Gujarat High Court
Pooja Cosntruction Company vs Jetpur Navagadh Nagar Palika on 1 August, 2019
Equivalent citations: AIRONLINE 2019 GUJ 712, (2019) 4 GUJ LR 2457
Author: K.M.Thaker
Bench: K.M.Thaker, V.P. Patel
C/SCA/8616/2018 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8616 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE K.M.THAKER Sd/-
and
HONOURABLE MR.JUSTICE V.P. PATEL Sd/-
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1 Whether Reporters of Local Papers may be allowed to see the YES
judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law as to NO
the interpretation of the Constitution of India or any order
made thereunder ?
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POOJA COSNTRUCTION COMPANY
Versus
JETPUR NAVAGADH NAGAR PALIKA & 4 other(s)
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Appearance:
MR ASHISH M DAGLI(2203) for the Petitioner(s) No. 1
MR J.K. SHAH, AGP (1) for the Respondent(s) No. 4,5
MR BHAVESH P TRIVEDI(2731) for the Respondent(s) No. 1,2
MR MAHESH P PATEL(3381) for the Respondent(s) No. 3
MR RR TRIVEDI(941) for the Respondent(s) No. 1,2
MR. KALRAV R PATEL(7041) for the Respondent(s) No. 3
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CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
and
HONOURABLE MR.JUSTICE V.P. PATEL
1
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C/SCA/8616/2018 CAV JUDGMENT
Date : 01/08/2019
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE K.M.THAKER)
1. Heard Mr.Ashish Dagli, learned advocate for the petitioner and Mr.Bhavesh Trivedi, learned advocate for respondent No.1 and 2 as well as Mr.Mahesh Patel, learned advocate for respondent No.3.
2. This petition has arisen on account of petitioner's grievance in the matter of notice inviting tender (issued by respondent municipality) for supplying manpower to execute the works, functions and duties of the municipality and granting work order to the respondent No.3.
3. The subject or purpose of the notice inviting tender (issued by respondent municipality) viz. 'manpower supply' is actually a jargon employed by the respondent municipality for engaging outside agency and outside workers (i.e. the persons who are not employees of municipality) to execute various works including primary and essential functions and statutory duties of the respondent municipality.
4. It has emerged from the record and from the submissions that the respondent municipality issued Letter of Acceptance in favour of respondent No.3. The petitioner felt aggrieved by the said decision and action of the respondent municipality . Hence, present petition. 2 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT
5. The subject of the challenge raised in present petition is described and summarised by the petitioner in following terms:
"2. ... ... ... the legality and validity of the action on the part of the respondent Nagar Palika by giving tender to respondent no.3 M/s. D.R. Enterprise, though the respondent no.3 is not qualified and in fact this being an on-line tender the necessary details were also not filled in and were kept blank...."
6. The petitioner has prayed, inter alia, that:
"9(B) The Hon'ble Court may be pleased to allow this petition by issuing appropriate writ, order or direction, quashing and setting aside the action/decision on the part of the respondent municipality of accepting the tender of respondent no.3, M/s. D.R. Enterprise, as being unjust, improper and thereby be pleased to direct the respondent to accept the tender bid of the petitioner as having found complied with all the terms conditions of the tender;"
7. So as to support and justify the relief prayed for the petitioner has averred and stated that:
"4. It is respectfully submitted that the petitioner as well as 2 other firms namely; Shiv Shakti Security, Dhoraji and D.R.Enterprise, have filled up the tender. Technical bid was opened on 5-5- 2018. It is submitted that as can be seen that since it was an on-line tender ,bid submitted and once it is opened on 5-5-2018 on verification of the necessary documents attached to the tender, on approval it is technically also need to be qualified. However, on 5-5-2018, the petitioner has submitted his detailed objection about disqualification of other 2 firms namely: Shiv Shankti Security and D.R. Enterprise and copy of the objection dated 9-5-2018 is annexed marked Annexure'C' to this petition. It is submitted that the petitioner has stated in the objection that on verification at Annexure-(1) &(2) attached to the tender document, it was found that the respond could not fulfill the required criteria. It was therefore, objected that on this ground the respondent no.3 is not to be qualified and it is the petitioner who is then left, needs to be given tender in his favour. It is submitted that the copy of the details of Annexure (2) with regard to details of turnover of Pooja Construction is annexed marked Annexure'D' which was also submitted alongwith the tender bid. It is submitted that the financial data of Chartered Accountant with respect to turnover of last 3 years of M/s.Pooja Construction was also made available from Chartered Accountant and a copy of the financial data is annexed marked ent no.3 is not qualified and Annexure'E' to this petition.
5. It is submitted that on 22-5-2018, detailed objection was again given in furtherance to the earlier objection dated 9-5-2018 and requested that the respondent no.3 does not fulfill the and the dent no.3 is not technically qualified and therefore, it was requested that the contract order may not be issued to him and he may be declared as 'not qualified'. A copy of the claim dated 22-5-2018 is annexed marked Annexure'F to this petition. It is submitted that details available from the on-line after bid bid was opened of respondent no.3 D.R. Enterprise is annexed marked Annexure'G', where as can be seen that the agency commission stated by the respondent no.3 is 0.01 paise per day per employee. It is submitted that apart from the fact that such an amount stated by the respondent no.3 on all other ground, is absolutely unhealthy and on the contrary it smakes active association of other office bearers of the municipality as under the guise of allotting the tender to him on lower rate and thereafter the corruption to be carried with the help of the officers of the municipality. It may be submitted that on 31-5-2018 also a detailed representation is also given to the Collector, Rajkot and a copy of the same is annexed hereto and marked Annexure'H and requested that the municipality is acting high-handedly and though the respondent no.3 is not qualified inspite the same the tender bid is opened, not only that he was also given Work Order. It is submitted that even on 4-6-2018 representation was made to the Chief Officer of the Nagar Palika as to how such bid was given in favour of the respondent no.3. A copy of the representation dated 4-6-2018 given by other independent 3 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT person is also annexed marked Annexure' I to this petition. It is submitted that in fact one of the Councillor Shri Vanrajbhai B. Gida also shown his displeasure about the act on the part of the municipality of granting tender to the respondent no.3 and on the contrary even the municipality is also on one hand not agreeable but it seems that the President and the Chief Officer have joined hands with the respondent no.3 and made such orders and the petitioner also came to know that even Work Order is also issued recently before couple of days only (before 2 days). Under this set of circumstances the petitioner approaches this Hon'ble court by way of filing present petition as act on the part of the municipality is now in colorable exercise of powers and therefore, only on this ground the impugned action of allotment of tender in favour of respondent no.3 needs to be quashed and set aside and the bid of the petitioner may also be accepted in the facts and circumstances of the present case.
6. It is submitted that relaxation of non- fulfillment of the terms and conditions of the tender granted by the municipality in favour of the respondent no.3 is nothing but an act of favourism and act dehorse the terms and conditions of the contract. It is submitted that in fact though the representation is also made to the other authorities also, no action is taken and on the contrary the Work Order is issued. Under the circumstances the petitioner therefore, approach this Hon'ble court by way of filing present petition. It is submitted that the pending the petition the petitioner urge this Hon'ble court to grant interim relief as prayed for as if the relief as prayed for is not granted the petitioner will suffer irreparable loss and injury which cannot be compensated in terms of money on the other hand no prejudice is going to be caused if the relief as prayed for is granted."
8. Somewhere in March-April 2018, the respondent municipality issued notice and invited tenders for 'providing expert manpower services for various work of Jetpur Navagadh Municipality'. 8.1 According to the NIT, the technical bids were scheduled to be opened at 16.00 hours on 21.4.2018 and the price bids were to be opened at 16.30 hours on 21.4.2018.
8.2 After conclusion of tender process, the respondent municipality, on 30.5.2018, issued Letter of Acceptance / work order to respondent No.3.
8.3 Feeling aggrieved by the said decision and action of respondent No.3, the petitioner filed present petition on or around 7.6.2018.
9. The principal ground or allegation on which the petition is based 4 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT is alleged breach or non-compliance of two clauses of eligibility criteria viz. clause 4(f) and clause 4(g).
10. The petition is opposed by the respondent municipality as well as respondent No.3. Initially, only the respondent municipality filed affidavit and opposed the petition. In its reply affidavit dated 1.7.2018, the respondent municipality averred and stated that:
"3. With reference to the averments made in para 2 is concerned it is denied that Respondent No. 3 D.R. Enterprise is not qualified for the contract. It is further denied that allotment of tender was made in favour of Respondent No. 3 by doing undue favor and by giving go by to the terms and conditions of the tender itself.
5. With reference to the averments made in para 4 is concerned it is stated that there is no dispute regarding the procedure of bid and opening of bid. It is true that petitioner has raised objections but those objections were not justified and respondent No. 3 was lowest bidder and also he was qualified therefore petitioner's objections were not considered. It is denied that Resp. No.3 was not qualified and was not fulfilling the required criteria. Therefore there was no question of givigin tender to the petitioner. As stated earlier the Resp. No.3 was the lowest bidder. Therefore naturally he was to be allotted the tender. So far financial Data of petitioner is concerned there is not dispute about the same.
6. With reference to the averments made in para 5 is concerned it is repetition of earlier averments. It is denied that Resp. No.3 was not qualified at all. It is further repeated that as per humble opinion of present Respondent the Resp. No.3 was qualified and since it is lowest bidder therefore it was entitled for allotment of tender. It is true that commission of respondent No.3 is .01 paisa per employee but merely because it is only lower side it cannot be said that there is active association of other office bearers of the municipality. It is further denied that some corruption is to be carried out by some officers of the municipality. It is humbly submitted that since petitioner is not granted tender therefore in frustration he has made reckless and baseless allegations. It is furhter submitted that petitioner may have made representation to Collector Shree Rajkot but present respondent cannot comment upon it. But however since allegations of petitioner was not true thereofre tender granted in favour of respondent No.3 cannot be cancelled. It is further humbly submitted that Municipal Councilor Mr.Vanraj B. Gida shown his displeasure for granting the tender to Resp. No.3 but it is humbly submitted that it is decision of Municipality to allot the tender the Resp. No.3 and more so he is the lowest bidder and was qualified also. Therefore displeasure of Mr.Vanraj B. Gida is of no use to petitioner.
