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2003 DIGILAW 1326 (PNJ)

Maya Construction Company v. State Of Punjab

2003-09-22

G.S.SINGHVI, S.S.SARON

body2003
Judgment G.S.SINGHVI, J. 1. With a view to deal with the problems of Co-operative Labour and Construction Societies, Government of Punjab vide notification dated 9-8-1979 (Annexure RI in C.W.P. No. 5998 of 2000) constituted a Board consisting of the following: 1. Co-operation Minister, Punjab Chairman 2. Financial Commissioner, Revenue and Secretary to Govt., Punjab, Co-operation Department. Member 3. Secretary to Govt., Punjab. P.W.D. Department. Member 4. Secretary to Govt., Punjab, Local Self Government. Member 5. Chief Engineer (B & R) Member 6. Chief Engineer (Irrigation) Member 7. Chief Engineer (P.H.) Member 8. Representative of Northern Railway Member 9. Representative of Central Public Works Department. Member 10. Chairman of Punjab State Co-operative Labour and Construction Federation Ltd., Chandigarh. Member 11. Two Representatives from Distt. Co-operative Labour and Construction Unions. Member 12. Registrar, Co-operative Societies, Punjab. Member 13. Deputy Registrar, Cooperation Member-Secretary 2. The Board was reconstituted vide notification dated 23-4-1990 (Annexufe R-3 in C.W.P. No. 5998 of 2000) with Commissioner and Secretary to Government, Punjab, Co-operation Department as its Chairman. The Board held meetings from time to time and made recommendations for extending certain concessions to the Co-operative Labour and Construction Societies in the State. The State Government accepted the recommendations of the Board and issued notifications dated 31-5-1989 and 16-8-1994 for giving preference to the Co-operative Labour and Construction Societies in the matter of allotment of works by its departments and local bodies etc. In the meeting of Labour Advisory Board held on 9-8-1999, suggestion made by Co-operation Minister of the Government of Punjab to extend concessions and privileges to the Co-operative Labour and Construction Societies for a period of five years was accepted and the following decisions were taken: " (i) The concessions to Co-operative Labour and Construction Societies in the State will continue for a further period of five years i.e. from 15-8-99 to 14-8-2004. (ii) All unskilled works up to any value should be allotted to these societies and for the allotment of skilled work, the present limit of Rs. 5,00 lacs is increased to Rs. 10.00 lacs. (iii) the concessions granted to Labour and Construction Societies will henceforth also apply to works relating to B.B.M.B., Punjab. Punjab Agro Industries Corporation, Department of Food and Supply, Punjab. Punjab Health Systems Corporations and works relating to world Bank aided projects in all Department. (iv) There will be no earnest money for the skilled works up to Rs. 10.00 lacs. (iii) the concessions granted to Labour and Construction Societies will henceforth also apply to works relating to B.B.M.B., Punjab. Punjab Agro Industries Corporation, Department of Food and Supply, Punjab. Punjab Health Systems Corporations and works relating to world Bank aided projects in all Department. (iv) There will be no earnest money for the skilled works up to Rs. 5.00 lacs. the Societies will deposit earnest money @ 25% of the earnest money deposited by other Contractors for the skilled works up to Rs. 10.00 lacs and it will be 50% of the earnest money deposited by other Contractors for the skilled works above Rs. 10.00 lacs. However, the societies will not furnish any other Bank guarantee or security. " 3 The State Government accepted the recommendations of the Board and issued notification No. 76/ 52/ 79-CI (v)/11209 dated 10-9-1999 (Annexures P-3 and R-3 in C.W.P. No. 5998 of 2000). The relevant extracts of that notification read as under " 1. All unskilled works up to any value and skilled works up to the limit of Rs. 1000000/- for each work should be allotted to these societies only by way of tenders within common schedule of rates fixed by Public Works Department, Punjab. In case these societies fail to tender or do not accept the work within the ceiling rates so fixed, the work may be executed by inviting upon tenders from both the contractors and the societies. 2. If more than one Labour and Construction Co-operative Societies have offered tenders for a work, the lowest rate accepted will be made applicable to the other societies as well for doing that work up to their capacity, the work left over be got executed by inviting upon tenders from contractors as well as the societies. 3. Till the time the ceiling rates are fixed in any particular circle the existing practice should continue for the allotment of the works of the societies. 4. There will be no earnest money for the skilled works up to Rs. 5.00 lacs. The societies will deposit earnest money at the rate of 25% of the rate prescribed for other P.W.D. Contractors for all skilled works up to Rs. 1000000/- and at the rate of 50% of the prescribed earnest money for other PWD Contractor for all skilled works above Rs. 1000000/- without any Bank Guarantee and Security Deposits. 5. 