Madhya Pradesh High Court
M/S Bakshi Security And Personnel ... vs State Bank Of India on 24 October, 2017
Author: S.K. Gangele
Bench: S.K. Gangele
1
W.P. No. 14173 of 2017
M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs.
State Bank of India and others
HIGH COURT OF MADHYA PRADESH PRINCIPAL
SEAT AT JABALPUR
Writ Petition No. 14173 of 2017
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Present : Hon. Shri Justice S.K.Gangele &
Hon. Shri Justice Anurag Shrivastava,J.J.
M/s. Bakshi Security & Personnel
Services Pvt. Ltd. Petitioners
Versus
State Bank of India and others Respondents
Shri Naman Nagrath, Senior Advocate assisted by Shri
Nitin Agrawal, learned counsel for the petitioner.
Shri R.N. Singh, learned Senior Advocate assisted by Shri
Ashish Shroti, learned counsel for the respondent.
Ms. Anjali Shrivastava, learned counsel for respondent no.
2.
Shri Saurabh Singh, learned counsel for respondent nos. 3
and 4.
Shri Atin Vishwakarma and Shri Ankit Saxena, learned
counsel for respondent no. 5.
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Whether approved for reporting: Yes/No.
ORDER
(Pronounced on : 24.10.2017) Per S.K. Gangele, J.
1. The petitioner has filed this petition for quashment of tender process and award of contracts by the respondent 2 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others no.1. The petitioner further prayed a relief that respondent no. 1 be directed to invite fresh bids with approval from the Central Vigilance Commission. The respondent no. 1 floated request for proposal (RPF) for requirement of Care Services at its near about 15000 ATM centres in the State of M.P. and Chhattisgarh on 17.01.2017. Time schedule of bid process in accordance with R.F.P., last date of submission of pre bid query on RFP was 20.01.2017.
Pre bid meetings were held with bidders on 25.01.2017.
Last date for submission of bids in response to RFP was 1.2.2017. The date of opening of commercial bids was 6.2.2017. The mandatory eligibility criteria for bidder was also mentioned in the R.F.P. one of the mandatory condition was that the bidder should have at least 5000 personnel deployed at various sites on permanent role as on the date of publication of R.F.P. Notice. Bidder should not be a loss making company. Cumulative and annual turn over for the last three years should not be less than Rs.60 crores. We have quoted some of the mandatory eligibility criteria which is necessary to decide the controversy.
2. Subsequently, the tender committee had taken a 3 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others decision that the mandatory criteria of having 5000 personnel is on higher side, hence, it be reduced to 500 and issued a corrigendum on 27.1.2017 and extended the time of submission of bid upto 6.2.2017.
3. The respondent no.1, hereinafter called "the bank", received thirteen bids. The committee constituted by the bank scrutinized the bids as per terms of eligibility of mandatory requirement and shortlisted five bidders, i.e. the petitioner and respondents nos. 2 to 5. The bank also received queries from various bidders.
4. In between a writ petition was filed by some employees before this court, which was registered as W.P. No. 1761 of 2017. This court issued an interim order on 7.2.2017 that final decision in regard to allotment may not be taken. That petition was dismissed subsequently.
5. In the RFP no reserved price was mentioned. In accordance with Clause 5 (1) (3) of R.F.P. the bidder has to take into consideration certain aspects before submitting the bid. Clause 4.13 of R.F.P. reads as under :-
"The price quoted in the Commercial Bid must be in Indian Rupees, inclusive of all taxes, levies, etc., except Service Tax, wherever, applicable Service 4 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others Tax will be paid by the Bank on the actual basis.
Bidders have to quote in the Commercial Bid the Total expenses per ATM Site per month for providing the Caretaker Service, including the Minimum Wages, statutory payments taking into consideration the future enhancements in Minimum Wages" except Service Tax, wherever applicable. If the amount so quoted by the Bidder in the commercial Bids is unreasonable or impractical, based on the statutory payments or otherwise, then the Bank reserves the right to reject such Bids.
The bidders are advised not to indicate any discount. Any discount/rebate shall be factored in and included in the calculations before quoting the final bid.
