Uralungal Labour Contract Co-Operative Society Ltd. v State of Kerala & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **TUESDAY, THE 3[RD] DAY OF JANUARY 2023 / 13TH POUSHA, 1944** ## **WP(C) NO. 29442 OF 2022** ## **PETITIONER/S:** URALUNGAL LABOUR CONTRACT CO-OPERATIVE SOCIETY LTD. NO. 10957 MADAPPALLY COLLEGE P.O. - 673 102, VADAKARA, KOZHIKODE DISTRICT, REPRESENTED BY ITS CHAIRMAN. BY ADVS. M.SASINDRAN S.SHYAM KUMAR ## **RESPONDENT/S:** 1 STATE OF KERALA REPRESENTED BY ITS SECRETARY PUBLIC WORKS DEPARTMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695 001. 2 THE CHIEF ENGINEER, BUILDINGS, PUBLIC WORKS DEPARTMENT, PUBLIC OFFICE, MUSEUM, VIKAS BHAVAN P.O., THIRUVANANTHAPURAM -695 033. 3 THE SUPERINTENDING ENGINEER BUILDINGS JUDICIAL CIRCLE, PUBLIC WORKS DEPARTMENT,SUB JAIL ROAD, PWD QUARTERS, PERIYAR NAGAR, ALUVA- 683 101. 4 A.M.MUHAMMED ALI NIRMAN CONSTRUCTIONS NIRMA TOWER, PATTARKULAM, NARUKARA P.O. MANJERI - 676 122, KASARAGOD DISTRICT. BY ADVS. ADVOCATE GENERAL OFFICE KERALA K.M SATHYANATHA MENON K.M ## **OTHER PRESENT:** SR.GP. K.V.MANOJKUMAR THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.12.2022, THE COURT ON 03.01.2023, DELIVERED THE FOLLOWING: W.P.(C) No.29442 of 2022 -2- ## **JUDGMENT** Dated this the 3[rd] day of January, 2023 The petitioner, a Labour Contract Cooperative Society (LCCS) and the holder of an A Class PWD Contractors licence, submitted its bid in response to Ext.P6 notice inviting tenders for constructing a seven storied building for the court complex at Kannur. As against the estimated rate of Rs.21,90,80,722.29, the petitioner quoted Rs.20,35,25,991.01 which is 7.10% below the probable amount of contract and the 4th respondent quoted at Rs.18,69,63,488.40, the quoted rate being 14.66% below the probable amount of contract. The bids were opened on 30.06.2022. The 4th respondent being the lowest bidder it was decided to award the contract to him. The petitioner was expecting the contract to W.P.(C) No.29442 of 2022 -3- be awarded in its favour by virtue of Exts.P1 to P3 Government orders, granting 10% price preference and other privileges to LCCSs. Contrary to its expectation, the third respondent proceeded to award the contract in favour of the 4[th] respondent based on Ext.P8 Government order dated 19.02.2022, which had the effect of taking away the preferential rights granted to Cooperative Societies. Hence, this writ petition seeking the following reliefs; _“i) issue a writ of mandamus or any other writ, order or direction to the 3rd respondent to award the work notified vide Ext.P6 to the petitioner;_ _ii) declare that the Ext.P8 Government order does not disentitle a Co- operative Society registered with the P.W.D. as contractor, to get the benefit of Ext.P1 and other Government orders granting preference and privilege to the Co-operative Societies;_ _iii) declare the petitioner society is entitled to get contract of the work notified in Exhibit P6, applying the Ext.P1 Government order;_ _iv) declare that Ext.P10 Government Order is applicable to the Ext.P6 notice inviting tender and hence the benefits of Ext.P1 are available to the Co-operative societies;_ _v) declare that when the Government_ W.P.(C) No.29442 of 2022 -4- _formulates policy to grant benefits to the Labour Contract Co-operative Societies including that is price preference, the same would not be arbitrarily taken away through d discrimination;_ _vi) exempt the petitioner from producing the English Translation of Malayalam Exhibits produced along with this writ petition and the petere further undertakes that he is ready and willing to produce English Trans of Malayalam documents as and when required.”_ 2. Before proceeding to decide the issue involved, it is to be noticed that the challenge against award of contracts by the Public Works Department and other agencies of the Government, by denying the benefit due to the LCCSs, based on Ext.P8 Government order, was challenged by the petitioner in W.P.(C) No.24162 of 2022 and connected cases. After detailed consideration, this Court repelled the challenge by judgment dated 23.11.2022. 3. Adv.M.Sasindran, learned Counsel for the petitioner submitted that the findings based on which the earlier writ petitions were dismissed will not apply to the case at hand. For this W.P.(C) No.29442 of 2022 -5- purpose, reference was made to paragraph 13 of the judgment in W.P.