Allowed

Cherian Varkey Construction Company (Pvt) Ltd. v. State of Kerala

Kerala HC17 Feb 2020WA/281/2020

Case brief

AI extract

What is this about?

A bridge tender dispute concerned price preference for a labour contract co-operative society. The court allowed the appeals and set aside the common interim order permitting tender proceedings to continue. It left the Government Order's validity to the writ court and requested expeditious disposal of the petitions.

What did the court decide?

Common interim order set aside; parties given liberty to seek early disposal of the writ petitions.

Cherian Varkey Construction Company (Pvt) Ltd. Vs State… — Cooperative Societies | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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MONDAY, THE 17TH DAY OF FEBRUARY 2020 / 28TH MAGHA, 1941

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WA.No.281 OF 2020

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AGAINST THE ORDER IN WP(C) 3189/2020(W) OF HIGH COURT OF KERALA

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APPELLANT/PETITIONER:

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CHERIAN VARKEY CONSTRUCTION COMPANY (PVT) LTD. ENGINEERS AND CONTRACTORS, VTH FLOOR, ALFA PLAZA, K.P.VALLON ROAD, KADAVANTHRA, KOCHI-682 020, REPRESENTED BY ITS DIRECTOR, REJI M.CHERIAN.

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BY ADVS. SRI.SANTHOSH MATHEW SRI.ARUN THOMAS SRI.JENNIS STEPHEN SRI.VIJAY V. PAUL SMT.KARTHIKA MARIA SRI.ANIL SEBASTIAN PULICKEL SMT.DIVYA SARA GEORGE SMT.JAISY ELZA JOE SHRI.ABI BENNY AREECKAL

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RESPONDENTS/RESPONDENTS:

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1 STATE OF KERALA REPRESENTED BY ITS SECRETARY TO GOVERNMENT, PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001.

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2 KERALA ROAD FUND BOARD, PROJECT MANAGEMENT UNIT, SREEBALA BUILDINGS, TC 11/339, 5TH FLOOR, KESTON ROAD, NANTHANCODE, KOWDIAR P.O., THIRUVANANTHAPURAM-695 003, REPRESENTED BY ITS PROJECT MANAGER.

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3 URALUNGAL LABOUR CONTRACT CO-OPERATIVE SOCIETY LTD.NO.10957, MADAPPALLY COLLEGE P.O., VADAKARA, KOZHIKODE-686 546, REPRESENTED BY ITS PRESIDENT.

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SRI.K.V.SOHAN STATE ATTORNEY FOR R1, SRI.V.RAJASEKHARAN NAIR FOR R2, SRI.M SASINDRAN, STANDING COUNSEL FOR R3

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 17.02.2020 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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JUDGMENT

S.MANIKUMAR, CJ

Cherian Varkey Construction Company (Pvt.) Ltd., Engineers and Contractors, represented by its Director, the appellant herein, has filed W.P.(C) No.3189/2020 for a writ of mandamus, commanding Kerala Road Fund Board, Project Management Unit, Thiruvananthapuram, respondent No.2 therein, to finalise the tender proceedings strictly, in accordance with the terms of NIT and without any price preference to the Uralungal Labour Contract Co-operative Society Ltd., hereinafter called 'ULCC Society Ltd.'

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Pending disposal of the said writ petition, writ petitioner, has sought for an interim direction to the Kerala Road Fund Board, Thiruvananthapuram, respondent No.2 therein, not to award the work covered by Exts.P1 to the ULCC Society Ltd., the 3^rd respondent therein.

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Cherian Varkey Construction Company (Pvt.) Ltd., has also filed another writ petition No.3760/2020, to call for the records relating to Ext.P6 Government Order, restoring the priority benefits provided as per G.O.(MS) No.135/97/Co-op dated 13.11.1997 to Uralungal Labour

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Contract Co-operative Society and to quash the same. Other prayers

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sought for are as follows:

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Call for the records leading to Ext. P6 and issue a writ of certiorari, or any other appropriate writ, order or direction quashing the same.

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Issue a writ of mandamus or any other appropriate writ, order, or direction declaring that Ext. P6 is arbitrary, illegal and violative of Part III of the Constitution of India.

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Issue a writ of mandamus or any other appropriate writ, order, or direction declaring that the 6th respondent ULCC is not entitled to claim any benefits under Ext. P3 for works exceeding Rs. 10 lakhs as held in Ext. P4 judgment.

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Call for the records leading to Ext. P5 and issue a writ of certiorari or any other appropriate writ, order or direction quashing the same in so far as it extends any benefit to the 6th respondent ULCC for works exceeding Rs. 10 lakhs.

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Issue a writ of mandamus or any other appropriate writ, order, or direction declaring that Ext. P5 is arbitrary, illegal and violative of Part III of the Constitution of India in so far as it extends any benefit to the 6th respondent ULCC for works exceeding Rs. 10 lakhs.

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Issue a writ of mandamus or any other appropriate writ, order, or direction declaring that for projects funded by the 5th respondent KIIFB, preferential treatment cannot be extended to the 6^th respondent ULCC on the basis of Exts. P3, P5, and P6.

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Issue a writ of mandamus or any other appropriate writ, order, or direction declaring that clause 8 (b) (i) of Ext. P3 is arbitrary, illegal and violative of Part III of the Constitution of India in so far as it extends any benefit to the 6th respondent ULCC for works exceeding Rs. 10 lakhs.

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Pending disposal of W.P.(C) No.3760/2020, Cherian Varkey

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Construction Company (Pvt.) Ltd., petitioner therein, has sought for the following interim reliefs:

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Direct the Public Works Department, Kerala Road Fund Board and Kerala Infrastructure Investment Fund Board not to award any work exceeding Rs. 10 lakhs to the 6th respondent by extending any benefit under Ext. P3 or Ext. P6, pending disposal of this Writ Petition.

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Stay the operation of Ext. P3 and Ext. P6 in so far as it provides for price preference to the 6th respondent ULCC for works exceeding Rs. 10 lakhs called for by the Public Works Department, Kerala Road Fund Board and Kerala Infrastructure Investment Fund Board.

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Direct the Kerala Infrastructure Investment Fund Board to produce the terms and conditions including interest rates prescribed for the Public Works Department to avail financial assistance for projects and specifically clarify whether the Kerala Infrastructure Investment Fund Board has approved the practice of providing preferential treatment in pricing to the 6th respondent ULCC alone.

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Direct the 6th respondent ULCC to produce the proceedings from Registrar of Co-Operation, eligibility certificate from Joint Registrar and work certificate from concerned Assistant Registrar which they have submitted in response to Ext. P1 Notice Inviting Tender.

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Direct the 6th respondent ULCC to produce the details of the works that are currently being undertaken by the 6th respondent ULCC.

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Record of proceedings shows that in W.P.(C) No.3189/2020, writ

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court passed an order that, finalisation of the tender, if any, shall stand

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deferred till 7.2.2020. Thereafter W.P.(C) No.3189/2020 was taken up along with W.P.(C) No.3760/2020 filed to quash Ext.P6 Government Order dated 2.8.2008 and after taking note of the decision of this Court in Ramesh P. and another v. T.Asokan and others reported in [2018 (5) KHC 189] and Government Orders, a learned Single Judge vacated the interim order granted on 5.2.2020 in W.P.(C) No.3189/2020, which read thus:

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“ (9). Having considered the contentions advanced on all sides and having perused the documents, I notice that Ext.P3 specifically provided that societies which have secured special orders enhancing pecuniary limits will not be covered by the limits as provided in Ext.P3. In view of the contention that the 6^th respondent Society is permitted by its byelaws to take up works in any part of the State as also in view of the fact that the petitioner has participated in the tender process knowing of the special privilege granted to the 6 respondent by ExtP6 order, the continuation of the interim order is not justified.

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In the above view of the matter, the interim order granted in W.P.(C) No.3189/2020 shall stand vacated. The respondents will be free to proceed with the tendering process in accordance with the notice inviting tenders and the applicable government orders.

