Sri Chandrashekar S E vs. State Of Karnataka
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The petitioners were successful bidders in a tender process initiated by respondents No. 3 and 4 for the collection of fee at Abbi Falls for the period August 1, 2024, to March 31, 2025. A dispute arose concerning the payment of Goods and Services Tax (GST) before the agreement could be signed. The petitioners claim they had applied for a trade license. Subsequently, on February 19, 2025, an impugned resolution was passed by respondent No. 3, disqualifying the petitioners from participating in future tenders. This disqualification order is the subject of the present writ petitions filed by the successful bidders.
Held
The Court held that the disqualification of the petitioners from participating in future tenders was in violation of the principles of natural justice. The notice issued to the petitioners on October 28, 2024, did not inform them that an unsatisfactory reply regarding GST payment would lead to their disqualification from future tenders. The Court found that the petitioners were never made aware of this potential consequence. Therefore, the disqualification proceedings and the consequent order were deemed contrary to law and unsustainable. The Court quashed the impugned resolution. However, it granted liberty to the respondents to issue appropriate fresh notices, seek replies, consider them, and pass necessary orders in accordance with the law if they so desired.
Key Issues
1. Whether the disqualification of the petitioners from participating in future tenders, without prior notice of such a consequence, violates the principles of natural justice, particularly the right to be heard, as contemplated under the relevant provisions of law governing tender processes? The petitioners argued that while two notices were issued seeking a reply, neither notice indicated that unsatisfactory replies would lead to disqualification from future tenders. They contended that disqualification is a severe measure that affects their right to participate in future tenders and cannot be imposed without a specific notice to that effect. The respondents, represented by counsel for respondents No. 3 and 4, argued that a notice was indeed issued and that the petitioners had committed a grave illegality by allegedly forging the Panchayat's seal. They submitted that no indulgence should be shown to the petitioners. The High Court Government Pleader for respondents No. 1 and 2 supported the dismissal of the petitions.
Sections Cited
Section 19, Section 20
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Heard together (3 matters)
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Cause title — parties, addresses and appearances
ORAL ORDER The petitioners in all these cases are successful bidders in a tender notified by respondent No.4. 2. Heard Shri. Srinivas V., learned counsel appearing for the petitioners; Shri Shamanth Naik, learned High Court Government Pleader appearing for respondents No.1 and 2 and Shri S. Basavaraju, learned counsel appearing for respondents No.3 and 4. NC: 2025:KHC:11946
On 02.07.2024, respondents No.3 and 4 call for tender for collection of fee at Abbi falls for a period between 01.08.2024 to 31.03.2025. The petitioner claims that he had become the successful bidder and has applied for a trade licence for running the business. The agreement also was drafted and was not signed for the reason that GST is not paid and the issue is related to payment of GST. On 19.02.2025, comes the impugned order disqualifying the petitioners from participating in future tenders.
It is this order of disqualification or proceedings of disqualification that is driven the petitioners to this Court, in the subject petition.
The learned counsel appearing for the petitioners would submit that though two notices were issued seeking reply from the hands of these petitioners, it was not indicated that the petitioners would be disqualified, if the reply was not satisfactory. He would further submit that the disqualification is a serious measure, which will take away his right to participate in future tenders and without issuance of a notice, the said disqualification could not have come about. NC: 2025:KHC:11946
The learned counsel appearing for respondents No.3 and 4 takes this Court through the statement of objections to contend that notice was in fact given and what the petitioners have done is a grave illegality of forging the seal of the Panchayath and therefore, no indulgence should be shown is the submission of the learned counsel.
Learned High Court Government Pleader would also toe the lines of learned counsel appearing for respondents No.3 and 4 in seeking dismissal of the petition.
I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material available on record.
