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Judgment
Ritu Raj Awasthi, J.—Heard Mr. Prashant Chandra, learned Senior Advocate, assisted by Mr. Shishir Jain for the petitioner, Mr. Jaideep Narayan Mathur, Senior Advocate, assisted by Sri I.P. Singh for the opposite parties and perused the records.
We have heard the learned counsel for the parties at considerable length and with their consent we proceed to decide the matter at the admission stage.
The writ petition has been filed assailing the decision dated 30.06.2009 of the Board of U.P. Jal Nigam and the consequent tender notice dated 01.08.2009 by means of which the tenders had been invited for the supply of Class 15 and 20250 to 600 mm diameter AC pressure pipes manufactured by MAZA process only. It has been further prayed that a direction may be issued to the respondent Nigam to issue fresh tender notice for the supply of aforesaid AC pressure pipes ignoring the decision dated 30.06.2009 by the Board of U.P. Jal Nigam without creating any embargo regarding process of manufacturing of AC pressure pipes.
The case of the petitioners is that they are small scale industries (SSI) duly registered with the respondents for making supply of pressure pipes being manufactured by them. They have the license from Bureau of Indian Standards (BIS) and registered as SSI. The petitioners are manufacturing AC Pressure Pipes through MAGNANI process. It has been urged by the petitioners that as per letter dated 16.08.2001 of the Bureau of Indian Standards, both the manufacturing process namely MAZA & MAGNANI are accepted and duly certified by the BIS. The quality of the pressure pipes manufactured by either of the process is same. The BIS also certifies that the manufactured products meet the requirements of prescribed standard and the quality of manufactured pressure pipes by either of the process is same.
It has been further urged that it has been subsisting practice in U.P. Jal Nigam as not to mention the process of manufacturing of AC Pressure pipes while inviting tenders for the supply of the same and in the tenders issued by the U.P. Jal Nigam in the past, no demarcation was ever made on the basis of process of manufacture of AC pressure pipes.
The tender notice dated 27.02.2009 was issued for supply of ISI marks AC pressure pipes and couplings manufactured with the use of fly ash confirming to IS:1592/2003 (Fourth Revision) or its latest amendment with a set of three rubber rings. In the said tender notice no demarcation was made with regard to process of manufacturing of pressure pipes. The only condition provided in the tenders was that the supplier or the contractor must be registered with the purchase section of the Headquarter of U.P. Jal Nigam.
On 30.06.2009 the Board of U.P. Jal Nigam had taken a decision that AC pressure pipes above 200 mm diameter manufactured by MAZA process shall be used in the works being carried out by the U.P. Jal Nigam. Consequently by order dated 06.07.2009 the opposite party no.2 unilaterally changed the terms of the tender notice dated 27.02.2009 and the petitioners were required to submit their tenders/bids for AC pressure pipes of 200 mm and above diameter manufactured of MAZA process only.
It has been vehemently urged by the counsel for the petitioners that said decision of the Board of U.P. Jal Nigam dated 30.06.2009 was taken to favour the cartel of manufacturers of AC pressure pipes who follow the MAZA process. The petitioners have come to know and verily believe that out of the five companies who manufacture the pressure pipes by MAZA process registered with respondent Nigam, four companies belong to one and the same group known as Kanoria Group whereas the 5th company namely M/s Venkateshwara Pipes Limited, Sikandarabad is south based company and it has no supply order and rate contract in the north region.
Earlier assailing the Board''s decision dated 30.06.2009 and consequent order dated 06.07.2009, the writ petition no. 6686(M/B) of 2009 (Danteshwari Pipes Pvt. Ltd. vs. U.P. Jal Nigam) and writ petition no. 6688 (MB)/2009 (Jhansi Concrete Products vs. U.P. Jal Nigam and others) and W.P. No. 6690(M/B)/2009 (ACME Asbestos Pipes Pvt. Ltd. vs. U.P. Jal Nigam) were filed before this Court.
