Kerala High Court
George Thomas Puthenveettil vs Union Of India on 9 July, 2012
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
MONDAY, THE 12TH DAY OF JUNE 2017/22ND JYAISHTA, 1939
WP(C).No. 16639 of 2017 (D)
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PETITIONER:
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GEORGE THOMAS PUTHENVEETTIL
COLONEL (TS), BINDIAN ARMY (RETIRED), PROPRIETOR,
GEORGE THOMAS PUTHENVEETTIL SECURITY AGENCY,
T.C.8/1831/2, PAREKOVIL ROAD,
THIRUMALA P.O., TRIVANDURM.
BY ADVS.SRI.GEORGE VARGHESE(PERUMPALLIKUTTIYIL)
SRI.P.J.JOE PAUL
RESPONDENTS:
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1. UNION OF INDIA,
REPRESENTED BY SECRETARY TO THE MINISTRY OF DEFENCE,
GOVERNEMNT OF INDIA, SOUTH BLOCK,
NEW DELHI - 110 001.
2. DIRECTOR GENERAL RESETTLEMENT
DIRECTORATE GENERAL RESETTLEMENT,
DEPARTMENT OF EX-SERVICE WELFARE,
MINISTRY OF DEFENCE, GOVERNMENT OF INDIA,
WEST BLOCK - IV, R.K.PURAM,
NEW DELHI - 110 066.
3. JOINT DIRECTOR (IN CHARGE OF STATE OF KERALA),
EMPLOYEMENT DIRECTORATE,
DIRECTORATE GENERAL RESETTLEMENT,
WEST BLOCK - IV, R.K.PURAM, NEW DELHI.
4. BHARAT PETROLEUM CORPORATION LTD.,
COCHIN REFINERY AMBALAMUKAL
REP. BY ITS EXECUTIVE DIRECTOR,
P.B.NO.2, AMBALAMUKAL,
ERNAKULAM - 682 302.
5. CHIEF MANAGER (P&CS)
BHARAT PETROLEUM CORPORATION LTD.,
COCHIN REFINERY P.B. NO.2,
AMBALAMUKAL, ERNAKULAM - 682 302.
WPC No.16639 of 2017 2
6. MANAGER (SECURITY)
BHARAT PETROLEUM CORPORTION LTD,
COCHIN REFINERY P.B.NO.2,
AMBALAMUKAL, ERNAKULAM - 682 302.
7. LT.COL.VINOD KUMAT T
M/S. 3983/VINOD KUMAR T.SECURITY AGENCY,
15/283, 'SANSKRITI', KANNAMNGALAM P.O.,
VENGARA, MALAPPURAM - 676 304.
8. MAJ.VARGHESE P.C
M/S. 3241/VARGHESE PC SECURITY AGENCY,
SHOP NO. XIII/781/4, 2ND FLOOR,
INTERNATIONAL TRADE CENTRE, CHANGANNUR,
ALAPPUZHA - 689 121.
R1-R3 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL
R7 BY ADV. SRI.T.SANJAY
R7 BY ADV. SRI.M.PREMCHAND
R4-R6 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR
R4-R6 BY ADV. SRI.P.GOPINATH
R4-R6 BY ADV. SRI.K.JOHN MATHAI
R4-R6 BY ADV. SRI.JOSON MANAVALAN
R4-R6 BY ADV. SRI.KURYAN THOMAS
R4-R6 BY ADV. SRI.PAULOSE C. ABRAHAM
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
12-06-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WPC No.16639 of 2017 3
WP(C).No. 16639 of 2017 (D)
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APPENDIX
PETITIONER'S EXHIBITS
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EXHIBIT P1 A TRUE COPY OF OFFICE MEMORANDUM NO. 28(3)/2012-D(RES-1)
DATED 09.07.2012
EXHIBIT P2 A TRUE COPY OF EMPANELMENT CERTIFICATE DATED 21.11.2013
ISSUED TO THE PETITIONER BY 2ND RESPONDENT.
EXHIBIT P3 A TRUE COPY OF RENEWED EMPANELMENT CERTIFICATE ISSUED BY
THE 2ND RESPONDENT.
