bombay high courtbombay high court disposed of by this common judgment. 2 we have taken the facts...

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IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION

WRIT PETITION NO.1043 OF 2013(WP/10541/2012 Aurangabad Bench)

Balaji Goods Transport Company.Through it's Proprietor:Vijay S/o Gulabrao Pawar,Age : 44 years, Occupation : Business,R/o 29, Sahakar Nagar, Near Dashmesh Nagar, New Osmanpura,Aurangabad. ..PETITIONER

Versus

1 The State of Maharashtra.Through it's Principal Secretary,Food, Civil Supplies and ConsumerProtection Department, Mantralaya,Mumbai.

2 The Collector, Aurangabad,Tq. & Dist. Aurangabad.

..RESPONDENTS

WITHCIVIL APPLICATION NO.2958 OF 2013

INWRIT PETITION NO.1043 OF 2013

Balaji Goods Transport Company. ..Applicantversus

State of Maharashtra and another. ..Respondents

WITHWRIT PETITION NO.569 OF 2013

M/s Dombivli Grain Merchant Associationand others. ..Petitioners

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versusThe State of Maharashtra and others. ..Respondents



Jalgaon Golden Transport Pvt.Ltd.. ..Applicant.versus

M/s Dombivli Grain Merchants Associationand others. ..Petitioners

AndState of Maharashtra and others. ..Respondents


INCIVIL APPLICATION NO.1857 OF 2013


Purshottam Market. ..Applicantversus

Jalgaon Golden Transport Pvt.Ltd.and others. ..Respondents

WITHWRIT PETITION NO.980 OF 2013 (WP/5929/2012, Nagpur Bench)

M/s Deshmukh Transport Company, Yevatmal. ..Petitionersversus

State of Maharashtra. ..Respondent

WITHWRIT PETITION NO.981 OF 2013(WP/2131/2012, Nagpur Bench)

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All Maharashtra Fair Price Shop Keepersand Kerosene Dealers Federation and another. ..Petitioners

versusThe State of Maharashtra. ..Respondent

............. Mr.Kamlesh P. Mali, for the Petitioners in Writ Petition No.1043/2013 and for the Applicants in Civil Application No.2958/2013.

Mr.P.S.Dani i/by Mr.J.G.Reddy, for the Petitioners in Writ Petition No.569/2013.

Mr.A.A.Kumbhakoni, Special Counsel a/w Mr.P.B.Darandale, AGP, for the Respondents/State in all petitions.

Mr.S.B.Talekar a/w Mr.N.R.Bubna i/by Mr.Ajay Patil, for the Respondent No.3 in Writ Petition No.569/2013 and for the Applicants in Civil Application No.1857/2013.

Mr.R.B.Raghuvanshi i/by Mrs.Rutuja Ambekar for the Applicants in Civil Application Nos.2128/2013, 2508/2013, 2956/2013, 3006/2013 and 3007/2013.

Mr.Kiran Kandpile, for the Applicants in Civil Application No.2955/2013.

None for the Petitioners in Writ Petition Nos.980/2013 and 981/2013.

Mr.Nigel Quaraishy and Mr.Dhananjay B. Deshmukh i/by Mr.Abhijeet A. Joshi, for the Applicants in Civil Application No.1636/2013.

............

CORAM : S.C.DHARMADHIKARI&

MRS.REVATI MOHITE DERE, JJ.

Reserved on : 13th December, 2013Pronounced on : 07th January, 2014

Judgment (Per S.C.Dharmadhikari, J.):

1 All these petitions involve common questions of fact and law.

Common arguments were canvassed by both sides. Hence, they are

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disposed of by this common judgment.

2 We have taken the facts from only one of the petitions,

namely, Writ Petition No.1043/2013.

3 These Petitions have been brought from the Nagpur and

Aurangabad Benches of this Court for being heard along with the

petitions pending at the Principal Seat in terms of the order dated

23.01.2013. After they were so brought and consolidated that they have

been placed before our Bench.

4 The Petitioners in these petitions are Transporters and are

engaged in the business of transportation of various goods and

commodities. They are either partnership or proprietary firms. They claim

to have undertaken transportation work for the Government, Semi

Government Corporations and statutory bodies. They claim to have

experience in transportation of essential commodities as well. They

further claim that they have undertaken transportation work for the

Public Distribution System. It is stated in the writ petitions that initially

the State Government came with a policy of “Door Step Delivery Scheme”

and accordingly, the Government Resolution dated 29.03.2001 was issued

by the State Government, copy of which is at AnnexureB to Writ Petition

No.1043/2013 from which the facts have been taken.

5 It is alleged that though this scheme envisaged Door Step

Delivery from the Food Corporation of India godowns directly to the Fair

Price Shops, it did not function properly. By the Government Resolution

dated 25.10.2005 (AnnexureC) this scheme was stopped completely. The

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allegation is that the Government is trying to reintroduce the scheme by

the Government Resolutions dated 23.02.2012 and 26.11.2012. The extra

work which is now to be performed would be to deliver the essential

commodities from the Food Corporation of India godowns to the

Government godowns and from the Government godowns to the Fair

Price Shops. It is alleged that the State Government and the Central

Government have various schemes for distribution of essential

commodities and that such distribution through the Public Distribution

System contemplates engagement of contractors by the Government for

the above mentioned transportation work. Any other work will also be

required to be undertaken if so prescribed.

6 The Petitioners allege that due to failure of Door Step

Delivery Scheme, since 2005 onwards the work of Public Distribution

System was done in two phases, namely, essential commodities were to be

lifted from the Food Corporation of India godowns to the Government

godowns in each taluka place. The second phase was that the Fair Price

Shop owners used to lift their quota from the Government godowns

situate at taluka places. As far as the tribal area is concerned, the work of

distribution to all Fair Price Shops was done through the State Marketing

Federation. In the first phase, the contractor was required to transport the

essential commodities from the Food Corporation of India godowns to the

Government godowns. The said work was to be completed within 50

days. However, almost 90% of the contractors could not complete this

work of transportation.

