Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 5334/2019 & CM Nos. 23513-23514/2019
CPWD CONTRACTORS ASSOCIATION
AND ORS. ..... Petitioners
Through: Mr Vinay Kumar Garg, Sr.
Advocate with Mr Vikas
Sharma and Ms Nupur,
Advocates.
versus
UNION OF INDIA AND ANR. ..... Respondents
Through: Ms Rashmi Bansal with Ms
Annu Singh, Advocates for R-1
and R-2.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
O R D E R
% 16.05.2019
VIBHU BAKHRU, J
1. Petitioner no.1 is an association of contractors enlisted with the
Central Public Work Department (CPWD). Petitioner no.3 is an
individual contractor enlisted with CPWD as a Class-III contractor.
The petitioners have filed the present petition impugning the Office
Memorandum dated 14.03.2019 (hereafter ‘the impugned OM’). By
the impugned OM, CPWD has directed that wherever a contract is
awarded for works, other than day-to-day maintenance, the same shall
be a comprehensive contract entailing all works including civil,
electrical, etc. Similarly, the impugned OM also postulates that
W.P. (C) 5334/2019 Page 1 of 8
whenever maintenance work is outsourced, only one contract would
be entered into by CPWD covering all disciplines. The import of the
impugned OM is that multiple contractors at the same site and for the
same project are eliminated.
2. The rationale for introducing the impugned OM, as stated in the
Office Memorandum, is that multiple contractors for a single project
entails certain inconvenience due to frequent entry of their workers,
unhygienic conditions and coordination problems with different
agencies.
3. The petitioners challenge the impugned OM, essentially, on
three fronts. First, it is submitted that the impugned OM is contrary to
the Rules of Enlistment of Contractors in CPWD, 2005 (hereafter ‘the
Rules’). It is contended that under the Rules, various types of
contractors are enlisted in several categories for various disciplines
such as civil, electrical, horticulture, etc. The contractors are also
enlisted in different categories depending on the value of the works
which can be contracted to them. It is contended that if a single
comprehensive contract is awarded for a project, various contractors
who are enlisted with CPWD may not be eligible to participate in the
same. The learned counsel appearing for the petitioners has drawn the
attention of this Court to Rule 4.0 of the Rules, which is set out
below:-
“4.0 Applicability : CPWD enlists contractors who
intend to work with the department. It is done to
have a ready list of suitable and competent
W.P. (C) 5334/2019 Page 2 of 8
contractors for CPWD works so as to minimize
requirement of verification of credentials of
contractors at the time of individual tenders. At
the same time, only those contracts are allowed
to continue in the list that remain active in
CPWD and perform well. Any Indian
individual, Sole Proprietorship Firm, Partnership
Firm, Public Limited Company or a Private
Limited Company may apply for enlistment as a
contractor in CPWD under these Rules provided
the eligibility criteria and other conditions are
satisfied. The enlisted contractors have to abide
by all the rules made herein and as amended
from time to time during the currency of their
enlistment.
4. He submitted that if a comprehensive contract is awarded, then
the contractors enlisted in separate categories would be rendered
ineligible to apply.
5. Second, it is submitted that the said impugned notification is
contrary to Paragraph 4 of the CVC Guidelines. The learned counsel
appearing for the petitioners drew the attention of this Court to a
Circular dated 01.05.2006 and referred to Paragraph 4 of the said
Circular, which reads as under:-
“4. For this purpose, the CVOs are required to be
well conversant with their organisation’s
works/purchase manual. Wherever works/purchase
manuals are non-existant, they should be got
prepared, particularly, in those organisations which
have substantial procurement activities. CVOs
should also ensure that the manuals are updated from
time to time. They should check and ensure that the
W.P. (C) 5334/2019 Page 3 of 8
field staff is well conversant with the extant
provisions of the manuals, and the guidelines issued
by the Commission/CVOs from time to time. CVOs
should have a full and active participation during the
CTE inspections to know about the problem areas in
the organisation’s procurement process.”
6. He submitted that all organizations are required to be
conversant with the works and purchase manual and also ensure that
manuals are updated from time to time. The current system of
categorising the contractors on the separate expertise would not be
applicable in view of the impugned notification. He contended that in
this view, the impugned notification also runs contrary to the
requirement for the organisations to be well-versed with their
procurement process.
7. Third, he submitted that there are several contractors enlisted in
lower categories and can be awarded works only of lower values. He
submitted that if a single contract is to be awarded for one project,
then the value of the same is likely to be high and this would
automatically eliminate the possibility to award works to contractors
enlisted in lower categories.
