Kerala Government Electrical ... vs State Of Kerala Represented By
2021 Latest Caselaw 3856 Ker

         IN THE HIGH COURT OF KERALA AT ERNAKULAM

                            PRESENT

              THE HONOURABLE MR.JUSTICE N.NAGARESH

 WEDNESDAY, THE 03RD DAY OF FEBRUARY 2021/14TH MAGHA,1942

                    WP(C).No.9671 OF 2020(H)


PETITIONER:


              KERALA GOVERNMENT ELECTRICAL CONTRACTORS
              ASSOCIATION,REPRESENTED BY ITS
              WORKING PRESIDENT-P.VELAPPAN NAIR,
              REGISTER NO.T/529/1995, P.W.D ELECTRICAL
              DIVISION OFFICE, PMG JN, PATTOM P.O.,
              THIRUVANANTHAPURAM-04.

              BY ADVS.
              SHRI.AJITH KRISHNAN
              SRI.G.SHRIKUMAR (SR.)

RESPONDENTS:


     1        STATE OF KERALA REPRESENTED BY
              THE CHIEF SECRETARY,
              GOVERNMENT OF KERALA,
              GOVERNMENT SECRETARIAT,
              THIRUVANANTHAPURAM-695 001.

     2        ADDITIONAL CHIEF SECRETARY,
              STATE OF KERALA,
              PUBLIC WORKS DEPARTMENT,
              GOVERNMENT SECRETARIAT,
              THIRUVANANTHAPURAM-695 001.

     3        THE CHIEF ENGINEER,
              PUBLIC WORKS DEPARTMENT-BUILDINGS,
              PUBLIC OFFICE,
              THIRUVANANTHAPURAM-695 033.
 WP(C) No.9671/2020
                             :2 :


       4      THE CHIEF ELECTRICAL ENGINEER,
              PUBLIC WORKS DEPARTMENT(ELECTRICAL WING),
              PUBLIC OFFICE, THIRUVANANTHAPURAM-695 033.

            R1-R4 BY GOVERNMENT PLEADER SRI. K.V.MANOJ KUMAR

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 03-02-2021 THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
 WP(C) No.9671/2020
                                 :3 :




