Common Judgment: (A.P. Bhangale, J.)
1. Heard the learned Counsel for the respective parties.
Facts in Writ Petition No.1907 of 1998 :
2. On or about 13.3.1981, the petitioner/Company was awarded a Contract bearing no. W.188.C.360 with the respondent/Railway to supply two lakh ten thousand units of Monoblock Prestressed Concrete Sleepers (hereinafter referred as 'MPCS units') to the Railways. The respondents had enhanced the above order by further two lakh MPCS units of 60 KG specifications. The petitioner/Company manufactured and supplied the MPCS units and have received payments from the respondents. On 24.9.1990, the respondent awarded the first repeat order for manufacture and supply of 7,50,000/- (seven Lakh fifty thousand) and 82,000 (eighty two thousand units) inclusive of adhoc orders sanctioned by Railway Board vide letters dated 10.5.1989 and 7.12.1989. Accordingly, the petitioners have manufactured and supplied MPCS units.
3. On 24.3.1995, further repeat ad hoc order of one lakh MPCS units plus 6,75,000 MPCS units was lodged. As on 27.11.1997, the petitioner have manufactured 4,58,677 MPCS units. On 6.2.1996, by letter No.W.188.C.Ro/II/360, respondents requisitioned the petitioner to manufacture and supply additional quantity of 40,000 MPCS units over and above 1,35,000 MPCS units. By 31.3.1996, the entire quantity of 1,75,000 MPCS units were to be supplied during 1995-96.
4. On 27.6.1997, respondents had decided to invite open tenders for procurement of total 76,00,000 MPCS units from various factories. Respondent/Railways decided to exercise the negative option as set out in clause 7.2 of the Contract Agreement to modify and reduce the number of MPCS units from 6,75,000 to 4,72,500 to be manufactured and supplied from the petitioner/Company.
5. According to the petitioner/Company, the unilateral action on the part of the respondent/Railways to unilaterally reduce the requirements of MPCS units has violated fundamental right of the petitioner and is in breach of the principles of natural justice and the principle of promissory estoppel. Learned Counsel for the petitioner contended that midway action taken by the respondent with retrospective effect amounted to alteration or variation of the clause in the Contract as payment was made at lesser new rate.
6. On behalf of the respondents, it is contended that the petition is not maintainable as the Contract was concluded at Delhi and the Delhi Court has territorial jurisdiction and not this Court. Secondly, it is contended that, in view of the arbitration clause, the parties ought to have been relegated to resort to arbitration in view of the provision in section 8 of the Arbitration and Conciliation Act, 1996. Thirdly, it is contended that the petitioner/Company sought to enforce the Contact and intended to claim damages for alleged breach of the Contract and, therefore, the remedy for the petitioner was to institute the civil suit in the competent Civil Court. On merits, it is contended that Contract was broadly worded and variation in the clause in the Contract was permissible. Option exercised by the Railways could not have been construed by the petitioner as termination of the Contract as the petitioner was not put to any loss and the amounts were paid as per the Contract with the petitioner. Option to invite Open Tenders was neither violative of the fundamental rights nor in violation of the principles of natural justice. It is contended that the principles of promissory estoppel and the principles of natural justice were not attracted in the facts and circumstances of the case.
Facts in Writ Petition No.1908 of 1998 :
7. On or about 11.9.1980, the petitioner/Company was awarded a Contract bearing no. W.188.C.361 with the respondent/Railway to supply two lakh ten thousand units of Monoblock Concrete Sleepers (hereinafter referred as 'MPCS units') to the Railways. The respondents had enhanced the above order requiring the petitioners to manufacture further 4,10,000 numbers of MPCS units. The petitioner/ Company manufactured and supplied the MPCS units and have received payments from the respondents. On 4.9.1992, the respondent awarded the first repeat order for manufacture and supply of 7,50,000/- (seven Lakh fifty thousand) numbers of MPCS units by Contract No.W.188.C.361/RO.
