Full Text
HIGH COURT OF DELHI
Date of Decision: 06.01.2020
WELL PROTECT MANPOWER PVT. LTD. ..... Petitioner
Through: Mr. Tarkeshwar Nath, Advocate with Mr. Mahavir Singh Rawat, Advocate.
Through: Ms. Shobhna Takiar, Advocate with Ms. Shweta Anand, Advocate.
HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
JUDGMENT
1. This is a writ petition under Article 226 of the Constitution of India, by which the petitioner seeks a writ of mandamus to set aside and quash the Letter of Award dated 19.06.2019 issued to respondent No.3 arising from NIT No. 14/YSC/DDA/208-19 dated 16.04.2019. 2020:DHC:41-DB A prayer has also been made that the tender be awarded in favour of the petitioner.
2. Some facts which are required to be noticed for disposal of this writ petition are that a tender was invited online through the etendering mode on behalf of Delhi Development Authority (DDA) (Sports Wing) for the work of providing Security Guards, Watch and Ward and Security Surveillance of Yamuna Sports Complex, DDA, Surajmal Vihar, Delhi-110092 vide NIT No.14/YSC/DDA/2018-19. The tender was to be uploaded in two parts; the first part contained the “Technical Bid” and the second part contained the “Financial Bid”. The period of contract was fixed for 12 months and the last date of submission of bid was 24.04.2019. The technical bid was scheduled to be opened on 26.04.2019. Admittedly, the petitioner uploaded its bid and was found technically successful alongwith 7 other bidders. The Financial bid was opened on 13.06.2019 wherein the petitioner was declared as L-4 and respondent No.3 was declared as the successful bidder.
3. The reason for rejection of the petitioner‟s bid, as communicated to the petitioner, was that the petitioner had quoted a price of Rs.877.61 which was based solely on the minimum wages without any mark-up or profit component; and in the absence of the petitioner showing any profit element, the bid of the petitioner was treated as non-responsive. Relying upon O.M. dated 28.01.2014, Mr. Nath, learned counsel for the petitioner submits that the O.M. has been incorrectly applied to the facts of the present case, for the reason that there is hardly a difference of Rs.9/- between the bid of the petitioner and that of the successful bidder/Stallion Security who quoted Rs.886.36. While relying upon the stand of the respondents itself, counsel for the petitioner submits that claiming a profit of Rs.9/- is as bad as claiming no profit at all. It is the petitioner's contention that the entire exercise has been done only to benefit respondent No.3.
4. Counter-affidavit is stated to have been filed. The same is however not yet on record. Additional copy has been handed-over in court.
5. Ms. Shobhna Takiar, learned counsel for the respondents has relied upon Clause 76 of the tender documents, which reads as under:-
6. She also submits that the O.M. filed and relied upon by the DDA makes it clear that any bid which has quoted 'NIL' charges over and above the minimum wages shall be declared unresponsive. This O.M. reads as under:- “ Dated 28th January, 2014 OFFICE MEMORANDUM Subject Clarification in Rule 160 (xiv) of General Financial Rules, 2005-regarding award of contract to a firm which has quoted „NIL‟ consideration in the bid ********* The undersigned is directed to invite attention to the provision of Rule 160 (xiv) of GFRs, 2005 which inter-alia states that the “Contract should ordinarily be awarded to the lowest evaluated bidder whose bid has been found to be responsive and who is eligible and qualified to perform the contract satisfactorily as per the terms and conditions incorporated in the corresponding bidding document”. Attention is also invited to Para 3.[6] of the Manual on Policies and Procedures for Purchase of Goods issued by this Department which inter-alia state that “Inadequacy of consideration is not a ground for avoiding the contract”.
2. A doubt has arisen as to whether award of a contract can be made against a bid with “NIL” consideration. In a recent case of hiring of manpower services, it was seen that the lowest bidder had quoted „Nil‟ charges over and above the minimum wages. The issue was referred to Ministry of Law which has advised that in such cases an agreement without consideration becomes null and void.
3. It is, therefore, decided that the Ministries/ Departments may consider inclusion of the clause in the bid documents itself that “if a firm quotes „Nil‟ charges / consideration the bid shall be treated as unresponsive and will not be considered. (Sanjay Aggarwal) Director (PPD) T.No.23094961 To
(i) All the Secretaries & the Financial Advisers of
(ii) Copy forwarded to C&AG (with usual No. of spare copies) and to Secretary, Union Public Service Commission, etc. as per standard endorsement list). (Sanjay Aggarwal) Director (PPD) 23094961”
7. She submits that if a person is ready to carry-out the work for 'NIL' profit, it is presumed that either he would not supply trained staff or would provide sub-standard uniforms and equipment or would cut corners in other ways, as it cannot be expected that the petitioner would have bid to do charity. She submits that there is no infirmity in the action of the respondents and the same is also based on the approval of the Commissioner, DDA.
