Kerala High Court
Cherian Varkey Construction vs State Of Kerala on 17 November, 2020
Author: N. Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 17TH DAY OF NOVEMBER 2020/26TH KARTHIKA, 1942
WP(C).No.3189 OF 2020(W)
PETITIONER:
CHERIAN VARKEY CONSTRUCTION
COMPANY (PVT) LTD.,
ENGINEERS AND CONTRACTORS, VTH FLOOR,
ALFA PLAZA, K.P.VALLON ROAD, KADAVANTHRA,
KOCHI-682 020,
REPRESENTED BY ITS DIRECTOR, REJI M.CHERIAN.
BY ADVS.
SRI.SANTHOSH MATHEW
SRI.ARUN THOMAS
SRI.JENNIS STEPHEN
SRI.VIJAY V. PAUL
SMT.KARTHIKA MARIA
SRI.ANIL SEBASTIAN PULICKEL
SMT.DIVYA SARA GEORGE
RESPONDENTS:
1 STATE OF KERALA,
REPRESENTED BY ITS SECRETARY TO GOVERNMENT,
PUBLIC WORKS DEPARTMENT,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695 001.
2 KERALA ROAD FUND BOARD,
PROJECT MANAGEMENT UNIT,
SEEBALA BUILDINGS, TC 11/339,
5TH FLOOR, KESTON ROAD,
NANTHANCODE, KOWDIAR P.O.,
THIRUVANANTHAPURAM-695 003,
REPRESENTED BY ITS PROJECT MANAGER.
WPC Nos.3189 & 3760/2020
:2:
3 URALUNGAL LABOUR CONTRACT CO-OPERATIVE
SOCIETY LTD. NO.10957,
MADAPPALLY COLLEGE P.O., VADAKARA,
KOZHIKODE-686 546,
REPRESENTED BY ITS PRESIDENT.
ADDL. 4 P.G. MURALEEDHARAN
AGED 59, S/O.GOVINDAN,
ARYA SADANAM,
PERUMPALAM P.O., PIN - 685 570.
(ADDITIONAL R4 IS IMPLEADED AS PER ORDER
DATED 25.06.2020 IN I.A.4/2020 IN WP(C))
R1 BY SRI.K.V.SOHAN, STATE ATTORNEY
R2 BY ADV. SRI.K.V.MANOJ KUMAR
R3 BY SRI.M.SASINDRAN, SC, URALUNGAL LABOUR
CONTRACT CO-OPERATIVE SOCIETY NO.10957
R4 BY ADV.T.A. SHAJI
R4 BY ADV. ATHUL SHAJI
R4 BY ADV. SRI.S.ABHILASH VISHNU
R4 BY ADV. ANWIN JOHN ANTONY
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 17.11.2020, ALONG WITH WP(C).3760/2020(T), THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) Nos.3189 & 3760/2020
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 17TH DAY OF NOVEMBER 2020/26TH KARTHIKA,1942
WP(C).No.3760 OF 2020(T)
PETITIONER:
1 CHERIAN VARKEY CONSTRUCTION COMPANY (PVT)LTD.,
ENGINEERS AND CONTRACTORS,
VTH FLOOR, ALFA PLAZA, K.P. VALLON ROAD,
KADAVANTHRA, KOCHI-682 020,
REPRESENTED BY ITS DIRECTOR, REJI M. CHERIAN.
2 REJI M. CHERIAN, AGED 50 YEARS, S/O.CHERIAN
VARKEY, SHAREHOLDER AND DIRECTOR, CHERIAN
VARKEY CONSTRUCTION COMPANY (PVT) LTD,
ENGINEERS AND CONTRACTORS,
VTH FLOOR, ALFA PLAZA, K.P. VALLON ROAD,
KADAVANTHRA, KOCHI-682 020
3 SAJI V. CHERIAN, AGED 52, S/O.CHERIAN VARKEY,
SHAREHOLDER AND DIRECTOR, CHERIAN VARKEY
CONSTRUCTION COMPANY (PVT) LTD,
ENGINEERS AND CONTRACTORS,
VTH FLOOR, ALFA PLAZA, K.P. VALLON ROAD,
KADAVANTHRA, KOCHI-682 020
(ADDL. PETITIONERS 2 AND 3 ARE IMPLEADED AS
PER ORDER DT.17.11.2020 IN IA NO.4/2020)
BY ADVS.
SRI.SANTHOSH MATHEW
SRI.ARUN THOMAS
SRI.JENNIS STEPHEN
SRI.VIJAY V. PAUL
SRI.ANIL SEBASTIAN PULICKEL
SMT.DIVYA SARA GEORGE
SMT.JAISY ELZA JOE
SHRI.ABI BENNY AREECKAL
W.P.(C) Nos.3189 & 3760/2020
4
SMT.LEAH RACHEL NINAN
RESPONDENTS:
1 STATE OF KERALA,
REPRESENTED BY THE ADDITIONAL
CHIEF SECRETARY-FINANCE,
FINANCE DEPARTMENT,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695 001.