8. With reference to the averments made in para 6 of the petition is concerned it is denied that necessary terms and conditions of tender are relaxed and they not fulfilled. It is denied that there is an act of favouritism on part of the municipality. It is also denied that allotting tender to the Resp. No.3 is dehors the terms and conditions of the contract. It is humbly stated that petitioner has frivolous and false grounds therefore representation of petitioner is not considered.
9. It is further humbly submitted that petitioner has approached belatedly to the Hon'ble Court. It is humbly submitted that date of opening of Bid was on 21.4.2018. Thereafter vide order Dt. 30.5.2018 officer order was issued by the Municipality to allot work to the respondent No.3. True copy of officer order is produced here marked at ANNEXURE-R-1. Thereafter on 13.6.2018 a letter was written to the petitioner with regard to his representation on 22.5.2018 to take back his amount. True copy of said letter is annexed here and marked at ANNEXURE-R-2. It is further humbly submitted that on 30.5.2018 respondent No.3 is granted work order. True copy of work order is produced here and marked as ANNEXURE-R-3. On that day even agreement is executed between 5 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT respondent No.3 and respondent municipality. True copy Agreement is produced here and marked at ANNEXURE-R-4. Therefore in this view of the matter petitioner has waited from 30.5.2018 and after everything is over he has approached to the Hon'ble Court and then seeking interim relief. It is further humbly submitted that no interim relief can be granted to the petitioner because now work of the respon. No.3 is going on with municipality. Granting Interim Relief will further frustrate the work of the municipalities.
10. It is further submitted that Rates of the Respondent No.3 were very lower and competitive and were lowest. True copy of online tender is produced here and marked at ANNEXURE-R-5. It is further humbly submitted that if the Hon'ble Court peruses the rates of the all the three parties then the rates of Resp. No.3 were at the most lowest. Therefore Res. No.3 was allotted tender.
11. It is further humbly submitted that it is true that turn over of bidder must of Rs.100 Lakhs, but if the Hon'ble Court peruses that turn over is AVEAGE ie. Average of last Three years. Respondent No.3 has supplied the details of turn over of last three years to the Municipality at as per this details in year 2014-2015 his turn over is Rs.2,03,500=00 year 2015-2016 Rs.63,25,020=00 for year 2016-2017 Rs.3,40,52,620=00 which comes to total 40,58,1140=00. Said document is produced here and marked at ANNEXURE-R-6. Therefore in view of above annual average of Resp. No.3 is 100 lakhs, therefore there is no substance in the arguments that Resp. No.3 is not qualified because it does not have turn over of Rs.100 Lakhs annually. Not only this even certificates of Chartered accountant were submitted for this fact."
11. Subsequently, respondent No.3 also filed an affidavit dated 14.8.2018 and denied the allegations by the petitioner. In the said affidavit the respondent No.3 has averred and stated that:
"6. I say that with reference to Para 4 it is contended by the petitioner that though my firm was not qualified for participating in tender, was treated as qualified. And therefore on 09.05.2018 the petitioner raised objections with the authority. It is contended in the objections that since the respondent no.3 is having registration under E1 CLASS registered with R&B department Mehsana, therefore my firm cannot participate as the said class has upper limit of Rs 50 Lakhs. I say that aforesaid fact is false as the upper limit provided is for carrying out any work with respect to R8B Department and docs not apply to impugned nature of work. I say that the petitioner has not also placed any document on record in support of their contention suggesting such bar as contended by them in Para no 4. Copy of the E1 class registration is annexed herewith and marked as ANNEXURE: RR1.
7. I say that in furtherance of their objection dated DATED 09.05.2018 it was also contended that the respondent no 3 herein was not eligible because respondent no 3 herein was unable to meet with 'key technical qualification' wherein the AVERAGE turnover of the firm participating in the tender should be 100 LAKHS. I say that the respondent no.3 is having average turnover of more than Rs 100 Lakhs and the respondent no 3 has annexed a certificate issued by Chartered Accountant along with their application. Copy of the Chartered Accountant certificate is annexed herewith and marked as ANNEXURE: RR2. I say that in connection with the same a document being annexure II was also filled up which is placed on record by Respondent no.1 along with their reply at page 73.
8. I further say that the said objections dated 09.05.2018 were placed before respondent no 1 and as the objections here raised had no merits therefore the respondent no 1 thought it fit not to consider them. I say that the respondent no 1 allowed my firm to participate in the tender proceeding as my firm was qualified and has also met with all the qualifications as mentioned in the tender. I say that further the petitioner has provided their turnover details and certificate of Chartered Accountant, the respondent no 3 would not comment for the want of knowledge.
9. I say that with reference to Para 5 it is mentioned that the petitioner on 22.05.2018 again raised objections before authority regarding qualification of padner respondent no 3 with reference to criteria of turnover as the petitioner does not meet with the same because it provides for 'Annual Turnover of Rs. 100 Lakhs from the business of supply of Manpower'. I say that response in connection with eligibility of the respondent no.3 with regard to turnover is stated in para 8 herein and a necessary certificate issued by Chartered Accountant were also placed along with the application. I 6 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT further say that the respondent no.3 also fulfills this criteria because the respondent no.3 does not do any work other than supplying of Manpower and hence the entire turnover is achieved from providing Manpower services only."
12. In this backdrop, Mr.Dagli, learned advocate for the petitioner reiterated the allegations mentioned in the petition. Learned counsel for the petitioner submitted that respondent No.3 did not fulfill and comply the conditions / requirement related to eligibility criteria prescribed under clause 4(f) and 4(g) of the tender document / NIT inasmuch as respondent No.3 did not fulfill the requirement of average turnover of minimum Rs.100 lakh during last two financial years and the requirement to submit the provident fund registration. Mr.Dagli, learned advocate for the respondent also raised allegation with reference to the certificate issued by the Chartered Accountant. He also submitted that instead of employing regular employees, the municipality is engaging contractors / outsiders for different works. He submitted that the municipality arbitrarily awarded the work order to respondent No.3. He also alleged that respondent No.1 municipality ignored or overlooked the fact that respondent No.3 does not fulfill prescribed eligibility criteria mentioned in the tender document and that, therefore, respondent No.3 cannot be considered eligible bidder. He submitted that the work order should not have been awarded to respondent No.3. He submitted that the respondents have arbitrarily considered respondent No.3 as 'qualified bidder' and rejected petitioner's bid though the 7 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT petitioner qualified at the technical bid evaluation stage. According to learned counsel for the petitioner, both the decisions are arbitrary and contrary to the provisions in the tender document. Any other submission is not made.
12.1 Learned counsel for the respondent No.1 municipality opposed the petition and denied the allegations and submissions by the petitioner. He relied on the details mentioned in the reply affidavit and the documents annexed to the affidavit. Learned counsel for the respondent municipality submitted that the documents annexed by respondent No.3 with its technical bid and price bid complied the requirement for e-tender as well as submission of physical submissions of the copies of the documents and the respondent municipality has not committed any illegality or irregularity during tender evaluation process or with regard to the final decision. Learned counsel for the respondent municipality submitted that the bids referred by the municipality including the bid submitted by the petitioner and respondent No.3 were duly scrutinised in light of the terms and conditions mentioned in the tender document. He further submitted that the documents submitted by respondent No.3 have been found in order and the said documents collectively fulfilled the conditions and eligibility criteria prescribed under the tender document. Learned 8 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT advocate for respondent No.1 municipality further submitted that respondent No.3 emerged as L1 bidder and therefore, the municipality decided to award the work order to respondent No.3 since the respondent No.3 fulfill the terms and conditions prescribed in the tender document. Learned advocate for respondent No.1 also submitted that neither the petitioner nor any other bidder placed any material before the municipality to demonstrate that the documents submitted by respondent No.3 are fake or fabricated and not genuine and that, therefore, in absence of any evidence, such allegation could not have been entertained by the municipality. According to learned advocate for respondent No.1 municipality, there is no illegality or arbitrariness in awarding the work order to respondent No.3. He also emphasised that the major part of the total period of work order is already over, during which respondent No.3 has executed the work and the life of the work order (for which the work order is awarded) would expire within couple of months. He also reiterated and emphasised the details mentioned in paragraph Nos.4 to 8 of its reply affidavit.
12.2 Learned counsel for respondent No.3 adopted the submissions by the respondent municipality and also relied on and reiterated the details and facts mentioned in paragraph Nos.6 to 10 of its reply affidavit.
13. We have considered rival submissions and material available on 9 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT record.
14. In this context, it is relevant to note, at the outset, that according to the work order dated 30.5.2018 (issued by respondent municipality in favour of respondent No.3), the validity period would expire in March 2019 (31.3.2019). Meaning thereby, during the pendency of the petition, the said validity period almost reached the closing / expiry date. 14.1 From foregoing narration of relevant facts, it has emerged that the petitioner has alleged non-compliance of clause 4(f) and clause 4(g) of the tender document. The said clause 4(f) and clause 4(g) read thus:
"f. Annual turnover (Average) should be of minimum 100 Lac as specified in the Bid Summary during the last two financial years from the business of supply of manpower, evidenced through certification by a registered Chartered Accountant.
g. Should be registered under the Contract Labour (Regulation and Abolition) Act, 1970 and possessing proper PF registrations. Copy of latest license should be attached, submission of cence to municipality at the contract awarded time."
15. With reference to the relief prayed for in first part of paragraph No.9(B) At the outset, it may be mentioned that in light of the discussion that follows and for reasons recorded hereafter, it has emerged that the petitioner has failed to demonstrate that the respondent No.3 did not fulfill or comply the two conditions under eligibility criteria and/or that though respondent No.3 could not have been considered qualified bidder the respondent municipality arbitrarily awarded the work order to respondent No.3.
10 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT
16. Respondent No.1 has placed on record copy of the Annexure-II submitted by respondent No.3 (along with its bid) wherein, the said respondent No.3 provided the details of its turnover during last 3 years. The said document (at page 73 of present petition) reflects below quoted details:
"10. Details of Turnover of last three years
(a) Year 2014-2015 : Turnover: 2,03,500=00
(b) Year 2015-2016 : Turnover: 63,25,020=00
(c) year 2016-2017 : Turnover: 3,40,52,620=00 16.1 While dealing with the petitioner's allegations, respondent No.1 has, in its affidavit dated 1.7.2018, submitted and clarified (pg.58) that:
"11. It is further humbly submitted that it is true that turn over of bidder must of Rs.100 Lakhs, but if the Hon'ble Court peruses that turn over is AVEAGE ie. Average of last Three years. Respondent No.3 has supplied the details of turn over of last three years to the Municipality at as per this details in year 2014-2015 his turn over is Rs.2,03,500=00 year 2015-2016 Rs.63,25,020=00 for year 2016-2017 Rs.3,40,52,620=00 which comes to total 40,58,1140=00. Said document is produced here and marked at ANNEXURE-R-6. Therefore in view of above annual average of Resp. No.3 is 100 lakhs, therefore there is no substance in the arguments that Resp. No.3 is not qualified because it does not have turn over of Rs.100 Lakhs annually. Not only this even certificates of Chartered accountant were submitted for this fact."
