M/S Aroon Aviation Services Private Limited vs. Union Of INDIA And 4 Ors

Facts

The petitioner, M/s Aroon Aviation Services Private Limited, challenged the Letter of Acceptance (LOA) issued by the North East Frontier Railway (Respondent No. 2) to M/s Urmila International Service Pvt. Ltd. (Respondent No. 4) for a four-year contract for cleaning coaches and allied services at Guwahati Station. The tender, with an approximate cost of Rs. 39.37 crore, saw the petitioner placed as L3 bidder, while Respondent No. 4 was L1 and Respondent No. 5 was L2. The petitioner contended that Respondent Nos. 4 and 5 had quoted rates in violation of minimum wage provisions and statutory compliances for EPF and ESI. The petitioner submitted representations to the authorities, disputing the calculation methodology for wages and statutory deductions. The authorities responded, but the petitioner remained aggrieved, leading to the filing of this writ petition.

Held

The Court held that the methodology for calculating rates by bidders, as presented by the respondent authorities in their communication dated 20.02.2025, was erroneous. This erroneous calculation formed the basis for declaring Respondent Nos. 4 and 5 as L1 and L2 bidders, necessitating judicial interference. The Court found that the calculations proposed by the petitioner in their representation dated 21.02.2025 accurately reflected the required methodology, aligning with statutory provisions and the Supreme Court's decision in Sri Digvijay Woolen Mills Limited. The Court adopted a beneficial rule of construction for social welfare legislation, favoring the interpretation more beneficial to the workmen. Consequently, the matter was remanded back to the Railway Respondents for a re-examination of the quoted rates by all technically qualified bidders. This re-examination must strictly follow the petitioner's methodology and justifications, and also consider the procedure adopted by the North Eastern Railway for a similar tender. The contract awarded to Respondent No. 4 would stand superseded by the fresh decision to be taken within one month.

Key Issues

1. Whether the rates quoted by Respondent Nos. 4 and 5 in their price bids for the tender were in compliance with the minimum wages, Employees' Provident Fund (EPF), and Employees' State Insurance (ESI) Act provisions, as stipulated in the tender conditions? The petitioner argued that Respondent Nos. 4 and 5 failed to quote rates compliant with minimum wages and statutory deductions for EPF and ESI, leading to their incorrect placement as L1 and L2 bidders. The petitioner relied on the Employees’ State Insurance (Central) Rules, 1950, and the Supreme Court case of Sri Digvijay Woolen Mills Limited. The respondents, through their communication dated 20.02.2025, presented a methodology for calculating the estimate cost, asserting that L1 and L2 bidders quoted above minimum wages. The petitioner countered this methodology in a subsequent representation dated 21.02.2025, proposing an alternative calculation for statutory deductions.