The learned counsel for the petitioners has argued
that "level playing field" is being denied and fair
competition amongst the registered electrical contractors
is prevented to the advantage of the civil contractors
while awarding contracts by the Public Works Department
of the State. Therefore, at this juncture, it is
apposite to quote observations of the Hon'ble Apex Court
in the matter of Reliance Energy Ltd. & another V/s
Maharashtra State Road Development Corporation Ltd. &
others [ (2007) 8 SCC 1 ]. In paragraph no.36 of this
judgment, the Hon'ble Supreme Court has explained the
concept of "level playing field" and has held thus:
"......... "Level playing field" is an important
concept while construing Article 19(1)(g) of the
Constitution. It is this doctrine which is
invoked by REL/HDEC in the present case. When
Article 19(1)(g) confers fundamental right to
carry on business to a company, it is entitled to
invoke the said doctrine of "level playing
field". We may clarify that this doctrine is,
however, subject to public interest. In the
world of globalisation, competition is an
important factor to be kept in mind. The
doctrine of "level playing field" is an important
doctrine which is embodied in Article 19(1)(g) of
the Constitution. "This is because the said
doctrine provides space within which equally
placed competitors are allowed to bid so as to
subserve the larger public interest.
"Globalisation", in essence, is liberalisation of
trade. Today India has dismantled licence raj.
The economic reforms introduced after 1992 have
brought in the concept of "globalisation".
Decisions or acts which result in unequal and
discriminatory treatment, would violate the
doctrine of "level playing field" embodied in
Article 19(1)(g). Time has come, therefore, to
say that Article 14 which refers to the principle
of "equality" should not be read as a stand alone
item but it should be read in conjunction with
Article 21 which embodies several aspects of
life. There is one more aspect which needs to be
mentioned in the matter of implementation of the
aforestated doctrine of "level playing field".
According to Lord Goldsmith, commitment to the
"rule of law" is the heart of parliamentary
democracy. One of the important elements of the
"rule of law" is legal certainty. Article 14
applies to government policies and if the policy
or act of the Government, even in contractual
matters, fails to satisfy the test of
"reasonableness", then such an act or decision
would be unconstitutional."
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.3196/2013
Aurangabad Electrical Contractors
Association,
Versus
The State of Maharashtra,
CORAM: R.M. BORDE &
A.M. BADAR, JJ.
JUDGMENT PRONOUNCED ON 10.04.2014
Citation; 2015(1) MHLJ 182
Heard learned counsel for the parties. Rule. Rule
is made returnable forthwith and with consent of learned
counsel for the parties, the petition is taken up for
final hearing.
2]
By the instant petition, petitioners, who are
associations of electrical contractors, are praying for
setting
aside
Government
resolution
bearing
No.CAT1097/693/building2 dated 27.1.2004 (Exhibit A)
and Government circular No.CAT03/11/CN/109/building2
dated 24.3.2011 (Exhibit B) issued by Public Works
Department of the respondent State of Maharashtra.
3]
By the impugned Government resolution dated
27.1.2004, the State Government has resolved that
composite tender for civil and electrical work needs to
be invited for construction of buildings costing Rs.1/
crore or more and by circular dated 24.3.2011, the Public
Works Department of the State, after noting that the
provisions of Government resolution dated 27.1.2004 are
not being followed by giving excuse that estimate of
electrical work is not received in time, has directed the
officers of the Public Works Department to follow the
said Government resolution.
The learned counsel for petitioners vehemently
4]
argued that by issuing the impugned Government resolution
dated 27.1.2004, the State Government has violated the
right of electrical contractors to compete and the
Government resolution as well as the circular issued by
the State is violative of the provisions of Articles14
and 19(1)(g) of the Constitution of India. According to
the learned counsel for petitioners, action of the State
in issuing a single tender for civil as well as
electrical work of the project has virtually reduced the
electrical contractors to the position of mere sub
contractor of the main civil contractor and such action
is discriminatory. By such composite tender, there will
not be proper competition for electrical part of the work
and only limited number of electrical contractors are
being involved in this method of issuing composite tender
for both works. The learned counsel for the petitioners
further pointed out judgment of the Kerala High Court in
Writ Petition (Civil) Nos.28113/2009H and 30556/2009L
decided on 19.11.2010 by the learned Single Judge of that
Court and contended that in similar situation, the Kerala
High Court has held such an action of issuing composite
tender for civil and electrical work together as
violative of the provisions of Articles 14 and 19(1)(g)
of the Constitution of India.
