over of 138.91 crores in 2017-18. It is stated that Ext.P6 provided for a three step procedure including (i) pre- qualification criteria for bidder (ii.) proof of concept and (iii) opening of the commercial bids. 4. Ext.P6 shows that Ceiling Micro Phones manufactured by Shure or Clearone or Sennheiser, were the products for which tender was invited with the technical specifications as shown under the head A- 1.1. It is stated that Ext.P6 notice inviting tender ## **WP(C).No. 40550 of 2018** ## **4** was issued on 12.4.2018. The pre-bid meeting was held on 2.5.2018 and the techno-commercial bids were opened on 10.5.2018. It is stated that after opening the techno-commercial bids on 10.5.2018 and the completion of the proof of concept on 24.7.2018, the bids were revised and the technical specifications were altered by the 3[rd] respondent. The learned counsel for the petitioner would contend that the petitioner was the lowest bidder all through out. However, by the revision of the technical specifications, it became impossible for the petitioner to supply the ceiling micro phones as per the revised specifications, since the only Company which produces the ceiling micro phones with the revised specifications refused to extend the Original Equipment Manufacturer's (OEM) authorization and warranty support to the petitioner as a result of a cartel formation with the 4[th] respondent. It is contended that though specific complaints had been preferred by the petitioner before the 3[rd] respondent with regard to the unethical practices of the said Company, no action had been taken thereon and the **WP(C).No. 40550 of 2018** **5** respondents proceeded to reject the techno-commercial bid of the petitioner and accepted the bid submitted by the 4[th] respondent. The learned counsel for the petitioner placed reliance on the decisions of the Apex Court in _**Michigan Rubber (India) Limited v.**_ _**State of Karnataka and Others (2012 (8) SCC 216)**_ to contend that where the decisions of the tender inviting authority are arbitrary, discriminatory or vitiated by mala fide, this Court would be duty bound to interevene. Reliance is also placed on circulars issued by the Central Vigilance Commission to contend that technical specifications cannot be revised midway through the tender process. 5. Detailed counter affidavits have been filed on behalf of 3[rd] and 4[th] respondents. The 3[rd] respondent would contend that the issue in question is a completely commercial transaction and the writ petition is not maintainable in the facts and circumstances of the instant case. It is stated that the allegations in the writ petition are essentially made against Shure incorporated along with its official distributor in India, M/s Sun Infonet Pvt. **WP(C).No. 40550 of 2018 6** Ltd. However, both the entities have not been made parties to this writ petition. It is further submitted that the allegation of the petitioner that it is after opening the commercial bid of the petitioner that the technical specifications were revised is completely contrary to facts since the commercial bid submitted by the petitioner had been returned to it after the proof of concept was exhibited before the 3[rd] respondent and it was found necessary to revise the technical specifications. It is stated that Ext.P2 revisions in the technical specifications were issued as early as on 19.9.2018. It is stated that all the bidders who had submitted their bids pursuant to Ext.P6 had been given equal opportunity to participate in the process pursuant to Ext.P2 as well. It is stated that the petitioner had submitted its revised commercial bid pursuant to Ext.P2 and had fully participated in the ensuing tender proceedings. It is only long after the bid submitted by the petitioner was not found to be in compliance with tender conditions and its offer was rejected and the bid in favour of the 4[th] respondent **7** ## **WP(C).No. 40550 of 2018** was confirmed that this writ petition is preferred, it is submitted. Relying on the specific clauses in the tender document, the learned Senior Counsel appearing for the 3[rd] respondent would submit that the OEM's authorization and warranty support was a specific condition provided in Ext.P6 itself and the rejection of the bid for non compliance with the said requirement is completely in order. 6. It is stated that even at the proof of concept stage, the petitioner was unable to satisfy the 3[rd] respondent with regard to the viability of its products and had sought repeated chances for successfully completing the POC. It is stated that the petitioner was struggling to meet the technical performance expectations of the audio component and immediate feedback had been given that its POC was not meeting the technical quality requirements. It is stated that in Ext.P2 revised commercial bid also, the technical specifications of critical audio components were fine tuned but no specific make or model was specified for any of the Components. It is stated that two other bidders had submitted bids **WP(C).No. 40550 of 2018** **8** complying with the revised technical specifications and had also produced the OEM and warranty support as provided in Ext.P6. It is contended that further contentions of the petitioner are completely without any merits. Since the commercial bid of the petitioner pursuant to Ext.P6 was never opened, the contention that the petitioner was the lowest tenderer is completely unsupported by any material. 