5.00 lacs. The societies will deposit earnest money at the rate of 25% of the rate prescribed for other P.W.D. Contractors for all skilled works up to Rs. 1000000/- and at the rate of 50% of the prescribed earnest money for other PWD Contractor for all skilled works above Rs. 1000000/- without any Bank Guarantee and Security Deposits. 5. Skilled and unskilled portion of works should be determined separately before calling tenders when some unskilled work is mingled in a skilled work. 6. Payments should be made to the Labour and Construction Society every fortnight for the work executed. 7. The Labour and Construction Societies be exempted from any licensing fee. 8. The concessions granted to Labour and Construction Societies will also apply to works relating to Semi-Government, Local Government, Public Sector Corporation, Punjab State Electricity Board, Canal Lining Works, Sutlej Yamuna Link Canal, Punjab StateTubewell Corporation, Punjab State Police Housing Corporation, Bhakhra Beas Management Board (BBMB), PUNSUP, Punjab Agro, Food and Civil Supplies, Punjab Health Systems Corporation and work relating to world Bank Aided Project etc. and work to these societies will be allotted on preferential basis. 9. The copies of the tender notices issued by the work allotting agency will also be forwarded to the District Co-operative Labour and Construction Union as well as to the concerned Assistant Registrar, Cooperative Societies for their information. 10. The Labour and Construction Societies should be given preference for allotment of machinery and equipment on hire basis by the work allotting agencies as against other private agencies. " 4 The petitioners, who are enlisted and registered as contractors with Municipal Councils, S.A.S. Nagar (Mohali) and Barnala, have challenged notification dated 10-9-1999 by contending that reservation of all unskilled works without any monetary limit and skilled works up to the limit of Rs. 10 lacs for the Co-operative Labour and Construction Societies is violative of their fundamental right to equality guaranteed under Article 14 and also their right to trade and business guaranteed under Article 19(1)(Kg) of the Constitution of India. They have averred that exclusion of the private contractors from the zone of consideration for allotment of unskilled works (unlimited) and skilled works up to the limit of Rs. 10 lacs is totally irrational, arbitrary and contrary to public interest. They have averred that exclusion of the private contractors from the zone of consideration for allotment of unskilled works (unlimited) and skilled works up to the limit of Rs. 10 lacs is totally irrational, arbitrary and contrary to public interest. According to them, the works executed by the Co-operative Labour and Construction Societies are substandard and are far more costly than the similar works executed by the private contractors and, therefore, the policy contained in the impugned notification is liable to be struck down. 5. The respondents have contested the writ petition. In the written statement filed on behalf of respondent No. 1 through the Additional Secretary, Co-operation Department in C.W.P. No. 5998 of 2000, it has been averred that the writ petition is liable to be dismissed because C.W.P. No. 3599 of 1998. Sunil Kumar V/s. The State of Punjab filed for quashing notification dated 10-8-1984 was dismissed by the Division Bench on 8-11-1988 and challenge to similar concessions extended to the Co-operative Labour and Construction Societies by the Government of Haryana was negatived in Surender Singh v. The State of Haryana, AIR 1986 Punj and Har 222. Respondent No. 1 has referred to the recommendations made by the National Advisory Council on Labour Co-operatives and pleaded that the decision taken in the meeting of the State Labour Advisory Board held on 10-8-1999 does not suffer from any legal infirmity and Municipal Council, S.A.S. Nagar (Mohali) did not commit any illegality by reserving the works for the Co-operative Labour and Construction Societies. It is also the case of respondent No. 1 that if the Cooperative Labour and Construction Societies do not agree to execute the works, then the matter becomes open to all and contract is required to be given by inviting open tenders. 6. In a separate written statement filed on behalf of respondent No. 2, it has been averred that the works are being given to the Co-operative Labour and Construction Societies strictly in accordance with the policy contained in notification dated 10-9-1999 and the petitioners do not have the locus standi to question the same. 7. 6. In a separate written statement filed on behalf of respondent No. 2, it has been averred that the works are being given to the Co-operative Labour and Construction Societies strictly in accordance with the policy contained in notification dated 10-9-1999 and the petitioners do not have the locus standi to question the same. 7. In the written statement filed on behalf of Ropar District Co-operative Labour and Construction Societies Association, reliance has been placed on the judgment of Surinder Singhs case (supra) and the order passed in Sunil Kumars case (supra) and it has been averred that the petitioners cannot challenge the concessions granted by the State Government to the Co-operative Labour and Construction Societies. 