5]
Per contra, according to the learned AGP, the State
Government has taken a policy decision of issuing
composite tender for getting civil as well as electrical
work done in order to save time as well as cost of
project. According to the learned AGP, such policy
decision of the State cannot be branded as discriminatory
or arbitrary as it is taken in the interest of getting
the project work completed in a time bound frame.
Considering the rival submissions, it is necessary
6]
to examine the impugned Government resolution as well as
circular in detail. Considering the response filed by
the State in this case, it is not in dispute that the
electrical contractors have been given the licence and
registration by the Chief Engineer (Electrical) under the
Public Works Department and the electrical wing of the
Public Works Department decides the criteria for
registration, qualification and eligibility of the
electrical contractors. Similarly, it is not in dispute
that prior to 2004, the State Government used to issue
separate tenders for getting the electrical work as well
as civil work of a project done through the registered
contractors. It was from the year 2004, system of
issuing composite tender for getting civil and electrical
work of the project done from the concerned contractor is
adopted by the State Government and the response filed by
the respondent State further shows that this system is
adopted for saving time as well as cost. Careful perusal
of the Government resolution dated 27.1.2004 shows that
the State has adopted policy of issuing composite tender
for civil and electrical work if the project is costing
Rs.1/ crore or more by assigning the reason that
tendering of the civil and electrical work simultaneously
and carrying the electrical work with the civil work of
the project curtails delay in completion of the project.
The object as reflected from the Government resolution
seems to be avoidance of delay caused because of delay in
execution of electrical work, breaking of constructed
portion for electrical fittings and ducting etc. Clause
(1) of this impugned Government resolution dated
27.1.2004 provides that generally the Executive Engineer
(Civil) should issue a composite tender notice for
inviting quotation for undertaking civil and electrical
works of the project. As per this condition, if
electrical work is major component of the project of a
nature of installation of centralized airconditioning
system or installation of elevators, then the tender
notice may be issued by the electrical department of the
PWD. According to Clause (5) of this Government
resolution, while submitting quotations, if concerned
civil contractor is not having registration as electrical
contractor, then in such a case, such civil contractor /
tenderer can enter in joint venture with the electrical
contractor of that class or he can get the work done
through the registered electrical contractor by engaging
such electrical contractor as his subcontractor. This
Clause (5) of the impugned Government resolution makes it
clear that the civil contractor shall be responsible for
completion of civil as well as electrical work of the
concerned project. Even Clause (8) of the impugned
Government resolution demonstrates that the main
contractor shall be responsible for all electrical work
including obtaining of supply of electricity, permissions
or no objection certificates from the Municipal
Corporations or Electric Supply Companies, etc.
7]
Now let us consider the impugned Government circular
dated 24.3.2011 issued by the Public Works Department.
After noting that the Government resolution dated
27.1.2004 is not followed by the Department with an
excuse that estimate for electrical work of the project
is not received in time, the Public Works Department has
categorically directed all its officers to issue
composite tender for civil and electrical work as
directed by the Government resolution dated 27.1.2004.
It is further directed in the said circular that the
officers of the Public Works Department should intimate
about the project to be tendered to the Electrical
Department at least a month in advance so as to enable
the Electrical Department to give estimate of the
electrical work. The said circular further provides that
if estimate is not received from the Electrical
Department, then the Superintending Engineer or the
Executive Engineer of the PWD should get the estimate
prepared from private electrical consultant and names of
defaulting officers of the Electrical Department be
informed to the Chief Engineer (Electrical) of the PWD.
8]
The main challenge to the Government resolution and
circular is that the issuance of composite tender for
getting the civil as well as electrical work for the
project done from the successful contractor will result
in monopoly of civil contractors to the exclusion of
electrical contractors. Exactly identical situation
arose in State of Kerala where the State Government by
issuing circular had proposed that all building works
when the estimate amount exceeds Rs.1/ crore, both civil
and electrical work be tendered together as a single
tender. This action of State of Kerala of tendering all
civil works and electrical works simultaneously was
subject matter of challenge in Writ Petition (Civil) Nos.