6. The bank fixed the reserve price of Rs.26,540/-. The sealed covers were opened in front of the bidders on 23.2.2017. On opening of seal covers, it was noticed by the Committee that respondent had quoted lowest bid. He was L-1. The petitioner was L-4 and respondent nos. 2, 3 and 4 were L-2, L-3 and L-5.
7. The bank received a communication from Deputy 5 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others Chief Labour Commissioner, Jabalpur in regard to fixation of minimum wages dated 29.1.2017. The bank noticed that there was substantial enhancement in minimum wage, hence, it issued notice to all the bidders vide E-mail dated 28.3.2017 about calling of revised commercial bids because the bank realized that bids submitted by all the parties were not covering payment to the Caretakers as per revised notification dated 19.1.2017 except the respondent no. 5 who had quoted an amount of Rs.49836/-. The petitioner vide letter dated 29.03.2017 objected about inviting revised bids. Thereafter, all the technical bidders were directed to submit revised commercial bids and aforesaid bids were opened on 1.4.2017 by the Committee.
8. The bank fixed the bench mark of accepting bids a minimum quotation of Rs.42,812/- as reserved price and after opening the revised bids the respondent no. 2 was declared as L-1 and respondent no. 3 as L-2. The petitioner and respondent nos. 3, 4 and 5 were requested to match the price of L-1. The respondent nos. 4 and 5 agreed to match the price and the petitioner also agreed under protest to match L-1. The bank fixed the reserved price after taking 6 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others into the consideration the mandatory criteria as mentioned by the bank in Annexure R-1-6:-
COST CALCULATION SHEET IN RESPECT OF TOTAL EXPENSES PER ATM SITE PER MONTH FOR PROVIDING CARETAKERS SERVICES ROUND THE CLOCK 1 2 REVISION FOR NEXT YEAR REVISED TWICE IN YEAR @ AREA TPYE 1.6%(HALF YEARLY) I.E 3.2% B C B C MINIMUM WAGES PAY PER DAY W.E.F. 19.1.2017 438.61 351.29 452.65 362.53 DUTY 30-00 30-00 30-00 30-00 MONTHLY WAGES 13158.30 10538.70 13579.37 10875.94 [email protected]% 1790.84 1434.32 1848.15 1480.22 ESIC (4.75% IN B TYPE AREA) 625.02 0-00 645.02 0-00 WP 1% IN C TYPE AREA 0-00 105.39 0-00 108.76 SUB TOTAL 15574.16 12078.40 16072.54 12464.91 PAYMENT FOR 3 NATIONAL HOLIDAYS 109.65 87.82 113.16 90.63 TOTAL WAGE 15683.82 12166.23 16185.7 12555.55 Average wages for 3 years may be calculated (AVERAGE 14147.82 42443.46 OF B & C AREA) FOR 1 SHIFT ADMINISTRATIVE COST UNIFORM (1000 YEARS PER PERSON) 1000* 3/12. 250-00 SHOES (800 FOR 2 PAIRS YEARLY PER PERSON ) 800* 3/12. 200-00 PETROLLING COST (1200 YEARLY) 100-00 CLEANING MATERIAL (2400 YEARLY) 200-00 MOBILE 120 MONTHLY 120-00 MISC (600 YEARLY ) 50-00 TOTAL 920-00 Break Even Considered @ 40% 368 GRAND TOTAL (WAGE+ADMINISTRATIVE COST) 42811.46 Rounded off to 42812
9. Thereafter the bank had taken a decision of allotment of ATM sites to the bidders in following ratio :-
50% to L-1, 25% to L-2 and 25% to L-3, L-4 and L5 in equal proportions. The rate of L-1 was Rs.43002, L-2, Rs.43061 and the petitioner Rs.42,094. Agreements were executed by the bank on 25.8.2017. Thereafter, the petitioner filed this writ petition before this court and this 7 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others court granted interim order on 25.9.2017.
10. Learned counsel for the petitioner has submitted that procedure and allotment of ATM sites by the bank in accordance with the tender process is arbitrary and illegal.