8. We have heard learned counsel for the parties and have considered their rival submissions. Bids of the successful bidders have been quoted in the writ petition by counsel for the petitioner. We deem it appropriate to extract the same hereunder:- “ Sl No Agency Rate (Per person per day as calculated Amount Bid Rank
1. Kore Security Services
836.03 1,28,16,339.90 L[1]
2. Bimla Enterprises 839.259 1,28,66,315.70 L[2]
3. Gorkha Security Services
877.60 1,34,53,608.00 L[3]
4. Lambert Security
877.61 1,34,53,761.30 L[4] Management Private Limited
5. Gaurav
6. Well Protect Security Service Pvt. Ltd
7. Stallion Security 886.36 1,35,87,898.80 L[5]
8. R.D.
905.97 1,38,88,520.10 L[6] ”
9. An analysis of the bids would show that while the minimum wages were Rs.877.60, three bidders had quoted Rs.877.61 while two had quoted above that price at Rs.886.36 and Rs.905.97. M/s R.D. Enterprises quoted at Rs.905.97; but the DDA, applying their O.M. dated 28.01.2014, awarded the tender to M/s Stallion Security who quoted Rs.886.36. We fail to understand as to how a person who quotes Rs.9/- more than minimum wages would be materially different from one who has quoted the minimum wage rates. The O.M. in our view, serves no purpose at all especially when the DDA itself has calculated the 'justified rate', which has been placed on record by the petitioner. We deem it appropriate to reproduce the same below:- “ Justified Rate: Calculation Total: Basic Wages + ESI Rs.743.73 „A‟ Add: 15% CP & OH on A Rs.111.56 Total i/c CP & OH amount= Rs.855.29 „B‟ Add: 9% CGST on CP & OH= (B) Rs.76.98 Add: 9% SGST on CP & OH= (B) Rs.76.98 Total justified Rate Rs. 1009.25 ”
10. In our view, the effect of calculating the justified rate would be that it is DDA's own understanding that a person would quote Rs.1009.25 to earn a justified or reasonable profit of 15%.
11. Mr. Nath has relied upon a decision rendered by this court in the petitioner's own case titled M/s Well Protect Manpower Services Pvt. Ltd. Vs. East Delhi Municipal Corporation and Ors. in W.P.(C) No.1330/2018 dated 26.09.2019, para 10 of which is reproduced below:-
12. Ms. Takiar submits that this judgment would not help the cause of the petitioner. She relies on para 7 of the judgment, wherein respondent No.2 had pointed-out that the entire bid is not for 'NIL' amount but for consideration. Para 7 of this judgment is reproduced below:-
respondent to take an appropriate decision in the light of the order passed. The aforesaid order has not been challenged. It is thus not open for the respondent to take a plea that the bid of the petitioner is not responsive because of low workable rates or agency charges.”
13. We find that in the case of M/s Well Protect Manpower Services Pvt. Ltd. (supra) this court had made certain observations; however, since the period of the contract had come to an end, the writ petition was dismissed as having become infructuous.
14. Mr. Nath, learned counsel for the petitioner has also relied upon a decision rendered by a Coordinate Bench of this court in the case of Orion Security Solutions Pvt. Ltd. vs. Govt. of NCT of Delhi & Ors. 2016 (233) DLT 181 in support of his contention, placing reliance on para Nos. 40, 41 and 45 of this judgment to state that the procedure adopted by the DDA is not transparent. The said paras read as under:-
the tenderer, the history of his having successfully completed similar work earlier and his financial health are important considerations. In any commercial transaction, similar considerations would prevail while deciding the awards of contract but when the awarding authority is the State or its agency, an element of public interest under public law is necessarily pitched in. No doubt, a mere difference in prices offered by two tenderers may or may not be decisive in deciding in public interest but the converse is also true. It may not be necessary that the expenses which would be borne in completing the contract or in performance of contract would only be covered under the charges claimed by the tenderer." xxxxxx
15. We find force in the submissions made by Mr. Nath based upon the decision of the Co-ordinate Bench of this court in Orion Security Solutions (supra). As things stand, clause 76 of the tender document as quoted above makes a tender non-responsive if a firm quotes " 'NIL' charges consideration". For one, we are unable to decipher whether the words " 'NIL' charges consideration" as used in clause 76 is intended to mean 'zero consideration' or 'zero profit'.
16. As observed in Orion Security Solutions (supra), in all circumstances the charges quoted by a bidder on a particular count may not alone be the basis of his financial capacity to perform the contract. This may happen because the bidder may enjoy certain economies of scale if he is performing similar contracts on a larger scale; or by reason of the bidder making legitimate profit under some other head. Secondly, even assuming that the DDA considers it necessary that a bidder should disclose the profit he intends to make, over and above the minimum wages that he is required by law to pay, we are unable to fathom as to how a bidder who discloses a profit of Rs.9/- over and above the minimum wages payable, is in any substantial or material way, different or better suited than a person who discloses a profit of Rs.0/-. Thirdly, in this case the DDA have themselves calculated what they describe as the 'justified rate' in the sum of Rs.1009.25, which is the sum arrived at after adding basic wages, Employees State Insurance payments, 15% contractor profit and overheads as well as CGST and SGST payable thereon. This must be taken to be what the DDA considers a fair and reasonable rate, that may be quoted by a bidder. That being said however, the DDA has accepted the bid of respondent No. 3/Stallion Security, which quoted a bid of Rs.886.36 that is well below the DDA's own justified rate of Rs.1009.25. Evidently therefore, the DDA has not applied its own justified rate; and if had it done so, it would have rejected all the bidders.
17. It however transpires that the tender process is long-closed; that the contract stands awarded in the month of June, 2019 for a period of one year; and that therefore, the matter is, for all intents and purposes, infructuous. We nevertheless hope that DDA would bear the observations made above in mind for similar future tenders.
18. For the reasons stated above, we find no reason to interfere in the tendering process at this stage in this case, the same having been completed long back.
19. The writ petition is therefore disposed of in the above terms. G.S.SISTANI, J. ANUP JAIRAM BHAMBHANI, J. JANUARY 06, 2020 Ne