8. On 18.4.1995, second repeat order by Contract No.W.188.C.RO.II/361 by the respondents for manufacture of 6,00,000 numbers of MPCS units was awarded. The petitioners are in the midst of executing this contract and as on 31.10.1997, they have manufactured and supplied to the respondents 3,55,000 numbers of MPCS units. On 6.2.1996, by letter No.W.188.C.Ro/II/361, respondents requisitioned the petitioner to manufacture and supply additional quantity of 35,000 MPCS units over and above 1,20,000 MPCS units. The entire quantity of 1,55,000 numbers was to be supplied during the year 1995-96 i.e. upto 31.3.1996.
9. On 27.6.1997, respondents had decided to invite open tenders for procurement of total 76,00,000 MPCS units from various factories. Respondent/Railways decided to exercise the negative option as set out in clause 7.2 of the Contract Agreement to modify and reduce the number of MPCS units from 6,00,000 to 4,20,500 to be manufactured and supplied from the petitioner/Company.
10. According to the petitioner/Company, the unilateral action on the part of the respondent/Railways to unilaterally reduce the requirements of MPCS units has violated fundamental right of the petitioner and is in breach of the principles of natural justice and the principle of promissory estoppel. Learned Counsel for the petitioner contended that midway action taken by the respondent with retrospective effect amounted to alteration or variation of the clause in the Contract as payment was made at lesser new rate.
11. On behalf of the respondents, it is contended that the petition is not maintainable as the Contract was concluded at Delhi and the Delhi Court has territorial jurisdiction and not this Court. Secondly, it is contended that, in view of the arbitration clause, the parties ought to have been relegated to resort to arbitration in view of the provision in section 8 of the Arbitration and Conciliation Act, 1996. Thirdly, it is contended that the petitioner/Company sought to enforce the Contact and intended to claim damages for alleged breach of the Contract and, therefore, the remedy for the petitioner was to institute the civil suit in the competent Civil Court. On merits, it is contended that Contract was broadly worded and variation in the clause in the Contract was permissible. Option exercised by the Railways could not have been construed by the petitioner as termination of the Contract as the petitioner was not put to any loss and the amounts were paid as per the Contract with the petitioner. Option to invite Open Tenders was neither violative of the fundamental rights nor in violation of the principles of natural justice. It is contended that the principles of promissory estoppel and the principles of natural justice were not attracted in the facts and circumstances of the case.
12. The learned Counsel for the petitioner posed a question as to whether the Contract between the parties was terminated unreasonably, malafidely and arbitrarily under the colourable exercise of power, without following the principles of natural justice. We have heard the rival submissions at length and also perused the rulings cited. In the facts and circumstances, applying the rulings cited before us, there is nothing substantive to prevent this Court from entertaining the Writ Petition by examining the merits of the controversy, considering the long lapse of period since the petition is pending for decision.
13. Opposing the contention as to maintainability of the Writ Petition, our attention is invited by learned Counsel for the petitioner to the ruling in the case of ABL International Ltd. and another Vs. Export Credit Guarantee Corporation of India Ltd and others reported in (2004) 3 SCC 553. In Para 27, it is concluded thus:
â27. From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition:
(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.
(b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also maintainable.
28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition.â
14. The Apex Court had considered the long pendency and the facts and circumstances of the case in the light of judicial precedents cited to set aside the Judgment delivered by the Division Bench impugned therein to restore back the ruling of the learned Single Judge of the Calcutta High Court. Terms of Contract qua contract are not enforceable in exercise of writ jurisdiction.