7 The Petitioners allege that the Minister of Food, Civil Supplies

and Consumer Protection, Government of Maharashtra has written a

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letter dated 23.04.2009 to the Principal Secretary that in many districts

the allotted quota has lapsed for one reason or other. Therefore, the

action should be taken against the concerned persons. The Government

has issued the circular dated 18.10.2010 directing expedition of

incomplete steps or work. The Petitioners have also sought information

under the Right to Information Act, 2005, but what is alleged is that the

information provided is not complete. The information was sought as to

how much of the work which is allotted and particularly in the first phase

of transportation of essential commodities from the Food Corporation of

India godowns to the Government godowns has been completed by the

contractors. The information provided was incomplete and particularly

about districts which have been referred therein. Thus, incomplete work

led to non transportation of essential commodities. That also resulted in

the quota or percentage of food grains and essential commodities

distributed through the Public Distribution System getting lapsed. Thus,

the Door Step Delivery Scheme was unsuccessful.

8 The Petitioners then allege that now the Government

proposes to undertake such scheme for distribution of essential

commodities and for that purpose it has issued the Government

Resolution dated 23.02.2012 (AnnexureH). The Petitioners allege that

the Government proposes to do away with several contractors for

transportation of essential commodities phasewise. Now vide clause

No.5, the Government proposes to implement the very scheme which was

earlier abandoned, but through a single contractor and for the entire

district. The inclusion of clause No.5 results in repetition of same mistakes

as committed earlier. Further, inclusion of clause No.5 is at the instance of

few contractors. Thus, they have been favoured and despite not achieving

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the target, they will continue to be allotted the transportation work.

9 The Petitioners, after issuance of this Government Resolution

collected more information. The said clause also appears in the

Government Resolution dated 23.11.2012. It is alleged that this further

information lends support to the allegation of the Petitioners that there is

discrimination and favouritism inasmuch as the existing contractors can

continue to obtain the orders and contracts for transportation of essential

commodities though their performance was far from satisfactory. The

Petitioners had issued the notice dated 25.09.2012 calling upon the

Respondent Nos.1 and 2 to forthwith take such steps as would divide the

work of transportation of essential commodities as in the past. According

to them, phasewise contract ensures smooth and efficient transportation

of essential commodities from the Food Corporation of India godowns to

the Government godowns and thereafter, from the Government godowns

to the Fair Price Shops. The Petitioners allege that engaging of several

contractors ensures that there is no stoppage of work and mid way. Now

by introduction of single phase transportation and by a sole contractor,

would necessarily result in delay in the distribution of essential

commodities. Some of them are perishable in nature. In these

circumstances the Petitioners called upon the Respondents to take

requisite steps and amend their policy. The Petitioners allege that despite

receipt of such Advocate's notice, corrective measures were not taken and

the Government Resolution dated 26.11.2012 has been issued. Annexure

J is the copy of this resolution.

10 It is stated that after the Writ Petition was filed on

07.12.2012, on the same day the State Government issued a detailed

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programme inviting tenders for allotment of the work of distribution as

per the Government Resolutions dated 23.02.2012 and 26.11.2012. This

is an etendering process. The Petitioners allege that once they have raised

the issue of terms and conditions in the Government Resolutions being

arbitrary and discriminatory, so also, violative of the mandate of Articles

14 and 19(1)(g) of the Constitution of India, then, the haste is

unpardonable. The Petitioners have annexed the copy of the programme

dated 07.12.2012 as AnnexureM.

11 It is stated that during the pendency of Writ Petition, the

Collector has issued the Tender Notice on 27.12.2012 in daily “Samana”

and has also issued the Tender Form. The said Tender Form was issued to

the present Petitioners in Prebid Meeting dated 05.01.2013. This Tender

Form is applicable with same terms and conditions all over Maharashtra.

It is stated that after perusal of the said Tender Form immediately the

Petitioner has raised objection before the Collector in the Prebid

Conference/ Meeting that the eligibility criteria prescribed as per Clause

No.13 of the Tender Form is deliberately included to favour only the

existing Public Distribution System contractors. It is alleged that since

August, 2006 some of the contractors are carrying out the work so also

some of the contractors are allotted the work in December, 2007. The

Tender Work was normally of three years, however, since the date of

allotment i.e. from August, 2006 or December, 2007 till today there are

no fresh tenders issued for allotment of contract in the Public Distribution

System. AnnexureN is the copy of Tender Notice along with the Tender

Form.

12 It is then stated that as per the condition No.13 the

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contractor should have the experience of transportation of 40000 Metric

Tonnes for previous two years of any Central Government, State

Government, Semi Government or Private Institutions. This experience is

available only for contractors who are continuously carrying out the work

for last two years. AnnexureO is a copy of the list of the benefited

contractors.

13 Further, it is stated that even as per the condition No.14, the

same would be available only to the existing contractors who are carrying

out the work for last more than two years. The Petitioner on 05.01.2013

has orally, so also, in writing specifically raised the objection. It is,

therefore, stated that the condition Nos.13 and 14 are illegal, arbitrary

and violative of Articles 14 and 19(1)(g) of the Constitution of India and

are liable to be quashed and set aside.

14 It is then stated that the State on one hand relies upon the

Joshi Committee Report and on the other hand is taking steps contrary to

the said Report for allotment of the Tender Work. As per the Joshi

Committee Report, the payment of the tenderer is required to be done as

follows:

If Truck carries the load of 9 M.T.,(a) From Taluka City “0” point to “0” Point of A Village :

10 km + 2 km (Payment will be made for whole 9 M.T. only for 10 kms, even though 3 M.T. is unloaded).

