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Dipak Handling Agency vs The Minerals And Metals Trading … on 14 August, 1997

Orissa High Court
Dipak Handling Agency vs The Minerals And Metals Trading … on 14 August, 1997
Equivalent citations: 1997 II OLR 284
Author: D Patnaik
Bench: D Patnaik, P Misra


D.M. Patnaik, J.

1. The petitioner assails the action of the opposite party No. 1, the Minerals and Metals Trading Corporation Ltd., Barbil (for short “M.M.T.C.”) cancelling his tender and giving the contract to the opposite party No. 2, as arbitrary and violating the principles of natural justice.

2. The petitioner’s case is, opposite party No. 1 is a Government of India Undertaking Corporation. It floated tender dated 15.3.1996 under Annexure-1 inviting offer from approved contractors for loading (by hand and machine), levelling of iron ore unloaded in their dumps at Barbil, Banspani, Barajamda, Noamundi and Gua. The petitioner, a contractor, along with others including opposite party No. 2 submitted tenders after observing all formalities relating thereto and tenders were scheduled to be opened on 25.3.1996 at 4’O clock. It is his further case that the tenders were not opened as per the scheduled time but surprisingly on 22.4.1996 the petitioner received letter of the opposite party No. 1 intimating the cancellation of his tender with a request to take back earnest money of Rs. 2000/-. This was done under Annexure-3. Since no reason was assigned of such cancellation, the petitioner by his letter dated
26.4.1996 (Annexure-4) requested opposite party No. 1 to intimate the reason for cancellation of tender. The opposite party No. 2 under Annexure-7 dated 1.5.1996 intimated him that they had the right to reject any tender without assigning reason. By order dated 23.4.1996, the opposite party No. 1 after entering into negotiation with opposite party No. 1 awarded the contract to him. This action of the opposite party No. 1 is challenged in this writ petition.

3. Opposite party No. 1 filed a counter, wherein it admitted the facts pleaded in the writ petition with regard to the petitioner’s submitting the tender and the petitioner’s price being the lowest among others, and giving the same in favour of the opposite party No. 2 as claimed by the petitioner. The grounds taken justifying such cancellation are that all the tenders were opened at the scheduled time. On verification of the tenders so far as the same related to Barbil, the petitioner did not fulfil Clause 18(h) of the Schedule to the tender which stipulated that the petitioner should have a labour licence as provided under Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970. It was further found to be deficient in absence of P.F.Account and Income-Tax Clearance Certificate. It is further pleaded that the petitioner did not furnish any document, etc. for satisfaction of the opposite party No. 1, in regard to its experience in handling work, labourer and availability of machines and other infrastructural support, etc. It is further their case that such was the case with other contractors except opposite party No. 2 and therefore tender for Barbil station was cancelled. That apart, it also took the plea even this petitioner-Firm was given sufficient time to supply the documents required in the tender form yet it did not supply the same.

4. Mr. S.S. Das, learned counsel for the petitioner strenuously urged that the petitioner’s firm along with others submitted tenders and even though the opposite party No. 1 cancelled tender of all, it being an instrumentality of the State, should not have violated principles of natural justice by not inviting the petitioner for negotiation notwithstanding the fact that the rate quoted by the petitioner was the lowest of all.

5. However, the main thrust of argument of Mr. Das centered round the reason given by the opposite party No. 1 in cancelling tender of the petitioner. This related to non-compliance of conditions as prescribed under Clause 18(h) of the Schedule to the tender. The contention of Mr. Das is that Section 12 of the Contract Labour (Regulation and Abolition) Act, 1970 (for short ‘the Act’) prescribed that a contractor shall furnish a licence for the Contract Labour before execution of any work, but not at the time of consideration of the tender Mr. Das while drawing attention to Rule 21 and 21(1) of the Central Rules under the said Act and the prescribed form, submitted that it is apparently clear that intention of the legislature was not that it will be obligatory on the part of the contractor to furnish such licence at the time of tender and therefore according to him, prescribing such clause at the time of calling for tender and that too before issuance of work order is beyond the competency of the authority and can be said to be arbitrary.

6. Mr. G.K. Agrawal, learned counsel for opposite party No. 1, and Mr. B.B. Mohanty, learned counsel for opposite party No. 2, while countering argument of Mr. Das supported action of the opposite party No. 1 as justified. Rival contention need examination.

