Case: M/S UTKAL SUPPLIERS Vs. M/S MAA KANAK DURGA ENTERPRISES &amp; ORS

to any of these decisions, and in second-guessing the authoritys requirement of a licence under the Contract Labour Act, has clearly overstepped the bounds of judicial review in such matters. In any case, a registration certificate under Section 4 of the Orissa Act cannot possibly be the equivalent of a valid labour licence issued by the labour department. Section 4 of the Orissa Act reads as follows: 4. Registration of establishment.–(1) Within the period specified in sub-section (4), the employer of every establishment shall send to the Inspector of the area concerned, a statement in the prescribed form, together with such fees as may be prescribed, containing– (a) the name of the employer arid the manager, if any; (b) the postal address of the establishment; (c) the name, if any, of the establishment; (d) the category of the establishment, that is whether it be a shop, commercial establishment, hotel, restaurant, cafe, boarding or eating house, theatre or other place of public amusement of entertainment; and (e) such other particulars as may be prescribed. (2) No adolescent shall be allowed to work in any employment for more than six hours in a day. (3) In the event of any doubt or difference of opinion between an employer and the Inspector as to the category to which an establishment should belong, the Inspector shall refer the matter-to the Chief Inspector who shall, after such enquiry as may be prescribed, decide the category of such establishment and his decision shall be final for the purpose of this Act. (4) Within thirty days from the date mentioned in Column (2) below in respect of an establishment mentioned in Column (1), the statement together with fees shall be sent to the Inspector under sub-section (1)– CHART A reading of this Section would show that the registration of an establishment under the Orissa Act is to categorise the establishment as a shop, commercial establishment, hotel, etc. and not for the purpose of issuing a labour licence which, in the context of the present TCN, can only be a labour licence under the Contract Labour Act. 15. The argument of Respondent no.1 with reference to Section 1(4) of Contract Labour Act is wholly misplaced. Section 1(4) of the said Act reads as follows: 1. Short title, extent, commencement and application.— xxx xxx xxx (4) It applies— (a) to every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labour; (b) to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen: Provided that the appropriate Government may, after giving not less than two months notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment or contractor employing such number of workmen less than twenty as may be specified in the notification. The requirement of this Act that its applicability be extended only to establishments in which there are 20 or more workmen can be done away with by the appropriate government under the proviso, making it clear that this is not an inflexible requirement. In any case, the acceptance of such argument would amount to second-guessing the authoritys interpretation of its own TCN which, as has been stated hereinabove, cannot be so second-guessed unless it is arbitrary, perverse or mala fide. 16. The High Courts characterising the action of accepting the Appellants tender as mala fide is itself open to question. The plea of mala fide made in the writ petition reads as follows: 22. That, in the meantime the petitioner ascertained that the tender inviting authorities have connived with the Opp. Party No. 4 to 6 and it is also ascertained that Opp. Party No. 4 to 6 belong to one establishment and are supplying the same contract to the SCB, so accordingly, with a malafide intention both have connived and a pre-planned attempt has been made to oust the petitioner on a flimsy ground. The entire exercise has been done by Opp. Party No. 3 to award the contract to Opp. Party No. 5 as they are still continuing the aforesaid work and the entire endeavour of the Opp. Party No. 3 is to create some litigation so that, the opposite parties can continue during pendency of the writ application. This plea was answered by the authority in its counter affidavit filed before the High Court as follows: 15. That in reply to the averments made in paragraphs 22 to 25 of the writ petition it is humbly and respectfully submitted that, the bidding process has been concluded in a transparent manner adhering to the required guidelines made thereto. It is further stated that the petitioner failed to comply with two basic requirements under eligibility criteria stipulated in the tender conditions i.e. (i) submission of valid Labour licence; (ii) submission of proper certificate of continuous three years experience in diet preparation and supply to Government/Reputed Private Health Institution having minimum 200 bed strength. As a result, the Tender Committee disqualified the bid of the petitioner. It is further submitted that after thorough examination of the documents, M/s. Utkal Suppliers (O.P. No. 5) came out to be the L-1 bidder in the tender process and the same was sent to the higher authorities for detailed examination of technical and financial bids. SLPC being the competent authority as per F.D. Notification No.22393/Fdt.08.06.2012 after due examination of records has recommended to place the work order with the L-1 bidder. Accordingly, the work order has been issued in favour of the L-1 bidder (O.P. No. 5) vide this office letter No. 23347 dated 27.11.2020 and the selected firm has taken up diet services work in the hospital w.e.f. 01.12.2020. A reference to the aforesaid pleadings would also go to show that except for an incantation of the expression mala fide, no mala fide has in fact been made out on the facts of this case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. Having heard learned counsel appearing on behalf of the Appellant and Respondent no.1, what is clear is that the authority concerned read its own TCN to refer to the licence to be submitted by bidders as the labour licence under the Contract Labour Act. This is also clear from a reading of the tender document as a whole, and in particular, clauses VI.20.6, VI.20.20 and VI.20.21Sub-clauses (20) and (21), in particular, make it clear that the staff employed would be employed by the agency as contract labour, the agency being responsible to make alternative arrangements in cases where their staff goes on strike.11. This Court has repeatedly held that judicial review in these matters is equivalent to judicial restraint in these matters. What is reviewed is not the decision itself but the manner in which it was made. The writ court does not have the expertise to correct such decisions by substituting its own decision for the decision of the authority. This has clearly been held in the celebrated case of Tata Cellular v. Union of India, (1994) 6 SCC 651 ,  paragraph 94 of which states as follows:94. The principles deducible from the above are:(1) The modern trend points to judicial restraint in administrative action.