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Byford Pvt. Ltd. and ors. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 785 of 1971
Judge
Reported inAIR1972Delhi59; ILR1972Delhi171
ActsRegistration and Licensing of Industrial Undertaking Rules, 1952 - Rule 7
AppellantByford Pvt. Ltd. and ors.
RespondentUnion of India and ors.
Advocates: B.R. Iyengar,; Bishambar Lal,; S.C. Patel,;
Cases ReferredC. K. Achuthan v. State of Kerala and
Excerpt:
(i) practice-necessary party--nor-joinder of--effect of not impleading necessary parties to writ petition.; that a necessary party is one without whom no order can be made effectively; a proper party is, on the other hand, one is whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding. again a party whose interests are directly affected is a necessary party.; where, thereforee, if the petitioner succeeds in his writ petition it would have he direct consequence of depriving of some other parties of the rights which have accrued to them: held, that there cannot be any interference with the rights that have thus accrued to them without making them parties to this writ petition.; (ii).....s. rangarajan, j.(1) the petitioner company, messrs byford pvt. ltd. had submitted a tender in pursuance of a tender notice dated 9-11-1970 issued by the gujarat state cooperative land development bank ltd., ahmedabad (2nd respondent) hereafter called the bank. quotations were invited by the bank from those suppliers in the member countries of the international bank for reconstruction & development and switzerland, who had established tractor manufacturing facilities in india or had obtained 'necessary approvals of the government of india' for manufacture of tractors in india prior to the date of the issue of this notice, for supply of 800 wheel type imported tractors in various quantities in the horse power ranges of above 25 but not exceeding 50, as per specifications given in the.....
Judgment:

S. Rangarajan, J.

(1) The petitioner company, Messrs Byford Pvt. Ltd. had submitted a tender in pursuance of a tender notice dated 9-11-1970 issued by the Gujarat State Cooperative Land Development Bank Ltd., Ahmedabad (2nd Respondent) hereafter called the Bank. Quotations were invited by the Bank from those suppliers in the member countries of the International Bank for Reconstruction & Development and Switzerland, who had established tractor manufacturing facilities in India or had obtained 'necessary approvals of the Government of India' for manufacture of tractors in India prior to the date of the issue of this notice, for supply of 800 wheel type imported tractors in various quantities in the horse power ranges of above 25 but not exceeding 50, as per specifications given in the tender papers.

(2) A sum of 35 million U.S. dollars have been received by the Government of India as credit from the International Development Association (hereinafter called the I.D.A.) in various currencies; it was intended that portion of the proceeds of the said credit should be available for payments under the contracts for which the above said invitation to bid was issued. The said credit was made available in pursuance of a scheme for carrying out the Gujarat Agricultural Credit Project.

(3) On 3-6-1970 a Development Credit Agreement was entered into between the I.D.A. and the Government of India and, as a corollary, another agreement, called the project agreement, was entered into between the I.D.A., Agricultural Refinance Corporation and the Bank, on the same day. The credit was to be utilised for the Gujarat Agriculture Credit Project, which is a lending programme to finance investments in minor irrigation facilities and equipment and in farm mechanisation. Out of the total of 35 million U.S. dollars, 7 -4 million dollars were earmarked for tractors, spare parts, harvesters etc. 2,200 imported tractors were to be supplied to the farmers in that State through the loans from the Bank, the procedure in this regard having been prescribed by the Development Credit Agreement between the I.D.A. and the Government of India. The Bank was required to obtain quotations for lots of 700-800 tractors by public invitations from those suppliers in the countries which are members of the International bank for Reconstruction and Development (hereafter called the World Bank), and Switzerland, who had established tractor manufacturing facilities in India or had obtained necessary approvals of the Government of India, in the manufacture of tractors in India prior to the date on which quotations were sought by the tender notice dated 9-11-1970. Thereafter the Bank had to advertise the particulars of different models of tractors, along with the prices quoted, of those selected suppliers and the farmers of the State had to make their choices, in order of preference, of the tractors, which they would be willing to buy from those selected. The Bank had then to aggregate the orders received and forward them to the I.D.A. for its approval before placing orders. Thereafter the Bank would enter into contracts with the selected suppliers at the prices quoted for the number of tractors ordered.

(4) The petitioner company had applied, on 30-6-1970, for industrial license to manufacture tractors of 30 Horse Power known as model S-200 in collaboration with a Japanese firm Messrs.Ishikawajima- Harima Heavy Industries Co. Ltd., which will hereafter be referred to only as the Japanese firm, said to be one of the seven big industrial house of Japan and the largest ship builder of the world. The Industrial Licensing Committee favorably considered the application of the petitioner company for the grant of a license to manufacture tractors in India at its meeting held on 31-8-1970. A Letter of Intent was also issued to the petitioner company on 12th November, 1970 on the basis of the said decision of the Licensing Committee. After the issue of the Letter of Intent the petitioner company complied with the other formalities like the submission of the collaboration agreement, on 28th December, 1970 and for grant of capital goods import license on 2nd January, 1971. The approval of the foreign collaboration agreement was granted on 22-4-1971 and the clearance of the import of capital goods on 9-6-1971.

(5) The last date for the submission of tenders was extended from 21-12-1970 (originally fixed) to 5-1-1971. The tenders were opened on 6-1-1971. There were fourteen tenders, two of which were from Indigenous Tractors and were thereforee rejected straightaway; the oF petitioner company was one of the remaining twelve. Since the Bank had no information about the names of the firms qualified for submitting the tenders the representatives of those who submitted tenders were informed on 6-1-1971 that the tender papers would be scrutinised by the concerned authorities of the Government of India.

(6) In February, 1971 the Bank sent details about the tenders received to the Ministry of Finance, Department of Economic Affairs. Govern- ment of India. The Technical Adviser of the Bank also went to Mew Delhi to discuss the matter personally with the concerned officers. Thereafter the Bank sought certain clarifications from the various tenderers. Some technical data and a copy of the test report of the tractors offered by the petitioner company were called for by the Bank in the month of February 1971 and these were also supplied to the Government of India for submission to the I.D.A.