16.2 The respondent No.1 has further averred and clarified that:
"It is true that commission of respondent No.3 is .01 paisa per employee but merely because it is only lower side it cannot be said that there is active association of other office bearers of the municipality. It is further denied that some corruption is to be carried out by some officers of the municipality. It is humbly submitted that since petitioner is not granted tender therefore in frustration he has made reckless and baseless allegations. It is further submitted that petitioner may have made representation to Collector Shree Rajkot but present respondent cannot comment upon it. But however since allegations of petitioner was not true therefore tender granted in favour of respondent No.3 cannot be cancelled. It is further humbly submitted that Municipal Councilor Mr.Vanraj B. Gida shown his displeasure for granting the tender to Resp. No.3 but it is humbly submitted that it is decision of Municipality to allot the tender the Resp. No.3 and more so he is the lowest bidder and was qualified also. Therefore displeasure of Mr.Vanraj B. Gida is of no use to petitioner."
16.3 Besides this, respondent No.3 has also dealt with the petitioner's allegation. In this context, it is relevant to recall the details by respondent No.3 in paragraph Nos.6 to 11 of its affidavit. Along with its 11 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT affidavit, respondent No.3 has also placed on record the registration certificate as "approved contractor". The certificate issued by Chartered Accountant (whereby the petitioner's turnover is certified) and the certificate issued by some of the establishments where the said respondent executed the works / contracts of similar nature are also placed on record.
17. While the petitioner has raised allegations against respondent Nos.1 and 3 and has expressed some doubt about the documents on which said respondents relied, the petitioner has, however, failed to place on record any material, much less cogent evidence to assail or to substantiate and support the allegations or to even derogate the documents (on which respondent Nos.1 and 3 have, while asserting that the said documents were submitted along with the bid) relied on (to support the submission that respondent No.3 fulfilled the prescribed eligibility criteria when the said respondent submitted its bid). Any material to assail the documents (submitted by respondent No.3 and relied on by respondent No.1) and/or to support the allegations against said documents is not placed on record by the petitioner. The petitioner has failed to substantiate and establish its allegations. 17.1 In absence of any material, much less cogent evidence which would support and justify the petitioner's allegations, the doubts and 12 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT allegations by the petitioner cannot be accepted and the Court cannot entertain such unsubstantiated allegation or doubt by the petitioner. 17.2 The Court cannot treat such unsubstantiated allegations as evidence and the Court cannot interfere with the decision of employer (agency which invites tenders) merely on the basis of bald and unsubstantiated allegations, when there is no material to support and justify such allegations.
17.3 It is pertinent that respondent No.1 has, by means of affidavit, categorically asserted that the documents were submitted along with the bid and the certificates submitted by respondent No.3 fulfill and meet with the eligibility criteria and that there is no basis, much less any credible material of probative value, to demonstrate that the documents submitted by respondent No.3 are fake or fabricated and forged. Further, according to respondent No.1, respondent No.3 satisfactorily demonstrated that its average turnover during specified period was more than Rs.100 lakhs and that, therefore, respondent No.3 fulfilled the eligibility criteria. Moreover, respondent No.1 has also claimed that the price bid / rate submitted and quoted by respondent No.3 emerged as the lowest (i.e. respondent No.3 emerged as L1 bidder) and that, therefore, there was no justification to not award the work order to respondent No.3, more particularly when (i) respondent No.3 13 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT established that it fulfilled the eligibility criteria (i.e. it emerged as eligible and qualified bidder); and (ii) the said respondent No.3 also emerged as L1 bidder.
18. The scope of judicial review in matter of awarding contract and in the matter of eligibility criteria prescribed by means of tender condition in a tender document, is explained by Hon'ble Apex Court in various decisions.
[a] In the decision in case of Directorate of Education & Ors. v. Educomp Datamatics Ltd. & Ors. [(2004) 4 SCC 19], Hon'ble Apex Court observed, inter alia, that:-
"10.In Air India Limited v. Cochin International Airport Limited [2000 (2) SCC 617], this Court observed :
"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. 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 bound vitiated by mala fides, unreasonableness and arbitrariness."
[Emphasis supplied]
11.This principle was again re-stated by this Court in Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and others [2000 (5) SCC 287]. It was held that the terms and conditions in the tender are prescribed by the Government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the Courts to say whether the conditions prescribed in the tender under considerations were better than the one prescribed in the earlier tender invitations.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The Courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide."(emphasis supplied) [b] In the decision in case of Central Coalfields Limited & Ors. v. SLL- 14 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT SML (Joint Venture Consortium) & Ors. [(2016) 8 SCC 622], Hon'ble Apex Court observed, inter alia, that:-
"43. Continuing in the vein of accepting the inherent authority of an employer to deviate from the terms and conditions of an NIT, and reintroducing the privilege of participation principle and the level playing field concept, this Court laid emphasis on the decision making process, particularly in respect of a commercial contract. One of the more significant cases on the subject is the three judge decision in Tata Cellular v. Union of India, 1994 6 SCC 651 which gave importance to the lawfulness of a decision and not its soundness. If an administrative decision, such as a deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation. This was quite clearly stated by this Court (following Tata Cellular) in Jagdish Mandal v. State of Orissa, 2007 14 SCC 517 in the following words:
"Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind.
A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands and millions and may increase the project cost manifold."
This Court then laid down the questions that ought to be asked in such a situation. It was said :
"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."
44. On asking these questions in the present appeals, it is more than apparent that the decision taken by CCL to adhere to the terms and conditions of the NIT and the GTC was certainly not irrational in any manner whatsoever or intended to favour anyone. The decision was lawful and not unsound.
47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber.
48. Therefore, whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited 15 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot." (emphasis supplied) 18.1 From above quoted observations, it emerges that the decision making process of employer or principal in accepting or rejecting a bid should not be interfered with unless it is tainted with malafides or is intended to arbitrarily favour someone or it is wholly irrational which any prudent authority would not take. The Court would interfere only if the decision is found to be perverse. Likewise the right to decide as to which tender condition or criteria is essential falls within the realm of employer / principal, and the employer's decision on this count and its soundness should not be questioned or doubted by the Court. [c] In the decision in case of Maa Binda Express Carrier & Anr. v. North Eastern Frontier Railway & Ors. [(2014) 3 SCC 760], Hon'ble Apex Court observed and explained that:-
"8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non- discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process." (emphasis supplied) [d] In para No.10 of the decision in case of Global Energy Ltd. & Anr.16 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT
v. Adani Exports Ltd. & Ors. [(2005) 4 SCC 435], Hon'ble Apex Court observed, inter alia, that:-
"10. The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the Courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this Court, it is rather surprising that the learned Single Judge passed an interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a bank guarantee or a bankers' cheque till three days after the actual date of opening of the tender. The order of the learned Single Judge being wholly illegal, was, therefore, rightly set aside by the Division Bench." (emphasis supplied) [e] In the decision in case of Association of Registration Plates v. Union of India & Ors. [(2005) 1 SCC 679], Hon'ble Apex Court observed, inter alia, that:-
"35. Taking up first the challenge to the impugned conditions in the Notices Inviting Tenders issued by various State authorities, we find sufficient force in submissions advanced on behalf of the Union and the State authorities and the contesting manufacturers. The State as the implementing authority has to ensure that scheme of high security plates is effectively implemented. Keeping in view the enormous work involved in switching over to new plates within two years for existing vehicles of such large numbers in each State, resort to 'trial and error' method would prove hazardous. Its concern to get the right and most competent person cannot be questioned. It has to eliminate manufacturers who have developed recently just to enter into the new field. The insistence of the State of search for an experienced manufacturer with sound financial and technical capacity cannot be misunderstood. The relevant terms and conditions quoted above are so formulated to enable the State to adjudge the capability of a particular tenderer who can provide a fail-safe and sustainable delivery capacity. Only such tenderer has to be selected who can take responsibility for marketing, servicing and providing continuously the specified plates for vehicles in large number firstly in initial two years and annually in the next 13 years. The manufacturer chosen would, in fact, be a sort of an agent or medium of the RTOs concerned for fulfillment of the statutory obligations on them of providing high security plates to vehicles in accordance with rule 50. Capacity and capability are two most relevant criteria for framing suitable conditions of any Notices Inviting Tenders. The impugned clauses by which it is stipulated that the tenderer individually or as a member of joint-venture must have an experience in the field of registration plates in at least three countries, a common minimum net worth of Rs.40 crores and either joint-venture partner having a minimum annual turnover of at least Rs.50 crores and a minimum of 15% turnover of registration plates business have been, as stated, incorporated as essential conditions to ensure that the manufacturer selected would be technically and financially competent to fulfil the contractual obligations which looking to the magnitude of the job requires huge investment qualitatively and quantitatively.
38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering Authority is found to be malicious and misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of a class of intending tenderer under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep out of field indigenous manufacturers. It is explained that on the date of formulation of scheme in rule 50 and issuance of guidelines thereunder by Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates."17 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT
(emphasis supplied) [f] In paragraph Nos.10 and 11 of the decision in case of Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation & Ors. [(2000) 5 SCC 287], Hon'ble Apex Court observed, inter alia, that:-
"10. There have been several decisions rendered by this Court on the question of tender process, the award of contract and evolved several principles in regard to the same. Ultimately what prevails with the courts in these matters is that while public interest is paramount there should be no arbitrariness in the matter of award of contract and all participants in the tender process should be treated alike. We may sum up the legal position thus:
(i) The Government is free to enter into any contract with citizens but the court may interfere where it acts arbitrarily or country to public interest;
(ii) The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate between persons similarly situate;
(iii) It is open to the Government to reject even the highest bid at a tender where such rejection is not arbitrary or unreasonable or such rejection is in public interest for valid and good reasons.
