M/s Sumeet Security Service, Nayagarh vs State Of Odisha And Another

Dr. B.R. Sarangi, ACJ

M/s Sumeet Security Service, Nayagarh, which is a partnership firm, has filed this writ petition seeking to quash the order dated 01.11.2022 under Annexure-6, by which the tender committee unanimously decided to reject the entire financial bid format (F2) of the petitioner due to submission of incomplete financial bid format, as a result of which the petitioner has not been eligible for further assessment and comparison in financial bid.

The factual matrix of the case, in brief, is that opposite party no.2, on 30.06.2022, issued Request for Proposal (RFP)-2 inviting applications from eligible bidders for selection of most suitable Agency to Undertake Outsourcing of Different Manpower Services at Government Health Institutions in the district of Nayagarh. The petitioner, having requisite qualification, submitted its bid, qualified in the verification and provisionally selected for further assessment. Accordingly, opposite party no.2, vide letter no.2888 dated 27.10.2022, informed the qualified bidder to attend the financial bid meeting held on 28.10.2022 at 11.30 A.M. Pursuant thereto, the petitioner filed all the requisites in Form-F2 price schedule for providing different manpower services with financial proposal. On 28.10.2022, when the petitioner attended the financial bid meeting found some discrepancies on the activity of opposite party no.2 to disqualify it as a successful bidder. Therefore, the petitioner submitted a representation before the Collector, Nayagarh regarding award of work order to L1 bidder attaching comparison statement of financial bid. Since no reply came from the side of the Collector, the petitioner sent legal notice to opposite party no.2 through its advocate on 29.10.2022. But, in reply to the notice dated 29.10.2022, the petitioner was informed that the tender committee unanimously decided to reject the entire financial bid format of the petitioner firm due to submission of incomplete financial bid format (F-2). Hence, this writ petition.

Mr. Milan Kanungo, learned Senior Counsel along with Ms. Chandana Mishra, learned counsel appearing for the petitioner contended that the financial bid of the petitioner has been rejected on the ground of non-submission of complete financial bid format (F2). But the deficiency in disclosure and the manner of incompleteness have not been indicated in the order of rejection. Therefore, since the order impugned dated 01.11.2022 in Annexure-6 has been passed without assigning any reason, the same cannot be sustained in the eye of law.

Mr. P.P. Mohanty, learned Addl. Government Advocate appearing for the State-opposite parties contended that opposite party no.2 issued Request for Proposal on 30.06.2022 for selection of most suitable Agency to Undertake Outsourcing of Different Manpower Services at Government Health Institutions in the district of Nayagarh. Opposite party no.2 also issued another notice for Techno Managerial Personnel Services at Government Health Institution. The last date for submission of proposal was fixed to 20.07.2022 at 5.00 PM and the date of opening of the said bids was fixed to 21.07.2022 at 11.30 AM in the office of opposite party no.2. Pursuant to the aforesaid notice, 19 bidders submitted their bids with regard to selection of Agency for Outsourcing of different Manpower at Government Health Institutions, Nayagarh. The petitioner submitted Form-F2 at Column-f (total per personnel per month) as e=a+b+c+d excluding the annual service charges. Therefore, the bid of the petitioner was rejected by the committee, as it submitted incomplete Form-F2 without adding service charges. It is further contended that the petitioner quoted service charge as Re.1 per bill, but so far as its applicability to 154 workmen is concerned, that will come to fraction, which is not permissible. Thereby, the bid submitted by the petitioner was rejected. Consequentially, no illegality or irregularity has been committed by the authority in passing the order impugned, so as to call for interference of this Court at this stage.

This Court heard Mr. Milan Kanungo, learned Senior Counsel along with Ms. Chandana Mishra, learned counsel appearing for the petitioner and Mr. P.P. Mohanty, learned Addl. Government Advocate appearing for the State-opposite parties in hybrid mode. Pleadings having been exchanged between the parties, with the consent of learned counsel for the parties this writ petition is being disposed of finally at the stage of admission.