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The respondents shall also place appropriate pleadings on record. Post on 4.3.2020.”

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Being aggrieved by the impugned order made in W.P.(C) Nos.3189 & 3760 of 2020 dated 12^th February, 2020, instant writ appeals,

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W.A Nos.281 & 282 of 2020 are filed. The issue involved in both the writ appeals relate to the challenge made in Government Order viz., G.O.(MS) 181/08/Co-op. dated 02.8.2008, by which, the Authority has granted work to ULCC Society, Kozhikode. As pleadings and contentions are common, both the appeals are taken together and disposed of by this common judgment.

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Inviting the attention of this Court to the prayers made in the petitions, Mr.Santhosh Mathew, learned counsel for appellant submitted that Class A contractors/accredited agencies were permitted to participate in e- tender by online for the work, viz., KIIFB 2016-17 construction of Perumbalam - Panavally bridge in Alappuzha District, with the probable amount of contract at Rs.90,77,55,153/-. As per the tender notification, all Government Orders and rules were made applicable.

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Appellant quoted a sum of Rs.95,20,30,846/- whereas, ULCC Society Ltd., offered Rs.97,12,98,011/- and the difference comes to Rs.1,92,67,165/-. He further submitted that Government have issued G.O. (MS) No.135/97/Co-op. dated 13.11.1997, entrusting certain works on preferential terms and conditions.

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Referring to paragraph No.6 of the said Government Order, learned counsel for appellant, submitted that initially Uralungal Labour

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Contract Co-operative Society Ltd., was given preference in certain items

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of work and minimum and maximum value was also set out in the said Government Order, which is reproduced hereunder:

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“(6) The limits upto which a particular item of work may be entrusted

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to the societies and the total value of works a Society may have on hand at any time will be regulated as follows:

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Class of Society	Limit of each item of work	Maximum value of works on hand at a time	Audit Classification	Average number of members employed by the Society at least 200 days in one year for the last three years of last year
A class	Rs.10.00 lakhs	Rs.50.00 lakhs	A or B	150
B Class	Rs.5.00 lakhs	Rs.25.00 lakhs	A or B	100
C class	Rs.2.00 lakhs	Rs.10.00 lakhs	B or C	25

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NOTE:- (i) The estimated cost will be reckoned for purposes of assessing the maximum cost of work which a Society should furnish a certificate showing the cost of works they have on hand duly countersigned by the Assistant Registrar of Co-operative Societies (General) concerned of the Co-operative Department. The certificate should also indicate that the tenders already awarded to the Society have not been sub-let.

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G.O. The cost of works so undertaken will not be taken into account while reckoning the maximum costs of works on hand at any time for purposes of entrusting the work at concessional rates.

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Type of works:-

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(7) The following types of works may be entrusted to the Labour Contract Cooperative Societies as per this Orders. (a) Earth works at all types, simple masonry works relating to minor and medium irrigation projects and construction of roads. (b) Simple building works like construction of school buildings, hostels, etc. (c) Maintenance and minor repairs of Roads and Buildings. (d) Supply in bulk of quantities of building materials, stone blast and sand. (e) Other items of works not involving skilled labour. (f) Where skilled work and unskilled works are combined, the work will be awarded at the discretion of the work awarding authority.

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Procedure for and conditions of award of contract.

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(8) (a) There will be regular tender for the works, and the Societies should present tenders in the manner prescribed by the work awarding authority. Where a society quotes lowest rates, it will be entitled to the work at the quoted rate.

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(b) In cases where a private contractor has quoted the lowest rate, the Labour Contact Co-operative Society which has quoted for the work will be given preference in awarding contracts as follows.

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(i) When the lowest tender is from a private contractor, Labour Contract Co-

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operative Society will be awarded the work at 10% above the lowest tender, if the Society is willing to do the work. The work awarding Authority should ascertain the willingness of the Labour Contract Society in writing.”

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Mr.Santhosh Mathew, learned counsel for appellant, further submitted that in clause No.7(c) of Ext.P3, initially the Government entrusted the work to ULCC Society, for simple building works, which included maintenance and repairs of roads and buildings. He also brought to our notice to various Government Orders, by which, Government have made amendments enabling ULCC Society, to undertake the work with minimum and maximum limit.

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In this context, attention of this Court was invited to Ext.P6 Government Order viz., G.O.(MS) 181/08/Co-op. dated 02.8.2008. Perusal of the Government Order shows that the restriction in maximum price limits, as per the earlier Government order has been removed.

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Government Order dated 02.08.2008:

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GOVERNMENT OF KERALA

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Abstract

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Co-operation Department – Granting permission to the Uralungal Labour Contract Co-operative Society to take up and execute any work without the restriction of financial limits and to restore the priority benefits provided in the G.O.(Ms.) No.135/97/Co-op. Dated 13.11.1997 – Sanctioned – Orders issued.

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CO-OPERATION (C) DEPARTMENT

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G.O.(Ms) 181/08/Co-op. dated, Thiruvananthapuram 02.08.2008

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Read: (1) G.O.(Ms) No.135/97/Co-op dated 13.11.1997 (2) Letter no.MT (1) 31228/2006 dated 18.09.2006 of the Registrar of Co-operative Societies, Thiruvananthapuram.

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ORDER

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In the circumstances, explained by the Registrar of Cooperative Societies in her letter read as second paper, Government are pleased to restore the priority benefits provided in the order first cited to the Uralungal Labour Contract Co-operative Society and to permit the society to take up and execute any work without the restriction of financial limits.

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By Order of the Governor,

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ROZARIO ELIZABETH, ADDITIONAL SECRETARY TO GOVERNMENT

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The Registrar of Co-operative Societies, Thiruvananthapuram. President, Uralungal Labour Contract Co-operative Society,

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Madappally College, Vadakara, Kozhikode – 673102. The Joint Registrar of Co-operative Societies (General), Kozhikode. Finance Department (This issues with the approval of the Council

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of Ministers)

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Public Works Department (vide Note no.23153/H3/06/PWD

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dated 26.03.2008)

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The Accountant General (Audit), Kerala, Thiruvananthapuram. Stock File / Office copy

Forwarded/ by Order,

Section Officer

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Inviting attention of this Court to Article 14 of the Constitution of India and in particular, equality of opportunity, Mr.Santhosh Mathew,, submitted that, government orders giving priority to ULCC Society, affect the right of the appellant to carry on with business. According to the learned counsel for appellant, Government Orders issued imposes some restrictions on the right conferred under Article 19(1)(g) of the Constitution of India, and the same cannot be done by issuing executive orders under Article 162 of the Constitution of India, whereas it can only be done by way of enactment. According to him, Government have no powers to issue the above said executive orders.

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Referring to the judgement passed in W.P.(C) Nos.26206/16 & 26489/18 dated 2/2/2018 and 19.9.2018 respectively, learned counsel for appellant submitted that though in the writ petitions, challenge was made to the Government Orders, vis-a-vis the tender invited, while the correctness of the said Government Order was not tested or gone into in the aforesaid writ petitions, for the reason that the said Government Order granting benefit to the ULCC Society Ltd., were not notified.

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Mr.Santhosh Mathew, further submitted that the correctness of Ext.P6 Government Order, viz.,G.O.(MS) No.181/08/Co-op. dated

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2.8.2008 on the anvil of Articles 13, 14 & 19 of the Constitution of India, was addressed by the writ court. But the writ court proceeded on the premise that validity of the Government Orders has been considered in earlier proceedings and therefore, be applicable to the instant writ petitions.

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Learned counsel for appellant, also submitted that though the contract is stated to have been awarded, yet the same has not reached a finality for the reason that the Contractor/ULCC Society Ltd., who is the 3^rd respondent in W.P.(C) No.3189/2020, has not executed the formal contract and furnished other requirements as per the notice inviting tender.