(7) By the letter of 14-4-1971 the Ministry of Finance, Department of Economic Affairs, of the Government of India intimated to the Bank that only five firms were qualified for getting choices of farmers. The petitioner company was not one of the five. It .would be best to read that letter fully:

G. Venkataramanan No.F.4(12)/71-FB.II Under Secretary Ministry of Finance, Tel. 372154 Deptt of Economic Affairs. 14-4-1971 Dear Shri Joshi, I am sending this in continuation of my telegram of 14th April, 1971. As intimated to you in the telegram, the tractors of the following five companies qualify for obtaining farmers' preferences: 1. Eicher 2. Kirloskar 3. Escorts 4. International 5. Tafe We have taken the stand that 'necessary approvals' would mean that the manufacturer must satisfy the following criteria: Should have obtained: (i) Letter of Intent; (ii) Approval for the foreign collaboration terms; and (iii) Approval for import of capital equipment. The International Development Association has been informed of our stand on this. As proposed by you in your D.O. letter No. LDB/DO/Tech/12521 dated the 6th march, 1971, the following models of three of the above five firms are rejected : 1. M/s Kirloskar Bros. D-5006 (West Germany) 2. M/s Escorts Tractor Ltd. Ford-4000 (England) 3. M/s Tafe MF-165 (England) R-3200 (Italy) IMT-533-3A With regards, Yours sincerely, Sd. G. Venkataramanan.

(8) The Bank then invited choices of farmers by public notice, on 5-5-1971, in the local papers, the last date of submission of choices being 22-5-1971. About 13,000 applications were received by the Bank which selected by lots 800 farmers on 31-5-1971. According to the petitioner, however, this happened on 9-6-1971 but this allegation has not been substantiated. The details of the same were sent by the Bank on 12-6-1971 to the I.D.A. through the Government of India. The I.D.A. informed the Bank on 7-7-1971 through the Government of India to place orders and on 14-7-1971 the letters were accordingly returned to the three firms whose tractors were selected by the farmers. The petitioner company claims that it had imported four prototype units from their principals in Japan and in respect of one of them comprehensive tests were complied with at Government Tractor Training and Testing Station, Budni. The tests revealed that the tractor was suitable for use under Indian conditions. The petitioner company used the other units for giving demonstrations to farmers on an extensive scale. It had been already tested in Europe and the continent and the performance was acclaimed to be of a superb order. This tractor is said to be fitted with sealed brakes on account of which it is most suitable for paddy cultivation involving piddling operations. The other tractors and models, which were not fitted with such sealed brakes, were not ideally suited for wet cultivation particularly paddy cultivation. After the Letter of Intent was issued the petitioner company had incurred expenditure to the extent of about Rs. 2 lakhs on items such as appointing technical consultants- and financial advisers, advertising and preparation of project report and factory lay-out. It is claimed that the Letter of Intent is itself a document evidencing Government's approval in principle of the project applied for. It is also stated that the inquiries made by the petitioner company with 'the Ministry of Food and Agriculture, Ministry of Industrial Development, Local World Bank authority and the Bank' resulted in an assurance from all of them that the petitioner is eligible to quote against this tender.

(9) The petitioner company was not given due opportunity of being. heard before the aforesaid letter dated 17-4-1971 was issued by the first to the second respondent; it had been excluded from consideration ' by the farmers of Gujarat state even without such an opportunity.

(10) The petitioner company is also stated to have been discriminated against. So far as the supply of tractors in Punjab is concerned the Punjab Agro Industries Corporation had invited tenders on 30-3-1971 with 21-6-1971 as the last date for receipt of tenders. It was clarified later by notification dated 11-6-1971, that the suppliers who had ob-_ tained Letters of Intent and approval for foreign collaboration could submit their offers, on the basis of which farmers, preferences would be obtained. Clearance of the capital-goods-import-application was considered sufficient if it is obtained before 16th October, 1971, the date on which the farmers' choices would be aggregated.

(11) It is stated in the affidavit of Shri G. Venkataramanan Under Secretary to the Government of India in the Ministry of Finance (Department of Economic Affairs) filed on behalf of the Union of India (first respondent) in opposition to this writ petition that the expression 'necessary approvals of the Government of India' referred to in the Invitation to Tender, which is in the plural, referred to not merely the issue of a Letter of Intent but also the securing of approval to the foreign collaboration agreement and clearance for import of capital goods. Since the petitioner company had not fully satisfied ail the conditions for being eligible for implementation of the manufacturing programme on the date of the issue of Invitation to Tender, namely, 9-11-1970, the petitioner-company was excluded from consideration. The issue of a Letter of Intent was nothing more than an intimation by the Government of India that they were prepared to issue a license provided the applicant satisfied the conditions stipulated therein. Those conditions include the terms of foreign collaboration, import of capital goods, if any, and the phased manufacturing programme being settled to the satisfaction of the Government. The letter would lapse automatically if the above conditions were not fulfillled within a period of six months from the date of the Letter of Intent.

(12) It is further pointed out in the affidavit of Shri Venkataramanan that the petitioner company was aware of the above meaning of the words 'necessary approvals' and that even if it did not know it should have sought for necessary clarification from the respondents. It is - still further explained that the Punjab Agro Industries Corporation had nothing to do with the tender notices issued by the Bank in Gujarat. Even Punjab had insisted on the first two items of approval, namely, the Letter of Intent, and in respect of the foreign collaboration agreement; the third, namely, for import of capital goods could be obtained a little later, before the date of aggregation of,farmers' choice Each State had its own conditions and they do not provide a basis for comparison with each other.

(13) Concerning the allegation made in the petition, that out of those five tenderers who had been approved the firms had purposely stepped down their production in order to import more tractors and that for the manufacture of the tractor Models of Messi Ferguson (Tafe) 135, Ford (Escorts) 2000, Eicher Model 3007 and 3009 in India, they do not have any manufacturing programme, it was explained by Shri Venketaramanan that the tender notice referred only to the eligibility of the supplier and not to the particular makes and models with reference to the manufacturing programme. Even if the tender of the petitioner company had been accepted, it is pointed out, it would have .had to import spare parts for seven years and it would take two or three years to manufacture the tractors and parts in India

(14) In the affidavit of Shri Mahandi K. Jivani, Deputy Manager of the Bank, filed on behalf of the Bank (second respondent) in opposition to the present writ petition, it is pointed out that the petitioner had not even alleged violation of any statutory provision or of any rule or regulation made under any statute; even if the petitioner's content- ion were correct it would only give rise to a civil liability and could not form the subject matter of a writ petition.

