Kamtheen Security Services vs State of M.P. and Others

In both these appeals filed under section 2(1) of the M.P. Uchcha Nyayalaya (Khand Nyayapeeth Ko Appeal) Adhiniyam, 2005, appellant seek exception to orders passed by the Writ Court in Writ Petition Nos. 17826/2014 and 16307/2014, on 25.6.2015; and, as the questions of law and fact are identical in both the cases, both the appeals are being heard and disposed of by this common order.

For the sake of convenience, documents and material available in the record of Writ Appeal No. 410/2015 are being referred to in this order.

A Tender was invited by the Authorities of Shyamshah Medical College, Rewa for the purpose of cleaning the Medical College premises, including the Hostel premises, for the Session 2014-2015. Annexure P/1 in the record of W.P. No. 17826/2014 is the tender document. In the Notice inviting tender, certain conditions were stipulated, which included employing 80 employees for the purpose of cleaning; the employees should be paid the minimum wage as notified by the Collector or the Labour Department for payment of wages to an unskilled labourer and the benefit of EPF, ESI and Service Tax should also be borne by the contractor.

In Writ Appeal No. 410/2015, the dispute pertains to the tender for engaging security guard and the same condition of specifying the payment of minimum wages to the employees, alongwith EPF, ESI and Service Tax to be deducted was stipulated. Clause 25 of the Tender Document contained a stipulation that the person submitting the offer has to declare the minimum wages to be paid alongwith the amount of EPF, ESI and Service Tax that would be paid. It was the case of respondent No. 4 M/s. Noor Associates that it was mandatory for all persons submitting their offer to indicate specifically the amount that will be paid towards minimum wages to the employees; the amount that will be deducted towards EPF, ESI and Service Tax. It is said that in the offer submitted by the present appellant - Kamtheen Security Services, Indore, they did not disclose the minimum wages to be paid; they undervalued it and by misrepresentation made their offer the lowest one, which was accepted by the Tender Committee. Accordingly, it was the case of respondent No. 4 M/s. Noor Associates, in Writ Petition No. 17826/2014, that the present appellant has not filled the tender document in accordance to the mandatory requirements; he has manipulated the figures with regard to payment of minimum wages to the employees and, therefore, in accepting his offer, an error has been committed. The learned writ Court has accepted this contention and, therefore, this appeal.

Similarly, in Writ Appeal No. 411/2015, the tender was for the purpose of appointment of Security Guards and for the same the minimum wages notified by the Collector was to be paid as is applicable to a semi skilled worker. In this case, it was the case of respondent No. 4 M/s. Noor Associates in Writ Petition No. 16307/2014, that as in the earlier case the minimum wage were not properly indicated in the tender document and inspite of the fact that a Committee had recommended ''not to accept the offer due to non-compliance with the mandatory requirement'', the same has been accepted. The learned writ Court found error in accepting the tender so far as it pertains to employment of Security Guard and having interfered into the matter, these appeals have been filed.

Shri R.N. Singh, learned Senior Advocate for the appellant, took us through the material available on record and argued that payment of minimum wages to an employee alongwith the requirement of deducting statutory deductions like EPF, ESI and Service Tax are the requirement of law and merely because the same is not reflected in the tender document, the tender of the appellant could not be rejected. It is said that the appellant is duty bound to comply with the requirement of law, make all such deductions which are statutorily required and merely because he has not reflected the same in his offer, that would not become an illegality warranting rejection of his tender. The Tender Committee having evaluated all these factors and finding the appellant''s offer to be the lowest accepted his tender and now having worked for more than 10 months, the action taken is unsustainable.