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Responding to the above submissions, Mr.M.Sasindran, learned counsel for ULCC Ltd., submitted that the appellant is well aware of the validity of the Government Order dated 13.11.1997 and other modified Government Orders granting benefits to Labour Contract Societies without any restriction on contract value, and therefore, the contract for construction of the bridges and buildings, awarded to ULCC Society Ltd. is in accordance with law.

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Inviting attention of this court to the decision of the Apex Court

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in Raunaq International Ltd. v. I.V.R. Constructions Ltd., reported in [1999 KHC 916], Mr.M.Sasindran, learned counsel for the Contractor, submitted that when there is no allegation of malafides, or any other illegality and therefore, it is trite that, interim orders should not be granted in this appeal. He further submitted that, when the contract is already awarded, interim order of stay of further proceedings at this juncture would jeopardise the very purpose and unless and until the construction of Perumbalam - Panavally bridge in Alappuzha District is done before the monsoon, it will cause hardship to the community at large. Paragraphs 14 to 19 of Raunaq International Ltd. (supra) referred to by the learned counsel is reproduced:

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“14. Where there is an allegation of mala fides or an allegation that the contract has been entered into for collateral purposes, and the Court is satisfied on the material before it, that the allegation needs further examination, the Court would be entitled to entertain the petition. But even here, the Court must weigh the consequences in balance before granting interim orders.

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Where the decision making process has been structured and the tender conditions set out the requirements, the Court is entitled to examine whether these requirements have been considered. However, if any relaxation is granted for bona fide reasons, the tender conditions permit such relaxation and the decision is arrived at for legitimate reasons after a fair consideration of all offers, the Court should hesitate to

WA.Nos.281 of 2020

intervene.

It is also necessary to remember that price may not always be the sole criterion for awarding a contract. Often when an evaluation committee of experts is appointed to evaluate offers, the expert committee's special knowledge plays a decisive role in deciding which is the best offer. Price offered is only one of the criteria. The past record of the tenderers, the quality of the goods or services which are offered, assessing such quality on the basis of the past performance of the tenderer, its market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a much better quality of work, can be legitimately paid in order to secure proper performance of the contract and good quality of work which is as much in public interest as a low price. The Court should not substitute its own decision for the decision of an expert evaluation committee.

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Normally before such a project is undertaking, a detailed consideration of the need, viability, financing and cost effectiveness of the proposed project and offers received takes place at various levels in the Government. If there is a good reason why the project should not be undertaken, then the time to object is at the time when the same is under consideration and before a final decision is taken to undertake the project. If breach of law in the execution of the project is apprehended, then it is at the stage when the viability of the project is being considered that the objection before the appropriate authorities including the Court must be raised. We would expect that if such objection or material is placed before the Government the same would be considered before a final decision is taken. It is common experience that considerable time is spent by the authorities concerned before a final decision is taken regarding the execution of a public project. This is the appropriate time

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when all aspects and all objections should be considered. It is only when valid objections are not taken into account or ignored that the Court may intervene. Even so, the Court should be moved at the earliest possible opportunity. Belated petitions should not be entertained.

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The same considerations must weigh with the Court when interim orders are passed in such petitions. The party at whose instance interim orders are obtained has to be made accountable for the consequences of the interim order. The interim order could delay the project, jettison finely worked financial arrangements and escalate costs. Hence the petitioner asking for interim orders, in appropriate cases should be asked to provide security for any increase in cost as a result of such delay, or any damages suffered by the opposite party in consequence of an interim order. Otherwise public detriment may outweigh public benefit in granting such interim orders. Stay order or injunction order, if issued, must be moulded to provide for restitution.

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A somewhat different approach may be required in the cases of award of a contract by the Government for the purchase of items for its use. Judicial review would be permissible only on the established grounds for such review including mala fides, arbitrariness or unreasonableness of the Wednesbury variety. Balance of convenience would play a major role in moulding interim relief.”

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Mr.M.Sasindran, learned counsel for ULCC Ltd., also invited attention of this Court to the reliefs sought for in the writ petitions and submitted that Ext.P1 e-tender notice has not been challenged in W.P.(C) No.3189/2020 and interim order of stay was granted only in W.P.(C) No.3189/2020. The prayers sought for in W.P.(C) No.3189/2020 are as

WA.Nos.281 of 2020

follows:

“i) Issue a writ of mandamus or any other appropriate writ, order or direction, commanding the 2^nd respondent to finalise the tender proceedings strictly in accordance with the terms of NIT and without any price preference to the ULCC Society.

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ii) To issue such other appropriate writ, order or direction which this Hon'ble Court may deem fit and just in the circumstance of the case.”

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Writ court was not inclined to grant any interim relief in W.P.(C) No.3760/2020, wherein various reliefs are sought for as extracted supra. Mr.M.Sasindran, learned counsel for ULCC Ltd., further submitted that in the absence of any challenge to the e-tender notice, by which, contract has been awarded to ULCC Ltd. and since the interim order was granted only in the writ petition seeking compliance of NIT in the matter of the award of contract alone, and the appellant having participated in the contract knowing fully well that the society is entitled to get benefit of the Government orders, writ petitions can be heard on their merit irrespective of award of contract to the society, especially in view of the larger questions raised in W.P.(C) No.3760/2020. Therefore, there is no need to interfere with the interim order dated 12.2.2020.

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Mr.K.V.Sohan, learned State Attorney submitted that, appellant

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was fully aware of the terms and conditions of the e-tender notice, by which preference given to the society is discernible and since the appellant has participated in the tender, at this juncture, it is not open to the appellant to to challenge the notice inviting tender. Subsequent Government Orders are also issued and that there is no challenge to the same. It is also his contention that, at this juncture, if the proceedings are stayed, public will be aggrieved. According to learned State Attorney, stay may not be granted with the finalisation of the e-tender and for a logical conclusion of the same.

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By way of reply, Mr.Santhosh Mathew, learned counsel for appellant, contended that the necessity of challenge to G.O.(MS) No.135/97/C o-op. dated 13.11.1997 was felt, when the Government have decided to permit Class A contractors/accredited agencies to participate in e-tender. According to him, the grounds raised in terms of Articles 13, 14 and 19 of the Constitution of India were not addressed by the writ court and if the tender is allowed to be finalised, nothing remains in the writ petitions to be adjudicated.

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Heard learned counsel for parties and perused the material available on record.

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Articles 13, 14 and 19 of the Constitution of India relied upon

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by Mr.Santhosh Mathew, learned counsel for appellant, are reproduced

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hereunder:

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“13. Laws inconsistent with or in derogation of the fundamental rights.

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(1) All laws in force in the territory of India immediately before the commencement

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of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void,

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(2) The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void.

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(3) In this article, unless the context otherwise requires,-

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(a) “law" includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of law;

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(b) "laws in force" includes laws passed or made by a Legislature or olher competent authority in the territory of India before the commencement of this Constitution and not previously repealed, notwithstanding that any such law or any part thereof may not be then in operation either at all or in particular areas.

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[(4) Nothing in this article shall apply to any amendment of this Constitution made under Article 368.]

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14 . Equality before law .-The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.

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Protection of certain rights regarding freedom of speech,

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etc.- (1) All citizens shall have the right--

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(a) to freedom of speech and expression.

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(b) to assemble peaceably and without arms.

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(d) to move freely throughout the territory of India

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(e) to reside and settle in any part of the territory of India

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(g) to practise any profession, or to carry on any occupation, trade or business.

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(g) to practice any profession, or to carry on any occupation, trade or business.

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(2) Nothing in sub-clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub-clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with Foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.

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(3) Nothing in sub-clause (b) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the sovereignty and integrity of India or public order, reasonable restrictions on the exercise of the right conferred by the said sub clause.

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(4) Nothing in sub-clause (c) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of "[the sovereignty and integrity of India or] public order

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or morality, reasonable restrictions on the exercise of the right conferred by the said

sub-clause.

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(5) Nothing in [sub-clauses (d) and (e)] of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub-clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe.