7. Admittedly the period of the contract was for one year and the same was to expire on 31.3.1997. Though point was raised by the counsel for opposite party that the matter has become infructuous because of efflux of time as stipulated, Mr. Das urged that since it is not the case of the petitioner alone but this would affect even other contractors and that since it is a question of interpretation of a clause touching the contractual obligation between parties, the same should be clarified which shall be a clear guidance for any future action by persons and/or authority calling for tender in similar cases. Therefore, we have proposed to deal with the point raised by Mr. Das in the following manner.

8. Licensing of Contractors come under Chapter – IV of the Act. Section 11 deal with appointment of licensing officers with which we are not presently concerned, since there is no doubt in regard to that point Section 12 of the Act is quoted for better appreciation.

“Licensing of contractors – (1) With effect from such date as the appropriate Government may, by notification in the Official Gazette, appoint, no contractor to whom this Act applies, shall undertake or execute any work through contract labour except under and in accordance with a licence issued in that behalf by the licensing officer.

(2) Subject to the provisions of this Act. a licence under Sub-section (1) may contain such conditions including, in particular. conditions as to hours of work, fixation of wages and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules, if any, made under Section 35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as security for the due performance of the conditions as may be prescribed.”

The words employed in the section and the meaning conveyed thereunder are plain and unambiguous. This nowhere states that a contractor shall not be registered under any department of the Government, unless he possess a licence nor his offer to take up any work shall not be considered in the absence of such a licence. The plain language employed conveys the meaning that it would be a sufficient compliance with provisions of this section, if a contractor possess such licence before he undertakes or executes any work. For government department/authorities it shall be sufficient compliance if the contractor is asked to furnish the same within a reasonable time granted to him but in no case the same should be insisted upon to be furnished along with the tender.

That apart, Sub-section (2) of the said section also supports such interpretation since it prescribes that the licence under Sub-section (1) may contain conditions including, in particular, conditions, as to hours of work, fixation of wages and other essential amenities in respect of contract labour. It is the common knowledge that rate of wages and hours for work by labourers vary from work to work and the same under no circumstances can be similar to one another and this obviously mean for the purpose of the Act to have licence under Section 12 is not to have a licence for all times to come, but a licence at different time as and when so required keeping in view the nature and period of contract undertaken and number of persons employed.

Section 35 of the Act gives power to the appropriate Government to frame rules relating to various matters named thereunder, including prescribing the form of application for grant or renewal of licence under Section 13.

9. Pursuant to this making power, the Central Government has framed the Contract Labour (Regulation and Abolition) Central Rules, 1971. Rule 21 of the Rules prescribes that every application for licence by the contractor shall be in triplicate, in Form-IV. Sub-rule (2) prescribes that application for grant of such licence shall be accompanied by a certificate by the principal emplower in Form-V to the effect that the applicant has been employed by him as a contractor in relation to his establishment and that he undertakes to be bound by all the provisions of the Act and the rules made thereunder. This clearly shows, as rightly pointed by Mr. Das, that unless a contractor has been awarded a contract it would not be possible on his part to get a licence since a certificate for engagement of the contractor is an absolute necessary pre-requisite before applying for licence to the licensing authority. Therefore, it was not justified on the part of the opposite party No. 1 not to consider the tender of the petitioner on the ground for non-submission of licence along with tender. It is made clear that such condition is inconsistent with the purpose and legislative intent of the provisions of the Contract Labour Act. Therefore, insertion of such a clause while calling for tender is bad and cancelling of tender at that stage can be said to be without authority of law and therefore we make it clear that the opposite party No. 1 and any public authority or Government organisation or instrumentalities of the State should not make it condition precedent while considering tender, though it will be competent on the part of those authorities to include such requirement as one of the terms in the agreement to be entered and it would be always necessary for such authority to demand a licence from the contractor after accepting of his tender, but before issuance of work order. In every case. the contractor whose tender has been accepted should be given reasonable time to produce licence and what should be the reasonable time would always depend on the nature and type of work for which tender is called for.

10. Having gone through the counter of the opposite party No. 1 and having heard learned counsel for opposite parties, we are of the view that we have not found any infirmity incorporating other conditions in the tender call notice.

11. Mr. Das on instruction submitted that the petitioner has not submitted any tender for the coming year. Since the petitioner has not submitted tender for 1997-98, we are unable to pass any order for considering his case along with orders and it would be unjust at this stage to direct the opposite party No. 1 to consider his case since admittedly he is not a competitor along with others.

12. In the result, the writ petition is disposed of subject to the aforesaid observation. Parties to bear their own cost.

P.K. Misra, J.

13. I agree.

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