2 THE SECRETARY TO THE GOVERNMENT,
DEPARTMENT OF CO-OPERATION,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695 001.
3 THE SECRETARY TO THE GOVERNMENT,
PUBLIC WORKS DEPARTMENT, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM-695 001.
4 KERALA ROAD FUND BOARD,
PROJECT MANAGEMENT UNIT, SREEBALA BUILDINGS,
TC 11/339, 5TH FLOOR, KESTON ROAD,
NANTHANCODE, KOWDIAR P.O.,
THIRUVANANTHAPURAM-695 003
REPRESENTED BY ITS PROJECT MANAGER.
5 KERALA INFRASTRUCTURE INVESTMENT FUND BOARD,
2ND FLOOR, FELICITY SQUARE, MG ROAD,
STATUE, THIRUVANANTHAPURAM-695 001
REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER.
6 URALUNGAL LABOUR CONTRACT CO-OPERATIVE
SOCIETY LTD., NO.10957,
MADAPPALLY COLLEGE PO, VADAKARA,
KOZHIKODE-686 546
REPRESENTED BY ITS PRESIDENT.
ADDL. 7 P.G.MURALEEDHARAN,
AGED 59, S/O.GOVINDAN,
ARYA SADANAM, PERUMPALAM P.O.,685570.
IS IMPLEADED AS PER ORDER DATED 25/06/2020 IN
IA NO.1/2020 IN WP(C) 3760/2020
W.P.(C) Nos.3189 & 3760/2020
5
ADDL. 8 K.THAVAMONY,
AGED 53 YEARS, S/O KUNJU PILLAI,
CHALIL HOUSE, PERUMBALAM PO,
ALAPPUZHA DISTRICT.
IS IMPLEADED AS PER ORDER DATED 14/07/2020 IN
IA 3/2020 IN WP(C) 3760/2020
R4 BY ADV. SRI.K.V.MANOJ KUMAR
R6 BY ADV. SRI.M.SASINDRAN
R7 BY ADV. S.ABHILASH VISHNU
R7 BY ADV. SRI.T.A. SHAJI
R7 BY ADV. SRI.ATHUL SHAJI
R7 BY ADV. ANWIN JOHNY ANTONY
R8 BY ADV. ANOOP JOSEPH
R8 BY ADV. SRI.K.B.ARUNKUMAR
R8 BY ADV. SMT.ASWANI THUVVAKKADAN
BY STATE ATTORNEY, SRI. K.V.SOHAN,
BY GOVERNMENT PLEADER, SRI. DEEPA NARAYANAN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 17.11.2020, ALONG WITH WP(C).3189/2020(W), THE COURT
ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) Nos.3189 & 3760/2020
6
N. NAGARESH, J.
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W.P.(C) Nos.3189 and 3760 of 2020
`````````````````````````````````````````````````````````````
Dated this the 17th day of November, 2020
JUDGMENT
~~~~~~~~~ A construction company has filed these two writ petitions. W.P.(C) No.3189/2020 has been filed seeking to command the 2nd respondent-Kerala Road Fund Board to finalise Ext.P1 tender without giving any price preference to Uralungal Labour Contract Co-operative Society Ltd. W.P. (C) No.3760/2020 has been filed seeking to quash Ext.P6 Government Order which restores priority benefits to and permitting the said Society to take up and execute any work without restriction of financial limits. Certain incidental and consequential reliefs are also sought.
W.P.(C) Nos.3189 & 3760/2020 7
2. The petitioner-Company states that it is a leading provider of civil engineering and construction services. The Kerala Road Fund Board (KRFB) invited tenders for the work 'KIFFB 2016-'17 Construction of Perumbalam Panavally Bridge in Alappuzha District' for an estimated cost of ₹90,77,55,153/-. The petitioner quoted an amount of ₹95,20,30,846.99. The Uralungal Labour Contract Co-operative Society (ULCC) quoted ₹97,12,98,011.62. A third bidder quoted ₹1,03,49,95,745.60. The petitioner being the lowest bidder (L1) is entitled to get letter of acceptance. But, the KRFB is taking steps to award the work to the ULCC.
3. According to the petitioner, there is no Clause in the tender notification giving any preference to ULCC. In the Division Bench judgment of this Court in Ramesan P. and another v. T. Asokan and others [2018 (5) KHC 189], it has been held that in the absence of a specific provision in the Notice Inviting Tender (NIT), no preference can be given to a tenderer.
W.P.(C) Nos.3189 & 3760/2020 8
4. Respondents 1 to 3 in W.P.(C) No.3760/2020 opposed the writ petition filing counter affidavit through learned State Attorney Sri. K.V. Sohan. The 6th respondent- ULCC also filed counter affidavit controverting the contentions of the petitioner. A member of Thaikkattussery Block Panchayat got impleaded himself as additional 7 th respondent, to contest the writ petition. A native of Perumbalam Village, who is a practising lawyer and former Chairman of Action Council for the Perumbalam Bridge, got impleaded himself as additional 8th respondent, contending that contract has been given to the 6th respondent flouting law. Petitioner in IA No.4/2020, who are Directors of the Company, sought to get impleaded as additional petitioners during the course of hearing of the writ petitions.