(b) From “0” point of A village to “0” point of B Village : (16 kms – 10 kms) + 2 kms = 8 kms and payment will be made only for 6 M.T. even though 3 M.T. is unloaded out of 6 M.T..

(c) From “0” point of B village to “0” point of C Village : (20 kms – 16 kms) + 2 kms = 6 kms and payment will be made only for 2 M.T..

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15 It is stated that on the contrary, for example, the Collector of

Aurangabad has taken the approved distance from Public Works

Department from “0” point of city to “0” point of each village separately

and the payment will be made as follows:

If Truck carries the load of 9 M.T.,(a) Taluka City “0” point to “0” Point of A Village : 10

kms. (even if it unloads 3 M.T. it will be paid for carrying 9 M.T.).

(b) Taluka city “0” point to “0” point of B village : 16 kms. (even if it unloads 3 M.T. out of 6 M.T., contractor will be paid 16 kms for 6 M.T.).

(c) Taluka city “0” point to “0” point of C village : 20 kms. (even if it unloads remaining 3 M.T., the contractor will be paid for 20 kms.).

16 It is stated that as per the present distances called and

payment to be made, the contractor will be paid from “0” point to “A”

village 10 kms not only that instead of paying from “A” village to “B”

village 6 kms, he will be paid for 16 kms and further instead of 4 kms

from “B” village to “C” village, he will be paid for 20 kms. By this method,

the Government would be put to loss for around 100 to 150 crores in the

State of Maharashtra. This is also inserted only to favour the existing few

contractors who are carrying out the work for last two years. AnnexureR

is a copy of the Point Distance for the Aurangabad District.

17 It is then stated that this Court in Writ Petition No.87/2004

has specifically laid down that if the condition of experience are made

only for the purpose of favouring the existing contractors, then, the same

is illegal, arbitrary and violative of Article 14 of the Constitution of India.

Annexure S is a copy of the order passed in Writ Petition No.87/2004.

18 The Petitioners have also referred to the observations of the

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Honourable Supreme Court in Writ Petition No.196/2001 and the findings

of the report of the Honourable Mr. Justice D.P.Wadhawa Committee. It is

submitted that the Honourable Supreme Court directed the State

Governments to ensure that the transportation work is done by the

contractors in such manner that the allotted quota must not lapse. If there

is laxity in distribution of civil supplies, then, the Chief Secretary of each

State Government was to be held personally responsible for such acts.

This decision and report of the said Committee was brought to the notice

of the Government, still the Government has included the conditions in

the impugned Resolutions so as to avoid a fair competition. It is the same

tenderers and bidders/ contractors, who had earlier taken part in the

scheme of distribution of essential commodities under the Public

Distribution System, would be bidding now. The competition would be

restricted to them alone. It is, therefore, alleged that the Government

Resolutions which are impugned in the Writ Petition deserve to be struck

down.

19 Mr.Mali, learned counsel appearing for the Petitioners in Writ

Petition No.1043/2013, submitted that the impugned conditions inserted

by clause No.5 and 13 and 14 are tailor made for the benefit of the

existing contractors. He has invited our attention to the annexures to the

Writ Petition and submitted that in terms of the earlier policy, the contract

of the existing contractors was to come to an end by May, 2001. However,

these contractors have been continued from 01.04.2001 to 31.03.2006. It

is submitted that for 09 districts mentioned in the Government

Resolution, copy of which is at AnnexureB, only one contractor was

envisaged. The very Government contractors continued to obtain benefits

as such contractors are operating for the Government from 1996. Our

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attention has been invited to two stage/ phase contracts and it is

submitted that the Chart which is annexed at page 159 of the paper book,

would show that some of the contractors are continued from 19951996.

They have strong hold over the affairs of the concerned Department,

namely, Food and Civil Supplies. What has been now sought to be

introduced will favour these existing contractors only. In that regard,

Mr.Mali invites our attention to AnnexureD page 31, which is a copy of

the letter addressed by the Minister of Food and Civil Supplies, so also,

Consumer Protection, Government of Maharashtra. In this letter dated

23.04.2009, the Minister invites the attention of the concerned

Authorities to the policy of the State undertaken for distribution of

essential commodities. He has brought to the notice of the concerned

Authorities that the quota of essential commodities meant for the State of

Maharashtra under various schemes has surprisingly lapsed and for all

districts in the State. In fact there is a policy to penalize the contractors on

account of whose default there is lapsing of quota. Even the contracts can

be cancelled. However, the Additional and District Collectors of the

concerned Districts have not taken any steps nor have they proceeded

against the contractors. In these circumstances it is necessary to call for

their explanations. The Minister stated that wherever the quota has

lapsed, then whether any measures have been initiated against the

contractors and if any, the information in this regard should be obtained

and forwarded to the Minister. This letter is addressed by the Minister to

the Principal Secretary in the said Department.

20 Mr.Mali submits that the Government issued the circular,

copy of which is at AnnexureE page 32 and pointed out that the quota

meant for the State of Maharashtra should not lapse and for that purpose

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the requisite steps as enunciated in this circular should be undertaken.

Our attention is also invited to the AnnexureF to this Writ Petition which

highlights this situation and calls for a review meeting every month. It is

submitted that loss can be estimated at 91,00,000 quintals and penalty to

the extent of Rs.4 crores has been recovered. In that regard, our attention

is invited to the districtwise measures undertaken and enlisted in the

table appended to the communication at page 35 dated 13.05.2011. Thus,

more than 60% of the quota has lapsed and for which the existing

contractors have to be squarely blamed. Mr.Mali submitted that the

information obtained under the Right to Information Act, 2005 and

documents supplied reveal serious lapses on the part of the existing

contractors. The Government has not taken any step to blacklist any of

the contractors though their lapses have been indicated in the Additional

Affidavit filed on behalf of the Petitioners on 27.10.2013. Mr.Mali

submitted that the contents of the Additional Affidavit have not been

controverted. The annexures to the same and particularly pages 347 and

353 of the paper book would reveal as to how there are serious defaults

committed and which have been overlooked. The statistics for last four

years would indicate that the lapses have resulted in the real beneficiaries

of the Scheme being deprived of continued supply of quality food grains.