(C) No.24162 of 2022, extracted hereunder for easy reference; “ _13. The indisputable position emanating from the above decision is that the employer's interpretation ought to be accepted even if a different view is possible. As such, there is no reason to interfere with the rejection of petitioner's tender based on the employer's understanding of the conditions in Ext.P20. Yet another crucial aspect is that in the notices inviting tender only the first condition in Ext.P20 is incorporated. That condition only permits the LCCS to participate in the tender, like any other PWD contractor, without the benefits granted to them. Hence, the argument based on the interpretation of the second condition in Ext.P20 cannot be countenanced. The above discussion leads to the definite conclusion that as on the date of opening of the technical bids, Ext.P20 was in vogue and therefore, rejection of the petitioner's bid as technically non-responsive, warrants no interference.”_ ## W.P.(C) No.29442 of 2022 -6- 4. It is submitted that as far as the other writ petitions were concerned, the petitioner’s bids were not considered whereas in the instant case, the petitioner was allowed to participate and its price bid was opened. Therefore, the finding that the employer’s interpretation ought to be accepted will work in the petitioner’s favour, since the employer had understood Ext.P8 to be of no consequence with respect to the petitioner’s right to participate in the tender. In support of this contention, attention is drawn to Clause 1913 of the PWD Manual which stipulates that the rules will not apply for the registration of LCC Societies governed by separate Government orders. 5. It is contended that the second reason that had prompted this Court to dismiss the earlier writ petitions was that, in the notices inviting tender in those cases only the first condition in Ext.P8, which permitted the LCCS to ## W.P.(C) No.29442 of 2022 -7- participate in the tender like any other PWD contractor, without the benefits granted to them, was incorporated. It is submitted that in Ext.P6 notice inviting tender, no mention is made about Ext.P8 and hence, the second reason would also not apply. 6. Adv.K.V.Manoj Kumar, learned Senior Government Pleader submitted that, as on the date of opening of the bids (30.06.2022), Ext.P8 Government order was in force. As such, the petitioner was not entitled for the 10% price preference granted under Exts.P1 to P3. The petitioner had correctly understood the position as revealed from paragraph 15 of the statement of facts. The petitioner’s contention based on Clause 1913 of the PWD Manual cannot be countenanced since Ext.P6 clearly stipulates that all existing conditions relating to the bidding in the Kerala PWD will be applicable to the tender, unless expressly defined in the bidding ## W.P.(C) No.29442 of 2022 -8- document. It is specifically stated that all subsequent Government orders would be applicable to the tender. Moreover, on finding the 4[th] respondent to be the lowest bidder, the letter of acceptance was issued the 4[th] respondent has complied with all requisite formalities and has made the necessary deposits. Further delay in commencing the work is against public interest is the last submission. 7. Adv.K.M.Sathyanatha Menon, learned Counsel appearing for the 4[th] respondent contended that the writ petition is liable to be dismissed for suppression of material facts. It is submitted that, after finding the 4[th] respondent to be the lowest bidder, Ext.R4(a) letter of acceptance was issued on 05.09.2022. Thereupon, the 4th respondent submitted the necessary documents, treasury deposit receipt, bank guarantee and stamp paper worth Rs.1,00,000/- on 16.09.2022. The writ petition was filed on 15.09.2022, fully ## W.P.(C) No.29442 of 2022 -9- aware of the issuance of a letter of acceptance, but without mentioning that crucial fact. Attention is drawn to Ext.R4(b) communication of the Chief Engineer clarifying that societies having contractor’s licence are not entitled for price preference and the subject tender should be awarded to the 4[th] respondent, he being the lowest tenderer. As such, the employer had correctly understood the position emanating from Ext.P8 Government order. Even otherwise, no right is conferred on the petitioner by reason of its participation in the tender. It is pointed out that there is a difference of Rs.1,65,62,502.60 between the rates quoted by the 4th respondent and the petitioner. Hence, it will be in public interest also to award the contract in the 4th respondent’ favour. 8. The limited scope of interference in contractual matters and the question as to whether Ext.P10 Government order issued ## W.P.