Court’s decision
The Delhi High Court upheld the validity of a public tender for security services but issued binding directions to ensure statutory compliance and fairness in contract award. While declining to quash the tender, the Court ruled that any shortfall in the number of security supervisors must be rectified before award, strictly in accordance with the Delhi Private Security Agencies regulatory framework. Crucially, it held that where multiple bidders quote identical lowest prices for a service contract, the procuring authority must follow the Government e-Marketplace mechanism of random selection, and not rely on turnover-based criteria. The writ petition was disposed of with directions, reinforcing transparency and statutory adherence in public procurement.
Facts
The petition challenged a GeM-based tender issued for supply of security manpower services at a civic complex for a period exceeding three years. The tender specified deployment of over 270 security guards but requisitioned only 16 security supervisors. The petitioner alleged that this configuration violated the Private Security Agencies (Regulation) Act and the Delhi Private Security Agencies (Regulation) Rules, 2023, which mandate a higher supervisor-to-guard ratio. Additionally, the tender’s additional terms prescribed that if multiple bidders emerged as lowest financial bidders, the contract would be awarded to the bidder with the highest turnover over the previous five years. The petitioner argued that this condition was inconsistent with GeM’s General Terms and Conditions governing service bids.
Issues
Two central issues arose for determination. First, whether the tender violated statutory requirements by providing an inadequate number of security supervisors vis-à-vis the number of guards proposed. Second, whether the tender condition permitting award of contract to the highest-turnover bidder among identical lowest bidders was valid, given the overriding provisions of the GeM framework mandating random selection in such situations. A preliminary objection was also raised regarding the petitioner’s locus, as it had not participated in the bidding process.
Petitioner’s arguments
The petitioner contended that the tender was ex facie illegal as it failed to comply with Rule 10 of the 2023 Rules, which prescribes one supervisor for every fifteen guards at a single premises, and one for every six guards when deployed across multiple premises. With over 270 guards proposed, the requirement of only 16 supervisors was argued to be statutorily deficient. The petitioner further assailed the turnover-based tie-breaker as arbitrary, asserting that once bidders are technically qualified and quote identical prices, financial turnover bears no rational nexus to service quality. It was urged that the GeM General Terms and Conditions expressly mandate random selection among multiple L-1 bidders for service contracts.
Respondent’s arguments
The respondent municipal authority maintained that the security deployment pertained to a single, centralized premises, making the fifteen-guard ratio applicable. It acknowledged a minor shortfall in supervisors but assured the Court that the same would be rectified prior to award, relying on tender clauses permitting variation in manpower requirements. On the issue of multiple L-1 bidders, the respondent submitted that it was conscious of the overriding nature of the GeM General Terms and Conditions and would follow the platform’s random selection mechanism, notwithstanding any additional terms in the tender. The respondent also objected to maintainability, arguing absence of locus since the petitioner was not a bidder.
Analysis of the law
The Court examined Rule 10 of the Delhi Private Security Agencies (Regulation) Rules, 2023, emphasizing that statutory manpower norms are mandatory and cannot be diluted by tender conditions. It also analyzed the GeM General Terms and Conditions, particularly the clause governing identical lowest bids in service procurements. The GeM framework was treated as having contractual and regulatory primacy, especially where the tender itself incorporated a disclaimer invalidating any additional condition inconsistent with GeM norms. The Court reiterated that public procurement must conform not only to fairness under Article 14 but also to specific statutory and platform-based rules governing the tender.
Precedent analysis
While the judgment did not rely on named precedents, it applied settled principles of administrative and tender law: that statutory requirements override tender discretion, and that arbitrary eligibility or award criteria cannot be sustained once bidders meet prescribed technical and financial thresholds. The reasoning aligns with consistent judicial views that procurement authorities must adhere to declared norms and cannot introduce subjective or extraneous considerations at the stage of contract award.
Court’s reasoning
On supervisor deployment, the Court accepted the respondent’s stand that the premises constituted a single unit and that Rule 10(1) applied. It held that since the tender expressly allowed adjustment of manpower prior to award, and the respondent undertook on affidavit to rectify any shortfall, the tender could not be invalidated at the threshold. On the second issue, the Court found the turnover-based tie-breaker ex facie inconsistent with the GeM General Terms and Conditions. It held that such inconsistency could not survive, particularly when the tender disclaimer itself rendered conflicting clauses invalid. The Court agreed that turnover loses relevance once bidders are technically qualified and quote identical prices.
Conclusion
The Delhi High Court disposed of the writ petition without quashing the tender but issued clear and binding directions. It directed the respondent to ensure full compliance with statutory supervisor requirements before awarding the contract and mandated that, in case of multiple L-1 bidders, the award must strictly follow the GeM random selection mechanism. The objection on locus was rejected, with the Court holding that the petition facilitated legal compliance rather than undermining the tender process.
Implications
This ruling reinforces two critical principles in public procurement: statutory compliance in manpower-intensive contracts and strict adherence to GeM’s standardized bidding framework. It sends a clear signal that turnover-based or similar discretionary criteria cannot override platform rules or constitutional principles of equality. For procuring authorities, the judgment underscores the need to harmonize additional tender conditions with overarching GeM norms. For bidders and stakeholders, it affirms that courts will intervene to prevent arbitrary award mechanisms while allowing tenders to proceed where defects are curable before final award.
Case law reference
- Principle on statutory compliance in tenders: The Court applied the settled rule that tender conditions must conform to governing statutes and rules, and any deviation can be corrected only within the bounds of law.
- Principle on tie-breakers in public procurement: It reaffirmed that once bidders are equally placed on price and technical qualification, arbitrary criteria such as turnover cannot determine award if the governing framework prescribes a different mechanism.
- Application in the present case: These principles were applied to uphold Rule 10 compliance obligations and to strike down the turnover-based tie-breaker in favour of the GeM random algorithm.
FAQs
Q1. Can a government authority award a service contract based on highest turnover if prices are identical?
No. Where the GeM framework applies, identical lowest bids in service contracts must be resolved through the platform’s random selection mechanism, not turnover-based criteria.
Q2. Are statutory manpower norms mandatory in security service tenders?
Yes. Rules under the Private Security Agencies regulatory regime are mandatory, and any shortfall must be rectified before contract award.
Q3. Can a non-bidder challenge a tender in court?
Yes, if the challenge highlights statutory or procedural illegality and aids compliance with law, courts may entertain such petitions despite non-participation.