15. In JasbirSingh Chhabra and Others .vs. State of Punjab and Others reported in AIR 2010 SC 622, while considering the doctrine of promissory estoppels, the Apex Court dealing with the particular decision of the State Government, held that the same could not be said to be mala fide. That was a case relating to change in land use. The land meant for industrial use. However, the State Government approved the proposal of the State Corporation for earmarking 2030% of the land for industrial housing in the existing and upcoming focal points and growth centres developed by the Project. The object underlying the policy decision was to provide some land for residential purpose to those who had set up or were intending to set up industrial units and the workers already employed or to be employed in such units. Upholding such a policy decision and noticing the fact, the State Government did not sanction change of land use in the particular phases from industrial to commercial. It was held that, while exercising power of judicial review, the Courts should not readily accept the charge of malus animus led against the State and its functionaries. In paragraph 34 of the judgment, it was observed thus:
ââ34. It is trite to say that while exercising power of judicial review, the superior courts should not readily accept the charge of malus animus laid against the State and its functionaries. The burden to prove the charge of malafides is always on the person who moves the Court for invalidation of the action of the State and/or its agencies and instrumentalities on the ground that the same is vitiated due to malafides and the courts should resist the temptation of drawing dubious inferences of malafides or bad faith on the basis of vague and bald allegations or inchoate pleadings. In such cases, wisdom would demand that the Court should insist upon furnishing of some tangible evidence by the petitioner in support of his/her allegations.â
16. The ruling in KrishanLal Vs. Food Corporation of India reported in (2012) 4 SCC 786 has been referred to, to buttress the argument that there being arbitration clause in the MOU, the petitioners should have invoked the same instead of writ jurisdiction. In the said decision, while recording the arguments that the appellant ought to have resorted to arbitration clause instead of filing a writ petition in the High Court, the Apex Court while appreciating the said plea but keeping in mind the nature of the controversy and the decision thereof, held that relegating the parties to arbitration will not be feasible especially when the proceedings before the arbitration could also dragged on for another decade. In the given facts and circumstances, it was held that availability of alternative remedy for adjudication of the dispute could not be a ground for not to entertain writ particularly at the belated stage of the proceedings.
17. Judicial quest is to strike just balance between administrative discretion as per Government policy and need of fairness. Art. 14 is attracted in the matter of awarding Contracts. In the case of RamanaDayaram Shetty vs. The International Airport Authority and Ors., 1979 (3 ) SCC 489, it is observed that the Court is not concerned with the merits or correctness of the decision taken, but the manner in which decision is taken. Court is not to substitute its opinion for the opinion of the authority deciding the matter Evaluation and award of Contract is essentially commercial functions and primarily principles of natural justice and equity stay at a distance in such matters if award is bona fide and in public interest. Procedural aberration or errors in assessment or prejudice to tenderers may be excused or condoned in otherwise lawful decision in contracts by negotiations.
18. This Court issued notice in these writ petitions on 2/7/1998. Respondents were then heard on said notice before admission and matter was admitted by issuing âRuleâ on 11/11/1998. At that juncture no objection either on the ground of lack of territorial jurisdiction or availability of arbitration as alternate remedy was raised. These objections are coming up for the first time almost after 16 years of issuance of issuance of rule in the matter. In AIR 1971 Supreme Court 33L. Hridaya Narayan vs. Income Tax Office officer, Bareilly, U.P., the Hon'ble. Apex Court has held that alternate remedy is not always a bar when petition was entertained for final hearing by High Court. Here, the petition has been entertained after extending opportunity to the other side to oppose the admission. Judgment of division bench of this court reported at 2001  Mah.L.J. 103 â Costa and Co. private limited, Goa v. Sales Tax Officer, Margao, holds that it would be abdicating its duties by throwing writ petition on technical ground after keeping the matter over a period of time. It could have been disposed of on such technical plea by it at the time of entertaining petition, but having entertained, granted stay and kept it dormant for 8 years, it would be unfair to tell the party to go to a proper authority under the Statute. Division bench finds that it would amount to gross miscarriage of justice. The objection of learned Advocate General Tat a writ petition challenging show cause notice as not maintainable was overruled.
