W.P.(C). Nos. 14314/2012, 14748/2012, 25976/2012 & 28207/2012

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR** **TUESDAY, THE 1ST DAY OF JANUARY 2013/11TH POUSHA 1934** ## **WP(C).No. 14314 of 2012 (L)** ## **---------------------------------------** ## **PETITIONERS:** **---------------------** ## ***1. M/S. K.V.JACOB & SONS** **ENGINEERS & CONTRACTORS, KALLAPPARA HOUSE, KUMARAPURAM.P.O., PALLIKKARA, REPRESENTED BY THE MANAGING PARTNER, K.V.JACOB.** ***IT IS RECORDED THAT THE IST PETITIONER IS WITHDRAWN FROM THE W.P.(C). AS PER ORDER DTD. 01/01/2013 IN MEMO DATED 04/12/2012.** **2. M/S.KAVUMKAL ROAD BUILDERS, CHEMPANOLY, VECHOOCHIRA.P.O., RANNI, REPRESENTED BY THE MANAGING PARTNER, KURIAKOSE SABU.** ## **3. K.SASIDHARAN,** **PROPRIETOR, METAGUARD ENGINEERS AND CONTRACTORS, KALIYIKKAL PONAKOM, MAVELIKKARA.** **BY SRI.K.L.VARGHESE, SENIOR ADVOCATE, ADVS. SMT.SANTHA VARGHESE, SRI.RAHUL VARGHESE, SRI.RANJITH VARGHESE.** **RESPONDENTS:** **------------------------** **1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001.** **2. THE CHIEF ENGINEER, PWD ROADS & BRIDGES, THIRUVANANTHAPURAM-695 001.** **Prv.** ## **W.P.(C). NO.14314/2012-L:** **3. THE SUPERINTENDING ENGINEER, PWD ROADS & BRIDGES SOUTH CIRCLE, THIRUVANANTHAPURAM - 695 001.** **4. KERALA STATE CONSTRUCTION CORPORATION LIMITED, REPRESENTED BY ITS MANAGING DIRECTOR, DOOR NO.30/1521-A, BAY UNDER THE BRIDGE, NORTHERN SIDE OF RAILWAY, PONNURUNNY, VYTTILA, KOCHI-682 019.** **R1 TO R3 BY ADDL. ADVOCATE GENERAL SRI. K.A. JALEEL, R4 BY ADV. SRI.M.V.THAMBAN, S.C.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18/12/2012, ALONG WITH W.P.(C).NO.14748/2012 AND CONNECTED CASES, THE COURT ON 01/01/2013 DELIVERED THE FOLLOWING:** **Prv.** ## **W.P.(C). NO.14314/2012-L:** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** - **P1TRUE COPY OF THE PQ TENDER NO.51/SESC/2011-12.** - **P2TRUE COPY OF THE BID SUMMARY IN RESPECT OF TENDER REF NO.51/SESC/2011-12 RELATING TO THE IST PETITIONER.** - **P3TRUE COPY OF THE BID SUMMARY IN RESPECT OF TENDER REF NO.66/SESC/2011-12 RELATING TO THE 2ND PETITIONER.** - **P3ATRUE COPY OF THE BID SUMMARY IN RESPECT OF TENDER REF NO.66/SESC/2011-12 RELATING TO THE 3RD PETITIONER.** - **P4TRUE COPY OF THE GOVERNMENT ORDER DT. 7.08.1997.** - **P5TRUE COPY OF THE TENDER NOTICE DT. 30.11.2011 FOR PRE-QUALIFICATION AND EXECUTION OF WORK.** - **P6TRUE COPY OF THE AUDIT REPORT OF THE ACCOUNTANT GENERAL OF KERALA DT. 05.07.1991.** - **P7TRUE COPY OF THE FINANCIAL STATEMENT.** - **P8TRUE COPY OF THE NOTIFICATION ISSUED BY THE 4TH RESPONDENT IN THEIR WEBSITE RELATING TO THE “METHOD OF SUBMISSION OF THE TENDER OFFER AND THE SELECTION PROCEDURE”** - **P9TRUE COPY OF THE MEMORANDUM OF UNDERSTANDING.** - **P10TRUE COPY OF THE JUDGMENT DT. 21.05.2012 IN W.P[C]NO.23683 OF 2006(T)** - **P11TRUE COPY OF THE LIST OF TECHNICAL STAFF.** - **P12TRUE COPY OF THE WEBSITE REPORT RELATING TO THE OBJECTIVE OF THE 4TH RESPONDENT-CONSTRUCTION CORPORATION.** - **P13TRUE COPY OF LETTER DT. 12/09/2012 ISSUED BY THE P.1.** - **P14TRUE COPY OF THE LETTER DT. 13/09/2012 ISSUED BY THE P.3.** - **P15TRUE COPY OF THE LETTER DT. 14/09/2012 ISSUED BY THE P.2.** - **P16TRUE COPY OF NOTICE DT. 20/09/2012 ISSUED BY PETITIONER'S ADVOCATES TO THE RESPONDENTS INCLUDING THE CHIEF SECRETARY.** - **P17TRUE COPY OF THE RELEVANT PORTIONS OF THE 74TH REPORT OF THE COMMITTEE ON PUBLIC ACCOUNTS DT. 17/12/2008.** ## **W.P.(C).NO.14314/2012-L:** ## **RESPONDENTS' EXHIBITS:** **EXT.R4.A: TRUE COPY OF THE G.O.(MS).MO.52/88/PW & T DTD. 28/09/1988. EXT.R4.B: TRUE COPY OF THE GO(MS).NO.39/75/PW DTD. 27/02/1975. EXT.R4.C: TRUE COPY THE RELEVANT PORTION OF THE PWD MANUAL REGARDING THE REGISTRATION OF CONTRACTORS AS IT EXISTED IN THE 2ND EDITION, 1977 (CORRECTED UP TO 30/01/1976. EXT.R4.D: TRUE COPY OF THE GO(MS).NO.67/87/PW & T DTD. 13/08/1987. EXT.R4.E: TRUE COPY OF THE MINUTES OF THE 161ST MEETING DT. 29/12/2010 OF THE BOARD OF DIRECTORS OF THE KSCC.** ## **//TRUE COPY//** **P.A. TO JUDGE** **Prv.** ## **`T.R. RAMACHANDRAN NAIR, J. ~~~~~~~~~~~~~~~~~~~~~~~~~~~` W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ``` ~~~~~~~~~~~~~~~~~~~~~~~~~~~ ``` **`Dated this the 1[st]` day of January** **`, 2013`** ## **`J U D G M E N T`** All these writ petitions are filed by respective petitioners who are ‘A’ Class contractors having registration of the Public Works Department (P.W.D. for short), challenging the preference shown in favour of the Kerala State Construction Corporation Ltd. under various Government Orders. Since common questions have arisen for consideration, the writ petitions are disposed of together. 2. At the outset, learned Standing Counsel for the Corporation Shri M.V.Thamban submitted that all the issues raised have been found against in similar petitions by a common Judgment in W.P.(C). No.10699/2012 and connected cases by a learned Single Judge of this Court dated 04/12/2012 and, therefore, none of the legal questions raised herein could be sustained. 3. Heard the learned Senior Counsel for the petitioners Shri G.Shrikumar, Shri K.L.Varghese, Shri K.Ramakumar in various writ petitions and learned counsel Shri Ajith Krishnan who appeared in W.P.(C). No.28207/2012. Learned Additional Advocate General Shri K.A.Jaleel appeared for the State and learned Standing Counsel Shri M.V.Thamban ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:2:-** appeared for the Corporation. Shri K.R.B.Kaimal, learned Senior Counsel argued for a contesting party respondent. 4. In W.P.(C).No. 14314/2012, petitioners 1 to 3 are ‘A’ Class registered contractors. The writ petition survives as far as petitioners 2 and 3 are concerned since the first petitioner, as per memo dated 05/12/2012, has sought to withdraw from the writ petition. The learned counsel for the petitioners point out that petitioners 2 and 3 have responded to tender notifications in respect of different items of work and that they are the lowest tenderers. But, the fourth respondent Corporation claimed that they are entitled for 10% price preference in addition to waiver of earnest money deposit, in the light of Ext.P4 Government Order, G.O.(MS). No.81/97/PW&T dated 07/08/1997. The learned Senior Counsel for the petitioners points out that the fourth respondent can never claim financial soundness since from its very inception after its formation, it has been running at a heavy loss year after year. Reliance is placed on Ext.P6 audit report of the Accountant General of Kerala dated 05/07/1991. Ext.P7 is the financial statement concerning the same wherein the current liabilities have been shown as `. 4575 lakhs. In paras.10 and 11, the petitioners have categorized various items of work tendered by the fourth respondent which have not been completed within time or terminated. It is also submitted that Exts.P8 and P9 will show that the fourth respondent is awarding works ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:3:-** on sub contract basis to various contractors. Thus, it is pointed out that the very grant of the price preference to the fourth respondent cannot be supported legally. Petitioners therefore seek for change of policy by the Government by nullifying the Government Order and the first prayer in the writ petition is to direct the first respondent to reconsider the benefits being granted to the fourth respondent-Corporation as per Ext.P4 Government Order and withdraw all such provisions in the light of the financial position of the fourth respondent. The second prayer is to direct respondents 1 to 3 to award the works under various notifications to the respective petitioners. 