Rajendra Kumar Agrawal vs State Of Madhya Pradesh And Others

Heard on admission.

The present writ petition is filed under Article 226 of the Constitution of India challenging the condition of the Notice Inviting Tender (NIT) for

selection of manpower agency for providing unskilled labourers/workers. The impugned condition of eligibility of Part-A, Section 2 of the NIT requires

that a bidder has to furnish no dues certificate in respect of Provident Fund (PF), Employees’ State Insurance Certificate (ESIC) and other

applicable dues against all workers. The aforesaid condition reads thus:

“A proprietorship Firm Registration Act, 1958 Bidder who in present or past have entered into agreement(s) with Municipal Corporation for supply

of manpower, such bidders shall mandatorily be required to obtain a clearance certificate from Additional Commissioner (Finance), Municipal

Corporation, Jabalpur which shall clearly stated that the bidder has duly paid the P.F., ESIC and other applicable dues against all the workers provided

to Municipal Corporation till date and no dues remain pending against the work allotted to the bidder. After obtaining such certificate, the bidder shall

be required to submit the certificate of Municipal Corporation at the time of bidding. Bids submitted without the clearance certificate from respective

Additional Commissioner (Finance), Account Officer, Municipal Corporation in case of absence of Additional Commissioner (Finance) shall be liable

to be rejected by Municipal Corporation at their discretion.â€​

The aforesaid condition is mainly challenged on the ground that the same is arbitrary and irrational, as it has no nexus with the nature of work for

which the NIT is issued. Learned counsel appearing for the petitioner also urged that he has made various representations before the concerned

authorities to issue no due certificate but the same has not been paid heed to. Therefore, the respondent-Corporation be directed to issue clearance

certificate before proceeding further with the NIT.

We do not find any merit in the aforesaid contentions raised by the learned counsel for the petitioner. The Corporation has invited tenders for

selection of manpower agency for providing unskilled labourers/workers. The object is evident from the impugned condition to safeguard and secure

the interest of unorganized unskilled labourers and to ensure that the statutory liability in respect of PF/ESIC and other applicable dues of such

workers has been discharged by the intended tenderers. The aforesaid requirement of clearance certificate from an officer of the Corporation has

been made a mandatory condition.

The Apex Court in the case of Michigan Rubber (India) Limited vs. State of Karnataka and others, (2012) 8 SCC 21 6dealing with the scope of

interference in the matter of tender conditions ruled thus:

“23. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play.

These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any

ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;

(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for

striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy

standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State

authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not

warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to

successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very

restrictive since no person can claim fundamental right to carry on business with the Government.

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 reachedâ€​; and

(ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article

226.â€​

In the case of Siemens Aktiengeselischaft and Siemens Ltd. vs. Delhi Metro Rail Corporation Ltd. and another, (2014) 11 SCC 28 8the Supreme

Court quoted from the judgment reported as (1994) 6 SCC 651 (Tata Cellular v. Union of India) and (2007) 14 SCC 517 (Jagdish Mandal v. State of

Orissa) to hold as under:

“23. There is no gainsaying that in any challenge to the award of contact before the High Court and so also before this Court what is to be

examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit

in appeal over the soundness of the decision. The Court can only examine whether the decision making process was fair, reasonable and transparent.

In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bona fide with no perceptible injury to public

interest.â€​

In the case of Montercarlo Ltd. vs. N.T.P.C Ltd., (2016) 15 SCC 272 it was held that in the competitive commercial field in the matter of award of

contract through tender, the conditions regarding bidder’s expertise and technical capability and capacity are decided by the experts. In the matter

of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have

sanguinity and are workable and realistic.

In the case of Afcons Infrastructure Ltd. (supra) it was held that the owner or the employer of a project, having authored the tender documents, is

the best person to understand and appreciate its requirements to achieve the work which is sought to be executed. The constitutional Courts must

defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in

the application of the terms of the tender conditions.

A co-ordinate Bench of this Court in a recent judgment passed in Mahavir Coal Resources Pvt. Ltd. vs. M.P. Power Generating Co. Ltd. and

others [W.P. No.9000/2019, decided on 2-5-2019] has held that in the matter of formulating conditions of a tender document and awarding contract,

greater latitude is required to be conceded to the authorities unless the action of the authority is found to be malicious and the process adopted or

decision made by the authority is irrational or arbitrary or is vitiated by him by favouritism or malafide.

The principle deducible from the above discussion, is that interference by the Courts in such matter is required only when the decision taken by the

authority is irrational or arbitrary, or is vitiated by bias, favouritism or malafide.

In view of the aforesaid, we do not perceive any illegality or arbitrariness in the impugned condition of eligibility criteria of Part-A of Section 2 of

the NIT warranting interference in exercise of power of judicial review under Article 226 of the Constitution of India.

Ex-consequenti, the writ petition being sans substance, is hereby dismissed. There shall be no order as to costs.