19. The ruling in Rajesh Sadanand Patil Vs. Additional Collector, Pune reported in 2003 (2) Mah LJ 200 is cited on behalf of the petitioner to argue that the Apex Court had followed the ruling in Shrilekha Vidyarthis case reported in AIR 1991 SC 537 holding that requirements of Art. 14 and contractual obligations are not alien concepts so as not to co-exists and hence, the Apex Court proceeded to decide the writ petitions on merits.
20. The ruling in Karnataka State Forests Industries Corporation Vs. Indian Rocks reported in 2008 (14) SCALE 98 is cited to canvass an argument that the Apex Court held that although ordinarily superior Court would not enforce the terms of Contract qua Contract, it is trite that when an action of the State is arbitrary or discriminatory and thus violative of Art 14 of the Constitution of India, a Writ Petition would be maintainable.
21. Some more rulings are also sought to be pressed into service to submit that the High Court can entertain the writ Petition notwithstanding the fact that alternative remedy may be available. Division Bench of this Court in Costa and Co. Pvt. Limited vs. Sales Tax Office, Margaon 2001 (2) Mah LJ 103 held that when writ petition has been entertained, stay was granted and writ petition was kept dormant for long time, then in the peculiar facts and circumstances that would be unfair to say that party shall, go to authority under the Statute concerned. That would amount to gross miscarriage of justice.
22. Tender terms are within realm of Contract Public sector units must have free hands to set the terms of Contract. The area of discretion on behalf of the Public Authority covers various factors such as requirements, planning, analysis, reliability, operation, and economics of obtaining the products pursuant to the Contract. Freedom of choice and the flexibility in the matter of Contracts is necessity for any public authority.
23. The Division bench judgment of this Court in NitinIndustries Associates, Khamgaon v State of Maharashtra and Others reported at 1986 Mah.L.J. 474 considers provisions of Bombay Reorganization Act, particularly its section 41. It holds that provisions of said section 41 read with Rule 1 of Chapter XXXI of the Bombay High Court Appellate Side Rules can not abridge writ jurisdiction. No enactment passed by the Parliament and/or by State Legislature can trench upon the jurisdiction conferred on High Court by article 226 of Constitution of India. Said section and provisions of Chapter XXXI of Appellate Side Rules are designed to meet administrative requirements and administrative convenience. Hence it is not that every petition under article 226 which is presented to the bench at Nagpur needs to be entertained and regard must be had to these two provisions in filing of writ petition so that the petition can be dealt with by an appropriate bench. This bench also expressed that ordinarily it is extremely slow in entertaining such matters which should have been filed before the Principal Bench at Mumbai, but in peculiar facts and circumstances before it, when the matter was already admitted about two years back and was to be heard finally, bench held that a matter should be heard at Nagpur. In present matter, respondent 1 Union of India has its headquarters at New Delhi. Except for that, nothing took place at New Delhi. Contract was signed in Maharashtra at Mumbai and petitioners agreed to produce concrete sleepers at Nagpur. The communication which gave rise to a cause of action is received by them at Mumbai which affects their manufacturing activity at Nagpur. It is not in dispute that they have manufacturing unit at Butibori on lands allotted by Railways to them in Nagpur District. Petitioners are longstanding suppliers of monoblock prestressed concrete sleepers to Railways. They argue that effect of communication dated 18/11/1997 or 18/10/1997 is that even though there was no reduction in demand for sleepers and in fact demand was continuously increasing, Railways in purported exercise of its discretionary power under clause 7.2 of the contract illegally brought down the quantity of sleepers by 30%. Since 1981 petitioners have supplied 14,60,000 units to Railways. By 27/11/1997, out of total quantity of 6,75,000 units, they had supplied 4,58,677 units. Approximate projected demand for concrete sleepers in next 3 years from June 1997 was 76 lacs sleepers throughout India and it was in addition to contracts already awarded. This clause 7.2 of the contract stipulated that quantity of order would be subject to variation of plus or minus 30% at the sole discretion of purchaser, necessarily depended on prevailing demand for sleepers. Therefore, the zonal railway concerned can only make a recommendation in respect of required quantity of sleepers and thereafter the said power under clause 7.2 can't be resorted to and not otherwise. According to them, communication dated 18/11/1997 or 18/11/1007 is violative of art. 19  [g] of the Constitution of India. Prayer in the writ petition 1907 and 1908 of 1998 is to quash and set aside said decision contained in letters dated 18/10/1997 or 18/11/1997, and hold to that petitioners are entitled to declaration that the reduced rate per unit cannot apply to contractual quantity. Other prayers in said petition have not been argued and pressed. But facts in both matters show that their profits from production at Nagpur have been adversely affected according to respective petitioners. Cognizance of this grievance about alleged injury at Nagpur has been taken by this bench and as such, here, we are not inclined at this stage to permit the respondents to urge the territorial lack of jurisdiction, that too after lapse of many years. Respondents ought to have raised said objection pointing out that the Court at New Delhi alone has jurisdiction at the earliest opportunity. By not raising such or similar objections then, the respondents acquiesced in and permitted the adjudication to remain pending before this bench and can not now be allowed to take a somersault.