5. The legal grounds urged by the learned counsel for the petitioner Advocate Santhosh Mathew, are as follows:-
A Division Bench of this Court in Ramesan P. and another (supra) has held that in the absence of a specific provision in the NIT for grant of price preference, the work W.P.(C) Nos.3189 & 3760/2020 9 cannot be awarded to the 6th respondent. The preferential treatment sought to be extended to the ULCC is indicative of bringing about a 'spoils system' frowned upon by the Hon'ble Apex Court in Supreme Court Advocates on Record Association v. Union of India [(2016) 5 SCC 1]. The Government Orders giving price preference to co-operatives violate the fundamental rights of the petitioner under Articles 14, 15 and 19(1)(g) of the Constitution of India.
6. Counsel for the petitioner further pointed out that Clause 8(b)(i) of Ext.P3 Government Order gives Labour Contract Co-operative Societies a right to get selected irrespective of the amount it quotes, which is highly arbitrary and grossly illegal. Exts.P3 and P6 ensure that whenever a Labour Contract Co-operative Society participates in a tender, it can be awarded the work irrespective of the amounts quoted by any of the parties. Ext.P6 singles out the ULCC and not any class of Labour Contract Co-operative Societies for conferring benefits, thereby offending Article 14 of the Constitution. The works executed by the Government out of W.P.(C) Nos.3189 & 3760/2020 10 its own funds and works executed availing financial assistance from Kerala Infrastructure Investment Fund Board (KIIFB) paying interest, cannot be treated similarly. When price preference is given in latter types of work to a particular society, it is at the cost of public exchequer, which is impermissible. The proposed award of work to ULCC and the impugned Government Orders are therefore liable to be interfered with.
7. Distinguishing the judgment of this Court in Moideenkutty Haji K. v. Superintending Engineer, PWD and others [AIR 2001 Kerala 294] wherein this Court held that giving preference to specified Labour Contract Societies in public works of simple nature by ignoring lowest quotation is not discriminatory, Advocate Santhosh Mathew appearing for the petitioner pointed out that in the two writ petitions therein, the PAC amounts were negligent and the State has brought down the award amount to a substantial level. The said judgment cannot be made applicable to the case on hand. In the judgment in W.A. No.1117/2017, a Division W.P.(C) Nos.3189 & 3760/2020 11 Bench of this Court held that when tenders are invited, it is for the State to prescribe the qualifying norms and if the argument that every Contractor is entitled to every work is accepted, that will be disastrous. Learned counsel for the petitioner submitted that the said Division Bench judgment cannot be held to be laying down a law, since there is no discussion on merits of the case.
8. Learned counsel pointed out that in W.P.(C) No.13449/2004, this Court has held that when the Government invites tenders for execution of a work, all the tenderers participating are entitled to be considered for the award of work in tune with basic principles of tender proceedings and all of them should have a reasonable chance to secure the contract by quoting the most competitive rate. This Court further held that it is competent for the Government to give price preference to Co-operative Societies, but that cannot result in total exclusion of other private contractors from the field altogether. The learned counsel argued that the provisions contained in the W.P.(C) Nos.3189 & 3760/2020 12 Government Orders impugned would practically result in total exclusion of private contractors.
9. The counsel for the petitioner heavily relied on the judgment of this Court in W.P.(C) No.26206/2016 wherein it was held that whenever a tender is invited, it should be pointed out in the tender itself that benefit of Government Orders relating to price preference would be extended to any Labour Co-operative Society. If such disclosure is not made in the tender, then the award of work should go to lowest tenderer. The judgment was upheld by a Division Bench of this Court in Ramesan P. and another v. T. Asokan and others [2018 (4) KLT 730].
10. Relying on the judgment of the Apex Court in Mannalal Jain v. State of Assam and others [AIR 1962 SC 386], the learned counsel for the petitioner argued that in the matter of price preference to be given to Co-operative institutions, it has to be ascertained first whether the Society in question is a Contract Labour Co-operative Society at all. In the case of ULCC, there is nothing on record to indicate W.P.(C) Nos.3189 & 3760/2020 13 that all members of the said ULCC are labourers. If persons other than labourers are made members of the Society, then obviously the Government Orders giving price preference to labour co-operatives cannot be extended to ULCC.
11. The learned counsel further argued that the Sate is obligated to act in a fair manner in cases of award of tenders. Relying on the judgment of the Apex Court in Ramana Dayaram Shetty v. International Airport Authority of India and others [(1979) 3 SCC 489], the learned counsel argued that even though the State is entitled to refuse to enter into relationship with anyone, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationships and discriminate between persons similarly circumstanced. State has to act in conformity with some standard or principle which needs the test of reasonableness and non- discrimination. Any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and nondiscriminatory ground.
