Sunday 18 January 2015

Whether concept of "Level playing field" can be used for interpretation of constitution?


     The learned counsel for the petitioners has argued 
that   "level   playing   field"   is   being   denied   and   fair 
competition amongst the registered electrical contractors 
is   prevented   to   the   advantage   of   the   civil   contractors 
while  awarding  contracts  by the Public  Works  Department 
of   the   State.     Therefore,   at   this   juncture,   it   is 
apposite to quote observations of the Hon'ble Apex Court 
in   the   matter   of  Reliance   Energy   Ltd.   &   another   V/s 
Maharashtra   State   Road   Development   Corporation   Ltd.   &  
others  [  (2007) 8 SCC 1 ].   In paragraph no.36 of this 
judgment,   the   Hon'ble   Supreme   Court   has   explained   the 
concept of "level playing field" and has held thus:­
"......... "Level playing field" is an important 
concept while construing Article 19(1)(g) of the 
Constitution.     It   is   this   doctrine   which   is 
invoked   by   REL/HDEC   in   the   present   case.     When 
Article   19(1)(g)   confers   fundamental   right   to 
carry on business to a company, it is entitled to 
invoke   the   said   doctrine   of   "level   playing 
field".     We   may   clarify   that   this   doctrine   is, 
however,   subject   to   public   interest.     In   the 
world   of   globalisation,   competition   is   an 
important   factor   to   be   kept   in   mind.     The 

doctrine of "level playing field" is an important 
doctrine which is embodied in Article 19(1)(g) of 
the   Constitution.     "This   is   because   the   said 
doctrine   provides   space   within   which   equally 
placed   competitors   are   allowed   to   bid   so   as   to 
subserve the larger public  interest. 
"Globalisation", in essence, is liberalisation of 
trade.     Today   India   has   dismantled   licence   raj. 
The   economic   reforms   introduced   after   1992   have 

brought   in   the   concept   of   "globalisation". 
Decisions   or   acts   which   result   in   unequal   and 
discriminatory   treatment,   would   violate   the 
doctrine   of   "level   playing   field"   embodied   in 
Article   19(1)(g).     Time   has   come,   therefore,   to 
say that Article 14 which refers to the principle 
of "equality" should not be read as a stand alone 
item   but   it   should   be   read   in   conjunction   with 
Article   21   which   embodies   several   aspects   of 
life.  There is one more aspect which needs to be 
mentioned in the matter of implementation of the 
aforestated   doctrine   of   "level   playing   field". 
According   to   Lord   Goldsmith,   commitment   to   the 
"rule   of   law"   is   the   heart   of   parliamentary 
democracy.   One of the important elements of the 
"rule   of   law"   is   legal   certainty.     Article   14 
applies to government policies and if the policy 
or   act   of   the   Government,   even   in   contractual 
matters,   fails   to   satisfy   the   test   of 
"reasonableness",   then   such   an   act   or   decision 
would be unconstitutional."
          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                     BENCH AT AURANGABAD
     
                      WRIT PETITION NO.3196/2013
Aurangabad Electrical Contractors
Association, 
                         Versus

The State of Maharashtra,


CORAM: R.M. BORDE &
   A.M. BADAR, JJ. 
  
JUDGMENT PRONOUNCED ON 10.04.2014
Citation; 2015(1) MHLJ 182


Heard learned counsel for the parties.   Rule.   Rule 
is made returnable forthwith and with consent of learned 
counsel   for   the   parties,   the   petition   is   taken   up   for 
final hearing.
2]
By   the   instant   petition,   petitioners,   who   are 
associations   of   electrical   contractors,   are   praying   for 
setting

aside

Government

resolution

bearing 
No.CAT­1097/693/building­2   dated   27.1.2004   (Exhibit   A) 
and   Government   circular   No.CAT­03/11/CN/109/building­2 
dated   24.3.2011   (Exhibit   B)   issued   by   Public   Works 
Department of the respondent ­ State of Maharashtra.  
3]
By   the   impugned   Government   resolution   dated 

