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2025 DIGILAW 1503 (TS)

Bhargavi Enterprises v. State of Telangana

2025-11-14

NAGESH BHEEMAPAKA

body2025
ORDER : Nagesh Bheemapaka, J. Petitioner challenges the action of Respondents 3 and 4, in selecting and empanelling Respondents 5 to 10 in the List of Out Sourcing Agencies, Suryapet District (2025-26) in contravention of tender eligibility conditions of Tender Notice dated 13.06.2025 and consequentially allotting Respondents 5 to 10 to the needy government departments for outsourcing work by the 3 rd respondent vide proceedings dated 20.08.2025 as illegal, arbitrary, unfair, against the tender rules and conditions and in violation of Articles 14 and 21 of the Constitution of India; consequently, to set aside the list of Outsourcing Agencies, Suryapet District (2025-26) to the extent of the Respondent Nos. S to 10 and also to set aside the consequential orders of the 3 rd respondent vide proceedings dated 20.08.2025. 2. The case of petitioner is that it is a duly registered outsourcing agency, having been established in 2016, and has been providing manpower to various Government Departments in Suryapet District for several years. It claims to possess all valid statutory registrations, including labour licence, EPF, ESI, GST and professional tax registrations and asserts that it has been renewing its licence periodically, the latest being valid up to 31.12.2025. 2.1. The 3 rd respondent issued Tender Notification dated 13.06.2025 inviting Applications from registered outsourcing agencies for empanelment to provide manpower to various Government Departments in Suryapet District for the financial year 2025-26. As per the tender conditions, all the interested agencies were required to submit Applications along with supporting documents between 16.06.2025 and 20.06.2025. The tender notification stipulated, among other things, that each applicant should have a minimum annual turnover of Rs.30,00,000/-in any one of the last three financial years, should possess valid EPF and ESI registration certificates, should have paid contributions under those enactments for at least six months prior to submission and should hold valid GST registration and submit proof of return filings for the last six months. Additionally, each applicant was required to enclose a demand draft for Rs.15,000/- towards processing fee and Rs.5,00,000/- towards earnest money deposit. 2.2. Petitioner submitted its Application within the prescribed period along with all the necessary documents and certificates to establish compliance with the eligibility criteria. It was thereafter, included in the list of agencies found eligible for empanelment, and proceedings dated 23.07.2025 were issued confirming their inclusion among 27 agencies shortlisted for empanelment for the said financial year. 2.2. Petitioner submitted its Application within the prescribed period along with all the necessary documents and certificates to establish compliance with the eligibility criteria. It was thereafter, included in the list of agencies found eligible for empanelment, and proceedings dated 23.07.2025 were issued confirming their inclusion among 27 agencies shortlisted for empanelment for the said financial year. It is contended, after such empanelment, Respondents 3 and 4, without any justification, included certain other agencies, namely Respondents 5 to 10, which were ineligible under the tender terms. The petitioner submits that these agencies neither had the requisite turnover of Rs.30,00,000/- nor the statutory compliance documents required under the tender conditions. Petitioner on discovering that such agencies were nevertheless included and subsequently, allotted outsourcing work through proceedings dated 20.08.2025, filed the present Writ Petition. 2.3. Petitioner states that it has an impeccable record of service and has been executing outsourcing work in various Government Departments such as Medical and Health Department, Revenue Department and the District Treasury, among others, for the past several years to the satisfaction of the authorities. It has duly paid its outsourcing employees' salaries and remitted statutory contributions towards EPF and ESI without default. Petitioner's annual turnover for the financial year 2024-25 was Rs.1,52,37,450/-, which exceeds the minimum financial requirement prescribed by the tender conditions. 2.4. Petitioner states that tender notification dated 13.06.2025 was intended to ensure transparency and to empanel only those agencies which are financially and operationally sound. It prescribes mandatory eligibility conditions that must be satisfied without exception. According to petitioner, Respondents 5 to 10 failed to meet several of these mandatory criteria; they had ‘nil’ turnover for the financial years 2022-23, 2023-24 and 2024-25, while Respondent No. 6 had meagre turnover amounts of Rs.5,08,402/- in 2023-24 and Rs.3,62,880/- in 2024-25. Thus, none of them met the minimum annual turnover requirement of Rs.30,00,000/- in any of the last three financial years. 