M/S Good Year Security Services (Regd) v. Union of India & Ors

order no. F.11(29) This committee is of the view that the bid may be rejected as the bidder has

Services CTT/FMB/Security/07-08 dated 13.7.2010 for 4 years. (Annexure A) b. Blacklisting order contested in Delhi High Court and order was set aside, vide order of Hon'ble High Court of Delhi of W.P.(C) 4691/2010 and C.M No.9275/2010 dated

26.10.2010. c. One Court Case pending in Delhi High Court W.P(C) 1433/2012 and C.M. Appl. 11632/2013. On enquiry, M/s Good Year Security Services submitted that court case pending is the writ petition and miscellaneous claims and Dept of Trade and Taxes, GNCT for not releasing the EMD. However, in W.P(C) 1433/2012 and C.M. Appl. 11632/2013, order dated

26.8.14 of Delhi High Court states "The learned counsel for the respondent states that bank guarantee has been invoked on account of the services rendered by the petitioner having been submitted a false affidavit to the effect that that the agency has not been involved in any litigation regarding Security Jobs as per clause of eligibility criteria on page 10 of Tender document.(Annexure C)

In view of suppression and misrepresentation of facts, the bid of the firm can be rejected as per clause 10(i), 10(ii)(b) on page 14, of Tender document.

found to be unsatisfactory" (Annexure B)

¶9Mr. B.B. Gupta, learned senior counsel for the third respondent Jai Prakash urged that this Court should not entertain the writ petition because a false affidavit suppressing material facts had been relied upon by the petitioner. It was submitted that the Court should not interpret the terms of the tender as it is primarily the task of the contract awarding agency which in the present case is CGHS. Learned counsel stressed that the petitioner's argument that the litigation pending between it and CGHS, does not relate to any material aspect concerning "security job", is not something that can be gone into under Article 226 proceedings.

¶10There is practically no controversy on relevant and material facts. The petitioner and Jai Prakash were the two bidders; the structure of the NIT in the present case is such that there is very little "dispute" with respect to the price component since major or substantial parts are determined by the CGHS. Both the bidders had quoted or rather claimed 5% administrative charges. This resulted in a bid tie. The "tie-breaker" provision meant that the bidder with a higher turnover had to be preferred. Again, here too, the record clearly shows that the petitioner had a higher turnover and was therefore entitled to the contract. What is in controversy is whether the petitioner suppressed material facts which it ought to have disclosed. Clause 16 states that an undertaking that no litigation relating to a "Security Job" with the CGHS should be pending. The condition for the purposes for facility of reference is extracted below; it reads as follows:-

S.No. Eligibility of Bidders Documents to be scanned and uploaded as PDF documents against tender ID 2017_DHS_196586 on CPP Portal to establish eligibility: The Agency should not have been black listed by any Government organization or by CGHS, nor involved in any litigation regarding Security jobs An undertaking on non judicial stamp paper by the bidder stating:

(a) that the agency has not been blacklisted by any Government organization including ESIC, EPFO & CGHS should be uploaded.

(b) that the agency has not been involved in any litigation regarding Security Jobs

(c) the undertaking should also indicate whether or not any investigation by any competent authority is pending against it.

¶11CGHS – as is evident from the observations of its Tender Evaluation Committee, rejected the petitioner's bid on the ground that a litigation, in fact, was pending i.e. W.P.(C) No.1433/2012. Now, the facts of this case show that the initial allegation levelled against the petitioner by Jai Prakash was that it had been blacklisted for a substantial period and that this fact was studiously suppressed from CGHS. The records however disclose that the initial blacklisting order was set aside and the Court had required the Commissioner to go into the matter afresh. After remission, the Special Commissioner was of the opinion that the charge made against the petitioner was unfounded – as can be seen from the extracted portions of the

