ORDER
R. Balasubramanian, J.
1. The writ petitioner challenges the validity of Condition No. 16 found incorporated in the tender floated by the first respondent calling for bids in respect of 'Annual Maintenance Contract' (AMC) as violative of Article 14 of the Constitution of India and being opposed to principles of public tender laid down by the Hon'ble Supreme Court of India. The Neyveli Lignite Corporation, hereinafter referred to as the 'Corporation', annually invites persons to submit tenders for awarding Annual Maintenance Contracts (AMC) and non-Maintenance Contracts (NMC). 'NMC' contracts are described as 'A' Schedule contracts and 'AMC' contracts are described as 'B' Schedule contracts. There is an annexure to the tender form issued for awarding 'AMC' contracts, Condition No. 16 with the note meant only for 'B' Schedule contracts is under attack in the writ petition, condition No. 16 in the tender is extracted hereunder:
'16. Cases of Equal Binding: In case of equal bidding, the successful bidder will be selected on the following priority:
(i) Priority-1 : Other things being equal, preference will be given to contractors who have surrendered their land/house for NLC projects. In case of more than one such qualified persons, decision will be taken based on LOT system among land/House evictees only.
(ii) Priority-2: If no land displaced person as above is available, preference will be given to SC/ST contractors. In case of more than one such persons, decision will be taken based on LOT system among SC/ST candidates only.
(iii) Priority-3: If no displaced/SC/ST bidders are available, preference will be given to NLC Registered contractor. In case of more than one such persons, decision will be taken based on LOT system among the NLC Registered contractors only.
(iv) Priority-4: If no bidder is available in the above categories lot will be conducted among the available bidders.
(v) Any person can avail such concession only once in a financial year in a particular unit.
(vi) Firms/companies are not eligible for such concession.'
The relevant clause in the note to 'B' Schedule contract is Clause 1.(v). It is extracted hereundcr:
'(v) Any offer less that (+) 1.0% (plus one percentage) over the estimate value will be summarily rejected.'
2. The grounds of attack on the condition referred to above is on the following lines:
In case of awarding work on public tender, utmost public interest should be in the mind condition 1.(v) in the note annexed to AMC contract prohibits a person from quoting less than the estimated value plus 1% in other words, if a person is inclined to quote less than the estimated value plus 1% his tender would be summarily rejected; by doing so and by consequently giving room to every person to quote a minimum of 1% above the estimated value; the company is likely to spend more than what must be spent actually for having the work done; by the above device, the Corporation wanted to bring a number of people on equal platform to eliminate persons, with high caliber, who had quoted higher than the minimum referred to above by invoking condition No. 16 of the tender schedule; in other words, such a condition namely 1.(v) in the note to the AMC contract is solely with a view to shield vested interested persons; such condition namely, condition No. 1.(v) is arbitrary and capricious and therefore cannot be sustained; likewise the classification of persons under the priority columns in condition No. 16 of the tender is not reasonable and there is no rationale to the object sought to be achieved, which violates Article 14 of the Constitution of India.
3. The above referred to condition and classification are sought to be sustained by the NLC on the following grounds:
As a company it is very keen and desirous to protect it's interest fully ; to achieve that it can take a policy decision; the contract concerned in this case is purely a labour contract; the labourers must be paid minimum wages as per law; if minimum wages are not paid to them by the contractor, then it is likely to have an adverse impact on the interest of the Company; the duration of the contract is available with the company; the company is in a position to gauge the volume of work and the labourers to be employed; in that context the company is in a position to work out the wages payable to all the workmen during the currency of the contract; having that alone in mind, the company introduced condition No. 1(v) in the note annexed to AMC contract; this was done solely with a view to see that the contractor successfully completes the work; the condition that the bid amount should be 1% over the estimated value would be reasonable margin which the contractor can have after spending on the labourers; if anybody is allowed to bid in the tender quoting lesser amount than the indicated one, then there is every possibility of a breach of contract being committed by the contractors, since he may not be in a portion to pay the minimum wages payable to the workmen; the company is an expanding organization and as statistics stand, they are likely to acquire vast extend of land every year; there is an agreed scheme in and by which persons displaced on account of such acquisition should be rehabilitated; the company owes a duty to provide rehabilitation to such displaced persons; only in that context the priority classification has been brought in; therefore it cannot be said that the classification is arbitrary and irrational; it is not as though all the contracts for every year are being given to person who come under the priority classification alone and in fact the statistics for the year 2001-2002 would show that as many as 547 out of 608 contracts for that year had been allowed to persons outside the priority classification.