8. The averments contained in C.W.P. No. 17089 of 2001 and the written statements filed on behalf of the respondents are more or less identical and, therefore, it is not necessary to make a detailed reference to the pleadings of that case. 9. Shri O. P. Goval, learned Senior Counsel appearing for the petitioners relied on the judgment of a Division Bench of this Court in Punjab Drugs Manufacturers Association V/s. State of Punjab, AIR 1989 Pun) and Har 117 and argued that exclusion of the private contractors from the zone of competition for the award of contracts of unskilled works of unlimited value and skilled works of the value of Rs. 10 lacs is totally arbitrary, irrational and violative of the petitioners fundamental rights guaranteed under Articles 14 and 16 of the Constitution. Shri Goyal submitted that in the garb of extending concession to the Co-operative and Labour Construction Societies, the State Government created a monopoly in their favour and this is legally and constitutionally impermissible. He also relied on the judgments of the Supreme Court in Manna Lal Jain V/s. State of Assam, AIR 1962 SC 386 and Rasbihari Panda V/s. State of Orissa, AIR 1969 SC 1081 and of Orissa High Court in Hrudananda Patra V/s. Revenue Divisional Commissioner Central Division, Cuttack, AIR 1979 Orissa 13. Learned counsel then argued that right guaranteed under Article 19(l)(g) cannot be abridged, curtailed or restricted except by enacting a law and the impugned notification cannot be treated as law within the meaning of Article 19(2) read with Article 13 of the Constitution of India. 10. Learned counsel then argued that right guaranteed under Article 19(l)(g) cannot be abridged, curtailed or restricted except by enacting a law and the impugned notification cannot be treated as law within the meaning of Article 19(2) read with Article 13 of the Constitution of India. 10. Learned counsel for the respondents argued that the preferential opportunity given to the Co-operative Labour and Construction Societies in the matter of allotment of skilled and unskilled works does not suffer from any constitutional vice. Ms. Rita Kohli submitted that the impugned notification contains a policy decision taken by the State Government on the recommendations of the National Labour Advisory Council and the Board and the petitioners cannot complain against the preferential treatment given to the Co-operative Societies with a view to strengthen the co-operative movement in this field. She argued that the Court may not interfere with the policy decision taken by the Government because it does not, in any manner, affect the constitutional rights of the petitioners. In support of this argument, Ms. Kohli relied on the judgments of the Supreme Court in Indian Railway Service of Mechanical Engineers Association v. Indian Railway Traffic Service Association, (1993) 3 JT (SC) 474 : (1993 AIR SCW 2342} and P.T.R. Exports (Madras) Pvt. Ltd. V/s. The Union of India, (1996) 6 JT (SC) 435 : (AIR 1996 SC 3461). 11. Shri D. V. Sharma, learned counsel for Ropar District Co-operative Labour and Construction Societies Union Limited relied on the judgments of the Supreme Court in Sarkari Sasta Anaj Vikreta Sangh, Tehsil Bemetra V/s. State of Madhya Pradesh, AIR 1981 SC 2030 and Krishnan Kakkanth v. Government of Kerala, AIR 1997 SC 128 and argued that the concession given by the State Government to the Co-operative Societies consisting of unemployed youths cannot be dubbed as arbitrary or discriminatory because the petitioners have not been totally excluded from the zone of competition. 12. We have given serious thought to the respective submissions and carefully perused the record. 13. 12. We have given serious thought to the respective submissions and carefully perused the record. 13. At the out-set, we consider it necessary and appropriate to mention that even though, the judgment of the Division Bench of this Court in Punjab Drugs Manufacturers Association V/s. State of Punjab (AIR 1989 Pun) & Har 117) (supra) on which learned counsel for the petitioners built the castle of his arguments was reversed by the Supreme Court in Indian Drugs and Phram, Ltd. V/s. Punjab Drugs Manufacturers Association, AIR 1999 SC 1626, but the counsel representing neither side brought the judgment of the Supreme Court to our notice. 14. In Sarkari Sasta Anaj Vikreta Sangh v. State of Madhya Pradesh (AIR 1981 SC 2030) (supra), the Supreme Court examined the challenge to clause (2) of M. P. Foodstuffs (Civil Supply Distribution) Scheme. 1981 under which preference was given to the Co-operative Societies in the matter of allotment of fair-price shops. While rejecting the plea of the petitioners that the impugned clause was discriminatory, their Lordships of the Supreme Court observed (Para 11): "No one can doubt the positive and progressive role which co-operative societies are expected to and do play in the economy of our country and, most surely, in the fair and effective distribution of essential articles of food. There certainly was a reasonable classification and a nexus with the object intended to be achieved, which was fair and assured supply of rations to the consumer, the fundamental right of traders like the petitioners to carry on business in foodstuffs was in no way affected. They could carry on trade in foodstuffs without hindrance as dealers: only, they could not run fair price shops as agents of the Government. No one could claim a right to run a fair price shop as an agent of the Government. All that he could claim was a right to be considered to be appointed as an agent of the Government to run a fair price shop. If the Government took a policy decision to prefer co-operative societies for appointment as their agents to run fair price shops, in the light of the frustrating and unfortunate experience gathered in the last two decades, we do not see how we can possibly hold that there was any discrimination." 