12. Learned State Attorney Sri. K.V. Sohan strongly W.P.(C) Nos.3189 & 3760/2020 14 defended the writ petition. On the issue of violation of the right of the petitioner guaranteed under Article 14 of the Constitution, the learned State Attorney pointed out that the petitioner is a Private Limited Company whereas the 6th respondent is a Labour Contract Co-operative Society. By Ext.P6 order, the Government has given the benefit of Ext.P3 order to the 6th respondent, without any restriction on financial limits. While Article 14 forbids Class legislation, it does not forbid reasonable classification, the condition being there must be a nexus between the basis of classification and object sought to be achieved.
13. Learned State Attorney urged that Sections 43 to 55 of the Kerala Co-operative Societies Act, 1969 constitute a declaration of policy of the State, to nurture and aid Co-operative Societies. After due publication of Exts.P3, P5 and P6 in official gazette, the Government is giving preferential treatment to Co-operative Societies. The State policy is also in tune with the Directive Principles contained in Part IV of the Constitution.
W.P.(C) Nos.3189 & 3760/2020 15
14. The learned State Attorney pointed out that the price preference given to the 6th respondent and other Co-operatives is, in fact, by way of subsidy on tender works and is not intended to create any monopoly. Relying on the judgment in Indian Drugs and Pharm Ltd. and others v. Punjab Drug Manufacturers Association and others [AIR 1999 SC 1626], the learned State Attorney argued that policy restrictions can be imposed by exercise of executive power of the State under Article 162 of the Constitution. Preference shown to labour co-operatives being in public interest, it cannot be construed as arbitrary so as to give rise to a contention of violation of Article 14.
15. Relying on the judgments of the Hon'ble Apex Court in State Trading Corporation of India v. The Commercial Tax Officer and others [AIR 1963 SC 1811], learned State Attorney contended that a company registered under the Companies Act, 1956 is not a citizen within the meaning of Article 19 of the Constitution and cannot seek for enforcement of fundamental rights guaranteed to citizens. W.P.(C) Nos.3189 & 3760/2020 16 The petitioner, being a Company, is not entitled to claim protection under Article 19(1)(g).
16. Learned counsel for the 6th respondent-ULCC Sri. M. Sasindran stated that W.P.(C) No.3189/2020 was filed by the petitioner relying on the judgment of this Court in Ramesan P. and another (supra). During the pendency of the afore writ appeal, Government Orders giving price preference were notified in the gazette and the defects noticed in the said judgment stand cured and therefore, the petitioner is not entitled to any relief in W.P.(C) No.3189/2020.
17. The counsel for the 6th respondent-ULCC further stated that though Government Orders giving price preference to labour Co-operatives are challenged in W.P.(C) No.3760/2020, there is no challenge to Ext.P1-NIT. This Court in Ext.R6(d) judgment has held that price preference given to Co-operative Societies is to achieve an avowed object of encouraging co-operative sector.
18. Learned counsel argued that if by Ext.P6 order, the 6th respondent-Society alone is singled out for differential W.P.(C) Nos.3189 & 3760/2020 17 treatment as a Society, it can be questioned only by another Co-operative Society and not by a Private Limited Company. Price preference to co-operatives was in existence since 1959 and hence it is a time-tested method.
19. As regards competency of the State to issue price preference orders in favour of Co-operatives, the learned counsel urged that 'Co-operative Societies' come under State list and 'contracts' come under Concurrent list. Therefore, State Legislature has got legislative competence. Under Article 162, the Executive power of the State extends to the matters with respect to which the legislature of the State has power to make law. Therefore, any Executive order so issued would be valid as long as it is not offending any constitutional provision. The writ petitions are therefore without any force or merit and are only to be dismissed, contended the counsel for the 6th respondent.
20. I have heard Advocate Santhosh Mathew, learned counsel appearing for the petitioner, Sri. K.V. Sohan, learned State Attorney, Advocate M. Sasindran, learned counsel W.P.(C) Nos.3189 & 3760/2020 18 appearing for the Society, Advocate T.A. Shaji, learned counsel appearing for the additional 7 th respondent, Advocate K.V. Manojkumar, learned counsel for the 4th respondent and Advocate Anoop Joseph, learned counsel for the additional 8 th respondent.
21. In W.P.(C) No.3189/2020, the petitioner seeks to command the 2nd respondent-Kerala Road Fund Board to finalise the tender in terms of NIT, without any price preference to the ULCC Society. No orders of the respondents are under challenge. In W.P.(C) No.3760/2020, Exts.P3, P5 and P6 Government Orders are under challenge.
22. As far as Ext.P3 G.O.(MS) No.135/97/Co-op. dated 13.11.1997 of the Government of Kerala, Co-operation(C) Department is concerned, the petitioner has specific challenge against Clause 8(b)(i) thereof. Clause 8 of Ext.P3 G.O. reads as follows:-
"(8) (a) There will be regular tender for the works, and the Societies should present tenders in the manner prescribed by the work awarding authority.
Where a society quotes lowest rates, it will be entitled to the work at the quoted rate.