27.1.2004,   the   State   Government   has   resolved   that 
composite tender for civil and electrical work needs to 
be  invited  for  construction of  buildings  costing  Rs.1/­ 
crore or more and by circular dated 24.3.2011, the Public 
Works   Department   of   the   State,   after   noting   that   the 
provisions   of   Government   resolution   dated   27.1.2004   are 
not   being   followed   by   giving   excuse   that   estimate   of 

electrical work is not received in time, has directed the 
officers   of   the   Public   Works   Department   to   follow   the 
said Government resolution.
The   learned   counsel   for   petitioners   vehemently 
4]
argued that by issuing the impugned Government resolution 
dated   27.1.2004,   the   State   Government   has   violated   the 
right   of   electrical   contractors   to   compete   and   the 
Government resolution as well as the circular issued by 
the   State   is   violative   of   the   provisions   of   Articles14 
and 19(1)(g) of the Constitution of India.  According to 
the learned counsel for petitioners, action of the State 
in   issuing   a   single   tender   for   civil   as   well   as 
electrical work of the project has virtually reduced the 
electrical   contractors   to   the   position   of   mere   sub­
contractor of the main civil contractor and such action 

is discriminatory.   By such composite tender, there will 
not be proper competition for electrical part of the work 
and   only   limited   number   of   electrical   contractors   are 
being involved in this method of issuing composite tender 
for both works.  The learned counsel for the petitioners 
further pointed out judgment of the Kerala High Court in 
Writ   Petition   (Civil)   Nos.28113/2009­H   and   30556/2009­L 
decided on 19.11.2010 by the learned Single Judge of that 
Court and contended that in similar situation, the Kerala 
High Court has held such an action of issuing composite 
tender   for   civil   and   electrical   work   together   as 
violative of the provisions of Articles 14 and 19(1)(g) 
of the Constitution of India.
5]
Per contra, according to the learned AGP, the State 
Government   has   taken   a   policy   decision   of   issuing 
composite tender for getting civil as well as electrical 
work   done   in   order   to   save   time   as   well   as   cost   of 
project.     According   to   the   learned   AGP,   such   policy 
decision of the State cannot be branded as discriminatory 
or  arbitrary  as it  is  taken in  the  interest of  getting 
the project work completed in a time bound frame.

Considering   the   rival   submissions,   it   is   necessary 
6]
to examine the impugned Government resolution as well as 
circular   in   detail.     Considering   the   response   filed   by 
the   State   in   this   case,   it   is   not   in   dispute   that   the 
electrical   contractors   have   been   given   the   licence   and 
registration by the Chief Engineer (Electrical) under the 
Public   Works   Department   and   the   electrical   wing   of   the 

Public   Works   Department   decides   the   criteria   for 
registration,   qualification   and   eligibility   of   the 
electrical contractors.  Similarly, it is not in dispute 
that   prior   to   2004,   the   State   Government   used   to   issue 
separate tenders for getting the electrical work as well 
as   civil   work   of   a   project   done   through   the   registered 
contractors.     It   was   from   the   year   2004,     system   of 
issuing composite tender for getting civil and electrical 
work of the project done from the concerned contractor is 
adopted by the State Government and the response filed by 
the respondent ­ State further shows that this system is 
adopted for saving time as well as cost.  Careful perusal 
of  the  Government  resolution  dated  27.1.2004  shows  that 
the State has adopted policy of issuing composite tender 
for civil and electrical work if the project is costing 

Rs.1/­   crore   or   more   by   assigning   the   reason   that 
tendering of the civil and electrical work simultaneously 
and carrying the electrical work with the civil work of 
the project curtails delay in completion of the project. 
The   object   as   reflected   from   the   Government   resolution 
seems to be avoidance of delay caused because of delay in 
execution   of   electrical   work,   breaking   of   constructed 
portion for electrical fittings and ducting etc.  Clause 
(1)   of   this   impugned   Government   resolution   dated 
27.1.2004 provides that generally the Executive Engineer 
(Civil)   should   issue   a   composite   tender   notice   for 
inviting   quotation   for   undertaking   civil   and   electrical 
works   of   the   project.     As   per   this   condition,   if 
electrical   work   is   major   component   of   the   project   of   a 
nature   of   installation   of   centralized   air­conditioning 
system   or   installation   of   elevators,   then   the   tender 
notice may be issued by the electrical department of the 
PWD.     According   to   Clause   (5)   of   this   Government 
resolution,   while   submitting   quotations,   if   concerned 
civil contractor is not having registration as electrical 
contractor, then in such a case, such civil contractor / 
tenderer can enter in joint venture with the electrical 