(C) No.29442 of 2022 -10- cancelling Ext.P8 is clarificatory in nature being questions dealt with and answered in the earlier judgment, I refrain from venturing into that exercise again. The only contention remaining to be considered is whether the permission to participate in the bid confers any better right on the petitioner. The answer to this contention can only be in the negative, since mere participation in the tender does not confer any right on bidders. The bidders’ right would get crystalised only on the contract being concluded by execution of the agreement. In _**Central Coalfields Limited and another v. SLL SML**_ _**(Joint Venture Consortium) and others [(2016) 8**_ _**SCC 622],**_ the Apex Court has made it clear that, even if an administrative decision is taken in deviation of the terms of NIT, the court will not judicially review the decision unless such direction is found to be arbitrary, irrational, W.P.(C) No.29442 of 2022 -11- unreasonable, _mala fide_ or biased. 9. The contention that, by virtue of Clause 1913 of the PWD Manual, the petitioner was not bound to follow the procedure for registration through the PRICE portal cannot be accepted in the light of Ext.P14, which made registration through the portal mandatory for all contractors. Further, in Ext.P6 Notice Inviting Tender, it is made clear that all subsequent Government Orders will be applicable. As rightly contended by the Government Pleader, the petitioner has also understood this position correctly as evident from a reading of paragraph 15 of the writ petition extracted hereunder; “ _15. Through Ext.P8, a situation has been created that for participating in a tender proceedings, a Labour Contract Co-operative Society has to register with the portal being maintained by the first respondent. On the occasion the Labour Contract Co-operative Society does not register with the PWD portal, the Labour Contract Co-operative Society would_ W.P.(C) No.29442 of 2022 -12- _not be eligible for participate in the tender proceedings. On the other hand, when the Labour Contract Co- operative Society registers with the Online portal, being maintained by the first respondent, due to the non-supportive software of the first respondent, the Labour Contract Cooperative Societies would not get the benefits of various Government orders including that of price preference. That being so, Ext.P8 is absolutely arbitrary and illegal and has issued with no vision and proper consideration.”_ Yet another crucial aspect is that, by the time the writ petition was filed, the 4th respondent had been issued with the letter of acceptance, which fact, surprisingly, is not mentioned in the writ petition. For the aforementioned reasons, the writ petition is dismissed. Sd/- ## **V.G.ARUN** ## **JUDGE** Scl/ W.P.(C) No.29442 of 2022 -13- ## **APPENDIX OF WP(C) 29442/2022** ## **PETITIONER EXHIBITS** Exhibit P1 A TRUE COPY OF THE G.O. (MS.)NO.135/97/CO-OP. DATED 13.11.1997. Exhibit P2 A TRUE COPY OF THE G.O. (MS.)NO.181/08/CO-OP. 02.08.2008. Exhibit P3 A TRUE COPY OF THE G.O. (MS.)NO.568/2020/CO-OP. 04.11.2020. Exhibit P4 A TRUE COPY OF THE REGISTRATION CERTIFICATE ISSUED TO THE PETITIONER SOCIETY. Exhibit P5 A TRUE COPY OF THE JUDGMENT DATED 1711-2020 IN W.P.(C).NO.3760 OF 2020. Exhibit P6 A TRUE COPY OF THE NOTICE INVITING TENDER DATED 06.06.2022 FOR CONSTRUCTION OF SEVEN STORIED BUILDING FOR COURT.COMPLEX AT KANNUR (1ST PHASE). Exhibit P7 A TRUE COPY OF THE BOQ SUMMARY DETAILS OF EXT.P6 TENDER. Exhibit P8 A TRUE COPY OF THE G.O.(MS) NO.6/2022/PWD DATED 19-02-2022. Exhibit P9 A TRUE COPY OF THE MINUTES OF MEETING HELD BY CHIEF SECRETARY ON 07.07.2022. Exhibit P10 A TRUE COPY OF THE G.O. (MS).NO.21/2022/PWD 10. DATED 29.07.2022. Exhibit P11 A TRUE COPY OF THE INTERIM ORDER DATED 03.08.2022 IN W.P.(C).NO.24162/2022. Exhibit P12 A TRUE COPY OF THE INTERIM ORDER DATED EXHIBIT P12: 22.07.2022 IN W.P. (C).NO.23881/2022. **RESPONDENT EXHIBITS** Exhibit R4(a) True copy of the letter of acceptance issued by the Superintending Engineer, in favour of the 4th respondent. -14- ## W.P.(C) No.29442 of 2022 Exhibit R4(b) True copy of the letter issued by 4th respondent to the Superintending Engineer, PWD Judicial Building Circle, Ernakulam without enclosures. Exhibit R4(c) True copy of the communication issued by the Chief Engineer to the Superintending Engineer dated 26.08.2022. PETITIONER EXHIBITS Exhibit P13 RUE COPY OF THE RELEVANT EXTRACTS OF PWD MANUAL. Exhibit P14 TRUE COPY OF THE G.O. (MS).NO.60/2019/PWD DATED 27.12.2019 ISSUED BY THE GOVERNMENT OF KERALA. Exhibit P15 TRUE COPY OF THE G.O.(MS.) NO.50/2020/PWD DATED 05.06.2020 ISSUED BY THE GOVERNMENT OF KERALA. RESPONDENT EXHIBITS Exhibit R4(d) A COPY OF GO (MS) NO. 4 /2021/COOP DEPARTMENT 3. DATED 9.02.2021 ISSUED BY THE GOVERNMENT.