IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 27.11.2009 Coram: THE HONOURABLE MR.H.L.GOKHALE, CHIEF JUSTICE AND THE HONOURABLE MR.JUSTICE N.PAUL VASANTHAKUMAR W.A.No.573 of 2009 and M.P.Nos.1, 2 & 4 of 2009 The Tamil Nadu Ex-Servicemen’s Corporation Limited (TEXCO), Government of Tamil Nadu Undertaking, 2, West Mada Street, Sri Nagar Colony, Saidapet, Chennai – 600 015. ..Appellant vs. 1. The Bharat Sanchar Nigam Limited (BSNL), Rep. by its Chief General Manager, Anna Salai, Chennai – 600 002. 2. The General Manager (BSNL), Gandhiji Road, Erode – 640 011. 3. The Government of India, Rep. by its Secretary to Government, Department of Ex-servicemen Welfare, Ministry of Defence, New Delhi – 1. 4. The Directorate General of Re-settlement, Government of India, Ministry of Defence, West Block IV, R.K.Puram, New Delhi – 1. 5. Brig. Mr.Velu Proprietor, M/s.Vajraa Security and Allied Services, No.39, R.V.Layout, Ondipudur, Coimbatore – 16. https://hcservices.ecourts.gov.in/hcservices/ 6. Brig.Mr.Veera Pradap, No.6/158, South Alagapuram, Salem – 14. 7. Erode District Ex-servicemen and family Welfare Association, (Regd. No.67/2007), Rep. by its President G.Srinivasan, 14-A, Davamani Illam, Bharathi Veedhi, Avalpoonthurai, Erode – 638 115. 8. Kovai Mandala Ex-servicemen and Family Welfare Association, (Coimbatore, Erode, Nilgiri District), Rep. by its President, V.Meckanz, 99, Karuppusamy Nagar, Kavundampalayam, Coimbatore-641 030. ..Respondents (R-7 impleaded as party respondent vide order Dated 2.9.2008 made in M.P.3/2009) (R-8 impleaded as party respondent vide order Dated 4.11.2009 made in M.P.No.5/2009) PRAYER: Appeal filed under Clause 15 of the Letters Patent against the order dated 22.4.2009 made in W.P.No.23934 of 2008 on the file of this Court. WP.No.23934 of 2008: Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Mandamus, calling for the entire records and proceedings of the 2nd respondent in the impugned letters (i) Nos. G180/Security Guard/Limited Tender/ Vol-II/08-09/34/dated 08.09.2008 (ii) Nos. G180/Security Guard/Limited Tender/Vol-II/08-09/35 dated 08.09.2008 awarding of contract for supply of security personnel numbering to 89 in Zone B and 86 in Zone A to the respondents 5 and 6 respectively in pursuance to the allotment made on 02.09.2008 and considering the legality and proprietary thereof quash the same and consequently direct the respondents 1 and 2 to award the entire contract to the petitioner as per the petitioners representation dated 28.07.2008. For Appellant : Ms.Pushpa Menon For Respondents 1 & 2 : Mr.S.Udayakumar For Respondents 3 & 4 : Mr.G.Jagannathan, Central Government Counsel https://hcservices.ecourts.gov.in/hcservices/ For Respondent 5 : Mr.K.F.Manavalan For Respondent 6 : Mr.R.Arumugam For Respondent 7 : Ms.D.Nagasaila For Respondent 8 : Mr.R.Thiagarajan J U D G M E N T THE HON’BLE CHIEF JUSTICE Heard Ms.Pushpa Menon, learned counsel in support of this appeal. Mr.S.Udayakumar, learned counsel appears for respondents 1 and 2. Mr.G.Jaganathan, learned Central Government Counsel appears for respondents 3 and 4. Mr.K.F.Manavalan, learned counsel appears for respondent no.5. Mr.R.Arumugam, learned counsel appears for respondent no.6. Ms.D.Nagasaila, learned counsel appears for respondent no.7 and Mr.R.Thiagarajan, learned counsel appears for respondent no.8. 2. This appeal seeks to challenge the order passed by a learned single Judge dated 22nd April, 2009 whereby the writ petition No.23934 of 2008 filed by the appellant was dismissed by the learned single Judge. 3. The appellant is a Government of Tamil Nadu Undertaking specially constituted for the employment of Ex-servicemen. It is the case of the appellant that the appellant ought to have the priority/exclusive rights in the matter of employment of Ex- servicemen, wherever the appellant has been functioning satisfactorily, and where more than 100 Ex-servicemen are required. The orders passed by respondents 1 and 2, i.e., Bharat Sanchar Nigam Limited (for short, ‘BSNL’) and its General Manager at Erode dated 8th September, 2008 distributing the work of engaging the Ex-servicemen amongst the appellant and two other agencies i.e., respondents 5 and 6, were challenged by the appellant by filing the above referred to writ petition. Those orders have been upheld by the learned single Judge. Hence, this appeal. 