                         JUDGMENT

~~~~~~~~~

Dated this the 3rd day of February, 2021

The petitioner is Kerala Government Electrical

Contractors Association. The members of the petitioner-

Association are engaged in installing, maintaining and

undertaking electrical contract works in the buildings

constructed by the State Government and various Public

Sector Undertakings. The petitioner has approached this

Court aggrieved by the proposal of the 1 st respondent-State of

Kerala to implement a composite tender system in the building

wings for all building construction tenders.

2. Electrical and civil contracts are normally tendered

separately by the respondents as the need for electrical works

arises and proper assessment thereof can be made only after

completion of the structure of the building. The Electrical

Wing of PWD used to invite tenders for carrying out electrical WP(C) No.9671/2020

work, only when the structure of the building is about to be

completed. The electrical works were being carried out by the

registered Electrical Contractors under the Public Works

Department who hold a licence granted by the Electrical

Inspectorate of the State Government. Licence is granted

only to those Electrical Contractors having sufficient

experience and prescribed qualifications.

3. While the scheme was of first awarding civil

contracts in respect of a building and then inviting tenders

from Electrical Contractors, the Government attempted to

change the system by introducing a composite tender system

for simultaneous execution of civil and electrical works. The

Government on 20.04.2008 issued Ext.P2 Circular which

stated that all civil works and electrical works should be

tendered simultaneously and electrical works carried along

with the civil works. By Ext.P3 letter dated 24.07.2009, the

Chief Engineer informed the Principal Secretary to

Government that if a composite tender system is adopted,

only a limited number of Electrical Contractors will be involved WP(C) No.9671/2020

and therefore requested that the Government may decide

whether to follow composite tendering of civil and electrical

works and to consider whether to follow the present separate

tender procedure for civil and electrical works under the

co-ordination of the concerned engineers of buildings and

electrical wings.

4. The petitioner approached this Court filing W.P.(C)

No.30556/2009, aggrieved by the proposal of composite

tender system. This Court held that none of the concerns of

the petitioner has been answered by the Government. This

Court by Ext.P4 judgment held that the system of inviting

tender only through the civil contractors will effectively deny

opportunities to the electrical contractors. It will result in

absence of any competition. This Court found that it would

violate the concept of level playing field resulting in violation of

Article 19(1)(g) of the Constitution of India. This Court further

held that Article 14 will be attracted while testing the validity of

the Government Policy. This Court accordingly quashed the

orders impugned in the writ petition and directed the WP(C) No.9671/2020

Government to reconsider the matter in the light of the

findings rendered in the judgment.

5. Pursuant to Ext.P4 judgment, the Government

issued Ext.P5 order dated 13.01.2011 directing that the

component tender document should have two separate

schedules of works, Part A for civil works and Part B for

electrical works. The Government ordered that only

contractors with electrical registration with PWD will be

awarded electrical works. In 2015, when the Executive

Engineer, Electronic Division issued a composite tender, the

petitioner filed W.P.(C) No.2618/2015, which was allowed by

this Court as per Ext.P6 judgment dated 31.03.2015.

6. But, to the surprise and detriment of the members

of the petitioner-Association, the Government has now issued

Ext.P1 order dated 26.02.2020 according sanction to

implement composite tender system. As per Ext.P1, if the

major component is civil, the existing civil contractors may

also be permitted to take part in composite tender upto their

tendering limits provided that existing civil contractor will have WP(C) No.9671/2020

to submit an undertaking that they will obtain valid

electrical/electronic licence or associate with an agency

having valid electrical/electronic licence. If the major

component is electrical work, the existing electrical contractors

may also be permitted to take part in composite tender upto

their tendering limits, provided they will give an undertaking

that they will obtain a valid civil licence/electronic licence or

associate with an agency having civil/electronic licence.

7. Ext.P1 does not provide a level playing field for the

Electrical Contractors and put them at the mercy of big civil

contracting Companies/Firms for survival. It will enhance

costs of construction thereby substantially affecting public