28113/2009H and 30556/2009L and the learned Single
Judge of Kerala High Court while allowing those writ
petitions by judgment dated 19.11.2010 has held thus in
paragraph no.18 of the said judgment as under:
"Judged in the light of the above principles, the
question to be considered herein is whether the
circulars Exts.P3, P6 and P8 provide any level
playing field for any electrical contractors.
The system of inviting tender only through the
civil contractor will effectively deny any
opportunity to submit tender for electrical
contractors independently. The civil contractor
will have to name the electrical contractor,
going by Ext.P8 circular. It is therefore
entirely upto the civil contractor to quote the
rates for execution of the work and name the
electrical contractors. The chance of the
electrical contractor getting any work entirely
depends upon the volition of the civil
contractor. The same will result in absence of
any competition from among electrical
contractors, as the contractors will not be able
to compete for the work on their own by
submitting the tender. Therefore, the prospect
of civil contractors getting monopoly in the
field is writ large. They can on their own whims
and fancies, join along with any of the
electrical contractors whom they name, in the
tenders. Even though it is provided that
registration of electrical contractor /
electrician will be a precondition for carrying
out the electrical works in PWD, that alone will
not help the electrical contractors to
participate in the tender, as pointed out
already. Thus, the same violates the concept of
level playing field resulting in violation of
Article 19(1)(g) of the Constitution, as held in
Reliance Energy's case (supra). Article 14 will
be attracted while testing the validity of a
Government policy. On both counts the circulars
are invalid and arbitrary and discriminatory."
We are informed by the learned counsel appearing for
both the parties that this judgment of the Kerala High
Court has attained finality as it is not carried in
appeal by the State of Kerala.
9]
Reverting to the case in hand, let us consider
whether the action of the State in Public Works
Department in issuing impugned Government resolution and
circular for tendering civil work and electrical work of
the project simultaneously by issuing composite tender is
sustainable in the eyes of law. It hardly needs to
mention that Article 14 of the Constitution embodies the
principle of nondiscrimination whereas Article 21 refers
to right to life and it includes fair opportunity.
Article 19(1)(g) confers fundamental right to carry on
business. By now it is well settled that the principle
of "judicial review" cannot be denied even in contractual
matters in which the Government exercises its contractual
power in order to prevent arbitrariness in State action.
The action of the State in the matter of awarding
contract must be free from arbitrariness and it must be
nondiscriminatory. If tested on this touchstone, then
it is revealed that condition no.5 of the impugned
Government resolution dated 27.1.2004 cannot be said to
be nondiscriminatory, fair or nonarbitrary. The
condition no.5 of the impugned Government resolution
demonstrates that when composite tender for civil work
and electrical work is invited, only civil contractors
are eligible to apply and they are entitled to enter into
joint venture with the registered electrical contractor
or they can appoint registered electrical contractor as
subcontractor for getting the electrical part of the
tendered work done. It needs to mention here that as per
PWD Manual, electrical contractors have been given the
licence and registration by the electrical wing of the
Public Works Department. Thus, with implementation of
the impugned Government resolution, electrical
contractors who are independent and distinct class in
themselves are deprived to enter into contract with the
Government independently. It is a matter of common
knowledge that civil work is always a major component in
building construction and awarding absolute discretion to
the civil contractor to select the electrical contractor
for undertaking electrical portion of the work results in
preventing open and fair competition amongst the
registered electrical contractors. By inviting composite
tender for a project work, valuable right of registered
electrical contractors to participate in the tender
process is lost as the main civil contract would have
absolute right and authority to dictate terms to the
electrical contractors.
10] Perusal of the impugned circular dated 24.3.2011
issued by the Public Works Department further makes it
clear that the electrical contractors are reduced to
position of subcontractors of the main civil contractor.