In the short counter affidavit filed by the U.P. Jal Nigam in the aforesaid writ petitions the respondents had tried to justify the decision of the Board on the basis of the report submitted by the committee which had opined that the process of manufacture of AC pressure pipes through MAZA process was better than the process of manufacture through MAGNANI process. Subsequently by order dated 16.07.2009 the tender notice dated 27.02.2009 was cancelled by the U.P. Jal Nigam and thereafter through a supplementary affidavit the said decision was brought on record in the aforesaid writ petition by the U.P. Jal Nigam. In view of the cancellation of the tender notice dated 27.02.2009 the said writ petitions were dismissed by this Court.
Subsequently thereafter another tender notice dated 01.08.2009 was issued by means of which the Board''s decision dated 30.06.2009 was sought to be enforced by the respondent Nigam and the tenders were invited for supply of Class 15 and 20 200 mm to 600 mm diameter pipes manufactured by MAZA process only and the date of the opening of the tender was fixed on 02.09.2009.
It has been submitted by the counsel for the petitioners that the rates on which the AC pressure pipes manufactured through MAZA process required to be supplied are much costlier when the pipes manufactured of the same quality are available at lesser price, the decision of the respondents to get the AC pressure pipes manufactured by MAZA process only is totally arbitrary wrong and not justifiable. It has been submitted that since the AC pressure pipes manufactured by MAGNANI process are approved by BIS and they are as per the norms and standards fixed by the BIS, therefore, the impugned tender notice is totally arbitrary and illegal. As per the BIS norms and standards there was no intelligible differentia for taking the impugned decision by the Board.
It has been further submitted as a matter of fact that the dead stock of the cartel of manufacturers of pipes through MAZA process is sought to be purchased by the U.P. Jal Nigam at the higher rates and difference in price would make the respondent Nigam poorer by almost Rs. 7.00 crores per annum.
Lastly it has been submitted by the counsel for the petitioners that by means of the impugned decisions the petitioners have been deprived of the right to participate in the tender to the extent of their extinction and the impugned decision of the Board of U.P. Jal Nigam suffers from the vice of wednesbury unreasonableness and is contrary to the doctrine of ''level playing field'' and it is undisputedly for the purpose of favouring a cartel of manufacturers of AC pressure pipes which follow the MAZA process.
The learned counsel for the respondent has drawn the attention of this Court towards the short counter affidavit filed by U.P. Jal Nigam in writ petition no. 6686 (M/B) of 2009 which is annexed as Annexure No.7 to the present writ petition in which the report of the committee dated 10.04.2006 was enclosed. The said committee had made inspection of the manufacturing process of AC pressure pipes through MAZA process and MAGNANI process and had come to the conclusion that the MAZA process in comparison to MAGNANI process for the manufacture of AC pressure pipes is better from every angle and for the use of AC pressure pipes of Class 15 and higher class of radious of 150 mm or higher radius the AC pipes manufactured through MAZA process shall be used whereas the AC pressure pipes of 125 mm or less radius may be used of MAGNANI process.
In order to support his arguments the learned counsel for the respondent has placed reliance on a Division Bench decision of Punjab and Hariyana High Court pronounced in the case of Ankit Pipes Private Ltd., Jaipur and others vs. State of Hariyana and others (CWP No. 14712/2004) wherein almost similar controversy was decided and it was held that more than one technical committee had evaluated the two processes in detail on the basis of tests conducted in the laboratories and found qualitative difference between the pipes manufactured by the two processes. The committee finally opined that the pipes manufactured by applying MAZA process are technically superior to the pipes manufactured by other process. There is no reason to reject the said opinion. In that view of the matter specification of the machine which are required to be employed in the process, is of no consequence in so far as the petitioners are concerned because admittedly they are not using the MAZA process. The impugned decision is a conscious decision which was based on experts opinion and as cautioned by the supreme court in EduComp Detamatics Limited''s case, 2004 vol. 4 SCC 19 we find it difficult to substitute our opinion for that of the experts, even if we were convinced that the pipes manufactured by MAGNANI process were not inferior in quality. The writ petition having no force was dismissed.