(15) Even in the rejoinder affidavit filed by Shri P.L. Goel on behalf of the petitioner company to the return of the second respondent no specific mention was made of infringement of any statute on rule despite the preliminary objection taken by the Bank that there was no statutory duty cast on it to accept the tender of the petitioner and that the petitioner had nowhere mentioned any such violation. The petitioner company only asserted in the rejoinder that it was within its rights; a further averment was made that the petitioner company's fundamental and other rights were infringed. The petitioner company having been registered under the Companies Act and not being a citizen of India could not possess any fundamental right which can be claimed to be thus infringed. Stress was laid in the rejoinders filed by the petitioner company to the returns filed by respondents No. 1 and 2 about their having been discriminated against and the Bank improperly delegating its functions, of either accepting or rejecting the tender submitted by the petitioner-company, to the Central Government. The position was taken that the Letter of Intent was issued to the petitioner company after the approval of the Cabinet and that the date of the issue of the said letter, namely, 11-12-1970, was not material since the approval had been given by the Central Government to the petitioner company in fact and in law on 31-3-1970. Reliance was placed for this purpose solely on what is stated to be the approval by the Licensing Committee of the Government of India on 31-8-1970. If necessary clarifications had been made concerning 'approvals', as in the case of Punjab, the petitioner company would have complied with the various requirements in time; the respondents were under legal obligation to clarify what they meant by 'approvals'. 'On account of the amount of labour and expenditure incurred by the petitioner company on the faith of such representations the respondent were estopped from excluding the petitioner company, as it has been done by the letter dated 14-4-1971.

(16) Shri B. R. L. Iyengar. Counsel for the petitioner company has urged as follows:

(1) The expression 'necessary approvals of the Government of India' only means the approval according to law, namely, the approval of the Government in principle of the petitioner company's proposal to manufacture tractors in collaboration with the Japanese firm, which is the only approval contemplated by Rule 7(2)(b) of the Industrial Licensing Rules, 1952. (2) In any case, the requirement in the Invitation to Tender, if it is to be construed as referring to the fulfillment of a.ll the three contentions as alleged by the respondents even before the date of the Invitation to Tender, would be arbitrary and capricious, having no reasonable relation to or nexus with the object to be served by the said scheme. (3) Even if there is any ambiguity in this regard the said expression must be taken to intend what a reasonable person would understand by it; the person making the representation and the petitioner company having so understood the said expression and incurred detriment on that footing the respondents were estopped from excluding the petitioner company from being considered by the farmers of Gujarat State. (4) The letter dated 14-4-1971 having been admittedly issued by the first respondent to the second respondent without giving an opportunity to show cause against the issue of such letter, principles of natural justice were violated; it is vitiated for that reason. (5) The petitioner company had been discriminated against.

(17) Mrs. Shyamla Pappu, learned counsel for the first respondent raised the following preliminary objections :

(1) The suppliers who have been chosen by the Bank as a result of the voting by the farmers are necessary parties to this petition and they have not been made parties to this Writ Petition; it must fail for that reason alone. (2) The petitioner-company having come to know as early as the 16th April, 1971 about their not being eligible to tender and to whom the earnest money of Rs. 25,000.00 had been refunded by the Bank by means of a Draft as early as 4th May, 1971 and the same having been accepted without any protest was barred by laches from filing the present Writ Petition-after a delay of nearly three months, even after the petitioner- company knew it was not eligible to tender. The rights of third party suppliers, not imp leaded as parties, had intervened in the meantime.

(18) It was also urged that The Bank was only a Society registered under the Gujarat Cooperative Societies Act and was, thereforee, not a State or local authority or any other body within the meaning of Art. 12 of the Constitution of India and hence no writ could be issued against the Bank. In the view we take of this petition it is needless to decide this contention.

(19) Preliminary Objection No. 1 Despite the specific objection taken in paragraph 32 of the first respondent's return that the suppliers had not been made parties to the present Writ Petition, the petitioner did not even make any endeavor to meet with the said objection in the separate rejoinder filed to the first respondent's return; nor were any steps taken subsequently to get over this objection. The said suppliers are (1) Tafe representing Messi Ferguson, (2) International and (3) Escort (Ford) who have to supply to the Bank 537, 83 and 180 tractors, respectively. Tafe has no doubt intervened in this Writ Petition but it is not disputed that an Intervener can make submissions concerning legal positions but not permitted to controvert facts, stated in the Writ Petition; the Intervener has also no right of appeal against the decision reached in the Writ Petition. Shri Iyengar relied upon a decision of a Division Bench of this Court consisting of Andley and Tatachari, JJ. in Civil Writ No. 550 of 1970 decided on 25-3-1971- Mohan Chandm Joshi v. Union of India and others (1). What has been held in the case, following the decisions of the Supreme Court in Udit Narayan Singh Malpaharia v. Additional Member, Board of Revenue, Bihar, (1963) Supp.S.C.R. 676 and N. Raghavendra Rao v. Deputy Commissioner, South Kanara, : [1964]7SCR549 , is that while a necessary party has to be imp leaded in a Writ Petition a proper party may not be imp leaded. The further question for consideration, thereforee, is whether these suppliers are necessary parties to the present Writ Petition. Shri lyengar states that all that is sought to be done in this writ Petition is that the letter of the first Respondent dated 14-4-1971 to the Bank informing them that the petitioner-company was not eligible should be struck down and excluded from consideration and that the necessary consequence of this would be that the petitioner-company also should automatically go before the farmers for exercising their preference in respect of the Japanese tractors. If, as will be explained later, the letter dated 14-4-1971 correctly spells out what the expression 'necessary approvals' employed in the Invitation to Tender means then there would be no occasion to quash that letter regardless of whether the petitioner company had to be given an opportunity of being heard. In other words the petitioner-company would have to show that they were, on a proper construction of the Invitation to Tender or by any other process of legal reasoning, illegally excluded from the farmers' choice. By the time the present Writ Petition was filed the suppliers in question had been chosen by the farmers and then tenders had also been accepted by the Bank. The agreements could have been entered into by the Bank with the suppliers chosen by the farmers by 27-7-1971 while on the expiry of the date mentioned by tenders but this could not be done because of the order of stay passed by this Court on the Writ Petition, which was filed 'on 19-7-1971. Before there can be any interference by way of judicial review with the rights that have thus accrued to those suppliers, those suppliers ought to be heard. As was observed by the Supreme Court in the case of Udit Naryan Singh Malpaharia(2) a necessary party is one without whom no order can be made effectively; a proper party is, on the other hand, one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding. It was still further explained in that case that a party whose interests are directly affected is a necessary party. If the petitioner-company succeeds in the present Writ Petition it would have the direct consequence of depriving those suppliers of the rights which have accrued to them by reason of the farmers having voted in their favor and their having secured the right to supply tractors as mentioned above to the Bank. There cannot be any interference with the rights that have thus accrued to them without making them parties to this Writ Petition. In these circumstances the Petition would have to fail even on the ground of non-joinder of the necessary parties.

