Sainath Sales And Services Pvt. ... vs Government Of Nct Of Delhi & Anr.
2019 Latest Caselaw 716 Del

$~59
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
%                         Date of Decision : 5th February, 2019

+                         W.P.(C)No.1170/2019

       SAINATH SALES AND SERVICES
       PVT. LTD. & ANR.                     ..... Petitioners
                      Through : Mr. Abhay Kumar, Mr. Saurabh
                                Mishra and Mr. Himanshu Pal
                                Singh, Advs.

                          versus

       GOVERNMENT OF NCT OF DELHI & ANR. ... Respondents
                   Through : Mr. Sanjoy Ghose, Additional
                             Standing Counsel, GNCTD.

CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN

S. RAVINDRA BHAT, J. (ORAL)

CM Nos.5269-70/2019 Allowed, subject to just exceptions.

The applications are disposed of.

W.P.(C)No.1170/2019 & CM No.5268/2019

1. The petitioners, security and sanitation providing agencies, complain of violation of their rights under Articles 14 and 19(1) (g) of the Constitution of India and seek directions for setting aside certain conditions (Para 1.4, 2.2.9 and 3.3.2 of the Instructions to Bidders) in the Notice Inviting Tenders ("NIT" hereafter) issued by the

respondent, Govt. of NCT of Delhi ("GNCTD" hereafter) for providing Services of „Aayas‟ and „Malis‟ issued on 07.01.2019.

2. The petitioners are agencies engaged in providing services of security and sanitation including in the field of providing housekeeping, manpower etc., like Aayas and Malis in Government institutions. Both of them are existing Service Providers to the GNCTD. NIT invited tenders for providing services of Aayas and Malis in Govt. Schools in Delhi. A total of 790 Aayas are required in 447 schools and a total of 98 Malis are required in 98 Schools. The classification of the post under the NIT is "Unskilled". The estimated cost of the tender is approx. `18.50 crore per year. The term of the tender is to be for 2 years initially which is extendable for further 2 years subject to satisfactory performance. The Cost of Service per month, excluding premium, is `1.463 Cr.

3. It is submitted that the said tender documents contain some impugned illegal and arbitrary conditions for qualification for Bidders with complete deviation from the earlier tender for same/similar work without any reasonable basis. By insisting on such stringent conditions, service providers like the Petitioners would not be able to apply, which will render them ineligible. It is urged that such conditions would completely destroy the basic competition amongst the service providers for public work and would only confine the zone to few chosen large agencies only.

4. The conditions objected to by the petitioners are firstly, that Clause 1.1.1 states that the authority (GNCTD) proposes to engage services of "Aayas and Malis from a License Service Provider".

However, there is no clarification provided by the GNCTD since the definition of "Licensed Service Provider" is not defined anywhere in the Notice for Invitation of Tender and therefore creates ambiguity. Thus, the terms need to be clarified by the GNCTD. Secondly, it is submitted that Clause 1.4 stipulates that each person who is engaged for not less than 9 months shall be awarded marks viz. 1 mark for unskilled, 2 marks for semi-skilled and 3 marks for skilled worker. It is submitted that this condition does not have any nexus with the objects ought to be achieved by the contract as the NIT itself stipulates that all the Aayas and Malis are in the category of "Unskilled workers". Therefore, it is submitted that the aforesaid term is self-contradictory and untenable in law. It is argued that Clause 1.4, stipulates that to be eligible a bidder must have a cumulative three- year score equal to 10 times the number of personnel proposed to be procured under RFP viz. 888 X10 = 8,880. It is submitted that even this condition has, no nexus with the object of the contract whatsoever as the same reeks from the malice that the small agencies are wholly rendered ineligible, despite the fact that they are absolutely competent to provide the services and in fact, have been providing services to the department which is evident from the fact the petitioner No.1 is still performing the contract awarded by the GNCTD for Housekeeping and Sanitation Services, the invitation for which was made on05.12.2014. Thus the petitioners despite having performed similar work in the past are now made ineligible by this condition. In this context, it is urged that typically in most public contracts, the pre- requisite of the eligibility is usually 30-40%, but to make this

condition more stringent, it can be raised to 100%. There are various agencies who have successfully deployed a manpower of 1000-1500 people in a single contract but they are not eligible as per these new unreasonable terms which shows the duality and arbitrary nature in which the terms are incorporated into the RFP. Therefore, the pre- requisite of 10 times the required strength, is questioned as arbitrary and illegal.

5. Learned counsel also urges that Clause 1.4 is blatantly violative of the Guidelines issued by Central Vigilance Commission of India, Govt. of India wherein they have stated that while considering "Experience" as a prequalification, similar work can be assessed on various grounds viz. having completed 3 works of approximately 40% of the value of the present contract, or, having completed 2 works of approximately 50% of the value of present contract, or, having completed 1 works of approximately 80% of the value of present contract. However, insisting upon a capacity of 10 times the present work is unreasonable.

