Karnataka HC gives rival bidder four months on KMF contract after Finance Secretary says tender terms breach procurement rules

The petitioner challenged KMF’s rate acceptance letter dated 21 February 2026 in favour of respondent No. 5 and the related work order dated 1 April 2026.

He contended that clause 3.2 of the tender prevented bidders from quoting below a 2% service charge and required the tender committee to obtain the concerned bidders’ consent if more than one bidder was L-1.

The Finance Secretary’s affidavit stated that the tender terms were inconsistent with the Karnataka Transparency in Public Procurements Act (KTTP Act) and Finance Department instructions.

KMF then relied on the urgency of festival-season production, existing raw-material stocks, and the time required to conduct a fresh tender.

Whether the challenged tender terms and resulting award could stand in light of the Finance Secretary’s statement that they were inconsistent with the KTTP Act and Finance Department instructions.

Whether, given KMF’s operational and festival-season requirements, the existing arrangement should be replaced immediately or the contract period shared temporarily while a fresh tender was conducted.

The Court referred to the KTTP Act and Finance Department instructions as governing the tender process, recording the Finance Secretary’s position that the tender terms did not comply with them; it did not identify a specific statutory provision or set out a detailed statutory test.

The Court also considered *Venu Enterprises v. State of Karnataka*, W.P. No. 32105 of 2018, in which the contract period was divided among bidders classified as L-1.

The judgment applied that precedent as support for allocating separate periods among tenderers, rather than treating the existing award as an unqualified basis for continuing the contract.

The Court noted that the Finance Secretary’s affidavit raised a compliance problem with the tender terms and stated that the tender would have to be quashed.

However, KMF’s evidence of perishable raw milk, existing stock valued at Rs. 86.67 lakh, daily turnover of Rs. 35 lakh, and substantial festival demand showed the practical consequences of halting production while a fresh tender was completed.

Taking account of the time KMF said a new tender would require and the precedent permitting a divided contract period, the Court adopted a temporary sharing arrangement and directed KMF to proceed with a fresh tender.

It directed KMF to commence the fresh tender process in December 2026 and complete it, issuing a work order in accordance with the Finance Department’s finalisation, by the end of January 2027.

Although the Court stated that the tender would have to be quashed, the operative order disposed of the petition through the temporary arrangement and fresh-tender directions; it did not expressly quash the challenged rate acceptance letter or work order.