Third Eye Security Pvt. Ltd. (M/s. ) v. State of M. P.
2024-09-12
BINOD KUMAR DWIVEDI, SUSHRUT ARVIND DHARMADHIKARI
body2024
DigiLaw.ai
ORDER Per: Justice Sushrut Arvind Dharmadhikari Heard finally with the consent of both the parties. 1. This petition under Article 226 of the Constitution of India has been filed by the petitioner which is a private limited company engaged in the business of supplying security-related services to state and other private entities, the petitioner prayed for the following reliefs:- (I) To issue a writ in the nature of certiorari to quash the impugned rejection of the petitioner's bid by the MPIDC in the NIT dated 11.8.2023 and to adjudicate such bid afresh on merits and as per law; (II) To hold that as on date of filing of the petition, the petitioner holds a valid deemed license under the “Private Security Agencies Central Model rules, 2020”. (III) To issue a writ in the nature of mandamus to the Respondent- MPIDC (respondent No. 3 to 5) directing it to consider the bid of the petitioner on merits in the technical and financial rounds in respect of the NIT dated 11.08.2023 in strict compliance with the Private Security Agencies Central Model rules, 2020; (IV) To issue a writ in the nature of certiorari to quash the award of contract by the MPIDC in favor of any other bidder (respondent No. 6 or 7, as the case may be) in the absence of consideration of the petitioner's bid in such NIT dated 11.8.2023; (V) To grant any other relief, as may be deemed fit in the interest of justice and fairness. 2. The brief facts of the case are that the petitioner is aggrieved by the impugned action/order dated 14.3.2024 taken by the M.P. Industrial Development Corporation (respondents 3-5), for having expelled/rejected the petitioner's offer-bid in respect of a Tender bearing NIT No. 7429 issued on 11.8.2023. The said Tender has been floated for purposes of "selection of security service provider for providing security services at SEZ and other Industrial area/establishments of MPIDC - Regional Office, Indore" and is operable for a period of 12 months only. 3.
The said Tender has been floated for purposes of "selection of security service provider for providing security services at SEZ and other Industrial area/establishments of MPIDC - Regional Office, Indore" and is operable for a period of 12 months only. 3. As per the petitioner, its bid has been rejected by the aforesaid tender-issuing agency MPIDC in the technical round (initial/preliminary stage) on the sole ground that the petitioner does not allegedly hold a 'valid license under the Private Security Agencies (Regulation) Act, 2005 (a central legislation) - which is one of the eligibility-conditions of the NIT under question, which is worded as under in such NIT under its head "PreQualification Criteria": 4. Learned counsel for the petitioner submits that it had submitted its bid in the aforesaid NIT on 13.10.2023 and was sanguine of being considered on merits. However, vide the "Technical Evaluation Sheet" issued by the MPIDC on 14.3.2024 (Annexure P-10 of the petition), the petitioner's bid appears to have been rejected on the ground that it does not possess any valid licence under the PSARA Act, 2005, as reflected in Serial No. 7 of the "Technical Evaluation Sheet". As per the petitioner and seen from such Evaluation Sheet issued by the MPIDC, it appears that except on such criterion, the petitioner was found to be at par with other participants. 5. The counsel for the petitioner further submits that it was originally issued a license dated 3.9.2010 by respondent No. 2 (Annexure P-3) which was issued by Secretary, M.P. Home Department through its 'Controlling Authority' as provided under the aforesaid Act of 2005. As per the petitioner, such licence was renewed thereafter on 3.9.2016 for a further period of next 5 years i.e. until 31.3.2021 to "run the business of private security agency". The petitioner admits that its license was due for expiry on 31.3.2021, but it had submitted its pplication for renewal of the same in the prescribed form before respondent No. 2 as per section 8(1) of the PSARA Act, 2005 read with Rule 5(1) of the 2 Private Security Agencies Central Model rules, 2020 and within the prescribed time-period provided therein.