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(6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, [nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,-

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(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or

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(ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise].”

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Government have issued G.O.(MS) 181/08/Co-op. dated 02.8.2008, by which, Uralungal Co-operative Society is permitted to take up and execute any works without the restriction of the financial limits. Clause 8 of Ext.P3 Government Order dated 13.11.1997, giving preference to the Labour Contract Co-operative Societies, in participating in e-tender, as quoted above, relates to the price

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preference of 10%, howver subject to the financial limitation prescribed thereunder.

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Subsequent Government Orders issued in this regard are relevant and they are as follows (except Government Order dated

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2.8.2008, which is extracted above).

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Government Order dated 13.11.1997:

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GOVERNMENT OF KERALA

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Abstract

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Co-operation Labour Contract Co-operative Societies – Entrustment of works on preferential term and conditions – revised – Orders issued.

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CO-OPERATION (C), DEPARTMENT

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G.O.(Ms) No.135/97/Co-op. Dated, Thiruvananthapuram, 13-11-1997

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Read: (1) G.O.(MS) No.284/74/AD dated 28-10-74

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(2) G.O.(MS) No.136/78/AD dated 12-5-78

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(3) G.O.(MS) No.231/84/AD dated 4-8-84

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(4) G.O.(MS) No.68/92/Co-op. dated 6-8-92

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(5) Correspondence resting with Lr. No.MT (1) 21469/91 dated 9-2-95

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from the Registrar of Co-op. Societies, Trivandrum.

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ORDER

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In the G.O. read as first paper above, orders were issued prescribing the terms and conditions for awarding Government works to Labour Contract Co-operative Societies. The monetary limit stipulated in para (4) of the G.O. were revised as per the G.O. read as 2^nd & 3^rd papers above.

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The Registrar of Co-operative Societies has pointed out that there has been a long standing demand for the revision of the limits of works that can be entrusted with Labour Contract Co-operative Societies and the limit of advance fixed by the Government due to the considerable increase in the cost of labour and materials and also in

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view of the revision of the schedule of Rates for works by the Public Works Department several times after issuance of G.O. (MS) 231/84/AD dated 4-8-84 prescribing the limits for each item of work and maximum value of works on hand at any time by the Labour Contract Co-operative Societies. Considering the practical difficulties experienced by the Labour Contract Co-operative Societies the Registrar of Co-operative Societies has suggested certain amendments to the Rules issued in G.O. (MS) 284/74/AD dated 28-10-74 as amended in G.O.(MS) 241/84/AD dated 4-8-84 and G.O.(MS) 68/92/Co-op. dated 6-8-92.

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Government have examined the proposal in detail and are pleased to issue the following orders in suppression of all existing orders.

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Eligibility

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Labour Contract Co-operative Societies should satisfy the following conditions in order to become eligible for the concessions contemplated in these orders:

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(i) The Societies should have at let 50 (fifty) actual labourers as members and a paid up Share Capital of Rs.10,000/- (Rupees Ten thousand only).

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(ii) Members should be actual labourers, but sympathisers may be admitted upto 10% of the total membership, subject to a maximum of seven members.

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(iii) The number of sympathiser members in the Committee of the management shall not exceed two.

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(iv) Membership should be confined to those residing in the area of operation of the society as provided in its Byelaws.

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(v) Society should undertake works only within the area of operation as provided in the Byelaws.

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(vi) The Society is eligible to undertake a contract work under this G.O. only where the concerned Joint Registrar of Co-operative Societies certifies regarding item (i) to (v) above and also that the Society is working satisfactorily and in case of elder Societies that they have been satisfactorily discharging their liabilities to Government in respect of works entrusted earlier.

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5. Classification and Limits.

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(a) The Registrar of Co-operative Societies will classify the Societies into A, B and C Classes as per the following guidelines.

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'A' Class

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The Society should have a minimum paid up Share Capital of Rs.25,000/- with 200 members or more and it should have a standing of 3 years with average value of works taken up annually for the last three years more than Rs.20/- lakhs and should have carried out works satisfactorily in the past and should have a paid Secretary or Manager and a work supervisor as its employees.

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'B' Class

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The Society should have a minimum paid up Share Capital of Rs.15,000/- with 150 members or more and it should have a standing of 2 years with average value of works taken up annually for the last two years more than Rs.10/- lakhs and should have carried out works satisfactorily in the past and should have a paid Secretary or Manager and a work Supervisor as its employees.

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'C' Class

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The Society should have a minimum paid up Share Capital of Rs.10,000/- with 50 members or more and should have a paid Secretary or Manager as its employees.

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The Classification will be reviewed once in three years by the Registrar of Co-operative Societies based on the specific recommendation of the Joint Registrar of Co-operative Societies of the District concerned recording the reasons thereafter.

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(5) (b) Notwithstanding anything contained in clause (5) (a) above, in order to award work to the newly registered Labour Contract Cooperative Societies, the classification of which have not been done, the Registrar of Co-operative Societies will include them under Class 'C'. Such classification shall be revised later depending on their audit classification and experience in undertaking works.

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(6)The limits upto which a particular item of work may be entrusted to the societies and the total value of works a Society may have on hand at any time will be regulated as follows:

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Class of	Limit of each item of work	Maximum value of works on hand	Audit Classificatio	Average number of members
Society		at a time	n	employed by the Society at least 200 days in one year for the last three years of lastyear
A class	Rs.10.00 lakhs	Rs.50.00 lakhs	A or B	150
B class	Rs.5.00 lakhs	Rs.25.00 lakhs	A or B	100
C class	Rs.2.00 lakhs	Rs.10.00 lakhs	B or C	25

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NOTE:(i) The estimated cost will be reckoned for purposes of assessing the maximum cost of work which a Society should furnish a certificate showing the cost of works they have on hand duly countersigned by the Assistant Registrar of Co-operative Societies (General) concerned of the Co-operative Department. The certificate should also indicate that the tenders already awarded to the Society have not been sub-let.

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(ii) The Labour Contract Co-operative Societies will be at liberty to take up works as any other private contractor on the basis of the tenders submitted by them without availing themselves of the concessions contemplated in this G.O. The cost of works so undertaken will not be taken into account while reckoning the maximum costs of works on hand at any time for purposes of entrusting the work at concessional rates.

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Type of works:-

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(7) The following types of works may be entrusted to the Labour Contract Co- operative Societies as per this Orders.

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(a) Earth works at all types, simple masonry works relating to minor and medium irrigation projects and construction of roads.

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(b) Simple building works like construction of school buildings, hostels, etc.

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(d) Supply in bulk of quantities of building materials, stone blast and sand.

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(e) Other items of works not involving skilled labour.

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(f) Where skilled work and unskilled works are combined, the work will be awarded at the discretion of the work awarding authority.

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Procedure for and conditions of award of contract.

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(b) In cases where a private contractor has quoted the lowest rate, the Labour Contact Co-operative Society which has quoted for the work will be given preference in awarding contracts as follows.

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(i) When the lowest tender is from a private contractor, Labour Contract Co-operative Society will be awarded the work at 10% above the lowest tender, if the Society is willing to do the work. The work awarding Authority should ascertain the willingness of the Labour Contract Society in writing.

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(ii) Where the quotation of a Labour Contract Co-operative Society is below the rate quoted by a private contractor, the work will be awarded to the Labour Contract Co-operative Society at the rate quoted by it.

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(iii) Where two Societies quote the same rate, negotiations will be held and the Contract awarded to the Society which is willing to do the work at the lowest rate, failing which lots will be taken in the presence of the representatives of the concerned societies and the work will be awarded at the rates arrived as above.

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(iv) In cases where societies are unwilling to take up the work at the rates arrived at as above, the contract will be awarded to the lowest tenderor at the quoted rate.

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(9) Advance upto 20% of the cost of works will be given to the societies, subject to a maximum of Rs.20,000/- in respect of all works. The advance will be recovered in part bills sanctioned to the Society in such way that at no times will be outstanding advances exceed 20% of the balanced amount of work to be finished. During each financial year interest will be charged on the advance at the bank rate prevailing as on the last day of February of the proceedings financial year.