This circular which provides that the Public Works
Department (Civil) should intimate about the project work
which is to be tendered to the electrical wing for
preparation of estimate of electrical work, at least one
month in advance and in case of failure of the electrical
wing of the PWD to submit such estimate, then such
estimate may be procured by engaging private consultant;
refers electrical contractor as subcontractor of the
main civil contractor. What is intended by the Public
Works Department by issuing impugned Government
resolution and circular is that the quotation in respect
of the tendered work should be submitted by the main
civil contractor by engaging registered electrical
contractor as his subcontractor for performing
electrical work of the project. Thus, virtually the
registered electrical contractors with the Public Works
Department (Electrical) are prevented from competing in
the tender process as generally in all building projects,
the civil work undoubtedly cost much more than the cost
of electrical work. In this way, the impugned Government
resolution and circular is creating monopoly of civil
contractors to the exclusion of electrical contractors.
11] The learned counsel for the petitioners has argued
that "level playing field" is being denied and fair
competition amongst the registered electrical contractors
is prevented to the advantage of the civil contractors
while awarding contracts by the Public Works Department
of the State. Therefore, at this juncture, it is
apposite to quote observations of the Hon'ble Apex Court
in the matter of Reliance Energy Ltd. & another V/s
Maharashtra State Road Development Corporation Ltd. &
others [ (2007) 8 SCC 1 ]. In paragraph no.36 of this
judgment, the Hon'ble Supreme Court has explained the
concept of "level playing field" and has held thus:
"......... "Level playing field" is an important
concept while construing Article 19(1)(g) of the
Constitution. It is this doctrine which is
invoked by REL/HDEC in the present case. When
Article 19(1)(g) confers fundamental right to
carry on business to a company, it is entitled to
invoke the said doctrine of "level playing
field". We may clarify that this doctrine is,
however, subject to public interest. In the
world of globalisation, competition is an
important factor to be kept in mind. The
doctrine of "level playing field" is an important
doctrine which is embodied in Article 19(1)(g) of
the Constitution. "This is because the said
doctrine provides space within which equally
placed competitors are allowed to bid so as to
subserve
the
larger
public
interest.
"Globalisation", in essence, is liberalisation of
trade. Today India has dismantled licence raj.
The economic reforms introduced after 1992 have
brought in the concept of "globalisation".
Decisions or acts which result in unequal and
discriminatory treatment, would violate the
doctrine of "level playing field" embodied in
Article 19(1)(g). Time has come, therefore, to
say that Article 14 which refers to the principle
of "equality" should not be read as a stand alone
item but it should be read in conjunction with
Article 21 which embodies several aspects of
life. There is one more aspect which needs to be
mentioned in the matter of implementation of the
aforestated doctrine of "level playing field".
According to Lord Goldsmith, commitment to the
"rule of law" is the heart of parliamentary
democracy. One of the important elements of the
"rule of law" is legal certainty. Article 14
applies to government policies and if the policy
or act of the Government, even in contractual
matters, fails to satisfy the test of
"reasonableness", then such an act or decision
would be unconstitutional."
12] Undoubtedly, the impugned Government resolution
dated 27.1.2004 issued by the Public Works Department
denies "level playing field" to the electrical
contractors inasmuch as entire discretion is conferred
upon the civil contractors to choose electrical
contractor for entering in joint venture or for
appointment as subcontractor for getting the electrical
work of the project executed through him. Such action
is obviously unjust, unfair and arbitrary. The impugned
Government resolution and circular exclude almost all
electrical contractors from carrying on their business by
entering in fair competition by participating in tender
process for a project of the respondent State and,
therefore, such action as contemplated in the impugned
Government resolution and circular is liable to be
adjudicated as void. As the electrical contractors are
virtually prevented from getting any electrical work of
the tender project unless they are allowed by the civil
contractors to join in composite tender, by agreeing with
the view taken by the learned Single Judge of Kerala High
Court, we hold that the impugned Government resolution
and circular are violative of the provisions of Articles
14, 19(1)(g) and 21 of the Constitution of India and,
therefore, they are liable to be quashed and set aside.
We accordingly order so. It is made clear that quashing
of the impugned Government resolution and circular will
not affect the works already tendered during the pendency
of present writ petition. Rule is made absolute in above
terms. No order as to costs.
(R.M. BORDE, J.)
(A.M. BADAR, J.)
ndk/aeca
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