The petitioner submits that its renewal application as well as its payment of fee through challan was done on 13.2.2021 i.e. within the prescribed period of 45 days before the date of expiry of such license, although the date of 'acknowledgment' of such application was given the date 18.2.2021 by the licensing authority. 6. As per the petitioner, its license-renewal application was kept pending before the concerned authority ever since its submission in February 2021, without any formal approval or rejection, which amounts to its "pendency". The petitioner relies upon a Communication/Intimation dated 17.1.2023 (Annexure P-5) and a Notice dated 12.6.2024 (Annexure P-12) - both issued by the licensing-authority. Through the Intimation dated 17.1.2023, it was conveyed by the licensing-authority to the petitioner that its renewal-application is under pendency, while vide Notice dated 12.6.2024, it was conveyed by the same authority that it has directed the PoliceCommissioner, Indore to conduct the exercise of "police verification" of the petitioner, as part of the adjudication of its renewal-license. The petitioner relies upon such communications to drive home the demonstration that its license-renewal application was at its advanced stage of adjudication and thus, there was no cause of action for it to approach any Court of competent jurisdiction to pray for expeditious adjudication of its renewal-application. 7. Learned counsel for the petitioner submits that despite such extant pendency of its renewal-application by Respondent No. 2, the same was held to be an absence of holding such 'valid licence' by the MPIDC and thus, its bid-offer was rejected by the MPIDC. The petitioner challenges the above by placing reliance upon rule 5(10) of the Private Security Agencies Central Model rules of 2020, which have been annexed in the petition as Annexure P-2. The petitioner submits that it is entitled to claim benefit of rule 5(10) of such Central Model Rules - which provide as under: "5. RENEWAL OF LICENSE. (10) The validity of renewed license shall be counted from the date of expiry of the previous license and shall be upto a period of five years irrespective of its date of renewal. In case the application is decided by the controlling authority after expiry of the existing license, the intervening period shall deem to be under valid license." 8.
(10) The validity of renewed license shall be counted from the date of expiry of the previous license and shall be upto a period of five years irrespective of its date of renewal. In case the application is decided by the controlling authority after expiry of the existing license, the intervening period shall deem to be under valid license." 8. Relying upon the above, the petitioner submits that its license during the "intervening period" i.e. the period between the "expiry of a valid license" and the "final decision of the renewal application" is to be deemed to be valid, by virtue of the aforesaid rule 5(10). Thus, as per the petitioner, it could not have been ousted by rejection of its bid by the MPIDC on such ground of not possessing any valid license, as the pendency of its renewal application expressly amounts to holding of a 'deemed valid' license. 9. Per contra, the tender-issuing agency i.e. MPIDC, which in undisputedly a "State instrumentality" - has filed its reply before this Court to aver that mere pendency of a renewal-application does not amount to holding a valid license under the PSARA Act 2005 and thus, the petitioner's bid has been rightly rejected for having failed to show a valid license on the date of submission of its bid. Also, as per the MPIDC, it has already 'awarded' the contract and work order in favour of Respondent No. 7 i.e. M/s CISS Services and thus, no interference from this Court, especially at this stage, can be called for. 10. Reply from respondent No. 7 is also on record, which is seen to be based on identical lines - that the petitioner was rightly ousted by the MPIDC on the ground of not having a valid license as on the date of submission of its bid. 11. The State Government has also filed its Reply before this Court, therein posing a challenge to the maintainability of this petition, and also averring that pendency of a renewal-application does not tantamount to its acceptance/approval.
11. The State Government has also filed its Reply before this Court, therein posing a challenge to the maintainability of this petition, and also averring that pendency of a renewal-application does not tantamount to its acceptance/approval. Additionally, the Counsel for the State submits that vide its order dated 30.8.2024 which is annexed in its Reply, the renewalapplication of the petitioner has been rejected by the Controlling Authority (Secretary, Home Department) on the ground that the same was filed with a delay as per section 8(1) of the PSARA Act, 2005 read with rule 5(1) of the Central Model rules, 2020. Thus, as per the State, this petition has been rendered infructuous and liable to be dismissed. 12. On the other hand, Senior Counsel for the petitioner apprises the Court that during the pendency of this petition and especially after filing of Replies by the MPIDC and private respondent No. 7, the State-Govt. (respondent No. 3) had rejected its renewal application, merely on a perverse finding that such renewal-application was belated, as per the Central Model rules, 2020. This rejection order dated 30.8.2024 passed by respondent No. 2 was challenged before this Court in W.P. No. 26072/2024 and subsequently quashed by the Single-Bench, vide order dated 6.9.2024 on the following grounds which as per such order, "could not be objected" by the Counsel for the sate in that petition: (i) Violation of principles of natural justice - ingrained in the proviso to section 8 of PSARA Act, 2005; and (ii) Application of the Hon'ble Supreme Court's order dated 10.1.2022 in passed in Suo Motu Writ Petition (Civil) No. 3 of 2020 by the Hon'ble Supreme Court thereby extending the limitation as may be prescribed under any general or special laws in respect of all judicial or quasijudicial proceedings upto 1.3.2022. 13. Based on the above, the petitioner claims that since the rejection of its renewal application has already been quashed by this High Court in a separate petition; and since the such application has been "remanded back" to the licensing-authority, therefore such factum amounts to pendency of its renewal-application again, enabling it to claim benefit of rule 5(10) of the Central Model rules, 2020 - which provides that pendency of a renewal- application is to be deemed as a valid license. The counsel for the State admits this factum of pendency of petitioner's renewal-application as on date, before respondent No. 2.
