Karnataka Co Operative Poultry Federation LTD vs. The State Of Karnataka
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The petitioner, Karnataka Co-operative Poultry Federation Ltd., a cooperative poultry foundation, filed a writ petition challenging certain conditions in a tender notification dated July 11, 2022, issued by the Department of Women and Child Development. The tender was for the supply of eggs for children and women suffering from nutritional deficiencies. The petitioner objected to conditions requiring registration certificates from the National Egg Coordination Committee and a GST Registration Certificate as prerequisites for participating in the tender. The State contended that the matter falls within the realm of contract law and that the High Court should not interfere with tender conditions, which are within the discretion of the authorities.
Held
The High Court declined to grant indulgence and dismissed the writ petition. The Court held that matters relating to tenders generally fall within the realm of contract law, as recognized by Articles 298 and 299 of the Constitution of India. The Court stated that while State actions can be impeached if arbitrary or violative of Article 14, judicial review of State actions in its manifold activities is restrictive. In specialized fields like formulating tender conditions, State authorities are granted greater latitude to ensure contractors have the necessary capacity and resources. The Court cited the Supreme Court's decision in Silpi Constructions Contractors v. Union of India, emphasizing that writ courts should not easily interfere in commercial activities involving government entities and that judicial restraint is the modern trend. The Court found the petitioner's argument regarding the lack of statutory power to demand a certificate from a private body difficult to countenance, stating that when the State acts under Article 298 without specific legislation, its power to prescribe conditions is wide. The Court concluded that the petitioner's case did not demonstrably fit into the restrictive grounds for judicial review and that the tender conditions were not wholly arbitrary, discriminatory, or actuated by malice. Therefore, the petition was dismissed as devoid of merits.
Key Issues
1. Whether the High Court, in its writ jurisdiction, should interfere with the conditions stipulated in a tender notification issued under the executive power of the State, specifically concerning the requirement of registration with the National Egg Coordination Committee and GST Registration. Petitioner's arguments: The petitioner argued that the impugned conditions, specifically Condition No. 6 at Division IV, Column 3, and Conditions at Division, Column VI, Item No. 1, along with Annexure-6, Items 2 and 3, in the tender notification are void and arbitrary. They contended that the requirement of a Certificate of Registration with the National Egg Coordination Committee, a private body, is not supported by statutory power and is therefore untenable. They also implicitly challenged the GST registration requirement by grouping it with the other condition they found objectionable. Revenue/State's arguments: The respondent-State argued that the matter is purely in the realm of contract and that the Writ Court should not interfere. They contended that the formulation of tender conditions is within the wisdom of the authorities, and intending bidders have no say. The scope of judicial review in such matters is restrictive, and the petitioner has not demonstrated a case fitting within this scope. They further argued that the conditions are a result of accumulated wisdom and experience of government functionaries.
Sections Cited
Article 298, Article 299, Article 14, Article 162
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Cause title — parties, addresses and appearances
ORDER
Petitioner, a Cooperative Poultry Foundation, claims to be the State Apex Body, functioning under the aegis of Government Departments such as Cooperation, Animal Husbandry, Women & Child Welfare, etc. It claims that 206 Primary Societies and other ancillary units are federated in it. Learned Sr. Advocate appearing for the petitioner submits that his client has been engaged in the poultry
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business and other allied products with an objective of encouraging the farmers and of generating employment opportunities in the rural areas.
Petitioner-Federation is invoking the writ juri iction of this Court for assailing certain conditions incorporated in the Tender Notification dated 11.07.2022, a copy whereof avails at Annexure-D. It has been issued by the Department of Women and Child Development, calling for tenders inter alia for supplying eggs on 5th, 15th & 25th days of every calendar month. These eggs are given to children in the age band of six months to six years, to kids & their families suffering from nutrition deficiency, to pregnant women and to 'post delivery women' in the State.
