IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE FIFTEENTH DAY OF OCTOBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 9778 of 2008 Between: M/s Vinay Security Force, 6-3-609/80, Anand Nagar,Khairtabad, Hyderabad rep by its Managing Director, Col.K.Vinod, S/o. Late K.Dharma Rao, aged 59 years ..... PETITIONER AND 1 Electornics Corporation of India Limited ECIL POst, Hyderabad-500 062, rep by its Chiarman-cum-Managing director. 2 M/s Alaska Security,1-2-330/1/A, Domalguda, Hyderabad-500 029, Rep by its Managing Director, LT.Col.P.A Somaiah, 3 The Director General of Resetlement, Govt of India Ministry of Defence, West Block-IV, R.K.Puram, New Delhi-110066. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to to issue a writ of mandamus or any other apropriate writ, order or orders, declaring the action of the 1st Respondent in allowing the lsponsored agencies for suply of Ex-servicement Security Guards to ﬁle their tenders on the basis of the minimum wages prescribed by the Government of A.P., as illegal, arbitrary and opposed to the norms prescrbed by the 3rd Respondent and to issue a consequential direction to thel 1st Respondent to call for fresh tenders for supply of Ex-Servicemen Security Guards by canceling the acceptatnce of the tender of the 2nd Respondent and pass Counsel for the Petitioner:MR.V.SRINIVAS Counsel for the Respondent No.: MR.B.NARAYANA REDDY The Court made the following : O R D E R: 1. The writ petitioner is a proprietary concern. It is engaged in supplying ex-servicemen as security guards to public sector undertakings and other government bodies. It is registered with the Director General of Re-settlement, Ministry of Defence, Government of India. M/s Alaska Security represented by its Managing Director Lt.Col.P.A.Somaiah-2 nd respondent is also engaged in supplying Ex-servicemen as security guards to public sector undertakings and other required bodies. 2. Electronics Corporation of India Limited-1st respondent is a Government of India enterprise under Department of Atomic Energy. It is duly incorporated under the Companies Act, 1956. 1st Respondent-Company initiated the process of appointing security agency for its oﬃce and therefore addressed a letter dated 5.2.2008 to the Director General of Resettlement to provide list of security agencies located in Hyderabad and empanelled with it. 3rd respondent through its letter dated 28.2.2008 sponsored three agencies including the petitioner and 2nd respondent herein. 1st respondent under its letter dated 12.3.2008 invited quotations from all the three DGR empanelled security agencies. Accordingly, the agencies submitted their quotations. 1st respondent-company constituted a two member committee to assess the credentials in respect of oﬃce administration, experience etc. before considering the price bid. The Committee conducted physical inspection of the parties’ premises on 26.3.2008 and reported the status in respect of the petitioner as under: “ After reaching Khairatabad, in order to reach to the oﬃce address given in the quotation, we have telephoned to the proprietor Lt.Col.K.Vinod to know the location of the oﬃce. Since, he has not responded, we have given a call to his residence where his wife has responded and on enquiry about the oﬃce, she has said that the oﬃce would be closed at that time i.e. 1330 hours and will be open only in the evenings. Hence, we could not visit the office.” 3. The Committee reported the status of 2nd respondent as under: “ As per the address provided by the party, visited the place located at Domalguda. The party has an oﬃce operating the security and other services from there. The proprietor as per the DGR sponsorship Lt.col.Somaiah was not there. It is understood that he is available at his residence at Yapral. It is managed by Chief Administrative Oﬃcer and other staﬀ who were available at the time of visit. Met the Chief Administrative Oﬃcer who has informed that they are in the ﬁeld of supplying the Security Guards for the last one year. As of today, they are supplying 27 Security Guards to Heavy Water Board, Manuguru and 25 Guards to IOCL, Kondapally. Expecting an order from BSNL for supply of 280 guards and said that can supply the required guards with 48 hours of notice.” The committee reported the status of other agency which is M/s Vomkar Security Services at Bhaskar Rao Nagar, Sainikpuri, Hyderabad as under: “ As per the address provided by the party, visited the place located in Bhaskar Rao nagar, Sainikpuri, Hyderabad. It is a residential ﬂat where the proprietor of the Vomkar Security Services resides. They operate their services from the residence. No separate office exists. Col.N.B.Chinnappa, Proprietor of the Vomkar Security Services was not at home when we have visited. No other staﬀ of the Agency was available. His wife had informed that they are presently operating from their residence. It is a recently established agency and presently a total of 7 guards at RCMA Kanchanbagh.” Considering the experience of 2nd respondent in another DAE unit and IOCL which matches with the security requirements and also considering the credentials in respect of office administration, 2nd respondent was found most suitable for award of contract. R1 accepted the quotation of 2nd respondent and awarded the contract of supply of security