(20) Preliminary Objection No. 2. The second preliminary objection concerning laches, though a separate question, is also somewhat linked up in this case with the first preliminary objection. A few facts which are necessary to appreciate this point may alone be noticed in this connection. It is asserted in the return of the first respondent that the petitioner company had information about their being ineligible as early as 14th April, 1971-the date on which the above-said letter was issued by the first respondent to the Bank. On 16-4-1971 the petitioner- company had sent a telegram to the Managing Director of the Bank staling that their offer was declared not eligible at that late stage. There was also a threat of resort to legal intervention coupled with a request to withhold further action in announcing names. On the same day telegrams were issued by the petitioner-company not only to the Director (Shri G. B. Ramakrishna, Ministry of Finance, Department of Economic Affairs, New Delhi) but also to the Ministers for Finance, and Food & Agriculture. On the 19th April, 1971 a lawyer's notice was also sent setting out the facts in detail. Copies of the telegrams and the said notice are Annexure E to the present Writ Petition. It is worth recalling that even on the 4th May, 1971 the earnest deposit money (Rs. 25,000) was-refunded by the Bank to the petitioner, by means of a Draft, which was stated to have been accepted without protest by the petitioner-company. It was not mentioned in the rejoinder filed by the petitioner-company to the return filed by the second respondent that the earnest money was not refunded; there was only a denial that the petitioner had accepted the refund of earnest money without any protest; there was a further averment that various representations had been made to the competent authorities. It was averred in the return of the second respondent also not denied by the petitioner, that the Bank had invited choices of farmers by public notice published on 5-5-1971 in the local newspapers, the last date for sub- mission of choices being 22-5-71. The farmers' choices were aggregated on 31-5-1971. The petitioner, thereforee, knew about its being declared ineligible even on 14-4-1971 as stated by the first respondent or at that the latest on 16-4-1971, as could be seen from the telegrams. issued by the petitioner that the petitioner was excluded from being considered by the farmers. The petitioner had sufficient time, even before the farmers' choices were asked for by means of the publication in the local papers on 5-5-1971, to approach this court for relief and ask for the farmers' choices being stayed pending determination of the petitoner's claim for being so considered. 'On the other hand, the petitioner merely chose to rest content with sending telegrams, despite threatening legal action and asking the concerned persons from proceeding further in the matter. In spite of those telegrams and also a lawyer's notice a public announcement had been made through the local press. Not merely this : even the earnest money was refunded to the petitioner on 4-5-1971.

(21) What amounts to laches disentitling a party to relief would depend upon the circumstances of each case. In Tilok Chand Moti Chand v. Munchi, : [1969]2SCR824 ; Hidayatullah, C.J. agreed with the result (dismissal of the petition on the ground of delay) reached by Bachawat and Mitter, JJ. Hegde, J. and Sikri, J. (as his Lordship then was) differed from Bachawat and Mitter, JJ. Even though no period was prescribed, Hidayatullah, C.J. observed, that the utmost expedition is the sine qua non for such claims, the party aggrieved having to move the Court at the earliest possible time and explain satisfactorily even a semblance of delay. It was further pointed out that in India each case will have to be considered on its own facts; there is no lower limit of time to move the court since even though the case is brought within any period prescribed by the Limitation Act the Court need not necessarily give the total time to the litigant. Similarly, in a suitable case, the Court may entertain such a petition even after lapse of time. It is not necessary for the purpose of this case to notice the extent to which differing views were expressed on the total time that would be available to a party with a grievance to move the Court. The above- noticed observations of Hidayatullah, C.J. are sufficient to cover the present case

(22) The entire scheme vis-a-vis the manufacture, importation and distribution of tractors to farmers requires expeditious implementation. Some time would be taken up by the farmers having to vote on the question as to who the suppliers of tractors should be. When Letters of Intent are issued to parties, application in respect of the conditions imposed should be made within six months and it would remain valid only for one year unless extended by Government on an application made within that year. There has thus to be expeditions all round. This is not a case, thereforee, where a party can take his own time to move the Court or say that he could even have any period, if any, allowed by the law of Limitation. In the events that have happened, and inspire of the hearing of the Writ Petition having been expedited, if the matter is to go once again before the farmers for their choice it would mean more delay which in the context must be regarded as unconscionable. Dealing with the preliminary objection raised on the ground of delay or laches the petitioner only stated in the rejoinder to the return filed by the second respondent that it had sent telegrams referred to above and it also approached the Governor of Gujarat on 15th July, 1971 before filing this Writ Petition on the 19th July, 1971. The telegrams were issued on the 16th April, 1971 whereas, it is worth repeating, not only the earnest money of the petitioner was refunded but publication was also made in the local paper for the choices of the farmers to be expressed even in the first week of May, 1971. The petitioner has thus not given any tenable reason for filing the present Writ Petition even in the early part of May, 1971 except that the present Writ Petition has been filed after exhausting all the administrative channels. On the other hand a misleading allegation had been made in paragraph 46 of the Writ petition that the aggregation of farmers' choices would take place only on 27-7-1971, thereby suggesting an unwarranted inference that inspire of the farmers' choices having been aggregated only on 27-7-1971 there was some indecent hurry by pre-poning it to 31-1-1971. In the returns filed by the first respondent (also of the second respondent) it was specifically stated that the farmers were required by the publication made by the Bank on 5-5-1971 to indicate their choices by 22-5-1971. The Bank had filed a copy (Annexure A) of the publication made on 5-5-1971 along with their reply to the application for stay pending disposal of the Writ Petition. It was specifically stated therein that the applications from the farmers would be accepted till 22-5-1971. The above-said date mentioned in the Writ Petition, namely, 27-7-1971, 'has been explained in the affidavit of Shri Venkataramanan (vice paras 4 and 5) as the date on which the quotations received from the firm were to expire and that but for the stay obtained on 19-7-1971 the Bank could have signed the agreement. Yet another wrong allegation made in paragraph 44 of the Writ Petition, was that the Food & Agriculture Department had stayed the directive given by the first respondent on 14-4-1971 to the second respondent. This was squarely denied by Shri Venkataramanan and no reference was even made by the petitioner to any such stay during the hearing.