administrative order. Therefore, Jai Prakash's allegations were baseless, on that aspect. So far as the pending litigation i.e. W.P.(C) No.1433/2012 goes, the Tender Evaluation Committee solely went by some pleading made in counter affidavit of the respondent (in that case) that a bank guarantee was invoked since the services of the petitioner were unsatisfactory. Now, a mere allegation to that effect, in the opinion of the Court, is not determinative. More crucially, the eligibility condition clearly stipulated that no litigation with respect to "security job" should be pending. There is no material on the record to say that a litigation concerning "security job" (i.e. the performance of a particular contract of providing security services or anything touching upon the functioning of the petitioner's employees in such contract) is an issue in any litigation. In the very nature of contracts relating to commercial dealings, disputes relating to payments, claims of unsatisfactory service may and do arise. Such disputes may in the perception of the recipient organization entitle it to make cuts from the payment of the service provider, which in turn, may be enabled to seek redressal through an arbitration clause, failing which it has the right to approach courts. Therefore, the interpretation of the term "the Agency has not been involved in any litigation regarding security jobs" necessarily has to be a narrow one. The danger of proceeding on a wider interpretation would mean that the CGHS would be ruling out any party which makes a claim against it – genuine or otherwise, despite its entitlement to do so in law. Plainly, such a condition would be contrary to public policy as operating in restraint of legal proceedings. In other words, if a wide interpretation were to be preferred (as the CGHS has done, in rejecting the petitioners' bid), it would also mean that it would not involve or award contracts to anyone who claims anything

against it – despite the genuineness of its cause or claim and the right of such party to seek redress, in the manner provided by law. Rather than proceeding on such a wide interpretation of the condition which would lead to manifest arbitrariness, the Court is of the opinion that the nature of the tender condition is such that a narrow interpretation would sustain it. Consequently a narrow interpretation, based on the plain text of the clause has to be preferred.

¶12On an application of such a narrow interpretation to the facts of this case, this Court is of the opinion that the claim in a writ petition for refund of EMD allegedly by encashing the bank guarantee without due cause per se is not a litigation relating to a "security job". The settled authorities, i.e. Tata Cellular v. Union of India 1994 (6) SCC 651; Michigan Rubber (India) Limited Vs. State of Karnataka & Others (2012) 8 SCC 216; Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. & Anr 2016

(16) SCC 818; JSW Infrastructure v Kakinada Seaports 2017 (4) SCC 740 etc.) have emphasized that courts play a limited and circumscribed role in scrutiny, while exercising judicial review under Article 226 of the Constitution of India and that deference to executive decision ought to be the rule. Again, earlier Global Energy Ltd & Anr v Adani Exports Ltd & Ors (2005) 4 SCC 435 had highlighted, that tender conditions cannot normally be subjected to judicial review unless they are arbitrary or discriminatory. When the facts bespeak of illegality, manifest arbitrariness or unreasonable decision making (i.e. a decision so unreasonable that no reasonable man placed in a like situation would have taken it) or when the decision is because of lack of good faith (i.e. it is mala fide) the court can interdict the administrative or public agency's decision. Each of the

decisions have emphasized that non-arbitrariness and reasonableness are bedrock principles which, if ignored, can imperil the executive agency's decision.

¶13This court is of opinion that in the facts of this case, the rejection of the petitioner's bid is plainly arbitrary as the tender evaluation committee adopted a wide interpretation of the tender condition. A wide interpretation – as held by this court, results in manifest injustice and arbitrariness, because it decrees exclusion and commercial limbo, as it were, to a party that is otherwise eligible and fit to enter into contract, merely because it has approached the courts. This exclusion is both in restraint of legal proceedings, as it prevents any entity from seeking legal redress, regardless of CGHS' unreasonableness in withholding any dues, and also is unfounded in law. For these reasons, the cancellation of the petitioners' bid is arbitrary and unreasonable.