(b) In cases where a private contractor has W.P.(C) Nos.3189 & 3760/2020 19 quoted the lowest rate, the Labour Contract Co- operative Society which has quoted for the work will be given preference in awarding contracts as follows:
(i) When the lowest tender is from a private contractor, Labour Contract Co-operative Society will be awarded the work at 10% above the lowest tender, if the Society is willing to do the work. The work awarding Authority should ascertain the willingness of the Labour Contract Society in writing.
(ii) Where the quotation of a Labour Contract Co-operative Society is below the rate quoted by a private contractor, the work will be awarded to the Labour Contract Co-operative Society at the rate quoted by it.
(iii) Where two Societies quote the same rate, negotiations will be held and the Contract awarded to the Society which is willing to do the work at the lowest rate, falling which lots will be taken in the presence of the representatives of the concerned societies and the work will be awarded at the rates arrived as above.
(iv) In cases where societies are unwilling to take up the work at the rates arrived at as above, the contract will be awarded to the lowest tenderer at the quoted rate."
23. In Ext.P5 G.O.(MS) No.44/04/PWD dated 19.03.2004 of Government of Kerala, Public Works(H) Department, paragraphs 4 to 6 are relevant, which read as follows:-
"4. The orders issued in the Government orders read as 1st and 3rd papers above confer a preordained right to a Society to be awarded a work on the strength of its mere participation in a tender and its W.P.(C) Nos.3189 & 3760/2020 20 opening of tender it makes a post tender offer of 10% above that of the lowest tender. This provision is against the basic tenets of tendering process and is against natural justice. The PWD manual clearly prohibits a procedure of negotiating with anybody other than the lowest tenderer. The only concession that can be given in terms of the provision of the Manual is that if a tender offer of a society is not more than 10% over that of the lowest tenderer, such tender could be treated as the lowest for award of contract. In other words if Co-operative Societies are participating in a tender, then if the tender amount is not more than 10% of the lowest tender then, the society will get a price preference and quality (sic) itself to be the lowest tenderer.
5. Government in the Local Self Government Department has issued orders in Circular No.34947/DPI/03 dated 04.08.2003 stating that clause 8(b)(1) and clause 10 of the Government order read as 1st paper above will not be applicable to contracts under Local Self Government Institutions.
6. In the above circumstances, Government, after having examined the matter in detail, are pleased to order that clause 8(b)(1) of the Government Order read as 1st paper above would not be applicable to contracts administered by the Public Works Department. Labour Contract Co-operative Societies which participate in the tenders floated by PWD would instead be eligible for a 10% price preference in the matter of tenders issued PWD."
24. Ext.P6 G.O. (MS) No.181/08/Co-op. Dated 02.08.2008 of Government of Kerala, Co-operation(C) Department, upon which is the primary challenge, reads as follows:-
W.P.(C) Nos.3189 & 3760/2020 21 GOVERNMENT OF KERALA Abstract Co-operation Department - Granting permission to the Uralungal Labour Contract Co-operative Society to take up and execute any work without the restriction of financial limits and to restore the priority benefits provided in the G.O.(Ms.) No.135/97/Co-op. Dated 13.11.1997 - Sanctioned - Orders issued.
...............................................................................................................
CO-OPERATION (C) DEPARTMENT G.O.(Ms) 181/08/Co-op. Dated, Thiruvananthapuram 02.08.2008 ............................................................................................................... Read: (1) G.O.(Ms)No.135/97/Co-op.dated 13.11.1997 (2) Letter No.MT(1)31228/2006 dated 18.09.2006 of the Registrar of Co-operative Societies, Thiruvananthapuram.
ORDER In the circumstances explained by the Registrar of Co- operative Societies in her letter read as second paper, Government are pleased to restore the priority benefits provided in the order first cited to the Uralungal Labour Contract Co-operative Society and to permit the society to take up and execute any work without the restriction of financial limits.
By Order of the Governor, ROZARIO ELIZABETH ADDITIONAL SECRETARY TO GOVERNMENT
25. The thrust of the challenge to Exts.P3, P5 and P6 Government Orders is based on Articles 14 and 19 of the Constitution of India. Ext.P3 provides that when the lowest W.P.(C) Nos.3189 & 3760/2020 22 tender is from a private contractor, Labour Co-operative Society will be awarded the work at 10% above the lowest tender, if the Society is willing to do the work. Ext.P5 gives a 10% price preference to Labour Contract Societies. Ext.P6 permits the ULCC Society to take up and execute any work without the restriction of financial limits. In the matter of award of Government Contracts, these Government Orders indeed give a preference to Labour Co-operative Societies. The question is whether those orders would offend the right guaranteed to the petitioner under Articles 14 and 19 of the Constitution of India.
26. The constitutional right to equality can be applied among similarly situated persons and it is a settled proposition that the State can classify a group for differential treatment, provided the classification is reasonable and has a nexus with the object sought to be achieved.