The criteria adopted by the bank is unknown to law. The bank fixed the Minimum Reserved Price excluding statutory bonus. This fact was not mentioned in the RFP. The terms and conditions of RFP were changed by the bank.
Initially the minimum requirement of man power for submitting the bid was 5000 persons. It was reduced to 500 only. The classified bidders were permitted to submit the second bid without calling the fresh tenders and the bank has distributed the work on its whims and fancies.
The tender of the petitioner was lower than L-1 and L-2.
However, the petitioner has not granted 50% of the work.
L-1 was not eligible to get work because he is defaulter of PF. In support of his contentions learned Senior Counsel relied on the following judgments :-
(I) Jagdish Mandal Vs. State of Orissa and others, (2007) 14 SCC 517, (II) Tejas Constructions & Infrastructure Private Limited Vs. Municipal Council, Sandhwa and another, 8 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others (2012) 6 SCC 464,
11. Contrary to this, learned Senior Counsel appearing on behalf of respondent no. 1 - bank contended that the procedure adopted by the Bank is fair. The change in the criteria was communicated to all the bidders and they were given opportunity to participate in bid process. The minimum price was not quoted in RFP in order to prevent cartalization. The petitioner accepted the proposal of the bank and it also executed an agreement after participated in the meeting and had given its consent hence the writ petition filed by the petitioner is not maintainable on the principle of acquiescence and waiver. There is no illegality in award of contract. The petition is liable to be dismissed.
In support of his contentions, learned Senior Counsel relied on the following judgments :-
(a) Food Corporation of India Vs. Kamdhenu Cattle Feed Industries, (1993), 1 SCC 71, Pr. 10 and 11.
(b) Meerut Development Authority Vs. Association of Management Studies and Anr., (2009) 6 SCC 171, Pr. 26, 27, 28 & 29.
( c) Reliance Airport Developers Pvt. Ltd. Vs. Airports Authority of India, (2006) 10 SCC 1, Pr. 52 to 55, 74 and 75.
9 W.P. No. 14173 of 2017M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others
(d) Tejas Constructions & Infrastructure Pvt. Ltd. Vs. Municipal Council Sendhwa, (2012) 6 SCC 464, Pr. 15, 32 to 34.
(e) Swan Gold Mining Ltd. Vs. Hindustan Copper Ltd., (2015) 5 SCC 739, Pr. 18.
(f) Air India Vs. Cochin International Airport Ltd. & Ors., (2000) 2 SCC 617, Pr. 7.
(g) Rajasthan State Industrial Developments & Investment Corporation Vs. Diamond & Gem Development Corporation Ltd., (2013) 5 SCC 470, Pr. 15, 16, 23 & 30.
12. Learned Counsel appearing on behalf of other respondents have adopted the arguments of learned Senior Counsel of respondent no. 1.
13. Before considering the rival submissions of the parties, and the points raised by learned Senior Counsel it is just and proper to consider the law in regard to interference by the court in exercise of powers under Article 226 of the Constitution of India in contractual matters.
14. Apex Court in Jagdish Mandal Vs. State of Orissa and others with Laxman Sharma Vs. State of Orissa and others reported in (2007) 14, SCC 517 after considering the earlier judgments on the aforesaid subject 10 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others in regard to scope of judicial review in award of contract has held as under :-
Scope of Judicial Review of award of contracts :
21. We may refer to some of the decisions of this Court, which have dealt with the scope of judicial review of award of contracts.
21.1) In Sterling Computers Ltd vs. M & N Publications Ltd [1993 (1) SCC 445], this Court observed : (SCC p.458, para 18), "18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the court is concerned primarily as to whether there has been any infirmity in the decision making process the courts can certainly examine whether 'decision making process' was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution."
21.2) In Tata Cellular v. Union of India [AIR 1996 SC 11], this Court referred to the limitations relating to the scope of judicial review of administrative decisions and exercise of powers in awarding contracts, thus :
(1) The modern trend points to judicial restraint in administrative action.
(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the administrative action. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract.