The grievance of the petitioner is against the tender conditions i.e., Para IV Clauses I & VI, Part V Clause III, which require Registration Certificates issued by the National Egg Coordination Committee and Certificate of GST Registration as the pre-requisites for being in the tender fray. The learned Addl. Government Advocate, on request appearing for the respondent-State & its officials,
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vehemently resists the Writ Petition contending that the matter is purely in the realm of contract and therefore, Writ Court should not interfere. What condition should be incorporated in a tender for certain works is left to the wi om of the authorities and intending bidders have no say in the matter. Lastly, the scope of Judicial Review in matters like this is very restrictive and petitioner does not have a concrete case that fits into this scope. So contending, he seeks dismissal of the Writ Petition.
Having heard the learned counsel for the parties and having perused the Petition Papers, this court declines to grant indulgence in the matter for the following reasons:
(a) Ordinarily, matters relating to tenders of the kind fall into the realm of law of contract. The Government as a corporate body and its departments often enter into contract generally by tender procedure. Articles 298 & 299 of the Constitution of India recognize the freedom of contract availing to the government. Article 298 in so many words states that the Union Government and State Government are competent to carry on any commercial or industrial undertaking, whether or not it is related to a 6
matter within their legislative competence. In D.D.Basu's 'Shorter Constitution of India' Volume 2, 15th Edition, Lexis Nexis at pages 1483 & 1484, it is printed as under:
"The State acts in its executive power under Art. 298 in entering or not entering in contracts with individual parties. A decision of the State or its agency can be impeached on the ground that it is arbitrary or violative of Art. 14 on any of the grounds available in public law. But Art. 14 cannot be construed as a charter for judicial review of State action to call upon the State to account for its actions in its manifold activities, by stating reasons for such actions."
(b) In the matter of formulating conditions of a tender document and awarding a tender in a specialized field, a greater latitude is required to be conceded to the State authorities. Certain conditions as of necessity have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Courts cannot whittle down the terms of the tender, as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. Where the tender conditions make it mandatory to supply certain information and documents, courts cannot falter the same on the grounds on which the executive actions of the State are ordinarily struck down.
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(c) Learned Addl. Govt. Advocate is more than justified in contending that the impugned conditions incorporated in the tender document are the result of accumulated wi om gained from long experience by the functionaries of the government whilst dealing with the contractors and therefore, a Writ Court cannot run a race of opinions with the executive vide Silpi Constructions Contractors v. Union of India, (2020) 16 SCC 489. (d) Learned Sr. Advocate Mr.Patil appearing for the petitioner specifically admits that the tender in question is not floated under any particular legislation and that it is issued in the executive power of the State. If that be so, the text & context of Articles 298 & 299 of the Constitution come to the rescue of the respondents, the interference in writ juri iction being very restrictive, more particularly when the field is wide open to the authorities. The case of the petitioner does not demonstrably fit into restrictive grounds that constitute an exception to the general norm of non-interference in Judicial Review.
(e) The vehement submission of Mr.Patil that no statutory power is available to the respondent-authorities to 8
seek production of Certificate of Registration with the National Egg Coordinate Committee which is only a private body, is difficult to countenance. If State is acting u/a 298, admittedly, there being no legislation at place, the power to prescribe conditions is very wide. The contractual power under this Article is not much relatable to executive power of the State availing u/a 162, is the opinion of Mr.H.M.Seervai in his 'Constitutional Law of India', 4th Edition, at paragraphs 19.19 & 19. 20. If that be so, it is open to the government to prescribe certification from a private body, as a tender condition. The Apex Court in Silpi Constructions, supra, has reiterated the law that the writ court should not easily interfere in commercial activities just because public sector undertakings, government or its agencies are involved and that the modern trend in a Welfare State points out to judicial restraint. The terms of 'tender' cannot be open to judicial scrutiny because the 'invitation to tender' is in the realm of contract. The government must have freedom of contract and striking out the terms of tender virtually amounts to substituting courts decision in matters in which Judges lack
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expertise. Court cannot overrule the decisions of the government and its agencies on technical matters where all the advantages of expertise lie with them and not with the Judges, otherwise "it would find itself wandering amid the maize of therapeutics or bugling at the mysteries of the Pharmacopoeia" to borrow the words of Chief Justice Neely DS
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.