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Chirag Enterprises Vs. State of Rajasthan and anr. - Court Judgment

LegalCrystal Citation
CourtRajasthan High Court
Decided On
Case NumberCivil Writ Petn. No. 1934 of 1980
Reported inAIR1981Raj170; 1981()WLN53
ActsConstitution of India - Article 226
AppellantChirag Enterprises
RespondentState of Rajasthan and anr.
Appellant Advocate Jitendra Maheshwari, Adv. and;Party in person
Respondent Advocate D.S. Shisodia, Govt. Adv.
DispositionPetition allowed
Cases ReferredKasturi Lal v. State of Jammu and Kashmir (supra
.....impugned order, by which all tenders including that of the petitioner have been not considered for rate contract for pvc hose pipes in rajasthan for the year 1980-81.;(b) affidavit - affidavit filed after concluding of arguments--decision of committee vitiated on account of decision taken by a committee consisting of one non-member--held, it is not in interest of justice to permit taking of affidavit on record.;the affidavit has been produced after arguments have been concluded. shri goel was not one of the member of this committee according to cspm. it is not disputed by the respondent that it does not fall in any category of the manual in clause 1(2). that being so irrespective of the consideration of the objection about late production, where entire decision of the committee is..........of tender enquiry no. 2/80, petitioner firm submitted its tender for pvc hose pipes to be rate contracted by organisation for one year. the cspo manual has a centralised list of items which can only be purchased by way of rate contract and hose pipes are included in it at serial no. 43.7. according to procedure provided in cspo manual hose pipes were being purchased by concluding rate contracted after 1976 with two delhi firms. in 1979-80 for some reasons or the other rate contract for hose pipes were not finalised.8. in the year 1980-81, after tenders were invited, tenderers were required to get their samples tested, and submitted to the cspo. according to the version of the petitioner his quotations were lowest for two sizes of hose pipes i.e. 400mm and 75 mm and his tender.....

G.M. Lodha, J.

1. Petitioner's Tender, State's Pleasure and peoples' treasure, the juxtaposition of these trio postulates are on test and trial. Administrative discretion is to be put to judicial post morterm on the touch-stone of 'rule of law'.

2. The new dimensions of scope ofjudicial review in the field of administrative law, by celebrated decisions of the Apex Court in Ramana Dayaram Shetty v. International Airport Authority of India, (AIR 1979 SC 1628) and Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir, (AIR 1980 SC 1992), having smashed the VETO power of the administrative wing of the State, proverbially known as the 'BUREAUCRACY' in matters of State Contracts, Tenders, Licences, Quotas and Permits; flood gates have been opened for citizens for invoking Article 226 of the Constitution and claiming the enforcement of 'ubi jus ibi idem remedium'.

3. Overt and covert disregard, flagrant violations of the laws, norms and fair play principles, by those who are trustees and custodians, at any level today, is pregnant with disastrous consequences not so much to them, but to the society as a whole.

4. According to an eminent jurist 'the hallmark of modern jurisprudence in its realism, functionalism, empricism and pragmatism. M/s. Chirag Enterprises malting the above bedrock, prays in this petition that the State functionaries should be told by this Court that they are 'trustee' of Public funds. The treasury containing the 'Consolidated Fund of the State' with the Public Exchequer should not be squandered at the pleasure as per the obsolete outdated universally condemend feudal doctrine of 'King's Pleasure'. The rule of law is well entrenched in the four corners of the Constitution of India with its apex as Art. 141, and 'treasure cannot be at pleasure' now in 1981.

5. The above being the pivot of the 'tender' litigation, let me now narrate the relevant facts in a nutshell.

6. The Central Stores Purchase Organisation, Government of Rajasthan, (hereinafter referred to as CSPO) issued notice inviting tenders. In pursuance of tender enquiry No. 2/80, petitioner firm submitted its tender for PVC Hose Pipes to be rate contracted by organisation for one year. The CSPO Manual has a centralised list of items which can only be purchased by way of rate contract and Hose Pipes are included in it at serial No. 43.

7. According to procedure provided in CSPO Manual Hose Pipes were being purchased by concluding rate contracted after 1976 with two Delhi firms. In 1979-80 for some reasons or the other rate contract for Hose Pipes were not finalised.

8. In the year 1980-81, after tenders were invited, tenderers were required to get their samples tested, and submitted to the CSPO. According to the version of the petitioner his quotations were lowest for two sizes of Hose Pipes i.e. 400MM and 75 MM and his tender was complete in all respect. The petitioner expected the acceptance of tender and started to make preparations to meet the demand of agriculture, irrigation, and forest departments during peak season. He spent lakhs of Rupees for preparing Hose Pipes.