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(10) The Societies will be exempted from payment of security deposit and earnest money. The usual retention of 10% of each bill will, however, be made to guard against default in the satisfactory completion work.

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(11) Materials like Cement, wire etc. will be sold to the societies according to the normal rules.

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(12) Tools and equipments will be hired out to the Societies according to rules.

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(13) The Societies should maintain proper accounts in respect of each item of work.

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(14) The Societies should maintain a Work Register.

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(15) The Executive Engineer will arrange for technical supervision and guidance to the Societies within their limits free of cost, but without prejudice to the interest of the Department.

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(16) The Societies shall not sub-let the work entrusted to them execution.

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(17) It shall be competent for the awarding authority to cancel the work allotted to a society on violation of any of the conditions. But, before doing so they should consult the concerned Joint Registrar of Cooperative Societies.

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(18) However, this Order will not affect the Labour Contract Cooperative Societies which are enjoying the concessions of enhanced limited by special order of Government.

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By order of the Governor

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G.RAJAMMAL

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Joint Secretary to Govt.

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The Registrar of Co-Op. Societies, Thiruvananthapuram. The Chief Engineer (Roads & Bridges)/(B&LW)/(Irrigation), Trivandrum. The Chief Engineer, Kerala Water Authority, Thiruvananthapuram. The Chief Engineer, Harbour Engineering Department. The Accountant General (A&E)/(Audit), Kerala (this issues

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with the concurrence of Fin. Dept.)

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The Finance Department (vide U.O.No.67117/AWA 1/97/Fin. dt.25-9-97) The Public Works Department (vide U.O.No.37261/H3/97/PED dated 26-10-97) P.S. to Minister for Elec. & Co-operation C.A. to Secretary (Co-op.) Stock file/O.C.

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Forwarded/By order Sd/Section Officer.

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Government Order dated 19.03.2004:

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GOVERNMENT OF KERALA

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Abstract

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Tender and arrangement of contracts - preferential terms and conditions to Labour Contract Co-operative Societies - Revised orders issued.

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PUBLIC WORKS (H) DEPARTMENT

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G.O(MS) No.44/04/PWD Dated, Thiruvananthapuram,

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19.03.2004

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Read: (1) G.O.(MS) No.135/97/Co-op. Dated 13.11.1997.

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(2) Lr.No. C8A-362108/01/Gl.Dated 27.10.2001.

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(3) G.O.(Ms) No.4/02/Co-op. Dated 28.1.2002.

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(4) Several representations received from various associations of contractors.

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O R D E R

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In the Government Order read as 1^st paper above it was ordered that when the lowest tender is from a private contractor the Labour contract Co-operative Society will be awarded the work at 10% above the lowest tender if the society is willing to do the work.

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In the letter read as third paper above Chief Engineer (Roads & Bridges) has reported that those orders have resulted in many eligible and capable contractors participating in tenders have lost their interest in giving tender offers by depositing earnest money deposit and by purchasing tender schedule and that consequently the very purpose of inviting seals and secret tendering system is being defeated. Chief Engineer has hence recommended modification of the orders.

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Government have considered the matter in the light of the report of the chief Engineer. The procedure to be followed in the matter of execution of works through tenders and arrangement of contracts are prescribed in the Kerala Public Works Department Manual. The provisions of the manual do not generally permit negotiation, after tenders are opened. (para15.7.12 of Manual) Negotiations are permitted,

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if at all only with the lowest tenderer. The Manual provides that as per rule no negotiation should be carried on which will be contrary to the principles of tendering by which unfair advantage is gained by a tenderer after opening of tenders through such negotiation (para 15.7.12)

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The orders issued in the Government orders read as 1^st and 3^rd papers above confer a preordained right to a Society to be awarded a work on the strength of its mere participation in a tender and its opening of tender it makes a post tender offer of 10% above that of the lowest tender. This provision is against the basic tenets of tendering process and is against natural justice. The PWD manual clearly prohibits a procedure of negotiating with anybody other than the lowest tenderer. The only concession that can be given in terms of the provision of the Manual is that if a tender offer of a society is not more than 10% over that of the lowest tenderer, such tender could be treated as the lowest for award of contract. In other words if Co-operative Societies are participating in a tender, then if the tender amount is not more than 10% of the lowest tender then, the society will get a price preference and quality itself to be the lowest tenderer.

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Government in the Local Self Government Department has issued orders in Circular No.34947/DPI/03 dated 04.8.03 stating that clause 8 (b)(1) and clause 10 of the Government order read as 1^st paper above will not be applicable to contracts under Local Self Government institutions.

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In the above circumstances, Government, after having examined the matter in detail are pleased to order that clause 8(b)(1) of the Government Order read as 1^st paper above would not be applicable to contracts administered by the Public Works Department. Labour Contract Co-operative Societies which participate in the tenders floated by PWD would instead be eligible for a 10% price preference in the matter of tenders issued by PWD.

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By Order of the Governor

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Babu Jacob

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Additional Chief Secretary

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To	All	Chief	Engineers	of	PWD,	Thiruvananthapuram.
	Acco	untant	General	(AEE/	Audit)	Kerala,
	Thiru	vanantha	puram/Trissur.

Finance Department

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Co-operation Department.

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Copy to:PS to M(W) PA to ACS PA to Secretary PA to Additional Secretary.

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Forwarded/By order

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Section Officer.

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Government Order dated 30.7.2014

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GOVERNMENT OF KERALA

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Abstract

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Finance Department - Revised guidelines for execution of public works and selection of Government accredited agencies - orders Issued - Regarding

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FINANCE (INDUSTRIES & PUBLIC WORKS 'B) DEPARTMENT

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G.O.(P)No.311/74/Fin. Dated,Thiruvananthapuram 3O/O7/2O14

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Read 1) G.O. (P) No.408 /07/Fin dated 07/09/2007

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1. G.O. (MS) No. 133/07/LSGD dated 18.5.2007

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3)G.o(Rt)No.8989/10/Fin,dated l4.12.2010

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ORDER

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Government vide reference 1st cited, issued general guidelines for executing public works through various accredited agencies other than Public works Department. Local Self Government Department also issued similar guidelines for execution of public works of LSG institutions vide reference 2^nd cited. However, these guidelines are found to be not comprehensive and consequently financially imprudent decisions are taken while entrusting works to such agencies.

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On reviewing the existing orders, Government felt that, better clarity is required on this issue, to ensure equity, transparency and prudence. It was also observed that certain important aspects like criteria for selecting these agencies, the powers of such agencies for issuing technical sanction and acceptance of tender, execution of works using alternate technology, mode of payment etc need further consideration and clarity.

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Government vide reference third cited, appointed an expert committee to study above issues. Based on the recommendations of the committee and the modifications suggested by the chief Technical Examiner and chief Engineers

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thereupon, the following revised guidelines for execution of public works through Government accredited agencies are ordered with immediate effect.

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Hereinafter accredited agencies authorised by Government in Finance Department shall alone be eligible for execution of public works of Government Departments and organizations. The guidelines for selection of accredited Agencies, categorizations of such agencies and related matters are given in Annexure.l. The guidelines to be followed while entrusting the works to such accredited agencies are detailed in Annexure - I1.

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All Government Departments/PSUs/Autonomous Bodies executing public works through Government accredited agencies shall follow these guidelines scrupulously. 6) The revised guidelines will be applicable for all public works executed through Government accredited agencies with effect from 1^st August 2014 onwards.

