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Issues Involved:
1. Maintainability of the petition under Article 226 of the Constitution of India. 2. Validity of Annexure-L and whether it requires judicial interference. Issue-wise Detailed Analysis: 1. Maintainability of the Petition under Article 226 of the Constitution of India: The respondents contested the jurisdiction of the Karnataka High Court, arguing that no cause of action arose within its territorial limits. They relied on Article 226(2) of the Constitution and the Supreme Court judgment in Oil and Natural Gas Commission v. Utpat Kumar Basu. Conversely, the petitioner argued that part of the cause of action arose within the territorial jurisdiction of the Karnataka High Court, as certain equipment was to be installed in Karnataka. The court examined Article 226(2), which states that a High Court can exercise its power if the cause of action, wholly or in part, arises within its jurisdiction. It referenced several judgments, including D. Munirangappa v. Amidayala Venkatappa and Anr., which clarified that even a fraction of the cause of action is sufficient to confer jurisdiction. The court found that part of the cause of action did indeed arise within Karnataka, as the equipment was to be supplied there. Therefore, it held that the petition was maintainable under Article 226, rejecting the preliminary objection regarding jurisdiction. 2. Validity of Annexure-L and Whether it Requires Judicial Interference: The petitioner challenged Annexure-L, an endorsement rejecting their bid as non-responsive based on the tender conditions. The petitioner argued that the rejection was arbitrary and not based on the bid document. The court examined various clauses of the bidding documents, including Clauses 5, 11, 24.4, and 26.2, which outline the requirements for a responsive bid and the grounds for rejection. The court noted that the petitioner's bid included an additional annexure stating that new taxes/levies/duties added by the government after the date of tender opening would be charged extra. This annexure was not part of the prescribed bid documents and was used as the basis for rejecting the bid. The court found that the rejection based on this annexure was arbitrary and outside the scope of the bid documents. It referenced the principles of judicial review, particularly the Wednesbury test, which limits the court's role to examining the legality, rationality, and procedural propriety of administrative actions. The court concluded that Annexure-L was arbitrary and required to be set aside. However, it recognized the time-bound nature of the project and the involvement of World Bank funds. Therefore, it directed the respondents to reconsider the petitioner's bid strictly according to the contract terms and bid documents. If the petitioner's bid met the requirements, the respondents were to cancel the award to the third respondent. The court also directed the parties to maintain the status quo for 15 days to allow for reconsideration. Conclusion: The petition was allowed, and Annexure-L was set aside. The matter was remitted to the second respondent for reconsideration within 15 days, with directions to cancel the award to the third respondent if the petitioner's bid met the tender conditions. The court emphasized the need for a decision based on the bid documents and the observations made in the order. Each party was to bear its own costs.
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