24. The Respondents have pointed out that policy of allotting additional work to existing suppliers by issuing the repeat orders was discontinued in June 1997 and tenders were for the first time invited for supply of such units. Thus for the first time competitive bidding process was introduced and in it, Railway received offers to supply sleepers at a much lesser rates. Though there is some dispute about the exact difference in rate per unit offered to petitioners in the repeat contract and rate offered by petitioners in tender, we do not find it necessary to go into those details. Rate offered by petitioners for the same work in tender process is lower than the rate which they agreed to under repeat contract. If their stance is accepted, petitioners will be supplying same units at two different rates during same period. In any case, Railways will be purchasing sleepers at two different rates from same or different suppliers at one and same time. It looks not only anomalous but also arbitrary. Rate per unit determined and evolved through a valid competitive bidding is the only fair and standard rate constitutionally acceptable. When public revenue and public interest is involved, a situation leading to purchasing of sleepers at such standard rate and higher rate which derogates from fairness and spirit under Art. 14, can not be countenanced. It is apparent that effort of Railway to procure sleepers at such standard rate which is also less than the rate agreed with the petitioners cannot be said to be either arbitrary or erroneous or malafides exercise of power. In fact not taking the step as impugned in these petitions will be a fraud on public revenue and the Constitution.
25. As per clause 7.2 of the repeat contract, total quantity of order ie sleepers is subject to variation of plus or minus 30% at sole discretion of the purchaser. This clause stipulates that this variation is to be approved at Board Level on the recommendations of the zonal railway. Petitioners claim entitlement to supply 6,75,000 and 6,00,000 sleepers respectively under repeat orders at the agreed rate and not at reduced rate quoted by them in open tenders. On 2/7/1998, this court granted ad-interim ex parte stay to the effect and operation of impugned communications dated 18/10/1997 and 18/11/1997 in both the writ petitions. Interim orders were continued while admitting writ petitions on 11/11/1998 for final hearing. Petitioner in WP 1907/1998 claims that he supplied 6.75 lacs sleepers ie full quantity. He got payment at agreed rate for 4.72 lacks units and 81, 639 units have been paid at lesser rate ie 1997 tendered rate. Difference in amount, however, has been later on made over to said petitioner which is contingent upon the result of present adjudication. Remaining 1,20,861 units have been paid for at new or lesser or tendered rate. Civil application 4421/2005 has been preferred to bring these subsequent events on record. Petitioners in the petition 1908/1998 has filed civil application 4420/2006 pointing out that it has received less payment for 33,002 concrete sleepers. Said petitioner also claims agreed contractual rate for balance 1,46,998 sleepers and contends that 1997 tendered rate cannot be made applicable to this quantity. The total price difference claimed is Rs. 1,42,32,346/â for balance quantity of 146998 sleepers. Declaration of entitlement to retain differential amount of Rs.39,18,235/â received because of interim orders of this court is also claimed. Difference in price per sleeper as per contractual rate and 1997 tendered rate therefore is roughly of Rs. 100/- or more. Thus for the first time when tender process was resorted to, Railway received competitive and lesser rates than quoted by respective petitioners under repeat orders. Otherwise, both the petitioners would have merrily continued to charge more rate and earned unfair or wrongful profits.