9. The petitioner was surprised to note that in spite of his tender being lowest the Government started making purchases of PVC Hose Pipes by other method. According to the petitioner Hose Pipes of 50 MM lowest tender was of Rs. 14.35 which has been purchased by the Government by other method at the rate of Rs. 23.76. Similarly Hose Pipes of 60 MM for which the lowest rate offered was Rs. 18.45, has been purchased at the rate of Rs. 25.60. Similarly for Hose Pipes of 75 MM for which tenders were received for Rs. 24.00 purchases have been made by the Government at the rate of Rs. 57.00.

10. The petitioner in the writ petition, in his verbal arguments and in his written arguments, has made serious grievances that the public functionaries are squandering the public money and are displaying not only dereliction of duties enjoined but betrays confidence upon them to safeguard public money and in acting with a questionable conduct.

11. The petitioner himself has not given even the name of the departments and the place where purchases were made. Unless specific officer and the place of the department is mentioned, the respondent cannot be expected to make enquiry about the correctness of the allegations and therefore, the allegation of this nature is to be rejected being hope-lessely vague and sweeping in nature.

12. The question which requires consideration is whether the Central Stores Purchases Committee, (hereinafter referred to as the CSPC), who took the decision on 3-10-1980, not to give rate contract for these items of PVC Hose Pipes for this year did so arbitrarily, mala fide or with some ulterior motive warranting interference by this Court,

13. In the reply which was filed earlier before the arguments were concluded and also the record which was shown to this Court, only one line cryptic observation was made by the CSPC which reads as under:

'this year no rate contract should beentered for this item.'

14. During the course of arguments, the petitioners' contention was that the Committee's rejection of the tenders and decision not to give the rate contract for this year was liable to be quashed because it was arbitrary and unreasonable and not in public interest. Reliance was placed on judgments of Supreme Courton Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) (supra), Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir (AIR 1980 SC 1992), Century Spinning & . (AIR 1971 SC 1021) and on Erusian Equipment and Chemicals Ltd. v. State of West Bengal (AIR 1975 SC 266).

15. In reply to the above Mr. Shisodia, submitted that the question of acceptance or rejection of the tender was purely administrative one. He pointed out that the technical report which was received for this item mentioned that the specification etc. should be recasted and the present tender cannot be considered unless that is done and fresh tenders are invited.

16. Before conclusion of the argument, the reply as well as affidavit which were submitted by the respondents did not support the above contention of Mr. Shisodia in as much as no member of the Committee who decided the question of tender for PVC Hose Pipes or a person present in the Committee verified the above facts of defence. Moreover this part of the reply further was supported by affidavit which mentioned that it was based on legal advice.

17. After the arguments were over and the judgment was reserved, an additional affidavit and reply was filed, which was objected to by the petitioner. Affidavit of Shri R. S. Sharma dated 2-2-1981 contains various facts. It is accompanied by another affidavit of Shri K. L. Goel who alleges that he was present in the meeting as Member of the CSPC.

18. The petitioner seriously objected against taking on record the affidavit of Shri K. L. Goel. The objection of the petitioner which has been supported by written reply dated 6-2-1981 is as under:

'That it is strange that by this new application the State of Rajasthan has come to file two new affidavits, as under 3

1. Affidavit of Mr. R. S. Sharma.

2. Affidavit of Mr. K. L, Goel, Addl, Chief Engineer PHED.

While in his affidavit, Mr. R. S. Sharma, has corrected verification of some facts, earlier sworn to be true on the basis of legal advice the affidavit of Mr. K. L. Goel brings entirely new facts on record, without permission of the Court, which cannot be allowed after the case is complete and the judgment has been reserved. The affidavit of Shri K. L. Goel cannot be read and considered in the case.'

19. Yet another objection which was taken by the petitioner was that according to CSPO Manual Clause 1 (2) the Committee consists of the following:

'1. Financial Commissioner ..... Chairman

2. Chief Engineer/Addl. Chief ..... Member

Engineer, Public Works


3. Industries Secretary -do-

4. Agriculture Engineer -do-

5. Stores Purchase Officer ..... Member Secretary'

Since Shri K. L. Goel is Additional Chief Engineer Public Health Engineering Department, he cannot be a member of this Committee. The affidavit filed by him is irrelevant and his participation in the meeting vitiates the decision, argued the petitioner.

