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Registration Certificate u/s 4 of the Orissa Act cannot be equivalent to a valid Labor License: SC

The High Court has not adverted to any of these decisions, and in second-guessing the authority’s requirement of a license under the Contract Labour Act, has clearly overstepped the bounds of judicial review in such matters. In any case, a registration certificate under Section 4 of the Orissa Act cannot possibly be the equivalent of a valid labour license issued by the labour department. [Para 14]



M/S UTKAL SUPPLIERS VS M/S MAA KANAK DURGA ENTERPRISES & ORS

CIVIL APPEAL NOS. 1517-1518 OF 2021

[ARISING OUT OF SLP (CIVIL) NO.4222-4223 OF 2021]

Decided on April 09th, 2021


The present case was decided by a division bench of the Supreme Court consisting of Justice Rohinton Fali Nariman and Justice B.R.Gavai.


These appeals arise out of a Tender Call Notice [“TCN”] dated 30.12.2019 issued by Respondent No.4, viz., the Office of the Superintendent, SCB Medical College and Hospital, Cuttack. By this TCN, sealed tenders in a two-bid system (technical and financial) are invited from eligible registered diet preparation and catering firms/suppliers etc. having a valid labour license and a food license with a minimum of three years of relevant experience in the field of preparation and distribution of therapeutic and non-therapeutic diet to government or private health institutions having a minimum of 200 beds 1 for the year 2019-2020.Pursuant to the aforesaid, four bids were received by the Tender Committee – from the Appellant, Respondent no.1, Respondent no.5 and Respondent no.6. Vide the Technical Committee meeting dated 17.02.2020, Respondent no.1 and Respondent no.6 were held to be disqualified inter alia for the reason that they had not submitted a valid labour license, i.e., a contract labour licence from the competent authority, as per the TCN requirement. The Appellant and Respondent no.5 were shortlisted for opening of financial bids.


The learned Senior Advocate, appearing on behalf of the Appellant, has argued that the High Court could not have second-guessed the authority’s reading of its own tender and held that a registration certificate granted under the Orissa Shops and Commercial Establishments Act, 1956 [“Orissa Act”] could replace a labour license under the Contract Labour (Regulation and Abolition) Act, 1970 [“Contract Labour Act”], as required by the authority. He also argued that the minimum three years’ experience, as per the requirement contained in clause VI.3.3 was missing, as the experience certificate furnished by Respondent no.1 had a gap period from 06.08.2017 to 31.07.2018 which could not be made up and which was wrongly sought to be made up by the High Court. He also argued that it was perverse to hold that the action of the authority in granting the contract in favour of the Appellant was mala fide, and further went on to argue that after quashing the work order in favour of the Appellant, the High Court exceeded its jurisdiction in directing the authority to grant the work order to Respondent no.1. [Para 8]


The learned counsel appearing on behalf of Respondent no.1 countered each of the aforesaid submissions. He pointed out that under Section 1(4) of the Contract Labour Act, the Act would apply only to an establishment in which 20 or more workmen 6 are employed. As the TCN did not require that establishments/firms etc. that applied have 20 or more workmen, it is obvious that it is not this Act that was the subject matter of clause VI.3.9 but it was the Orissa Act, the registration certificate under which was produced to the satisfaction of the High Court by Respondent no.1. He also countered the argument that three years’ experience was not made out in the case of Respondent no.1 and referred to certain certificates issued by the All-India-Institute of Medical Sciences, Bhubaneswar, which made it clear that it had such experience. He argued that in the present case, the High Court had not exceeded the parameters of judicial review as it found mala fides attributable to the authority and also argued that the contract was to be awarded to Respondent no.1 only if it was found that its financial bid was lower than that of the Appellant. [Para 9]


This Court has repeatedly held that judicial review in these matters is equivalent to judicial restraint in these matters. What is reviewed is not the decision itself but the manner in which it was made. The writ court does not have the expertise to correct such decisions by substituting its own decision for the decision of the authority. This has clearly been held in the celebrated case of Tata Cellular v. Union of India, (1994) 6 SCC 651. [Para 11]


The Supreme Court also relied on the case of MonteCarlo Ltd. V. NTPC Ltd (2016)15 SCC 272, Galaxy Transport Agencies v. New J.K Roadways (2020) SCC Online SC 1035 and State of Madhya Pradesh v. U.P State Bridge Corporation Ltd 2020 SCC Online SC 1001 to reiterate the fact that interpretation of the law being in the sphere of commerce stands on a distinct footing than while interpreting statutes. The Court also highlighted that the authority that floats the contract or tender and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted.


The High Court has not adverted to any of these decisions, and in second-guessing the authority’s requirement of a license under the Contract Labour Act, has clearly overstepped the bounds of judicial review in such matters. In any case, a registration certificate under Section 4 of the Orissa Act cannot possibly be the equivalent of a valid labour license issued by the labour department. [Para 14]


The requirement of this Act that its applicability be extended only to establishments in which there are 20 or more workmen can be done away with by the appropriate government under the proviso, making it clear that this is not an inflexible requirement. In any case, the acceptance of such argument would amount to second-guessing the authority’s interpretation of its own TCN which, as has been stated hereinabove, cannot be so second-guessed unless it is arbitrary, perverse or mala fide. [Para 15]


The High Court’s judgment is consequently set aside and the appeals are allowed. The Appellant is to be put back, within one week from the date of this judgment, to complete performance under the agreement entered into between the Appellant and the authority on 27.11.2020. [Para 17]



Keerthana R

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