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(By Order of the Governer) V.SOMASUNDARAN

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chief secretary (Finance)

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The Accountant General (A&E) Kerala, Thiruvananthapuram The Accountant General (G&SSA) Kerala, Thiruvanathapuram The Accountant General (E&RSA) Kerala, Thiruvanarhapuram All Heads of Departments and Offices

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All Departments of Secretariat All Private Secretaries to Ministers Private Secretary to Chief Minister Private Secretary to the Leader of Opposition All Secretaries to Government

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The Secretary, Kerala Public Service Commission, Thiruvananthapuram (with C/L) The Registrar, university of Kerala/Cochin/Kozhikode/Kottayam (with C/L) The Registrar, High Court of Kerala

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The Secretary, Kerala Human Rights Commission,Thiruvananthapuram The Managing Director, Kerala State Transport Corporation,Thiruvananthapuram (with C/L)

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The Secretary, Kerala State Electricity Board, Thiruvananthapuram (with C/L) The Secretary to Governor The Nodal officer, Stock file/Office copy

ANNEXURE - 1

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Guidelines for selection of Agencies for Government accreditation for the execution of public works

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(1) A Selection Committee headed by Secretary (Finance-Expenditure) will be constituted in Finance Department to advise Government on selection and accreditation of agencies authorised to execute public works and related technical matters. The Chief Technical Examiner, Chief Engineer PWD (Buildings), and a Technical Expert having no direct association with the listed agencies will be the other members of the Committee. The Committee shall scrutinize the applications for accreditation and recommend eligible agencies based on the criteria prescribed hereunder. The Committee shall also review the prevailing system for accreditation and advise Government on necessary modifications in the guidelines as and when found necessary.

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(2) The authorised agencies under State/Central Government having engineering units with adequate qualified manpower will be considered for accreditation. Reputed Non-Governmental Organizations, agencies like Nirmiti Kendra, COSTFORD etc and Cooperative Societies having qualified manpower and expertise in executing public works can also be considered for accreditation.

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(3) The accreditation will be based on prevailing works management systems, bid capacity, strength of technical manpower, geographical spread of units and experience in executing various public works.

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(4) The accredited agencies will be broadly classified into four categories as shown below. The Committee shall select the eligible agencies to any of the following categories.

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(A) State Government Dept/State PSU which follows state PWD system for execution of public works.

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(B) Departments and PSUs under the Government of India, willing to execute works as per State Government norms.

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(C) Organisation with limited Government control like Co-operative Societies, joint venture organizations having sufficient experience in public works and following State PWD norms.

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(D) NGOs, Charitable Societies having sufficient experience in execution of public works and following alternate cost effective technologies.

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(5) The accreditation will be initially for a period of five years subject to any disqualification during the period as per guidelines. The renewal will be considered based on the performance review of selected agencies by the Selection Committee.

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(6) The Government will have the right to cancel the accreditation of any of the agencies at any time, based on the advice of the Committee, on account of any irregularity/low performance in executing public works entrusted with them.

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ANNEXURE- II

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Guidelines for entrusting works to Government accredited Agencies

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(1) Government Departments/PSUs/Autonomous Bodies having no permanent engineering wing can directly entrust their works to accredited agencies, if required, on a deposit work mode or as project management consultancy mode without the prior approval of Government, provided the estimate cost of the works is within its delegated powers. Government Departments/Organisations having engineering divisions can also outsource works to accredited agencies for specific technical requirements which are unavailable within the dept/organisations but, with the approval of Government.

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(2) Government Departments and organisation may entrust their works to any agency under category (A) & (B), Annexure-I without any bidding

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process. The Government Department/PSUs/Board shall select the accredited agency based on their technical expertise and capability to execute the proposed work, and suitability of the agency to the specific project. The number of works in hand of an agency at a time should be restricted based on the availability of technically qualified manpower of the agency and its financial capacity.

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(3) The Government/Organisations desire to get competitive offers on centage charges, for their works, may obtain competitive offers on centage charges from the accredited agencies before selecting the agency.

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(4) The agencies under category (C) can also be entrusted execution of public works without bidding process, on emergent situations based on the special nature of the work . But selection of such agencies shall be done by the Administrative Department based on the criteria mentioned at para 2 above.

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(5) The agencies under category (D) shall be not normally be entrusted with public works without any bidding process. However these agencies can be directly engaged for works executed under LSGIs, based on the guidelines issued by that Department from time to time. While State Nirmiti Kendra (KES NIC) continue to enjoy the status quo, District Nirmiti Kendra can be entrusted with public works upto a total cost not exceeding Rs. 75 lakhs without any bidding process.

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(6) The agencies under category (A), (B) & (C) may generally follow Kerala PWD Manual or other rules and guidelines issued by Government for executing public works. The category (D) agencies may adopt fair and cost effective practices to the satisfaction of concerned department/organization as stipulated in the terms and conditions of the agreement to be signed between department and agency for each work. Administrative Sanction shall be issued by the Department/PSU

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themselves subject to the delegation of powers given. The estimate shall have adequate provisions for applicable taxes and statutory fees but shall not include the contractor's profit. The estimates prepared by agencies under Category D shall not exceed prevailing state PWD schedule of rates under no circumstances. The estimates submitted by the accredited agencies shall include all taxes applicable and shall not include any lump sum provision for item not directly related to the works.

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(8) Based on the estimates of the agencies, Technical Sanction can be given by the officers as per their internal delegation of powers for category (A) and (B) agencies up to the powers given to Chief Engineers of Public Works Department. For agencies coming under category (C) & (D), Technical Sanction may be issued by the Committee approved by Administrative Department subject to their delegation of powers. All estimates beyond the limits specified above shall be submitted to Technical Sanction Committee constituted by Government.

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(9) Tendering procedures, if required, shall be done as per State Public Works Manual for works assigned and tender acceptance shall be done by officers as per their internal delegation of powers. The tender acceptance beyond the delegated powers will be done at the level of Government. Tender excess for works whose estimates are based of KPWD SoR will be restricted upto the limits based on prevailing Government orders at the time of opening of tenders. The works assigned to agencies under category (D) shall be carried out at or below the estimate rates and no tender excess will be permitted for such works.

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(10) The works executed through all accredited agencies will be subjected to the inspection by competent authority entrusted by Government to ensure quality, transparency and cost effe ctivenes s .

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(11) The centage charges for works entrusted to agencies for taking up the

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works including planning, designing, tendering, supervising and handing over shall be:

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(a) 5% on all works above Rs.5 Crore

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(b) 6% on all works below Rs. 5 crore upto Rs. 3 crore

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(d) 8% on all works below Rs. 1 crore Centage charges on LSGD works will be based on Government orders issued from that Department from time to time. The statutory fee payable for getting various approvals to deposit works on turnkey mode shall be payable extra over and above the centage charges. For project management consultancy type works, the centage charges shall not exceed 2% of the estimate.

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(12) No mobilisation advance will be given to agencies which are not directly executing the work. The mobilisation advance upto 20% of the estimate cost for the components of works directly executed by the Government agency can be considered, in emergent situations, with the prior approval of Government.

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Administrative Department/organisation may enter into agreement

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with the selected agencies project-wise by incorporating various provisions of this order to have better clarity and uniformity. There shall be suitable provisions for dispute resolution with the intention of limiting the financial liability to Government. Suitable defects liability provision shall be given with an observation period of not less than 5 years against quality of materials and workmanship, after completion of the entire project or the identified phases of the project.

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(14) For deposit works, the advance payment for execution shall be limited to 20% of the estimate. The remaining payments shall be released based on actual value of amount executed in five installments each one limiting to

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15% estimate amount. Before releasing each installment, Administrative Department shall ensure that the agency has made all statutory payments and contributions from the payments released earlier. Remaining 5% of the executed value of work will be kept as performance guarantee which will be released only after successful completion of observation period, as mentioned above. For project management consultancy type jobs (where payment is directly made to the contractors), the charges payable to the agency shall be released based on the stages of progress as mentioned in the agreement.

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(15) The above said guidelines are not applicable to the construction works undertaken by Government organisations through their own internal technical manpower existing or established for the purpose of executing their own projects.