exchequer. Ext.P1 offends the fundamental rights guaranteed

to the members of the petitioner-Association under Articles 14

and 19(1)(g) of the Constitution of India, contends the

petitioner.

8. The 2nd respondent defended the writ petition filing

counter affidavit. The 2nd respondent stated that there were

complaints among various Departments that the civil and WP(C) No.9671/2020

electrical works are not arranged simultaneously and this has

led to splitting and cutting open of walls already plastered and

drilled and wiring activities carried out to the building. This

tendency causes damage to the building and delays the

functional use of the building even for years. Composite

tender system was accepted for timely completion of building

projects and to get quality output. The Government have

adopted the process followed by Central Public Works

Department.

9. There is no discrimination shown to electrical

contractors. On the other hand, they are given

encouragement and facility to come over to the new process.

The electrical contractors and civil contractors individually or

as joint ventures are permitted to quote in the tender, till they

attain experience in composite category. The 2 nd respondent

emphatically denied the statement that electrical requirements

can be assessed only after the structural work. There will not

be delay in executing electrical work under the composite

tendering system resulting in escalation of cost because the WP(C) No.9671/2020

completion time is fixed between 12 to 24 months.

10. In the initial stages, bidders from major component

category are allowed. If a proper category of composite

contractors is formed as soon as possible, wherein both

eligible civil as well as electrical contractors are enlisted, the

question of uneven advantage to civil category will not arise.

The objective of composite tender is to have better

co-ordination among different components of works. The

electrical part of the work in the composite tender can be

carried out only with the association of electrical contractors

and hence the role of electrical contractors is inevitable,

contended the 2nd respondent.

11. The major issue involved in adopting composite

tender was that of extending level playing field for different

categories of contractors. The Department has addressed the

issue. The new scheme will create a new category of

composite contractors. The existing civil contractors and

existing electrical contractors can very well come over to the

new category. In fact, the Government have provided ample WP(C) No.9671/2020

opportunities to them for that purpose. A civil contractor will

not be able to bid and complete the work without partnering

with registered electrical contractors, unless the civil

contractor himself is a registered electrical contractor. Under

the existing scheme of things, projects used to take 5 to 6

years for completion. Under the new scheme, maximum

completion period of major works will be from 12 months to 24

months. This time target cannot be achieved if tendering of

electrical work is done after completion of civil structural work

of a building. The fear expressed by the petitioner-

Association is therefore baseless. The writ petition is liable to

be dismissed, contended the 2nd respondent.

12. Learned Senior Counsel Sri. G. Sreekumar,

assisted by Sri. Ajith Krishnan, appearing for the petitioner

argued that if the present composite tender system is

implemented, at the time of acceptance of tender, authorities

will have no idea about the execution of electrical works which

usually can be commenced only after the execution of major

part of civil works. By efflux of time taken for execution of civil WP(C) No.9671/2020

work, the cost of electrical work will go up and there will be

change in technology and user of electrical appliances also.

The new system therefore will not produce the desired result.

13. The learned Senior Counsel pointed out that as of

now, registration is required for all components of work. Civil

work will be carried out by civil contractors and electrical work

by electrical contractors. Committing civil contractors to

undertake electrical work after obtaining an undertaking that

he will obtain electrical registration or associate with another

electrical contractor, is not a reasonable classification.

Electrical work in a building contract being a comparatively

minor component work, the category of electrical contractors

will be practically ousted from all bidding processes, since

works where electrical component is major would be very few.

Practically, the electrical contractors will be left to the mercy of

big civil contractors.

14. Placing reliance on the judgment of the Apex Court

in Natural Resources Allocation, In re, Special Reference

No.1 of 2012 [(2012) 10 SCC 1], the learned Senior Counsel WP(C) No.9671/2020

argued that the mandate contained in Article 39 of the

Constitution requires that material resources of the community