contractor   of   that   class   or   he   can   get   the   work   done 
through the registered electrical contractor by engaging 
such  electrical contractor  as  his  sub­contractor.    This 
Clause (5) of the impugned Government resolution makes it 
clear that the civil contractor shall be responsible for 
completion   of   civil   as   well   as   electrical   work   of   the 
concerned   project.     Even   Clause   (8)   of   the   impugned 
Government   resolution   demonstrates   that   the   main 
contractor  shall  be responsible for all electrical  work 
including obtaining of supply of electricity, permissions 
or   no   objection   certificates   from   the   Municipal 
Corporations or Electric Supply Companies, etc.
7]
Now let us consider the impugned Government circular 
dated   24.3.2011   issued   by   the   Public   Works   Department. 
After   noting   that   the   Government   resolution   dated 
27.1.2004   is   not   followed   by   the   Department   with   an 
excuse that estimate for electrical work of the project 
is not received in time, the Public Works Department has 
categorically   directed   all   its   officers   to   issue 
composite   tender   for   civil   and   electrical   work   as 
directed   by   the   Government   resolution   dated   27.1.2004. 
It   is   further   directed   in   the   said   circular   that   the 

officers  of the Public  Works  Department should  intimate 
about   the   project   to   be   tendered   to   the   Electrical 
Department  at  least a  month in  advance  so  as  to enable 
the   Electrical   Department   to   give   estimate   of   the 
electrical work.  The said circular further provides that 
if   estimate   is   not   received   from   the   Electrical 
Department,   then   the   Superintending   Engineer   or   the 
Executive   Engineer   of   the   PWD   should   get   the   estimate 
prepared from private electrical consultant and names of 
defaulting   officers   of   the   Electrical   Department   be 
informed to the Chief Engineer (Electrical) of the PWD.
8]
The main challenge to the Government resolution and 
circular   is   that   the   issuance   of   composite   tender   for 
getting   the   civil   as   well   as   electrical   work   for   the 
project done  from  the  successful  contractor will  result 
in   monopoly   of   civil   contractors   to   the   exclusion   of 
electrical   contractors.     Exactly   identical   situation 
arose   in   State   of   Kerala   where   the   State   Government   by 
issuing   circular   had   proposed   that   all   building   works 
when the estimate amount exceeds Rs.1/­ crore, both civil 
and   electrical   work   be   tendered   together   as   a   single 
tender.  This action of State of Kerala of tendering all 

civil   works   and   electrical   works   simultaneously   was 
subject matter of challenge in Writ Petition (Civil) Nos.
28113/2009­H   and   30556/2009­L   and   the   learned   Single 
Judge   of   Kerala   High   Court   while   allowing   those   writ 
petitions by judgment dated 19.11.2010 has held thus in 
paragraph no.18 of the said judgment as under:­
"Judged in the light of the above principles, the 
question   to   be   considered   herein   is   whether   the 
circulars   Exts.P3,   P6   and   P8   provide   any   level 
playing   field   for   any   electrical   contractors. 
The   system   of   inviting   tender   only   through   the 
civil   contractor   will   effectively   deny   any 
opportunity   to   submit   tender   for   electrical 
contractors independently.   The civil contractor 
will   have   to   name   the   electrical   contractor, 
going   by   Ext.P8   circular.     It   is   therefore 
entirely   upto   the   civil   contractor   to   quote   the 
rates   for   execution   of   the   work   and   name   the 
electrical   contractors.     The   chance   of   the 
electrical   contractor   getting   any   work   entirely 
depends   upon   the   volition   of   the   civil 
contractor.   The same will result in absence of 
any   competition   from   among   electrical 
contractors, as the contractors will not be able 
to   compete   for   the   work   on   their   own   by 
submitting   the   tender.     Therefore,   the   prospect 
of   civil   contractors   getting   monopoly   in   the 
field is writ large.  They can on their own whims 

and   fancies,   join   along   with   any   of   the 
electrical   contractors   whom   they   name,   in   the 
tenders.     Even   though   it   is   provided   that 
registration   of   electrical   contractor   / 
electrician   will   be   a   precondition   for   carrying 
out the electrical works in PWD, that alone will 
not   help   the   electrical   contractors   to 
participate   in   the   tender,   as   pointed   out 
already.   Thus, the same violates the concept of 

