Punjab-Haryana High Court
M/S Gem Security Services vs State Of Punjab And Others on 14 February, 2013
Bench: A.K. Sikri, Rakesh Kumar Jain
CWP No. 1576 of 2013 (O&M) -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CWP No. 1576 of 2013 (O&M)
Date of Decision : 14.02.2013.
M/s Gem Security Services
...Petitioner
Versus
State of Punjab and others
...Respondents
CORAM: HON'BLE MR. JUSTICE A.K. SIKRI, CHIEF JUSTICE
HON'BLE MR. JUSTICE RAKESH KUMAR JAIN
Present: Mr. Sanjeev Sharma, Senior Advocate,
with Mr. Shekhar Verma, Advocate,
for the petitioner.
Mr. P.S. Bajwa, Additional Advocate General, Punjab.
Mr. Vikas Singh, Advocate,
for respondent No. 2.
Mr. Atul Kaushik, Advocate,
for respondent No. 3.
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A.K. SIKRI, C.J. (ORAL)
The petitioner herein, which is a registered security agency under the Private Security Agencies (Regulation) Act, 2005, is in the business of providing security services and has provided such services to the respondent No. 2 i.e. Punjab State Cooperative Supply and Marketing Federation Limited (MARKFED) as well. Last contract was awarded to the petitioner by the MARKFED for the year 2009-2012. As the period of this contract was expiring, therefore, notice inviting the tenders was issued for 2012-2015. The CWP No. 1576 of 2013 (O&M) -2- petitioner also submitted its bid quoting service charge @ 1.04% which comes to approximately Rs. 25,000/- per month for each zone. The respondent No. 3 was also one of the bidders who has mentioned the rate of 13.67% which was inclusive of elements of all liabilities and in fact its bid was @ 1.04% (after deducting other elements).
2. Bids were to be submitted having regard to Clauses 8 and 9 of the tender documents and these two clauses read as under:-
"Clause 8:- Rates shall be quoted by the security agency as a percentage of the wages (without Provident Fund and other statutory payments) payable to the security agency. The service tax shall, however, be reimbursed to the security agency by MARKFED after deposit of the same and on furnishing the proof of payment of such tax as per MARKFED Rules."
Clause 9:- Security agencies should ensure to quote the logical rates, which should include all its obligations to meet statutory requirements/liabilities wherever applicable. However, wherever it is proved beyond doubt that the rates offered are abnormally low or high or are without any logic ignoring the element of statutory liabilities to be met by the agency, the offer made by them would outrightly be rejected irrespective of the fact of quoting lowest rate."
3. It appears that in so far as the petitioner is concerned, it had quoted only service charges of 1.04% and did not include payment qua provident fund or other statutory liabilities under various Labour laws like The payment of Wages Act, 1936; The Industrial Disputes Act, 1947; The Minimum Wages Act, 1948; The Employees' CWP No. 1576 of 2013 (O&M) -3- Provident Funds and Miscellaneous Provisions Act, 1952; The Payment of Bonus Act, 1965; The Contract Labour (Regulation and Abolition) Act, 1970; The Payment of Gratuity Act, 1972; The Equal Remuneration Act, 1976; Punjab Industrial Establishment (National/Casual & Festival Holidays Act, 1965); Punjab Industrial Establishment (National & Festival Act, 1965); Bonus which is payable under the Payment of Bonus Act, 1965 and Annual Leave with Wages under the Factories Act, 1948, as the petitioner understood that in terms of Clause 8, these statutory liabilities would be met by the MARKFED. On the other hand, the rate of 13.67%, quoted by the respondent No. 3, was inclusive of all such liabilities. That was the reason for wide variation of rates quoted by the petitioner and the respondent No. 3 respectively.