4. The appellant Corporation was created by the State of Tamil Nadu by the Government Order bearing G.O.Ms.No.889, Public (Ex- Servicemen) Department, dated 7th May, 1985. The case of the appellant is that there are certain directions issued by the Ministry of Defence, Ministry of Heavy Industries & Public Enterprises and BSNL itself which give preference to the employment of Ex-servicemen through State run Corporations such as the appellant, and guidelines of the Director General of Re-settlement (for short ‘the DGR’), an officer of the Ministry of Defence as well as the impugned order of respondent no.2 will have to be read in the light of these superior documents. https://hcservices.ecourts.gov.in/hcservices/ 5 (i) It is the case of the appellant that under the directions issued by the Ministry of Defence on 22nd May, 2002, each Agency engaged in sponsorship of Ex-servicemen is supposed to be sponsored initially for a period of two years as per para 14(c) of the guidelines issued by the DGR with further re-sponsoring for two years in the event of satisfactory performance. This letter of the Government of India, however, deals with the State Corporation separately. It reads as follows: - “ Government of India, Ministry of Defence, Dte Gen Resettlement, West Block-IV, R.K.Puram, New Delhi – 110 066. No.2112/SA/BSNL/Emp 22 May, 2002 Mr.G.L.Sethi, AGM (Admn.) Bharat Sanchar Nigam Limited, Office of the Chief General Manager, Punjab Circle, Chandigarh SPONSORSHIP OF SECURITY AND ALLIED SERVICES 1. Reference your letter No.Staff/P-48/Conf/II/82 dated 29.4.2002. 2. As per Sub-Para(c) of Para 14 of DGR Guidelines, initially an agency is sponsored for two years. On recommendation of the Principal Employer, the same agency is responsored for another two years provided its performance is satisfactory and there is nothing outstanding against the agency. In case of state run Ex- servicemen Corportions such as UP Sainik Kalyan Nigam Limited, Tamil Nadu Ex-servicemen Corporation, Himachal Pradesh Ex- servicemen Corporation, Punjab Ex-servicemen Corporation, the agencies can continue to work in the PSUs where deployment of security guards is more than 100 and they obtain satisfactory performance certificate from the PSUs -sd- (D.K.Tripathi), Lt.Col. Dy.Director (EMP) For DGR” Thus, as far as these State Sponsored Agencies are concerned, they can continue beyond four years. https://hcservices.ecourts.gov.in/hcservices/ (ii) In continuation of this circular, there is a further letter of the Ministry of Defence, dated 15th September, 2005 stating that as far as the State Ex-servicemen Corporations are concerned, they can be allowed to apply for security services directly to the Central Public Sector Undertakings or their units located in their respective States without the sponsorship of DGR. This letter reads as follows: - “ No.496/I/2003/D(Res) Government of India Ministry of Defence (Department of Ex-servicemen Welfare) New Delhi, dated 15th Sept.2005 Subject: Appointment of security personnel in Public Sector Under-takings from Ex-servicemen Security Agencies sponsored by the Directorate General of Resettlement (DGR). The undersigned is directed to refer to the Department of Public Enterprises OM No.6/22/93/DPE/SC-ST Cell dated 11.2.2005 on the subject mentioned above and to say that many State Ex-servicemen Corporations and State Governments have represented to this Ministry that they may be allowed to obtain security contracts from the Central PSUs as was the practice earlier instead of being required to be sponsored by the DGR. 2. The matter has been reconsidered and it has been decided with the approval of Raksha Mantri that in partial modification of the DPE OM quoted above, State Ex-servicemen Corporations be allowed to apply for security services directly before the Central PSUs or their units located in their respective States without the sponsorship of DGR. It is requested that necessary instructions may kindly be issued urgently in this regard to all administrative Ministries/Departments and Chief Executives of PSUs. (A.K.Upadhya) Joint Secretary to the Govt. of India,” (underlining supplied) 6(i) Correspondingly, there is a communication of the Ministry of Heavy Industries and Public Enterprises, dated 04th October, 2005, which specifically permits the State Ex-servicemen Corporations to apply for providing security services directly to the Central Public Sector Enterprises or their units located in their respective States without the sponsorship of DGR. This letter reads as follows: - https://hcservices.ecourts.gov.in/hcservices/ “ No.6/22/93-DPE (SC/ST Cell) Government of India Ministry of Heavy Industries & Public Enterprises Department of Public Enterprises ------- 14th Block, CGO Complex, Lodhi Road, New Delhi – 110 003. Subject: Appointment of Security Personnel in Public Sector Undertakings from Ex-servicemen Security Agencies sponsored by the Directorate General of Resettlement (DGR) The undersigned is directed to refer to this Department’s OM of even number dated 1.2.1999 and 27.1.2003 and in partial modification of OM of even number dated the 11th February, 2005 on the above mentioned subject, it has now been decided in consultation with Ministry of Defence and with the approval of the competent authority that State Ex-servicemen Corporations be allowed to apply for security services directly before the Central PSEs or their units located in their respective State without the sponsorship of DGR. 2. All the administrative Ministries/Departments are requested to kindly issue necessary instructions to the Public Sector Enterprises under their administrative control to obtain contract security services from the Directorate General of Resettlement (DGR), West Block-IV, R.K.Puram, New