Admittedly, CDM & PHO, Nayagarh-opposite party no.2 issued a Request for Proposal (RFP) on 30.06.2022 inviting applications from the interested bidders for selection of agency for outsourcing of different manpower at Govt. Health Institutions, Nayagarh. The CDM & PHO, Nayagarh-opposite party no.2 also issued another notice for Techno Managerial Personnel Service at Government Health Institution. The last date for submission of proposal was fixed to 20.07.2022 at 5.00 PM and the date of opening of the said bids was fixed to 21.07.2022 at 11.30 AM in the office of the opposite party no.2. Pursuant to aforesaid notice, all total 19 bidders submitted their bids with regard to selection of Agency for Outsourcing of different Manpower at Government Health Institutions, Nayagarh. Similarly, 24 bidders submitted their bids with regard to Techno Managerial Personnel Service at Government Health Institutions. As per the bid notice, the tender was opened on 28.10.2022 for different Manpower. After opening of the bid, 10 bidders were qualified in the technical bid for selection of agency for outsourcing of different manpower at Govt. Health Institutions, Nayagarh. The qualifying amount limit, excluding GST, was fixed to Rs.18,24,848.25. After opening of financial bid, six bidders were found qualified by way of quoting same rate, i.e., Rs.18,24,848.25. The evaluation of financial proposal was enumerated in Clause-5.2 of the bid documents, which reads as under:-

“5.2 Evaluation of Financial Proposal

The total price (exclusive of GST) as per price format F2 shall be considered for price evaluation. However, in case two bidders quote the same lowest price, then the agency with the highest mark in the technical bid shall be awarded the contract. However, if two bidders quote the same lowest price and their technical mark also become equal, then in that case, the bidder having the higher annual average turnover shall be awarded the contract.”

Taking into consideration the aforesaid clause-5.2, as six bidders had quoted the same rate, ranking of technical scoring was taken place, whereas three bidders, namely, (1) Ganjam Manpower and Security Service Pvt. Ltd., (2) Executive Security Service Pvt. Ltd. and (3) L&K Services, Bhubaneswar were qualified as L1 having scored the same number, i.e., 100. As the technical scoring of the three bidders was same, the average annual turnover of three financial years of the said three bidders were taken into consideration and after considering the same, M/s L&K Services, Rabi Talkies, Bhubaneswar was declared as L1, since its annual average turnover of the last three financial years came to Rs.54.61 crores and, as such, the said agency, i.e., M/s L&K Services, Rabi Talkies, Bhubaneswar was declared as the highest bidder with regard to selection of agency for outsourcing of different manpower at Government Health Institution, Nayagarh.

The reasons for declaring the petitioner ineligible with regard to selection of agency for outsourcing of different manpower at Government Health Institution, Nayagarh revealed that the petitioner had quoted ‘nil’ price with regard to service charge. Form-F2 of the bid documents stipulated at column-e (total per personnel) is equal to e=a+b+c+d. While calculating column ‘f’, it is found that the petitioner had submitted Form-F2 at column-f (total per personal per month) as e=a+b+c+d excluding the annual service charges. Therefore, the bid of the petitioner was rejected by the committee, as it has submitted Form-F2 as incomplete one without adding service charge. Since the tender relates to outsourcing of manpower, the petitioner had quoted its rate without taking into consideration the service charges. Since the petitioner had not quoted any rate of service charge, the bid application of the petitioner was found to be incomplete one. Even while calculating the rate offered by the petitioner in Form-F2 of the bid documents with regard to providing Techno Managerial Manpower Services, taking into consideration the aforesaid defects, the bid committee has also rejected the bid of the petitioner with regard to said service. Consequentially, M/s L&K Service, Rabi Talkies, Bhubaneswar, as the lowest bidder, was selected as the agency for outsourcing of different manpower at Government Health Institutions, Nayagarh, and M/s Ganjam Manpower and Security Services was selected as the lowest bidder with regard to Techno Managerial Manpower. Although both of them are necessary parties, they have not been made as parties to this writ petition. Thereby, the writ petition is liable to be dismissed for non-joinder of proper parties.

At page-42 of the brief in Annexure-1, i.e., Request for Proposal, Form-F2 has been prescribed. The said format of Form-F2 is quoted below:-

FORM F-2

(To be submitted with Financial Proposal)

Price Schedule for the Providing Different Manpower Services

Name of the District-: Nayagarh

Sl

Particulars

Monthly Cost per Personnel (Rs.) exclusive of GST

.

*Take home Remunerati on/ Month (to be quoted based on 26 days Service)

EPF

(Employe r’s share of 13%)

ESI

(Employe r’s share of 3.25%)

Servi ce Char ge

**

Total (per personn el per Month)

**** No.  of person nel

Total Cost/Mo nth (exclusiv e of GST (Rs.)

(upto two decimal places

only

Name            of Positions

a

b

c

d

e e=a+b+c

+d

F

g=exf

1

Remunerati on of ATTENDA

NT (Semi

skilled)

2

Remunerati on of GARDENE R (Un

Skilled)

3

Remunerati on of Cook cum Attendant (Semi

Skilled)

4

Remunerati on of DRIVER

(skilled)

5

Total Cost/Mont h (exclusive

of GST)

The petitioner has submitted the said Form-F2, which has been annexed as Annexure-A/2 to the counter affidavit filed by opposite party no.2, to the following effect:-

Form F-2

(to be submitted with Financial Proposal)

Price Schedule for the Providing Different Manpower Services.