4. Mr. K. Sakthivel learned counsel representing the parties impleaded pursuant to the orders in W.P.M.P. Nos. 60636 to 60638 of 2002, in addition to the points put forward by the company, would contend in support of the conditions as follows:
The writ petitioner is a defunct and non-functioning society; therefore it cannot maintain a writ petition; the society has many numbers, who come under the project affected families; they are benefited by the priority class; the society cannot therefore advance argument against their interest; the person, who had sworn to an affidavit is not in the address mentioned; therefore he has come to court with unclean hands; the classification is reasonable and has nexus to the object sought to be achieved; under Article 38 of the Constitution of India, the State shall strive to promote the welfare of the people and therefore the rehabilitation scheme finalized by the company is consultation with the Government cannot be said to be violative of any provision of law.
5. Mrs. Nalini Chidambaram learned senior counsel appearing for the party impleaded pursuant to the order in W.M.P. No. 62192 of 2000 would contend as follows;-
There is no challenge in the writ petition to condition No. 1(v) in the note attached to the AMC contract; therefore the petitioner should not be allowed to advance argument on the validity of the said condition, since it would amount to going beyond the scope of the writ petition; under Article 15(4) of the Constitution of India, the State has the power to make a special provision for the advancement of people belonging to SC & ST; therefore priority No. 2 under condition No. 16 cannot be said to the violative of any provision of law; the Court has to only see whether the classification is reasonable and as a nexus for the object sought to be achieved; if both are found, then the classification will be sustained and there is no arbitrariness in the action of the Company.
6. Absence of reasonableness and fairness; presence of arbitrariness, mala fides and biased favouritism, if made as grounds in attacking an action of the State, then there will be no difficulty at all in invoking Article 14 of the Constitution of India to interfere with the order challenged. There cannot be any exception to such well settled position in law. NLC, though may not be a State by itself, yet it will be an instrumentality of the State. Therefore there is no doubt that their action also can be tested on any one of the grounds referred to above. It is they, who have floated the tenders. They want to have there work to be done by somebody else. With that view in mind, the Corporation wants to award contracts to third parties. That is the reason for floating tenders. NLC is an industry mining coal. Their operations are huge and large. Their operation is by specialised people. It is not as though the operation, which they carry on, is of an ordinary nature. As already stated, the volume of their work and their area of operation are very large and vast. We are concerned in this case with AMC contracts. There is no dispute that for AMC contracts only man power is involved. No materials of the contractor are involved. The volume of the work to be done under each contract to be awarded and the nature of work which each contractor has to do are purely within the knowledge of the Corporation. Nobody can dispute that in such a situation the Company would be the master of the situation and it is the Judge of it's own cause. How the Company should have their work done by others does not lie in the mouth of others. The Hon'ble Supreme Court of India in the Judgment reported in Raunaq International Ltd. v. I.V.R. Construction Ltd., had held as follows:-
'The award of a contract, whether it is by a Private Party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations. These would be:
(1) the price at which the other side is willing to do the work;
(2) whether the goods or service offered are of the requisite specifications;
(3) Whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfill the requirements of the job is also important;
(4) The ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5) Past experience of the tenderer and whether he had successfully completed similar work earlier;
(6) Time which will be taken to deliver the goods or services; and often.
(7) The ability of the tenderer to lake follow-up action, rectify defects or to give post-contract services.
Even when the State or a Public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or a agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.'
In my opinion, consideration No. 3 referred to above would apply to the case on hand.