26. Power to vary requirement of sleepers is reserved by Board and they have brought down the order quantity by 30%. This reduction obviously relates to total contractual number of units and not having any bearing on quantity still to be manufactured or supplied. Such reduction is in sole discretion of the purchaser, even as per agreed terms of contract. Variation in number of units needed will have impact on developmental activities of Railways and hence, has to be approved at Board level on the recommendation of the Zonal Railway. Condition of approval of Board or need of recommendation of the zonal authority therefor, is not for protection of petitioners but to safeguard the functioning of Railways and its administration. Here for valid reasons, contractual quantity has been brought down within permissible limits in public interest. Petitioners have not shown that the Board has curtailed the number of sleepers to be used by the Railways and their decision (impugned herein) prejudices the development works of Railway. None of the petitioners have demonstrated that their factory or establishment has suffered any loss because their machinery or manpower was lying idle. In fact, there is no such plea or proof. Railways only shifted the quantity reduced from repeat contract purchase to new tender contract purchase. Rates offered by petitioners in 1997 for tender purchase are to be paid to them for said quantity. Manufacturing activity of the petitioners continued unhampered and they do not point out any adverse effect even in civil applications filed to bring on record the relevant subsequent events. In effect, their profit margin only has been reduced to certain extent and no loss as such is suffered by them. They only stand to gain less profit than expected. When earlier rate ie contractual rate was not arrived at after following transparent procedure flowing from Art. 14 of the Constitution of India, grievance of such a nature and of less profit cannot be entertained in the writ jurisdiction. Petitioners who have supplied earlier quantity at a much more rate have themselves quoted lesser rate in open competitive bidding. This conduct shows that earlier rate quoted by them has not been equitable and fair. It is not their argument that they quoted lesser rate in open tender because of more payment expected by them under repeat order. Not getting that profit ie projected expected profit did not have any adverse impact on their business. Action of public authority like Railway in avoiding loss of public revenue cannot be said to be arbitrary or erroneous. It is not malafide. Petitioners abused their standing in market for several years and earned undue profits by charging Railways exorbitantly for sleepers which tantamount to nothing but causing wrongful loss to the public revenue. When constrained by the respondents and circumstances, they chose to offer lesser rates. We therefore find that no legal injury was suffered by any of the petitioners. Higher rate claimed by them even after acceptance of their tendered rate cannot be allowed or granted. They also cannot retain the benefit derived under interim orders of this court. Their contention that the quantity has been brought down retrospectively by the respondents is also not justified and legally sound. There is no scope for intervention under Art. 226 of the Constitution of India for judicial review in such a contractual matter.
27. Reliance is also placed by the learned Counsel for the petitioners upon the ruling of NitinIndustrial Associates, Khamgaon .vs. State of Maharashtra and Others reported in 1986 Mh.L.J. 474. In this case, the act of respondent nos. 1 and 2 in ignoring the tenders and then again without rejecting or terminating the same, proceeding to allocate the two items amongst the three parties by the said resolution dt.3.8.1984 was held to be bad in law and the said resolution was quashed.
28. In our view, the respondent/Railway Authority in the case in hand acted within its right to examine the repeat orders granted to the petitioners after the Contract initially entered into was already concluded long back. Respondent/Railway Authority exercised discretion to save public money wherever possible to award the work to the appropriate competitive bidders in the larger interest of the Railway administration. We do not find any compelling ground in the facts and circumstances to interfere with discretion exercised by the respondent/Railways in exercise of the extraordinary writ Jurisdiction. The Writ Petition is, therefore, found without merits and dismissed. No order as to costs. Rule is discharged accordingly.