5. In W.P.(C).No.14748/2012, the petitioner is a registered ‘A’Class contractor, who has executed certain works within time as described para.1 of the writ petition. Ext.P1 is a tender notification dated 30/03/2012. The petitioner has quoted 1.8% below the Probable Amount of Contract (in short PAC) and was the lowest bidder eligible to be awarded with notified work. The fourth respondent has quoted 5% above PAC. In the light of the Government Orders Exts.P2 and P2(a), namely, G.O.(MS). No. 23/PW&T/88, dated 28/04/1988 and G.O.(MS).No.81/97/PW&T dated 07/08/1997, respondents 1 to 3 are trying to award the work to the fourth respondent. It is stated that the fourth respondent is not having the financial eligibility to be considered for the work. Various factors have been pointed out in the grounds of the writ petition to challenge the acceptance ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:4:-** of tender of the fourth respondent, and the first prayer is to direct respondent Nos.1 to 3 to approve the tender of the petitioner and to award the notified work to the petitioner and the second prayer is to direct respondent Nos.1 to 3 to refrain from considering the tender of the fourth respondent. 6. In W.P.(C).No. 25976/2012, the petitioner has participated pursuant to the tender notification Ext.P1. The petitioner was the lowest bidder and has quoted 10% above the estimated rate and the fourth respondent has quoted 15% above the estimated rate. The Government Order Ext.P3, G.O.(MS).No.81/97/PW&T dated 07/08/1997 providing for price preference is totally bad in law, it is contended. In para.8 it is stated that the various works noted therein, were tendered in favour of the fourth respondent but the performance is dismal and in paras.8 and 9 various items of works have been mentioned which according to the petitioner have been abandoned/terminated and rearranged. Exts.P5 and P6 are the notifications issued by the fourth respondent providing for awarding works to sub contractors. The petitioner therefore is seeking for a direction to the first respondent to reconsider the benefits being added to the fourth respondent-Corporation as per Ext.P3 Government Order and award the work to the petitioner being the lowest bidder. ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:5:-** 7. In W.P.(C).No.28207/2012, the petitioner as per Ext.P1 tender notification quoted lowest tender being 18.57% above the estimated rate. The fifth respondent-Corporation submitted 25% above the estimated rate. The steps for awarding the work to the Corporation are under challenge in the writ petition on various grounds. The prayers are to quash the records leading to the decision to award the works, if any, in favour of the fifth respondent and; to award the work to the petitioner. 8. By opening his arguments Shri G.Shrikumar, learned Senior Counsel for the petitioner in W.P.(C).No. 25976/2012, attacked the price preference given to the fourth respondent as illegal, arbitrary and violative of Article 14 of the Constitution of India. Reliance is placed on the principle for awarding a contract, and a common Judgment of this Court in Ext.P7 in support of the plea that if such price preference is given to the fourth respondent, the same will be violative of Article 14 as well as Article 19(1) (g). It is submitted that all the tenderers are expected to be granted a level playing field and the basic idea in award of contract is defeated by the price preference given to the fourth respondent. Learned Counsel submitted that the system adopted by the fourth respondent to award sub contracts will itself show that they are picking and choosing contractors for awarding works after quoting under Ext.P1 notification and the like notifications. The system, therefore, according to the learned Counsel definitely gives an **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:6:-** undue advantage in the matter of tendering works and, in spite of the fact that the fourth respondent-Corporation is not financially sound, if tenders are awarded in their favour, it will defeat the purpose itself. It is submitted that the Government will have to recall the benefit and consider everyone of the contractors equally. The quality of work tendered by the fourth respondent, according to the learned Senior Counsel for the petitioner, is really poor. 9. The learned Senior Counsel Shri K.L.Varghese for the petitioners in W.P.(C).No.14314/2012 further explained that apart from the violation of Article 14 of the Constitution of India, the system of price preference, on the plea that the fourth respondent is a Government owned Corporation, has really failed in the light of the experience in the field wherein they have incurred heavy loss which has been found out in the audit report as well as the legislative committee in respect of a major work, namely, the work of a legislature complex. It is submitted that the fourth respondent has not been successful in executing various works for the last so many years, their financial background is not rosy and the same itself disentitles the fourth respondent-Corporation from cornering the tenders in the light of the price preference granted to them as per various Government Orders. Learned Senior Counsel submitted that the financial liability has arisen to `. 4575 lakhs which is evident from Exts.P6 and P7. **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:7:-** While attacking the credentials of the fourth respondent, learned Senior Counsel submitted that they are not having any separate paraphernalia for executing the work and are depending upon the sub contractors which itself is highly objectionable. By citing examples in respect of the works executed and awarded to them it is submitted that their performance is dismal in various sectors. The learned Senior Counsel also invited my attention to various decisions of the Apex Court to contend that the taxer payers’ money shall not be spent by the Government in such a manner which will lead to eccentric principle of philanthropy and the Government cannot indulge in favouring the fourth respondent at the cost of public revenue and the benefits to the public. It is submitted that in the light of the erratic manner in which the fourth respondent has been functioning, it has become highly necessary for this Court to interfere at this stage and to hold that the policy itself is bad in law and a direction should be issued to the Government to withdraw such benefits. Learned Counsel expanded the arguments by referring to various decisions of the Apex Court and other principles on administrative law. 10. Learned Senior Counsel for the petitioner in W.P.