27. Article 37 in Part IV of the Constitution of India, the Directive Principles of State Policy, mandates that the principles laid down in Part IV are fundamental in the W.P.(C) Nos.3189 & 3760/2020 23 governance of the Country and it shall be the duty of the State to apply the principles thereon in making laws. Article 38(1) provides that the State shall strive to promote welfare of the people by securing and protecting a social order in which economic justice shall inform all the institutions of national life. Article 38(2) provides that the State shall strive to minimise the inequalities of income and endeavour to eliminate inequalities in status, facilities and opportunities not only among individuals but also among groups of people engaged in different avocations.
28. The construction workers/labourers are a group by themselves who contribute substantially to the national reconstruction, and still considered as one of the vulnerable groups of workmen who suffer from insecurity of continuous employment and consequentially, of livelihood. If the Government takes any legally recognizable step for their benefit and livelihood, it can be treated only as in discharge of the obligation of the State under the Directive Principles of State Policy.
W.P.(C) Nos.3189 & 3760/2020 24
29. Article 43 provides that the State shall endeavour to secure, by suitable legislation, economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, living wages, conditions of work ensuring a decent standard of life (emphasis supplied). Therefore, if the respondents opt to encourage a Co-operative of Construction workers in the matter of governmental contract work, it can be taken as done with the intention of ensuring a decent standard of life to construction workers. Article 43A obligates the State to take steps by suitable legislation or in any other way to secure the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry (emphasis supplied). Promoting Co- operatives of Construction workers, managed by themselves by extending them price preference, can only be seen as a means to this end. Article 43B inserted in the Constitution of India with effect from 15.12.2012, provides that the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management W.P.(C) Nos.3189 & 3760/2020 25 of co-operative societies.
30. Chapter VI of the Kerala Co-operative Societies Act, 1969, as pointed out by the learned State Attorney, can be viewed as a policy declaration of the State in the matter of Co-operatives. Section 42 enables the Government to subscribe directly to the share capital of a Society with limited liability. Section 43 provides for indirect partnership of Government in Societies. Section 53(f) provides that the Government may give financial assistance to Co-operative Societies in any form including subsidies. (emphasis supplied).
31. The impugned orders of the Government have therefore sufficient legal justifications. The question then will be whether any of these orders offend Article 14 or 19(1) of the Constitution of India rendering them as unconstitutional. The State has given price preference to Workers Co-operatives in the matter of Government contracts, treating them as a separate class. The justification for the preference is based on Chapter IV of the Constitution of India and also W.P.(C) Nos.3189 & 3760/2020 26 on Chapter VI of the Kerala Co-operative Societies Act, 1969, as found hereinabove. The Construction Workers Co- operatives therefore stand on a different footing and the classification is based indeed on intelligible and legally sustainable grounds. The challenge based on Article 14, on the impugned Exts.P3, P5 and P6 orders therefore must fail.
32. The learned counsel for the petitioner has a further argument that by giving a special treatment to the 6 th respondent-ULCC in Ext.P6 vis-a-vis other Contractors Labour Co-operatives, the State has resorted to discrimination. From the pleadings and arguments, it has come out that by the size of the ULCC and by the quantum of Contract work so far undertaken and successfully completed by them, the ULCC stands on a different footing in comparison to other Labour Contract Co-operatives. At any rate, the petitioner being a Private Limited Company cannot take up the cause of discrimination allegedly shown to other Co-operative Societies.
33. The arguments of the counsel for the petitioner W.P.(C) Nos.3189 & 3760/2020 27 based on the Division Bench judgment of this Court in Ramesan P. and another (supra) is also not sustainable. In the judgment of a learned Single Judge in Asokan T. v. State of Kerala and others [2018 (1) KLT 760], it was held that without either providing for price preference in the NIT or a notification published in Official Gazette, price preference cannot be given. During the pendency of Writ Appeal, the Government Orders under challenge were published in Official Gazette. The Division Bench in Ramesan P. and another (supra) has held that the notified Government Orders can operate prospectively.
34. As regards the challenge against the impugned orders based on Article 19(1), the law is settled that in the matter of largesse of award of job contracts, the Government is permitted to depart from the general norms set down by it, in favour of particular group of persons by subjecting such persons with different standard or norms, if such departure is based on some valid principles which are not irrational, unreasonable or arbitrary, as held by the Hon'ble Supreme W.P.(C) Nos.3189 & 3760/2020 28 Court in Krishnan Kakkanth v. Government of Kerala [AIR 1997 SC 128]. The reasonableness of restriction is to be determined in an objective manner and from the stand point of the interests of general public and not from the point of view of the interests of the persons upon whom the restrictions are imposed or upon abstract consideration.
35. A restriction cannot be said to be unreasonable merely because it operates harshly. In determining the infringement of the right guaranteed under Article 19(1), the nature of the right alleged to have been infringed and the underlying purpose of the restriction imposed has to be taken into consideration. Under Article 19, though every citizen has freedom to carry on any trade, business or occupation, the Article does not give a right of award of Government contract to any citizen. The Constitution does not recognise franchise or rights to business which are dependent on grants by the State or business affected by public interest. The claim made by the petitioner based on Article 19 of the Constitution of India must therefore necessarily fail.