11. Broadly stated, the courts would not interfere with the matter of administrative action or changes made therein unless the Government's action is arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide." (emphasis supplied) [g] In the decision in case of JSW Infrastructure Ltd. v. Kakinada Seaports Ltd. [(2017) 4 SCC 170], Hon'ble Apex Court clarified and explained that "the employer must have play in the joints i.e. necessary freedom to take administrative decisions within certain boundaries". In paragraph No.9 of the said decision, Hon'ble Apex Court observed, inter alia, that:-
"9. We may also add that the law is well settled that superior courts while exercising their power of judicial review must act with restraint while dealing with contractual matters. A Three Judge Bench of this Court in Tata Cellular vs. Union of India v. Unikon of India (1994) 6 SCC 651 held that (i) there should be judicial restraint in review of administrative action; (ii) the court should not act like court of appeal; it cannot review the decision but can only review the decision making process (iii) the court does not usually have the necessary expertise to correct such technical decisions.; (iv) the employer must have play in the joints i.e., necessary freedom to take administrative decisions within certain boundaries." (emphasis supplied) 18.2 When the facts of present case and the allegations by the 18 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT petitioner are examined in light of material available on records and in light of above quoted observations by Hon'ble Apex Court and in light of the terms and conditions of NIT / tender document, it emerges that the allegations by the petitioner are not established and that the petitioner has failed to place on record any material to support its allegations and/or to make out the case that respondent No.3 was not eligible or duly qualified.
18.3 The petitioner has failed to make out any justification and any case against the decision of respondent No.1 and/or to convince the Court to set aside and disturb the work order issued to respondent No.3.
18.4 Therefore, the allegations by the petitioner cannot be accepted and sustained and the municipality's decision rejecting the petitioner's contention and the decision that the petitioner fulfills the eligibility criteria and is eligible / qualified bidder and the decision by respondent No.1, so far as it relates to issuing and awarding work order to respondent No.3, does not warrant any interference. Present petition, to that extent, does not deserve to be accepted.
19. Now, so far as the petitioner's demand that the municipality should be directed to award the work order to it (to the petitioner) and the the respondent municipality's action of outsourcing its primary and 19 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT statutory duties are concerned what deserves to be mentioned at this stage is the fact that while examining the petitioner's allegations and the reply by municipality and other respondents, the Court noticed that the respondent municipality invited bids so as to award contract / work order for 'supplying manpower' for executing various functions, duties and works which include some of the primary, basic and essential duties and statutory functions of municipality (to outside agency).
19.1 Meaning thereby the respondent municipality - a local self-
government body wants to abdicate its duties and obligations and shirk off its responsibilities and accountability and hand over its work and functions to outside agency and the persons who are not employees of municipality.
20. In view of the relief prayed for in second part of paragraph No.9(B) it is necessary to address pertinent question viz. whether local authority can assign its basic, statutory and primary duties and essential functions to an outside agency on contract or on outsourcing basis and instead of discharging its statutory duties through its own employees, who would be subject to rules, regulations as well as supervision and control of the municipality, whether such local authority can outsource such work and handover its primary, essential and statutory duties in the hands of persons who are not its employees and not under its direct 20 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT supervision and control and are not subject to its rules, regulations and disciplinary measures.
20.1 It is necessary to address the said issue in light of the second part of the relief prayed for by the petitioner viz. that the work order for such works should be issued in its favour because, while examining the relief prayed for by the petitioner, it would be necessary to examine whether it is legal and proper for municipality to outsource such functions and duties and whether the Court would be justified in passing order which may permit (or oblige) the municipality to to outsource such functions and duties.
20.2 It is necessary to address aforesaid issue also because if the said relief is granted it would amount to permitting or facilitating or approving respondent municipality's unauthorised, incompetent, impermissible and unjustified intentions and attempt to outsource basic and primary duties and essential functions of municipality.
21. Having regard to above mentioned aspects and to examine above mentioned issue the Court directed the respondent municipality to offer its explanation in response to the said issue.
21.1 The respondent municipality, through its learned counsel, 21 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT submitted that for want of sanction to recruit regular employees and on account of vacancies against sanctioned posts and to meet with exigencies as well as routine and daily work with less number of employees the respondent municipality resolved and decided to outsource manpower. It is also claimed that instructions and directions to outsource manpower are issued by the State.
21.2 In its further affidavit dated 13.9.2018 the municipality tried to justify its action. The relevant part of said affidavit reads thus:
"2. It is humbly submitted that the general body of the municipality has passed resolution to obtain essential services through outsourcing. It is humbly submitted that the as has been rightly stated by the Ld. Under Secretary the total (set up) strength of the Respondent No.1 Municipality is 305 posts and out of this total set up 162 posts are vacant and only 142 are filled up. Therefore it is less than even half of the strength. It is further humbly submitted that in circular Dt. 5-5-2018 the Commissioner Municipal Administration, Gandhinagar has clearly stated that in no circumstances municipality shall make any appointment on daily wage basis and if necessary municipality shall take those service through outsourcing. Said Circular is already annexed at page 120 of the affidavit in reply. Therefore, in these circumstances looking to the exigencies of the work and to see that essential services are not disturbed the General Board of Municipality decided to float the tender for outsourcing.
8. It is further humbly submitted that the Govt. has vide circular Dt. 15.2.2007 has instructed that, it was found that in some municipalities unauthorised persons are appointed and work is being taken from them. Therefore it was directed that in no circumstances such appointments must be made. Else the Chief Officer will be personally held liable. Therefore as a interim measure Municipality shall take all it's essential services through registered agency. True copy of the said circular is produced here and marked at ANNEXURE-R-7.
9. It is further humbly submitted that Assistant Labour Commissioner, Govt. of Gujarat vide Circular Dt. 15.9.2015 has issued a circular that in different departments of Govt. are engaging workman through outsourcing agencies. It is directed that all the workman even though their services are taken through outsourcing whether skilled, semi-skilled or unskilled, they must be paid wages as per the provisions of minimum wages. Act. The Municipality is following these orders. True copy of the said circular is produced here and marked at ANNEXURE-R-8.
10. It is further humbly submitted that in para 7 of the Affidavit in reply submitted by Ld. Secretary it is stated that Municipality has invited tenders for service of site supervisor, clerk, computer operator, etc. It is further stated that municipality shall follow the procedure as scribed under Ss. 47, 50 and 271. It is humbly submitted that municipality has not floated the tender in violation of s. 47, 50 or 271 of Gujarat Municipalities Act. It is humbly submitted that only till the regular posts are filled by regular recruitment, the services are taken through outsourcing and this is interim arrangement only. On the contrary in view of circular produced at Annexure-R. 4. It is specifically stated that in no circumstances any daily wager shall be appointed in the municipality and if necessary services shall be taken through outsourcing.
11. It is further humbly submitted that setup of municipality is fixed by the Ld. Director of the Municipalities. Now if the Hon'ble appreciates total 162 posts of set up are lying vacant out of total 305 posts. In these circumstances whenever Govt. imposes additional duties on Municipality, naturally 22 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT additional work force would be required for eg. Swachh Bharat Abhiyan, etc. Still to fulfill this duty we require more manpower. More ever, for eg. Driver, total posts are 9 and out of which 2 are filled and 7 are vacant. Municipality has it's own vehicles such as tractors, cars, fire fighters, Ambulance, to run ail these vehicles more drivers are required. This is pointed out only with a view to draw the Hon'ble Court's kind attention that in view of specific prohibition for engagement of daily wagers or contractual the municipality is constrained to take those services through outsourcing agencies."
21.3 Before proceeding further, it is relevant to mention that during hearing and proceedings of present petition certain other affidavits came to be placed on record of present petition. One of the affidavits is an affidavit dated 12.9.2018 filed by Under Secretary, Urban Development and Urban Housing Department. The relevant part of said affidavit reads thus:
"5. It is further submitted before this Hon'ble Court that the General Administration Department (GAD), had issued two Government Resolutions dated 30.11.2006 and 01.04.2010 wherein the outsourcing was permitted for rendering services of Class-IV employees like Sweeper, Driver etc. Copy of both the Government Resolutions dated 30.11.2006 and 01.04.2010 is annexed hereto and marked as Annexure-R-1 (Colly.). The Urban Development & Urban Housing Department (UDD) Had also vide Government Resolution dated 01.06.2010 promulgated the minimum establish standard that shall be adopted by each Municipality on its constitution. Copy of the Government Resolution dated 01.06.2010 is annexed hereto and marked as Annexure-R-2. The respondent no.2 has a total sanctioned strength of 305 posts out of which as on the date 143 posts are filled in and 162 are vacant. It appears that for filling up some of the vacant posts, the respondent no.2 Jetpur Navagadh Nagar Palika has issued the tender in question. Copy of set up of respondent no.2 Jetpur Navagadh Nagar Palika is annexed hereto and marked as Annexure-R-3.
6. It is further submitted before this Hon'ble Court that the Commissioner of Municipalities Administration had issued a Government Resolution dated 05.05.2018 wherein the procedure for filling up the vacant sanctioned posts has been enumerated and in this regard guidelines and procedures were set out. A copy of Circular dated 05.05.2018 is annexed hereto and marked as Annexure-R-4.
7. In the facts of the present case, the respondent no.2 Jetpur Navagadh Nagar Palika had issued tender in question wherein the applications were invited for providing Manpower Services for carrying out services of Site Supervisor, Clerk, Computer Operator, Chemist, Wireman, Electric Operator, Peon, Sweeper etc. Therefore as already submitted hereinabove the respondent no.2 Jetpur Navagadh Nagar Palika should follow the relevant sections i.e. Section 47, 50, 271 of the "The Gujarat Municipal Act, 1963" and the resolutions passed by the Government time and again."
21.4 Plain reading of said resolutions (on which the respondents relied) do not indicate that outsourcing even basic, primary and statutory duties and essential functions of municipality or municipality or corporation is permitted and/or the basic - primary and statutory functions or essential functions.