The counsel for the State admits this factum of pendency of petitioner's renewal-application as on date, before respondent No. 2. 14. Be that as may, this Court is ceased of the controversy: Whether the MPIDC was justified in rejecting the petitioner's bid in light of the pendency of its renewal-application and whether if at all, such plea is maintainable before this Court under Article 226 of the Constitution? EXERCISE OF WRIT JURISDICTION AFTER A CONTRACT COMES INTO EXISTENCE: 15. As far as the issue of judicial interference at the stage of exercise of writ jurisdiction after a contract comes into existence is concerned, the petitioner relies upon a recent ruling dated July 9, 2024 of the Hon'ble Supreme Court in Subodh Kumar Singh Rathour v. Chief Executive Officer and Others in Civil Appeal No.6741/2024 (reported in 2024 SCC OnLine SC 1682), wherein it has inter alia been held as under: "55. This court held that even after the contract comes into existence an action may lie by way of a writ to either (I) obviate an arbitrary or unreasonable action on part of the State or (Il) to call upon it to honour its obligations unless there is a serious or genuine dispute as regards the liability of the State from honouring such obligation. Existence of an alternative remedy or a disputed question of fact may be a ground to not entertain the parties in a writ as long as it is not being used as smokescreen to defeat genuine claims of public law remedy. The relevant observations read as under: - ..... “v. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a Writ Petition. 132. As, we have held the Notice of Cancellation dated 7.2.2023 to be nonest, the issuance of a fresh tender to any third-party in respect of the same work would not defeat the vested rights that accrued in favour of the appellant. Similarly, the handing over of the operation and maintenance of the E.M. Bypass to the KMC also would have no bearing whatsoever, on the rights that stood vested in the appellant as on the date of cancellation of the tender.
Similarly, the handing over of the operation and maintenance of the E.M. Bypass to the KMC also would have no bearing whatsoever, on the rights that stood vested in the appellant as on the date of cancellation of the tender. Such vested rights would continue to operate notwithstanding any change in the control and maintenance of the underpasses. " 16. The aforesaid recent ruling is squarely applicable to the fasts and circumstances of the present controversy, based upon which coming into existence of a contract cannot be held to negate the maintainability of the matter. 17. This Court finds substance in the above submission and holds that tested on the anvil of law and principles laid down in the rulings cited above, it may be concluded that the instant matter requires exercise of power of judicial review, as the practice adopted by the authority/MPIDC prima facie appears to be in contravention of law and moreover, being bereft of fairness and equity. ADJUDICATION OF THE CONTROVERSY ON MERITS: 18. Having adjudicated the issue of maintainability of the petition, the Court now examines the facts of the controversy, which reveal that as on date, the petitioner's Application for grant of renewal of its license under the PSARA Act, 2005 is undeniably pending before the respondent No. 2 (State Home Secretary), by virtue of final order dated 6/9/2024 passed by this Court in W.P. No. 26072/2024. The petitioner has invited attention of this Court to rule 5(9) of the Private Security Agencies Central Model Rules, 2020 which stipulates that "an order for renewal or rejection of application for renewal of license must be issued within 30 days from the receipt of the application" - to contend that now that its renewal-application has been remitted to the respondent No. 2 wherein it has also appeared in person, the concerned respondent No. 2 is now legally obligated to adjudicate the same within the above-mentioned time-period. 19. Although this Court is not ceased with the issue of merits of such pending-application, but it is expected that the same shall be adjudicated by the respondent No. 2 within the prescribed time-period, especially in light of the fact that it was originally filed in February 2021, the exact date of which is to be ascertained by the said authority. 20.
20. Irrespective of the final fate of such renewal-application, the factum of its current pendency has not been disputed by any of the parties, and thus, the pendency of petitioner's license-renewal application before respondent N o. 2 is an admitted fact. 21. Based upon the above, this Court now proceeds to examine the provision of law as relied upon by the petitioner i.e. Rule 5(10) of the Private Security Agencies Central Model rules of 2020, which provide as under: "5. RENEWAL OF LICENSE. (10) The validity of renewed license shall be counted from the date of expiry of the previous license and shall be upto a period of five years irrespective of its date of renewal. In case the application is decided by the controlling authority after expiry of the existing license, the intervening period shall deem to be under valid license." 22. An examination of the aforesaid legal provision brings forth that the intervening period between the point in time when a renewal application is filed until its final decision - is to be deemed as valid and thus, if the petitioner's application is found to be pending, the benefit of such deeming fiction would be applicable in its favour. 23. Replies filed supported by Affidavits, by the State and by MPIDC - have relied upon the Private Security Agencies Central Model rules of 2020 to compute the alleged delay on the part of the petitioner in filing its renewal- application. The 'State' along with its Reply has included its order dated 30.8.2024 wherein it arrived at a finding that the petitioner's application was delayed, as per the limitation prescribed under the Private Security Agencies Central Model Rules of 2020. Interestingly, at the stage of arguments, the Counsel for the State and private-respondent No. 7 have vehemently argued that such Private Security Agencies Central Model Rules, 2020 are beyond the limits prescribed in the PSARA Act, 2005 and hence, such Model rules have no applicability and instead, the M.P. Private Security Agencies rules, 2012 are to take precedence over the Central Model rules, 2020. However, examination of the pleadings on Affidavits by the Respondent State and MPIDC as filed before this Court reveals that no pleadings to such effect have been made by them - in respect of non-applicability of the Private Security Agencies Central Model rules, 2020.