Name of the District: Nayagarh

Sl

Particulars

Monthly Cost per Personnel (Rs.) exclusive of GST

**** No. of Person nel

Total Cost / Month (exclusive of GST Rs.)

(up to two decimal places only)

Take home Remunera tion/ Month

(to be quoted based on 26 days Service)

EPF

(Employer ’s share of 13%)

ESI

(Employ er’s share of 3.25%)

Service Charge

** Rs.1/- per Bill

Total (per personnel per Month)

Name of Positions

a

b

c

d

e e=

F

g = e x f

a+b+c+d

1

Remunerati on of ATTENDA

NT (Semi

skilled)

9516.00

1237.08

309.27

-

11,062.35

154

1703601.90

2

Remunerati on of GARDENE R (Un

Skilled)

8476.00

1101.88

275.47

-

9853.35

03

29560.05

3

Remunerati on of Cook cum Attendant (Semi

Skilled)

9516.00

1237.08

309.27

-

11062.35

06

66374.10

4

Remunerati on of DRIVER

(skilled)

10816.00

1406.08

351.52

-

12573.60

02

25,147.20

5

Total Cost/Mont h (exclusive

of GST)

1824683.25

Perusal of Form-F2 submitted by the petitioner would indicate that the petitioner had quoted Re.1/- per bill towards service charges, which comes under the heading (d) and, as such, the total per personnel per month is coming under the heading (e) and the said heading (e) is equal to column (a+b+c+d). Re.1/- per bill mentioned under the heading service charge under heading clause-(d), has not been added in the column (e). If the quantum prescribed Re.1/- per bill would be taken into consideration along with the number of personnel, as mentioned in column (f), i.e., 154 and column-(g) requires (g)=(e x f) and, column (e) has been calculated excluding service charges as Re.1/- per bill and if that will be divided by 154 persons, it will come to some fractions, which is not permissible under law. Furthermore, the petitioner had never quoted the service charge at column no.(d) in Form-F2 in respect of each personnel stated at serial numbers 1 to 4. But the petitioner chose to enter the service charge beyond the column and quoted the price at its own and at its suitable place, which was not taken into account by the tender committee. Filling up forms clearly indicate with regard to the service charges at column (d) with the foot note in Form-F2 under Annexure-A/2 and Annexure-B/2, which are quoted below:-

“** the service charge shall be quoted by taking into account all the managerial costs of the personnel including statutory requirements, uniform, etc. mentioned in the Terms of Reference (Section-3). The bidders are required to quote the price (service charge) in whole rupees and no fraction of rupees will be considered and quoting in fraction of rupee will be lead to summarily rejection of financial bid. There must not be any compromise on the take home remuneration mentioned above.”

The petitioner has quoted Re.1/- per bill as service charge. If Re.1/- as service charge per bill is considered, it would amount to fraction of one rupee, as the tender was invited for supply of manpower for more than six hundred persons. The contention raised that no reasons has been assigned, while issuing Annexure-6 in rejecting the bid of the petitioner, is not correct, in view of the fact that in the order impugned it has been clearly mentioned that due to submission of incomplete financial bid format (F-2) in both the proposals, the petitioner is not eligible for further assessment and comparison in financial bid. Therefore, when the reason for rejection has been clearly indicated in the order impugned, the contention raised by learned Senior Counsel appearing for the petitioner has no legs to stand and, as such, the same cannot be accepted. Furthermore, the petitioner did not choose to attend the pre-bid meeting held on 07.07.2022 at 11.30 AM in the office of opposite party no.2. Form-F2 clearly stipulates that the charges need to be quoted for monthly cost per personnel including service charges. As per the scope of the proposal at clause 3.3, the bill needs to be raised by the agency for each Government Health Institution of Nayagarh district. If the contention of learned Senior Counsel appearing for the petitioner is accepted with regard to service charge of Re.1/- per bill, then as per RFP the service charge needs to be calculated in order to consider the same with other bidders. As such, since the service charges of Re.1/- came to fraction, it led to rejection of financial bid. On 03.11.2012 and 27.03.2013, the Finance Department, Govt. of Odisha issued Note Sheet with regard to service charge of the outsourcing services, wherein advisory was issued that bids with ‘nil’ or very low service charges can be treated as non-responsive bid, which are liable to be rejected and further zero service charges are also liable to be rejected. On 22.05.2018, the Finance Department, Govt. of Odisha issued Note Sheet in a clarification to Home Department advising that bids with ‘Nil’ or very low service charges can be treated as non-responsive bids, which are liable to be rejected. The relevant part of the Note Sheet is extracted hereunder:-