23 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT 21.5 In view of the reply and response by the municipality, the Court passed order dated 28.11.2018 wherein the Court recorded submission/reply by the municipality that at the relevant time there were 164 vacancies (in respect of different posts) on the sanctioned establishment and that before initiating the tender process, the respondent municipality had submitted proposal seeking approval for filling up the posts / for appointments to the said vacant posts, however, the request was not accepted by respondent No.5 (Director of Municipalities) and the State instructed the municipality to adopt the process of outsourcing. In the said order dated 28.11.2018 it is recorded, inter alia, that:
"From the record it comes out that most of the work /jobs for which appointments are sought to be made through Outsourcing relate to primary, basic and statutory duties of the nagarpalika.
It is matter of dismay and surprise that the respondent and the State should even suggest that the Primary and basic and/ or statutory duties of municipality should be thrown out of the Municipality's purview and obligation and given to private agencies/ through outsourcing.
Under the circumstances, the Under Secretary, Urban Housing and Development Department (who has filed the affidavit dated 10.9.2018) as well as Respondent No.5 shall appear before the Court and explain as to why such instruction have been issued to nagarpalika and why the nagarpalika is expected to give out the primary, basic and statutory duties of the municipality to private agency through Outsourcing."
22. After the said order dated 28.11.2018, the Court passed further order on 7.12.2018 wherein, the Court directed, inter alia, that:
"Besides this, the respondent municipality shall place on record the details of the contract awarded to respondent no.3 i.e. the date on which the contract came to be awarded, the period for which the contract is awarded, total number of employees actually deployed by the contractor, the posts/jobs for which the said employees have been deployed, the total number of employees for which the contract is awarded and the details of the bills raised by the contractor from the date the contract came to be awarded till 07/12/2018."
22.1 In response to the said order dated 7.12.2018, the respondent municipality submitted an affidavit dated 12.12.2018 made by the Chief Officer. Under the said affidavit, the respondent municipality clarified that under the work order issued to present respondent No.3, the said 24 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT respondent had deployed 201 persons (in June 2018), 220 persons (in July 2018), 214 persons (in August 2018), 224 persons (in September 2018) and 302 persons (in October 2018). In about 19 categories viz. Clerk, Clerk-cum-Computer Operator, Clerk-cum-JSE, Computer Operator, Driver, Wireman, Pump Operator, Pumpman, Surveyor, Peon, Pagi (Watchman), Helper, Cleaner, Sweeper, Junior Sanitary Inspector, Site Supervisor, Valveman, Labourer and Chemist. The municipality also clarified that for deploying the said persons, the municipality paid, to the said respondent, Rs.13,19,720/- (for June 2018), Rs.15,13,954/- (for July 2018), Rs.14,12,362/- (for August 2018), Rs.11,68,694/- (for September 2018) and Rs.21,64,173/- (for October 2018).
22.2 Certain other salient and interesting features which emerge from the affidavits filed by municipality are that:
(a) At the relevant time, the respondent municipality had 305 posts on sanctioned establishment;
(b) Almost 162 regular / permanent posts on sanctioned establishment were vacant at the relevant time; (c) According to the municipality, the Commissioner, Municipal
Administration had instructed that 'if necessary municipality shall take 25 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT service through outsourcing';
(d) The State Government claims that the circulars issued by Government do not permit outsourcing primary functions and statutory duties of municipality;
(e) After municipality issued contract to respondent No.3, during first phase of 5 months the respondent No.3 raised bills for about Rs.75.75 lakh (total for 5 months) and municipality paid such large amount for deploying, on an average, about 200 to 230 persons p.m., against 162 vacancy.
22.3 From the said details it comes out that the municipality outsourced the work and functions of sweepers, cleaners, water supply department, sanitation department, etc. and paid large amounts towards the bills raised by the agency.
22.4 On the other hand the respondent Nos.4 and 5 have disputed the statements and allegations by the municipality. In its affidavit dated 7.12.2018, respondent No.5 has mentioned, inter alia, that:
"3. It is submitted that the respondent no.1 made incorrect statement by making with the statements that the instructions were issued by the State Government to appoint personnel of sanctioned posts by way of outsourcing. It is clarified that no such specific instructions for the purpose of appointment involved in the present petition were issued by either respondent no. 4 or respondent no. 5 to respondent no. 1-Municipality. As per the Government Resolution dated 05.05.2018, respondent no.1-Municipality was suppose to appoint the persons of different positions on sanctioned posts by following relevant provisions of Sections 47, 50 and 271 of the Gujarat Municipalities Act, 1963 and regular posts by time and again in this regard.
4. It is submitted that it would incumbent upon respondent no.1 forwarded necessary proposals for regular appointment on the sanctioned posts available with them. It is evident from the 26 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT letter dated 30.10.2018 issued by the respondent no. 1 stating that as on 30.10.2018 no proposals from the office of respondent no.1 to the office of respondent no. 5 was pending, with regard to the granting necessary approval to fill up sanctioned posts. A copy of such letter dated 30.10.2018 is annexed hereto and marked as Annexure-R5-I.
5. It is submitted that the proposal to amend the recruitment rules alongwith proposal to fill up the sanctioned posts to the regular recruitment as recently been forwarded by the respondent no.1 on 13.11.2018 to the office of the Regional Commissioner of Municipality (Administration), Rajkot. The said proposal is yet to be forwarded to the office of the respondent no.5 for final approval which shall be given appropriate accordance inconsonance to the Government Resolution dated 05.05.2018."
22.5 Respondent No.5 has, in the said affidavit, asserted that 'the respondent No.1 made incorrect statement by making with the statements that the instructions were issued by the State Government to appoint personnel of sanctioned posts by way of outsourcing...'.
23. In light of the facts emerged from the affidavits by respondents, the Court was constrained to pass order dated 13.12.2018. The said order dated 13.12.2018 reads thus:
"2. Learned counsel for the respondent nagarpalika read some of the details recorded in the resolution. The said details raise several issues of grave concern, more particularly with regard to State Government's lethargy and indifference towards the difficulties and problems of local authority as well as power to issue direction to resort to outsourcing / contractual appointments even in respect of vacancies against sanctioned posts.
3. This is not a solitary case involving the issues which are mentioned in the respondent municipality 's resolution dated 26.9.2016. This Court has come across few cases (Special Civil Applications) wherein the municipality , Municipality and Panchayats have been constrained to take recourse to outsourcing on account of instruction/direction by Director / Commissioner or State Government or on account of refusal to sanction adequate set up and/or refusal or delay by Government in granting approval to fill up regular sanctioned and permanent vacant posts which compels the municipality , Municipality or Panchayats to engage persons for different works, by recourse to outsourcing.
4. In this view of the matter, we direct (i) the Secretary, Urban Development Department; and
(ii) the Commissioner of Municipalities to file appropriate affidavit dealing with the issues mentioned hereinabove and the statements/ allegations in the resolution placed on record by respondent municipality . Such affidavit shall be filed on or before 21.12.2018.
... ... ..."
23.1 The said respondent No.5 (i.e. Deputy Director, Commissioner of Municipalities) subsequently filed another affidavit dated 20.12.2018 27 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT wherein, it is averred and stated that:
"7. It is submitted that the stand of the State Government is already placed before this Hon'ble Court and the cost of repetition. It is submitted that the policy of the State Government is not to promote outsourcing for the basic and primary duties to be performed by the Municipalities at the cost of sanctioned strength. It is evidently clear from the bar perusal of the Government Resolution dated dated 05.05.2018 that the Municipalities are directed not to recruit any contractual employees and recruitment through outsourcing is only stop gap arrangements were entire sanctioned strength is fill up through regular recruitment process, more particularly in case of emergency or contingency. Such exception cannot be termed as mandate of the State Government bypass relevant provisions of Section of the 47, 50 and 271 of the Gujarat Municipalities Act, 1963 at the cost sanctioned posts. As has already been submitted by respondent no.5 in his affidavit dated 07.12.2018 that no proposal from the office respondent no.1 for regular appointment of sanctioned posts were pending with the respondent no.5 dated 30.10.2018 as it is evident from the letter produce alongwith said affidavit."
24. It is pertinent that by means of its affidavits, respondent Nos.4 and 5 claim that 'the policy of the State Government is not to promote outsourcing for the basic and primary duties to be performed by the municipalities at the cost of sanctioned strength...'. 24.1 The said deponents also claim that 'the municipalities are directed not to recruit any contractual employees and recruitment through outsourcing is only a stop gap arrangement where entire sanctioned strength is filled up through regular recruitment process, more particularly in case of emergency or contingency. Such exception cannot be termed as mandate of the State Government to bypass relevant provisions...'.
24.2 According to the deponent the respondent municipality is supposed to appoint persons on sanctioned posts (i.e. to fill up sanctioned posts) by following Sections 47, 50 and 271 of the Act. 24.3 The reply and the explanation of respondent Nos.4 and 5 and the 28 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT stand taken by them do not support the decision of respondent municipality to outsource its functions and to engage manpower by way of outsourcing.
24.4 Respondent Nos.4 and 5 have averred and emphasised in their affidavits that 'the policy of the State Government is not to promote outsourcing for basic primary of duties to be performed by the municipality at the cost of sanctioned strength'.
24.5 From said affidavit by the respondent Nos.4 and 5 it emerges that even according to the said respondent outsourcing is not permissible in respect of or against clear vacancies but it can only be a stop-gap arrangement in emergency or contingency. The respondent Nos.4 and 5 have, by means of their affidavits, emphasised that (a) outsourcing is permissible only as stop-gap arrangement; (b) outsourcing is permissible only where entire sanctioned strength is filled through regular recruitment process; (c) it is permissible only in emergency or contingency; and (d) it is an exception; and (e) relevant provisions are not to be circumvented or not to be given go-bye. The municipality (and/or municipalities and/or corporations), however, seem to be reading said resolutions to suit its / their convenience and purpose and on pretext of or on strength of said resolutions it takes recourse to the mode of outsourcing the functions / manpower, instead of taking steps 29 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT to recruit employees for vacant posts.
24.6 The affidavits by respondent Nos.4 and 5 make it clear that instead of outsourcing manpower in respect of clear vacancies, the vacant posts on sanctioned establishments should have been filled up by recruiting employees in regular mode in accordance with and after following recruitment rules and procedure.
25. It is pertinent that on one hand the respondent Nos.4 and 5 plead such stand before the Court whereas the municipality, on the other hand, tried to justify or rationalise its action (viz. outsourcing manpower) on the ground that said respondent Nos.4 and 5 and the State have issued such instruction and approval to appoint persons on sanctioned posts are not granted by the authority.