4. As per the petitioner, even if the liabilities under the aforesaid Labour statutes, which were included by the respondent No. 3 were to be excluded therefrom, the element of service charge quoted by the respondent No. 3 would come to around 1.04% and, therefore, the rates quoted by the respondent No. 3 were also the same as that of the petitioner. Still, contract was awarded to the respondent No. 3 on 01.08.2012. The petitioner made representation thereagainst vide his letter dated 07.08.2012. The petitioner also met the officials of the respondent No. 2, in this behalf, stating that the award of contract to the respondent No. 3 was clearly erroneous, inasmuch as it is the petitioner which was L1 and had quoted the CWP No. 1576 of 2013 (O&M) -4- lowest rates.
5. Since the request of the petitioner was not acceded to by the respondent No. 2, CWP No. 15262 of 2011 was filed on 09.08.2012, which was disposed of on the same date by this Court, directing the respondent No. 2 to decide the representation of the petitioner by passing speaking order. Speaking order dated 15.09.2012 (Annexure R1) was passed by the respondent No. 2 rejecting the representation of the petitioner. The primary reason given was that the bid of the petitioner at 1.04% service charge was too low and, therefore, did not appear to be feasible or practical bid. Aggrieved by that order, the petitioner filed another writ petition i.e. CWP No. 17468 of 2012. In this writ petition, notice of motion was issued and the respondent No. 2 was called upon to produce the entire record pertaining to the tender proceedings. When the matter came up again on 10.10.2012, the petitioner withdrew this writ petition filing an affidavit that assurance was given to award the petitioner the contract and, thus, according to the petitioner, relief had been granted to it administratively by the respondent No. 2 itself. Thereafter, letter dated 15.10.2012 was written by the respondent No. 2 to the petitioner asking the petitioner to furnish the bank guarantee and execute necessary agreement for a part of the work for which tenders were invited. In fact, it so happened that the respondent No. 3, whom the entire work pertaining to the three zones had been awarded, had expressed its inability to do part CWP No. 1576 of 2013 (O&M) -5- thereof. It is that work which was withdrawn from the respondent No. 3 and was awarded to the petitioner vide letter dated 18.12.2012, but within ten days, the said award was cancelled. It is this cancellation which is challenged by the petitioner by filing the present writ petition submitting that there was no reason for cancelling the award of the work once it was awarded.
6. The respondent No. 2 has filed the written statement. In the first instance, maintainability of this writ petition is challenged on the ground that the petitioner has not annexed the copy of orders dated 15.09.2012 which was a speaking order and vide which earlier representations of the petitioner were rejected. It is submitted that the said order discloses all the facts because of which work was not awarded to the petitioner. On merits, in so far as allotting the work vide letter dated 18.12.2012 and withdrawing the same on 28.12.2012 is concerned, submission is that letter dated 18.12.2012 was issued subject to the concurrence of the Audit Department, but the Audit Department refused to give any such consent on the ground that it amounted to sub letting of the work which was not permissible. It is further submitted in the written statement that the respondent No. 2 has cancelled the work awarded even to the respondent No. 3 because of the reason that the Audit Department has not granted any consent for award of work to the respondent No. 3 as well. On this premise, it is stated in the written statement that the decision is taken to re-tender the entire work. CWP No. 1576 of 2013 (O&M) -6-
7. The facts which emerge from the aforesaid events would disclose that in so far as the petitioner is concerned, its bid was not found to be responsive, primarily because of the reason that the prices quoted by the petitioner were too low and did not appear to the Evaluation Committee to be feasible or practical. In the orders dated 15.09.2012, vide which representation of the petitioner was rejected by the Managing Director, referring to Clauses 8 and 9 of the NIT conditions, this reason is elaborately discussed in the following manner:-
"From the above, it comes out that as per Clause 8, the agencies were required to quote rates as percentage of wages (without Provident Fund and other statutory payments). Further, as per Clause 9, the security agencies were required to quote logical rates which should include all their obligations to meet statutory requirements/liabilities and should not be abnormally low or high. Further, as per terms and conditions, Markfed is required to pay to the security agencies minimum wages, contribution to Employees Provident Fund and ESI, besides percentage of wages as service charges quoted by the concerned agency. Out of the funds hence received, the security agencies are further required to pay minimum wages to the workers and EPF & ESI to the concerned authorities alongwith other statutory liabilities. The statutory liabilities include wages payable to the reliever worker on account of 7 days casual leave, 7 days national holidays and 19 days annual leave in a year. All these statutory payments when amalgamated, come out to be around 10% of the wages.