2.5. It is further stated that Respondents 5 and 7 did not have valid labour licences as on the last date of submission of Applications. Respondent No. 5 was newly registered only in May 2025, barely a month before the tender, therefore could not have furnished proof of statutory compliance for the preceding six months. Respondent No. 7's registration was cancelled in 2017 and had not been renewed thereafter. Respondent No. 8's registration expired on 31.12.2024 and was never renewed. Respondent No. 5 was newly registered only in May 2025, barely a month before the tender, therefore could not have furnished proof of statutory compliance for the preceding six months. Respondent No. 7's registration was cancelled in 2017 and had not been renewed thereafter. Respondent No. 8's registration expired on 31.12.2024 and was never renewed. Respondents 9 and 10 had not submitted any proof of EPF and ESI contribution payments for the last six months preceding the tender. 2.6. It is contended that the official respondents were duty-bound to verify each of these documents at the time of scrutiny but failed to do so. Inclusion of such ineligible agencies, according to petitioner, is a result of collusion and extraneous considerations. It is further alleged that the 3rd respondent, acting as the Chairman of the District Outsourcing Selection Committee, and the 4 th respondent, acting as the Convener, have selectively relaxed the eligibility criteria for certain favoured agencies, which is impermissible under law. Petitioner states that such actions of the official respondents are in violation of the tender terms, Government Orders governing the empanelment process, and the fundamental principles of equality and fairness. Petitioner relies upon G.O.Rt.No.4459 dated 27.12.2006 and G.O.Rt.No.4271 dated 01.11.2008, which require that all outsourcing agencies must be duly registered, financially sound, and compliant with all labour and statutory obligations. Any relaxation of these conditions, unless notified prior to the tender, is contrary to law. Petitioner contends that respondents' conduct amounts to violation of Articles 14 and 21 of the Constitution of India, as it defeats the object of ensuring equal opportunity and fair competition among outsourcing agencies. Petitioner therefore, seeks quashing of the impugned proceedings dated 20.08.2025 to the extent they relate to Respondents 5 to 10 and a direction to respondents to consider petitioner for allocation of outsourcing work in accordance with law. 3. By order dated 04.09.2025, this Court granted status quo existing as on that day shall be maintained by both the parties. 4. The 3 rd respondent - District Collector filed a detailed counter affidavit denying the allegations made by the petitioner. It is stated that tender and selection process was conducted strictly in accordance with the provisions of G.O.Rt.No.4459 dated 27.12.2006 and G.O.Rt.No.4271 dated 01.11.2008 and that no deviation or irregularity occurred at any stage. 4. The 3 rd respondent - District Collector filed a detailed counter affidavit denying the allegations made by the petitioner. It is stated that tender and selection process was conducted strictly in accordance with the provisions of G.O.Rt.No.4459 dated 27.12.2006 and G.O.Rt.No.4271 dated 01.11.2008 and that no deviation or irregularity occurred at any stage. It is further stated that petitioner misconstrued the process and has made baseless allegations without understanding the functioning of the District Outsourcing Selection Committee. A total of 34 Applications were received in response to the tender notification dated 13.06.2025. After preliminary scrutiny, 19 agencies were found to have fulfilled all the requirements, while 8 agencies were found to have valid EPF, ESI, GST, and labour registrations but had not submitted proof of Rs.30 lakh turnover. The remaining Applications were rejected for want of basic documentation. The District Level Outsourcing Committee, in its meeting held on 18.07.2025, considered the matter and resolved to accept equivalent proof of financial capacity in the form of bank guarantees of Rs.30,00,000/- for those agencies that had otherwise complied with all other conditions. This decision was taken to ensure a competitive process and was uniformly applied to all the agencies falling within that category. 4.1. It is stated, all the agencies, including Respondents 5 to 10, furnished valid bank guarantees, EPF and ESI registrations, and other documents before finalization of the empanelment list. After thorough verification, 27 agencies were empanelled, including petitioner. The allegation that ineligible agencies were included is incorrect and baseless. Subsequent allotments made under proceedings dated 20.08.2025 were done in accordance with administrative rotation and as per availability of work in various departments. It is further stated, empanelment does not confer any exclusive or vested right to be allotted outsourcing work. Empanelment merely qualifies an agency to be considered for allotment, subject to administrative discretion and requirement. Hence, petitioner's claim that it must be allotted work to the exclusion of others is legally untenable. 