(C). No.14748/2012 Shri K.Ramakumar submitted in the light of the principles stated by the Supreme Court in various decisions that Article 14 of the Constitution of India is attracted, wherever there is vice of arbitrariness, **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:8:-** the State is bound to consider the tenderers equally. Even in Ext.P1 tender notification, the price preference to the fourth respondent has not been indicated. The conditions in a tender notification cannot be varied by an executive order. It is well settled that the rules of game cannot be changed in midway. Learned Counsel submitted that any policy should be spelled out in the notification itself. It is submitted that in the matter of consideration of the award of work in favour of the fourth respondent, various relevant aspects have not been considered. It is submitted that even if the policy is sought to be supported on any alleged valid grounds, the grant of work to the fourth respondent by the Superintending Engineer will be tainted by bias as he is one of the members of the Board of Directors of the fourth respondent. It is submitted that the basic principle under which the Constitution works is equality before law as laid down in Article 14 of the Constitution of India, and the Supreme Court in various decisions has upheld the legal position and has laid down emphatically that in the matter of awarding contracts and other factors, the State cannot act on its will in favour of any tenderer. Shri K.Ramakumar further emphasised that the attempt by the State to give a preference to the fourth respondent will defeat the very purpose of the tendering process. It is submitted that the lowest tender ought to have been accepted and any action in favour of the fourth respondent will defeat the principles of transparency and ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:9:-** obligation to act in a fair manner. It is submitted that undue preference given to the fourth respondent which has resulted in causing huge loss etc. disentitles the fourth respondent from claiming any such benefits based on a Government Order. Learned counsel also submitted by referring to the PWD manual of the year 1971 and the revised one to show that the fourth respondent has no registration at all with PWD to consider their tender. It is submitted that the amendment of the PWD manual by substituting a clause as per G.O.(P).No.83/2012/PWD dated 05/11/2012 cannot have any retrospective effect and, therefore, Ext.P1 tender is not at all affected by the substitution of the clause. If that be so, the fourth respondent will go out of the reckoning, it is submitted. Learned Senior Counsel also relied upon various Judgments of the Apex Court in this context. Shri Ajith Krishnan, learned counsel supported the arguments of the learned Senior Counsel. 11. The contentions in a nut shell in the counter affidavit filed by the fourth respondent are the following: The stand taken is that in any of the writ petitions, there is no challenge against the Government Orders and therefore, the issue cannot be considered at all. It is submitted that some of the petitioners have been included (eg:- the petitioner in W.P.(C).No. 25976/2012) in the panel of ‘A’ Class contractors of the Corporation and, therefore, he is estopped from ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:10:-** challenging the empanelment of the contractors by the Corporation. The said petitioner has been executing various works also under the Corporation, which are current ones. The Corporation is a fully Government owned one and the Government by G.O.(MS).No. 23/PW&T/88, dated 28/04/1988 allowed a price preference of 10% of PAC excluding cost of Departmental materials for departmental works of the State Government. Other modifications were made as per G.O.(MS). No.81/97/PW&T dated 07/08/1997. The Corporation is permanently registered as ‘A’ Class contractor in the State. By the provisions of G.O. (MS).No.52/88/PW&T dated 28/09/1988, the Corporation is exempted from depositing `. 50,000/- for getting ‘A’ Class registration. It is stated that Ext.R4(a) produced along with the counter affidavit filed in W.P.(C).No. 25976/2012, is the Government Order dated 28/09/1988 declaring the Corporation as registered ‘A’ Class contractor. Already identical cases have been dismissed by this Court in the common Judgment in W.P.(C). No.10699/2012 and connected cases. It is submitted that the Government Order granting price preference cannot be assailed by the petitioners as arbitrary and illegal. It is contended that the Corporation has taken a policy decision to prepare a panel of ‘A’ Class contractors and a selection is made on the basis of their good track record and other factors. The panel for the year 2011-12 contains 67 contractors found eligible, which was **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:11:-** approved by the Board of Directors of the Corporation. It is submitted that the Corporation being a Government owned one, is entitled for the price preference in the light of the Government Orders. It is further pointed out that in the notifications it has been made clear that all other existing conditions relating to P.Q. tender of Kerala PWD will be applicable in the said tenders also. The above condition, therefore, makes the Government Order granting price preference applicable. It is submitted that the existence of such Government Orders are clearly within the knowledge of the petitioners and other Contractors. The counter affidavit rejects the averments in the writ petitions that the Corporation has been running at a heavy loss year after year. The situation has improved much as on 31/03/2010 and a profit of more than ` .7 lakhs and above have been obtained by the Corporation; for the financial year ended as on 31/03/2011, the profit recorded is ` .215.53 lakhs and; during the financial year ending as on 31/03/2012, it is recorded as ` .1030.4 lakhs. The allegation in the various writ petitions that the execution of the works by the Corporation has not been fully satisfied is also denied. Various details have been furnished in the relevant paragraphs of the counter affidavit. It is submitted therefore that the writ petitions are without any basis. 12. Learned Additional Advocate General Shri K.A.Jaleel submitted that when the Corporation is granted the work, the Government ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:12:-** need not fear about any termination of a contract in the midway. Whatever benefits earned by the Corporation enured to the Government itself. It is submitted that the PWD manual is not statutory in character and in that context the learned Additional Advocate General relied upon a decision of a Division Bench of this Court in _**State of Kerala v. Aboobacker Kutty** [1992 (2) KLT 939]_ . It is submitted that the petitioners cannot successfully contend that the benefit granted to the Corporation, a Government owned Corporation, by granting price preference is illegal and arbitrary under Article 14 of the Constitution of India. It is submitted that the whole aspect has been considered in a common Judgment in W.P.(C).No.10699/2012 and connected cases and the price preference granted has been held as legal. It is therefore submitted that the petitioners are not entitled for any reliefs in the writ petitions. 13. Learned Standing Counsel for the Corporation Shri M.V.Thamban submitted that the very same issue has been considered in various Judgments of this Court. It is submitted that as some of the petitioners are under the panel of the Corporation itself, the plea raised by them is without any _bona fides_ and they are estopped from contending so. Learned Counsel also relied upon various materials to contend that the Corporation is not running at a loss; that it has not defaulted the work as alleged by the petitioners; the policy of the Government is well supported ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:13:-** by the decisions of this Court and the Apex Court and; the Government Orders are not liable to be reviewed at the instance of the contractors like the petitioners. It is submitted that none of the vested rights of the petitioners are affected by the orders issued. 14. The common Judgment in W.P.