Delhi High Court
M/S Stallion Security vs Union Of India And Ors. on 26 November, 2018
$~17
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 31.10.2018
Pronounced on: 26.11.2018
+ W.P.(C) 3309/2018 & CM Appl. Nos. 12989-12990/2018
M/S STALLION SECURITY ..... Petitioner
Through: Mr. Sudhanshu Tomar, Adv.
versus
UNION OF INDIA AND ORS. ..... Respondents
Through: Mr. Vinod Diwakar, CGSC
with Mr. Kashish Bajaj, Adv.
for R-1 to 3.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
MR. JUSTICE PRATEEK JALAN
%
1. This writ petition concerns a tender (No. NIC/PTS/2017/07)
issued by the National Informatics Centre, New Delhi ("NIC") on
May 08, 2017 for provision of housekeeping and pest control services
at its headquarters in New Delhi (hereafter, "the subject tender").
2. The petitioner and the fourth respondent no. 4 herein (viz., R. K.
Jain & Sons Hospitality Services Pvt. Ltd- hereafter "RKJ")
participated in the subject tender and were found technically qualified.
In fact, the petitioner was providing these services to NIC under a rate
contract dated June 23, 2016, initially for the period July 01, 2016 to
June 30, 2017, which was thereafter extended until March 31, 2018.
The subject tender, however, culminated in the award of a contract
(Rate Contract No. NIC/TPS/2017/07/RC/01) dated March 07, 2018 in
favour of Respondent No. 4 for the period April 01, 2018 to March 31,
2019. This has led to the institution of these proceedings.
3. The petitioner has agitated two grievances before this Court:
(a) That RKJ's bid was accepted without following the process
of opening and uploading the financial bids of the bidders
on the designated website, as required for an e-tender.
(b) The petitioner has produced the bid submitted by it and the
bid submitted by RKJ to say that the latter did not provide
for payment of Employees' Provident Fund ("EPF") in
respect of two categories of employees, which led to an
artificial lowering of its bid. It is the contention of the
petitioner that, if the amounts provided by it for EPF in
respect of those two categories are ignored, then its bid
would be lower than that of the Respondent no. 4.
4. NIC filed a counter affidavit dated May 09, 2018 to the writ
petition, and also filed an additional affidavit dated October 31, 2018
dealing specifically with the question regarding non-opening of the
financial bids.
Re: non-opening of financial bids
5. In support of its contention that the financial bids had to be
opened and uploaded prior to the acceptance of the tender, the
petitioner relies upon an Office Memorandum dated November 30,
2011 issued by the Public Procurement Cell, Department of
Expenditure, Ministry of Finance, which states inter alia as follows:
"e. Ministries/ Departments, CPSEs and autonomous/
statutory bodies that are already publishing their tender
enquiries on www.tendersgov.in and/or on their
respective websites, shall ensure that their tender
enquiries are simultaneously published / mirrored on the
CPP Portal also. They may also ensure that all
corrigenda and details of the contract awarded as a
result of the tender enquiry, are also published on the
CPP Portal."
6. NIC, denies the petitioner's argument, and contends that the
financial bids were opened on September 01, 2017 and all technically
qualified bidders were invited to participate in that meeting. In fact,
the representative of the petitioner was present. At the meeting, and in
terms of the tender documents, NIC declared the "Grand Total Value"
(or "GTV") of each bidder, and identified the RKJ as the lowest
bidder based on this value. As the GTV represented the amount that
NIC would be liable to pay for the services deployed, there was no
requirement for further analysis of the detailed financial bids. It is also
contended by NIC, in the additional affidavit filed by it, that the GTV
was shown to all bidders on the Central Public Procurement Portal.
NIC has further stated that the petitioner was also empanelled on the
same selection criterion and process in the last tender.
7. NIC has also placed the tender documents before the Court as
part of the counter-affidavit filed by it. The tender being for a rate
contract, it was provided that the bidders were required to quote rates
for various items specified in Annexure 12 thereof, including
manpower, materials, pest control services and monthly agency
charges. Several details were also required to be provided under each
of these broad heads. Based on these rates for each of the line items,
the bidder was required to calculate the GTV of its bid. The GTV so
calculated was to be declared in Annexure 11 of the bid. The process
for financial evaluation of the bids was laid out in Annexure 9, as
follows:
"Financial Evaluation"
The lowest quoting vendor (LQ1)
will be determined as mentioned
below:
1) First Annexure -11 will be
opened for all the technically
qualified bidders on a specified
date.