Paragraph 4.1 under caption 'D Labour' contains a positive direction that the contractor should pay 'Wages' to every worker as notified by the management from time to time. In other words, 'wages' payable to the workmen to be employed in the work stands assured. It is needless to State that this clause being a part of the tender condition the contractor is bound by it. In the contest of the above tender condition, paragraph 1(v) of note (1) to AMC contract should be considered. The stand of the Company in this contest is that, by including paragraph 1.(v) in the important note, they want to assure that the work entrusted to a contractor should not suffer for the inability of the 'contractor to pay wages to the workmen as per the above tender condition and that is the reason they wanted every intending tenderer to quote at the minimum of the estimated value (+)1 % . According to the Corporation taking in to account the volume of the work to be done and the employment of the labour force, this 1 % would be a reasonable margin for the contractor, so that he would not feel the pinch of money at any point of time during the course of the contract to meet the payment of wages to the workers. In other words, according to the Company, if such a clause is not incorporated, then it is likely to result in people quoting anything above the estimated value and less than 1%. If such a tender is accepted, then the possibility of the contractor committing breach of the contract in the middle on account of his inability to pay the workers' wages cannot be totally ruled out. This stand of the Corporation, in my opinion, cannot be said to be arbitrary, capricious or unreasonable. At the risk of repetition, I say that the company, which is keen to have the work entrusted to a contractor to be completed without ant disruption during the course of the contract, is reasonably justified in saying that any tender which quotes less than the estimated value plus 1% shall be rejected. In other words, the criteria referred to above is solely with a view to protect the interest if the company. It is not as though the above referred to condition in the important note does prevent anybody to quote over and above the indicated rate. It is only prevents people from quoting less than the indicated rate. Therefore when there is no prohibition for anyone to compete in the tender, the mere indication in the note that tenders of any person which is less than the rate quoted there under would be rejected summarily would amount to denial of equal opportunity to all persons. There is nothing to show in the tender conditions or in the note referred to above that only the lowest tenderer would be accepted. There may be instances where though there may be lowest tenderer taking into account his caliber, performance and the past record, the company can reject it and yet go for a person of more caliber and capacity, who had quoted a high price. Looking from any angle, I do not find any ground to hold paragraph 1.(v) in the note (1) to AMC contract is violative of any provision of law. By chance there may be more than one person, who had quoted the minimum namely, estimated value (+) 1%. But that is not the direct impact of paragraph 1.(v). The validity of any provision on the touch stone of Article 14 of the Constitution of India should be tested with reference to the very provision itself. In other words, if the provision by itself discriminates persons similarly placed, then it can be said that it is violative of Article 14 of the Constitution of India. But as I already stated, paragraph 1.(v) by itself does not discriminate any person at all. What all it provides for is that the company will not accept the tender of any person, who quotes below the rate indicated in that paragraph. By way of summing up, I conclude that paragraph 1.(v) of the important note to 'B schedule' is not violative of any provision of law.
8. Coming now to tender condition No. 16, it comes into operation when cases of equal bidding arise. I am not prepared to read equal bidding in tender condition No. 16 to mean would be there only when there are equal bids at the rate mentioned in paragraph 1.(v) of the note to 'B schedule' contract. There is a possibility of many people quoting at the same rate namely, 'X' (+) 1%. There may also be a possibility of persons quoting in excess of 'X' (+) 1% namely, 'X' (+) 2% or 'X' (+) 3%. Many may be 'X' (+) 2% or 'X' (+) 3% and therefore each group would be equal bidders. Therefore tender condition No. 16 is not meant by itself to operate only in respect of tenderers, who quote the price indicated in Paragraph 1.(v) of the note to 'B Schedule' contract and it is available to be operated in all contingencies where there is equal bid. Once there us equal bidding, then the Corporation wants to give priority to the people brought under each of the priorities. There are three priorities and the persons grouped under each priority is a separate class by themselves. Each classifications has a intelligible differentia and has a nexus with the object sought to be achieved. The stand of the company is, priority No. 1 is only to alleviate sufferings of people, who have been affected by their displacement. They are called as Project Affected Families. This means, in the course of acquiring large extent of lands for the mining operation, several families have come to be totally uprooted from their holdings and they were displaced. Most of them were not qualified to get employment any where. Providing rehabilitation measures to persons put to such sufferings is not an unrecognized one. The Hon'ble Supreme Court of India in the judgment reported in was dealing with a case of persons losing possession of lands use to the same being taken over by National Thermal Power Corporation for setting up a super thermal power plant. In that case, the Hon'ble Supreme Court of India indicated certain measures to be taken to rehabilitate the persons dispossessed. Right from that date, each State Government, in whose jurisdiction persons are forced to suffer on account of industry expansion, is providing some rehabilitory measures. In the case on hand Rehabilitation Measures' for the Project Affected Persons. This is an approved rehabilitation Scheme with the concurrence of the State of Tamil Nadu. Paragraph 3.6.2(d) of this Scheme provides as follows:
'Certain contract works will be identified and awarded to PAFs with certain concessions, provided they form a society and all the members of the society are also of PAPs'
Therefore giving priority to displaced persons coming under category 'priority-1' cannot be said to be opposed to any provision of law. On the other hand, it is definitely a measure in rehabilitating people, who had suffered for the ultimate development of NLC. Therefore I find that there is reasonableness and rationale in grouping people as referred to above. Priorities 2 and 3 deal with preference to be given to SC & ST contractors and NLC registered contractors. Even in respect of these two priorities, I find that there are no materials to even indicate that the two classifications were made with any mala fide motive and it is bad on account of absence of reasonableness or fairness. As already stated, each classification stand by itself and each classification can be differentiated on intelligible differentia. NLC is under a legal obligation to provide rehabilitation measures to displaced persons. Giving priority to SC & ST contractors is also not shown to be against any provision of law. The Counter affidavit of NLC shows that in the allotment of contract for the year 2001-2002, as many as 547 contracts out of 608 (both AMC and NMC) were awarded to persons outside the priority class. Condition No. 16 for 'B Schedule' contract was always there. Paragraph 1.(v) in the note alone appears to have been added recently. It is not possible to sustain the argument of the learned senior counsel for the petitioner that by combined use of tender condition No. 16 and paragraph 1.(v) of the note to 'B Schedule' contract, there is a total denial of opportunity to all persons and it confines the opening only to a class of persons. Under these circumstances, I do not find any ground in law or on facts made out to interfere with tender condition No. 16 and paragraph 1.(v) of the opening note attached to 'B Schedule' contract.
9. Last but not the least, another valid point had been raised is that the petitioner society is defunct from the year 2000 onwards and it's registration had not been renewed thereafter. The said party had filed a paper book containing a certificate dated 5.11.2002 issued by the Registrar of Societies, Cuddalore. It shows that the registration of the petitioner society was valid upto 1999-2000 and thereafter it had not only been renewed but the society is also not functioning. On that ground alone, the petitioner is not entitled to maintain the writ petition. In addition to that, another point is also raised by the same party by saying that in the petitioner sangam there are persons belonging to Project Affected Families coming under Prioroty-1 (tender condition No. 16) and condition No. 16 and Paragraph 1.(v) of the note are to their advantage. No resolution by the petitioner to sangam is before this Court authorising the petitioner to file a writ petition. Therefore prima facie the petitioner is acting adverse to the interest of persons belonging to Project Affected Families advancing arguments in derogation to the interest of its' members, how belong to Project Affected Families and that cannot be allowed to do so. For this purpose, the learned counsel relies upon the judgment of this court reported in Association of Evening classes Teaching Staff v. Director of Collegiate Education, 2000 (4) CTC 31. The learned Judge had laid down the law in Paragraph 9 of the said judgment and it is extracted hereunder:
'9. The learned senior counsel appearing for the petitioner in replying to the preliminary objection submitted that this writ petition is filed for the benefit of the members only and so the submission of the learned Senior Counsel appearing for Respondents 4 to 12 cannot be countenanced. As rightly submitted by the learned senior counsel appearing for the respondent 4 to 12, the petitioner-association cannot agitate the matter which is not acceptable to all the members, as some members are willing to accept the procedure contemplated by the 2nd respondent-trust for appointment of lecturers. The learned senior counsel for respondents 4 to 12 has also submitted that there is no resolution at all authorizing the deponent to file this writ petition. Though an affidavit was filed by the deponent to say that there was a resolution and though the learned senior counsel for the petitioner submitted that he would produce the court. So I have to take it that no resolution was passed authorising the deponent to file this writ petition. So this writ petition at the instance of the association cannot be sustained as some of the members have come forward with the plea that the same is against their interest.'
Therefore on the two grounds reflected in this judgment also, the writ petition is liable to be dismissed. Accordingly the writ petition fails and it is dismissed. No Costs. Consequently the connected W.M.Ps are closed.