The court affirmed that compliance with statutory provisions in public tenders is essential, and arbitrary cancellation without notice is unjustified, upholding the tender cancellation based on legal grounds.

JUDGMENT :

Ashutosh Kumar, ACJ

The central issues in all the writ petitions are:(a) Whether the Government/ Government Agency is justified in cancelling the tender which was issued inviting bidders for empanelment of agencies only on the ground of one of the conditions in the tender being technically incorrect and not in conformity with the Private Securities Agencies (Regulation) Act, 2005 (hereinafter referred to as the 'Act of 2005')?; (b) Whether the contract with the successful bidders under the tender could be cancelled without issuing notice to them?; (c) Whether the faulty condition in the tender could be segregated and the already entered into contract could be saved?; (d) Whether the State has the authority to cancel the tender when the selection process has not been adversely commented upon in any manner or that after the allocation of work orders, the contractor had made any default in terms of the contract?; and (e) Whether the action of the State in cancelling the tender in its entirety smacks of malafides?

2. The Bihar Medical Services and Infrastructure Corporation Limited (hereinafter referred to as 'the BMSICL') had floated a tender for empanelment of agencies for outsourcing different job profiles. In the ‘Instructions to the Bidder’, which was part of the tender document, it was mentioned that for the outsourcing of security guards, if an agency or a bidder does not have a licence under the Act of 2005, the agency will source the same from a security firm having licence in accordance with the Act of 2005 in the State, thereby permitting even unlicensed bidders to participate in the bid.

3. The Act of 2005 specifies in Section 4 thereof that no person shall carry on or commence the business of private security agency, unless he holds a licence issued under the Act. The proviso to Section 4 , however, permits that the person carrying on the business of private security agency, immediately before the commencement of the Act, may continue to do so for a period of one year from the date of such commencement and if he has made an application for such licence within the said period of one year, till the disposal of such application. The second proviso to Section 4 further stipulates that no private security agency shall provide private security abroad without obtaining permission of the controlling authority, which shall consult the Central Government before according such permission.

4. It would further be necessary, for the disposal of these writ petitions, to indicate that there were various positions, viz., that of Manager, Assistant Manager, Electrician, Sweeper, etc. for which outsourcing agency had to be empanelled. Out of several such positions (ten in number), only one related to the supply of security guard/office boy/lift operator/ fireman.

5. The writ petitioners had applied under the bid and were successful for being allotted the work of supplying manpower for all positions including the security guards.

6. Later, on a review of the tender process, it was found that the relaxed condition in the tender document of permitting even the unlicensed bidders was not appropriate and thus a decision was taken to cancel all the tenders.

7. This was not a knee-jerk reaction. In fact, the Health Department, as it appears from the records, had constituted a committee under the Chairmanship of the Secretary, Health, which committee had discussed several issues, especially with regard to relaxing the terms of the tender, in violation of the provision contained in the Act of 2005, permitting such bidders also to participate who did n