In other words, a fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of 11 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others reasonableness (including its other facets pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
(Emphasis in original) This Court also noted that there are inherent limitations in the exercise of power of judicial review of contractual powers. This Court also observed that the duty to act fairly will vary in extent, depending upon the nature of cases, to which the said principle is sought to be applied. This Court held that the State has the right to refuse the lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose is not exercised for any collateral purpose or in infringement of Article
14. 21.3) In Raunaq International Ltd., vs. I.V.R. Construction Ltd. [1999 (1) SCC 492], this Court dealt with the matter in some detail. This Court held :
"9. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. These would be :
(1) The price at which the other side is willing to do the work;
(2) Whether the goods or services offered are of the requisite specifications;
(3) Whether the person tendering has the ability to deliver the goods or services as per specifications.
When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important; (4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5) past experience of the tenderer, and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or 12 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others services; and often, (7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services.
Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.
10. What are these elements of public interest? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in re- doing the entire work - thus involving larger outlays or public money and delaying the availability of services, facilities or goods, e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
11. When a writ petition is filed in the High court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far 13 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers."
21.4) In Air India Ltd. vs. Cochin International Airport Ltd [2000 (2) SCC 617], this Court summarized the scope of interference as enunciated in several earlier decisions thus :
"7. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene."
[Emphasis supplied] 21.5) In Association of Registration Plates vs. Union of 14 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others India [2005 (1) SCC 679], this Court held:
"43.....Article 14 of the Constitution prohibits government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contracts. At the same time, no person can claim a fundamental right to carry in business with the government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. ..."
21.6) In B.S.N. Joshi v. Nair Coal Services Ltd. [2006 (11) SCALE 526], this Court observed :
"56. It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best judge therefor; the same ordinarily being within its domain, court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record."
22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. 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 15 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others public works for years, or delay relief and succour 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 black- listing 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.
15. The Apex Court in Tejas Constructions and Infrastructure Private Limited Vs. Municipal Council, Sendhwa and another reported in (2012) 6 SCC 464 has held in regard to same subject as under :-
16. In Tata Cellular v. Union of India (1994) 6 SCC 651, this Court emphasized the need to find the right balance between administrative discretion to decide matters on the one hand and the need to remedy any unfairness on the other and observed: (SCC pp. 687-88, para 94) "(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal 16 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative, decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. ...
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative or quasi- administrative sphere. However, the decision can be tested by the application of the "Wednesbury principle" of reasonableness and the decision should be free from arbitrariness, not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
17. In Raunaq International Limited v. I.V.R. Construction Ltd. & Ors. (1999) 1 SCC 492, this Court reiterated the principle governing the process of judicial review and held that the Writ Court would not be justified in interfering with commercial transactions in which the State is one of the parties to the same except where there is substantial public interest involved and in cases where the transaction is mala fide. The court observed: (SCC pp. 500-01, paras 10-
11), "10. What are these elements of public interest? (1) Public money would be expended for the purposes of the contract. (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public 17 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work -- thus involving larger outlays of public money and delaying the availability of services, facilities or goods, e.g., a delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers."
18. In Reliance Airport Developers (P) Ltd. v. Airports Authority of India & Ors. (2006) 10 SCC 1, this Court held that while judicial review cannot be denied in contractual matters or matters in which the Government exercises its contractual powers, such review is intended to prevent arbitrariness and must be exercised in larger public interest.
19. Reference may also be made to Sterling Computers Ltd. v. M & N Publication Ltd. (1993) 1 SCC 445 where this Court held that power of judicial review in respect of contracts entered into on behalf of the State primarily involves examination of the question whether there was any infirmity in the decision-making process if such process was reasonable, rational and non-arbitrary, the Court would not interfere with the 18 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others decision.
20. In Air India Ltd. v. Cochin International Airport Ltd. & Ors. (2000) 2 SCC 617, this Court held that award of contract was essential in commercial transactions which involves commercial consideration and results in commercial decision. While taking such decision the State can choose its own method on terms of invitation to tender and enter into negotiations. The following passage from the decision is apposite: (SCC p. 623-24, para 7), "7............The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. ...............Even when some defect is found in the decision-making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene."