20. After authoritative pronouncement of the Supreme Court in Ramana Dayaram Shetty v. International Airport Authority of India (AIR' 1979 SC 1628) (supra), the matters of judicial review in matters of contracts and tender have assumed new dimension. Hon'ble Justice Bhagwati in this case observed as under (at P- 1629):

'This appeal by special leave raises interesting questions of law in the area of public law. What are the constitutional obligation on the State when it takes action in exercise of its statutory or executive power? Is the State entitled to deal with its property in any manner it likes or award a contract to any person it chooses without any constitutional limitations upon it? What are the parameters of its statutory or executive power in the matter of awarding a contract or dealing with its property? These questions fell in the sphere of both administrative law and constitutional law and they assume special significance in a modern welfare State which is committed to egalitarian values and dedicated to the rule of law. But these questions cannot be decided in the abstract. They can be determined only against the background of facts and hence we shall proceed to state the facts giving rise to the appeal.'

21. In Kasturi Lal v. State of Jammu and Kashmir (AIR 1980 SC 1992) (supra) the Hon'ble Supreme Court observed as under. (See H. N.):

'Where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will. There are two limitations imposed by law which structure and control the discretion of the Government in this behalf.

The first is in regard to the terms on which largess may be granted and the other, in regard to the persons who may be recipients of such largess. Unlike a private individual, the State cannot act as it pleases in the matter of giving largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion.'

'Every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest. If the Government awards a contract or leases out or otherwise deal with its properly or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid.'

Yet another important point which emerges from the decision of Kasturi Lal v. State of Jammu and Kashmir (supra) is that the Government cannot act arbitrarily in the matters of contract. It is, therefore, not necessary to discuss in detail entire earlier case law, because the issue stands clinched by the above two classic pronouncement of the Hon'ble Supreme Court which are directly relevant to the issue involved in the present case.

22. The question of granting or refusing to grant, accepting or rejecting, the tender has not been left, even otherwise to the arbitrary discretion of the executive because the Government has laid down the norms and principle by CSP Manual, which has been published by the Government of Rajasthan issued under the authority of Governor. The function of CSPO and CSPC have been defined in this Manual. According to Clause 2 (1) of CSP Manual the function of Organisation is to enter into rate contract for stores which are purchased in large quantities and are in common use in several departments of the Government. According to Clause 2 (4) the Organisation is required to draw up standard specifications ofvarious items of stores as far as practicable, in consultation with the departments concerned, where necessary. Then according to Clause 2 (5) the Organisation invites tenders for items on the centralised list, scrutinize the same, settle terms and rates, mode of delivery and terms of payment, convey acceptance execute agreement and issue Rate Contract orders for the information of the Direct Demanding Officers. The samples which are sent by the tenders are kept in the custody by virtue of Sub-clause (10) of this Clause 2 and inspection are arranged for stores supplied by contractors through technical Officers/Specialists of the Government Department as per Clause 2 (6).

23. The personnel of Central Store Purchase Committee which has been termed as a High. Power Committee in Clause 3 and its functions have been defined in Clause 3, which reads as under:

'(1) Stores articles for which rate contracts to be concluded.

(2) Specifications, approximate quantity, duration of rate contract and delivery period.

(3) Conditions of tender and contract including special conditions if any;

(4) Action under the standardised code against defaulting firms pertaining to all departments of the Government.

(5) Serious complaints against rate contract holding firms regarding non-supply, delayed supply, sub-standard-supply, non-submission of documents, returns, etc.

(6) Serious complaints against Direct Demanding Officers regarding delay in payments, non-observation of instructions issued from Central Stores Purchase Organisation, non-submission of returns, etc.

(7) Approve rates higher than the lowest rates quoted in a valid tender by recording reasons;

(8) Relaxation of conditions of tender and contract in the interest of Government work;

(9) Relaxation of any condition of tender and contract which may operate harshly on any contractor under special circumstances;

(10) Any such point as may be referred to by the Central Stores Purchase Organisation.'

24. Clause 3 (5) of this Manual prescribes the procedure for complaintsagainst rate contract holding firms regarding non-supply, delayed supply, sub-standard supply, non-submission of documents, returns etc. and tenders are invited by issue of notices in Clause 5 of Manual for rate contracts. There are various details regarding tenders notices given in Clauses 6, 7, 8, 9, and 10 etc. which need not be mentioned.

25. Even the procedure of receipt of the tender is mentioned in Clause 10 and the tenders are opened according to Clause 11 and tabulation of tenders is done under Clause 12 of the Manual, The samples can be required to be demonstrated under Clause 13. The procedure for acceptance of tender is given under Clause 15 of the Manual. Rate contract and order are given as per Clause 16.

