Himachal Pradesh High Court
Proprietor) vs Union Of India on 15 September, 2021
Bench: Tarlok Singh Chauhan, Satyen Vaidya
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
ON THE 15th DAY OF SEPTEMBER, 2021
BEFORE
.
HON'BLE MR. JUSTICE TARLOK SINGH CHAUHAN
&
HON'BLE MR. JUSTICE SATYEN VAIDYA
CIVIL WRIT PETITION NO. 5062 OF 2021
Between:-
M/S 5952/SHYAM SUNDER SHARMA
SECURITY AGENCY (THROUGH ITS SOLE
PROPRIETOR), HAVING ITS OFFICE AT
VPO-NANGALKHURD, TEH. HAROLI,
DISTT. UNA, H.P.-174507.
....PETITIONER
(BY SH. KUSH SHARMA, ADVOCATE)
AND
1. UNION OF INDIA
(MINISTRY OF DEFENCE)
THROUGH UNION OF INDIA,
THE DIRECTOR GENERAL OF
RESETTLEMENT DGR, DEPARTMENT
OF EX-SERVICEMEN WELFARE, NEW DELHI.
2. FOOD CORPORATION OF INDIA,
THROUGH ITS GENERAL MANAGER,
HAVING ITS REGIONAL OFFICE AT
SHIMLA, H.P.
..RESPONDENTS
(MR. VIR BAHADUR VERMA, CGC FOR R-1
AND MR. PEEYUSH VERMA, ADVOCATE FOR R-
2)
________________________________________________________________________
This petition coming on for orders this day, Hon'ble Mr. Justice
Satyen Vaidya, passed the following:
ORDER
By way of instant petition, petitioner has prayed for the following substantive reliefs:-
::: Downloaded on - 31/01/2022 23:04:52 :::CIS 2"i) That impugned decision dated 03.08.2021 (Annexure P-7) may kindly be quashed and set aside.
ii) The respondent No.2 (Employer) may kindly be directed .
not to implement the decision dated 03.08.2021 vis-a-vis the petitioner and may be permitted to continue under the terms of the contract dated 14.09.2020 for a further period of one year."
2. Petitioner is a Security Agency and is being run and managed by Col. Shyam Sunder Sharma (Retd.), an ex-serviceman, as its sole proprietor. Department of Public Enterprises, Government of India vide Office Memorandum No. 6/22/93-GL-15-DPE(SC/ST) dated 1st February, 1994, as amended from time to time, has instructed all Central Government Public Sector Undertakings/Enterprises (CPSU/CPSEs) to take security cover from Security Agencies sponsored by Directorate General Resettlement (for short, "DGR") (An attached office of the Ex-
servicemen Welfare Department, Ministry of Defence). Petitioner is duly empaneled with the DGR for the period from 30.01.2020 to 26.03.2022.
3. In response to requirement submitted by respondent No.2 (hereinafter referred to as "FCI"), the DGR, on 26.8.2020, sponsored names of petitioner along-with three other Security Agencies. FCI is a CPSU. While sponsoring petitioner to FCI, tentative requirement of Security Guards was shown to be 84 personnel and duration of contract was 2 years (01+01).
4. On 31.08.2020, FCI floated limited tender to the Security Agencies sponsored by the DGR including the petitioner. Petitioner was found L-1 and the work was awarded to the petitioner. Along-with ::: Downloaded on - 31/01/2022 23:04:52 :::CIS 3 notice inviting tender, respondent No.2 had published terms and conditions governing the contract. The condition No. (VII) read as .
under:-
VII. PERIOD OF CONTRACT:
(i) The contract shall remain in force for a period of one year, extendable on mutual consent for further period of one year on same rates, terms and conditions.
(ii) The General Manager (R) reserves right to terminate the contract at any time during its currency without assigning any reason thereof by giving thirty days notice in writing to the Agency/Contractor at their last known place of residence/business and the Agency/Contractor shall not be entitled to any compensation by reason of such termination. The action of the General Manager (R) Food Corporation of India, HP, under this clause shall be final, conclusive and binding on the Agency/Contractor and shall not be call in question."
5. An agreement was executed between petitioner and respondent No.2 on 14th September, 2020 and condition No. 11.1 of said agreement read as under: -
11.1 This contract is for a period of one year on the above terms and conditions w.e.f. 16.09.2020 to 15.09.2021. Further extension for a further period of one year on mutual consent on the same rates will be subject to the approval of FCI based on the performance of the Agency.