level   playing   field   resulting   in   violation   of 
Article 19(1)(g) of the Constitution, as held in 
Reliance Energy's case (supra).   Article 14 will 
be   attracted   while   testing   the   validity   of   a 
Government policy.   On both counts the circulars 
are invalid and arbitrary and discriminatory."
We are informed by the learned counsel appearing for 
both   the   parties   that   this   judgment   of   the   Kerala   High 
Court   has   attained   finality   as   it   is   not   carried   in 
appeal by the State of Kerala.
9]
Reverting   to   the   case   in   hand,   let   us   consider 
whether   the   action   of   the   State   in   Public   Works 
Department in issuing impugned Government resolution and 
circular for tendering civil work and electrical work of 
the project simultaneously by issuing composite tender is 

sustainable   in   the   eyes   of   law.     It   hardly   needs   to 
mention that Article 14 of the Constitution embodies the 
principle of non­discrimination whereas Article 21 refers 
to   right   to   life   and   it   includes   fair   opportunity. 
Article   19(1)(g)   confers   fundamental   right   to   carry   on 
business.   By now it is well settled that the principle 
of "judicial review" cannot be denied even in contractual 

matters in which the Government exercises its contractual 
power in order to prevent arbitrariness in State action. 
The   action   of   the   State   in   the   matter   of   awarding 
contract must be free from arbitrariness and it must be 
non­discriminatory.   If tested on this touch­stone, then 
it   is   revealed   that   condition   no.5   of   the   impugned 
Government  resolution  dated 27.1.2004  cannot  be said  to 
be   non­discriminatory,   fair   or   non­arbitrary.     The 
condition   no.5   of   the   impugned   Government   resolution 
demonstrates   that   when   composite   tender   for   civil   work 
and   electrical   work   is   invited,   only   civil   contractors 
are eligible to apply and they are entitled to enter into 
joint   venture   with   the   registered   electrical   contractor 
or  they can appoint registered  electrical  contractor  as 
sub­contractor   for   getting   the   electrical   part   of   the 

tendered work done.  It needs to mention here that as per 
PWD   Manual,   electrical   contractors   have   been   given   the 
licence   and   registration   by   the   electrical   wing   of   the 
Public   Works   Department.     Thus,   with   implementation   of 
the   impugned   Government   resolution,   electrical 
contractors   who   are   independent   and   distinct   class   in 
themselves are deprived to enter into contract with the 

Government   independently.     It   is   a   matter   of   common 
knowledge that civil work is always a major component in 
building construction and awarding absolute discretion to 
the civil contractor to select the electrical contractor 
for undertaking electrical portion of the work results in 
preventing   open   and   fair   competition   amongst   the 
registered electrical contractors.  By inviting composite 
tender for a project work, valuable right of registered 
electrical   contractors   to   participate   in   the   tender 
process   is   lost   as   the   main   civil   contract   would   have 
absolute   right   and   authority   to   dictate   terms   to   the 
electrical contractors.
10]   Perusal   of   the   impugned   circular   dated   24.3.2011 
issued   by   the   Public   Works   Department   further   makes   it 
clear   that   the   electrical   contractors   are   reduced   to 

position of sub­contractors of the main civil contractor. 
This   circular   which   provides   that   the   Public   Works 
Department (Civil) should intimate about the project work 
which   is   to   be   tendered   to   the   electrical   wing   for 
preparation of estimate of electrical work, at least one 
month in advance and in case of failure of the electrical 
wing   of   the   PWD   to   submit   such   estimate,   then   such 

estimate may be procured by engaging private consultant; 
refers   electrical   contractor   as   sub­contractor   of   the 
main   civil   contractor.     What   is   intended   by   the   Public 
Works   Department   by   issuing   impugned   Government 
resolution and circular is that the quotation in respect 
of   the   tendered   work   should   be   submitted   by   the   main 
civil   contractor   by   engaging   registered   electrical 
contractor   as   his   sub­contractor   for   performing 
electrical   work   of   the   project.       Thus,   virtually   the 
registered   electrical   contractors   with   the   Public   Works 
Department   (Electrical)   are   prevented   from   competing   in 
the tender process as generally in all building projects, 
the civil work undoubtedly cost much more than the cost 
of electrical work.  In this way, the impugned Government 
resolution   and   circular   is   creating   monopoly   of   civil 