It was emphasized by learned Senior Advocate that the requirement of mentioning the minimum wages to be paid alongwith EPF, ESI and Service Tax to be deducted was not a mandatory requirement as per the tender conditions and, therefore, if such an indication was not made in the tender document that could not be a ground for holding that the offer submitted by the appellant is illegal. Learned Senior Advocate further argued that the learned writ Court has exceeded its jurisdiction in the matter of exercising its power of judicial review available under Article 226 of the Constitution, in a contract matter. Accordingly, Shri R.N. Singh - learned Senior Advocate, submits that in both these appeals the learned writ Court has committed an error, particularly when the contract was only for a period of 12 months and now more than 10 months are over and, therefore, interference at this fag end, when the contract is coming to an end, was not called for.

Shri Aditya Adhikari, learned Senior Advocate, invited our attention to Clause 25 of the Tender Document, pertaining to grant of contract for cleaning purpose and Clause 13 of the Contract, for the purpose of security guard and argued that not only payment of minimum wages, deduction of EPF, ESI and Service Tax was a mandatory requirement, but in the Tender Form itself the said amounts should have been correctly reflected. Learned Senior Advocate invited our attention to the Notification issued by the office of the Labour Commissioner, Indore fixing the minimum wages for an unskilled employee at Rs. 5845/- per month and referring to the offer submitted by the present appellant, argued that the contract was for employing 80 cleaning employees and if salary to be paid to an employee was Rs. 5845/- per month, then for 80 employees the monthly salary would come to Rs. 4,67,600/-. Against this, appellant herein only disclosed payment of salary @ Rs. 3,91,615/- thereby he manipulated the figure of minimum wages to be paid only for the purpose of making his offer the lowest. Similarly, by giving an offer of Rs. 3,91,615/- by not disclosing the EPF, ESI and Service Tax, the appellant made his offer the lowest in comparison to respondent No. 4 and the other tenderer M/s. White House who by indicating the actual minimum wages to be paid to 80 employees, the amount of EPF, ESI and Service Tax to be deducted and by disclosing all these factors their offer became more than the present appellant. It is stated that the present appellant invented a novel method of not disclosing the correct minimum wages as a result his offer was the lowest and when his offer was accepted, he filed an affidavit stating that he shall pay minimum wages to the 80 employees and deduct the EPF, ESI and Service Tax. Accordingly, Shri Adhikari - learned Senior Advocate, pointed out that the learned writ Court having found this illegality to be committed, has not committed any error in allowing the petition.

As far as Writ Appeal No. 411/2015 is concerned, Shri Aditya Adhikari - learned Senior Advocate invites our attention to the observations made by a Committee of the State Government in the offer submitted by the appellant to the following effect and argues that inspite of objections in this regard, the offer of the appellant has been accepted. The observations are as under:

NOTE:: Considering remarks in relation to Tenderer 1 and 4, tenderers 2 and 3 only may be considered. Tenderer 2 is lower than 3 by Rs. 0.14 (14 paise). Tenderer 3 is ISO Standard Holder which is a condition of tender but not included in technical requirements. Full Committee may consider the above for final decision."

That apart, Shri Adhikari - learned Senior Advocate, submitted that in view of Clause 25 and 13 of the Tender Document, as mandatory conditions have been violated, the learned writ Court has interfered into the matter in view of the law laid down by the Supreme Court in the case of B.S.N. Joshi and Sons Ltd. Vs. Nair Coal Services Ltd. and Others, AIR 2007 SC 437 : (2006) 2 CTLJ 247 : (2006) 10 JT 131 : (2006) 11 SCALE 526 : (2006) 11 SCC 548 : (2006) 8 SCR 11 Supp .

We have considered the rival contentions and we find that in the Tender Document with regard to employing cleaning employees and security guards, there are specific conditions that Minimum Wages Act would be applicable and the contractor will have to give minimum wages as notified by the Collector for unskilled and semi-skilled employee as may be applicable. That apart, the employer will have to deduct EPF, ESI and Service Tax. Three offers were received they were - M/s. White House, New Delhi; M/s. Noor Associates, Rewa - respondent No. 4 in both the appeals represented by Shri Aditya Adhikari, Senior Advocate; and, M/s. Kamtheen Security Services, Indore - the appellant in both the cases.