6. Thus, initial period of contract was one-year w.e.f. 16.09.2020 to 15.09.2021 extendable for a further period of one year on mutual consent on same rates and subject to approval of FCI based on the performance of the Agency. The initial period of one year of the ::: Downloaded on - 31/01/2022 23:04:52 :::CIS 4 contract between the petitioner and respondent No.2 came to an end today on 15.09.2021.
.
7. On 03.08.2021, FCI submitted a request to DGR for sponsoring names of ex-serviceman Security Agencies to enable FCI to float tender for a period commencing from 16.09.2021. It was specifically mentioned in the correspondence dated 03.08.2021 that the FCI did not intend to resort to extension of existing contract with the petitioner and instead wanted to engage Security Agency afresh as per new guidelines issued by the Ministry of Defence, office Memo dated 13.05.2021 amended vide corrigendum dated 23.06.2021.
8. Aggrieved against the above noticed communication dated 03.08.2021 by FCI to DGR, petitioner has approached this Court by filing the instant petition.
9. Petitioner has contended that it has a right to seek continuation of its contract with FCI for another period of one year. As per petitioner, FCI has no reason to refuse extension; as its performance has throughout been satisfactory. No complaint whatsoever has been made by FCI at any time with respect to the performance of the petitioner. It is further submitted that petitioner has already shown its willingness to continue with the contract for next one year in the terms of new guidelines issued by the Ministry of Defence, office Memorandum dated 23.05.2021 read with corrigendum dated 23.06.2021.
::: Downloaded on - 31/01/2022 23:04:52 :::CIS 510. Petitioner has also averred that the Department of Ex-
servicemen Welfare, Ministry of Defence, Government of India vide .
office Memorandum dated 09.07.2012 formulated the guidelines for functioning of DGR empaneled ex-servicemen for Security services.
Various schemes have been framed by the Ministry of Defence to rehabilitate the Ex-servicemen and one of such schemes is to afford self-employment opportunity to Ex-servicemen as Security provider. The Department of Public Enterprises, Government of India has formulated a policy directing the Public Sector Undertakings and other Agencies of the Government of India to employee Security Agencies sponsored only through DGR. It has also been mentioned that as per above noted guidelines, DGR sponsors Ex-servicemen Security Agency for a period of two years or till ex-serviceman attains the age of 60 years, whichever is earlier.
11. Per contra, respondent No.2 has contested the claim of the petitioner on the ground that petitioner has no vested right to claim extension of contract. The discretion to extend the contract was with respondent No.2 and the same was not being exercised in order to reduce overall expenditure of FCI in making provision of security for its establishment in the State of Himachal Pradesh. As per FCI, it had already taken a decision to invite fresh tenders by seeking fresh sponsorship from the DGR for the engagement of Security services for the period commencing from 16.09.2021. In order to support its ::: Downloaded on - 31/01/2022 23:04:52 :::CIS 6 contention, respondent No.2 has pressed into service, contents of para 13(g) of new guidelines dated 13.05.2021, which read as under: -
.
"13(g) (I) The ESM Security Agency will be paid service charges as approved in the Competitive bidding on GeM Platform @ a maximum upto 10% of the total bill (including Additional Charges if applicable) by the Principal Employer. This will be reviewed periodically by DGR and issued through its Wage Notification.
(ii) Service Charge of all on going security agency contracts through DGR (i.e. those contracted or under negotiation before migration to GeM Portal) will be @10% (fixed) w.e.f. the date of issue of the ibid OM/DGR Wage Notification (Feb.2021)."
FCI has further clarified that these guidelines were subsequently amended on 23.06.2021 and were made prospective in its operation.
As per new guidelines, the service charges payable to the Security Agency could not be more than 10%.
12. It has further been canvassed on behalf of the respondents that on 31st August, 2021, Labour and Employment Officer had found violations of various provisions of the Contract Labour (R&A) Act, 1970 and Rules framed thereunder on inspection of the petitioner's establishment. It has thus been apprehended by the FCI that it being principal employer may have to face liability of penalty that may be imposed on petitioner. The violations found by the Labour and Employment Officer in the establishment of petitioner reflects adversely on its due performance.
::: Downloaded on - 31/01/2022 23:04:52 :::CIS 713. We have heard learned counsel for the parties and have also gone through the record.
.
14. The controversy between the parties can be summed up in a narrow encompass. The legality and propriety of the decision of FCI not to extend petitioner's contract is in issue.