EXHIBIT P4 A TRUE COPY OF LICENCE NO.9/2015 DATED 21.3.2015 ISSUED
TO THE PETITIONER BY GOVERNEM NT OF KERALA.
EXHIBIT P5 A TRUE COPY OF LETTER NO.2112/SA/BPCL/2017/KERALA/
3983/3135/3241/EMP. DATED 15.3.2017 ISSUED BY THE 3RD RESPONDENT.
EXHIBIT P6 A TRUE COPY OF EMAIL COMMUNICATION DATED 25.4.2017
ISSUED BY THE 4TH RESPONDENT.
EXHIBIT P7 A TRUE COPY OF NOTICE OF REVISION OF MINIMUM WAGES WITH
EFFECT FROM 19.1.2017 ISSUED BY THE 2ND RESPONDENT.
EXHIBIT P8 A TRUE COPY OF GAZETTE NOTIFICATION NO.513 PUBLISHED ON
10.3.2015.
EXHIBIT P9 A TRUE COPY OF COMPARATIVE REPORT UPLOADED BY THE 6TH
RESPONDENT AND TAKEN DOWN BY THE PETITIONER FROM THE WEBSITE OF THE 4TH
RESPONDENT.
EXHIBIT P10 A TRUE COPY OF EMAIL SENT BY THE PETITIONER ON 26.4.2017.
EXHIBIT P11 A TRUE COPY OF LETTER DATED 26.4.2017.
EXHIBIT P12 A TRUE COPY OF LETTER NO. J14/17017 DATED 09.5.2017 FROM
THE 5TH RESPONDNET.
EXHIBIT P13 A TRUE COPY OF E-MAIL DATED 11.5.2017.
EXT.P14 TRUE COPY OF NOTICE OF REVISION OF MINIMUM WAGES ISSUED
BY 2ND RESPONDENT.
EXT.P15 TRUE COPY OF LETTER OF AUTHORIZATION DATED 24.4.2017 ISSUED
BY THE PETITIONER.
RESPONDENT'S EXHIBITS NIL
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TRUE COPY
CSS/ P.S.TO JUDGE
C.R.
Dama Seshadri Naidu, J.
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WPC No.16639 of 2017
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Dated this the 12th day of June 2017
JUDGMENT
The petitioner George Thomas is a retired Colonel running a Security Agency, empanelled by the Director General Resettlement (DGR). Ext.P2 is the empanelment certificate and Ext.P3 its renewal. He also has Ext.P4 license issued by the Government of Kerala under the Private Security Agencies (Regulation), Act 2005. Through the Ext.P5, the DGR has also sponsored him for security and allied services.
2. In the Sponsorship Certificate, Lt. Col. Vinod Kumar, the seventh respondent, was assigned the position of being the senior- most followed by Thomas and Maj. Varghese P.C., the eighth respondent.
3. After receiving Ext.P5 sponsorship, Bharat Petroleum WPC No.16639 of 2017 2 Corporation (BPCL), the first respondent, issued the Ext.R4(a) tender notification for security coverage at its Refinery area and at its city office: SWSS Aluva STF, SPM and Estates. The Ext.R4(a), in fact, is an e-tender, with a strict stipulation that all the bids will be evaluated from the inputs made by the bidders on the procurement portal. It also cautions in express terms that the offer submitted against the tender will be evaluated electronically and 'vendors' are to comply with the guidelines provided in the tender notification. All the three candidates sponsored by the DGR-- Vinod Kumar, George Thomas, and Varghese--as mentioned in Ext.P5, responded to Ext.R4(a) tender notification.
4. As seen from record, eventually, through Ext.P12, BPCL rejected George Thomas's bid on two grounds: (a) That he quoted rates lower than those stipulated by the DGR; (b) that he has not quoted `hardship' allowance--another mandatory requirement.
5. Aggrieved, assailing Ext.P12, George Thomas has filed this writ petition.
WPC No.16639 of 2017 3
6. Sri George Varghese Perumpallikuttiyil, the petitioner's counsel, has strenuously contended that the Ext.P12 cannot be sustained with whatever justification. According to him, the reasons assigned in Ext.P12 for rejecting George Thomas's bid smack of mala fides, ill-will, and bias. Elaborating, Sri George Varghese has submitted that the Government through Ext.P8 exempted the application of the Employees State Insurance Act, 1948, to a class of employees who include ex-service men. According to him, the petitioner's excluding the amounts on ESI and, as a result, quoting amounts lower than those quoted by the DGR cannot be fatal.