agency. The action of 1st respondent in awarding the contract in favour of the 2nd respondent is assailed in this writ petition. It is stated in the writ aﬃdavit that action of 1st respondent in directing sponsored agencies to ﬁle quotations by taking into minimum wages as ﬁxed by the Government of Andhra Pradesh through its letter dated 12.3.2008 itself is bad. Para 3 of the aﬃdavit needs to be noted and it reads as under: “ In pursuance to letter of the 1st respondent dated 12.3.2008, the petitioner submitted its tender by strictly adhering to the norms prescribed by the 3rd respondent by taking into account the minimum wages prescribed by the State of Delhi. The 2nd respondent herein appears to have ﬁled its tender by taking the minimum wages of the A.P. State Government as notiﬁed on 31.5.2007. The 1st respondent opened the tenders on 2.4.2008 under intimation to the tenderers. The petitioner informed the Chief Vigilance Oﬃcer, ECIL and also to the Head, Personal Group of ECIL on 31.3.2008 that the quotations should be based on the minimum wages of Delhi State but not that of the State of A.P. The 1 st respondent, after opening the tenders, has found the tender of the 2nd respondent acceptable in view of the fact that the 2nd respondent quoted the minimum wages of the A.P. State, which are far below that of the Delhi State. Consequently the tender ﬁled by the petitioner stood rejected and the 2nd respondent has been awarded with the contract for a period of two years. The 2nd respondent is likely to execute the contract from 1.5.2008.’ 4. Notice before admission came to be ordered on 1.4.2008. Interim order also came to be passed on the even date. 5. R1 and R2 entered appearance and ﬁled their counters. R1 also ﬁled additional counter. The submission of quotations by the petitioner as well as R2 and some others is not disputed by R1. It is stated by R1 in the additional counter aﬃdavit that a committee was constituted for negotiations with all the agencies. The relevant portion of the counter affidavit reads as under: “ 3. …….All the parties including the existing security agency were called for negotiations on 29.3.2008 and negotiations were held with them individually and separately by the said committee. All the three (3) parties submitted their revised quotations and were asked to be present on 2.4.2008 at 1130 hrs. M/s Vomkar Security Agency remained absent. After opening the sealed covers the quotations were read out to the parties and a comparative statement of the revised quotations was prepared and the same was signed by all the committee members. As per the said comparative statement the committee recommended award of contract to the 2nd respondent. Accordingly, contract was awarded to 2nd respondent and the 2nd respondent is executing the contract from 1.5.2008. 4. It is submitted that as per Government of India, Ministry of Defence, Directorate General Resettlement, notice of the revised minimum wages with eﬀect from 1.2.2008 payable by any security agency sponsored through Directorate General Resettlement (DGR for short) was notiﬁed. The rates quoted by the 2nd respondent are fully in conformity with the same without deviation. The allegation made by the petitioner that the rates quoted by the petitioner also are in conformity with the minimum revised rates notiﬁed by DGR but not the quotation given by 2nd respondent is not true and not correct. It is necessary to bring to the notice of this Honourable Court that in clause (g) of the DGR notiﬁcation pertains to “uniform and washing allowance” and the same has to be paid at 10% basic. Therefore, the same works out to Rs.379.90 ps. As per the notes of the DGR notiﬁcation 30% of the claimed amount towards uniform and washing allowance will be paid to each guard as washing allowance by the proprietor. Therefore, 30 % of Rs.379.90 ps has to be paid to each security agency to their guard towards washing allowance which works out to Rs.113.97 ps. The remaining amount is for providing uniform by the security agency. The entire amount of Rs.379.90 is not meant to be paid to security guard. The 2nd respondent quoted Rs.113.97 towards washing allowance i.e., 30% of Rs.379.90 or alternatively 3% of the basic and agreed to provide uniform and shoes to each guard. Therefore, there is no deviation from the DGR notiﬁcation. There is no violation in recommending the award of contract to the 2nd respondent and in awarding contract to the respondent.” 6. The counter affidavit of 2nd respondent, in brief, is : The quotation submitted by it was in accordance with the wage rate applicable in the State of Delhi and its quotation stood the lowest. It is further stated in the counter aﬃdavit that the quotation submitted by the agencies were considered by the duly constituted committee in accordance with the norms and therefore award of contract in favour of this respondent cannot be assailed in the writ petition. 7. When the writ petition came up for admission hearing, with the consent of learned counsel for the parties, it is taken up for final disposal. 8. Heard learned counsel appearing for the petitioner and learned counsel appearing for R1 and R2. 