4.2. It is contended that the District Collector, being the competent authority, is empowered to exercise reasonable administrative discretion in interpreting the tender terms. Acceptance of bank guarantees as proof of financial capacity was within such permissible discretion. No favoritism or bias was shown to any particular agency. 4.2. It is contended that the District Collector, being the competent authority, is empowered to exercise reasonable administrative discretion in interpreting the tender terms. Acceptance of bank guarantees as proof of financial capacity was within such permissible discretion. No favoritism or bias was shown to any particular agency. They rely on the judgment of the Hon'ble Supreme Court in Durgawati Devi v. Union of India , 2019 SCC OnLine SC 2305 , particularly paragraphs 5, 7 and 8, wherein it was held that the terms and conditions of a tender are not open to judicial scrutiny except where arbitrariness, mala fides or discrimination are clearly established and that the Authority issuing tender is the best judge of its own requirements. The said judgment further lays down that a tender process cannot be invalidated merely because another interpretation of the conditions appears possible. 4.3. On the above grounds, it is contended that there was no illegality or irregularity in the empanelment or the subsequent allotments, and Writ Petition is devoid of merit and is liable to be dismissed. 5. Heard Smt. G. Jyothi Kiran, learned counsel for petitioner, Sri S. Manichander, learned Senior Counsel for Respondent No.1 and learned Government Pleader for Labour. 6. This Court has carefully considered the rival submissions of the parties and perused the material placed on record. It is not in dispute that petitioner participated in the tender process pursuant to Notification dated 13.06.2025 and they were found eligible, and both the petitioner and Respondents 5 to 10 were included in the final list of 27 empanelled agencies. It is also undisputed that subsequent work allotments were made under proceedings dated 20.08.2025 by the District Collector. 7. The core issue raised by petitioner is whether the inclusion of Respondents 5 to 10 in the empanelled list and their subsequent allotment of outsourcing work was contrary to the tender conditions and whether the District Collector had the authority to relax the financial criteria. 8. From the records produced, it is evident that the District Level Outsourcing Committee, in its meeting held on 18.07.2025, had consciously resolved to permit agencies lacking turnover certificates to furnish equivalent financial proof in the form of a bank guarantee of Rs.30,00,000/-. The Committee exercised such discretion to ensure wider competition and transparency and applied it uniformly to all similarly-placed applicants. The Committee exercised such discretion to ensure wider competition and transparency and applied it uniformly to all similarly-placed applicants. Petitioner has not placed any evidence to show that such discretion was exercised selectively or with any element of mala fide. The law is well settled that in matters of public tenders, the terms of the invitation to bid are not open to judicial scrutiny unless the same are arbitrary or discriminatory. The Hon'ble Supreme Court in Durgawati Devi ’s case (supra) held that the Authority floating the tender is the best judge of its requirements and that Courts should not substitute their own views or interfere with administrative decisions unless they are shown to be mala fide or irrational. Applying the said principle to the present case, this Court finds no infirmity in the decision of the respondents to accept bank guarantees as proof of financial capacity. 9. Petitioner has not demonstrated that empanelment or subsequent allotments were vitiated by arbitrariness or malice. Empanelment does not create a vested right to obtain work and the administrative authority retains the discretion to allocate work based on operational requirements. Petitioner's grievance is essentially directed against a policy decision taken by the Committee, which, in the absence of arbitrariness, cannot be interfered by this Court under Article 226 of the Constitution of India. Upon overall consideration, this Court finds that the impugned proceedings dated 20.08.2025 were issued after due consideration of all the relevant factors and that petitioner failed to establish any violation of law, mala fides or procedural irregularity. The contention that inclusion of Respondents 5 to 10 violated Articles 14 and 21 of the Constitution is untenable in the absence of any proof of discriminatory treatment. 10. For the reasons stated above, this Court is of the considered opinion that the action of respondents in empanelling and allotting outsourcing work to Respondents 5 to 10 pursuant to proceedings dated 20.08.2025 cannot be held to be illegal, arbitrary or in violation of the tender conditions. The decision of the District Level Outsourcing Committee is found to be within the bounds of administrative discretion and consistent with the principles laid down by the Hon'ble Supreme Court in Durgawati Devi ’s case. 11. Accordingly, the Writ Petition is dismissed as devoid of merit. No costs. 12. Miscellaneous petitions, if any, pending shall stand closed.