(23) It seems to us, thereforee, that the present petition is barred on the ground of delay and laches. Failure to implead necessary parties, the suppliers who were chosen by the farmers, becomes even more aggravated in the context of such delay and laches.

(24) We shall now deal with the contentions of the petitioner on the merits also, for the sake of completeness.

(25) It would be convenient to discuss the first and second contentions the merits together because they are somewhat connected. To appreciate the first contention of Shri Iyengar on the merits it would be necessary to have a brief idea not only about the nature of the agreement between the Government of India and the I.D.A. but its underlying purpose. The I.D.A. is an affiliate of the World Bank (International Bank for Reconstruction and Development). 35 million U.S. dollars, in various currencies, were loaned for execution of the Project. There was a similar project in Punjab which was to be implemented by the Punjab Agro Industries Corporation Ltd. Chandigarh in respect of 4000 tractors. 2,200 tractors for the use of the farmers in Gujarat were to be imported; the present controversy relates only to 800 tractors out of 2,200. The whole scheme was conceived to cover the gap between demand and supply of tractors. The necessary foreign exchange had to be obtained in various currencies. The sup- pliers should be from the member countries of the International Bank for Reconstruction & Development, and Switzerland; they should have established tractors-manufacturing-facilities in India or in the absence of such facilities the suppliers should at least have obtained the 'necessary approvals' of the Government of India for the man- facture of tractors in India prior to the date of issue of tender notice. The same condition was imposed not only in the case of Gujarat but also of Punjab. While in the Punjab, by subsequent clarifications, the requirements expressed in the tender notice were somewhat modified this was not done in the case of Gujarat except to the extent that the time for tenders which had been originally fixed up to 21-12-1970 was extended till 5-1-1970. It is stated in the rejoinder affidavit of the petitioner to the return filed by the second respondent that originally the tender notice in the case of Gujarat was in respect of water cooled engines but the date of tender was extended in order to enable tractors with air cooled engines also to be made eligible. This fact having been stated for the first time by way of rejoinder there has been no further opportunity for the respondents to traverse this allegation and hence has to be excluded from consideration. Neither the extension of tender in the case of Gujarat or the subsequent modifications by way of clarification made subsequent to the Invitation to Tender in the Punjab can be of any assistance to the petitioner in the view that even on 21-12-1970 (which was subsequently extended to 5-1-1971) the petitioner had secured nothing more than a Letter of Intent and he had not secured the approval of the foreign collaboration agreement concerning which there was no relaxation even by Punjab.

(26) The argument of Shri Iyengar was that the fixation of the date of the Invitation to Tender, namely, 9-11-1970, as one before which the necessary approvals should be obtained in order to qualify for submitting the tenders was arbitrary since the fixing of that date for securing the approvals, had no rational connection with the object of getting such approvals. He relied, in this connection, on the decision of the Supreme Court in Nim v. Union of India : (1968)ILLJ264SC , where the order of the Government of India reckoning the service for promoted Indian Police Service officers from 19-5-1951 was held invalid on the ground that the date was artificial and arbitrary, having nothing to do with the application of the relevant Rules. This case has clearly no application because it was not unreasonable or artificial to require persons submitting tenders to possess the necessary eligibility on the date of the issue of the Invitation to .Tender; the date of the issue of Invitation to Tender was a natural, not artificial, requirement.

(27) In order to satisfy ourselves that the approvals which were insisted upon in the Government's letter dated 14-4-1971 had not been thought of subsequent to the tenders being opened in this case, we directed the learned counsel for the first respondent to produce the relevant files. On a perusal of the same we are satisfied that reference to these aspects had been made even before the issue of the Invitation to Tender in the correspondence which ensued between the Director of the Ministry of Finance (Shri G. v. Ramakrishna) and the Indian Embassy in Washington. In the telex message dated 27-4-1970 issued by Shri Ramakrishna to Shri Shroff of the Indian Embassy in Washington D.C. the considerations which were to be taken into account in respect of applications for setting up a manufacturing unit of tractors were stated, inter alia, as follows :

'(1) Suitability Of Tractors Proposed To Be Manufactured For Indian CONDITIONS. After Testing A Few Samples Tractors If Any Modifications Or Adaptations Are Required To Suit Operating Conditions In India, These Are Indicated To The Party For Making Suitable CHANGES. . (II)THE Capital Cost Of The Investment Including The Cost Of The Imported Machinery, Raw Material And Component Requirements And Estimated Cost Of PRODUCTION. (III) Terms Of Foreign Collaboration If Any Including Technical Fees, Royalties, Foreign Investments ETC. Normally Royalties Are Approved Of The Order Of 3 Per Gent Of EX-FACtorY Sales Price Minds The Value Of Imported Components For A Period Of Five YEARS. Foreign Investment Is Considered up to 30 To 40 Per Cent Of Equity Base Depending On The Imported Capital Goods REQUIREMENTS. Other Conditions Of The Collaboration Agreement Are Also Subject To Scrutiny And Approval By GOVERNMENT. (IV) The Foreign Exchange Requirements For The Import Of Machinery Could Be Met Partly Or Fully By Means Of The investments Of- The Foreign Collaborators Within The Approved Percentage Referred To ABOVE. Items Of Machinery To Be Imported Will Be Subject To Indigenous Clearance On The Basis Of Availabilities Within The COUNTRY. The Above Are Broad Guidelines For Examination Of Proposals And It May Be Emphasised That Each Case Will Be Scrutinised On Merits Before Government Approval Is GIVEN?'