6. The petitioners also impugn Clauses 2.2.2 / 2.2.3 i.e. Financial Capacity which stipulates that the bidder shall bear a minimum Net Worth wherein the average annual turnover for past 3 years must be calculated and it should be 30% of the same. It is submitted that the financial capacity of the bidder is incongruent with the experience stipulated by Clause 1.4. This betrays inherent inconsistency in the terms of the RFP. Further clause 2.2.9 stipulates other eligibility conditions wherein Clause 2.2.9(a)(i) states that if a bidder has been awarded more than 3 assignments in the preceding 1 year to provide

services to the authority (namely, the Directorate of Education, GNCTD), he is rendered ineligible to apply. Similarly, in Clause 2.2.9(a)(ii) stipulates that if a bidder has been awarded more than 10assignments in the preceding 1 year to provide services to Govt. of NCT of Delhi, including any department, PSU, or any other entity owned or controlled by Govt. of NCT of Delhi, he is rendered ineligible to apply. It is argued that this clause of restriction is actually not a restriction but to ensure that the big contractors are not rendered ineligible, and are saved rendering them eligible. The petitioners also urge that Clause 2.2.9(b) which is in the form of a Proviso further dilutes the rigour of Clause 2.2.9(a) by stating that, if the total manpower is less than 500 people, then even if the bidder had been awarded more than 3 assignments, he would still be eligible. Similarly, it is further stated that if the total manpower is less than 5000people, then despite having been awarded more than 10assignments, the bidder would still be eligible. It is submitted that this proviso-like Clause 2.2.9(b) is even more mischievous than its main Clause 2.2.9(a), since it further dilutes the restrictions stipulated in 2.2.9(a). Therefore, it is arbitrary, unreasonable and opposed to public policy.

7. Counsel lastly points out that Clause 3.3.2 prescribes that out of all the prequalified bidders shall be ranked on the basis of their technical score, then only 5 shall be shortlisted for evaluation of their Financial Proposal. It is submitted that the mischief sought to be achieved by this short-listing is that these 5 shortlisted bidders can pool up and quote higher rates thereby causing loss to the public

exchequer. Therefore the same deserves to be set-aside and a more rational and reasonable process needs to be inserted in place of this condition.

8. The relevant tender conditions which the petitioners are aggrieved by, are reproduced below:

"1.4 Similar works

The bidder should have experience to have undertaken similar work or related work that is engaging unskilled, semi-skilled and skilled workers -in Government/Semi Government/Public Sector Undertaking/autonomous institution during a period of 3 (three) years preceding the bid due date. For each person engaged for a period of not less than Nine Months under an eligible assignment, a score of 1 (one) for unskilled worker, 2 (Two) for semiskilled worker and 3(Three) for skilled worker shall be awarded. To be eligible for pre-qualification, a bidder should have a cumulative three-year score equal to 10 (ten) times the number of personnel proposed to be procured under the RFP.

****************** ****************** 2.2.8 Notwithstanding anything to the contrary contained herein, in the event that the Bid Due Date falls within 3 (three) months of the closing of the latest financial year of a Bidder, it shall ignore such financial year from the purposes of its Bid and furnish all its information and certification with reference to the 3 (three) years or 1 (one) year, as the case may be, preceding its latest financial year. For the avoidance of doubt, financial year shall, for the purposes of a Bid hereunder, mean the accounting year followed by the Bidder in the course of its normal business.

2.2.9 Other Eligibility conditions shall include:

(a) No Bidder shall be eligible for consideration hereunder if it has been awarded during the period of I (one) year preceding Bid Due Date.

(i) more than 3 (three) assignments to provide manpower services to the Authority or

(ii) more than 10 (ten) assignments to provide manpower services to the Government of the NCT of Delhi, including any Department, public sector undertaking, autonomous institution or any other entity owned or controlled by the Government of the NCT of Delhi:

(b) The restriction in Sub-clause (i) shall not apply if the total manpower provided to the Authority is less than 500 (five hundred) persons and the restriction in Sub-clause (ii) shall not apply if the total manpower provided to any and all entities specified therein is less than 5,000 (five thousand) persons.]

****************** ****************** 3.3.1 The credentials of eligible bidders shall be measured in terms of their Technical Score. For a Bidder to be pre- qualified hereunder, he should meet all the conditions of eligibility and have a Technical Score equal to 10 (ten) times the number of Personnel proposed to be procured under this RFP.

3.3.2 The pre-qualified Bidders shall then be ranked on the basis of their Technical Scores and based on such ranking, not more than 5 (five) shall be short-listed for evaluation of their Financial Proposals in the second stage."

9. It is well settled that the court‟s jurisdiction to interfere in subjects, such as setting of terms by the government or any executive agency, for inviting tenders, is very narrow. The courts will use their discretion upon the petitioner establishing illegality, procedural

irregularity or mala fides in regard to the award of tenders. In Afcons Infrastructure Ltd v Nagpur Metro Rail Corporation Ltd & Ors., (2016) 16 SCC 818, the Supreme Court held as follows:

"15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given."

10. The tender conditions which the petitioners impugn in this petition are, to put it mildly from their perspective, inconvenient. Undoubtedly, these conditions have the effect of restricting participation of certain agencies. The petitioners paint a Scylla and Charybdis picture in stating that if tender conditions in Clause 1.4 is satisfied, they would be rendered ineligible because of condition 2.2.9. As the court sees the matter, no such consequence would occur. The difference between the two stipulations is that while the first (Clause 1.4) is aimed at limiting participation (toward previous experience) based on NCT contracts, the latter (Clause 2.2.9) is meant to widen participation, by defining similar works as contracts with all public agencies and PSUs and not only Govt. of NCT. A larger- and more robust public interest perspective appears to have prevailed with the policy makers, who have ensured that repetitive bidding by

contractors, who have specialized in Govt. of NCT tenders and "bagged" them in the past are restricted; at the same time, these conditions ensure a wider participation from amongst newer service providers, which would ensure healthy competition and reduce dependence on the existing few agencies. The court is of the opinion that no exception per se can be taken, to this objective or the manner of its implementation.

11. As far as the objection to Clause 3.3.2 on the ground that it permits screening goes, this too cannot be characterized as arbitrary. There may possibly be situations when the number of eligible bidders may be unduly large; the limiting of the number to ensure participation by agencies who have a sounder footing is not necessarily arbitrary.

12. For the above reasons, this court is of opinion that there is no merit in the present writ petition. It is accordingly dismissed, without order on costs.

S. RAVINDRA BHAT, J

PRATEEK JALAN, J FEBRUARY 05, 2019