It is in these circumstances Mr.Mali submits that this Court should

appreciate the background in which the impugned Government

Resolutions and the conditions therein have been challenged.

21 Mr.Mali submits that the decision taken in the Cabinet

Meeting held on 02.01.2012 on the point/ issue would reveal that the

Cabinet decided that for transportation of essential commodities from the

Food Corporation of India godowns to the Government godowns and from

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the Government godowns to the Fair Price Shops, the contract has to be

awarded and by open tender. The contract should be for a period of three

years and further decision is that the financial allocation of Rs.3.33 crores

is in addition to what was already sanctioned and disbursed for this

scheme. Mr.Mali, therefore, submits that the impugned conditions are

required to be struck down as violative of the mandate of Articles 14 and

19(1)(g) of the Constitution of India. It is submitted that the said

conditions would result in defeating the object and purpose of distribution

of essential commodities through the Public Distribution System. It is

submitted that the policy of single transporter being awarded the contract

for three years, results in total arbitrariness, discrimination and exclusion

of competitive bids from the field. It is submitted by Mr.Mali that the

clause has been inserted to benefit the existing contractors. It is worded to

suit their purpose and fill up their coffers. The State and ultimately public

at large is the loser. Therefore, clause5 deserve to be struck down to the

extent indicated in the Writ Petition.

22 Our attention is also invited to the Government Resolution

dated 23.11.2012 and it is submitted that the clauses 13 and 14 therein

are incorporated so as to enable the existing contractors alone to bid for

the contract. That defeats an open tender system. Our attention is also

invited to the Additional Affidavit of August, 2013 and annexures thereto

particularly referring to the Cabinet decision. It is submitted that there

was no provision in the Cabinet decision restricting the field to only one

contractor. There could be multiple contractors and their participation is

not ruled out, yet when the Notification dated 26.11.2012 was issued, the

Government has changed its earlier policy and decision and restricted the

number of contractors to one. That would rule out the participation of

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number of contractors and like the Petitioners. Thus, their exclusion is

unfair, unreasonable, unjust and totally arbitrary. For all these reasons it is

submitted that the Writ Petition be allowed.

23 Mr.Dani, learned counsel appearing for the Petitioners in Writ

Petition No.569/2013, invited our attention to the averments in the Writ

Petition and prayers and submitted that now there is complete monopoly.

This monopoly of single contractor is the net result of such conditions

being imposed and incorporated. Once such condition, which has no

nexus to the object and purpose sought to be achieved, is inserted, then,

the intent is clear and that is to benefit the existing contractors. Mr.Dani

has severely criticized insertion of the clause and in relation to the

financial capacity, by submitting that the Government for the first time

decided to appoint a districtwise transporter, namely, one transporter for

one district who shall lift the essential commodities directly from the

Central Government godowns and distribute the same to the various Fair

Price Shop owners at the cost of the Government. This has resulted in the

scheme being hijacked and monopolized by the big transporters. It is

submitted that the Petitioners in Writ Petition No.569/2013 have been

operating in Mumbai suburban and Thane districts. They have been

collecting the amount from the Fair Price Shop owners and depositing the

same to the Central Government and thereafter, distributing the quota to

the Fair Price Shop owners. In other places in the State of Maharashtra,

the Contractor directly lifts the quota from the Central Government and

distributes the same to the Fair Price Shop Owners. Now, by introduction

of this policy it is clear that the Government is encouraging participation

of only big contractors. It is submitted that timely supply of the essential

commodities is envisaged. However, now 4500 Fair Price Shop owners

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who were till date associated with the Petitioner Association would have

to wait for their turn. There is not a single complaint against the

Petitioners. In these circumstances the impugned conditions deserve to be

struck down.

24 It is then submitted by Mr.Dani that the condition with regard

to the financial capacity is also totally arbitrary and has no nexus with the

object sought to be achieved. The experience certificate as envisaged by

clause13 must contain a stipulation of minimal transportation in the past

two years and to the extent of 25% of the total transportation under the

Public Distribution System. This would make earlier stipulation of

experience of minimum two years redundant. In the first part of clause

13, production of experience certificate in the form of copies of the orders

of transportation work undertaken for the Central Government, State

Government or Semi Government Corporations is mandatory. This

transportation work should be of transportation of sugar, cement,

fertilizers, cotton, etc.. However, thereafter, stipulating the minimum

percentage of 25% once again rules out a broad based participation. The

condition with regard to the financial capacity is also unworkable

inasmuch as three years’ turnover stipulation has to be fulfilled. That

turnover should be comparable to the total expenditure for transportation

through the Public Distribution System for the subject district. In these

circumstances what now the State desires is to do away with the multiple

contractors. However, in the garb of doing that the Government ensures

that only limited or few favoured ones remain in the field. Therefore, the

figure in clause 14 is determined and which also cannot be said to be

having any nexus with the object sought to be achieved. It is submitted

that the condition that the financial capacity must be reflected only in

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terms of handling of Public Distribution System transportation work

further shows the premeditated and predetermined desire to favour the

big contractors. For all these reasons, Mr.Dani would submit that the

impugned conditions deserve to be struck down and the Respondents be

directed to allow the Petitioners to place their bids as well.

25 Mr.Dani submits that in the Writ Petition it has been pointed

out that the Petitioners have enough experience of handling such work.

The impugned condition is, therefore, not in larger public interest and

deserves to be struck down.

26 The Petitioners in other Writ Petitions have more or less

supported the arguments of Mr.Dani.