(C).No.10699/2012 and connected cases has considered the very same issue even though learned Senior Counsel for the petitioners point out that some of the points raised herein are not covered by the pleadings of parties in those cases. A reference to the pleadings of the parties therein and the arguments will show that one of the contention was that the Corporation is not having registration under the Kerala PWD Manual and then relied upon PWD Manual 2012, a contention similar to the pleas raised herein. The learned Judge (P.N.Ravindran, J.), after considering various aspects in the light of the various Judgments of this Court, concluded in para.16 thus: “…………. In the light of the decisions of this Court referred to above, the petitioners cannot in my opinion successfully challenge the price preference given to the Corporation in respect of works tendered by the Public Works Department. Since the Government Order dated 07/09/2007 quoted above has no application to works executed through the Public Works Department, it cannot be relied on to test the validity of the Government order giving price preference to the Corporation. The sub contractors empanelled by the ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:14:-** Corporation are A class PWD contractors. The petitioner in W.P.(C).No.10940/2012 was an empanelled contractor of the Corporation. The Corporation has in paragraph 9(ii) of the counter affidavit filed by it in W.P.(C).No.10969 of 2012 stated that to execute works on sub-contract arrangement, a memorandum of understanding is entered into with A Class PWD contractors shortlisted by the Corporation and included in the panel approved by the Board of Directors. The petitioners have not disputed the said fact. The petitioners’ contention is that the sub-contractor would not have participated in the tender process pursuant to the tender notice issued by the Public Works Department. That apart, as stated earlier, the petitioner in W.P.(C).No.10940/2012, a registered A Class contractor, was included in the panel of sub-contractors approved by the Board of Directors of the Corporation. I therefore, find no merit in the contention of the petitioners that as the Corporation is executing works under a sub-contract arrangement, the tendered works cannot be awarded to it.” In para.17 of the above Judgment, the question whether the Corporation is liable to be disqualified from participating in the tender process for the reason that it has not obtained registration under the PWD Manual, 2012 was considered and after referring to various aspects and the Government Order G.O.(P).No.83/2012/PWD dated 05/11/2012 it has held that the said contention cannot be accepted. In para.18, it has been held that by the **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:15:-** amendment in the Government order dated 05/11/2012, the Corporation has been included in the list of excluded categories and, therefore, there is no merit in the contentions of the petitioners that for want of registration under the PWD Manual, 2012 the Corporation is disqualified from participating in tenders floated by the Public Works Department. Accordingly, the writ petitions were dismissed. Evidently, those findings will loom large as far as the contentions of the petitioners are concerned also. 15. The Judgments relied upon by the learned Counsel for the petitioners mainly are _**Harminder Singh Arora v. Union of India and others** [(1986) 3 SCC 247],_ _**Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd. and others** [(1997) 1 SCC 53],_ _**Sterling Computers Limited and others v. M/s.M&N Publications Limited and others** [(1993) 1 SCC 445],_ _**Caterpillar India (P) Ltd. v. Western Coal Fields Ltd. and others** [(2007) 11 SCC 32],_ _**Tata Cellular v. Union of India** [(1994) 6 SCC 651],_ _**Delhi Science Forum and others v. Union of India and another** [(1996) 2 SCC 405]_ and the recent one in _**Natural Resources Allocation** in Re, Special Reference No.1 of 2012 [(2012) 10 SCC 1]_ ( **“** 2G Spectrum cases” as it is known) which was heavily relied upon by the learned Senior Counsel Shri K.Ramakumar. With regard to ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:16:-** unsound financial conditions, accumulated loss, current liabilities and other factors pointed out by learned Senior Counsel Shri K.L.Varghese, those pleas are in dispute by the Corporation in their counter affidavit and going by the arguments of the learned Standing Counsel Shri M.V.Thamban. The point stressed by the learned Senior Counsel Shri K.L.Varghese and Shri G.Shrikumar is that financial soundness being a factor to reckon the technical qualification, the same will have to be considered. 16. Reliance placed on in that context is on the decision of the Apex Court in _**Caterpillar India (P) Ltd. case** [(2007) 11 SCC 32]._ The facts of the case show that purchase preference was given to public sector enterprises. Various office memorandums were being issued from the year 1992 onwards. By office memorandum it was extended for a period of 3 years from 18/07/2005 and the word “may” in the earlier memorandum was substituted by the word “will”. It was contended that the substitution of the word “may” by the word “will” will be arbitrary. The Apex Court in para.10 of the Judgment issued a direction that industry-wise assessment be done and if there is already cost effectiveness in any public sector enterprises there may not be any need for the preference being given. Shri K.L.Varghese Senior Counsel submitted that thereafter an examination was done and a revised order was issued. ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:17:-** 17. The question considered therein is not identical to the one raised herein. The issue will have to be considered in the light of the fact whether being a Government owned Corporation there is any illegality in giving price preference. In _**Tata Cellular’s case** [(1994) 6 SCC 651]_ in para.94 various principles have been deduced and item No.5 therein is that “…. a fair play in the joints is a necessary concomitant for 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_ ”. Decisions of the Apex Court under various contexts have been relied on therein. In _**Dutta Associates Pvt. Ltd. case [(** 1997) 1 SCC 53]_ it was held that the decision making process as well as acceptance of tenders is concerned, it should be transparent, fair and open. Therein, after receiving tenders, a viability range was determined and the lowest tenderer was asked to raise his offer so as to cover the viability range and the said offer was accepted. The Apex Court held that the same is opposed to fairness and openness. 18. In fact, para.4 of the above Judgment will show that in the tender notice there was no specification of the viability range and it did not **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:18:-** say that only tenders coming within the viability range will be considered. Accordingly, it was held as follows: “………. The exercise of determining the viability range and calling upon Dutta Associates to make a counter-offer on the alleged ground that he was the lowest tenderer among the eligible tenderers is outside the tender notice. Fairness demanded that the authority should have notified in the tender notice itself the procedure which they proposed to adopt while accepting the tender. They did nothing of that sort. .......” Therefore, the decision turned on the special facts of the case as noted above. It is different from the situation herein which is covered by the various Government orders. 