25A. The above resume' would show that it is not purely an administrative action at the whim or caprice or sweet will and discretion of a particular officer. Since stores of crores of rupees are purchased in various departments due to fast developing and progressive economy of the State, the State has taken due care by prescribing detailed procedure etc. That being so the procedure of the Manual should be adhered to by department and any attempt to circumvent it directly/indirectly cannot be permitted. In addition to the principles enunciated in the above judgments, the requirements mentioned in the Manual themselves gives a right of action in a law Court to a limited extent. The above authoritative pronouncements keeps no doubt that this Court can make a judicial review, in the limited sphere.

26. It is not in dispute that the purchases of these items were likely to be in large quantities as the items are in common use in several departments of the Government. That being so Clause 5 (1) (2) directly applies and the respondents should normally purchase it by entering into rate contracts.

27. The original record which was placed before me during the arguments only shows that a one line rejection was made by the Committee without assigning any reason whatsoever. It is true in such matter where committee decides a number of item on the agenda a detailed reasoned order cannot be insisted upon. However, during the arguments as it was then, an affidavit of the Officer in charge was wholly inadequate and insufficient because he could not have any knowledge of what transpired in the meeting of theCommittee. Admittedly the Officer in charge was not present in the Committee and, therefore, he could not have claimed any personal knowledge regarding the reasons for rejection of all the tender for rate contract of this item.

28. Confronted with the above situation it appears that the respondents have now tried to introduce the affidavit of Shri K. L. Goel. This affidavit now mentions that there was an agenda which was placed before the Committee which contained technical report received from Technical Committee. According to that report of the Technical Committee opined that specification should be re-casted after mentioning required thickness, and weight per meter. It further desired that specification should be clear from the certificate and test result should be included in the certificate. Although the matter is primarily a technical one and it is not for this Court to make any comments, but how it is that this technical committee to whom this item must have been referred earlier also, has now discovered for the first time that specification should be re-casted by mentioning of thickness, weight per meter etc.

29. It is also surprising that the Technical Committee now recommended forthe first time that names of the laboratory should be mentioned whose certificates would be accepted. Even though this Court cannot claim special technical knowledge but it is matter of common knowledge that if PVC Hose Pipes are purchased, specification must be given of thickness or weight per meter. It is not intelligible how purchases have been made for the earlier year without specification of thickness, weight per meter etc. It is also not intelligible why earlier the certificate of laboratory were accepted unless the laboratory were of known recognition or of Government.

30. A perusal of annexure 15, the tender, notice published in the newspapers shows that the specification etc., were to be found in the tender as per Clause 3. Annexure-I. The tender form is accompanied by Schedule of specification for Hose Pipes and various specifications nave been mentioned in it. Regarding testing a note is mentioned that the sample should be tested and test certificate should be obtained from any Government test House or a Certificate from test-house of repute. The test certificate produced by the petitioner was of Government test house.

31. In view of the above established facts the technical Committee report leaves much desired. Another mysterious feature of this case is that reports existence was non-existent all through during arguments (sic). Even when the original file was shown this note was never shown nor even verbally mentioned.

32. In view of this, the objection of the petitioner to the acceptance of the affidavit of Shri Goel could not be ignored more so when the affidavit has been produced after arguments have been concluded. Shri Goel was not one of the member of this Committee according to CSPM. It is not disputed by the respondent that he does not fall in any category of the Manual in Clause 1 (2). That being so irrespective of the consideration of the objection about late production, where entire decision of the committee is vitiated on account of decision having been taken by a committee consisting of one non member; it would not be in the interest of justice to permit the respondent for taking on record of this affidavit of Goel at this late stage. The objection of the petitioner, therefore, accepted and Shri Goel's affidavit is rejected.

32A. In the absence of this affidavit, there is nothing on record to make out a valid defence for complete rejection of all the tenders for this item for this year. It is also of significance that during some of the previous years as per the assertion of the petitioner in his writ petition, similar situation had arisen when the rate contract were not given to the tenders and the purchases were made by different method. The petitioner has made a very serious revealing allegation containing aspertion on the organisation that earlier rate contract for this items were accepted when the lowest rates were of Delhi firm. It would not be proper to accept it at the face value without specific particulars and details.