8. This Court is of the view that none of the contentions advanced
on behalf of the petitioners are merited. First or all, the Rules are not
statutory rules and it is made explicit in the same. The Rules are only
for pre-verification of the contractors and do not entitle any of the
contractors for award of contracts. The rules merely provide for
verification of their eligibility to be considered for a contract for
W.P. (C) 5334/2019 Page 4 of 8
works of a stipulated value and nature to be awarded works for which
they have been pre-qualified. Rule 5 of the Rules is relevant and is set
out below:
“Scope – The enlistment of a contractor in CPWD shall
only entitle him to be considered for issue of tender
papers subject to the conditions laid down in each
individual Notice inviting Tenders. It shall not confer
any right on him either to be necessarily issued the
tender papers or for award of work.”
9. The contractors are required to meet the eligibility criteria set
out in separate tenders as and when floated. The Rules do not vest the
enlisted contractors with any right to be awarded contracts
notwithstanding that they do not fulfil the eligibility conditions. It is
also necessary to state that CPWD is entitled to determine the manner
in which and the persons with whom to enter into contracts, provided
that the same is done in a transparent manner and is not arbitrary or
unreasonable.
10. CPWD cannot be compelled to award contracts to multiple
contractors if it does not so desire to do so. The enlistment of
contractors is for the purpose of pre-verification for the convenience
of CPWD and not to confer any right with the individual contractors.
11. The impugned OM cannot, by any stretch, be stated to be
arbitrary or unreasonable. It does not fall foul of any of of the
principles enshrined in Part-III of the Constitution of India.
12. The contention that the impugned OM also runs contrary to the
W.P. (C) 5334/2019 Page 5 of 8
CVC Guidelines is also bereft of any merit. All organisations are
required to be conversant with the purchase manual as well as the
procurement process, therefore, the officers of CPWD are now
required to apprise themselves the import of the impugned OM and act
accordingly. The same does not, in any manner, run contrary to the
CVC guidelines.
13. The contention that all smaller contractors would be eliminated,
is erroneous. There may be various works of a lower value, which
involve only one discipline. Such contracts would be available to
those contractors enlisted in the relevant category. Even if it is
accepted that contracts for a lower value will be eliminated by virtue
of the impugned OM, there is nothing arbitrary or unreasonable about
the impugned OM. CPWD cannot be compelled to determine the
scope of the contract in a manner so as to accommodate all types of
contractors. All that it is required to ensure is that the contracts are
awarded in a transparent manner and the selection of the contractors is
not done in an arbitrary, capricious or an unreasonable manner.
14. In Michigan Rubber (India) Ltd. v. State of Karnataka, (2012)
8 SCC 216 , the Supreme Court had referred to various judgments and
had summarised the principles as under:
“ 23. From the above decisions, the following principles
emerge:
( a ) The basic requirement of Article 14 is fairness in action
by the State, and non-arbitrariness in essence and substance is
the heartbeat of fair play. These actions are amenable to the
judicial review only to the extent that the State must act
W.P. (C) 5334/2019 Page 6 of 8
validly for a discernible reason and not whimsically for any
ulterior purpose. If the State acts within the bounds of
reasonableness, it would be legitimate to take into
consideration the national priorities;
( b ) Fixation of a value of the tender is entirely within the
purview of the executive and the courts hardly have any role
to play in this process except for striking down such action of
the executive as is proved to be arbitrary or unreasonable. If
the Government acts in conformity with certain healthy
standards and norms such as awarding of contracts by inviting
tenders, in those circumstances, the interference by courts is
very limited;
( c ) In the matter of formulating conditions of a tender
document and awarding a contract, greater latitude is required
to be conceded to the State authorities unless the action of the
tendering authority is found to be malicious and a misuse of
its statutory powers, interference by courts is not warranted;
( d ) Certain preconditions or qualifications for tenders have
to be laid down to ensure that the contractor has the capacity
and the resources to successfully execute the work; and
( e ) If the State or its instrumentalities act reasonably, fairly
and in public interest in awarding contract, here again,
interference by court is very restrictive since no person can
claim a fundamental right to carry on business with the
Government.
24. Therefore, a court before interfering in tender or
contractual matters, in exercise of power of judicial review,
should pose to itself the following questions:
( i ) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone; or
whether the process adopted or decision made is so arbitrary
and irrational that the court can say: “the decision is such that
no responsible authority acting reasonably and in accordance
with relevant law could have reached”? and
( ii ) Whether the public interest is affected?
If the answers to the above questions are in the negative, then
there should be no interference under Article 226”
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15. As noticed above, the enlistment for the contract is for the
convenience of the CPWD. The same entitles the contractor to tender
papers but it does not to confer any right for being awarded the
contract.
16. In view of the above, the petition is dismissed as being
unmerited. All pending applications are disposed of.
VIBHU BAKHRU, J
MAY 16, 2019
MK
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