Delhi – 110 066 (Tel No.26192354) or from State ESM Corporations for sponsoring Ex-servicemen Security agencies on their panel” (G.S.BOTHYAL) DIRECTOR” (ii) It is then submitted by the appellant that on these lines, the first respondent-BSNL itself came out with their communication dated 16th May, 2007 applicable to the Tamil Nadu Circle and in that it was specifically stated as follows: - “In case of State run Ex-servicemen Corporation, such as TEXCO, the agencies can continue to work without any time limit, where deployment of security guards is more than 100 and their performance is satisfactory.” (underlining supplied) 7. It is the case of the appellant that the BSNL does not dispute that in the three zones of Erode Division, the requirement of security personnel is more than 100 and also that the performance of the appellant in these three divisions has all throughout been https://hcservices.ecourts.gov.in/hcservices/ satisfactory for last nearly 10 years. It is on this background that on 8th September, 2008 when the first and second respondents allotted the work of two zones namely, A & B to respondents 5 and 6 and only zone-C to the appellant that the appellant felt aggrieved and challenged the same by filing the above referred to writ petition, which has come to be dismissed by the learned single Judge. It was contended by the appellant that in the event the impugned order remains, nearly 279 ex-servicemen, who are gainfully employed over last ten years, will be unemployed. The learned single Judge had granted an interim order during the pendency of the petition which has been continued during the pendency of this appeal. Consequently, the ex-servicemen employed by the appellant are continuing to work in all the three zones at Erode. The respondent Nos.7 & 8 are the associations of these ex-servicemen employed by the appellant. They are supporting this appeal. 8. The bids of respondent nos. 5 & 6 have been accepted for Zones A & B by the BSNL, Erode. Their contention is that the second respondent had selected them after the tender process. The limited tenders were floated on 31st March, 2008 and on 30th June, 2008. Condition No.7 of the tender documents lays down the mode of evaluation. Clause 7(3) thereof provides that in case of multiple tenderers happen to be L1 rate, and if all of them agree to do the work at the same negotiated rate, the work will be equally divided among them. The said clause reads as follows: - “7. MODE OF EVALUATION: 1. The tender will be awarded to the L1 tenderer based on the service charges quoted. 2. In case of more than one tenderer is approved, L1 tenderer will be allotted 60% of the work and L2 tenderer will be allotted 40% of the work at L1 rate. 3. In case of multiple tenderers happen to be L1 rate, and if all of them are agreed to do the work at the same negotiated rate, the work will be equally divided among them and Security Deposits will be collected equally and lottery method will be adopted for distribution of work” It is submitted that it is on this footing that the appellant as well as respondent nos. 5 & 6 have been distributed three different zones since all of them had agreed to work at the same rate. The appellant ought to have challenged this condition. Having participated, without challenging the condition, the appellant cannot make any grievance on the selection of respondent nos. 5 & 6. 9. The respondents 5 & 6 submitted that the DGR has issued guidelines which govern this issue. They submit that under the https://hcservices.ecourts.gov.in/hcservices/ eligibility conditions for the Corporations approved by the State, clause 12(b) provides that the Chairman and other functionaries of the corporation should be only retired commissioned officers and clause 12(g) provides that under no circumstances, will the Corporation be allowed to continue beyond eight years at that location. These clauses i.e., 12(b) & (g) read as follows: - “12(b) The Chairman and all other functionaries of the Corporation should only be retired commissioned officers of Armed Forces who qualify to be ESM(O). There should be a minimum of three Directors. 12(g). ESM Corporation will be sponsored to a PSU for a period of two years initially which can be further extended by another two years based on satisfactory performance. At the end of the four years, DGR at its discretion may allow state ESM corporations for another four years at that location if there is a bulk requirement of security. Under no circumstances, will the corporation be allowed to continue beyond eight years at that location. Following this three other Security Agencies in waiting on the roster will be sponsored.” There is no dispute that the appellant corporation has been working with the BSNL, Erode for the last over eight years, and also that the Chairman and other functionaries of the appellant corporation are IAS Officers and not retired commissioned officers. Therefore, according to these respondents, the appellant had no right to be empanelled at all and should not have been selected, but having participated, it has been allotted one Zone namely, Zone-C under Clause 7(3) of the terms of the tender. According to these respondents, the petition should not be entertained and should be dismissed. 