IMPORTANT POINT
The court upheld the constitutionality of government orders granting price preference to Labour Contract Co-operative Societies in public tenders, affirming limited judicial review in contractual matters.

ORDER :

The petitioner is a private limited company and a registered A Class contractor under the Kerala Water Authority/ 1^st respondent. The petitioner had submitted its bid in response to the Ext.P1 e-tender notice issued by the 2^nd respondent for the work captioned “KIIFB Aided Thalassery- Kuthuparamba Comprehensive drinking Water Project- Construction of Service Reservoirs (24 Land & 14 LL) Supplying and Laying of Gravity mains, Distribution systems, Providing FHTCs etc.-Pipeline work”. In the tender proceedings conducted thereafter, petitioner and the 3^rd respondent were found to be having the necessary experience and expertise to be carry out the notified work. The financial bids were opened on 01-08-2024 and as per Ext.P5 item wise BoQ rates of the bidders published by the 2^nd respondent, petitioner's was the lowest quote (L1). The total PAC quote by the petitioner was 1.5% above the tendered PAC, while that of the 3^rd respondent was above 7%. As cost based system was adopted for the tender, all that remained was issuance of a selection notice/letter of award to the petitioner. At that stage, petitioner received reliable information that the work is likely to be awarded to the 3^rd respondent under the guise of the price preference orders issued by the Government with respect to Labour Contract Co-Operative Societies generally and the 3^rd respondent, specifically. In spite of the petitioner trying to reason out with the 2^nd respondent and other officials of the Water Authority, they were adamant in granting 10% price price preference to the 3^rd respondent. As the said illegal and arbitrary stand would result in the work being awarded to the 3^rd respondent, in spite of petitioner being the lowest bidder, this writ petition is filed seeking the following reliefs;

“A. To declare that the petitioner being the Lowest Tenderer (LI), the official respondents are bound to award the work in favour of the petitioner having regard to Ext P1 being a cost based tender;

B. To issue a writ or mandamus or any other writ or direction commanding the respondents No.1 and 2 to award the work to the petitioner pursuant to Ext P5.

C. To declare that there could be no price preference could be granted in favour of the third respondent in respect of Ext P1 tender.”

2. Learned counsel for the petitioner contended that, grant of price preference to the 3^rd respondent is grossly arbitrary, illegal and discriminatory and would result in tampering with the level playing field, which is fundamental for public tenders. Moreover, if any price preference was to be extended to participating Labour Contract Cooperative Societies, that should have found a place in the notice inviting tender. It is also contended that, being an autonomous body, Government Orders granting price preference to the 3^rd respondent or other societies, will not apply to tender proceedings of the Kerala Water Authority.

3. Learned Standing Counsel for the Water Authority submitted that the Government, through a series of orders, starting from GO(MS)No.135/97/Co-op. dated 13.11.1997 onwards, has conferred 10% price preference to Labour Contract Societies and the 3^rd respondent. In the subject contract, since total PAC quoted by the petitioners is 1.94% above tendered PAC and that of the 3^rd respondent is 9.77% above tendered PAC, 3^rd respondent became the lowest bidder (L1) on granting 10% price preference. The procedure adopted by the 2^nd respondent being strictly in accordance with the Government Orders governing the subject, no interference is warranted.

4. Learned counsel for the 3^rd respondent submitted that the constitutionality of the Government Orders extending benefits to Labour Contract Co-operative Societies and 3^rd respondent was challenged before this Court by private contractors. As per Ext.R3(e) judgment, this Court upheld the constitutionality of those Government Orders. That judgment was taken in appeal and the Division Bench categorically held that individual contractors