Kerala High Court
Irikkur Construction Company vs The Project Director on 15 February, 2024
Author: Devan Ramachandran
Bench: Devan Ramachandran
WP(C) No.16780/2023 1/8
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
Thursday, the 15th day of February 2024 / 26th Magha, 1945
IA.NO.1/2024 IN WP(C) NO. 16780 OF 2023 (V)
PETITIONER/PETITIONER :
IRIKKUR CONSTRUCTION COMPANY, MH TOWER, IRIKKUR P.O., IRUKKUR,
KANNUR - 670593, REPRESENTED BY ITS MANAGING PARTNER
RESPONDENTS/RESPONDENTS :
1. THE PROJECT DIRECTOR, KERALA ROAD FUND BOARD, BSNL BUILDING, PMG
JUNCTION, TRIVANDRUM - 695003
2. URALUNGAL LABOUR CONTRACT CO-OPERATIVE SOCIETY LIMITED, MADAPPALLI
COLLEGE P.O., VADAKARA, KOZHIKODE - 673102, REPRESENTED BY ITS
CHAIRMAN
3. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, PUBLIC WORKS
DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695001
Application praying that in the circumstances stated in the
affidavit filed therewith the High Court be pleased to amend the writ
petition incorporating the additional paragraphs 20 to 28 and, Grounds I
to S and additional prayers (g) and (h) 19 and to accept the additional
documents produced along with the affidavit and marked & produced as
Exhibit P-12, P-13 and P-14 on file.
2. The following be added as Paras 20 onwards to the Writ Petition:
20. The very stand taken by the first respondent in this regard is
against the government orders and prevailing law. It is true that as per
Exhibit P5 Labour Contract Societies are entitled for Price Preference up
to 10% over the quoted amount of the lowest bidder. That is the typical
condition that the bidder with the lowest evaluated Bid price will be
awarded the work as been modified such that if there is an approved labour
Contract Society within 10% of the quoted amount of the lowest bidder, the
work will be awarded to the Labour Contract Society.
21.The Exhibit P-5 government order is illegal, arbitrary, and
against the fundamental rights of petitioner. It is further submitted that
by implementing Exhibit P-5 huge loss will be caused to the Public
Exchequer as the Bid of the Labour Contract Societies are not the lowest
Bid but preference to be given. Thus, preference to the Labour Contract
Societies in the high-priced bids would certainly be a loss to the
Government itself.
22 It is submitted that the conditions extracted above flow from
Exhibit P-5 order as well as a series of earlier notification that sought
to confirm certain benefits on Labour Contract Societies. It is further
submitted that Government initially issued an order to entrust work on
preferential terms and conditions to Labour Contract Corporative
WP(C) No.16780/2023 2/8
societies, as per Government Order dated 13/11/1997. A true copy of the
GO(MS) No.135/ 97/Co- op dated 13/11/1997 is produced herewith and marked
as Exhibit P-12.
23 Subsequently, in the year 2004 another Government Order was
issued modifying Exhibit P-12 to the extent that Clause 8(1)(b) of Exhibit
P-12 will not be applicable to contracts administered with the Public
Works Department. A true copy of the GO (MS) No. 44/04/PWD dated
19/03/2004 is produced herewith and marked as Exhibit P-13.
24 It is submitted that the rationale behind the issuance of Exhibit
P-13, which applies only to PWD tenders, applies with equal force to non
PWD tenders as well. Additionally, it is submitted that the rules and
provisions governing non PWD tenders also do not permit post-tender
negotiations except with the lowest bidder, which is what is effectively
achieved by the operation of Exhibit P-12 as recognised in Exhibit P-13
itself. Exhibit P-13 has not been superseded and is still in force. It is
also pertinent to point out that the challenge against the same by the
second Respondent ended in vain.
25 It is further submitted that Exhibit P-5, P-12 and P-13 and other
orders giving priority to second respondent were challenged before this
Hon'ble Court by another Contractor and same was ended in dismissal. The
Writ Appeal, (Wa No.44/2021 and 47/2021) are pending before the Division
Bench of this Hon'ble Court.
26 Subsequently, in all the tenders invited by the PWD and the
Bodies under it incorporated the conditions stated in the above Government
Order with an intention to give more benefits to the second respondent.
Such action on the part of the respondents are arbitrary, illegal,
malafide and discriminatory in nature.