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Government Order dated 26.09.2014

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GOVERNMENT OF KERALA Abstract

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— Finance Department Revised guidelines for execution of Public Works and selection of Government accredited agencies-Constitution of - Selection committee Sanctioned OrdersIssued -------------------------------------------------------------------------------------------------FINANCE (INDUSTRIES & PUBLIC WORKS - B) DEPARTMENT

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G.O.(Ms) No.423/14/Fin. Dated, Thiruvananthapuram, 26.09.2014

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Read 1) G.O.(P) No.31l/14/Fin dated 30.07.2014

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ORDER

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Government have revised the guidelines for execution of Public Works through various accredited agencies other than Public Works Department vide Government Order read above. Among other things it was ordered therein to

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constitute a selection committee headed by Secretary (Finance Expenditure) to advise Government on selection and accreditation of agencies authorised to execute Public Works and related technical matters.

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Government have examined the matter in detail and are pleased to constitute the Selection Committee with the following members.

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a) Secretary (Finance Expenditure)-Chairman

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'b) Chief Engineer (Buildings) - Member

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c) Chief Technical Examiner -Member

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d) Head of the Department, Civil Engineering in College of Engineering, Thiruvananthapuram - Member

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(By Order of the Governor)

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A.R.AJAYAKUMAR ADDITIONAL

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SECRETARY (FINANCE)

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The Accountant General (A&E) Kerala, Thiruvanathapuram The Accountant General (G&SSA) Kerala, Thiruvanathapuram The Accountant General (E&RSA) Kerala, Thiruvanathapuram The Director of Treasuries, Thiruvananthapuram The Chief Technical Examiner, Thiruvananthapuram The Chief Engineer (Buildings), Thiruvananthapuram

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The Head of the Department, Civil Engineering, College of Engineering Thiruvananthapuram

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The Nodal Officer, www.finance.kerala.gov.in stock file/Office Copy

Forwarded/ by Order

Section Officer

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Government Order dated 8.1.2015

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GOVERNMENT OF KERALA Abstract

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Finance Department — Execution of Public Works through accredited agencies- proforma of application for accreditation-prescribed-Orders issued- Reg-

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FINANCE (INDUSTRIES & PUBLIC WORKS - B) DEPARTMENT

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G.O.(P) No. 11 /2015/Fin. Dated, Thiruvananthapuram, 08.01.2015

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Read 1) G.O.(P) No.311/14/Fin dated 30.07.2014 2) G.O (Ms) No. 423/14/Fin dated 26.09.2014 3) Minutes of the meeting of the Selection Committee held on 06.12.2014

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ORDER

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Government have issued revised guidelines for execution of Public Works through various accredited agencies vide order read first above. Accordingly a committee was constituted for advising Government on selection and accreditation of agencies authorised to execute Public Works and related technical matters vide Government Order read (2) cited.

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The Committee vide reference 3 cited recommended that the capabilities of existing agencies already authorised to execute public works has to be revisited based on the new guidelines. The Committee also approved a proforma for submitting application for accreditation.

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In the above circumstances Government are pleased to accept the recommendations of the committee and issue orders accordingly. All the new/existing Agencies seeking/renewing accreditation are requested to submit the application for accreditation in the proforma appended to this Order to Finance Department for placing the request before the selection committee to assess their capability in executing public works. No agency shall be permitted to

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undertake public works after 01 April 2015 unless it is authorised by the Government for fresh accreditation. However the existing Agencies are permitted to undertake public works till 31 March 2015.

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By Order of the Governor Dr.K.M.ABRAHAM Additional Chief Secretary (Finance)

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All Departments of Secretariat

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All Private Secretaries to Ministers

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Private Secretary to Chief Minister Private Secretary to the Leader of Opposition

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All Secretaries to Government

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The Registrar, High Court of Kerala The Secretary, Kerala Human Rights Commission, Thiruvananthapuram

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The Secretary to Governor The Nodal officer,ww.finance.kerala.gov.in Stock file/Office Copy

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Forwarded/By Order

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Section Officer

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Government Order dated 7.8.2015

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GOVERNMENT OF KERALA Abstract

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Finance Department —Selection & Accreditation of Agencies for execution of public works-revised -orders issued-

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FINANCE (INDUSTRIES & PUBLIC WORKS - B) DEPARTMENT

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G.O.(P) No.339/2015/Fin. Dated, Thiruvananthapuram, 07.08.2015

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Read 1) G.O.(P) No.311/14/Fin dated 30.07.2014 2) G.O(Ms) No. 423/14/Fin dated 26.09.2014 3) G.O.(P) No.11/l5/Fin dated 08.01.2015 4) Minutes of the meeting of the Selection Committee held on 26.03.2015

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S) G.O(Ms)No.137/l5/Fin dated17.4.2015

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ORDER

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Government in the order read as 1" paper above have issued revised guidelines for selection of accredited agencies for execution of public works. As per the reference read as 2^nd paper above, a Selection Committee headed by the Secretary (Finance Expenditure) with the Chief Technical Examiner, Chief Engineer (Buildings) and Professor and Head of the Department of Civil Engineering, College of Engineering, Thiruvananthapuram as members was constituted to advise the Government in selection and accreditation of agencies to be authorized to execute Public works and other related matters.

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As per Government Order read as 3^rd paper above, it was ordered that Agencies seeking accreditation from Government shall submit their application in the prescribed proforma along with testimonials for the evaluation of the selection committee. Accordingly the Selection Committee considered all the applications received till 15 June 2015 and evaluated their technical expertise, experience in the field and the availability of Infrastructural facilities vide reference third cited. Based on the recommendations of the Selection Committee Government are pleased to issue the following guidelines for execution of public works.

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i) Hereafter various agencies as detailed in the annexure to this Government Order alone will be authorised to execute public works as per the details

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specified therein.

ii) The CPWD being a Government of India department executing civil works is exempted from the purview of Government Order read as first paper above.

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iii) The Central Government PSUs requiring accreditation shall follow either CPWD or KPWD Manuals.

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iv) The District Nirmithi Kendras can be entrusted with the execution of public works up to Rs 3crores for a period of one year subject to the following conditions;

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a)The Technical sanction shall be given by a Committee with District Collector as Chairman, one Technical Member from District Nirmithi Kendra and an Executive Engineer from PWD/Irrigation/LSGD as members.

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b)PWD Manual and other guidelines issued by Government in this regard should be scrupulously followed.

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c) Quantity of works in hand at a time shall not exceed Rs. 10 crores.

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v) Special Purpose Vehicles under Government of Kerala shall be exempted from the selection procedure specified in the Government Order read as 1^st above . Their area of activities shall be confined to the specific purpose for which they are constituted.

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Administrative Department shall adopt a fair and competitive procedure for selecting an accredited agency from those enlisted in the annexure based on technical requirements,centage charges etc.

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All other conditions stipulated in the Government Order read as 1^st paper above will continue to be in force except those mentioned above.

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By Order of the Governor

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Dr. K. M. ABRAHAM

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Additional Chief Secretary (Finance)

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The Accountant General (A&E) Kerala, Thiruvanathapuram

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The Accountant General (G&SSA) Kerala, Thiruvanathapuram The Accountant General (E&RSA) Kerala, Thiruvanathapuram All Heads of Departments and Offices All Departments of Secretariat All Private Secretaries to Ministers Private Secretary to Chief Minister Private Secretary to the Leader of Opposition All Secretaries to Government The Registrar, High Court of Kerala The Secretary, Kerala Human Rights Commission, Thiruvananthapuram The Secretary to Governor The Nodal Officer www.finance.kerala.gov.in Stock file/Office Copy

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Forwarded By Order

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Section Officer

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In sum and substance, the above said changes are in relation to

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the minimum and maximum areas, by which, Uralungal Labour Contract Co-operative Society Ltd., can participate along with other private contractors. Minimum and maximum limit of amount are also quoted. At this juncture, we are not concerned with the variations made from time to time. But the main issue raised before this court is to the challenge made

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to Ext.P6 Government Order dated 02.8.2008.