W.P.(C) Nos.3189 & 3760/2020 29
36. The argument of the petitioner that the works executed by the Government out of its own tenders and works executed availing financial assistance from Kerala Infrastructure Investment Fund Board paying interest cannot be treated similarly, is also unacceptable. When preference is given to Labour Contract Co-operatives as a matter of State policy, it is for the State to decide how the amount raised through KIIFB to be expended and to what extent preference can be given to Co-operatives.
37. The further contention of the petitioner is that while giving price preference to Co-operatives, the Government has to ensure that the ULCC is a Labour Contract Co-operative Society at all. In the counter affidavit filed by respondents 1 to 3, it has been specifically stated that Ext.P6 order in favour of the ULCC was issued by the Government after considering the recommendations of the Registrar of Co-operative Societies, taking into account the number of members who are workers. There is no material on record to assume that the ULCC is not a Contract Labour Co-operative Society. The W.P.(C) Nos.3189 & 3760/2020 30 argument of the petitioner in this regard, is therefore liable to be rejected.
In the circumstance, the writ petitions filed by the petitioner are without merits and are consequently dismissed.
Sd/-
N. NAGARESH, JUDGE aks/05/10/2020 W.P.(C) Nos.3189 & 3760/2020 31 APPENDIX OF WP(C) 3189/2020 PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE NOTICE INVITING TENDER DATED 23.12.2019 ISSUED BY THE 2ND RESPONDENT.
EXHIBIT P2 TRUE COPY OF THE TENDER SUMMARY REPORT DATED 01.02.2020.
EXHIBIT P3 TRUE COPY OF THE G.O.(MS).NO.
135/97/CO-OP DATED 13-11-1997.
EXHIBIT P4 TRUE COPY OF THE AUDITORS CERTIFICATE AND REPORT OF THE 3RD RESPONENT FOR THE LAST FIVE YEARS.
EXHIBIT P5 TRUE COPY OF THE G.O.(MS) NO.
44/04/PWD DATED 19-03-2004.
EXHIBIT P6 TRUE COPY OF THE G.O.(MS) NO.
181/08/CO.OP DATED 02-08-2008.
EXHIBIT P7 TRUE COPY OF THE ORDER DATED 03.9.2019 ISSUED BY THIS HONBKE COURT IN W.P.C NO.9560 OF 2018.
EXHIBIT P8 TRUE COPY OF THE G.O.(MS) NO.41/2020/PWD DATED 19.3.2020 ISSUED BY THE PWD.
EXHIBIT P9 TRUE COPY OF THE BOQ SUMMARY DETAILS OF THE PROJECT-THOTTAPILLY-NALUCHIRA BRIDGE.
EXHIBIT P10 TRUE COPY OF THE G.O.(MS.) NO.44/2020 DATED 14.05.2020 ISSUED BY THE PWD.
EXHIBIT P11 TRUE COPY OF THE BOQ SUMMARY DETAILS OF THE PROJECT -PERUMBALAM PANAVALLY BRIDGE.
W.P.(C) Nos.3189 & 3760/2020 32 EXHIBIT P12 TRUE COPY OF THE COMPARATIVE CHART SHOWING THE QUOTES OFFERED BY ULCC AND K.V.JOSEPH AND SONS PVT. LTD. FOR THE WORK OF THOTTAPILLY-NALUCHIRA BRIDGE AND ULCC AND THE PETITIONER FOR THE WORK OF PERUMBALAM PANAVALLY BRIDGE.
EXHIBIT P13 TRUE COPY OF THE G.O.(P)NO.133/2016 DATED 01.09.2016.
RESPONDENTS' EXHIBITS:
EXHIBIT R1(A) TRUE COPY OF G.O.(MS) No.31/2016/CO-OP DATED 29.06.2016 EXHIBIT R1(B) TRUE COPY OF G.O.(MS) No.39/2016/CO-OP DATED 16.01.2016 EXHIBIT R1(C) TRUE COPY OF G.O.(RT.)No.144/2019/CO-
OP DATED 23.02.2019 EXHIBIT R1(D) TRUE COPY OF G.O.(RT.) NO.106/2018/CO-
OP DATED 22.02.2018 EXHIBIT R3(A) TRUE COPY OF THE G.O.(MS).NO.135/97/ CO-OP; DATED 13/11/1997.
EXHIBIT R3(B) TRUE COPY OF THE G.O.(MS) NO.181/08/ CO-OP; DATED 02/08/2008.
W.P.(C) Nos.3189 & 3760/2020 33 APPENDIX OF WP(C) 3760/2020 PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE NOTICE INVITING
TENDER ISSUED BY THE 4TH RESPONDENT
FOR THE WORK KIFFB 2016-17
CONSTRUCTION OF PERUMBALAM PANAVALLY BRIDGE IN ALAPPUZHA DISTRICT.
EXHIBIT P2 TRUE COPY OF THE TENDER SUMMARY REPORT.
EXHIBIT P3 TRUE COPY OF G.O.(MS) NO.135/97/CO-OP DATED 13.11.1997.