9. Learned counsel appearing for the petitioner submits that wages quoted by 2nd respondent are not on par with the Delhi State minimum wages and therefore his quotation is liable to be rejected and in which case the quotation of the petitioner would alone remain for consideration and consequently the contract is to be awarded to the petitioner. He further submits that the only component in which the competing ﬁrms have some liverage is as to service charges. He took me to the quotations submitted by the petitioner, 2nd respondent and one Vinay Security Force to convince that the quotation submitted by the petitioner in accordance with the Delhi State Minimum Wages and whereas the quotation submitted by R2 is not in accordance with Delhi State Minimum Wages. 10. Learned counsel appearing for R1 submits that all the three agencies have been called for negotiations and the petitioner having participated in the negotiations cannot be permitted to contend that the procedure adopted by R1 on selecting the agency is arbitrary and unreasonable. He would also submit that the committee considered the quotations and held negotiations with the parties individually and there after recommended awarding of contract to R2 and thus there is no arbitrariness or favouratism in awarding the contract in favour of 2nd respondent. 11. Learned counsel appearing for R2 submits that the quotation submitted by R2 is as per DGR wage structure and therefore R1 is justiﬁed in awarding the contract for providing security guards. He further submits that price may not always be the sole criteria for awarding a contract. He placed reliance on the decision of Supreme Court in RAUNAQ INTERNATIONAL LTD. V. IVR CONSTRUCTION[1] in support of his submissions. In the cited decision the Supreme Court held as under: “ 16. It is also necessary to remember that price may not always be the sole criterion for awarding a contract. Often when an evaluation committee of experts is appointed to evaluate oﬀers, the expert committee’s special knowledge plays a decisive role in deciding which is the best oﬀer. Price oﬀered is only one of the criteria. The past record of the tenderers, the quality of the goods or services which are oﬀered, assessing such quality on the basis of the past performance of the tenderer, its market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a much better quality of work can be legitimately paid in order to secure proper performance of the contract and good quality of work – which is as much in public interest as a low price. The court should not substitute its own decision for the decision of an expert evaluation committee.” 12. It is very well settled and needs no reiteration that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. The parameters of judicial review are too well settled in the matter of exercise of contractual powers by the governmental bodies. This Court does not exercise any appellate jurisdiction over the decisions taken by the governmental bodies in the matter of awarding contract. The court, of course, would interfere to prevent arbitrariness or favouritism and to protect larger public interest. The Court in exercise of its judicial review jurisdiction is concerned with decision-making process, but not with the decision itself. The Court in appropriate cases may issue writs directing the State, its Corporations, instrumentalities and agencies to adhere to the norms, standards and procedures laid down by them and prevent them from departing from those norms arbitrarily. The Court, of course, would interfere if the decision is found vitiated b y mala ﬁdes, unreasonableness and arbitrariness vide the decision of a Division Bench of this Court in UNION OF INDIA AND OTHERS V. LAXMI BUILDERS, SECUNDERABAD[2]. 13. Indisputably as per the minimum wages published by DGR on 26.3.2008, the uniform and washing allowance shall be 10 % of the basic. The petitioner quoted Rs.379.90 towards uniform and washing allowance which is exactly 10 % of the basic. The quotation submitted by 2nd respondent in which washing allowance has been stated as Rs.109.70. The amount mentioned under uniform and washing allowance is less than 10 % of the basic. Therefore, the quotation submitted by R2 cannot be termed as in tune with the minimum wages published by the DGR. R1 in additional counter aﬃdavit stated that R2 agreed to provide uniform and shoe to each guard apart from Rs.113.97 towards washing allowance. The subsequent explanation given by R2, if any, with regard to splitting up of washing allowance into two categories i.e. uniform and washing allowance is not contemplated under the minimum wages published by DGR. Therefore, in my considered view the wages quoted by R2 cannot be termed as in accordance with the minimum wages published by DGR. Once the quotation of R2 is excluded from consideration, the other quotation remains is that of the petitioner. 14. In view of the above discussion, this writ petition is allowed declaring the action of respondents in awarding the contract in favour of 2nd respondent as arbitrary and unfair. It is left open to 1st respondent either to accept the quotation of the petitioner or call for fresh quotations for supply of Ex-servicemen security guards. 15th October, 2008. (B.Seshasayana Reddy,J) cc in one week. tnb ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{LS} THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY W.P.NO.9778 OF 2008 15T H OCTOBER, 2008 [1] (1999) 1 SCC 492 [2] 2003(5) ALD 87 (DB)