should be so distributed as best to subserve the common

good and the Composite Tender System will cause

accumulation of wealth in the hands of a few Civil Corporate

Contractors. The system will only create powerful

monopolies, violating the law laid down by the Apex Court in

Rashbihari Panda v. State of Orissa [(1969) 1 SCC 414].

Relying on the judgment of the Apex Court in Jespar I. Slong

v. State of Meghalaya and others [(2004) 11 SCC 485], the

learned Senior Counsel pointed out that exclusion of

competition in public contracts was always frowned upon by

the Apex Court.

15. The learned Senior Counsel further pointed out that

the new composite tender system will in effect curb

competition. Experts in respective components will be ousted.

Ext.P1 would prevent qualified electrical contractors from

participating in the tender proceedings. Ext.P1 therefore would

offend right of the members of the petitioner-Association WP(C) No.9671/2020

under Article 19(1)(g). The learned Senior Counsel further

argued that Ext.P1 has been issued with malafide motives and

to circumvent the directions of this Court contained in Ext.P4

judgment. By Ext.P5 Government Order, it was decided that a

composite tender must be divided into two parts and

contractors with registration in the PWD alone can participate

in the tender proceedings for execution of electrical works.

But, by Ext.P1, participation of electrical contractors in tender

proceedings is completely eliminated.

16. Ext.P1 would result in fewer participation in tender

proceedings, contended the learned Senior Counsel. Only a

favoured lot will be awarded contracts. A cartel who

monopolise the field would be formed which will takeover the

entire works. As the contractors are given freedom to

determine the estimate rate, huge loss will be caused to the

public exchequer. There will be no transparency in the tender

system. As the new system would take away the opportunity

of the members of the petitioner-Association to bid for

contracts, they will lose their livelihood offending Article 21 of WP(C) No.9671/2020

the Constitution of India. Ext.P1 is therefore liable to be set

aside, argued the Senior Counsel. Placing reliance on the

judgment of the Apex Court in Reliance Energy Limited and

another v. Maharashtra State Road Development

Corporation Limited and others [(2007) 8 SCC 1], the

counsel urged that lack of level playing field under the

proposed tender system, would make it unreasonable.

Departure from the standard of eligibility followed until now,

would make the State action unsustainable, contended the

counsel placing reliance on Ramana Dayaram Shetty v.

International Airport Authority of India and others [(1979)

3 SCC 489].

17. Sri. K.V. Manoj Kumar, learned Senior Government

Pleader, argued that composite tender system is proven to be

the best system of awarding public works now. The Central

Government, the CPWD, Central Public Sector Undertakings

and State PSUs, all follow the composite tender system, which

is more advantageous to the public exchequer. There will not

be exclusion of electrical contractors from bidding. On the WP(C) No.9671/2020

other hand, both existing civil and electrical contractors are

given opportunity to come over to the new system and

become composite contractors.

18. The learned Senior Government Pleader placed

reliance on the judgments of the Apex Court in Shri Sitaram

Sugar Company Limited and another v. Union of India and

others [(1990) 3 SCC 223] and Jal Mahal Resorts Private

Limited v. K.P. Sharma and others [(2014) 8 SCC 804] to

urge that this Court should not venture a judicial review in the

matter which is essentially a policy issue best left to the

executive. Test of reasonableness cannot be applied in these

issues, as held by the Apex Court in G.B. Mahajan v.

Jalgaon Municipal Council and others [(1991) 3 SCC 91],

contended the learned Government Pleader. No person can

claim a fundamental right to carry on business with the

Government, urged the Senior Government Pleader.

19. In fact, the present system will be more beneficial to

the electrical contractors, argued the learned Government

Pleader. Once the Electrical Contractors join a composite WP(C) No.9671/2020

project and complete the work, the entire value of both civil

and electrical component of that work will go to the credit of

the electrical contractors also. Civil contractors as well as

electrical contractors are permitted to undertake works as a

consortium. The fear expressed by the petitioner is therefore

feigned, contended the learned Government Pleader.

20. Heard.

21. The prime ground of challenge against Ext.P1 is

discrimination. A reading of Ext.P1 would show that once

Ext.P1 composite tender scheme is implemented, existing civil

contractors who do not have electrical contract registration will

not be able to bid for the bids, unless they give an undertaking