(28) We have, thereforee, no reason to think that the approvals which were stated in the letter of the 14th April, 1971 to be necessary were those which had not been thought of earlier than the issue of the Invitation to tender.

(29) We do not see any force in the contention of Shri lyengar that no rational basis could be found for requiring such approvals to be obtained even before the issue of the Invitation to Tender. He urged they might as well, without any loss of performance, be up to the time the farmers' choice was obtained. Shri lyengar did not, however, suggest that these approvals were not necessary at all for the implementation of the scheme or that they were unrelated to the performance. His argument was limited to pointing out that it would have served the Government's purpose if the application of the petitioner for an industrial license for manufacturing tractors had been approved in principle before the date of the issue of the tender. It is urged, in other words, that even though the Letter of Intent, following upon the approval of the Industrial Licensing Committee dated 30-8-1970 was' issued on 12-11-1970, the said approval was itself sufficient to make the petitioner eligible for being considered by the farmers of Gujarat State. It is not for the Court to say what should have been the conditions which the Government ought to have specified when they issued the Invitation to Tender in order even to better achieve the purpose. The only possible attack could be that the insistence on all the three approvals having to be secured before the date of the issue of the tender was so unreasonable as to be struck down. If some valid reason, however, could be found for incorporating such a condition in the Invitation to Tender it is not within the province of this Court to embark upon an enquiry as to how the Government could have improved upon the conditions set out in the Invitation to Tender with a view to securing for the farmers, as it is contended by Shri Iyengar, a wider choice of tractors. It seems obvious that the Government did not wish that the programme should be delayed. Once it is seen that all the three items of approval had been decided upon even earlier than the issue of the Invitation to Tender and the approvals being reasonably related to the purpose of working out the scheme in question we fail to see how the Government acted capriciously in requiring that those who tendered should have secured all the three tenders on or before the date of the issue of the tender. The inconvenience that could result in such approvals not being obtained prior to the date of the issue of the Invitation to Tender are probably too manifest to require specific mention. If there was to be any relaxation in this regard it might raise further difficulties like having to specify which of those three items of approval could be relegated to a point of time later than the issue of the Invitation to tender; yet another difficulty may be the period of time until which such relaxation might be extended. If even in respect of a person who had not got all or any of the approvals before the date of the issue of the tender notice the farmers of Gujarat were called upon to exercise their choice difficulty would arise if any person out of those made eligible to tender submitted a tender and was also chosen by the farmers subsequently failed to secure all the three items of approvals. The choice by the farmers would then become fruitless and a fresh opportunity would have to be given to the farmers for exercising their choice, once again, excluding those who had failed to get all the necessary items of approval. This would at least result in not being able to adhere to any time schedule.

(30) The further contention of Shri Iyengar that the issue of a Letter of Intent by itself was sufficient is seen to be contradicted by the very terms subject to which the Letter of Intent was issued. They are as follows:-

'(I) Terms of foreign collaboration would be settled to the satisfaction of Government. (ii) The phased manufacturing programme would be settled to the satisfaction of the Director General, Technical Development. (iii) The import of capital goods, if any, would be settled to the satisfaction of the Government. (iv) The prototypes of the tractors proposed to be manufactured would be tested at the attracting Testing Station, Blidni and found suitable to Indian conditions and you will incorporate all modifications/ alterations as suggested by the Testing Station, Budni.'

(31) The Letter of Intent would automatically lapse if, within a period of six months, applications relating to the above conditions were not submitted, or if, within a period of one year from the date of issue, an industrial license is not issued unless the period is extended by Government on an application made to this effect before the expiry of the period of one year. The petitioner had confirmed the acceptance, as required by the said Letter of Intent, of the above conditions. Not merely that he had by submitting the tender in accordance with the notice inviting tenders had agreed, by necessary implication, to comply with the conditions mentioned in the tender notice, one of which was that the necessary approvals should have been obtained prior to the date of the issue of the tender. It is worth noting, in this context, that it had been specifically mentioned in the tender notice that the question of the Bank accepting only the lowest offer did not arise on account of the scheme having to be financed in the manner stated above on the basis of the choices of the farmers for different makes or models of tractors offered by different manufacturers. For this reason, thereforee, the petitioner could not be heard to say that he was entitled to any special consideration by reason of the tender made by him being the lowest.

(32) On this aspect of the case it remains to notice only the legal contention put forward by Shri Iyengar on the basis of Rule 7 (2)(b) of the Registration and Licensing of Industrial Undertakings Rules, 1952. For appreciating this contention the following portion of Rule 7 may be read :

'7. Application for license-(1) An application for a license or permission for the establishment of a new industrial undertaking or any substantial expansion of (or the production or manufacture of any new article in) an industrial undertaking shall be made before taking any of the following steps-(a) raising from the public any part of the capital required for the undertaking or expansion (or the production or manufacture of the new article (h) commencing the construction of any part of the factory buildings for the undertaking or expansion, (or the production or manufacture of the new article) (c) Placing an order for any part of the plant and machinery required for the undertaking or expansion (or the production or manufacture of the new article). (I-A) An application for a license or permission for changing the location of the whole or any part of an industrial undertaking which has been registered (or in respect of which a license or permission has been issued) shall be made before taking any of the following steps-(a) the acquisition of land or the construction of premises for the purpose of housing the industrial undertaking at the proposed new site; (b) the dismantling of any part of the plant and machinery at the existing site. (2) An application for a license or permission under the Act- (a) for the establishment of a new industrial undertaking, where foreign collaboration, import of capital equipment or issue of capital is involved, shall be made in Form D(l) appended to these rules; (b) for the establishment of a new industrial undertaking, where no foreign collaboration, import of capital equipment or issue of capital is involved or where a prior application made in Form D(l), under clause (a), has received the approval of the Government in principle, shall be made in Form D(II) appended to these rules.