27 In support of their contentions noted above, the Petitioners’

Advocates have relied upon the following decision:

1) (2013) 2 SCC 663People's Union for Civil Liberties (PDS Matters) v/s Union of India and others.

28 On the other hand, Mr.Kumbhakoni, learned Special Counsel

appearing for the State and Mr.S.B.Talekar, learned counsel appearing for

the contesting Respondents in Writ Petition No.569/2013, contended that

there is no merit in these petitions. They deserve to be dismissed simply

on the ground that the Petitioners who are desirous of participating in the

tender process, cannot challenge the terms and conditions of the tender.

They cannot challenge the policy decision of the State in choosing to

appoint only one contractor for the entire transportation work. If the

Petitioners are in a position to fulfill the terms and conditions of the

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tender, then, they would be held eligible for awarding the contract and

not otherwise. The Petitioners are apprehensive that having handled small

time operations and not having financial backing and capacity, would not

be awarded the contract that they have chosen to question the terms and

conditions of the tender. That is impermissible in law. Placing reliance

upon several decisions of the Honourable Supreme Court, Mr.Kumbhakoni

and Mr.Talekar submit that even if the terms and conditions of the tender

are open to challenge on the ground of discrimination and arbitrariness,

still such conditions have to be construed fairly and reasonably. There is

enough latitude and discretion in the State in these matters. The

Petitioners are forgetting that they may have fundamental right of trade,

business and occupation of their choice in terms of Article 19(1)(g) of the

Constitution of India,but that right does not take within its fold a right to

trade or contract with the Government. There is no fundamental right to

trade or undertake business or dealings with the Government. In such

circumstances choosing one or other terms from the entire set of

conditions and challenging them shows the intent of the Petitioners. They

have brought about a situation because of which the State is unable to

process the bids and award the contract even after a year of floating of

the tenders. The work is of vital nature, namely, distribution of essential

commodities through the Public Distribution System. The process of

distribution can be expedited only with the help of smooth and efficient

transport network. The essential commodities which are lying in the Food

Corporation of India godowns/ Central Government godowns have to

reach the Fair Price Shops from where they would be distributed to the

cardholders and beneficiaries of the Public Distribution System. This

entire work has come to a standstill because of these Writ Petitions.

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29 Mr.Kumbhakoni was at pains to point out that there is

nothing arbitrary, unreasonable and discriminatory about the two

conditions. The element of quantum handled by the contractors not only

in the Public Distribution System, but any transport of goods such as

sugar, cement, fertilizers, cotton, etc. is only to gauge their experience in

the field. It is not that they must show experience in transportation of the

Public Distribution System commodities. They ought to have handled the

work for the State, Central Government, Semi Government Corporations

and transportation ought to be of the goods and commodities of the

nature specified. Unless that is prescribed it will not be possible for the

Government or Authority to decide to whom the contract should be

awarded. The wisdom of the Government in choosing only one contractor

for the district and for all phases and stages cannot be questioned in the

writ jurisdiction. That decision has been taken to ensure that a single

contractor can be held responsible for the lapses in the transportation

work. Earlier multiple contractors were carrying on this work phasewise

and which resulted in the competent Authority requiring to trace and

chase the erring contractors. Their number being larger, handling of the

whole transport system became difficult and unmanageable. Now it has

been simplified and therefore, there is no substance in the first contention

that the decision is taken to favour the existing contractors or big

contractors.

30 Secondly, to gauge the capacity and resources of the bidders,

some rough calculation has been evolved. It is keeping that in mind the

condition is worded accordingly. There is nothing arbitrary in prescription

of the figure or evolving the eligibility criteria. As far as the experience is

concerned, what has been stipulated is that the experience should be of

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transporting of goods and commodities of the Central Government, State

Government or Semi Government Corporations. The transportation could

be of all types of goods, namely, food grains, levy sugar, cement,

fertilizers, cotton, etc.. The figure of transportation under the Public

Distribution System for last two years is taken as a measure. Thereafter,

the quantum is determined so as to compute 25% share or 40000 Metri

Tonnes minimum. As far as the financial capacity is concerned, the

turnover of preceding three years of the bidder would be examined. He

must have undertaken the transportation work to such an extent as would

match with the average figure of expenses of transportation for the past

three years under the Public Distribution System. The Chartered

Accountant’s certificate to this extent must indicate that the

transportation is to the extent of Rs.2.76 Crores at least. Countering the

submissions of Mr.Dani with regard to the stipulation of the Bank

guarantee to the tune of Rs.41 lacs, Mr.Kumbhakoni submits that this is

also measure or indicator of the financial capacity or resources of the

bidder. Therefore, Mr.Kumbhakoni submits that the explanation given in

the affidavit deserves to be accepted. Once the whole foundation of the

argument is that the existing contractor has been favoured and that

foundation itself has no basis, then, every single contention must fail.

Mr.Kumbhakoni and Mr.Talekar, therefore, submit that the Writ Petitions

must be dismissed. They have relied upon the following decisions to

support their above submissions:

1) (1990) 2 SCC 488G.J.Fernandez v/s State of Karnataka and others.

2) (2000) 5 SCC 287Monarch Infrastructure (P) Ltd. v/s Commissioner, Ulhasnagar Municipal Corporation and others.

3) (2004) 4 SCC 19

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Directorate of Education and others. v/s Educomp Datamatics Ltd. and others.

4) (2005) 1 SCC 679Association of Registration Plates v/s Union of India and others.

5) (2011) 8 SCC 161Indian Council for EnviroLegal Action v/s Union of India and others.

6) (2012) 8 SCC 216Michigan Rubber (India) Limited v/s State of Karnataka.

7) (2012) 6 SCC 464Tejas Constructions and Infrastructure Private Limited v/s Municipal Council, Sendhwa and another.

8) (2013) 2 SCC 398Kishore Samrite v/s State of Uttar Pradesh and others.

