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IN THE HIGH COURT OF DELHI
Satish Chandra Sharma, Subramonium Prasad, JJ.
JMC Projects (India) Limited - Appellant
Versus
Union of India - Respondent
W.P.(C) 1236 of 2020
Decided On : 02-11-2022
| Table of Content |
|---|
| 1. petitioner seeks to quash the impugned om. (Para 1 , 2 , 3) |
| 2. arguments against the impugned om being bad in law. (Para 4) |
| 3. impact of impugned om on bidders and competition. (Para 5 , 6 , 7 , 8 , 9) |
| 4. discussion on article 14 and its implications. (Para 10 , 11) |
| 5. framework for evaluating the rational classification under article 14. (Para 12 , 13 , 14 , 15) |
| 6. classification must be reasonable with a rational nexus. (Para 18 , 19) |
| 7. distinction between legal entities in assessing eligibility. (Para 22 , 23 , 25) |
| 8. rationale for judicial intervention in arbitrary government action. (Para 24 , 28) |
| 9. court quashes the impugned om and allows the writ petition. (Para 30 , 31) |
JUDGMENT
Subramonium Prasad, J. The instant writ petition has been filed seeking the quashing and setting aside of Office Memorandum No. DG/SOP/5 dated 10.01.2020 issued by Respondent No.2, i.e. the Central Public Works Department (CPWD) pertaining to "Modification in initial criteria for eligibility in SOP Annexure-24, Para 7.3 (CPWD Works Manual 2019)".
2. The facts leading to the instant petition are that vide Office Memorandum No. DG/SOP/5 dated 10.01.2020 (hereinafter referred to as "Impugned OM"), the CPWD allegedly amended and modified the eligibility criteria set out in Paragraph 7.3 in Section-II of Annexure-24 of the CPWD Works Manual as well as in Form `A' in Section-III of Annexure-24. By way of the supposed amendment, CPWD stated that the balance sheet furnished by a Public/Private Ltd. Company would entail both its standalone financial statement as well as its consolidated financial statement, and that the same would stand true for the calculation of Profit/Loss. The impugned OM has been reproduced as follows for ease of comprehension:
| Rule | Existing Provision | Modified Provision |
| 7.3 | The bidder should not have incurred any loss (profit after tax should be positive) in more than two years during available last five consecutive balance sheets, duly certified and audited by the Chartered Accountant. | The bidder should not have incurred any loss (profit after tax should be positive) in more than two years during available last five consecutive balance sheets, duly certified and audited by the Chartered Accountant. (The balance sheet in case of Pvt./Public Ltd. company means its standalone finance statement and consolidated financial statement both) |
| SECTION III INFORMATION REGARDING ELIGIBILITY | FINANCIAL INFORMATION (FORM 'A') (ii) Profit/Loss. | FINANCIAL INFORMATION (FORM 'A') (ii) Profit/Loss (standalone finance statement and consolidated financial statement both) |
3. Aggrieved by the impugned OM, the Petitioner herein submitted a representation dated 14.01.2020 to the Respondents, enumerating its concerns pertaining to the modification of the financial eligibility criteria of the bidders and requested for the withdrawal of the said modification with immediate effect. In view of the lack of response to the said representation, the Petitioner has approached this Court by way of the instant petition, seeking quashing and setting aside of the impugned OM.
4. Mr. Akhil Sibal, learned Senior Counsel appearing for the Petitioner, at the outset, submits that the impugned OM is bad in law as it violates Article 14 and Article 19(1)(g) of the Constitution of India, 1950, and should be set aside for the reason that it is discriminatory, manifestly arbitrary and has no basis in law. He has advanced the following arguments to support the relief that is being sought in the instant petition:
a) The impugned OM has been issued without the sanction of the competent authority and is, therefore, void ab initio. Reliance is placed on Para 1.6 of the CPWD Works Manual as per which the Director General of CPWD is the Competent Authority for revision of any provisions in the Manual. However, with regard to provisions relating to financial policy, the Ministry of Housing and Urban Affairs, i.e. Respondent No.1 is the designated authority to deal with the same.
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