7. On the hardship allowance, Sri Varghese has further contended that, as seen from clause 7 of Ext.P7, it is fixed. Therefore, George Thomas's failure to mention the amount does not lead to any prejudice either.
8. As a matter of further contention, Sri Varghese has also accused BPCL of gross favouritism. To elaborate, he would WPC No.16639 of 2017 4 contend that even before the BPCL scrutinised and finalised the bids, Vinod Kumar interviewed prospective employees in BPCL's official premises, as if he would emerge the successful bidder and would engage them on his behalf: he had all along enjoyed the principal employer's patronage. Sri Varghese has drawn my attention to paragraph-14 of the writ petition to hammer home his contention that George Thomas did make the allegation at the earliest point of time; he has even emailed his protest on that count.
9. Sri George Varghese has also submitted that, after rejecting the petitioner's bid, BPCL first considered Maj. Varghese's bid, for he was the second lowest bidder. But BPCL entertained a letter of correction from Maj. Varghese; ensured that his quote was on a par with that of Vinod Kumar, BPCL's blue-eyed candidate; and eventually awarded work to Vinod Kumar: it was on the premise that once the bids are equal, the senior-most must be preferred.
10. In short, Sri George Varghese would contend that the tender notification contains no provision permitting any bidder to WPC No.16639 of 2017 5 supplement his bid or to vary the rates quoted. Had they accepted Maj. Varghese's bid without entertaining correction to his quote, he would have been allotted the work; Vinod Kumar would not have stood any chance.
11. So the learned counsel has strenuously contended that the BPCL awarding the contract to Vinod Kumar was a premeditated measure and, only to further that, they eliminated George Thomas, besides coercing Maj. Varghese to alter his quote.
12. Summing up his submissions, Sri George Varghese submits that Ext.P12 cannot be sustained and awarding of work to Vinod Kumar should be nullified since George Thomas is the lowest bidder. As a matter of consequential directive, he urges this Court to direct BPCL to award the contract to George Thomas. BPCL's:
13. Sri E.K. Nandakumar, the learned Senior Counsel appearing for BPCL, on the other hand, has submitted that it is entirely incorrect on George Thomas's part to contend that the WPC No.16639 of 2017 6 State has exempted a class of employees from the ESI Act.
14. In elaboration, the learned Senior Counsel has drawn my attention to clause-14 of the Ext.P1 that at least 90% of the personnel should be from the ranks of ex-service men. According to him, even if one were to assume that Ext.P5 exemption would apply to the ex-service men to be employed in BPCL, it would at best apply to 90% of the personnel to be engaged. The balance 10% can be drawn from the general pool, and they need ESI protection. So George Thomas's quotation below the prescribed rates is fatal, contends the learned Senior Counsel.
15. As to the hardship allowance, Sri Nandakumar would argue that three of the personnel to be engaged are marine guards, and they are entitled to hardship allowance. Though he has conceded that the rate is fixed, according to the learned Senior Counsel quoting an amount is sine qua non; only the variation will be ignored, as is clear from the special note appended to Ext.R4(a) notification. He has justified the BPCL's awarding work to Vinod WPC No.16639 of 2017 7 Kumar, and drawn my attention to the various tender conditions to refute the allegations that BPCL had acted illegally or exhibited any favouritism.
7th Respondent's:
16. Sri Sanjay, the learned counsel for Vinod Kumar, has adopted the arguments advanced by the learned Senior Counsel for BPCL. That apart, he has also contended that, as seen from Ext.P5, Vinod Kumar, indisputably, is the senior-most sponsored candidate and that with George Thomas's rejection and Maj. Varghese's unwillingness to have the work at the quoted rate, it is but inevitable for the Corporation to award the work to Vinod Kumar.