¶14In view of the above reasons, this court is of the opinion that the claim in this writ petition has to succeed. The decision to award the tender and the contract arising out of the award to the third respondent, Jai Prakash Security Agency is hereby set aside. The first respondent is hereby directed to complete the formalities with respect to the award of the tender and the contract to the petitioner within two weeks and ensure that its personnel are deployed latest with effect from 01.09.2017. The writ petition is allowed. No costs.

S. RAVINDRA BHAT, J

S.P.GARG, J JULY 31, 2017/kks

* IN THE HIGH COURT OF DELHI AT NEW DELHI Decided on: 31.07.2017 + W.P.(C) 6080/2017, C.M. APPL.25250-25251/2017 M/S GOOD YEAR SECURITY SERVICES (REGD)..... Petitioner Through : Sh. Abhay Kumar, Sh. Saurabh Mishra, Sh. Khalid Akhtar, Sh. Amit Kumar Singh and Sh. Himanshu, Advocates. versus UNION OF INDIA & ORS ..... Respondents Through : Sh. Anurag Ahluwalia, CGSC with Dr. Dharan, CMO (NFSG), CGHS. Sh. B.B. Gupta, Senior Advocate with Sh. Anirudh Singh Chauhan and Sh. Vikas Shokeen, Advocates. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE S.P.GARG MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) 1. Complaining of arbitrariness and violation of Article 14, the petitioner has approached this Court to direct the second respondent (hereafter referred to as "CGHS") to award a contract pursuant to its Notice Inviting Tenders ("NIT") for providing security services and also quash the award of tender to the third respondent (hereafter referred to as Jai Prakash). This court had issued notice to parties on the previous date of hearing; CGHS, represented by counsel, has produced its entire original record, including all documents leading to award of contract pursuant to the tender; the successful bidder, i.e. the third respondent is represented by senior counsel. Both respondents state that the petition can be heard without formal affidavits or replies. The petition was therefore heard, finally on merits. 2. The petitioner is a registered partnership firm providing security and other related services. CGHS, on 25.04.2017, issued the NIT, calling for bids from agencies for providing round-the-clock security services in the CGHS Wellness Centres, hospitals, stores and offices located in Delhi/NCR under the Directorate General of Central Government Health Scheme on contract basis for a period of one year under a two bid system. The petitioner and Jai Prakash furnished their bids. The petitioner alleges that its turnover for the last 3 years was substantially higher than the average annual turnover of Jai Prakash. It is submitted that although the last date prescribed for uploading the bids was 16.05.2017, corrigenda were issued on 04.05.2017 and 12.05.2017. Later, the technical bid opening (i.e. the first part of the tender process) took place. At the time, of the 9 bidders, the tenders of 6 bidders were rejected. The 3 finalists included the petitioner and Jai Prakash. In the second stage i.e. the price bid, all 3 bidders had quoted identical rates i.e. 5% of the total value of administrative charges. As far as the other components were concerned, the CGHS had fixed the prices. In these circumstances, it is contended that the "tie-breaker condition" in Clause (13) of Section 1 of the NIT became applicable and the petitioner on account of its higher turnover was entitled to be declared as L1. The tie-breaker condition inter alia states that in case two bidders had quoted the same administrative charges, the bidder with the highest turnover was to be given preference. It is contended by the petitioner that since its turnover was in the range of over `17 crores annually, the third respondent's bid could not have been accepted since its turnover was about `8 crore. 3. The grievance articulated in the present proceeding is that despite its entitlement to be declared as L-1 and therefore further entitlement to enter into contract with CGHS, the petitioner's bid was rejected entirely based upon Jai Prakash's complaints/e-mail communications dated 02.06.2017 to 08.06.2017, alleging that the petitioner had been blacklisted for 4 years and that in addition a litigation or court case pertaining to the petitioner was pending. The petitioner also submits that CGHS furnished it with the copy of Jai Prakash's e-mail dated 02.06.2017 under cover of a letter dated 12.06.2017 and required it to furnish its reply. The letter of 12.06.2017 stated that CGHS was informed by Jai Prakash's Security Agency that it (the petitioner) had been "debarred" (