Besides this, to run its office, the security agency has to bear the establishment CWP No. 1576 of 2013 (O&M) -7- charges also. The rate quoted by any security agency less than the rates mentioned above, cannot meet out its requirements/liabilities. Any such agency quoting rates less than the above rates is likely to exploit the workers. Further from the bills of the security agencies, TDS @ 2.20% is compulsory, though it is reimbursed by the Income Tax Department after adjusting their tax liabilities at the year end. Hence the service charges @ 1.04% as quoted by M/s Gem Security Services cannot be considered as logical. The representation dated 06.08.2012 of M/s Gem Security Services is also an admission of this fact as the agency has requested to allow it to amend its financial bid by adding such statutory liabilities as quoted in the tender offers of M/s Terrier Utility Services Pvt. Ltd. However, the request of M/s Gem Security Services, Mohali for changing of the bid could not be acceded to at the stage when the tenders had already been opened, examined and the work for providing security services was allotted to M/s Terrier Utility Services Pvt. Ltd.
Thus, I fully agree with the recommendations of the committee of officers for rejecting the representations dated 06.08.2012 and 07.08.2012 of M/s Gem Security Services, Mohali, being without merits. Accordingly, the representations dated 06.08.2012 and 07.08.2012 of M/s Gem Security Services are disposed of."
8. Further, in so far as award letter dated 18.12.2012 is concerned, it was given to the petitioner with specific condition that the same is subject to the consent of the Audit Department. That consent has not been accorded by the said department. Though it is termed as "sub letting", it appears that in essence the reason is that once the work was awarded to the respondent No. 3 and the CWP No. 1576 of 2013 (O&M) -8- respondent No. 3 for certain reasons had expressed its inability to perform part of the said work, the valid course of action was to re- tender the said part of the work and could not be awarded to another bidder. It also appears that the petitioner had filed the second writ petition in which show cause notice was issued. Officials in the office of the respondent No. 2 thought that the bids can be bought by awarding the work, which is given up by the respondent No. 3 to the respondent No. 2. In these circumstances, we feel that objection of the Audit Department is well founded.
9. It also becomes clear from the written statement filed by the respondent No. 2 that it has taken a decision which appears to be equitable and a holistic approach is adopted by cancelling the entire tender process and even recalling the award of work to the respondent No. 3. Whereas, on the one hand, bid given by the petitioner @ 1.04% service charge appeared to be illogical to the Evaluation Committee, the bid of the respondent No. 3, which after deducting the element of service charge comes to 1.04% on the same yardsticks, would also be illogical. Therefore, there was no reason to award the work to the respondent No. 3 and on that very basis the bid of the petitioner was rejected.
10. We, thus, find justification in the move of the respondent No. 2 in cancelling the entire process and the same is taken to re- tender the work. However, we would like to make the remark that Clause 9 should be suitably amended and clarified, while issuing CWP No. 1576 of 2013 (O&M) -9- fresh tenders so that there is no confusion of the nature which has occurred in the present tendering process, which is reflected from the extreme bids given by the petitioner and the respondent No. 3, namely, the bid of the petitioner stating only the service charge, whereas bid of the respondent No. 3 had included all the statutory liabilities and this has resulted in the aforesaid situation which could have been averted. As a result, the present petition is disposed of permitting the respondent No. 2 to notify fresh bids.
(A.K. SIKRI) CHIEF JUSTICE (RAKESH KUMAR JAIN) JUDGE 14.02.2013 Amodh