19. _**Delhi Science Forum and others’ case** [(1996) 2 SCC 405]_ relied upon by the learned Senior Counsel Shri K.L.Varghese is in support of his argument that Government should avoid “misplaced philanthropy or ideology”. In para.10 therein, it was held as follows: “It cannot be disputed that in respect of grant of any right or licence by the Central Government or an authority which can be held to be State within the meaning of Article 12 of the Constitution not only the source of the power has to be traced, but it has also to be found that the procedure adopted for such grant was reasonable, rational and in conformity with the conditions which had been announced.” ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:19:-** The question was considered in the light of the provisions of the Telegraph Act, 1885, viz. Section 4(1) and first proviso. The discretion of the Central Government to grant licences to non Government companies including foreign collaborate companies for establishing, maintaining and working of telecommunication system was under challenge therein. The first proviso to Section 4(1), conferred power to grant licences on “such conditions and in consideration of such payments as it thinks fit”. It is in that context, the Apex Court held that the discretion must be exercised fairly. 20. The decision heavily relied upon by Shri K.Ramakumar, learned Senior Counsel is that of the Apex Court in _**Harminder Singh Arora’s case** [(1986) 3 SCC 247]_ . Therein, the tender of the appellant was found to be the lowest. Even though there was no provision in the tender notification to give concession to the Government suppliers, 10% price preference was given to the fourth respondent therein. It was noted that the policy of the Government of India regarding giving 10% price preference was contained in Government letter dated 13/08/1985 which came into existence after the second respondent therein had issued tender notice. In that context, the question was examined and in para.19 it has been held as follows: “………… If the tender form submitted by any party is not in conformity with the conditions of the tender notice the ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:20:-** same should not have been accepted but the authorities concerned arbitrarily and in a fanciful manner accepted the tender of respondent 4. The State or its instrumentality has to act in accordance with the conditions laid down in the tender notice. In any case if the authorities chose to accept the tender of respondent 4 for supplying pasteurized milk, the appellant should also have been given an opportunity to change his tender. The authorities have, however, given preference to the tender of respondent 4 for offering to supply pasteurized milk contrary to the terms contained in para.2 of the tender notice. We find considerable force in this contention of the appellant.” In para.24, it has been held further as follows: “………….. It is true that the Government may enter into a contract with any person but in so doing the State or its instrumentalities cannot act arbitrarily. In the instant case, tenders were invited and the appellant and respondent 4 submitted their tenders. The tenders were to be adjudged on their own intrinsic merits in accordance with the terms and conditions of the tender notice. ……...” The special facts of the said case are quite different from those herein. 21. The decision of the Apex Court in _**Sterling Computers Limited and others’ case** [(1993) 1 SCC 445]_ reiterates the principle under Article 14 of the Constitution and in paras.14 and 25 it has been held as follows: ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:21:-** “…. The action or the procedure adopted by the authorities which can be held to be State within the meaning of Article 12, while awarding contracts in respect of properties belonging to the State, can be judged and tested in the light of Article 14. …. Once the State decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14; the executive does not have an absolute discretion, certain precepts and principles have to be followed, the public interest being the paramount consideration. …. ” 22. In fact, in the recent decision of the Apex Court, relied upon by the learned Senior Counsel Shri K.Ramakumar, in _**Natural Resources Allocation** in Re, Special Reference No.1 of 2012 [(2012) 10 SCC 1]_ their Lordships in para.96 examined the principles underlying the object of Article 14 of the Constitution. After examining various decisions of the Apex Court, namely **,** _**E.P.Royappa v. State of T.N** [(1974) 4 SCC 3],_ _**Maneka Gandhi v. Union of India** [(1978) 1 SCC 248],_ _**Ajay Hasia v. Khalid Mujib Sehravardi** [(1981) 1 SCC 722],_ _**Ramana Dayaram Shetty v. International Airport Authority of India** [(1979) 3 SCC 489]_ and other decisions, the Apex Court reiterated the well known principles under Article 14 and held thus is para.107: “From a scrutiny of the trend of decisions it is clearly perceivable that the action of the State, whether it relates to distribution of largesse, grant of contracts or allotment of land, ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:22:-** is to be tested on the touchstone of Article 14 of the Constitution. A law may not be struck down for being arbitrary without the pointing out of a constitutional infirmity as _McDowell_ case **{** _**State of A.P. v. McDowell & Co.** [(1996) 3 SCC 709]_ _**}**_ has said. Therefore, a State action has to be tested for constitutional infirmities qua Article 14 of the Constitution. The action has to be fair, reasonable, nondiscriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which are rational, informed with reasons and guided by public interest, etc. All these principles are inherent in the fundamental conception of Article 14. This is mandate of Article 14 of the Constitution of India.” Therefore, the overall emphasis will be on fairness in action, it should be unbiased, non-discriminatory, transparent and without favouritism. 23. The decisions relied upon by the respondents are _**Krishnan v. Government of Kerala** [1997 (1) KLT 388 (SC)]_ _**, Biodigital (P) Ltd. v. State of Kerala and others** [ILR 2010 (4) Ker 462],_ _**State of Kerala v. Aboobacker Kutty** [1992 (2) KLT 939],_ Judgment in W.P.(C). No.1712/2010 dated 21/01/2010 which was confirmed in W.A.No.144/2010 dated 08/02/2010, Judgment in W.P.(C).No.3613/2011 dated 04/02/2011 and the Judgment in W.P.(C).No.29536/2011 dated 08/11/2011. ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:23:-** 24. In _**Krishnan’s case** [1997 (1) KLT 388 (SC)]_ , the Apex Court upheld the constitutional validity of the Circular of the State Government herein, whereby the State directed that for distribution of pumpsets under Comprehensive Coconut Development Programme and other similar schemes of the Agriculture Department, two co-operative institutions will arrange supplies in various districts. This was challenged on the ground of violation of Articles 14 and 19 of the Constitution of India. The Apex Court did not agree. It was held that 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 stand point of the interests of the persons upon whom the restrictions are imposed. It was also held that the impugned Circular therein does not result in any absolute restriction on the right of the parties for doing their business. The Apex Court in paras.33, 37 and 38 has held as follows: “It may be indicated that although a citizen has a fundamental right to carry on a trade or business, he has no fundamental right to insist upon the Government or any other individual for doing business with him. Any Government or an individual has got a right to enter into contract with a particular person or to determine person or persons with whom or it will deal. ….. To ascertain unreasonableness and arbitrariness in the context of Art.14 of the Constitution, it is not necessary to enter upon any exercise for finding out the wisdom in the ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:24:-** policy decision of the State Government. It is immaterial if a better or more comprehensive policy decision could have been taken. It is equally immaterial if it can be demonstrated that the policy decision is unwise and is likely to defeat the purpose for which such decision has been taken. Unless the policy decision is demonstrably capricious or arbitrary and not informed by any reason whatsoever or it suffers from the vice of discrimination or infringes any statute or provisions of the Constitution, the policy decision cannot be struck down. It should be borne in mind that except for the limited purpose of testing a public policy in the context of illegality and unconstitutionally, court should avoid “embarking on uncharted ocean of public policy”. …. ….The law is well settled that even in the matter of grant of largesse, award of job contracts etc. 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 which different standard or norm, if such departure is not arbitrary but based on some valid principle which in itself is not irrational, unreasonable or discriminatory.” 25. In _**Biodigital (P) Ltd. case** [ILR 2010 (4) Ker 462]_ , a Division Bench of this Court has upheld the preference given to a Government company in the matter of awarding of contract in the following terms in para.5: “In this case it is to be noted that the awardee preferred by the Government over the appellant is a Central ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:25:-** Government Company and the Government while awarding the contract very well knows that the profit if any in the contract will go to Government Company, which in turn reaches the Government as dividend. So much so, in regard to award of a contract to a fully owned Government Company, we feel Government need not be over sensitive about the contract amount as the cash flow is from itself to another agency of the Government. We, therefore, feel that even if Government orders or tender conditions do not provide for any preference to a Government Company in the award of contract by the Government, still it is open to the Government while awarding the contract to favour such a contractor as the risk of breach of contract is less and actually there will be no financial loss to the Government, even if the contract amount is higher than the lower price quoted by a private contractor.” The above view was taken after referring to the decision of the Apex Court in _**Harminder Singh Arora‘s case** [(1986) 3 SCC 247]_ and _**Tata Cellular‘s case** [(1994) 6 SCC 651]_ . 26. The decision of the Division Bench in _**State of Kerala v. Aboobacker Kutty** [1992 (2) KLT 939]_ is an authority for the proposition that the instructions contained in the PWD Manual are merely administrative instructions and not statutory rules. This was heavily relied upon by the learned Additional Advocate General to contend that the contention of the petitioners of alleged violation of the provisions of the ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:26:-** PWD Manual cannot be accepted. It was also explained that there is no violation of the provisions of the PWD Manual also and the Corporation is covered by the various Government Orders and notifications issued and the provisions of the PWD Manual. 27. In the Judgment in W.P.(C).No.3613/2011, a similar challenge was repelled by a learned Single Judge of this Court (Antony Dominic, J.) by stating thus in para.3: “In my view, the Government being the awarder of contract, it is also open to the Government to frame a policy providing for price preference in favour of the institutions such as Government Companies like the fourth respondent and if such a price preference is provided, there cannot be any invalidity as sought to be made out by the petitioner. This issue is covered by the Apex Court judgments in _**Krishnan Kakkanth v.Government of Kerala and others** [1997 (9) SCC 495],_ **Harminder Singh Arora v. Union of India and others** [(1986) 3 SCC 247], _**Madhya Pradesh Ration Vikrata Sangh Society and others v. State of Madhya Pradesh and another** [1981 (4) SCC 535]_ and also a Division Bench judgment of this Court reported in _**Biodigital (P) Ltd. v. State of Kerala and** others [ILR 2010 (4) Ker 462]_ .” The fourth respondent therein is the same fourth respondent-Corporation herein. ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:27:-** 28. I had occasion to consider the same question in the Judgment in W.P.(C).No.1712/2010 against the Construction Corporation itself. Therein, the decisions of the Apex Court in _**Harminder Singh Arora’s case**_ ( _supra_ ) and _**Dutta Associates Pvt. Ltd** ._ [(1997) 1 SCC 53] were relied upon by the petitioners and have been explained. The further question considered was whether in the absence of the details of crucial Government order in the tender notification, any resultant infirmity will be caused. These aspects were considered in paras.10 and 11 thus: _**“**_ 10. True that Article 14 insists that there should be a level playing field while considering various tenders. The tender conditions herein do not provide for a 10% price preference for the 4th respondent. What is enforced is Ext.P6 Govt. Order. There cannot be any dispute that Ext.P6 is applicable to the department herein. The Government Order Ext.P6 has got universal application as far as the departmental works are concerned. The tender conditions itself provided that "all conditions prevailing in this department regarding tenders for prequalification are applicable to this tender also. Further details if required can be had from this office during working hours." There cannot be any dispute that this clause provided in Ext.P2 was within the knowledge of the petitioner. Learned Standing Counsel for the 4th respondent contended that if the petitioner wanted further details with regard to any other conditions like applicability of Ext.P6, that would have been provided, going by the above said stipulation. ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:28:-** 11. The question therefore arises only whether Ext.P6 should have found a place in Ext.P2 tender conditions for its applicability. Since Ext.P6 provides a Government policy in the matter, it cannot be said that the absence of the details of the said Govt. Order in Ext.P2 will deprive the respondents from implementing Ext.P6 itself. Unlike the two cases considered by the Apex Court above, herein Ext.P6 order had been in force and even prior to that Exts.P4 and P5 were also in force. In that view of the matter, the implementation of the provisions of the Govt. Orders cannot be said to be arbitrary. The same is permissible in the light of the clause contained in Ext.P2 quoted above.” As far as the plea raised in respect of _**Harminder Singh Arora’s case**_ [[(1986) 3 SCC 247], it was noted that in the said case, the Government order was dated 13/08/1985 and the tender notice was dated 16/07/1985, prior to it. The said decision was distinguished thus in para.9 as follows: “9. A close reading of the relevant facts of the case in Harminder Singh Arora's case (supra), shows that therein the tender condition did not provide to effect a price preference. A general order passed by the Government was relied upon which is evident from para 24 of the judgment. The Government Order therein showing the policy of the Government to provide preference to State Government agencies, is dated 13.8.1985. The tender notice was dated 16.7.1985. It was held therein that the notification dated August 13, 1985 is of no avail to the respondents in so far as ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:29:-** the acceptance of tender of the 4th respondent is concerned. It is in these circumstances, it was held that "the tenders were to be adjudged on their own intrinsic merits in accordance with the terms and conditions of the tender notice." Hence, in the said case obviously a situation like the one herein was not available. Herein, we may have to consider the question in the light of Ext.P6 which reflects the policy of the Government providing for a price preference of 10% of the PAC to the 4th respondent Corporation. That the policy as such contained in Ext.P6 is not under challenge in this writ petition and the petitioner has not therefore sought for quashing Ext.P6.” The said Judgment was upheld in W.A.No.144/2010 by the Division Bench. The Division Bench also was of the view that the prescription that all conditions prevailing in the Department are applicable will be sufficient. In para.3, the Division Bench has held thus: “3.The KSCC is a Government company. The State Government, in its wisdom, had issued Ext.P6 G.O. way back on 26.2.1997, allowing the said company a price preference of 10% over the lowest quoted rate. Learned single Judge noted that the writ petitioner, going by its own showing, is an 'A class' Government contractor with sufficient experience and knowledge of the tender process in Government. The preference given to the KSCC is not, as such, challenged. i.e., to say, Ext.P6 is not under challenge. The decision or the policy of the Government in that regard is not impeached. The only plea is that the petitioner was not put to proper notice of ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:30:-** such a clause and had such a preference of the KSCC been notified, the petitioner would have quoted appropriately, in a more competitive manner, so that the 10% price escalation would have been appropriately taken care of, resulting in a proper competition with the KSCC. In support, the decisions of the Apex court in Harminder Singh Arora v. Union of India [(1986) 3 SCC 247] and Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd. [(1997) 1 SCC 53] were referred to before the learned single Judge and also before us. As rightly noticed in the impugned judgment, the law laid in those judgments do not apply to the facts of this case and in the instant case, the tender conditions had clearly notified that all conditions prevailing in the department are applicable.” 29. The Judgment in W.P.(C).No.29536/2011 (by Antony Dominic, J.), shows that the challenge was against the action of the fourth respondent Corporation inviting competitive tenders from the panel of registered contractors. In para.4, it has been held thus: “In my view, for a commercial transaction like invitation of tenders, it is always open to the respondent to prescribe norms for inviting tenders and to maintain a panel of such contractors. The respondent has only followed such an acceptable system and there is nothing arbitrary or unconstitutional in such a system.” 30. The question therefore is whether there is any illegality in the Government orders granting price preference. In the light of the **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:31:-** Judgments of this Court upholding the system as noted above, in W.P.(C). No.3613/2011, W.A.No.144/2010 which confirmed the Judgment in W.P. (C).No.1712/2010 as well as the common Judgment in W.P.(C). No.10699/2012 and connected cases, and by the Division Bench in _**Biodigital (P) Ltd.** case_ [ILR 2010 (4) Ker 462] and by the Apex Court in _**Krishnan's** case [1997 (1) KLT 388 (SC)]_ _**,**_ the Government orders did not suffer from any infirmity. The Corporation is a Government owned one. The advantages when tenders are granted to the Corporation as explained by the Additional Advocate General are that there need not be any fear of termination in the midway and finally, the benefit goes to the Government owned Corporation itself and in turn to the Government. It cannot be said that in issuing the Government order, the Government has acted arbitrarily and illegally. In none of the writ petitions, the Government orders are specifically under challenge. In W.P.(C).No.14748/2012, the prayers are to approve the tender of the petitioner and to award the work to the petitioner and Exts.P2 and P2(a) Government orders are not sought to be quashed. In W.P.(C).No.14314/2012 as noted already, the prayer is for a direction to the Government to review the policy and to issue fresh orders in the matter. The further prayer is to award works to the petitioners. There also, Government orders are not specifically under challenge. In W.P.(C). No.25976/2012 also similar prayers have been made seeking for issuance ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:32:-** of a writ of mandamus as sought for in W.P.(C).No.14314/2012. In W.P. (C).No.28207/2012, the prayer is to quash award of work in respect of the fifth respondent-Corporation and for a direction to accept the tender of the petitioner. Therefore, the Government orders are not specifically under challenge in all these writ petitions. It is to be noted therefore that the 10% price preference granted to the Corporation cannot be termed as unfair or arbitrary for any reason as held by this Court in various Judgments including the common Judgment in W.P.(C).No.10699/2012 and connected cases. I respectfully agree with the views taken in the common Judgment by the learned Single Judge. The learned Single Judge has also relied upon the decision of the Division Bench of this Court in _**Biodigital (P) Ltd.** case_ [ _supra_ ]. 31. The argument raised by Shri K.L.Varghese learned Senior Counsel by relying upon the quotes from the Administrative Law, tenth edition, under the heading “misplaced philanthropy” is the following: “Statutory authorities have sometimes made use of their wide general powers in order to confer social or economic benefits on particular sections of the community. In several such cases they have gone beyond the true limits of their powers. The policy of the courts is in general hostile to the use of public funds, such as rates, for new social experiments. ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:33:-** Local authorities are subject to a fiduciary duty to use their revenues with the due restraint. …..” Evidently, the context is different. Herein, it cannot be said that the support given by the Government to Government owned Corporation is beyond the executive power of the State or _ultra vires_ the powers under any Statute. The contention cannot be accepted in the light of the Judgment of the Division Bench in _**Biodigital (P) Ltd.** case (supra)_ . 32. The reliance placed on the Judgment of this Court in W.P.(C). No.23683/2006 and connected cases [Ext.P10 produced in W.P.