that they will associate with an electrical contractor having

valid registration. Similarly, an existing electrical contractor

also will have to undertake, unless he has a civil contract

registration, that he will associate with a registered civil

contractor. Therefore, it cannot be said that there is

discrimination between civil contractors and electrical

contractors.

WP(C) No.9671/2020

22. The argument of the petitioners is that since work

where electrical component is major, would be few and far

between, electrical contractors will be excluded from bidding in

majority of the contracts where civil work will be the major

component. This will be so, though to a lesser extent, to civil

contractors also. When electrical work is the major

component of a project, civil contractors will be put to a

comparatively disadvantageous position.

23. To ensure that contractors of minor components will

have opportunities in all public works, the Government have

taken a decision that a major contractor who has been

awarded work will have to undertake that he will associate

with minor component contractors to do minor component

works, unless the major component contractor himself is a

registered contractor for minor component work also. To

compensate such loss of opportunities to registered

contractors in the field, the Government have taken care to

design the composite tender scheme in such a manner that all

the contractors get a fair chance to be part of all contract WP(C) No.9671/2020

works and can gradually migrate to the category of composite

contractors.

24. Learned Senior Counsel for the petitioner heavily

relied on Ext.P4 judgment of this Court, which found that the

competitive tender system introduced as per Ext.P1 Circular

dated 20.04.2008 therein is unsustainable. At the outset, it is

to be noted that the system sought to be introduced as per the

said Circular dated 20.04.2008 and the system introduced as

per Ext.P1 Government Order in this writ petition are different.

25. The learned Single Judge of this Court found

Ext.P1 Circular mentioned in Ext.P4 judgment unsustainable

for the following reasons:-

(1) The additional counter affidavit of the respondents does not answer the various contentions raised by the petitioners that the electrical contractors will be totally excluded from the scene and there will be a monopoly of civil contracts.

(2) Para 20.5.1 of the PWD manual provides that the electrification works in Government buildings should be arranged only through licensed electrical contractors registered in the Department. No amendments to the PWD manual have been WP(C) No.9671/2020

made so far.

(3) Ext.P1 Circular therein does not provide for level playing field for any electrical contractors. The system introduced through Ext.P1 therein will result in absence of any competition from among electrical contractors. It will offend Article 19(1)(g) of the Constitution of India.

26. On a perusal of Ext.P1 Government Order, I find

that it cannot be said that electrical contractors will be

excluded from bidding exclusively and whenever electrical

component is the major work of a project, registered electrical

contractor can make their bid. In the case of works where the

electrical component is not the major component, the

electrical contractors can bid for the work as joint ventures/

consortium or can be a part of the project through agreements

or understanding with the successful bidder.

27. It has to be noted that if electrical component or

electronic component is the major component of any work, in

those cases the civil contractors can also participate only

through a joint venture/consortium or through an agreement or

understanding with the successful bidder. Therefore, it cannot WP(C) No.9671/2020

be said that there is a discrimination as against electrical

contractors.

28. It may be true that majority of works awarded by

Kerala Public Works Department will be having civil work as

the major component and therefore electrical contractors will

be at a disadvantageous position. But then, the 1 st

respondent has devised a scheme by which the electrical

contractors also can participate in all works where civil work is

the major component, by mandating that wherever a

registered civil contractor who himself is not a contractor

having electrical contract registration, such civil contractor will

have to undertake that he will carry out the work in association

with a registered electrical contractor. The electrical

contractors are provided with the opportunity of bidding in

works through joint venture/consortium method also.

Therefore, there will not be substantial reduction of

opportunities to the electrical contractors to participate in

Government works.

WP(C) No.9671/2020

29. In the matter of formulating conditions of a tender,

greater latitude is required to be conceded to State Authorities

unless the action is found to be malicious and misuse of