“Further A/D have quoted that “a Tender Committee of Finance Department in their Meeting held on 31.10.2013 observed that the Service Charges quoted in the range of 1 paisa to Rs.7/- is unreasonably low to carry out any service providing works and the corresponding bidders are non- serious bidders. So the Committee had decided not to consider such bids as these bids are treated as frivolous bids. In this context it is stated that no decision has been made by the Government so far as Budget-V Branch of Finance Department is “concerned towards minimum Service Charges of the Manpower Service Provider for finalization of Tender Process. Hence A/D is advised to take appropriate action at their level considering the clarification and views of Tender Committee a discussed at Para-1 an Para-2 above.”

On 11.07.2023, the Finance Department, Govt. of Odisha issued Office Memorandum with regard to Rate of Service Charges in outsourcing services, wherein the State Government prescribed the rate of service in outsourcing services to the following effect:-

“a. The minimum service charge shall be 3.85% (3% profit plus transaction charge);

b. The procuring entity can also fix the service charge above 3.85% with proper justification, whenever required. However, such charge should not exceed 7% in any case.”

But fact remains, the notification of the Finance Department, Govt. of Odisha issued on 11.07.2023 would apply prospectively but not retrospectively, so far as the bid of the petitioner is concerned, which was issued pursuant to RFP dated 30.06.2022. Thereby, for quoting of Re.1/- per bill as service charge, which is termed to be a very low service charge as per the notification dated 03.11.2012 and 27.03.2013 read with Note Sheet dated 22.05.2018, the bid of the petitioner should have been treated as non-responsive. Thereby, the tendering authority is well justified in rejecting the bid of the petitioner vide the order impugned in Annexure-6, which does not warrant interference of this Court at this stage.

In Sterling Computers Ltd. v. M & N Publications Ltd. (1993) 1 SCC 445, the apex Court observed as under:-

“18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the court is concerned primarily as to whether there has been any infirmity in the ‘decision-making process’. … the courts can certainly examine whether ‘decision-making process’ was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.”

In Tata Cellular v. Union of India, (1994) 6 SCC 651 : AIR 1996 SC 11, the apex Court, referring to the limitations relating to the scope of judicial review of administrative decisions and exercise of powers in awarding contracts, held to the following effect:-

“(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative action. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.… More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.”

The apex Court also noted that there are inherent limitations in the exercise of power of judicial review in contractual matter. As such, it was observed that the duty to act fairly will vary in extent, depending upon the nature of cases, to which said principle is sought to be applied. It was further held that the State has the right to refuse the lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose is not exercised for any collateral purpose or in infringement of Article 14.

In Air India Ltd. v. Cochin International Airport Ltd. (2000) 2 SCC 617, the apex Court, while summarizing the scope of interference as enunciated in several earlier decisions, held as follows:-

“7. … The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene.”

The scope of judicial review has also been taken into consideration elaborately in Jagdish Mandal v. State of Odisha, (2007) 14 SCC 517. In paragraph-22 of the said judgment, the apex Court held as follows:-

“…………..Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

OR

Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”;

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.”

Similar  view  has  also  been  reiterated  in Michigan Rubber (India) Limited v. State of Karnatak, (2012) 8 SCC 216 and Maa Binda Express Carrier v.

North East Frontier Railway, (2014) 3 SCC 760.

In Vidarbha Irrigation Development Corporation v. M/s Anoj Kumar Agarwalla), (2020) 17 SCC 577, the apex Court, in paragraph-16 of the judgment, held as under:-

“16. It is clear even on a reading of this judgment that the words used in the tender document cannot be ignored or treated as redundant or superfluous they must be given meaning and their necessary significance. Given the fact that in the present case, an essential tender condition which had to be strictly complied with was not so complied with, the appellant would have no power to condone lack of such strict compliance. Any such condonation, as has been done in the present case, would amount to perversity in the understanding or appreciation of the terms of the tender conditions, which must be interfered with by a constitutional court.”

In Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited, (2016) 16 SCC 818, the apex Court held that the constitutional courts are concerned with the decision making process. A decision if challenged (the decision having been arrived at through a valid process), the constitutional Courts can interfere if the decision is perverse. However, the constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority.

In view of the facts and law, as discussed above, this Court, in exercise of power conferred under judicial review in the matter of administrative decision and for awarding contract, does not find any infirmity in the decision making process so as to cause interference with the order dated 01.11.2022 passed by the tendering authority under Annexure-6 in rejecting the bid of the petitioner.

In the result, the writ petition is devoid of merit and thus dismissed. However, there shall be no order as to costs.

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