Stress has been laid on the words 'has received the approval of the Government in principle' occurring in Rule 7(2)(b). In the first place it has nowhere been stated in the petition that the insistance on the aforesaid 3 items of approval was in any manner contrary to the said Rules, particularly 7(2)(b). It is no doubt not obligatory on the part of the petitioner to even cite the appropriate rule. But it is urged on behalf of the respondents that the petitioner had not even indicated in the petition, even broadly or roughly, his present legal contention and. thereforee, the respondents were not called upon to meet such a challenge. We see great force in this objection. The petitioner has nowhere stated that the insistence on securing the above-said three items of approvals before the date of issue of Invitation to Tender was country to any statute or rule. Nor do we think that there is any merit in the said contention because the Invitation to Tender was issued for the purpose of a tractor manufacturing programme financed out of the credit received by the Government of India from the International Development Association, an affiliate of the World Bank. It is obvious that in such a situation that the Government of India had to ensure that the terms and conditions which had been agreed upon by the World Bank were properly implemented and without undue delay.

(33) Secondly we fail to see how reference to the above rule 7(2)(b) is even relevant in the matter of understanding the expression 'necessary approvals'. There was also some debate before us as to whether it was 'approval' in the singular or 'approvals' in the plural. It seems to us, as long as it is clear that the three items of approval were those spelt out by the Government of India on the one hand and the I.D.A. on the other even before the issue of the Invitation to Tender, the mere use of the singular or plural would hardly make any difference because an expression in the singular can be understood as plural in meaning, if the context so requires.

(34) Our attention has also been drawn by Shri Hathi, learned counsel for the second respondent to the following passage in 'Industrial licensing-Guide and Procedure' published by the Indian Investment Centre, Page 3, where details concerning the procedure for obtaining a Letter of Intent is stated in addition to what such Letter of Intent means. The said passage which sums up accurately and briefly the position in this regard must be taken to be well known to entrepreneurs of industry. It reads :

'Letter of Intent. This is a special procedure designed for according clearance in principle to the establishment of a new undertaking or additional, capacity, in cases involving separate approvals in respect of foreign collaboration, import of capital equipment and/or issue of capital. In this procedure, there are two stages. In this procedure, there are two stages. In the first stage, an application outlining the essential features of the proposal is filed. On the basis of a broad examination of the proposal, the Government will issue what is called a 'letter of intent'. The letter conveys the intention of the Government, in principle, to grant an industrial license, provided that the applicant comes up with definite proposals on the following matters, within the stipulated period, and is able to secure the approval of the concerned authorities thereon- (1) Terms of foreign collaboration, (2) Import of capital equipment, and/or (3) Issue of capital. This enables the applicant to finalise and formulate his proposals on these matters, with the assurance that if these proposals are found otherwise satisfactory and are approved, an industrial license will be forthcoming. The period of validity of a letter of intent is specified in the letter and usually ranges from 6 to 12 months, at the end of which it will automatically lapse. The validity can be got extended on sufficient grounds. At the second stage, after the conditions have been fulfillled, the letter of intent is converted into an industrial license.'

(35) It must be taken to be well-understood, thereforee, that merely securing the Letter of Intent was not sufficient in the matter of establishing an industrial undertaking for which a license is necessary though a person to whom the Letter of Intent is issued could in the event of his fulfillling the conditions converted into an industrial license. The Letter of Intent, thereforee, only enables the applicant to finalise and formulate the proposals on those matters with the assurance that if the proposals are otherwise found satisfactory an industrial license would be forthcoming. The confusion which is sought to be introduced into the discussion by reference to the Industrial Licencing Rules, without even making it a part of the petitioner's case, would be clear if it is remembered that even now the petitioner's right to get an industrial license is not in question. We could understand any reference to the Industrial Rules being necessary in the context of the petitioner being denied a license for his industry. Even regarding the supply of tractors in Gujarat the present tender has involved only the importation of 800 tractors out of 2200. The petitioner-company, there- ' fore, would be able to compete for the farmers' choice on a later occasion in respect of the balance of tractors required in the State of Gujarat. There is also the possibility of the petitioner going before the farmers of Punjab. It is not contended that by reason of the petitioner's tender not being accepted by the Banks in Gujarat the entire proposal to manufacture tractors in India would become frustrated. This will have a bearing only upon the number of tractors which they would be able to import into the country even though they are now unable to secure the choices of the farmers for at least a certain number of tractors. But then it is an expanding market; there is also a great gap to be bridged between demand and supply. Some of these aspects will be more relevant on the question of estoppel to which we shall revert later.

(36) On the question whether the petitioner-company which had submitted tenders in pursuance of the Invitation to Tender without obtaining necessary approvals prior to the date of the issue of the Invitation to Tender could still insist on being regarded as eligible to tender we are unable to think of any other answer except the one against the petitioner-company.

(37) We see much less force in the contention of Shri Iyengar that the respondents were estopped from excluding the petitioner-company from being considered by the farmers of Gujarat State. It is well settled that for any plea of estoppel to arise there must be either a promise or an assurance intended to be acted upon and only when the same is in fact acted upon that the question of the binding nature thereof or of an estoppel against the person making the promise or giving the assurance arises. In order to support a plea of estoppel the representation must also be of an existing fact (vide the observations of Mitter, J. speaking for the Supreme Court in Sat Narain v. Union of India & Am., C.A. 646 of 1964 decided on 27-9-1967)(5). There has not been any specific allegation in this case that any particular officer of the Bank or of the Government of India had made any representation to the petitioner that even without getting a Letter of Intent and getting the other two approvals before the date of the issue of the Invitation to Tender it was eligible to tender. The petitioner's failure to mention the name of even a single person as having represented to the petitioner-company about their being eligible to tender despite their not having obtained the approvals prior to the date of the issue of the tender is significant particularly when the petition contains elaborate quotations from decided cases about the Law of Estoppel applying even to the State and its undertakings. The allegations concerning estoppel, of a general kind made in the petition without even specifying who represented to whom and about what, have been denied by the respondents. Even in the rejoinders filed by the petitioner-company reliance has only been placed on the petitioner-company not having been told on the date of the opening of the tenders, or even subsequently, when they were asked to furnish additional technical data which was sought by the Bank, about their not being eligible. The Bank has stated that they had made it clear to the petitioner-company that they would seek the advice of the Central Government in the matter of finding out who among those who had submitted tenders were eligible for being chosen by the farmers of Gujarat.