contractors to the exclusion of electrical contractors.  
11]   The learned counsel for the petitioners has argued 
that   "level   playing   field"   is   being   denied   and   fair 
competition amongst the registered electrical contractors 
is   prevented   to   the   advantage   of   the   civil   contractors 
while  awarding  contracts  by the Public  Works  Department 
of   the   State.     Therefore,   at   this   juncture,   it   is 
apposite to quote observations of the Hon'ble Apex Court 
in   the   matter   of  Reliance   Energy   Ltd.   &   another   V/s 
Maharashtra   State   Road   Development   Corporation   Ltd.   &  
others  [  (2007) 8 SCC 1 ].   In paragraph no.36 of this 
judgment,   the   Hon'ble   Supreme   Court   has   explained   the 
concept of "level playing field" and has held thus:­
"......... "Level playing field" is an important 
concept while construing Article 19(1)(g) of the 
Constitution.     It   is   this   doctrine   which   is 
invoked   by   REL/HDEC   in   the   present   case.     When 
Article   19(1)(g)   confers   fundamental   right   to 
carry on business to a company, it is entitled to 
invoke   the   said   doctrine   of   "level   playing 
field".     We   may   clarify   that   this   doctrine   is, 
however,   subject   to   public   interest.     In   the 
world   of   globalisation,   competition   is   an 
important   factor   to   be   kept   in   mind.     The 

doctrine of "level playing field" is an important 
doctrine which is embodied in Article 19(1)(g) of 
the   Constitution.     "This   is   because   the   said 
doctrine   provides   space   within   which   equally 
placed   competitors   are   allowed   to   bid   so   as   to 
subserve

the

larger

public

interest. 
"Globalisation", in essence, is liberalisation of 
trade.     Today   India   has   dismantled   licence   raj. 
The   economic   reforms   introduced   after   1992   have 

brought   in   the   concept   of   "globalisation". 
Decisions   or   acts   which   result   in   unequal   and 
discriminatory   treatment,   would   violate   the 
doctrine   of   "level   playing   field"   embodied   in 
Article   19(1)(g).     Time   has   come,   therefore,   to 
say that Article 14 which refers to the principle 
of "equality" should not be read as a stand alone 
item   but   it   should   be   read   in   conjunction   with 
Article   21   which   embodies   several   aspects   of 
life.  There is one more aspect which needs to be 
mentioned in the matter of implementation of the 
aforestated   doctrine   of   "level   playing   field". 
According   to   Lord   Goldsmith,   commitment   to   the 
"rule   of   law"   is   the   heart   of   parliamentary 
democracy.   One of the important elements of the 
"rule   of   law"   is   legal   certainty.     Article   14 
applies to government policies and if the policy 
or   act   of   the   Government,   even   in   contractual 
matters,   fails   to   satisfy   the   test   of 
"reasonableness",   then   such   an   act   or   decision 
would be unconstitutional."

12]   Undoubtedly,   the   impugned   Government   resolution 
dated   27.1.2004   issued   by   the   Public   Works   Department 
denies   "level   playing   field"   to   the   electrical 
contractors   inasmuch   as   entire   discretion   is   conferred 
upon   the   civil   contractors   to   choose   electrical 
contractor   for   entering   in   joint   venture   or   for 

appointment as sub­contractor for getting the electrical 
work   of   the   project   executed   through   him.     Such   action 
is obviously unjust, unfair and arbitrary.   The impugned 
Government   resolution   and   circular   exclude   almost   all 
electrical contractors from carrying on their business by 
entering  in fair  competition  by participating  in  tender 
process   for   a   project   of   the   respondent   ­   State   and, 
therefore,   such   action   as   contemplated   in   the   impugned 
Government   resolution   and   circular   is   liable   to   be 
adjudicated as void.   As the electrical contractors are 
virtually  prevented from  getting  any  electrical work  of 
the tender project unless they are allowed by the civil 
contractors to join in composite tender, by agreeing with 
the view taken by the learned Single Judge of Kerala High 
Court,   we   hold   that   the   impugned   Government   resolution 
and circular are violative of the provisions of Articles 

14,   19(1)(g)   and   21   of   the   Constitution   of   India   and, 
therefore, they are liable to be quashed and set aside. 
We accordingly order so.  It is made clear that quashing 
of  the  impugned Government  resolution  and  circular  will 
not affect the works already tendered during the pendency 
of present writ petition.  Rule is made absolute in above 

terms.  No order as to costs.
   (R.M. BORDE, J.) 
     
(A.M. BADAR, J.)    
                    
                 
ndk/aeca
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