21. To the same effect is the decision of this Court in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. & Ors. (2005) 6 SCC 138 and Jagdish Mandal v. State of Orissa (2007) 14 SCC 517 19 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others where this Court laid down the following tests for judicial interference in exercise of power of judicial review of administrative action:
"22........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."
16. It is not necessary to consider other judgments on the subject because the Apex Court has crystallized the law in the aforesaid judgments. The principle of law is that where the process adopted or decision made by the authority is malafide or intended to favour some one or where process adopted or decision made is so arbitrary and irrational and court can hold that decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached on the decision, the court can interfere in contractual matter.
17. Admitted facts of the present case are that initially in accordance with RFP proposal was made by the respondent no.
20 W.P. No. 14173 of 2017M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others 2 to award contract. One of the essential condition was that the bidder should have at least 5000 personnel deployed at various sites on their permanent roles as on the date of publication of this RFP notice. Aforesaid condition was diluted subsequently by the respondent - bank and in place of employment of 5000 personnel, it was reduced to 500 personnel.
A corrigendum was issued on 27.01.2017. As per initial RFP the last date of submission of pre bid query was 20.1.2017. The date of submission of bid was extended upto 6.2.2017. However, it is an admitted fact that fresh RFP was not issued by the bank.
18. Subsequently after receipt of bids and opening of bids the bank had taken a decision to fix bench mark which means below the bench mark bid submitted by the bidder has to be rejected.
Bench mark was disclosed to the five bidders in the meeting when sealed covers were opened on 23.2.2017. The bench mark was Rs.26,540/-. On the basis of aforesaid bench mark, the respondent no. 1 was declared L-1, the petitioner was declared L-4, and other bidders, respondent nos. 2, 3 and 5 were declared as L-
2, L-3 and L-5. The bank again changed the bench mark because as per pleadings of the bank, it received an e-mail, a communication from Deputy Labour Commissioner about change in minimum wages vide notification dated 19.1.2017. There was substantial enhancement in minimum wage, hence, the bank had again recalculated the bench mark and subsequently fixed a reserved price of Rs.49,836/- per person. Bids which were quoted earlier by the five persons were cancelled. Thereafter, all the five 21 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others qualified persons were directed to submit revised commercial bid.
Those bids were opened on 1.4.2017. On opening of the revised commercial bids, the respondent no. 2 was declared as L-1, respondent no. 3 as L-2 and respondent nos. 3, 4 and 5 were directed to match the price of L-1. They had submitted their proposal and thereafter petitioner under protest agreed to match L-1 price. On the basis of this 50% work was allotted to L-1, 25% to L-2, L-3, L-4 and L-5 were allotted in equal proportion. There is no reason put fourth by the bank that why the bank has adopted this procedure. It is an admitted fact that the bank did not include the amount of bonus which is required to be paid by the bidder to its employees. If the minimum bonus which is required to be paid by the employer to its employees in accordance with provisions of Payment of Bonus Act is included, then all the bidders are out. Learned Senior Counsel for the respondent - bank has submitted that Payment of Bonus is legal liability of the employer. If that argument is accepted, then the Payment of Minimum Wages and other statutory payments are also liability of the employer, then there is no question of fixing the bench mark. The person who quoted the highest amount has been declared as L-1 in the aforesaid process because the amount quoted by him was more than the bench mark fixed by the bank and the persons, who quoted lower amount as of the bench mark they were placed below L-1. Notification of fixing minimum wage is dated 19.1.2017. As per RFP last date of submission of pre bid was 22 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others 20.1.2017. In the RFP it is mentioned that bidders would be liable and responsible for payment of minimum wages PF and other statutory liability. Relevant clause reads as under :-
CTA shall be solely liable and responsible for payment of Minimum Wages as per the Minimum Wages Act, 1948, PF Contribution, ESIC Contribution, Statutory Bonus, etc. and other applicable statutory dues to the Caretakers during the Contract period. The applicable rate for payment of minimum wages shall be the rate of minimum wages notified by the Central Government from time to time in respect of "Employment of Sweeping & Cleaning". Any legal case/expenses/penalty arising out of violation of any provisions of Minimum Wages Act or any other Act, Rules or Regulations shall be at the costs of CTA only and the Bank shall not be responsible for the same. Financial liabilities/ legal complications devolved against the Bank due to violation of Minimum Wages Act or any other Act, Rules or Regulations by the CTA will be recovered from the CTA/ from the amount payable to CTA and/ or by invoking the performance Bank Guarantee and/ or from the Security Deposit furnished by the CTA to the Bank while awarding the contract."