However, examination of the pleadings on Affidavits by the Respondent State and MPIDC as filed before this Court reveals that no pleadings to such effect have been made by them - in respect of non-applicability of the Private Security Agencies Central Model rules, 2020. In-fact, the alleged delay attributed upon the petitioner by the said Respondents flows from reliance upon the same Central Model Rules of 2020 and thus, the verbal pleadings to contrary cannot be made a ground to supplement the Replies which are on record. It is a settled law that the validity of an order has to be judged by the reasons stated in the order itself and not by anything else, as held by the Supreme Court in Mohinder Singh Gill and Another v. Chief Election Commissioner in 1978 AIR 851, 1978 SCR (3) 272 and by this Court in Satyam Cineplexes v. State of M.P. and Others in W.P. No. 4694/2014. Thus, we do not find force in the verbal averments of the Respondents and hold that the present controversy has to be settled in light of the PSARA Act, 2005 and the Central Model Rules, 2020 - more so, since the actions of the State-Govt. as well as the MPIDC are based upon the same. Interestingly, the Counsel for the MPIDC - whose impugned action is the subject-matter of this petition - has neither in its Reply nor in its arguments has contested the applicability of the Central Model Rules, 2020. It is seen that even otherwise, examination of the PSARA Act, 2005 requires that any State-rules have to conform to such Central-legislation. In the instant case, even if the M.P. Private Security Agencies Rules, 2012 find application, the same are silent with respect to the deeming fiction created by the Central rules of 2020, which also being a Central enactment/promulgation, has to take precedence. 24. During the course of arguments, Ld. Senior Counsel for the private respondent No. 7 relied on a number of judicial pronouncements through a compendium of case-law along with relevant statutes/Rules in a combined paper-book, running into more than 300 pages. The endeavour of the respondent No. 7 is in respect to convince this Court that the Central Model Rules, 2020 find no application to the facts of the instant case. However, examination of the pleadings (supported by Affidavits) made by the MPIDC and the State Govt.
The endeavour of the respondent No. 7 is in respect to convince this Court that the Central Model Rules, 2020 find no application to the facts of the instant case. However, examination of the pleadings (supported by Affidavits) made by the MPIDC and the State Govt. [whose actions are impugned] make it apparent that their actions are undeniably based upon the Central Model Rules, 2020. Thus, irrespective of the applicability of such rulings relied upon by private respondent No. 7, it is not considered necessary to dwell deep into the same, as none of the pleadings (on affidavits) as filed by any of the parties have contested the applicability of such Rules of 2020, except by way of verbal pleadings by Private-respondent No. 7. 25. Thus, scrutiny of the pleadings by all concerned parties to this litigation, results in following conclusions: (I) The petitioner is entitled to claim benefit of the deeming fiction as provided under rule 5(10) of such Central Model Rules of 2020, as per which the intervening period between filing of a renewal-application until its final adjudication amounts to the applicant as holding a 'deemed valid license'. (II) The rejection of the petitioner's bid by the MPIDC on the ground of not possessing a valid license under the PSARA Act, 2005 is held to be illegal and bad in law as the same is in contradiction to its underlying rule 5(10) of the Central Model Rules of 2020; (III) The Court can intervene in tender-related matters, through exercise of its writ jurisdiction even after a contract comes into existence in light of the Hon'ble Supreme Court's ruling in Subodh Kumar Singh Rathour v. Chief Executive Officer and Others in Civil Appeal No.6741/2024 (supra); (IV) The award of the underlying contract to private-respondent No. 7 by MPIDC is consequently quashed held as being bad in law as the same was arrived at, at the altar of the illegal expulsion of the petitioner in the technical evaluation round; (V) Thus, the MPIDC is directed to relegate all the 3 bidders to the stage of technical evaluation of the NIT floated by it, based upon the judicial finding that the petitioner held a (deemed) valid license on the date of submission of its bid; and thereafter take a fresh decision on merits in accordance with law.