(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in 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.(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.12. Equally, this Court in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818  [Afcons], has laid down:14. We must reiterate the words of caution that this Court has stated right from the time when Ramana Dayaram Shetty v. International Airport Authority of India [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489  ] was decided almost 40 years ago, namely, that the words used in the tender documents cannot be ignored or treated as redundant or superfluous — they must be given meaning and their necessary significance. In this context, the use of the word metro in Clause 4.2(a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked.15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.13. In Galaxy Transport Agencies v. New J.K. Roadways, 2020 SCC OnLine SC 1035, after referring to paragraph 15 of Afcons (supra), it was held:15. In the judgment in Bharat Coking Coal Ltd. v. AMR Dev Prabha, 2020 SCC OnLine SC 335, under the heading Deference to authoritys interpretation, this Court stated:51. Lastly, we deem it necessary to deal with another fundamental problem. It is obvious that Respondent No. 1 seeks to only enforce terms of the NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes.52. In the present facts, it is clear that BCCL and India have laid recourse to Clauses of the NIT, whether it be to justify condonation of delay of Respondent No. 6 in submitting performance bank guarantees or their decision to resume auction on grounds of technical failure. BCCL having authored these documents, is better placed to appreciate their requirements and interpret them. (Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., (2016) 16 SCC 818  )53. The High Court ought to have deferred to this understanding, unless it was patently perverse or mala fide. Given how BCCLs interpretation of these clauses was plausible and not absurd, solely differences in opinion of contractual interpretation ought not to have been grounds for the High Court to come to a finding that the appellant committed illegality.(emphasis in original)16. Further, in the recent judgment in Silppi Constructions Contractors v. Union of India, 2019 SCC OnLine SC 1133, this Court held as follows:20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the courts interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case.(emphasis in original)17. In accordance with these judgments and noting that the interpretation of the tendering authority in this case cannot be said to be a perverse one, the Division Bench ought not to have interfered with it by giving its own interpretation and not giving proper credence to the word both appearing in Condition No. 31 of the N.I.T. For this reason, the Division Benchs conclusion that JK Roadways was wrongly declared to be ineligible, is set aside.14. The High Court has not adverted to any of these decisions, and in second-guessing the authoritys requirement of a licence under the Contract Labour Act, has clearly overstepped the bounds of judicial review in such matters. In any case, a registration certificate under Section 4 of the Orissa Act cannot possibly be the equivalent of a valid labour licence issued by the labour department.A reading of this Section would show that the registration of an establishment under the Orissa Act is to categorise the establishment as a shop, commercial establishment, hotel, etc. and not for the purpose of issuing a labour licence which, in the context of the present TCN, can only be a labour licence under the Contract Labour Act.15. The argument of Respondent no.1 with reference to Section 1(4) of Contract Labour Act is wholly misplaced.The requirement of this Act that its applicability be extended only to establishments in which there are 20 or more workmen can be done away with by the appropriate government under the proviso, making it clear that this is not an inflexible requirement. In any case, the acceptance of such argument would amount to second-guessing the authoritys interpretation of its own TCN which, as has been stated hereinabove, cannot be so second-guessed unless it is arbitrary, perverse or mala fide.16. The High Courts characterising the action of accepting the Appellants tender as mala fide is itself open to question. The plea of mala fide made in the writ petition reads as follows:22. That, in the meantime the petitioner ascertained that the tender inviting authorities have connived with the Opp. Party No. 4 to 6 and it is also ascertained that Opp. Party No. 4 to 6 belong to one establishment and are supplying the same contract to the SCB, so accordingly, with a malafide intention both have connived and a pre-planned attempt has been made to oust the petitioner on a flimsy ground. The entire exercise has been done by Opp. Party No. 3 to award the contract to Opp. Party No. 5 as they are still continuing the aforesaid work and the entire endeavour of the Opp. Party No. 3 is to create some litigation so that, the opposite parties can continue during pendency of the writ application.This plea was answered by the authority in its counter affidavit filed before the High Court as follows:15. That in reply to the averments made in paragraphs 22 to 25 of the writ petition it is humbly and respectfully submitted that, the bidding process has been concluded in a transparent manner adhering to the required guidelines made thereto.It is further stated that the petitioner failed to comply with two basic requirements under eligibility criteria stipulated in the tender conditions i.e. (i) submission of valid Labour licence; (ii) submission of proper certificate of continuous three years experience in diet preparation and supply to Government/Reputed Private Health Institution having minimum 200 bed strength. As a result, the Tender Committee disqualified the bid of the petitioner.It is further submitted that after thorough examination of the documents, M/s. Utkal Suppliers (O.P. No. 5) came out to be the L-1 bidder in the tender process and the same was sent to the higher authorities for detailed examination of technical and financial bids. SLPC being the competent authority as per F.D. Notification No.22393/Fdt.08.06.2012 after due examination of records has recommended to place the work order with the L-1 bidder. Accordingly, the work order has been issued in favour of the L-1 bidder (O.P. No. 5) vide this office letter No. 23347 dated 27.11.2020 and the selected firm has taken up diet services work in the hospital w.e.f. 01.12.2020.A reference to the aforesaid pleadings would also go to show that except for an incantation of the expression mala fide, no mala fide has in fact been made out on the facts of this case.