17. Heard Sri George Varghese, the learned counsel for the petitioner; Sri E.K. Nandakumar, the learned Senior Counsel for BPCL; Sri Sanjay, the learned counsel for the 7th respondent; and Sri N. Nagaresh, the learned Assistant Solicitor General, besides perusing the record.
WPC No.16639 of 2017 8 Discussion:
18. As seen from record, the Ext.P1 is an invitation for tender; George Thomas, Vinod Kumar, and Maj. Varghese, all the three sponsored ex-servicemen, responded. So their response-- tender--is a proposal or offer to do a particular thing.
19. Offer, it is said, "is a statement of intent by the offeror to be legally bound by the terms of the offer if it is accepted."1 Sanjeev Row's Contract Act2 observes, quoting Pollock & Mulla's Indian Contract Act & Specific Relief Act3, that at the formative stage of a contract, every willingness to enter into a contract may not be taken as an offer. "Making of mind by the offeree would not create a contract till the acceptance is communicated in writing unconditionally to the offer. Where a particular act to be performed by the offeree is not mentioned, it would be left to the offeree's option the manner to be adopted for communicating the acceptance.
1 Chris Turner's Contract Law, (2007) p.5 2 12th Ed. p.1607 3 Id., p.50 WPC No.16639 of 2017 9
20. The commentary enumerates the essential features of a valid contract:
1. Must be unconditional and without ambiguity, [Sec. 38 (1,)].
2. Must be made at a proper place, and firm.
3. Must conform to the terms of the obligation.
4. The tenderer must be able and willing to honour his obligations.
5. Must afford reasonable opportunity for inspection. (Sec 38 (3).
6. Must be made to the right person.
7. Must be of full amount not in parts.
8. An offer of performance to one of the joint promisors (Sec. 38 ) E. Contracts:
21. Contracts are a key element of traditional business practice, and they are equally important on the Internet. Offers and acceptances can occur when parties exchange e-mail messages, engage in electronic data interchange (EDI), or fill out forms on Web pages. These Internet communications can be combined with traditional methods of forming contracts, such as the exchange of paper documents, faxes, and verbal agreements made over the WPC No.16639 of 2017 10 telephone or in person.4 Stages of e-tendering5
22. The first phase involves only principal to tenderer communication. This stage allows the principal to post the tender advertisement and documents on a website, and the tenderers download these tender documents. But the documents are still submitted in paper. There is no two-way communication occurring in an electronic environment.
23. The second phase involves tender submission, followed by a two-way communication. This stage of development is where the tender documents are downloaded from a website and submitted electronically. This stage finetunes the contract; the tender is not awarded electronically, though.
24. The final phase involves electronic-contract formation and its administration. This stage accords with the second stage, except that the tender is awarded and the contract formed 4Gary P. Schneider, Electronic Commerce, (11th Ed.) p.324 5 Id, p.214 WPC No.16639 of 2017 11 electronically via collaboration software. Judicial Review & Contractual Considerations:
25. In G.J. Fernandez v. State of Karnataka6 the Supreme Court has held that the conditions and stipulations in a tender notice will have two types of consequences. The first is that the party issuing the tender (the promisor) has the right to punctiliously and rigidly enforce them. Thus, if the other party (the promisee) does not strictly comply with the requirements, the promisor can decline to consider the offer. The second consequence is not that the promisor cannot deviate from those guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination.
26. Cut to the chase, the first category are those that lay down the essential conditions of eligibility, and the second category are those that are merely ancillary or subsidiary, not affecting the main object sought to be achieved through the contract. In the former, 6(1990) 2 SCC 488, at p.501) WPC No.16639 of 2017 12 the authority inviting the tender may enforce them rigidly. In the later, it may deviate from the conditions and not insist upon the strict, literal compliance: Poddar Steel Corpn. v. Ganesh Engg.
Works.7
27. Awarding a contract, whether by a private party or by a State, is essentially a commercial transaction. The principal can choose its own method to arrive at a decision, and it may grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. The State, its corporations, instrumentalities, and agencies must be fair to all concerned, however. Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only to further public interest and not merely because the party has made out a legal point. The court should always keep the larger public interest in mind to decide whether its intervention is called for or not. Only with a conclusion 7 (1991) 3 SCC 273, p.276 WPC No.16639 of 2017 13 that overwhelming public interest requires interference should the court interfere: Air India Ltd. v. Cochin International Airport Ltd.8
28. In Delhi Development Authority v. UEE Electricals Engg. (P) Ltd.,9 the Supreme Court has held that the power of judicial review should not be exercised absent any mala fides or irrationality.