2) LQ1, LQ2, LQ3..... bidders will
be decided on the Gross Total
Selection Criteria
Value (GTV) of the Annexure -11.
A for deciding L1
Vendor and lowest 3) After the LQ1 vendor is decided
unit rate for each on the Gross Total Value (GTV),
item Annexure-12 submitted by LQ1
Vendor will be opened for deciding
the lowest individual unit rates for
all the items of this tender.
4) In case LQ1 bidder has failed to
quote for all the items in Annexure-
12, his bid will be rejected, his
EMD will be forfeited and the
tender re-floated.
5) In the event of any mismatch in
the GTV value mentioned at
Annexure-11 and total of
Annexure-12 of the LQ1 Vendor,
the following criteria will be
adopted to remove the discrepancy
between these two values:
a) When Grand Total Value
given in Annexure -11 is
greater than the Grand Total
Value given in Annexure-12:
The value given in
Annexure-12 will be taken
as the value of Annexure-
b) When Grand Total Value
given in Annexure-11 is less
than the Grand Total Value
given in Annexure-12:
The value given in
Annexure-12 will be
replaced with the value
given in Annexure-11 and
the item wise value for each
item in Annexure-12 will be
reduced on Pro-Rata basis
and consequently unit
values will be worked out.
6) Thus the LQ1 vendor and the
lowest unit rates (for individual
items/services) shall be decided as
per the procedure mentioned above.
B Vendor Selection Only 1 (One) Vendor will be
selected.
8. It appears from the record that this is in fact the process that was
followed by NIC. Having compared the GTV declared by the
technically qualified bidders, NIC awarded the contract to the lowest
tenderer. The petitioner has also not denied that it received prior
intimation of the date of opening of the financial bids, or that its
employee attended the meeting wherein the financial bids were
opened. However, aside from a bare plea that the said employee was
not authorized for the purpose of the tender process, the petitioner has
urged that the financial bids also ought to have been uploaded on the
procurement website in the interest of transparency and to fulfill the
guidelines of the e-tender process.
9. The law regarding interference with tender processes and award
of contracts is now well settled: courts are to exercise restraint, be
guided by the public interest involved, and to interfere only when the
process is vitiated by mala fides or irrationality. In Jagdish Mandal v.
State of Orissa, (2007) 14 SCC 517 (paragraph 22), the Supreme
Court held as follows:
"Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness,
bias and mala fides. Its purpose is to check whether
choice or decision is made "lawfully" and not to check
whether choice or decision is "sound". When the power
of judicial review is invoked in matters relating to
tenders or award of contracts, certain special features
should be borne in mind. A contract is a commercial
transaction. Evaluating tenders and awarding contracts
are essentially commercial functions. Principles of equity
and natural justice stay at a distance. If the decision
relating to award of contract is bona fide and is in public
interest, courts will not, in exercise of power of judicial
review, interfere even if a procedural aberration or error
in assessment or prejudice to a tenderer, is made out.
The power of judicial review will not be permitted to be
invoked to protect private interest at the cost of public
interest, or to decide contractual disputes. The tenderer
or contractor with a grievance can always seek damages
in a civil court. Attempts by unsuccessful tenderers with
imaginary grievances, wounded pride and business
rivalry, to make mountains out of molehills of some
technical/procedural violation or some prejudice to self,
and persuade courts to interfere by exercising power of
judicial review, should be resisted. Such interferences,
either interim or final, may hold up public works for
years, or delay relief and succor to thousands and
millions and may increase the project cost manifold.
Therefore, a court before interfering in tender or
contractual matters in exercise of power of judicial
review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone;
or
Whether the process adopted or decision made is so
arbitrary and irrational that the court can say: "the
decision is such that no responsible authority acting
reasonably and in accordance with relevant law could
have reached";
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226. Cases involving
blacklisting or imposition of penal consequences on a
tenderer/contractor or distribution of State largesse
(allotment of sites/shops, grant of licences, dealerships
and franchises) stand on a different footing as they may
require a higher degree of fairness in action."