33. However, the basic fact remains that during last year also tenders were not accepted of any one for this item for rate contract. In case any technical objection were there, it is not intelligible, why after getting one full year the same was not remedied by giving specification etc. The reasons for non-acceptance of rate contract tenders for the earlier year are not before this Court. But one thing is very certain if technical Committee is consulted for this tender, itmust have been consulted for every year and the same advise would have been given by them last year also. That being so it is not possible to accept the defence put forward by respondent and justification for the order refusing to take tenders for rate contract for this item for the year 1980-81. Undoubtedly the order as it stands is arbitrary and the respondents have not been able to justify it by putting relevant material providing justification for it.

34. Even then I gave time to Mr, Shisodia to ascertain from the Government in case they are prepared to make firm commitment before this Court for next year commencing from 1st April, 1981 that tenders would be invited and purchase of this item would be made by rate contract. Mr. Shisodia after taking instructions from the concerned officer submitted that since the acceptance or rejection is done by the committee, it is not possible to make any such commitment for calling of tender before the Court. The Court had made this suggestion as in view of the facts and circumstances of the case, since much time has passed and hardly two months have remained in this year, someway out can be found and the the State Government and the tenders afresh for next year, (sic) It is also not intelligible why for coming year, the respondents are not inviting tenders and thus killing child in womb. This makes the afterthought defence of 'technical committee' report for 80-81 also suspicious lacking bona fides and genuineness.

34A. Therefore, there is no escape but to quash the impugned order, by which all tenders including that of the petitioner have been not considered for rate contract for PVC Hose Pipes in Rajasthan for the year 1980-81.

35. The petitioner cannot claim acceptance of his tender from this Court as it is for the Committee to reconsider it

36. The net result of the above discussion is that the respondents are directed to immediately convene a meeting of the CSPC consisting of the personnel mentioned in the Sub-clause (2) of Clause 1 of the Manual and permit no outsider to intervene in the deliberations of the Committee and decide the matter afresh on the basis of the tenders which were received by them for the year 1980-81, within a period of three weeks from today. In view of the above it is not necessary to discuss the various other points which have been raised by the petitioner in this case and specific allegations of mala fide, ulterior motive which have been taken by way of rejoinder.

37. Before parting with this judgment, it must be observed that the CSPO of the Rajasthan is required to make and ensure that purchases are made by various departments, which run in millions of rupees for every year by air and reasonable method of rate contracts, to ensure that there is no corruption. In the matter of purchases of store the State functionaries are required to act with stringent principles mentioned in this manual and safeguard that they are not circumvented by any device or method of avoided on any pretext (sic). Otherwise the citizens are bound to suspect the motives of those who are trustees and custodians of public funds. It is, therefore, necessary that when year after year the rate contracts are avoided and individual officers of the various departments are given direct authority to make purchases at their own level; that since authorities should treat it (as) matter of grave concern, and order independent probe to rule out corruption, favouritism and nepotism.

38. Justice and rule of law, the twin bedrock of society any good Government should not be allowed to be undermined, by such suspicious and doubts stifling process of law by questionable pretexts and using or permitting indirectly, misuse of public funds for selfish and ulterior purposes in disregard of law by law inventing intelligent and clever excuses as it results in blunting the instrument of Law. It is such patent and brazen distortion of justice which ultimately results in erosion of the rule of law.

39. I have been tempted to make these remarks not because there is any positive proof of corruption, favouritism or nepotism in this case but because the Government in spite of granting time twice, refused to assure this Court that for the coming year consistent with the 'Manual' tenders are being called afresh for PVC Hose Pipes and 'rate contracts' would be considered by the Committee according to the Manual. The absence of such innocuous assurance is a matter of concern, because it indirectly means an attitude of defiance, and claim for immunity from 'law' by a Government which by the written constitution is firmly committed to 'rule of law'. The learned Government Advocate felt helplessness, whenthe Deputy Secretary reused to permit him to give such an undertaking or assurance.

40. The 'Courts' concern for 'Justice and Rule of Law' should have been respected by the Government. This case should act as ''eye opener'' to all who are trustees of 'Public funds' and custodians of 'rule of law' and should result in a 'probe' in the allegation of the petitioner.

41. I would have saddled the respondents with costs but the petitioner has also acted in a very selfish manner by not giving the names of officers and parties from which he alleged that purchases have been made almost at double price of the tender rates. It is a typical selfish business mentality not to displease the officers, who might oblige the petitioner in future, if the allegation is true. If it is not true then it is still more serious matter that petitioner has made such sweeping false allegation against high officers of State. He has, therefore, disentitled himself from getting costs.

42. The writ petition is accepted as indicated above, without any order as to costs.

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