29. After referring to all the above precedents, the Supreme Court in B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.,10, has summarized the principles of judicial review vis-`-vis tenders:
(i) if there are essential conditions, the same must be adhered to;
(ii) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;
(iii) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing;
(iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to 8 (2000) 2 SCC 273, p.276 9 (2004) 11 SCC 213 10 (2006) 11 SCC 548, at 571 WPC No.16639 of 2017 14 compliance with another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction;
(v) when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with;
(vi) the contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority;
(vii) where a decision has been taken purely on public interest, the court ordinarily should exercise judicial restraint. The Need to Fulfill the Conditions:
30. In the Ext.P12, through which George Thomas's tender was rejected, BPCL informed him that as per Clause 3 of the Advice & Instruction to the Principal Employer, "the price so quoted shall not be below the DGR promulgated minimum wages WPC No.16639 of 2017 15 and the costing by the service providers is to factor all quality expectations outlined in the tender enquiry".
31. The letter of rejection11 also refers to Clause (1) under Scope of Work that "salary/wages for security guards will be in line with the letter No.2112/SA/Minimum Wages/EMP, dated 19th Jan 2017. This payment is subject to change as and when the DGR revises the pay scale". So the minimum rate as prescribed by DGR for Security Guards without Arms (Skilled) is Rs.1196.61; and for Supervisor (Highly Skilled) it is 1591.50, in both cases the Service Tax excluded. But George Thomas quoted Rs.1152.68 for Security Guards without Arms (Skilled) and Rs.1533.07 for Supervisor (Highly Skilled); it is less than the DGR promulgated minimum wages.
32. The communication also refers to `hardship allowance' to be paid to a category of employees. And it informs George Thomas that he has not quoted the `hardship allowance.' 11 Ext.P12 WPC No.16639 of 2017 16
33. Decluttered, the BPCL's rejection is premised on these two grounds: (a) That George Thomas quoted rates lower than those stipulated by the DGR; (b) that he has not quoted `hardship' allowance--another mandatory requirement. What is Mandatory?
34. All rules do not act alike; nor all conditions call for compulsory compliance. But the concept of a condition being mandatory or directory begs the question. What is mandatory for the promisor may be directory for the promisee. The element of subjectivity in this is impossible to be eliminated. The authorities that invite tenders presumably possess the expertise; courts cannot claim the same advantage. Barring well-wrought legal principles such as mala fides, arbitrariness, bias, and so forth, the court's jurisdiction to judicially review the executive action in awarding contracts is constricted. For the authorities should have enough latitude if they should act in the public interest--the paramount consideration in public law remedies, too.
WPC No.16639 of 2017 17 Did the Petitioner Violate the Mandatory Conditions?
35. Indeed, George Thomas has tried to explain away his failure to submit the offer fully complying with the tender conditions: the violations, if any, are minor or inconsequential. Are they?
36. First, as has been rightly contended by BPCL, the exemption from ESI does not extend across the board. There could be persons engaged from beyond the fold of ex-service men--at least by 10%. So George Thomas's excluding all mention about that contribution and thereby quoting rates below those specified by the DGR, I reckon, falls foul of an essential condition.
37. Second, the tender notification mandates that any variation in the hardship allowance quoted would be ignored. But the special note insists that the tenderer should quote the rate as has been stipulated. In other words, not quoting any rate at all as hardship allowance is entirely different from quoting an amount at variance from what has been fixed. Since George Thomas has, WPC No.16639 of 2017 18 admittedly, not quoted any amount, his act contravened the special note--containing a mandatory condition--and, therefore, the Corporation rejecting the petitioner's bid is unexceptionable. Conclusion:
This Court, therefore, finds no merit in the petitioner's contentions. As a result, it dismisses the writ petition. No order on costs.
Sd/- Dama Seshadri Naidu, Judge css/ true copy P.S.TO JUDGE