15. If the Government took a policy decision to prefer co-operative societies for appointment as their agents to run fair price shops, in the light of the frustrating and unfortunate experience gathered in the last two decades, we do not see how we can possibly hold that there was any discrimination." 15. In Krishnan Kakkanth V/s. Government of Kerala (AIR 1997 SC 128) (supra), the Supreme Court repelled the challenge to the scheme framed by Kerala Government vide circular dated 19-5-1995 for supply of pump-sets to farmers with a rider that pump-sets must be purchased only from the dealers approved by the Government and observed: "The Circular dt. 19-5-95 does not infringe the fundamental right of other dealers in pumpset nor is it violative of Article 14. The farmer or agriculturist who has chosen to receive subsidies or financial assistance under the schemes of the Government has an obligation to accept the terms and conditions for such assistance. One of such conditions is that in the northern region of the State, pumpset for which financial assistance has been given is to be purchased from the approved dealers of the Government. The private dealer cannot insist that the Government should also enter into contract with any such private dealer to make it an approved dealer. Since the Government has every right to select dealers of its choice for delivery of pumpsets at the price agreed upon and to render after-sales service to the purchasers of pumpsets covered by its financial assistance scheme, it is not open to challenge such selection of dealers on the score that such selection amounts to unreasonable restriction imposed on the dealers of the State to carry on trading activities in pumpsets. It is nobodys case that all the farmers and agriculturists have been compulsorily covered under such schemes. On the contrary, it is open to any farmer or agriculturist not to volunteer for taking such assistance. No restriction has been imposed on the trading activity of dealers in pumpsets in the State of Kerala including northern region comprising eight districts. Even in such area, a dealer is free to carry on his business. Such dealer, even in the absence of the said circular, cannot claim as a matter of fundamental right guaranteed under Article 19(l)(g) that a farmer or agriculturist must enter into a business deal with such trader in the matter of purchase of pumpsets. Even in such area, a dealer is free to carry on his business. Such dealer, even in the absence of the said circular, cannot claim as a matter of fundamental right guaranteed under Article 19(l)(g) that a farmer or agriculturist must enter into a business deal with such trader in the matter of purchase of pumpsets. Similarly, such trader also cannot claim that the Government should also accept him as an approved dealer of the Government. The trading activity in dealership of pumpsets has not been stopped or even controlled or regulated generally. The dealer can deal with purchasers of pumpsets without any control imposed on it to carry on such business. The obligation to purchase from approved dealer has been fastened only to such farmer or agriculturist who has volunteered to accept financial assistance under the scheme on various terms and conditions To ascertain unreasonableness and arbitrariness in the context of Article 14 of the Constitution, it is not necessary to enter upon any exercise for finding out the wisdom in the policy decision of the State Government. It is immaterial if a better or more comprehensive policy decision could have been taken. It is equally immaterial if it can be demonstrated that the policy decision is unwise and is likely to defeat the purpose for which such decision has been taken. Unless the policy decision is demonstrably capricious or arbitrary and not informed by any reason whatsoever or it suffers from the vice of discrimination or infringes any statute or provisions of the Constitution, the policy decision cannot be struck down. It should be borne in mind that except for the limited purpose of testing a public policy in the context of illegality and unconstitutionality Court should avoid embarking on uncharted ocean of public policy." 