10. After a survey of the authorities on the subject, the Supreme
Court in Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8
SCC 216 (paragraph 24), reiterated the tests formulated in Jagdish
Mandal (supra). In an earlier judgment, Reliance Airport Developers
(P) Ltd. v. Airports Authority of India, (2006) 10 SCC 1 (paragraph
91), the Supreme Court has cited the following dictum of the Queen's
Bench in R. v. Deptt. of Constitutional Affairs [2006 All ER (D) 101]:
"It is not every wandering from the precise paths of best
practice that lends fuel to a claim for judicial review."
11. Bearing these tests in mind, this court is of the view that the
absence of uploading of the financial bids cannot vitiate the entire
tender process. The purpose of uploading each stage of the tender
process on the designated website is indeed, as submitted on behalf of
the petitioner, to ensure transparency and fair dealing. However, in the
present case, there was no such opacity that justifies quashing the
tender process in its entirety, and the consequent award of the
contract. The concerned bidders were given an opportunity to attend
the opening of the financial bids, and the bids were evaluated in terms
of the tender conditions, in the presence of the representatives who
chose to attend. In the circumstances, we do not find the process
employed by NIC to be mala fide or irrational, calling for our
interference, nor do we consider that the quashing of the contract
would be in the public interest.
Re: EPF contributions
12. The controversy raised by the petitioner with regard to the rates
quoted by RKJ for various categories of employees, is that the said
party had not provided for EPF contributions in respect of two posts,
viz. Supervisor and Manager. In this connection, the petitioner has
averred as follows in paragraphs 10 and 12 of the Writ Petition:
"10. That the partners of petitioner, then compared the
financial bid given by the petitioner and the rate contract
awarded to the firm of respondent No. 4 and found that
the respondent No. 4 is not adding Employees Provident
Funds (EPF) contribution of supervisor and Manager.
The supervisors are three in number whereas the post of
Manager is single. It may be mentioned that EPF
Contribution @ 13.15% on wages upto ₹ 15000/- is
mandatory under law. The Rate contract awarded to the
respondent No. 4 is not adding the mandatory EPF
Contribution of 13.15% on the post of Supervisor and
Manager. The comparison chart of the financial bid of
the petitioner and the Rate contract awarded to the
respondent No. 4 is also made and annexed as Annexure
P-9 for kind perusal of this Hon‟ble court.
It is also worthy to mention that after deduction of the
EPF Contribution on the post of Supervisors and
Managers, the financial bid of the petitioner is lesser
than of the respondent No. 4. Under that circumstance,
the petitioner will be in the category of L-1.
XXX XXX XXX
12. That it may also be mentioned here that the
employees Provident Fund Contribution is mandatory in
nature and the statutory wage ceiling has been raised
from ₹ 6500/- to ₹ 15000/-. The copy of letter dated
28.08.2014 issued by the employees Provident Fund
Organization, Ministry of Labour, Govt. of India is
annexed herewith and marked as ANNEXURE P-11. It
is also worthy to mention here that the respondent No. 2
& 3 paid the EPF contribution @ 13.15% on the post of
Supervisor and Manager who are getting, salary more
than ₹ 15000/- per month in respect of the ongoing
contract of the petitioner uptil the period 31.03.2018 and
the said payment has been paid to the concerned
employee by the petitioner."
13. The petitioner also relied upon a comparison of the financial
bids submitted by it, and by the RKJ to argue that, if the EPF
contributions provided by it are ignored, it would emerge as the lowest
tenderer. The chart prepared by the petitioner is reproduced below:
COMPARISON RATE OF STALLION SECURITY & R.K.JAIN SONS HOSPITALITY
SERVICES (P) Ltd.
STALLION SECURITY R K Jain & SONS HOSPITALITY SERVICES (P) Ltd.