15. It is not in dispute that the petitioner is not eligible for extension of contract. It is also not in dispute that the terms and conditions of tender as also the contract executed between the petitioner and respondent No.2 prescribed a provision for extension of period of contract for another year with mutual consent of the parties and subject to the performance of Security Agency. FCI of its own has no complaint with respect to the performance of the petitioner during entire one year of service provided by it.
16. The "consent" contemplated under Clause (VII) of terms and conditions of tender and Clause 11.1 of the contract cannot be construed in a narrow sense, keeping in view laudable object of rehabilitation of the ex-servicemen. It cannot remain unnoticed that the period of sponsorship of ex-servicemen Security Agency is only two years or till the date the ex-serviceman attains the age of 60 years, whichever is earlier. Meaning thereby ex-serviceman has limited period to rehabilitate. We cannot also loose sight of the fact that a lot of effort and finance is required to establish and maintain a Security Agency of the magnitude involved in the present case. Any action ::: Downloaded on - 31/01/2022 23:04:52 :::CIS 8 that impedes the very purpose of the above noted rehabilitation scheme cannot be countenanced.
.
17. While considering the extension of contract period, FCI being a public authority has to act in a fair and reasonable manner. The consideration has to be made at the touch stone of the objectivity so as to make the decision-making process, just, fair and reasonable.
18. The FCI, in the instant case has taken a rigid stand to go ahead with its decision to invite fresh tenders and not to extend contract period of petitioner. No reason much less a justifiable reason is forthcoming from the FCI which may lend credence to its decision.
Simply because Department of Public Enterprises, Government of India has issued fresh guidelines during continuance of contract between the petitioner and FCI, does not provide any reason to FCI to refuse the extension of contract period of petitioner. There is nothing in these new guidelines, which may prohibit FCI from allowing the petitioner to extend the contract for a further period of one year. Petitioner in his pleadings as well as during course of hearing of the case has categorically undertaken that he is ready and willing to work strictly in terms of new guidelines dated 13.05.2021 read with corrigendum dated 23.06.2021. Petitioner is ready and willing to work on service charges at the rate of 10%, as prescribed by new guidelines dated 13.05.2021. That being so, no prejudice is likely to be caused to the FCI.
No such prejudice or likely harm has either been pleaded or shown at the behest of FCI.
::: Downloaded on - 31/01/2022 23:04:52 :::CIS 919. We are of the considered view that action of FCI, as impugned in the instant petition, is not in conformity with the settled principles of .
law. FCI being a public sector undertaking and thus a public authority cannot act merely at whims and caprices. It has to come out with some plausible reason to justify its action, failing which, the same becomes arbitrary, irrational and unreasonable.
20. We are conscious of the fact that the jurisdiction of this Court in the matters of commercial contracts involving public authorities is circumscribed by certain caveats. Nevertheless, the Constitutional Court being guardian of the rights guaranteed by the Constitution can always step in to cheque abrasions to or abuse thereof. The power of judicial review can always be exercised in case the administrative action suffers from arbitrariness, irrationality, bias or malafide. The only caution that is to be exercised is that the Court need not enter the domain that exclusively belong to the expertise of public authorities provided its exercise is bonafide, unbiased, fair and reasonable. The Constitutional Courts cannot remain silent with its eyes shut even to those actions of public authorities which impinges upon the guaranteed rights of the petitioner.
21. In the light of the above discussion, we find that the impugned action of FCI to be irrational, unreasonable and hence arbitrary.
22. The petition is thus allowed. Decision of FCI (respondent No.2), communicated vide letter dated 03.08.2021 (Annexure P-7) to DGR, whereby it has decided to invite fresh bids from the sponsored Security ::: Downloaded on - 31/01/2022 23:04:52 :::CIS 10 Agencies for period commencing w.e.f. 16.09.2021 is quashed and set aside and the FCI (respondent No.2) is directed to consider the .
continuation of petitioner as security provider agency for a period of one year w.e.f. 16.09.2021 by extending its contract strictly in terms of new guidelines issued by the Department of Public Enterprises, Government of India vide Office Memorandum dated 13.05.2021 and corrigendum dated 13.06.2021.
23. The writ petition is disposed of in the aforesaid terms, so also the pending application(s), if any.
(Tarlok Singh Chauhan)
Judge
September 15, 2021 ( Satyen Vaidya )
(naveen) Judge
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