19. The bidders had knowledge about notification of minimum wage. Then there was no question of giving second opportunity to all bidders.
20. It is undisputed fact that initially the bank fixed the bench mark of Rs.26540/-. At that time the sealed cover of five persons were opened and thereafter the bench mark was changed. It was fixed as Rs.49,836/-. In the aforesaid bench mark, bonus is not added and the earlier bids were cancelled. Only five bidders were granted opportunity to submit the revised bids. In 23 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others our opinion, the procedure adopted by the Bank is arbitrary, illegal and against known norms of law. If bids of all five bidders were not proper and bank fixed a revised bench mark, then it was obligatory on the part of the bank to issue a fresh RFP inviting bids from all persons. It would be a fair procedure.
21. As per proceedings filed by the bank of the meeting of publication dated 28.3.2017 in the second bid the bank received bids from five persons of following amount :-
Sl. No. Name Amount
1 Tiger 4 Security & Detective Pvt. Rs.43002/-.
Ltd.
2 Lion Manpower Solutions Pvt. Ltd. Rs.43061/-
3 Bakshi Security & Personnel Rs.42094/-
Services Pvt. Ltd.
4 Security & Intelligence Services Rs.37587/-
(India) Ltd.
5 Orion Security Solutions Pvt. Ltd. Rs.37108/-
22. Bid amount submitted by the respondent nos. 4 and 5 were much below than the bench mark. However, the petitioner and respondent nos. 4 and 5 all were allotted the ATM sites in equal proportion. There is no logic in it. In view of aforesaid facts of the case it is crystal clear that the process adopted by the bank and decision made by it is patently illegal and irregular. The decision is such that no responsible authority acting reasonably in accordance with law could have reached on the decision.
23. The arguments advanced by learned Senior Counsel of respondent - Bank that there is acquiescence and waiver on the part of the respondent, hence, petition is liable to be dismissed as 24 W.P. No. 14173 of 2017 M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others it is not tenable because the petitioner has objected about the procedure and he participated in the process under protest. Apart from this, the procedure adopted by the bank in award of contact is so unfair that it shocks the conscience of court, hence, it would be proper to quash the procedure.
24. Bank wanted to favour respondent no. 2, hence, award of contract and procedure is contrary to law. Consequently, the writ petition is allowed. The contract awarded by the respondent -
bank in favour of respondent no. 2 and other respondents including petitioner in pursuance to RPF is hereby quashed.
25. Respondent - bank is directed to issue fresh RFP as early as possible and invite fresh bids mentioning the reserved price in the RFP and award contract in accordance with law.
26. The petitioner has been providing services to the bank, hence, petitioner is permitted to continue the services during intervening period because he has employed employees. However, the petitioner would get the rates quoted by him in its bid document.
27. No order as to costs.
(S.K. GANGELE) (Anurag Shrivastava)
Judge Judge
bks
25
W.P. No. 14173 of 2017
M/s. Bakshi Security & Personnel Vs. Pvt. Ltd. Vs. State Bank of India and others HIGH COURT OF MADHYA PRADESH PRINCIPAL SEAT AT JABALPUR Writ Petition No. 14173 of 2017 ========================================== Present : Hon. Shri Justice S.K.Gangele & Hon. Shri Justice Anurag Shrivastava,J.J. M/s. Bakshi Security & Personnel Services Pvt. Ltd. Petitioners Versus State Bank of India and others Respondents ORDER FOR CONSIDERATION (S.K. GANGELE) JUDGE .10.2017 HON. SHRI JUSTICE ANURAG SHRIVASTAVA (ANURAG SHRIVASTAVA) JUDGE Post for:
. 10.2017 (S.K. GANGELE) JUDGE . 10.2017