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Though Mr.K.V.Sohan, learned State Attorney, and

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Mr.Mr.M.Sasindran, counsel for ULCC Ltd., submitted that Ext.P6 Government Order dated 2.8.2008 has been upheld by this Court, as

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rightly contended by the learned counsel for appellant, the validity of the said Government Order has not been tested on the grounds raised in W.P. (C) No.3760/2020, to be precise, Articles 13, 14 and 19 of the Constitution of India. At this juncture, it is also relevant to consider the judgment made in W.A No.2280/2018 dated 28^th January, 2019, in Prakash Constrowell Limited , wherein ULCC Society Ltd., was respondent No.5.

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“11. No doubt, the learned Single Judge did not have the occasion to consider the subsequent judgment of a Division Bench of this Court in Ramesan v. Asokan (supra) that found the conferment of the benefit of price preference to be illegal, on account of the non-publication of the Government Orders conferring benefits on one bidder to the exclusion of others, in the notification inviting tender. This Court found that suppressing such information from other bidders resulted in an unfair procedure having been followed, that vitiated any contract awarded based on such notification inviting tender. When we apply the ratio of the said judgment to the facts of the instant case, we cannot but find in favour of the appellant on his entitlement to an award of the contract in question, taking note of his undisputed status as the L1 bidder in the tender proceedings. We, therefore, set aside the impugned judgment of the learned single judge that dismissed the writ petition.

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While under normal circumstances, as a consequence of our above finding, we would have been inclined to quash the decision to award the contract to the 5^th respondent Society and declare the appellant herein as the successful tenderer entitled to the award of the contract, we cannot ignore the fact that the work under the contract has progressed to such an extent that the 5^th respondent society would now contend before us that

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intervention by this Court with the ongoing contract would visit not only the 5^th respondent society, but also the awarder of the contract, with severe adverse financial consequences. We are also mindful of the practical difficulties that will be faced by the awarder of the contract, in dealing with a new contractor, if the progress of the work is disrupted at this stage. The element of public interest in timely completion of the work must also be borne in mind in the exercise of our discretion.

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In order to balance the conflicting interests of the 5^th respondent society, that secured the contract by obtaining an unfair advantage of price preference, and that of the appellant contractor, who would have been awarded the contract pursuant to his status as the lowest bidder (L1) in the tender proceedings, we feel that as an alternative to terminating the contract awarded to the 5^th respondent, so as to award the contract to the appellant, and taking note of the fervent plea on behalf of the 5^th respondent that it be permitted to continue with the contract, it would be in the interests of justice to merely deprive the 5^th respondent society of the extent of unfair advantage that they obtained while securing the contract in their favour. The unfair advantage obtained by the 5^th respondent is that it could secure the benefit of the price preference order to steal a march over the appellant, who was the LI tenderer, to be declared as the successful bidder. Without the benefit of the price preference order, its higher bid in an amount of Rs.88,88,656,127.25, as against the lower bid amount offered by the appellant herein of Rs.87,98,62,885.00, would have disentitled the 5^th respondent to the award of the contract. The 5^th respondent society, therefore, obtained an unfair advantage to the extent of Rs.90,02,242/(which represents the difference between the L1 rate quoted by the appellant and the rate quoted by the 5^th respondent) and we feel that if the 5^th respondent society is to be permitted to continue with the contract, notwithstanding the illegality occasioned in its awarding, the appellant,

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whose rights were infringed, should be compensated to a like extent of Rs.90,02,242/-.

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We hasten to add that while we are not for a moment condoning the illegality in the award of the contract to the 5^th respondent, we are of the view that, in larger public interest, and taking note of the adverse financial consequences that would result to the awarder of the contract on account of the inevitable delay in completion of the project, if an interference is made with the progress of the contract at this stage, the alternate course of action whereby the 5^th respondent is deprived of the unfair advantage obtained by it, and the appellant compensated to the said extent, would be the more prudent course of action under the circumstances. Accordingly, we dispose this Writ Appeal as under:

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The impugned judgment of the learned single Judge is set aside;

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The 5^th respondent society is permitted to continue with the contract on condition that it pays an amount of Rs.90,02,242/- to the appellant within a period of two months from the date of receipt of a copy of the judgment.

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It is made clear that if the 5^th respondent society fails to pay the amount as directed, within the period granted in this judgment, it will lose the benefit of this judgment and the contract awarded to them shall stand cancelled. In that event, the appellant shall be treated as the successful bidder in the tender proceedings, and be entitled to the award of the contract from the stage at which the default occurs.”

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During the course of hearing of the instant appeals, we were

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also informed that the direction of the Hon'ble Division Bench of this

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Court in Prakash Constrowell Limited supra, directing the ULCC Society Ltd., 5^th respondent therein, to continue with the contract on condition that it pays an amount of Rs.90,02,242/- to the appellant therein, who was the lowest bidder, within two months from the date of receipt of a copy of the judgment, was taken on appeal before the Hon'ble Supreme Court and by an order in Special Leave to Appeal (C) Nos.6353/2019, the Hon'ble Apex Court vide order dated 26.3.2019 stayed the operation of the judgment.

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Perusal of the judgment in writ appeal Prakash Constrowell Ltd. also indicates that, a Division Bench of this Court in Ramesh P. and Another v. T.Asokan and others has observed that suppressing the information of non-publication of the Government Orders conferring benefits to one bidder to the exclusion of others in the notice inviting tender, resulted in an unfair procedure, to secure the benefits of price preference by ULCC Society Ltd., 5^th respondent therein and thus ULCC Society Ltd. has marched over the appellant therein, who was the successful bidder, having quoted the lowest bid amount. Though the said observation cannot be taken as striking down the Government Order dated 13.11.1997 and the subsequent Government Orders, since they

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were published in the gazette.

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Though the learned counsel for ULCC Ltd., as well as learned State Attorney contended that validity of the government orders, can be tested in respect of future contracts, irrespective of the present tender notification, which is not under challenge, we are afraid that such a contention could be accepted for the reason that the appellant himself had participated in the e-tender notification and his prayer in W.P.(C) No.3189/2020 is to finalise the tender proceedings in accordance with the terms of NIT, and without any price preference to the ULCC Society Ltd. In the light of the participation of the tender proceedings, it may not be desirable for the appellant to seek quashing of the tender notification and that is why the appellant appears to have not sought for quashing of the subsequent Government Orders in W.P.(C) 3189/2020.

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On the grounds stated supra, the validity of Ext.P6 Government Order dated 2.8.2008 can be tested as to whether the same requires to be quashed, can be only be taken up before the writ court. Contention of the learned counsel for appellant that, if there is a logical conclusion of the e-tender notice, by awarding the work and thereafter the commencement of work, nothing remains in the writ petitions, for

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consideration on merit.

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Having regard to the above facts and circumstances of the case, we are of the view that, writ court ought to have addressed all the grounds raised, however, the writ court has proceeded on the premise that the correctness of Ext.P6 Government Order dated 2.8.2008 has been upheld in W.P.(C) No.26206/2016 dated 2/2/2016, whereas validity of the aforesaid Government Orders were not gone into for the reason that, it was not notified at that point of time, but subsequently notified. Mr.K.V.Sohan, learned State Attorney submitted that the work of KIIFB 2016-17 construction of Perumbalam - Panavally bridge in Alappuzha District, is the second e-tender, as the earlier bidder did not complete the work, which caused huge expenditure to the State and that is why the re-tender and therefore, if the work is delayed, it will cause huge expenditure, and extension of time will also affect the public.

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Resultantly, we are of the view that rival contentions of the parties should be taken up, having regard to the nature of work, the time duration, monsoon season and hardship, if the project is delayed, and we request the writ court to dispose of the writ petitions as expeditiously as possible. For the reason stated supra, we are inclined to

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interfere with the common order made in W.P.(C) No.3189 & 3760 of 2020 dated 12.12.2020.

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In the result the common interim order is set aside and writ

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appeals are allowed. Liberty is also given to the parties to seek for early

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disposal.

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