10. The learned counsel appearing for these respondents made a grievance about the payment being made by the appellant corporation to the Ex-servicemen. Ms.Menon, learned counsel appearing for the appellant Corporation, has however placed the facts and figures to point out that the Ex-servicemen employed by the appellant corporation were in fact paid better wages than what was required by the DGR. It is material to note that this statement of Ms.Menon, is supported by Ms.D.Nagasaila and Mr.R.Thiagarajan, learned counsel, who appear for two associations of the ex-servicemen, who have joined this appeal as respondents 7 & 8. They submit, on the other hand, that the ex-servicemen did not get good treatment under private agencies like those run by respondents 5 & 6. They have no grievance with the IAS Officers running the State Sponsoring Agency. In any case, it is submitted by Ms.Menon that having allowed to participate, the respondents cannot object to the empanelment of the appellant. 11. Ms.Nagasaila, learned counsel, appearing for respondent no.7-association submitted that the ex-servicemen working through appellant corporation were working for the last over eight years and there was some legitimate expectation on their part that they will be https://hcservices.ecourts.gov.in/hcservices/ continued in their service. She submitted that when the ex-servicemen were happy in working with the appellant corporation, there was no reason to disturb that arrangement. Ultimately, the entire mechanism was for providing gainful employment to the ex-servicemen, and there should not be unnecessary disturbance to the ex-servicemen who are already employed. As far as the other ex-servicemen employed under agencies like respondents 5 & 6 are concerned, they should be employed elsewhere. 12. Learned counsel appearing for BSNL has defended the order passed by the learned single Judge and has submitted that they have allotted zones in accordance with the terms of the tender, and since the three parties had offered equal terms they were all allotted different areas as per clause 7(3) of the Mode of Evaluation of the terms of the tender. He, however, does not dispute that the performance of the ex-servicemen under the appellant is satisfactory. It is material to note that the Government of India through Secretary, Department of Ex-servicemen Welfare was joined as a respondent, but has not filed any counter either before the single Judge or before this Court. The counsel for DGR has however drawn our attention to note no.1 under the guideline No.73 which reads as follows: - “(1) All guidelines/instructions issued on the subject prior to the issue of these guidelines stand superseded with effect from 01st Feb 06” 13. It is submitted by Ms.Menon, learned counsel appearing for the appellant-corporation that the letter dated 22nd May, 2002 and 15th September, 2005 are issued by the Defence Ministry itself and the learned single Judge has erred in ignoring that they will have position of overriding the contrary guidelines issued by the DGR. This is clear from the Defence Ministry’s circular dated 15.09.2005 and Circular dated 04.10.2005 issued by Ministry of Heavy Industries and Public Enterprises, which permit the State Ex-servicemen Corporation to directly apply to the Public Sector Undertakings without the sponsorship of DGR. She submitted that apart from the fact that the Ministry had issued the guidelines in support of the State run ex-servicemen corporation, the parent ministry of BSNL had also issued similar directives on 4th October, 2005, which was accepted by BSNL on 16th May, 2007. She submitted that the BSNL cannot ignore its own circular dated 16th May, 2007, which is subsequent to the DGR guidelines which are effective from 1st February, 2006. 14. With respect to the participation of the appellant in the tender process, she submitted that as far as sponsorship and restriction with respect to time limit to function as an agency are concerned, that will have to be governed by the directives given by the Defence Ministry. For all other purposes, the guidelines of the DGR will apply. She submits that in the instant case if the quotation https://hcservices.ecourts.gov.in/hcservices/ of the appellant was lesser than others, it would be a different matter. Once all the agencies quoted similar rates, the senior most agency has to be awarded the contract. In support of her submission, she refers to Clause 20(l) of the DGR Guidelines, which reads as follows: - “In case all the agencies sponsored to an employer quote same rates in their tender, then the employer should award the contract to the senior most agencies. However, the principal employer may refer this case to the DGR for advice, if required.” 