31 With the assistance of the learned counsel appearing for the

respective parties, we have perused the petitions, their annexures

including the impugned conditions in the Government Resolutions dated

23.02.2012 and 26.11.2012. We have also perused the affidavit in reply

and additional affidavits of the Petitioners filed on record. We have also

perused the judgments brought to our notice. What appears to have

impressed this Court at the prima facie stage resulting in the detailed

order dated 24.01.2013 being passed is the tender notice dated

27.12.2012, to which attention has been invited and particularly

condition No.13(iii) which provides that the contractor in order to be

eligible should have experience of transportation. According to the

Division Bench presided over by the Honourable Mr. Justice P.V.Hardas,

the experience of transportation of food grains in last two years is

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equivalent to 25% of 31,91,983.84 Metric Tonnes which is 40000 Metric

Tonnes and equally the condition No.14 to which their attention was

invited by the learned Senior Counsel. The submission canvassed is that

these terms have been inserted to favour the existing contractors. It is,

therefore, a prima facie observation in the order of the above date that

the tender condition at paragraph 13(iii) appears to be tailor made to

ensure eligibility of the contractors who have been uninterruptedly

working as contractors in the Public Distribution System. This condition

would eliminate competition from other contractors who may otherwise

be eligible. Similar finding is rendered with regard to the condition No.14.

The submissions based on which these tentative and prima facie findings

have been rendered are elaborated before us. However, we find absolutely

no substance in them.

32 First of all, it needs to be clarified that the Petitioners cannot

question the terms and conditions on vague and general assumptions as

they do not have a fundamental right to trade with the Government. The

law on this point has been already laid down in the decisions on which

reliance has been placed by Mr.Kumbhakoni. In (2005)1 SCC 679

(Association of Registration Plates v/s Union of India), the Honourable

Supreme Court held as under:

“38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering authority is found to be malicious and misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of the class of intending tenderers under Article 19 of the

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Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep indigenous manufacturers out of the field. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by the Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a longterm basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates.

39. The notice inviting tender is open to response by all and even if one single manufacturer is ultimately selected for a region or State, it cannot be said that the State has created a monopoly of business in favour of a private party. Rule 50 permits the RTOs concerned themselves to implement the policy or to get it implemented through a selected approved manufacturer.

43. Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Article 14 of the Constitution prohibits the government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. Undisputedly, the legal position which has been firmly established from various decisions of this Court, cited at the Bar (supra) is that government contracts are highly

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valuable assets and the court should be prepared to enforce standards of fairness on the Government in its dealings with tenderers and contractors.

44. The grievance that the terms of notice inviting tender in the present cases virtually create a monopoly in favour of parties having foreign collaborations, is without substance. Selection of a competent contractor for assigning job of supply of a sophisticated article through an opentender procedure, is not an act of creating monopoly, as is sought to be suggested on behalf of the petitioners. What has been argued is that the terms of the notices inviting tenders deliberately exclude domestic manufacturers and new entrepreneurs in the field. In the absence of any indication from the record that the terms and conditions were tailormade to promote parties with foreign collaborations and to exclude indigenous manufacturers, judicial interference is uncalled for.”

To somewhat similar extent are the observations and findings

in the earlier Judgment of the Honourable Supreme Court reported in

(2004) 4 SCC 19 (Directorate of Education and others v/s Educomp

Datamatics Ltd. and others). In paragraphs 9, 10, 11 and 12, the

Honourable Supreme Court held as under:

“9. It is well settled now that the courts can scrutinise the award of the contracts by the Government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular vs. Union of India. After examining the entire case law the following principles have been deduced: (SCC pp.68788, para 94)

"94. The principles deducible from the above

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are:(1) The modern trend points to judicial

restraint in administrative action.(2) The court does not sit as a court of

appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.”

10. In Air India Limited vs. Cochin International Airport Limited, this Court observed: (SCC p.623, para 7)

"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that

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is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decisionmaking process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness."

11. This principle was again restated by this Court in Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation. It was held that the terms and conditions in the tender are prescribed by the Government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the Courts to say whether the conditions prescribed in the tender under consideration were better than the one prescribed in the earlier tender invitations.

12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the Government because it feels that

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some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.”

33 Once we clear the field in terms of the legal principles, it is

now time to turn to the subject Government Resolutions. The Government

Resolution of February, 2012 indicates as to how the Government has

considered the report of one Sudhakar Joshi Committee. That Committee

recommended several measures and steps for ensuring proper

implementation of the Public Distribution System. The Government

having considered these recommendations then issued this Government

Resolution. That contained one stipulation, namely, Door Step Delivery

Scheme. Details of that scheme envisage lifting of stock in advance and

from the Food Corporation of India godowns. In that regard a policy was

formulated of having a single contractor. Clause5 of this Government

Resolution enunciates this policy. We do not find any infirmity much less

of any serious nature in the decision to engage a single contractor and for

a period of three years. That is a matter which the State is free to decide

and determine. By that itself and without anything more one cannot infer

that the existing contractors or their continuation is looked after and

facilitated by the State. The policy cannot be said to be suffering from

such infirmities as would invite interference by this Court. Far from

infringing the mandate of Articles 14 and 19(1)(g) of the Constitution of

India, we are of the opinion that this Government Resolution read in its

entirety indicates that for smooth and effective implementation of the

scheme the Government has decided to employ and engage only one

contractor for transportation of the essential commodities from the Food

Corporation of India godowns to the Fair Price Shops. We are, therefore,

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not impressed by the first contention of Mr.Mali.

34 Equally, the Government Resolution dated 26.11.2012 and as

far as single contractor is concerned, that is not vitiated in any manner

inasmuch as a complete mechanism is evolved and provided with an

object and purpose of reaching the essential commodities to the Door Step

of the beneficiaries. To assure a timely and regular lifting of stocks for

Door Step Delivery that a single contractor is to be engaged. His work can

be then properly monitored and supervised by the competent Authority.