27 Meanwhile on 04/11/2020, the Department of Corporation of the
State issued an order granting special permission to the second respondent
to undertake work over and above the scope of what is permitted under
Exhibit P-13, such as National Highways, Multistorey Buildings, Irrigation
Works, Bridges etc. A true copy of the GO(RT) No.568/2020/Co.op dated
04/11/2020 is produced herewith and marked as Exhibit P-14. Exhibit P-14
arbitrarily and illegally favors second respondent to the exclusion of all
others and ensures that the benefits envisioned under the earlier
Government Orders are extended to them across all works undertaken by the
state Government, despite the same being specifically restricted earlier.
28 In the year 2021, the government had considered the issue and by
a comprehensive Government order, Exhibit P-6 it was notified that Labour
Contract Societies are entitled for price preference with a ceiling limit
and going by that no preference can be granted in respect of subject work.
3. The following paragraphs may be added as GROUND I onwards:-
I. The impugned conditions incorporated in various government orders
WP(C) No.16780/2023 3/8
under challenge in this writ petition is illegal and liable to be set
aside and they are discriminatory in nature and confer an unlawful
advantage upon the second respondent.
J. Award the work to the second respondent by replying to the
impugned conditions in Exhibit P-5. P-12, P-13 & P-14 are violative of the
fundamental rights of the petitioner guaranteed under the Constitution of
India.
K. It is a basic principle enshrined in the Constitution that any
discrimination among the people can only be affected through a law passed
by the legislature. The special conditions that favor the second
respondent in the Government Orders under challenge are tantamount to
creating economic reservations. The Government Orders under challenge here
are not Laws and therefore reservations put into effect through them
cannot stand. Furthermore, the discrimination sort to be effected by them
failed the tests of intelligible differentia and rational nexus as laid
down in State Of West Bengal Vs. Anwar Ali Sarkar(1952 SCR 284), that must
be an order for classification to be legal. The system that favors the
second respondent to the exclusion of all other bidders when it comes to
high value tenders is in the teeth of these Constitutional Principles.
L. The conditions under challenge in Exhibit P-5, P-12, P-13 and
P-14 do not merely extent certain concession to Labour Contract societies,
but do so in a manner that effectively ensures that whenever such a body
participating in a tender, it can be awarded a work irrespective of who
submitted the lowest bid. Thus, it effectively negates any reasonable
chance of private contractors must be awarded the work. The private
contractor like the petitioner with the lowest bid can be awarded the work
only if the second respondent do not participate in the tender or with its
consent. This is fundamentally opposed to the principles of competition,
fairness, and equality that underly the process of tendering. Therefore,
this Hon'ble Court will be justified in interfering with the Government
Orders under challenge.
M. The second respondent is not eligible for the benefits extended
to Labour Contracts Cooperative Societies under the challenged conditions
of Exhibit P-5 and the other Government Orders under which the price
preference in question has been awarded to such societies the eligibility
criteria for obtaining the same are specified in Clause 4 of Exhibit P-12
G.O. It is submitted that the price preference is being granted to the
bids of the second respondent without application of mind, and that in-
fact the second respondent does not satisfy the eligibility criteria.
Therefore, the steps being taken by the first respondent to award the
tender to the second respondent is to be interdicted.
N. The impugned conditions in Exhibit P-5, P-12, P-13 and P-14 are
arbitrary, illegal and opposed to public interest. BY awarding the
contracts to the second respondent the state is losing huge amount, which
otherwise entitled and offered by the private contractors like the
petitioner. A price preference in such case cannot be granted since the
WP(C) No.16780/2023 4/8
same is being done at the cost of all citizens, to enrich a select entity
or group.
O. The preferential treatment sought to be extended to the second
respondent is indicative of an attempt to bring about a "spoils system".
The Apex Court in Supreme Court Advocates On Record Association Vs. Union
Of India (2016 (5) SCC 1) held that it is necessary to appreciate that the
constitution does not envisage the 'spoils system' ( also known as
patronage system) wherein the political party which wins an election gives
Government position to its supporters, friends and relatives as a reward
for working towards victory and as an incentive to keep the party in
power.
P. It is relevant to note that the second respondent who is having
wide influence in the government is getting the work flouting the Central
Vigilance Commission and all the prevailing Government orders. The action
of the first respondent would implied make it clear the political
influence of the second respondent.