15. We have noted the submission of all the learned counsel appearing in this appeal. While examining the question of issue of selection of appropriate agency to employ the ex-servicemen, the purpose of the entire scheme cannot be lost sight off. The objective is re-settlement of the ex-servicemen who very often retire or are invalidated at a young age. The DGR undoubtedly permits many private agencies to function, and which are expected to be led by the former officers of the defence forces. At the same time, the entire exercise is not expected to unsettle the rehabilitated ex-servicemen. In the instant case, more than 275 ex-servicemen are working in different zones of BSNL at Erode through the appellant corporation. Although the Chairman of the appellant corporation is an IAS officer, (which is often likely in such corporation), these corporations set up in different States have been given preference by the Defence Ministry itself. They have been functioning and gainfully employing the ex- servicemen for years together. This has been permitted by the Defence Ministry, DGR and BSNL and rightly so since this cannot considered as a material deviation to disentitle them if they are otherwise doing good work. Thus, as far as the appellant corporation is concerned, it has been functioning for the last nearly 20 years. The guidelines 12 (b) regarding the directions of the State Corporation will have to be read as directory and the same appears to have been treated as such by respondents nos. 1 to 4. Two different associations of the ex- servicemen i.e., respondents 7 & 8 have expressed their full satisfaction in working under the appellant corporation. The grievance with respect to inadequate wages has been stoutly refuted not only by the appellant, but by these two associations. In fact, they made a grievance that at times, the private agencies do not give proper treatment and they are contended in working in the State run corporation. It is submitted on their behalf that these ex-servicemen have worked for nearly eight to ten years under the State run corporation and they do not want to get destabilized. These submissions have to be considered in all seriousness, if the objective of the rehabilitation is not to be ignored. 16. The question is whether the guidelines of DGR can remove the commitment, the scheme and the representation in the defence https://hcservices.ecourts.gov.in/hcservices/ ministry’s own circular? Can the BSNL reduce the work force of the appellant, contrary to its own decision dated 16th May, 2007 which is issued despite the guidelines of DGR dated 01.02.2006? or whether the tender clause and a particular DGR guideline will apply? And which approach will advance the correct interpretation? 17. The strength of the rule under the particular document will depend upon its source and hierarchy of the authority, and the purpose for which the relevant rules are made. Therefore, Clause 12 (g) of the DGR guidelines will have to be read in consonance with the directives issued by the Ministry itself. And Clause 7(3) of the tender documents will have to be read in consonance with Clause 20(l) of the DGR guidelines. This will have to be so when the State run agencies participate. Clause 7(3) of the tender documents does not specifically speak about the situation where the State sponsored ex- servicemen corporation participates in the tender process. This clause i.e., 7(3) will apply as it is where the State run Corporation is not in the contest. However, when the State run Corporation participates and gives equal terms, it cannot be restricted by Clause 7(3) of the tender document, but clause 20(l) of the DGR guidelines will apply since that is a superior document. Besides, Clause 7(3) of the tender document, if applied in any other manner, such a decision will be contrary to BSNL’s own circular dated 16th May, 2007. 18. Similarly, although Clause 12(g) of the DGR guidelines lays down the upper limit of eight years for the State approved corporations, this guideline will have to be read as not overriding the Defence Ministry’s directive dated 22nd May, 2002. Any other interpretation of these provisions will make the directives issued by the Ministry otiose. The Ministry’s directive specifically states that the State approved agencies can apply without the sponsorship of DGR. 19. The office of the DGR works under the Defence Ministry and the guidelines are laid down by DGR. They have to be read in in tune with the objectives of the Ministry. When there is a clear directive of the Ministry itself, the intention expressed in that directive cannot be given a go-by merely on the basis of a provision in the guidelines. Clause 12(g) of the guidelines will therefore have to be read as in consonance and subordinate to the directives of the Ministry dated 22nd May, 2002. In State of Orissa v. Tata Sponge Iron Ltd., reported in 2007 (8) SCC 189, the State Government had issued operational guidelines prescribing condition for exemption of sales tax, which was in addition to the conditions contained in the exemption notification issued under the Industrial Policy resolution. The Orrisa High Court held