26. It appears that the municipality and the said respondents are trying to pass the buck and they are trying to shift the blame to the other side. Amidst such irresponsible and inconsiderate conduct, the respondent Nos.4 and 5 forget and overlook that they are equally responsible and accountable for all lapse and breach (in case of outsourcing the duties and functions of municipality) including violation of relevant provisions under the Act.
27. In this context a slight detour or diversion would not be out of 30 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT place. It is pertinent that despite the reply filed by respondent Nos.4 and 5, the respondent municipality again took steps to re-invite the bids for outsourcing its functions. During the proceedings of present petition the petitioner submitted that despite said affidavits and above quoted orders the respondent municipality, after the period / life of the impugned work order expired, again issued NIT and invited fresh bids for supplying manpower.
27.1 The petitioner placed this fact on record vide its affidavit (made on 27th February 2019 before a Notary) and also placed on record copy of said NIT. The petitioner asserted that:
"3. I say and submit that respondent No.1 recently on /2/2019 issued on-line tender for outsourcing for various positions like Clerk, Computer Operator-cum-Clerk, Sanitary Inspector, Electric Pump Operator Forman, Peon, Valve man & Sweeper, etc. I further say and submit that tender was scheduled to be opened on 20.2.2019. Copy of advertisement inviting on-line tender is annexed herewith and marked as Annexure-I-1 to this additional affidavit."
27.2 In light of said submission, orders dated 26.2.2019 and 28.2.2019 came to be passed. Relevant part of said orders read thus:
Order dated 26.2.2019 "Today, learned counsel for the petitioner submits that according to the information with the petitioner, the respondent - municipality has issued similar tender and invited bids for man power supply and for outsourcing similar work(s)/jobs.
We grant time to the petitioner to file affidavit and place copy of such NIT, issued by the respondent, on record of this petition.
S.O. to 28.02.2019."
Order dated 28.2.2019 "In furtherance of the order dated 26.2.2019, learned advocate for petitioner today placed on record a copy of the Notice inviting tender issued by the Respondent municipality .
On the other hand, Mr. Trivedi, learned advocate for respondent municipality filed affidavit dated 27.2.2019 made by Chief Officer whereby the municipality declared that further process of Tender is 31 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT stayed.
Subsequently Mr. Trivedi also placed on record an Office Order dated 28.2.2019 whereby the municipality has taken decision to cancel the Tender process initiated pursuant to the Notice (at Page186).
Mr. Trivedi, learned advocate submitted that the municipality has cancelled the said Tender process." 27.3 When the Court directed the respondent No.1 municipality to clarify the said position the respondent No.1 filed an affidavit dated 27.2.2019 wherein, the respondent municipality claimed that:
"2. It is humbly submitted that, the term of the tender allotted to the present petitioner is ending on 31st March 2019. And the general election likely to be declared. Therefore once the aachar sanhita is applied the municipality won't be able to fetch the services of manpower. Therefore with a view to see that before the elections are declared the procedure inviting tender should be completed. Therefore subject to final outcome of present petition and subject to directions issued by this honourable high Court the tender was floated.
3. It is further humbly submitted that, the whole procedure carrying forward the opening of the tender and allotting the tender has been stayed till final outcome of present petition. Therefore at present tenders are not allotted to anyone. True copy of the office order issued by me to the office of the municipality is produced her and marked at ANNEXURE-R-1."
27.4 Subsequently, learned counsel for the respondent municipality placed on record of present petition office order dated 28.2.2019 declaring that the said tender process is cancelled by the municipality. 27.5 Since the respondent cancelled said subsequent / fresh process of inviting bids, the Court would rather treat the said issue as closed. 27.6 It is, however, relevant to note at this stage that the respondent municipality has, interestingly, tried to claim that by means of the said tender, the municipality merely called for supplying expert manpower service and not for filling any posts. It is pertinent that from the said affidavit, it also comes out that at the relevant time, there were at least 32 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT 162 vacant posts in different categories, however, instead of filling up the said vacancies / posts on sanctioned establishment by recruiting - appointing employees in accordance with Recruitment Rules, the respondent municipality took recourse to outsourcing manpower.
28. The said reply and explanation of the municipality is merely an excuse and a feeble attempt on its part so as to wriggle out of justification which it offered for outsourcing its functions and engaging manpower on outsourcing basis which is contrary to the reply by respondent Nos.4 and 5 and the stand taken by the said respondents.
29. Having regard to (a) the facts of the case and (b) the stand taken by respondent Nos.4 and 5 as well as respondent No.3 the action of the respondent municipality (viz. to invite bids for awarding work order to supply manpower for getting executed some of the primary and statutory and basic duties, functions and obligations of municipality) and so as to address above mentioned pertinent issue and to take decision with regard to second part of the relief prayed for by the petitioner it is necessary to turn to relevant provision under the Gujarat Municipalities Act, 1963. The aspects involved in present case and those which arise for consideration lead the Court to study and appreciate scope and effect of Sections 47, 50, 80, 271 and Sections 356, 257, 258, 260, 262 and proviso (a) of Section 271. The said relevant provision read thus: 33 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT
"47. Appointment of Chief Officers and Other Officers:-
(1) (a) For every municipality there shall be a Chief Officer appointed by the State Government.
(b) The Chief Officer of a municipality shall forthwith be transferred from that municipality by the State Government if a resolution to that effect is passed by the municipality with not less than two thirds of the total number of councillors of the municipality voting in favour of such resolution. (2) A municipality may, with the previous sanction of the Director, and shall, if so required by the State Government, create all or any of the following posts, namely :- (i) a municipal engineer, (ii) a water works engineer, (iii) a municipal health officer. (iv) a municipal auditor, (v) a municipal education officer, and (vi) any other officer as may be designated by the State Government in this behalf.
(3) Subject to the provisions of section 47A , the recruitment and conditions of service of the officers referred to in sub-section (1) and (2) shall be such as may be prescribed. (4) Subject to the provisions of Section 47A , the power to make appointment to the posts referred to in sub-section (2) shall vest in the municipality.]
50. Appointment of Other Officers and Servants of the Municipalities :-
(1) A municipality may with the previous sanction of the Director, create such post of officers and servants other than those specified in sub-section (1) and (2) of section 47 as it shall deem necessary for the purposes of carrying out the duties under the Act.
(2) The recruitment of such officers and servants and their condition of service shall be such as may be determined in accordance with rules made under section 271.
(3) The power to make appointment in any post referred to in sub- section (1) shall vest in the municipality or in the authority empowered by the municipality by rules made in this behalf under section 271.
67. Tenders to be invited for contracts involving expenditure exceeding Rs. 5,000 :-
(1) Except as is otherwise provided in sub- section (3), a Chief Officer shall, before entering into any contract for the execution of any work or the supply of any materials or goods which will involve expenditure exceeding five thousand rupees, give notice by advertisement in a newspaper, inviting tenders for such contract:
Provided that where the work or supply involves an expenditure exceeding twenty thousand rupees, the advertisement shall be published in such one or more daily newspapers as may be approved by the municipality:
Provided further that at least clear seven days shall be allowed to elapse between the date of the publication of the advertisement in the newspaper inviting tenders and the last date fixed for the receipt of tenders by the Chief Officer.
(2) The Chief Officer shall not be bound to accept any tender which may be made in pursuance of such notice, but may, with the approval of the Executive Committee, accept any of the tenders so made which appears to him, upon a view of all the circumstances, to be the most advantageous or may for reasons recorded reject all the tenders submitted to him.
(3) A municipality may authorise the Chief Officer, for reasons which shall be recorded in its proceedings, to enter into a contract without inviting tenders as herein provided or without accepting any tenders which he may receive after having invited them.
87. Duties of municipalities :-
It shall be the duty of every municipality to make reasonable and adequate provision for the following matters within the limits of the municipal borough, namely:-
A. In the sphere of public works-
(a) naming streets and numbering of premises;
(b) giving immediate relief to persons rendered destitute by such natural calamity as floods, fire or earthquake, within the municipal borough;
B. In the sphere of education- establishing and maintaining primary schools; C. In the sphere of public health and sanitation-
(a) regulating or abetting offensive or dangerous trades or practices;
(b) securing or removing dangerous buildings or places, and reclaiming unhealthy localities;
(c) obtaining a supply or an additional supply of water, proper and sufficient for preventing danger to the health of the inhabitants from the insufficiency or unwholesomeness of the 34 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT existing supply, when such supply or additional supply can be obtained at a reasonable cost;
(d) public vaccination;
(e) watering public streets and places;
(f) cleansing public streets, places and sewers, and all spaces, not being private property, which are open to the enjoyment of the public, whether such places are vested in the municipality or not; removing noxious vegetation; and abating all public nuisances;
(g) introducing and maintaining the system of water-closet so as to dispense with the removal of night-soil by carrying the same in a receptacle, cart or other means;
(h) disposing of night soil and rubbish and, if so required by the State Government, preparation of compost manure from such night soil and rubbish;
(i) providing special medical aid and accommodation for the sick in time of dangerous disease; and taking such measures as may be required to prevent the outbreak, or to suppress and prevent the recurrence, of such disease;
(j) establishing and maintaining public hospitals, dispensaries and family planning centres and providing public medical relief;
(k) acquiring and maintaining, changing and regulating places for the disposal of the dead, and disposal of unclaimed dead bodies and carcasses of dead animals;
(l) constructing, altering and maintaining public latrines and urinals. D. In sphere of development-
(a) constructing, altering and maintaining public streets, culverts, municipal boundary marks, markets, slaughter-houses, privies, drains, sewers, drainage- works, sewerage works, bath, washing places, drinking fountains, tanks, wells, dams and the like;
(b) suitable accommodation for calves, cows, or buffaloes required within the municipal borough for the supply of animal lymph;
(c) printing such annual reports on the municipal administration of the borough as ma be required by general or special orders of the State Government;
(d) paying the salary and the contingent expenditure on account of such police or guards as may be required by the municipality for the purposes of this Act or for the protection of any municipal property;
(e) improving agriculture by suitable measures including crop protection and crop experiments.
E. In sphere of town planning- devising town planning within the limits of the borough according to the law relating to town planning for the time being in force. F. In the sphere of administration-
(a) lighting public streets, places and buildings;
(b) extinguishing fires, and protecting life and property when fires occur;
(c) removing obstructions and projections in public streets or places and in spaces, not being private property, which are open to the enjoyment of the public, whether such spaces vest in the municipality or in Government;
(d) erecting substantial boundary marks of such description and in such positions as shall be approved by the Collector, defining the limits or any alteration in the limits of the municipal borough;
(e) registering births, marriages and deaths.
