Facts of the Case

Kalinga Warriors Security Service, a security and manpower service provider represented by its partner Sri Manas Jena, filed a writ petition before the Orissa High Court against the State of Odisha's Department of Health and Family Welfare and other officials, along with two rival security agencies, M/s. Bhabani Security Agency and Sarala Security & Facility Services.

The petitioner challenged a letter dated 18.11.2022 issued by the Chief District Medical & Public Health Officer, Bhadrak, seeking consent and a declaration from M/s. Bhabani Security Agency to provide outsourced manpower services under the 'Nirmal' scheme, and a further letter dated 24.11.2022 calling upon that agency to furnish a performance security deposit upon acceptance of the tender.

During the pendency of the writ petition, the petitioner also filed an interlocutory application pointing out that the State's Special Secretary had, on 15.03.2023, directed the district authorities to complete the agreement process with Bhabani Security Agency; the Court had, on 20.03.2023, stayed operation of the resulting agreement pending disposal of the writ petition.

The matter was heard at length and finally decided by a Division Bench of the Orissa High Court on 22.09.2023, in an elaborate 47-page order examining the entire outsourcing/tender process.

Issues Involved

  1. Whether the process by which the Health Department sought consent from, and proceeded to contract with, M/s. Bhabani Security Agency for outsourced manpower services was legal and in accordance with the terms of the Request for Proposal.
  2. Whether the petitioner, an unsuccessful/aggrieved bidder, had made out a case for judicial interference under Article 226 of the Constitution.

Petitioner's Arguments

  • The consent letter and the subsequent demand for a performance security deposit issued to Bhabani Security Agency were not in consonance with the terms of the Request for Proposal and unfairly favoured that agency.
  • The petitioner's rights as a competing bidder were prejudiced by the manner in which the outsourcing process was conducted.

Respondent's Arguments

  • The State respondents and Bhabani Security Agency contended that the consent letter dated 18.11.2022 and the subsequent letter dated 24.11.2022 seeking a performance security deposit were fully in consonance with the terms of the Request for Proposal.
  • The award of the outsourcing contract followed the due process contemplated under the tender documents and did not suffer from any illegality warranting interference.

Court Order / Findings

  • The Court held that there was no infirmity in the issuance of the letters dated 18.11.2022 and 24.11.2022, and that these were in consonance with the Request for Proposal.
  • The writ petition, being without merit, was dismissed.
  • The interim stay dated 20.03.2023 restraining operation of the agreement between the Health Department and Bhabani Security Agency, as extended from time to time, was vacated as a consequence of dismissal.
  • All pending applications were disposed of, with liberty to the opposite parties to proceed with the outsourcing arrangement; there was no order as to costs.

Important Clarification

This is a government-contract / tender-law decision, not a tax ruling. Businesses bidding for or objecting to outsourcing/tender awards should note that courts exercising writ jurisdiction give wide latitude to the administration in commercial and contractual matters, and will interfere only where clear illegality, mala fide, or procedural violation is demonstrated – which the Court found was not the case here.

Sections Involved

  • Constitution of India, 1950 – Articles 226 and 227 (writ jurisdiction)
  • General principles of tender/contract law governing State outsourcing and procurement decisions

Decision – In Favour of

The writ petition was dismissed and the matter was decided in favour of the State respondents and the successful contractor, M/s. Bhabani Security Agency; no relief was granted to the petitioner, Kalinga Warriors Security Service.

Case Details

  • Court: Orissa High Court, Cuttack
  • Case No.: W.P.(C) No.33801 of 2022
  • Coram: Dr. Justice B.R. Sarangi and Justice Murahari Sri Raman
  • Date of Judgment: 22.09.2023

Link to Download the Order

Click here to view/download the full order

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