He can be pulled up for any deficiencies and defects in service. This

guarantees greater accountability and makes him answerable throughout.

All this is prescribed to oversee that the essential commodities reach the

havenots and in the remotest corners of the State. In that regard, if the

condition of procuring an experience certificate is perused that reveals

that a person must be experienced enough. He must have sufficient

experience and which in this case is minimum two years and of

transporting all types of goods for the Central Government, State

Government and Semi Government offices or Corporations. If he has

transported the food grains, levy sugar, cement, fertilizers, cotton, etc.

that would be taken as a still better experience. If this experience is to be

counted and calculated in terms of money and finance, then, it should

measure up to at least 25% of the total Public Distribution System

transportation of past two years.

35 Now, mere experience in transportation alone is not

sufficient, therefore, the criteria of financial capacity has been rightly

evolved. That mandates production of certificate from the Chartered

Accountant. The bidder has to produce such certificate and which would

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evidence that his turnover for the past three years is equivalent to the

expenses incurred for transportation of food grains in the last three years.

This would assure the State that the bidder has a sufficient financial and

asset base so as to be in a position to undertake the contract work for a

period of three years. In the absence of such proof, it will not be possible

to gauge financial capacity.

36 Now coming to the tender notice itself, what has been

elaborated in terms of the financial capacity and to be more specific and

clear is the figure of Rs.2.76 crores. This financial capacity of the bidder is

measured by his capability of handling the transportation work to the

extent of this figure. This figure is taken as average expenses incurred for

transportation of food grains under the Public Distribution System for the

entire Aurangabad district in the past three years.

37 In the Affidavit In Reply filed on behalf of the Respondent

Nos.1 and 2 dated 23.01.2013, what has been stated is as under:

“7. With reference to para No.11C of the Writ Petition I say and submit that the clause 13 in the tender notice is as per provision in para 13 of Government Resolution dated 26.11.2012. This clause is about experience required for the bidder. The main purpose for inclusion of this para is to have an experienced transporter who will be able to handle the P.D.S. transportation effectively and will be able to work for the whole tender period. The quantity handled by any bidder should be about 25 percent of total food grain quantity transported in last 2 years in the concerned district. The condition regarding last two years is only for calculation of the quantity. So after calculation of the quantity in case of Aurangabad 40000 MT is the mandatory requirement of experience of quantity transported by any bidder but experience need not necessarily be in last two years. It can be inclusive of any prior period also.

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So, the contention in this regard is denied.8. With reference to para No.11D of the Writ Petition I say

and submit that the clause 14 in the tender notice is as per provision in para 14 of the Government Resolution dated 26.11.2012. This clause is about financial capacity required for the bidder. The main purpose for inclusion of this para is to have a financially sound and viable bidder who will able to handle the P.D.S. transportation effectively and will be able to work for whole tender period. The financial capacity of any bidder should be equal to about average cost incurred by district authorities in last 3 years. Condition about last three years is only for calculation of average cost of turn over amount. So after calculation, the amount of i.e. Rs.2,76,00,000/ in case of Aurangabad is the mandatory turn over amount for any bidder in last 3 years in his business of transport work but it need not necessarily be of Public Distribution Transport work so the contention in this regard is denied.”

38 Now, this figure for the district of Aurangabad would differ as

far as other districts are concerned. However, we do not find any

infraction of the Constitutional mandate of equality as enshrined in

Article 14 of the Constitution of India or freedom and guarantee to carry

on any trade, business or occupation of a citizen's choice as enshrined in

Article 19(1)(g) of the Constitution of India. As held by the Honourable

Supreme Court in the above decisions and which have been followed

consistently that it is not for the Court to decide what terms and

conditions ought to be inserted in the tender notice. It is a matter to be

decided essentially by the Authorities. They are competent to take such

decisions because of their knowledge and experience in the field. It is they

who have to manage a huge task of distribution of essential commodities

through the Public Distribution System. The persons who have evolved

and are implementing such schemes are the best judges of the situation at

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the ground level. If they find that multiple contractors are not able to

handle the transportation work because of lack of coordination or

otherwise, then, their wisdom to stipulate the condition of a single

contractor for the entire work cannot be questioned. Similarly, if they

evolve certain terms and conditions in order to ensure efficient and

proper working of the contract, then, equally that cannot be interfered

with merely because another view is possible. In such circumstances the

discretion that is vested with the Authorities and the latitude that they

have, enables them to incorporate in the tender notice appropriate terms

and conditions. Of course they ought not be such as would infringe the

Constitutional mandate noted above. In this case, we do not find any such

infringement by mere prescription of the tender conditions and

particularly about experience and financial capacity. The conditions are

imposed in larger public interest. They are not tailormade to suit the

existing contractors. If contractors fulfilling these terms are desirous of

applying and bidding, they are free to do so. The minimal experience and

financial capacity criteria does not eliminate newcomers and others at all.

The State could not have awarded a transportation contract to totally

inexperienced and incapable contractors. They ought to be experienced

and capable so that the interests of the State and the public do not suffer.

Further, contractors transporting various goods for the State are eligible.

Hence, the allegation noted as above is not well founded. Thus, the

impugned conditions are in consonance with the decisions taken at the

highest level to distribute the food grains and essential commodities

through a system known as Public Distribution System. Since the food

grains and essential commodities are meant for poor and lower strata of

the society, then there is obligation and duty to ensure that the stock

reaches the nearest Fair Price Shop. Access to food grains and essential

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commodities is an duty and obligation which is to be fulfilled by the State

in terms of Article 39(b) and (c) of the Constitution of India. The directive

principles of the State Policy as enshrined in the Constitution of India

have to guide the State in making the policy. Once we find that the

requirements in terms of the tender conditions serve larger public interest,

then, it is not for us to interfere with the same.