271. Municipalities to make rules :-
A municipality shall make rules not in consistent with this Act and the rules or orders made by the State Government under this Act, and may from time to time alter or rescind them-
(a) regulating the conduct of its business and the delegation of any of its powers or duties to any committee or to the Chief Officer or subject to the provisions of Section 54 the powers or duties of any committee to any other committee or to the Chief Officer and the appointment and constitution of committees under Section 55 ;
(b) prescribing the limitations and restrictions subject to which the Pilgrim committee shall exercise the powers and perform the duties of the municipality in respect of the Pilgrim Fund;
(c) Defining the functions of the president and others.- determining the executive functions to be performed by the President, Vice-President and the Chairman of any committee;
(d) Establishment-determining the staff of officers and servants to be employed by the municipality and their powers and duties;35 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT
(e) General guidance of municipal servants.-generally for the guidance of its officers and servants in all matters relating to the municipal administration;
(f) Amount of security .-fixing the amount and nature of the security to be furnished by any officer or servant from whom it may be deemed expedient to require security;
(g) Mode of appointing, etc., municipal servants.-determining subject to the limitations imposed by Section 47 and Section 50 the mode and conditions of appointing, punishing, or dismissing any officer or servant; and delegating to officers designated in the rules the power to appoint, fine, reduce, suspend or dismiss any officer or servant;
(h) Leave to municipal servants.-regulating the grant of leave to its officers or servants, and fixing the remuneration to be paid to the persons, if any, appointed to act for them whilst on leave;
(i) Pensions, etc.-regulating the period of service of its officers and servants and determining the conditions under which such officers and servants or any of them shall receive pensions, gratuities or compassionate allowances on retirement or discharge from service or on their becoming disabled through the execution of their duty, and the amount of such pensions, gratuities or compassionate allowances; and prescribing the conditions under which any gratuities or compassionate allowances may be paid to the surviving relatives of any such officers or servants, whose death has been caused through the execution of their duty;
(j) Provident funds.-authorizing the payment of contributions at such rates and subject to such conditions as may be prescribed in such rules, to any pension or provident fund which may be established by the municipality or, with the approval of the municipality, by its officers and servants;
(k) enabling such officers or servants who are subscribes to any provident fund to exercise the option of joining any pension fund established as aforesaid, either retrospectively or prospectively, on such terms and conditions as may be specified in the rules and providing for the manner in which the amount of contributions made to the provident fund by such officers or servants and the municipality and standing to the credit of such officers or servants on the date on which the option is exercised shall be dealt with;
(l) Prescribing taxes.-prescribing the taxes to be levied in the municipal borough for municipal purposes, the circumstances in which exemption will be allowed, 1[***] on which and the extent to which remissions will be granted, and the system on which refunds will be allowed and paid, in respect 2 [***]; the limits of the charges or payments to be fixed in lieu of any tax under Section 119 , the fees to be charged for licences or permissions granted under Section 118 and for giving copies and stamping weights and measures; the fees for notices demanding payments due on account of any tax and for the issue and execution of warrants of distress and the rates to-be charged for maintaining any live-stock distrained; and the time at which and the mode in which such taxes, charges, payments, fees or rates shall be levied or recovered or be payable and the persons authorised to receive payment of the same and the manner in which auctions of moveable and immovable property under Section 134 shall be held;
(m) Writing off amounts due.-prescribing the conditions subject, to which sums due on account of any tax or of costs in recovering any tax may be written off as irrecoverable and the conditions subject to which the whole or part of any fee chargeable for distress may be remitted by the Executive Committee:
Provided that-
(a) Approval required to rules.-no rule or alteration or rescission of a rule made under this section shall have effect unless and until it has been approved by the State Government;
(b) Officers transferred from or to the service of the Government.-if an officer serving or having served under a municipality has been, or is, transferred from or to the service of the Government or is partly employed by the Government and partly by a municipality, the municipality shall make such contributions to his pension and leave allowances as may be required by the conditions of his service under the Government, to be made by him or on his behalf;
(c) Notice required in certain cases of dismissal.-a municipality shall not, unless with the assent of the Government dispense with the services of any officer transferred from the service of the Government to the service of the municipality or employed partly by the Government and partly by the municipality, or finally dismiss from the service of the municipality any officer transferred from the service of the municipality, to the service of the Government without giving the Government six months previous notice."
29.1 Section 87 of the Act prescribes the duties and functions of municipality. Under the said provisions, the duties and functions are placed under 5 categories:
(i) in the sphere of public works; 36 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT (ii) in the sphere of education; (iii) in the sphere of public health and sanitation; (iv) in the sphere of development; (v) in the sphere of administration. 29.2 The duties and functions enumerated under first 3 categories to
some extent in fifth category are of public interest, public welfare and importance. They form or constitute basic, essential and primary civil duties and functions of municipalities.
29.3 Section 91 enumerates discretionary functions of the municipality and it also brings out the distinction between primary and basic duties and essential function of the municipality vis-a-vis discretionary functions. This section emphasises the position that the duties and functions under Section 87 are basic and statutory duties and essential functions.
30. Such activities and functions i.e. primary and basic duties and essential functions - including those covered within the purview of (included under Section 87) cannot be outsourced.
31. In this context it is relevant to take into account provisions under Section 47, Section 50 and Section 271 of the Act.
31.1 Section 47 makes provision for appointment of Chief Officer and 37 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT other officers for administration of the municipality and so as to enforce implementation and execution of the duties and functions of the municipality.
31.2 Section 50 of the Act makes provision for creation of such posts of officers and servants [other than those specified sub-sections (1) and (2) of Section 47] as may be necessary 'for the purpose of carrying out the duties under the Act'. Thus, the provisions under said two section of the Act postulate and mandate that the duties and functions of the municipality must be implemented and carried out by the officers and servants appointed on the posts created under the Act. 31.3 Sub-section (2) of Section 50 provides that such officers and servants should be recruited and their conditions of service should be such as are determined in accordance with the rules framed under Section 271 of the Act. Section 271(d) provides that Rules can be framed for determining the staff of officers and servants to be employed for the municipality and the powers and duties of such officers and servants. 31.4 Section 271(g) provides for framing rules with regard to mode of appointment, conditions of appointment, for disciplinary action, termination of service of officers and servants. The section mandates that Rules prescribing mode of appointment and conditions of 38 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT appointment of officers and employees (staff) including Rules for disciplinary action and for all aspects related to service of the employees should be framed by the municipality. Section 271(h)(i), (j) and (k) provide for framing rules in respect of service conditions for the officers and employees of the municipality.
31.5 In light of the said provision it becomes clear that the officers and servants of the municipality should be selected and recruited / appointed by the municipality and the conditions of their service must be determined by municipality that too in accordance with the Rules framed under Section 271 of the Act and not by any person or agency or body other than the municipality and the service conditions of such employees cannot be determined by any agency or body or person other than municipality.
31.6 The said provision project and highlight the position that said employees must be under supervision and control of the officer(s) of the nagarpalika / municipality and accountable to the municipality.
32. A conjoint reading of the said provision viz. Sections 47, 50, 87 and Section 271 make it clear that the Act does not provide any room to the municipality and does not permit the municipality to outsource its duties and functions, more particularly the duties specified under Section 39 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT 87 of the Act. The said provision do not postulate that the duties and functions of the municipality can be performed and executed by persons who are not its employees or that the municipality can get its duties and functions carried out and executed by persons (officers, employees and staff) who are not its employees (i.e. who are not selected, recruited and appointed as employees (or officers) of the municipality after following the procedure and in the mode prescribed under the Act and Rules) but are outsiders / non-employees. The Act rather mandates that the municipality must, itself, carry out the basic and primary duties and essential functions of municipality particularly those which fall under the purview of Section 87 through its own officers and employees recruited and appointed by the municipality on the posts created under and in accordance with the provisions of the Act and the Rules framed for said purpose and in exercise of power conferred by the Act. Further, the said employees should be under direct control and supervision of the officer appointed under Section 47 and they should be bound by the Rules framed under the Act, particularly under Section 271 of the Act. 32.1 The duties and functions which form basic, primary and essential duties and functions of municipality e.g. water supply, safety, public health, fire-tenders / fire-brigade, sanitation, fire, primary schools - education etc. cannot be placed in the hands of outside agency and/or in 40 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT the hands of the persons who are not officers and employees of (i.e. selected and appointed by) the municipality.
32.2 The said provision also envisage that the employees entrusted with the duties and functions of the municipality should be accountable to the municipality for their acts of omission and/or commission and that they should be bound by and they should be subject to the Discipline and Regulations of the municipality so that appropriate action against erring employees can be taken in the cases where the duties and functions are not performed (in the manner it should be discharged) under and in accordance with the Regulations.
32.3 Needless to mention that when the activities are outsourced and a third party / outside agency is engaged to deploy persons to perform the duties, then the municipality (and the officers appointed under Section 47 of the Act) will not have any role and/or any say in the matter of selection and appointment of employees and/or any authority or control and power of supervision over the said persons engaged and deployed on outsourcing basis.
32.4 Thus, engaging persons or entrusting duties and functions of municipality to persons who are not selected and recruited (i) by the municipality; (ii) in accordance with the procedure prescribed by the Act 41 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT and the Rules and the action of getting duties and functions of municipality executed by such non-employees, amount to breach of statute's mandate and violation of above mentioned provision. It would also tantamount to acting against basic tenets of public employment.
33. The Act does not admit or permit such situation.
34. It is pertinent that if essential functions and statutory duties e.g. water supply, fire brigade, food health and safety sanitation are handed over - placed in the hands of the persons who are not employees / officers of the municipality and are not bound by / cannot be subjected to the discipline of the municipality and Regulation of the municipality then such arrangement is likely to result into serious consequences. For illustration, if the activities and functions related to sphere of public works; sphere of education; sphere of public health and sanitation; sphere of development; sphere of administration (e.g. extinguishing fires, work of fire tenders / fire-brigade, protecting life and property when fire occur, maintaining public toilets and urinals, operation and maintenance of water supply stations and water treatment plants regular / daily sweeping and cleaning of roads and other public places, inspection and certification of premises and/or facilities used / frequented by public etc.) are put in hands of persons who are not employees of the municipality then such activities will become 'nobody's responsibility' 42 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT and in cases of non-performance, negligence, etc. there will not be any accountability. The legislature would never permit such situation.