SI. Particulars Cleaning Supervisor Manager Particulars Cleaning Supervisor Manager©
NO Personnel [b] [c] Personnel [b]
[a] [a]
1 Basic Pay + 13,584.00 16,468.00 17,916.00 Basic Pay + 13,584.00 16,468.00 17,916.00
DA* DA*
2 EPF 1786.29 1972.50 1972.50 EPF 1,786.30 NIL NIL
13.15% on 13.15%
15,000
3 ESI 4.75% 645.24 782.23 851.01 ESI 4.75% 645.24 782.23 851.01
4 Bonus 583.10 583.10 583.10 Bonus 1,131.55 1,371.78 1,492.40
8.33% on 8.33%
7,000/-
5 Cost per 16,598.63 19,805.83 21,322.61 Cost per 17,147.09 18,622.01 20,259.41
employee [ employee [
1 to 4] 1 to 10]
employee employee
7 Total Cost 6,47,346.57 59,417.49 21,322.61 Total Cost 6,68,736.51 55,866.03 20,259.41
[S. No. 5 X [S. No. 5 X
Sl. No. 6] Sl. No. 6]
8 Total of S. No. 7 of column a+b+c 7,28,086.67/- Total of S. No. 7 of column a+b+c 7,44,861.95/-
9 Material Charges 1,26,583/- Material Charges 1,06,215/-
10 Pest Control Services 8,500/- Pest Control Services 7,000/-
11 Monthly Agency Charges 15,000/- Monthly Agency Charges 17,800/-
12 Machines & Consumables 8,000/- Machines & Consumables 7,000/-
Grand Total Value 8,86,169.67/- Grand Total Value 8,82,876.95/-
Grand total after deducting EPF of for
Supervisor and Manager.
8,86,169.67 - 7890 = 8,78,279.67 8,78,279.67/-
14. It is clear from a reading of the above that, even according to
the petitioner, EPF contributions are mandatory only for employees
who are at a salary of less than ₹15,000 per month. The chart prepared
by the petitioner shows that the RKJ proposed a salary in excess of ₹
15,000 per month for the posts of Supervisor and Manager. The RKJ
can then not be faulted for failing to provide for EPF payments for
these two categories of employees. We notice that although the
petitioner's bid for these two categories was also in excess of ₹ 15,000
per month, it did provide for EPF payments to them and the GTV of
its bid was consequently higher than that of the Respondent no. 4.
Faced with such bids, NIC processed them on the basis of the GTV,
i.e. the cost that it would have to bear in each case. Such a course
cannot be termed as arbitrary or unreasonable, warranting interference
by the Court.
15. The petitioner's contention that in the past, NIC had been
paying EPF to persons earning more than ₹ 15,000 per month can also
be of no assistance to it. If a bidder chose to provide for a benefit that
may not be mandatory, and included it in a bid, which was then
accepted, NIC would have been obliged to pay that amount. This
however cannot compel it to insist, in a subsequent tender, that all
bidders must provide for such non-mandatory payments.
16. The tender documents also make it quite clear that NIC's
concern was with the amount that it would have to pay out, based on
the bid submitted by each tenderer. Compliance with statutory
provisions, applicable laws, rules, notifications etc. was within the
province of the bidder. Clause 15.4 of the bid documents makes this
position clear:
"15.4 The Empanelled Vendor shall at his own cost
comply with all the statutory provisions, laws, rules,
orders, notifications, etc. whether issued by Central or
State or Local Government as applicable to him and to
this contract from time to time while discharging his
responsibilities under this contract and indemnify the
Department against any loss which accrues to the
Department directly or indirectly on account of
commission/ omission of his responsibilities under this
contract."
17. In these circumstances, we are of the view that NIC was
justified in comparing each of the bids on the basis of the figures
quoted therein. The petitioner chose to pay EPF to those earning over
₹ 15,000 per month (and to include that as part of its bid), and the
Respondent no. 4 did not. Such payment not being mandatory, even
according to the petitioner, we cannot accept its contention that the bid
of Respondent no. 4 should have been rejected on this ground.
Conclusion
18. For the reasons aforesaid, we do not find the tender process to
be arbitrary or malafide on either of the grounds urged on behalf of the
petitioner. The writ petition is dismissed, but without any order as to
costs.
PRATEEK JALAN, J
S. RAVINDRA BHAT, J
November 26, 2018
„pv‟