(C). No.14314/2012] also cannot support the pleas of the petitioners. Therein, the Labour Contract Co-operative Society challenged the withdrawal of the benefit by the Government on various grounds. After considering various aspects, this Court in para.5 held as follows: “No provision of the Constitution of India or any law lay down that as of right co-operative societies are entitled to such preference in the award of contract through competitive tender proceedings.” The learned Single Judge (S.Siri Jagan, J.) was of the view that a concession given to the Co-operative Societies cannot be termed as a right confirmed on them and held that “such preference being only a concession, the State is equally competent to withdraw such concession in the larger interests of the State”. True that, in para.6 it has been held that the price ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:34:-** preference cannot result in total exclusion of other private contractors from the field altogether. Of course, the said observations are to be understood in the light of the specific challenge raised therein with regard to the withdrawal of the price preference and the question whether Government orders like the one herein are valid or not was not examined therein. Therefore, the said decision is distinguishable. 33. The learned Senior Counsel Shri K.Ramakumar and the other learned Senior Counsel appearing for the petitioners submitted that in the revised PWD guidelines there is no exclusion of the Corporation from the requirement of having continued registration. In the guidelines published as per G.O.(P).No.47/PW dated 04/02/1971 in para.6(a) it is stated that the registration is valid only for one financial year and registration cards are to be renewed every year. Various other conditions are also prescribed therein. In the Government order, G.O.(P).No.83/2012/PWD dated 05/11/2012, the relevant paragraph of the PWD Manual has been substituted as follows: “Government have examined the matter in detail and are pleased to modify the rules under Sub section 5 of sub section 6 of section 1901 in page No.117 of the revised PWD Manual as follows: ‘Application of the rules - These rules will not apply for the registration of Labour Contract Co- ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:35:-** operative Societies, Bharath Sevak Samaj, other workers, bodies and the Kerala State Construction Corporation Ltd., which are governed by separate Government orders and also in respect of works which are executed under the famine relief and flood relief rules’.” Shri K.Ramakumar, learned Senior Counsel submitted that the substitution therefore can have effect only from 05/11/2012 and not earlier and therefore, Ext.P1 notification is not affected and hence no preference can be given to the Corporation. 34. The very same issue has been considered in the common Judgment in W.P.(C).No.10699/2012 and connected cases. In paras.17 and 18, the question was considered and after referring to the relevant clauses and the conditions prescribed, it has been held in para.18 as follows: “…………Though at first blush it may appear that because of the stipulations in para 6(b)(5) of the PWD Manual, 2012, the Corporation cannot any longer be treated as an agency governed by a separate Government order and therefore the rules in section 1901 of the Revised PWD Manual, 2012 would apply to the Corporation also, in view of the substitution of para 6(b)(5) by Government order dated 5.11.2012, such a contention cannot any longer be raised. … …..” ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:36:-** After referring to the substituted paragraph, it has been held thus further: “By the said amendment, the Government have clarified that the rules in the Revised PWD Manual, 2012 regarding registration will not apply to the Labour Contract Co-operative Societies, Bharath Sevak Samaj, other workers, bodies and the Corporation, which are governed by separate Government orders and also in respect of works which are executed under the famine relief and flood relief rules. It is evident from the Government order dated 5.11.2012 that it was issued on the request of the Corporation. By substituting para 6(b)(5) in section 1901 of the PWD Manual, 2012, the Corporation has been included in the list of excluded categories. I accordingly hold that there is no merit in the contention of the petitioners that for want of registration under the PWD Manual, 2012 the Corporation is disqualified from participating in tenders floated by the Public Works Department. In view of the fact that the rules for registration of contractors contained in the PWD Manual, Revised Edition 2012 do not apply to the Corporation, the registration of which is governed by a separate Government order, namely, the Government order dated 28.9.1988, I am of the opinion that nothing turns on the failure ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:37:-** of the Kerala State Construction Corporation to apply for and obtain registration under the Revised PWD Manual, 2012.” 35. I respectfully agree with the same and, therefore, the said contention also cannot be accepted. Further Ext.R4(a), produced in W.P. (C).No.14748/2012 declares the Corporation as a Registered 'A' Class contractor which is also relevant in this context. Shri K.R.B.Kaimal learned Senior Counsel, relied upon a recent Judgment of a Division Bench to contend that substitution will make the order effective from the date on which the parent order/rules came into force. In O.P.(CAT).No.3714/2011 the Division Bench speaking through the Hon'ble The Chief Justice Mrs. Manjula Chellur in para.10 held as follows: “......... It is well settled that an amendment by way of substitution takes effect from the date on which the parent rule has come into existence.” It was concerning an amendment to a statutory rule. 36. As already held, in the tender notification, there is a specification that the Government orders etc. will be applicable as far as the tenders are concerned; and the Judgment in W.P.(C).No.1712/2010, I have upheld similar conditions which stands affirmed by the Division Bench in W.A.No.144/201. ## **W.P.(C).Nos. 14314/2012, 14748/2012 , 25976/2012 & 28207/2012** ## **-:38:-** 37. In the light of the above, the writ petitions are liable to be dismissed. Even though, Shri K.L.Varghese, learned Senior Counsel wanted a direction to be issued to the Government to reconsider the whole aspects, it is clear that in a matter of policy, this Court cannot dictate terms like that. It is upto the Government in all matters of policy to lay down the same and unless a policy is violative of the provisions of the Constitution or a Statute etc., this Court cannot step in. This Court cannot act as an appellate authority also to sit in appeal over the wisdom of the Government in such matters. The Corporation has disputed the various averments of the petitioners with regard to the alleged loss and other factors and it is pointed out that they are running at profit at least for the last three years and the details in respect of successive years have been quoted in the counter affidavit. Many of the other contentions regarding the execution of the works and dismal performance are also disputed. Therefore, with the materials projected by the petitioners which are disputed by the Corporation, this Court will not be justified in issuing any such direction and I refrain from doing so. All the writ petitions are thus dismissed. No costs. ``` (T.R. Ramachandran Nair, Judge.) ``` ``` ms ```