35. To avoid such chaotic situation and disastrous consequences, the legislature has, advisedly, prescribed that the duties and functions of the municipality should be undertaken, discharged and carried out by the officers and servants recruited, appointed and employed by the municipality under in accordance with the provisions of the Act and the Rules framed thereunder.
36. The said provision are specifically incorporated under the Act to ensure that the persons (officers and employees) appointed for performing and executing the duties and functions of the municipality must be under direct supervision and administrative control of the administrative head of the municipality so that the said officer can exercise effective control and direct supervision over the officers and employees of the municipality who are engaged for executing the duties and functions of the municipality.
37. When the Act prescribes the duties and functions which the municipality should perform and when the Act prescribes the manner and mode in which the duties and functions should be performed and when the Act also prescribes that the said functions should be performed 43 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT by the officers and employees of the municipality under control of and under supervision of the officers appointed under Section 47 and section (in accordance with Section 271 of the Act) and that the municipality should also frame Rules for their appointment and for their service conditions, then the said duties and functions must be performed in the manner prescribed under the Act and not in any other manner.
38. It, therefore, follows that the municipalities are not permitted to outsource the works, activities and functions which are prescribed by the said statute and the action of outsourcing such activities and/or the action of engaging persons on outsourcing basis (to execute the said works, duties and functions) amount to flouting the mandate under the Act. It also amounts to violation of statutory provision and abandoning statutory obligation as well as shirking the responsibility and acting in defiance of or in breach of provision under Section 87.
39. The municipalities, which indulge in and adopt such ill-practice or method of outsourcing its functions and duties actually commit violation of provisions under the Gujarat Municipalities Act and the Rules framed thereunder. Further by its such action the municipality not only violates the duty cast on the municipality but they also circumvent the public duty, abuse the fundamental character and basic or primary element of public employment and such municipality also deprive 44 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT opportunity of public employment to the persons who possess and fulfill prescribed eligibility criteria i.e. qualification, experience, etc. prescribed by the Rules framed under the Act.
40. Such action viz. indulging in and adopting the practice and method of outsourcing, violates the salutary principles the soul of Articles 14 and 16 of the Constitution and it also give rise to or pave wave for nepotism and engaging persons who do not fulfill prescribed eligibility criteria, they also undermine sanctity of recruitment process in domain of public employment.
41. In light of the foregoing discussion and for the reasons mentioned above, the relief prayed for by the petitioner in second part of paragraph No.9(B) viz. that the respondent be directed to issue or grant the work order to the petitioner for the works / functions of the municipality does not deserve to be and cannot be granted.
42. Before concluding we must also put on record and clarify, else we would fail in our duty, that the foregoing discussion with regard to Sections 47, 50, 87 and 271 of the Act, more particularly about inherent illegality in outsourcing primary and basic duties and essential functions of municipality, is equally applicable to the respondent Nos.1, 4 and 5 viz. the State, Director of Municipalities. In light of the foregoing 45 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT discussion and for the reasons mentioned above, we consider it appropriate to also remind the respondent Nos.4 and 5 about their obligation viz. to strive and achieve object of the statute and to enforce the scheme of the Act and to ensure that the municipalities should not indulge in and should not be permitted to indulge in any action contrary to above mentioned sections of the Act. They must also ensure that the municipality does not indulge in any act which violates and infringes Articles 14, 16 and 21 of the Constitution and to issue appropriate directions to all municipalities to not flout the mandate of the statute and/or the scheme of the Act and to not conduct its affairs in manner not permitted by the Act and to not sacrifice the spirit and object of various provisions.
43. The respondent No.1 (State), respondent No.4 (Director of Municipalities) and respondent No.5 (the Secretary) should not forget that in light of the scheme of the Act they would be equally responsible and accountable for violation (by the municipality / its officers) of any provision of the Act. In this context it would be profitable to turn to and to take into account Sections 256, 257, 258, 260, 262 and proviso (a) of Section 271. The said sections read thus:
"256. Posting under municipalities of officers and servants in State Service:-
(1) For the purpose of enabling the municipalities to discharge their functions and duties under this Act, it shall be lawful for the State Government to direct by a general or special order that such number of officers of the All India Service and of officers of the State Service except officers of class IV 46 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT Service shall be posted under such municipality and for such period and subject to such conditions as may be specified in the order and accordingly the officers specified in the order shall be posted under such municipality.
(2) ...............
257. Power of inspection and supervision:-
(1) The Director, Collector or any officer of Government authorized by the State Government by a general or special order shall have powers-
(a) ............... (b) to call for or inspect any extract from any municipality's or any committee's proceedings and
any book or documents in the possession of or under the control of a municipality.
(2) The Collector shall have power-
(a) to call for any return, statement, account, report or record which he may think fit to require such municipality to furnish;
(b) to require a municipality to take into its consideration any objection which appears to him to exist to the doing of anything which is about to be done or is being done by or on behalf of such municipality or any information which he is able to furnish and which appears to him to necessitate the doing of a certain thing by the municipality, and to make a written reply to him within a reasonable time stating its reasons for not desisting from doing, or for not doing, such thing (3) ...............
258. Powers of Collector to suspend execution of orders, etc., of municipalities:-
(1) If, in the opinion of the Collector, the execution of any order or resolution of a municipality, or the doing of anything which is about to be done or is being done by or on behalf of a municipality, is causing or is likely to cause injury or annoyance to the public or to lead to a breach of the peace or is unlawful, he may by order in writing under his signature suspend the execution or prohibit the doing thereof and where the execution of any work in pursuance of the order or resolution of the municipality is already commenced or completed direct the municipality to restore the position in which it was before the commencement of the work.
(2) When the Collector makes any order under this section he shall forthwith forward to the municipality affected thereby a copy of the order with a statement of the reasons for making it and also submit a report to the State Government alongwith copies of such order and statement.
(3) ...............
262. Power of State Government to provide for performance of duties on default by municipality:-
(1) When the State Government is informed, on complaint made or otherwise, that default, has been made in the performance of any duty imposed on a municipality by or under this Act or by or under an enactment for the time being in force, the State Government, if satisfied after due inquiry that the alleged default has been made, may direct the 75[Director] to fix a period for the performance of that duty.
(2) ...............
(3) ............... 271. Municipalities to make rules:- (a) to (m) ... ... ... ... ... Provided that - (a) Approval required to rules:- no rule or alteration or rescission of a rule made under this
section shall have effect unless and until it has been approved by the State Government;47 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT
(b) ...............
(c) ... ... ... ... ..."
44. A conjoint reading of above quoted provision bring out that the respondent Nos.1, 4 and 5, jointly and severally, have the power and authority to (i) to call for or inspect any extract from any proceedings of any municipality or any committee; (ii) to require a municipality to take into its consideration any objection which appears to exist to the doing of anything or which is about to be done or is being done by or on behalf of such municipality; (iii) to call for written reply or explanation or information with reference to anything done or being done by the municipality; (iv) to suspend execution of orders, etc., of municipalities;
(v) to suspend the execution of any order or resolution of a municipality, or the doing of anything which is about to be done or is being done by or on behalf of a municipality, if it is causing or is likely to cause injury or annoyance to the public or which is unlawful; (vi) to direct the municipality to restore the position in the cases where the work has already commenced; (vii) to fix a period for performance of duty imposed on municipality in cases where complain about default in performance is received by the State Government.
45. It, thus, emerges that the respondent Nos.1, 4 and 5 have the power to approve, sanction, suspend, cancel decision or order or resolution or action of corporation and also issue directions to the 48 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT municipality to withdraw objectionable or unlawful action. Thus, the said respondent Nos.1, 4 and 5 not only have supervisory power with regard to the decision, actions, resolutions, etc. of the municipality but they also have the power and authority to direct - instruct the municipality to reverse its action or decision and require the municipality to act according to its direction.
46. Thus, if the sanctioning or approving authority viz. the authority which is competent to / is authorised to sanction the number of post and strength of employees and/or to approve the Rules framed by the municipality and/or to approve or sanction the actions, decisions, resolutions, etc. of municipality and/or to permit or restrain any action / order / decision or prohibit any action of municipality or to direct the municipality to suspend and/or to withdraw such objectionable or unlawful action or order, fails to stop or restrain such actions (e.g. outsourcing its primary duties and essential functions) by any municipality or if they approve and/or condone such actions or permit and authorise the municipality to proceed with outsourcing, then, such failure or lapse on part of the concerned officer of respondent Nos.1 and 4 and/or respondent No.5, would amount to neglecting the duty imposed by statute (viz. Sections 256, 257, 258, 260, 262 and 271) and/or compromising the object of Sections 47, 50, 87 and 271 of the 49 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT Act and in such event the said authorities also may be considered responsible, liable and accountable for the breach of statutory provision, or defect / default in performance of statutory duty and functions by the municipality. The said respondents would also be responsible, liable and accountable, along with the municipality and its officers, servants and employees, for the consequences of such breach, defect, default and non- compliance by the municipality and its employees, officers and servants.
47. The said Sections 47, 50, 87, 271 and 256, 257, 258, 260, 262 and proviso (a) of Section 271, when considered conjointly, make it clear that the concerned authority / officer who fails to stop and arrest occurrence of such acts and who fail to restrain the municipality from taking recourse to outsourcing, would be equally accountable and responsible for the breach committed, in any manner, by the municipality and/or its officers in respect of municipality's duties and functions as well as for the consequences of such breach.
48. In light of the foregoing discussion and for reasons mentioned above, the relief prayed for in second part of paragraph No.9(B) (i.e. to direct the respondent to accept the tender bid of the petitioner) does not deserve to be and cannot be granted. So far as the relief prayed for in first part of paragraph No.9(B) is concerned, we have already held that the said relief does not deserve to be and cannot be granted. The 50 Downloaded on : Fri Aug 02 23:28:41 IST 2019 C/SCA/8616/2018 CAV JUDGMENT petition, consequently, fails and deserves to be rejected. Therefore, the petition is hereby rejected. Notice is discharged.
Sd/-
(K.M.THAKER, J) Sd/-
(V. P. PATEL,J) Bharat 51 Downloaded on : Fri Aug 02 23:28:41 IST 2019