16. In Indian Drugs and Pharm. Ltd. v. Punjab Drugs Manufacturers Association (AIR 1999 SC 1626) (supra), the Supreme Court reversed the judgment of the Division Bench of this Court Punjab Drugs Manufacturers Association V/s. State of Punjab (AIR 1989 Punj & Har 117) (supra) and held (Para 8): "Policy, whereby the State Government had directed the authorities concerned to purchase certain medicines only from public sector undertakings or their dealers only directs that certain drugs are to be purchased from the specified manufacturers. This does not preclude the other manufacturers or their dealers from either manufacturing or selling their products to other customers. It is of common knowledge that the requirement of drugs is not the need of the Government hospitals and dispensaries only. As a matter of fact, the need of the Government hospitals and dispensaries must be only a fraction of the actual demand in the market which demand is open to be met by the manufacturers like the appellants. Monopoly as contemplated under Article 19(6) of the Constitution is something to the total exclusion of others. Creation of a small captive market in favour of a State owned undertaking out of a larger market can hardly be termed as creation of monopoly as contemplated under Article 19(6) of the Constitution, more so because this captive market consists only of State owned hospitals and dispensaries. Thus, on facts there is no monopoly created by the impugned policy. Further, policy restrictions can be imposed by exercise of executive power of the State under Article 162 of the Constitution. Preference shown to public sector undertakings being in public interest, will not be construed as arbitrary so as to give rise to a contention of violation of Article 14 of the Constitution." (Underlining is ours) 17 In Surinder Singhs case (AIR 1986 Punj & Har 222) (supra), a learned Single Judge (S. S. Kang, J.), who was also a member of the Division Bench which decided Punjab Drugs Manufacturers Association v. State of Punjab (AIR 1989 Punj & Har 117) (supra) upheld the policy of the Government of Haryana for giving preference to the Cooperative Labour and Construction Societies and observed: "Where the Public Works Department of the State issued a direction by way of a notification stipulating that all unskilled works up to any value and skilled works up to the limit of Rs. 2 lacs for each work should be allotted to the Co-operative Labour and Construction Societies by way of tenders within the ceiling rates fixed by the competent authority, the notification could not be said to be violative of Article 14 on ground of discrimination or on the ground that it created monopoly in favour of such societies to the exclusion of individual private contractors. If the Government, in the light of their experience of dealing with the private contractors, took a policy decision to prefer the co-operative societies for execution of their works, it cannot be held that there was any discrimination. Also, the impugned notification does not create any monopoly in favour of the Societies. It confers certain concessions on them. If the Societies fail to tender or do not accept the work within the ceiling rates. option is left with the authorities concerned to get them executed by inviting open tenders from both the contractors and the societies. All that the impugned notification provides is that the societies are given an opportunity to execute the work within the ceiling rates fixed by the authorities, but if they do not agree to do so, then the matter becomes open to all and the works can be got executed by inviting open tenders from both the contractors and the societies. It is not that the private contractors are altogether excluded from consideration. Thus, the notification does not affect the right to carry on the trade by private contractors. The classification between the co-operative societies and the private contractors is reasonable one and has a direct nexus with the object intended to be achieved." 18. In our opinion, the judgment of the learned single Bench in Surinder Singhs case (AIR 1986 Punj & Har 222) (supra), which is in consonance with the ratio of the three judgments referred to hereinabove, represents the correct position of law and we approve the reasons given by him for upholding the policy framed by the government to extend certain concessions to the Co-operative Labour and Construction Societies. 19. Incidentally, it may be mentioned that the judgment of the single Bench in Surinder Singhs case (supra) was not even noticed by the Division Bench in Punjab Drugs Manufacturers Association V/s. State of Punjab (supra) which, as already mentioned, has been reversed by the Supreme Court. 20. In view of the above discussion, we hold that notification dated 10-9-1999 does not suffer from any constitutional or legal infirmity. 21. Hence, the writ petitions are dismissed. Since the petitioners had succeeded in stalling the implementing of the policy contained in notification dated 10-9-1999, we direct that each of them shall pay costs of Rs. 20. In view of the above discussion, we hold that notification dated 10-9-1999 does not suffer from any constitutional or legal infirmity. 21. Hence, the writ petitions are dismissed. Since the petitioners had succeeded in stalling the implementing of the policy contained in notification dated 10-9-1999, we direct that each of them shall pay costs of Rs. 2000/- to the State Government which shall be utilised for the benefit of the Cooperative Labour and Construction Societies in the State. Petitions dismissed.