(38) There is also no question, as it has been feebly suggested by the petitioner-company, of any delegation in favor of the first respondent since the whole scheme having come into operation as a result of the agreement between the Government of India and the J.D.A. the Bank had to depend necessarily upon the advice of the first respondent in this regard, in order to conform to the details of the above scheme and agreement.

(39) Shri Iyengar derived no real assistance whatever from the decision of the Supreme Court in Union of India & Ors v. M/s lndo-Afghan Agencies Ltd. : [1968]2SCR366 which held that the Government is not exempt from the equity arising out of the acts done by the citizens to their prejudice, relying upon the representations to its future conduct made by the Government. The petitioner has been unable to prove, much less has not even specifically averred, that any particular official of either the Central Government or of the Bank, had made any representation to the petitioner-company that he was eligible to tender.

(40) On this aspect of the case Shri lyengar also urged that even if the expression 'necessary approvals' in the tender was ambiguous and it was reasonably capable of the construction the petitioner-company had placed on it even then the petitioner company would be entitled to urge that the respondents are estopped from saying that the petitioner was not eligible. In support of this contention the following observations of Denning, L.J. in Sidney Bolsom Investment Trust Ltd v. E. Karmios & Co. (London) Ltd (I Q.B. 5297 were relied upon:

'In order to work as an estoppel, the representation must be clear and unequivocal, it must be intended to be acted on, and in fact acted on. And when I say it must be 'intended to be acted upon', I would add that a man must be taken to intend what a reasonable person would understand him to intend.'

(41) We are unable to agree. Any industrialist must be taken to have known that the Letter of Intent was not sufficient by itself unless he further came up with definite proposals concerning terms of foreign collaboration, import of capital equipment and issue of capital within the stipulated period and that the mere Letter of Intent did not guarantee the grant of an industrial license. The attempt of Shri Iyengar to link Rule 7(2)(b) concerning the Government agreeing in principle to grant an industrial license with the expression 'necessary' approvals' in the tender notice is seen to be a laboured one. Rule 7(2)(b) itself having no direct relevance in the matter of inviting tenders or accepting them

(42) Even on the ground of detriment suffered it was already noticed that the petitioner company had accepted the earnest money deposit of Rs. 25,000.00 which was sent by the Bank by means of a Draft on 4-5-1971. If the petitioner company had spent anything in the matter of making the tractor made by the Japanese firm popular in the State of Gujarat this benefit would certainly be available to them when they would be able to participate in respect of the tenders that would be called for in respect of the balance of 2200 tractors required to be imported, out of which the present controversy relates only to 800. The other items of expenditure stated to have been incurred, such as, on agricultural, technical and financial consultants, preparation of factory lay-out and project reports would still be useful to the petitioner company. It is not as if that the entire manufacturing programme is going to be effected by the present exclusion of the petitioner company. Judged by these considerations this is not a case where it can even be said that the petitioner has suffered real detriment by going ahead with the project or even advertising the tractors of the Japanese firm. In the result we hold that there is no estoppel against the Bank or even against the first respondent.

(43) Regarding the contention that the letter dated 14-4-1971 was issued by the first respondent to the Bank without giving the petitioner any opportunity of hearing it has not been shown how the petitioner company was entitled to a hearing before the issue of that letter. That letter does not cast any stigma on the petitioner company; the effect of that letter is merely to indicate that the petitioner company was not eligible to tender. There was really no adjudication involved. ^ It is not denied that on the date of the issue of the Invitation to Tender the petitioner had not even obtained the Letter of Intent and had not even secured one of the three items of approval which were required. The letter was an advice given by the first respondent to the Bank; the advice was sought and was given in discharge of the obligations which the first respondent had in the matter of working the scheme and its obligations under the agreement with the I.D.A. Shri lyengar can not thereforee, derive any real assistance from the decisions where the person concerned is either 'black-listed' or 'banned' without being given a hearing. In the present case there was really no adjudication involved, attracting the applicability of the rules of natural justice.

(44) As pointed out by Hidayatullah, J. (as his lordship then was) speaking for the Supreme Court in C. K. Achuthan v. State of Kerala and others : AIR1959SC490 there was no infringement of fundamental right when a person's tender to supply milk to a Government Hospital was later on revoked, after acceptance by the District Medical Officer of that Hospital, since it was open to the Government, as it was for a private party, to choose a person to their liking to fulfilll contracts which they wished to be performed. The present is even a stronger case for the respondents since it was not even a question of the Central Government choosing any one except to point out to the Bank that the necessary approvals which ought to have been obtained prior to the date of the issue of the Invitation to Tender had not been so obtained by the petitioner-company. It seems to us, thereforee, that there is only a single question which arises from consideration in this case, namely, whether the petitioner was eligible to tender or was not. If it was eligible to tender it would succeed for that very reason even as it would fail if it was not eligible. It cannot succeed on the ground which is now urged that it was not given a hearing before the first respondent informed the second respondent that he was not eligible to tender.

(45) It was finally contended that the petitioner had been discriminated against. On our finding that the petitioner was not eligible to tender no question of the petitioner company being discriminated against really arises for consideration. But it was still urged that only two out of the three items of approval had been finally required by the State of Punjab. Even though both Punjab and Gujarat were acting in pursuance of the same scheme no argument of discrimination can really be built upon the fact that the conditions ultimately insisted upon in the Punjab were more favorable to those who responded to the Invitation to Tender. This argument need not be discussed since the petitioner had not complied with even a single item, among the three items of approval required, on the date of the issue of the Invitation to Tender, nor even the argument that for some models, the details of which have been already noticed, for which there was not even an existing license, were included among those placed before the farmers of Gujarat to choose from because this aspect could not be agitated by the petitioner company once it is seen they were not eligible to tender,

(46) Before concluding it is only necessary to refer to C.M. 1517-W/ 71 which was filed on the eve of the commencement of the hearing of this Writ Petition for calling upon certain files to be produced by the first respondent. Such of them as are relevant were brought during the hearing and perused by us as well as by the counsel for the petitioner. The authenticated copies of the necessary portions of the relevant files have also been placed on record. No orders, thereforee, are required to bypassed on C.M. 1517-W/71.

(47) In the result the Writ Petition is dismissed, but in the circumstances we leave the parties to bear their own costs.


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