39 In that regard, Mr.Talekar is justified in relying upon a

judgment of the Honourable Supreme Court in the case of Tejas

Constructions and Infrastructure Private Limited v/s Municipal Council,

Sendhwa and another reported in (2012)6 SCC 464 (see paras 16 to 21).

40 In fact Mr.Talekar has gone ahead and termed these petitions

as an abuse of process of the Court. He relied on a judgment of the

Honourable Supreme Court in the case of Kishore Samrite v/s State of

Uttar Pradesh and others reported in (2013)2 SCC 398. He relied on

paragraphs 31 to 33 in that regard.

41 We do not go to this extent, but certainly we find that the

attempt of the Petitioners is to ensure that the Authorities are unable to

take a final decision. By bringing this litigation and raising the pleas,

which are now found to be without any substance, the Petitioners have

delayed the process enormously. By their acts they have ensured that the

final decisions to award the contracts are not taken by the Authorities. To

that extent, we agree with Mr.Talekar.

42 Finally, we must note that Mr.Mali placed reliance on a

judgment of the Nagpur Bench of this Court in the case of M/s

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D.K.Enterprises v/s State of Maharashtra in Writ Petition No.87/2004

dated 05.04.2004. In that case, identical Government Resolutions were

challenged and in similar contracts. The prescription of having minimum

number of trucks was one essentially under challenge. Thereafter, the

condition of experience was also challenged. However, it is material to

note that the Division Bench has not interfered with the terms and

conditions with regard to experience and that is evident by the

observations and findings in paragraph 16 of the judgment. All that the

Division Bench has done is to clarify and which clarification in paragraph

17 appears to be incorporated now in the impugned Resolutions.

Therefore, it is not only the experience of transporting the food grains

under the Public Distribution System which is to be taken into

consideration, but the experience in handling transportation work of all

types of goods for the Central Government, State Government, Semi

Government Corporations, is the stipulation now in place. Merely for

illustration, nature of goods transported has been clarified that enables

the State to take an informed and rational decision. Equally, measure for

determining the experience and financial capacity and total resources in

terms of money does not mean that something more has been added or

incorporated. How the experience and capacity has to be calculated and

computed is what is set out. The bidder will have to satisfy the conditions

13 and 14. The subclauses therein provide for distinct requirements to be

fulfilled. One is to produce the office copies of orders of transportation

placed by the Central Government, State Government or Semi

Government Corporations. The second is to indicate the nature of the

goods transported. Thirdly, the volume of such transportation is the

requirement to be fulfilled and in terms of production of relevant and

appropriate documents evidencing transportation of minimum quantity of

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40000 Metric Tonnes in the past two years. It is clarified that the

experience certificate issued in the names of partners or directors or

members would be taken as valid and lastly it is stipulated that the work

of transportation for private persons will not be taken into consideration

for determining the experience.

43 Equally, production of certificate from the Chartered

Accountant so as to indicate the financial capacity is a valid and germane

condition. The commercial and financial world now insists on production

of documentary proof which would evidence the financial resources and

capacity of the person bidding for the contract. This certificate ought to be

from the Chartered Accountant in this case and to evidence that last three

years turnover is at least Rs.2.76 Crores for Aurangabad district. That is a

requirement which must be said to be reasonable and fair considering the

nature of the work.

44 Finally, the condition with regard to the provision of the Bank

guarantee is also in consonance with the requirement earlier stipulated,

namely, financial capacity. One who can furnish a guarantee from a

nationalized Bank or scheduled bank to the extent of Rs.41 lacs is taken

as contractor or bidder with some resources at his command. The

measure or indicator stipulated in this condition cannot be said to be

arbitrary or unjust at all.

45 As a result of the above discussion, we find that none of the

conditions can be said to be suffering from the vice of the arbitrariness,

discrimination, unreasonableness, unfairness or are of such nature having

no nexus or connection with the object and purpose sought to be

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achieved. The State actions are not vitiated by malafides either. In such

circumstances we do not find merit in each of these petitions. They are

dismissed. Rule is discharged.

46 However, the Petitioners shall pay costs quantified at Rs.5

lacs to the Respondents. This order and direction does not mean that each

of the Petitioners will have to pay Rs.5 lacs to the Respondent Nos.1 and

2. The Petitioners in all these Petitions shall pay a total sum of Rs.5 lacs as

costs to the Respondent Nos.1 and 2, but same shall be paid within two

weeks from today.

47 In view of disposal of the Writ Petitions, all interlocutory

applications including Civil Application Nos.1857/2013 and 2958/2013

are disposed of.

48 At this stage, Mr.Mali appearing for the Petitioners prays that

the interim order which has been operating from 24th January 2013 be

continued for a period of one month so as to enable the Petitioners to

challenge this judgment in a higher court.

49 Once we have reached the conclusion that the Writ Petitions

have no merit, then, we cannot accept this request and for a simple

reason that it would cause further delay in awarding of contracts and

lifting of stocks. Request refused.

50 At this stage, Mr.Raghuwanshi appearing for the Applicants in

Civil Application No.2956/2013 in Civil Application No.1857/13 in Writ

Petition No.569 of 2013 submits that the new bidder, who has placed his

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bid, has not complied with the terms and conditions of the tender notice.

We are of the opinion that this controversy cannot be gone into, in this

limited jurisdiction. Since the copy of the Civil Application is stated to be

served on the Respondent Nos.1 and 2, i.e. the State and the Collector,

then, it is for them to consider this aspect and uninfluenced by the

judgment delivered today in the main matters. The controversy,

therefore, is kept open for being considered independently of this

judgment. The Civil Application No.2956/2013 is disposed of accordingly.

(Mrs.Revati Mohite Dere, J) (S.C. Dharmadhikari, J)

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