7. The 4[th] respondent has also placed a counter affidavit on record contending that pursuant to the proof of concept conducted on 25.7.2018, the 4[th] respondent had carried out the installation and demonstration of the complete audio components to the satisfaction of the 3[rd] respondent. It is stated that Ext.P2 letter for revised bid was dated 19.9.2018 and a further pre-bid meeting was held on 19.11.2018 in which the 4[th] respondent as well as the petitioner and other tenderers participated. It is stated that thereafter the tender was confirmed in favour of the 4[th] respondent and work orders were duly issued. Acting on the work order, major portion of the work has already been completed by the 4[th] respondent. It **WP(C).No. 40550 of 2018** **9** is stated that the CVC circulars produced by the petitioner and the decision relied on ie., _**Michigan Rubber (India) Limited v. State of Karnataka and Others (2012 (8) SCC 216)**_ has no application in the instant case. 8. I have considered the contentions advanced. Ext.P6 notice inviting tender and tender documents are seen issued on 12.4.2018. It contains a specific clause that all the products should have OEM authorization and warranty support of the manufacturer. It appears that the pre-bid meeting and the proof of concept had been carried out pursuant to Ext.P6 on 24.7.2018 and 25.7.2018, respectively. Thereafter, Ext.P2 proceedings were issued on 19.9.2018 revising the technical specifications. The said proceedings were not under challenge before this Court at the instance of the petitioner at the relevant time. The petitioner Company, as a matter of fact, participated in the tender, submitting a revised commercial bid as well. Further proof of concept appears to have been conducted and the tender was finalized in favour of the 4[th] respondent. It is **10** ## **WP(C).No. 40550 of 2018** only at that stage that the petitioner approached this Court, challenging the revision of the technical specifications itself. The contention of the petitioner is that it is after opening of the commercial bid that the specifications were revised to exclude the petitioner. However from the documents produced by the respondents and the counter affidavit filed by the 3[rd] respondent, it is clear that the initial commercial bid submitted with the original specifications was never opened and that it was returned to the tenderers unopened. 9.In the above view of the matter, the contention that the attempt was to exclude the petitioner by revising the specifications does not appear to be borne out by the pleadings or the documents produced in this writ petition. The further contention is that the only manufacturer of the ceiling micro phones with the specifications as provided in the revised communication has acted in a non-ethical manner by refusing to provide the OEM and warranty support to the petitioner alone. The original manufacturer is a known entity. The distributor of the said **WP(C).No. 40550 of 2018** **11** manufacturer in India has been pointed out in the counter affidavit submitted by the 3[rd] respondent itself. However neither the original manufacturer or its distributor in India are parties to this writ petition. 10.The further contention is that the award of the tender to the 4[th] respondent without considering the claim of the petitioner is vitiated. From the counter affidavits filed by respondents 3 and 4 as well as the documents placed before this Court, I find that the petitioner's tender has been rejected on the ground that it did not have the OEM and the warranty support, which involves financial implications as well. It is not in dispute before me that the petitioner, who had participated in the revised tender proceedings was unable to produce the OEM's authorization and warranty support, as has been specifically sought for in Ext.P6 itself. The 4[th] respondent has, as a matter of fact, produced the said authorization and warranty support as is evident from the documents produced along with counter affidavits of the 3[rd] and 4[th] respondents. Since the **WP(C).No. 40550 of 2018 12** petitioner's techno-commercial bid had been rejected on the basis of clear provisions as contained in Ext.P6 itself, I am of the opinion that the challenge raised against Exts.P1 and P1(2) orders of rejection are not sustainable. The challenge fails and the writ petition is accordingly dismissed. **Sd/-** sab **ANU SIVARAMAN JUDGE** **WP(C).No. 40550 of 2018** **13** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ORDER/INTIMATION DATED 30.11.2018 AND O3.12.2018 PASSED BY RESPONDENT NO.3.** **EXHIBIT P2 TRUE COPY OF THE REVISED TENDER DATED 19.09.2018.** - **EXHIBIT P3 TRUE COPY OF RELEVANT CVC GUIDENLINES.** - **EXHIBIT P4 TRUE COPY OF BOARD RESOLUTION DATED 06.12.2018 AUTHORIZING MR.PRAVEEN KUMAR TO INSTITUTE THE PRESENT PETITION.** - **EXHIBIT P5 TRUE COPY OF CERTIFICATE OF INCORPORATION DATED 13.01.1995 OF THE PETITIONER COMPANY.** **EXHIBIT P6 TRUE COPY OF THE NOTICE INVITING TENDER DATED 12.04.2018** - **EXHIBIT P7 TRUE COPY OF THE LETTER DATED 02.05.2018 WHEREBY QUERIES WERE RAISED BY THE PETITIONER.** - **EXHIBIT P8 TRUE COPY OF THE LETTER DATED 05.05.2018 ISSUED BY THE PETITIONER.** **EXHIBIT P9 TRUE COPY OF THE OEM AUTHORIZATION DATED 07.05.2018 AND OEM CONFIRMATION DATED 20.06.2018.** - **EXHIBIT P10 TRUE COPY OF THE E-MAIL DATED 03.07.2018 AND 11.07.2018 ISSUED BY RESPONDENT NO.3** - **EXHIBIT P11 TRUE COPY OF THE CATALOGUES OF THE THREE OEM'S SENNHEISER,CLEARONE AND SHURE ALONG WITH THEIR SPEFICICATIONS.** - **EXHIBIT P12 TRUE COPY OF THE QOATATION DATED 01.10.2018.** - **EXHIBIT P13 TRUE COPY OF THE LETTER DATED 15.10.2018. EXHIBIT P14 TRUE COPY OF THE CORRESPONDENCE EXCHANGED BETWEEN THE PETITIONER AND M/S SHURE.** **WP(C).No. 40550 of 2018 14** **EXHIBIT P15 TRUE COPY OF THE LETTER DATED 25.10.2018. EXHIBIT P16 TRUE COPY OF THE LETTER DATED 29.11.2018.**