The afore-narrated facts are not in dispute. The petitioners are all participants in a tender notified on 02.07.2024 by respondents No.3 and 4. The dispute arose with regard to payment of GST while signing the agreement, pursuant to the petitioners emerging as the successful bidders. The GST is not paid. Respondents No.3 and 4 later issue a notice on 28.10.2024, seeking reply from the hands of the NC: 2025:KHC:11946 petitioners for the purpose of payment of GST, inter alia. The notice reads as follows: "PÀæ.. ¸ÀA. PÉ. ¤. UÁæ.. ¥ÀA/164/2024-25
¢£ÁAPÀ: 28.10.2024 ೋೕ
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Identical notices are issued to other petitioners, as well. The petitioners have submitted their reply contending that they are not liable to pay any GST. NC: 2025:KHC:11946 Be that as it may. What comes about is the impugned resolution directing the disqualification of these petitioners and barring them from future tenders. This Court soa and so reads as follows: "ಸಂ*ೆ'ಯ #ೆಸರು :- -ೆ :ಡುಗ<ೆ !ಾ/ಮ ಪಂ+ಾ= *ಾಾನ ಸ_ೆ 8ಾಂಕದಂದು ನEೆದ -ಾಯV-ಾ ಸ`ಯ ೕಾVನಗಳJ, 10 ಸದಸ ರು ಾೕಕು 19.02.25 ರ5 S/ೕಮ -ೆ, ಾವV ರವರ ಅಧ b ೆಯ5 ಸ_ೆ *ೇ ನEೆ9ದ `ೕಂc d/ೕ9,ಂc ಷಯಗಳJ ಷಯಗಳJ ಷಯಗಳJ ಷಯಗಳJ-
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'ಎ ಅನುG ಕಟNRೆ ಸ-ಾVರ-ೆ6 ಅ ಾರ ನಷNವನುG ಉಂಟು ಾ,ರುವHದಂದ ಮತು% ಕOಾರು ಪತ/ವನುG ಸf ಾ, :ೕಡRೆ ಇರುವHದಂದ ಾನ -ಾಯV:ವVಹ<ಾ ಅp-ಾ ಅವರ ಪತ/ ಸಂ1ೆ - ಾ.ಪಂ.ಮ/!ಾ/. ಪಂ/-ೆ 9ಡುಗ<ೆ ಇತOೆ/05/2024-25 ರಂ ೆ ಕಾVಟಕ !ಾ/ಮ ಸWOಾq ಮತು% ಪಂ+ಾಯk Oಾq !ಾ/ಮ ಪಂ+ಾ=ಯ ಮತು% ೆಕ6ಪತ/ ಅrನಯಮ 2006ರ :ಯಮ 19 ಮತು% 20 ರಂvÉ !ಾ/ಮ ಪಂ+ಾ= ಆಡ(ತ ಮಂಡ(ಯ *ಾಾನ ಸ_ೆಯ5 ನಯಾನು*ಾರ :ಣVಯ -ೈ!ೊಂಡು ಅಗತ ಕ/ಮ -ೈ!ೊಳtಲು ಸೂ]ಸುವHದಂದ ಸ_ೆಯ5 ಈ ಬ!ೆh ಚ]V9 ಸದಸ ರು ಸ ಾVನುಮತ8ಂದ S/ೕ ಯಶವಂk ಎ -ೆ NC: 2025:KHC:11946 ಮತು% ಪವl -ೆ ಆX ಮತು% S/ೕ ಕುUಾಲಪo ? ಎಂ #ಾಗೂ ಚಂದ/UೇಖX ಎ ಇ ರವರುಗಳನುG ಮುಂ8ನ ಪಂ+ಾ=ಯ jೆಂಡX ಗ(!ೆ _ಾಗವfಸಲು ಅನಹVOೆಂದು ಆಡ(ತ ಮಂಡ(ಯು ೕಾV:9 :ಣVಯ -ೈ!ೊಳtಾQRೆ."
The issue now would be whether the petitioners are heard in the matter, prior to passage of the order of disqualification. The notice that is issued is quoted hereinabove. It nowhere indicates that the petitioners would be disqualified from future tenders, if the reply would be unsatisfactory. The petitioners contended in the reply that they had submitted with regard to the merit of the matter contending that they are not liable to pay GST, but what has come about is the drastic measure of disqualifying these petitioners.
In the considered view of this Court, the disqualification that has emerged is in violation of principles of natural justice, as the petitioners were never made aware that they would be disqualified, if the reply was not found satisfactory. In that light, the disqualification proceedings or an order passed thereon, becomes contrary to law, as is rendered unsustainable.
For the aforesaid reasons, the following: NC: 2025:KHC:11946 ORDER i) Writ petitions are allowed-in-part. ii) The impugned resolution No.6 passed by respondent No.3 on 19.02.2025 stands quashed. iii) The respondents are at liberty to issue appropriate notice to the petitioners, seek their reply and consider the same and pass necessary orders, in accordance with law, if they so desire, at this juncture.
Ordered accordingly. (M.NAGAPRASANNA) JUDGE
JY List No.: 1 Sl No.: 24 CT: BHK
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.