2017 (1) TMI 268 - HC - Indian Laws

Validity of award of a contract given by the Income Tax Department in the matter of supplying of technical and non-technical labours to the department - Held that - During the course of hearing except for contending that Clause 7.5 of the Bid document is ultra-vires and the conditions stipulated therein i.e. minimum wages as notified by the State Govt. can also be accepted makes the clause ultra-vires, nothing is brought to our notice on the basis of which it can be said that there is any statutory violation or malafides made out in awarding of a contract. As when the minimum wages fixed by the Central Govt. under the Minimum Wages Act is insisted upon, we find nothing ultra-vires in Clause 7.5 merely because the word State Govt. is also used before the word or . Once, it is crystal clear from the material available on record that contract has been awarded based on the minimum wages fixed by the Central Govt. , we see no reason to declare the Clause as ultra-vires. As far as accepting bid of the petitioner for technical staff, as the rate of the petitioner is lower is concerned, we cannot permit bifurcation of the contract for supplying of technical labours and non-technical labours by two different contracts. The contract is a consolidated contract for supply of both class of labours by one contract and if based on the subjective satisfaction of the employer and looking to the various aspects of the matter, they have awarded the contract to respondent no. 3 then in the absence of any statutory rule or regulation being violated or malafides being established, we see no reason to interfere into the matter, even in the objection raised by the petitioner which is available at page 37, we find that except for making vague and unspecified allegations, no objection which can be upheld under law are pointed out.

Summary

Issues: Challenge to contract award, legality of contract, violation of Constitution, minimum wages compliance, bid acceptance

The High Court of Madhya Pradesh heard a writ petition challenging the award of a contract by the Income Tax Department to respondent nos. 3 and 4 for supplying technical and non-technical labors. The petitioner and respondent no. 3 submitted bids for both types of staff, with the petitioner quoting higher rates. The petitioner alleged that the contract was illegally granted, citing Clause 7.5 of the contract as ultra vires of the Constitution. The petitioner argued that various illegalities were committed in awarding the contract. The petitioner relied on a Supreme Court judgment to support the claim of the contract being illegal. However, the respondent contended that there were no malafides or statutory violations in awarding the contract, referencing previous Supreme Court judgments to support their argument.

After hearing arguments from both parties and examining the records and grounds of the writ petition, the Court found that there was no statutory violation or malafides in awarding the contract. The Court specifically analyzed Clause 7.5 of the contract, which stated that the amount payable to contract labor should not be less than the rate fixed by the State Govt. or Central Govt. The Court noted that since the Income Tax Department, being a Central Govt. Department, followed the minimum wages fixed by the Central Govt., there was no issue with the clause. The Court emphasized that the contract was awarded based on the minimum wages set by the Central Govt., making the clause valid.

Regarding the bid acceptance, the Court stated that the contract was for the supply of both technical and non-technical labors, and it could not be bifurcated into separate contracts based on different bids. The Court held that as long as the employer's decision to award the contract to respondent no. 3 was based on subjective satisfaction and compliance with regulations, there was no reason to interfere. The Court dismissed the writ petition, finding no valid grounds for intervention and noting that the objections raised lacked specific allegations that could be upheld under the law based on established legal principles from previous Supreme Court judgments.

In conclusion, the High Court of Madhya Pradesh dismissed the writ petition challenging the contract award by the Income Tax Department, ruling that there were no statutory violations or malafides in the awarding of the contract. The Court upheld the validity of Clause 7.5 of the contract regarding minimum wages compliance and rejected the argument for bifurcation of the contract based on different bid rates for technical and non-technical staff.