G. S. Security And Man Power Services vs. The State Of Telangana

Held

The Court held that the acceptance of a bank guarantee of Rs. 30 lakhs in place of a turnover certificate did not constitute a material relaxation of tender conditions that rendered the empanelment process arbitrary or illegal. The Court found that the tender process was undertaken pursuant to G.O.Rt.No. 4459 dated 27.12.2006, which empowers the District Collector, as Chairman of the District outsourcing committee, to modify or relax tender conditions in the interest of administrative efficiency. The record indicated that the 6th respondent furnished a bank guarantee of Rs. 30 lakhs prior to empanelment, which was accepted by the Committee as sufficient proof of financial capability. The Court noted that this relaxation was uniformly extended to similarly-placed agencies, and the petitioner had not adduced evidence to show that the 6th respondent was singled out for favorable treatment. The Court applied the principles laid down by the Supreme Court in Tata Cellular and Monte Carlo Ltd., stating that the scope of judicial review is limited to examining the decision-making process for illegality, irrationality, or procedural impropriety, not to substitute its own decision for that of the competent authority. The Court concluded that accepting a bank guarantee as equivalent proof of financial strength fell within the permissible bounds of administrative discretion, and the process was neither arbitrary nor discriminatory, with no violation of natural justice or mala fide intention established. Therefore, the Court found no infirmity in the proceedings of the 3rd respondent allotting the outsourcing work to the 6th respondent.

Facts

The petitioner, G.S. Security & Man Power Services, challenged the action of the 3rd respondent (District Collector and Chairman, District Out Sourcing Committee, Suryapet) in allotting outsourcing work for the Government Medical College, Suryapet, to the 6th respondent, M/s Unicus Security Services Private Limited, for the financial year 2025-2026. The petitioner, a registered manpower and security services agency, had previously provided satisfactory services to the college. The petitioner contended that the 6th respondent did not meet the tender condition of having a minimum turnover of Rs. 30 lakhs in any one of the last three financial years, as their turnover for 2024-25 was only Rs. 3,62,830. Instead, the 6th respondent submitted a bank guarantee of Rs. 30 lakhs, which the petitioner argued was an impermissible substitution for the mandatory turnover certificate. The petitioner alleged this action was arbitrary, discriminatory, and violated principles of transparency and natural justice.

Key Issues

1. Whether the acceptance of a bank guarantee of Rs. 30 lakhs in lieu of a mandatory turnover certificate of Rs. 30 lakhs constitutes a material relaxation of tender conditions, rendering the empanelment process arbitrary and illegal, thereby violating Article 14 of the Constitution of India? 2. Whether the District Collector, as Chairman of the District Out Sourcing Committee, has the authority under G.O.Rt.No. 4459 dated 27.12.2006 to permit relaxation of essential eligibility criteria in tender conditions, specifically the turnover requirement, in the interest of administrative efficiency and fair participation? Petitioner's Arguments: The petitioner argued that the tender conditions, particularly Condition No. 6 regarding the minimum turnover, were essential eligibility criteria and could not be substituted by a bank guarantee. They contended that this substitution was arbitrary, discriminatory, and violated principles of transparency and fairness in government contracts, citing G.O.Rt.No. 4459. They also argued that the respondents' reliance on Supreme Court precedents was misplaced as those judgments do not permit relaxation of essential eligibility conditions. Respondents' Arguments: The respondents (State and the 6th respondent) argued that the tender notification was issued in accordance with G.O.Rt.No. 4459, which empowers the District Collector to modify or relax tender conditions. They stated that the committee permitted agencies unable to produce turnover proof but deemed financially sound to participate, and the bank guarantee was accepted as sufficient proof of financial capability. They further contended that this relaxation was uniformly extended to similarly-placed agencies and that judicial review in tender matters is limited to the decision-making process, not the merits of the decision, citing Tata Cellular and Monte Carlo Ltd. v. AFPC Ltd.