powers. If the State acts reasonably, fairly and in public

interest, interference by Courts is very restrictive. It has been

so held by the Hon'ble Apex Court in Michigan Rubber

(India) Ltd. v. State of Karnataka and others [(2012) 8 SCC

216].

30. As regards non-amendment of PWD manual, the

said ground relied on in Ext.P4 judgment is not available in the

present writ petition as Ext.P1 Government Order itself

envisages that necessary amendments will be done in the

PWD manual. As regards the lesser competition that may be

resultant of implementing Ext.P1 Government Order, it is to be

noted that Ext.P1 is the result of a policy decision of the

Government. Such decisions are taken by the Government

taking into consideration and after analysing and studying

data collected by the Government and after being convinced

that the policy decision will be more beneficial to the public at WP(C) No.9671/2020

large.

31. In the fast evolving economic, trade and industrial

scenario in the world, there would always be an element of

unpredictability on the efficacy of any policy decision. But,

considering its past experience, the State may have to resort

to and implement such decisions boldly. As long as such

policy decisions do not contravene any of the provisions of

Part III of the Constitution of India and as long as such

decisions are not found to be devoid of any reasons or

unconstitutional, courts of law shall not intervene. Such

decisions are best left to the Executive Authorities.

32. The learned Senior Counsel emphasised on Ext.P7

communication of the Additional Chief Secretary of Finance

Department addressed to the Chief Engineer, PWD

(Buildings), wherein the Additional Chief Secretary informed

that for all building works, the Public Works Department

should mandatorily move for simultaneous tenders for civil and

electrical works to be awarded simultaneously to separate

contractors. The contention of the petitioner is that when the WP(C) No.9671/2020

Finance Department represented by no less than an

Additional Chief Secretary has given a mandatory direction,

the Public Works Department cannot ignore the same and go

for composite tender system as envisaged in Ext.P1. Ext.P7

communication can be only taken as an interdepartmental

communication wherein one Department has communicated

its view on the aspect to another Department. The

Government have to weigh the views and opinions of all

Departments concerned and arrive at a final decision. Ext.P1

order signed by the Governor appears to be culmination of

such a process made by the Government. Ext.P1 therefore

cannot be settled on the basis of Ext.P7.

For all the aforesaid reasons, this Court finds that

there is no justifiable reason to interfere with Ext.P1

Government Order on any of the grounds raised by the

petitioner. The writ petition is therefore dismissed.

Sd/-

N. NAGARESH, JUDGE

aks/25.01.2021 WP(C) No.9671/2020

APPENDIX PETITIONER'S EXHIBITS:

EXHIBIT P1 TRUE COPY OF THE GOVERNMENT ORDER GO(MS) NO.27/2020/PWD DATED 26.02.2020 ISSUED BY THE 2ND RESPONDENT.

EXHIBIT P2 TRUE COPY OF THE CIRCULAR DATED 20.04.2008 ISSUED BY THE 1ST RESPONDENT.

EXHIBIT P3 TRUE COPY OF THE LETTER DATED 24.07.2009 ISSUED BY THE 3RD RESPONDENT.

EXHIBIT P4 TRUE COPY OF THE JUDGMENT DATED 19.11.2010 IN WP(C) NO. 30556/2009.

EXHIBIT P5 TRUE COPY OF THE GOVT.ORDER G.O(RT) NO.65/2011/PWD DATED 13.01.2011 ISSUED BY THE 2ND RESPONDENT.

EXHIBIT P6 TRUE COPY OF THE JUDGMENT DATED 31.03.2015 IN WP(C) NO. 2618/2015.

EXHIBIT P7 TRUE COPY OF THE LETTER DATED 11/10/2019 ISSUED BY THE ADDITIONAL CHIEF SECRETARY FINANCE TO THE 3RD RESPONDENT.

EXHIBIT P8           TRUE     COPY      OF       THE      AGREEMENT
                     NO.SE(K)57/2016/17    DATED    30/01/2017   IN

RELATION TO WORK OF CONSTRUCTION OF GOVT.

MEDICAL COLLEGE, PALAKKAD.

EXHIBIT P9           TRUE COPY OF THE LETTER NO.S.J.E.03/2015,
                     DATED     7/7/2015,    ISSUED     BY  THE
                     SUPERINTENDENT, SUB JAIL, ERNAKULAM

EXHIBIT P10          TRUE COPY OF THE RELEVANT PAGES OF WORK
                     SCHEDULE ISSUED TO THE CONTRACTOR.

EXHIBIT P11          TRUE COPY OF THE RELEVANT PAGE OF        WORK
                     SCHEDULE ISSUED TO THE CONTRACTOR.

EXHIBIT P12          TRUE COPY OF THE LETTER NO.F2/510/2013
                     DTD.29/06/2013,      ISSUED     BY  THE
                     SUPERINTENDING ENGINEER, KOZHIKODE.
 WP(C) No.9671/2020




EXHIBIT P13          TRUE COPY OF THE ORDER NO.B3-6/2003/CT

DATED 02/02/2018 ISSUED BY THE PRINCIPAL SECRETARY, TAX DEPARTMENT.

EXHIBIT P14 TRUE COPY OF THE GOVERNMENT ORDER G.O.(RT) NO.902/2015/PWD DATED 29/6/2015, ISSUED BY THE 2ND RESPONDENT.

EXHIBIT P15 TRUE COPY OF THE LETTER DATED 16/10/2015, ISSUED BY THE 3RD RESPONDENT PURSUANT TO EXHIBIT P14.

EXHIBIT P16 TRUE COPY OF THE GOVERNMENT ORDER G.O.(RT) NO.1384/2018/PWD DATED 7-9/2018, ISSUED BY THE 2ND RESPONDENT.

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