As far as employment of cleaning employees are concerned, it is an admitted position that as per the tender conditions the Contractor will have to employ atleast 80 employees for cleaning purpose and as per Notification issued by the Collector it is further an admitted position that the daily wages paid to an unskilled employee is Rs. 5845/- per month. Now, if this is the minimum wages that is to be paid to an unskilled employee every month, then for 80 employees the minimum wages that is required to be paid per month would be Rs. 4,67,600/-. This was the amount which was indicated in the Tender Document by respondent M/s. Noor Associates and as far as M/s. While House, New Delhi were concerned, they indicated the payment to be paid to 80 employees at Rs. 8,40,674.05 per month. In comparison to both these companies, appellant M/s. Kamtheen Security Services, Indore indicated the minimum wages to be paid per month at Rs. 3,91,615/-, which admittedly was less than the minimum wages of Rs. 5845/- to be paid every month. By doing so, the appellant made their offer the lowest and thereby induced the authorities to accept their offer and while doing so they committed any default in not indicating in Column No. 3 the EPF, ESI and Service Tax. That being so, the conduct of M/s. Kamtheen Security Services, the appellant herein, correctly was a clear case of misrepresentation of facts, which was why the learned writ Court interfered.

Accordingly, in this manner by showing a lower amount of wages contrary to the statutory provisions of the Minimum Wages Act; EPF, ESI and Service Tax, the appellant herein gave an offer which on the face of it was found to be lowest and once their offer was accepted, they filed an affidavit indicating that they shall pay minimum wages and deduct EPF, ESI and service tax for their employees. Learned writ Court from paragraph 6 has discussed this aspect and finding that the appellant did not disclose the correct position as required under the Tender document, and has infact misrepresented, violated the mandatory conditions and by applying the law laid down in the case of B.S.N. Joshi (supra) has interfered into the matter. In doing so, we are of the considered view that the learned Writ Court has not committed any error. When the tender condition stipulated that an employee has to be given minimum wage after deduction of EPF, ESI and Service Tax and when the same was to be reflected in the tender document as expenses to be incurred, if the appellant by not disclosing the correct figures, statutorily required, had made their offer the lowest in comparison to others, they have committed a deliberate omission and by manipulating these figures they made their offer lowest which cannot be permitted.

That apart, in the matter of grant of contract for security guards, it is clearly indicated by the Committee of the State Government that the appellant have not indicated properly the minimum wages to be paid under the Labour Laws, nor they have calculated the EPF, ESI and service tax to be paid correctly as per statutory requirement; they have undervalued these amounts and considering this it was recommended that their tender should be rejected, inspite of such a recommendation made by the Committee of the State Government vide Annexure R/1, available in the record of Writ Petition No. 16307/2014, for reasons which remain unexplained the work was granted to the appellant.

Considering all these defaults, if the learned writ Court has interfered into the matter, we see no error in the matter warranting reconsideration. Contention of Shri R.N. Singh, learned Senior Advocate, to the effect that disclosing minimum wages, EPF, ESI and Service Tax was not a mandatory requirement cannot be accepted. Clause 13, 24 and 25 of the Tender document clearly indicates that they are mandatory requirements and when the mandatory requirements are not disclosed and when inspite of the same tender of a defaulting party is accepted, the action of the accepting authority is nothing but an arbitrary and unreasonable decision, violating the requirement of Article 14 of the Constitution and if on such evaluation the writ Court has exercised its powers of judicial review under Article 226 of the Constitution, the writ Court has not committed any error.

We have considered the reasons given by the learned writ Court and we find that after evaluating each and every aspect of the matter in detail and after applying the principle of law as is applicable, the matter has been decided and, therefore, we see no error in the matter warranting reconsideration.

Accordingly, both the appeals fail and are dismissed.