Q. In Air India Ltd. Vs. Cochin International Airport Ltd., (2000
(2) SCC 617) the Hon'ble Court had held that the state, its corporations,
instrumentalities, and agencies are bound to adhere to the norms,
standards and procedure laid down by them and cannot depart from them
arbitrarily and that they have the public duty to be fair to all
concerned. While a decision itself may fall outside the scope of Judicial
Review, the Court can examine the decision-making process and interfere if
it is found vitiated by malafide, unreasonableness and arbitrariness. It
is submitted that in the instant case, the process followed to arrive at
the exemption granted to the second respondent under Exhibit P8 and
determination that second respondent is eligible to take benefits of the
price preference provided under the Government orders under challenge, is
tailored to favor the second respondent in an unreasonable and malafide
manner. The unreasonableness and arbitrariness, explicitly clear from the
actions of the first respondent, warrants interference of this Hon'ble
Court.
R. It is the duty of the tendering authority to secure maximum
public participation in the procurement process as held by the Apex Court
in Karnataka State Industrial Investment And Development Corporation Ltd.
Vs Cavalet India Ltd., and others (2005 (4) SCC 456). However, in the case
of the second respondent the state has made considerable efforts to
minimize the public participation as much as possible and tailored the
process relating to tenders to favor the second respondent, to the extent
that no other contractors shall be able to compete in the process. Such
action on the part of the State as well as the first respondent are to be
interdicted.
S. In Union of India Vs. Hindustan Development Corporation (AIR 1994
SC 988), The Hon'ble Supreme Court held that "Government had the right to
either accept or reject the lowest offer but that of course, if done on a
policy, should be on some rational and reasonable grounds". The price
WP(C) No.16780/2023 5/8
preference provided exclusively to second respondent in this case is
neither rational nor reasonable.
The following prayer also to incorporated as Prayer (g) & (h):-
Prayer (g) : issue a writ of certiorari or any other writ or order
or direction calling for the records leading to Exhibits P-5, P-12, P- 13,
& P-14 and quash the same.
h). issue a mandamus or any other writ or order or direction
declaring that the second respondent is not entitled for the price
preference granted under various government orders such as Exhibit
Exhibits P-5, P-12, P-13, & P-14;
This Application coming on for orders upon perusing the application
and the affidavit filed in support thereof, and this Court's order dated
05.02.2024 and upon hearing the arguments of M/S.DEEPU THANKAN, UMMUL
FIDA, LAKSHMI SREEDHAR, LEKSHMI P. NAIR & NAMITHA K.M., Advocates for the
petitioner, SRI.K.V.MANOJ KUMAR Advocate for R1 in I.A/WP(C), GOVERNMENT
PLEADER for R1 & R3 in I.A/WP(C) and of SRI.M.SASINDRAN, Advocate for R2
in I.A/WP(C), the Court passed the following:
WP(C) No.16780/2023 6/8
DEVAN RAMACHANDRAN, J.
--------------------------------------------------
I.A.Nos.1/2024 in WP(C) Nos.16780/2023 & 20252/2023
--------------------------------------------------
Dated this the 15th day of February, 2024
O R D E R
The petitioner seeks that these Writ Petitions be allowed to
be amended in the manner prayed for and offers to produce the
amended ones on or before 20.02.2024.
Sri.S.Kannan - learned Senior Government Pleader, objected
to the amendments; but thereafter, sought liberty for his client to
contest the prayers - to be brought in such amendment - on
their maintainability.
In the afore circumstances, with the afore requested liberty
being reserved to the official respondents, I allow these
applications.
The petitioner will file the amended Writ Petitions on or
before 20.02.2024.
WP(C)16780/23 & 20252/23
Post the Writ Petitions on 21.02.2024.
Sd/-
DEVAN RAMACHANDRAN,
RR
JUDGE
15-02-2024 /True Copy/ Assistant Registrar
APPENDIX OF WP(C) 16780/2023
Exhibit P-5 TRUE COPY OF THE GOVERNMENT ORDER DATED 09/02/2021
Exhibit P-6 TRUE COPY OF GO(MS).NO.21/2022/PWD DATED 29/07/2022
Exhibit P-8 TRUE COPY OF THE JUDGMENT RENDERED BY THE DIVISION
BENCH OF THIS HON'BLE COURT IN W.A.NO.132/2023 DATED
31/01/2023
Exhibit P12 A TRUE COPY OF THE GO(MS) NO.135/ 97/CO-OP DATED
13/11/1997
Exhibit P13 A TRUE COPY OF THE GO (MS) NO. 44/04/PWD DATED
19/03/2004
Exhibit P14 A TRUE COPY OF THE GO(RT) NO.568/2020/CO.OP DATED
04/11/2020
15-02-2024 /True Copy/ Assistant Registrar