EXHIBIT P4 TRUE COPY OF THE JUDGMENT IN MOIDEENKUTTY HAJI K.V.SUPERINTENDING ENGINEER, PWD REPORTED IN 2001 KHC 993. EXHIBIT P5 TRUE COPY OF THE G.O.(MS)NO.44/04/PWD DATED 19.3.2004.
EXHIBIT P6 TRUE COPY OF THE G.O.(MS) 181/08/CO-OP DATED 2.8.2008.
EXHIBIT P7 TRUE COPY OF THE JUDGMENT DATED 21.5.2012 IN WP(C) NO.13449 OF 2004.
EXHIBIT P8 TRUE COPY OF THE G.O.(P) NO.311/14/FIN DATED 30.7.2014.
EXHIBIT P9 TRUE COPY OF THE G.O.(MS)
NO.423/14/FIN. DATED 26.9.2014.
EXHIBIT P10 TRUE COPY OF THE G.O.(P)
NO.11/2015/FIN. DATED 8.1.2015.
EXHIBIT P11 TRUE COPY OF THE G.O.(P)
NO.339/2015/FIN. DATED 7.8.2015.
W.P.(C) Nos.3189 & 3760/2020
34
EXHIBIT P12 TRUE COPY OF THE ORDER DATED 3.9.2019
ISSUED BY THE HON'BLE COURT IN WPC
NO.9560 OF 2018.
RESPONDENTS' EXHIBITS:
EXHIBIT R7(A) TRUE COPY OF ONE OF THE NEWS ITEMS
DATED 20.07.2005 CARRIED BY THE HINDU
DAILY.
EXHIBIT R7(B) TRUE COPY OF THE ARTICLE DATED
09.08.2005 PRINTED IN MANGALAM DAILY.
EXHIBIT R7(C) TRUE COPY OF THE NEWS ITEM DATED 31.10.2005 PUBLISHED IN DESHABHIMANI DAILY.
EXHIBIT R7(D) TRUE COPY OF THE NEWS DATED 06.11.2005 CARRIED BY THE MANGALAM DAILY.
EXHIBIT R7(E) TRUE COPY OF THE NEWS ARTICLE DATED 29.11.2005 PUBLISHED IN DESHABHIMANI DAILY.
EXHIBIT R7(F) TRUE COPY OF THE NEWS DATED 02.01.2006 PUBLISHED IN MANGALAM DAILY.
EXHIBIT R7(G) TRUE COPY OF THE NEWS DATED 10.02.2006 PUBLISHED IN THE HINDU DAILY.
EXHIBIT R7(H) TRUE COPY OF THE NEWS DATED 17.02.2006 PRINTED IN MATHRUBHUMI DAILY.
EXHIBIT R7(I) TRUE COPY OF THE NEWS ITEM DATED 23.03.2006 CARRIED BY MALAYALA MANORAMA DAILY.
EXHIBIT R7(J) TRUE COPY OF THE NEWS DATED 03.04.2006 PRINTED IN DESHABHIMANI DAILY.
EXHIBIT R7(K) TRUE COPY OF THE NEWS DATED 07.05.2006 PUBLISHED IN DESHABHIMANI DAILY.
W.P.(C) Nos.3189 & 3760/2020 35 EXHIBIT R7(L) TRUE COPY OF THE NEWS ARTICLE DATED 08.05.2006 PRINTED IN METRO MANORAMA DAILY.
EXHIBIT R7(M) TRUE COPY OF THE NEWS ITEM DATED 31.08.2006 PUBLISHED IN MANGALAM DAILY.
EXHIBIT R1(A) TRUE COPY OF G.O.(MS) No.31/2016/CO-OP DATED 29.06.2016.
EXHIBIT R1(B) TRUE COPY OF G.O.(MS)No.39/2016/CO-OP DATED 16.01.2016.
EXHIBIT R1(C) TRUE COPY OF G.O.(Rt.) No.144/2019/CO-
OP DATED 23.02.2019 EXHIBIT R1(D) TRUE COPY OF G.O.(Rt) No.106/2018/CO-
OP DATED 22.02.2018 EXHIBIT R6(A) A TRUE COPY OF THE SHARE CERTIFICATE FOR THE 6TH RESPONDENT.
EXHIBIT R6(B) TRUE COPY OF THE G.O.(MS) No.284/74 AD. DATED 28.10.1974.
EXHIBIT R6(C) TRUE COPY OF THE G.O.MS 136/78/AD.
DATED 12-05-1978 EXHIBIT R6(D) A TRUE COPY OF THE JUDGMENT OF THE DIVISION BENCH IN W.A.403 OF 2001 DATED 01-08-2005.
EXHIBIT R6(E) TRUE COPY OF THE G.O.(MS) NO.144/2019/CO-OP; DATED 23-02-2019.
EXHIBIT R6(F) TRUE COPY OF THE G.O.(MS)No.481/10/CO-
OP; DATED 27-07-2010.
EXHIBIT R6(G) A TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN W.A.No.1117 OF 2017 DATED 12.3.2018.