In the case of Ankit Pipes Private Limited Jaipur and another vs. State of Harayana and others (supra), three manufacturers of Asbestos cement pressure pipes using MAGNANI process had questioned the legality and validity of a new eligibility criteria in the tender notice, in particular the requirement of process certification. Petitioners were said to be approved by BIS and duly certified under ISI license it was claimed that in so far as the quality of the products is concerned, there is no distinction between the two process and the alleged essentiality condition put in the tender is malafide attempt on the part of the respondent to eliminate a vast majority of pipes manufacturers and thereby creating a monopolistic situation for a very few manufacturers who would be eligible to tender, leading to lack of competitiveness in the tendering process and fall in the standards of quality of pipes to be procured for supply of drinking water. A committee of technical experts had examined the manufacturing process of AC pipes produced through MAZA and MAGNANI process and had certified that pipes manufactured by MAGNANI process is comparatively for superior to the pines manufactured by the MAGNANI process. Technical committee under Chairmanship of Chief Engineer had got the pipes manufactured by both the processes tested from IIT, Delhi and Shree Ram institute of industrial Research, Delhi, the samples of pipes of various sizes i.e. 150 mm and above sub grouped in two manufacturing processes namely MAZA and MAGNANI.
After going into all the technical aspects and analysing test results and after long deliberations the committee opined that the pipes manufactured through MAZA process are definitely a better products as compared to the pipe manufactured through MAGNANI process in terms of quality and reliability for ensuring availability of protected safe drinking water to the consumers. The report of the committee was approved by the Government of Harayana. The standards laid down by BIS for manufacture of AC pressure pipes and couplings were only on technical specification being adhered to, rather than specifying any particular process or types of machines used in the manufacture. It does not specify any particular process of manufacture and leaves it to the discretion of purchasing agency to specify the pipes of particular manufacturing process.
Mr. Jaideep Narayan Mathur, Senior Advocate, appearing on behalf of the respondents has submitted that the AC pressure pipes manufactured by MAZA process are being supplied in the contracts awarded by various other State governments and their instrumentalities. In this regard he has submitted that the State Government of Punjab, Hariyana and Gujrat have imposed a condition of supply of AC Pressure pipes of certain diameters manufactured by MAZA process only and by and large it has been accepted that the AC pressure pipes manufactured by MAZA process are better than those manufactured by MAGNANI process.
On the other hand Mr. Prashant Chandra, Senior Advocate in support of his arguments has relied upon various decisions of the Hon''ble Supreme Court particularly Union of India and other vs. Dinesh Engineering Corporation and another, 2001 Vol. 8 SCC 491, Sterling Computers Limited vs. M/s M & N Publications Limited and others, 1993 Vol. 1 SCC 445, and Reliance Energy Ltd. and another vs. Maharashtra State Road Development Corporation Limited and others, 2007 Vol. 8 SCC page 1 and has submitted that by means of the impugned decision the respondents have tried to create a sort of monopoly in favour of cartel of manufactures of AC pressure pipes by MAZA process which has been deprecated by the Hon''ble Supreme Court in the case of Union of India and others vs. Dinesh Engineering Corporation and others (supra). Moreover, the impugned decision is contrary to the doctrine of ''level playing field'' which is an important concept while construing Article 19(1)(g) of the Constitution of India. It has been held in the case of Reliance Energy Limited and another vs. Maharashtra State Road Development Corporation Limited and others (supra) that Article 14 applies to government orders and if policy or act of the government, even in contractual matters fails to satisfy the test of ''reasonableness'' then such an act or decision would be unconstitutional.
There is no dispute so far as the legal proposition of law as held by the Hon''ble Supreme Court in the aforesaid judgments are concerned. The State action in commercial/contractual transactions with private parties must be inconsonance with Article 14 and the decision making process by public authority in contractual transactions is open to the judicial review. However, the court cannot act as an appellate authority but if the process is violative of Article 14 the Court can strike down the decision and action taken pursuant thereof. The doctrine of ''level playing field'' is attracted very much while applying Article 19(1)(g) which confers the fundamental rights to carry on business, however, the same is subject to public interest.
We have considered the various submissions made by the parties and we are of the considered opinion that the powers of the High Court under Article 226 of the Constitution are wide enough to scrutinize the process of award of contract by public authority and it must be exercised to keep the public authorities within due bounds and for upholding the rule of law. However, at the same time it is a cardinal principle of law that every power has legal limits and therefore, even power of judicial review has selfimposed limitations and restraints. It is only the decision making process culminating on the award of contract which is subject to judicial scrutiny. If it is found to be vitiated by malafides, unreasonableness or arbitrariness the courts can interfere and set aside the decision taken by the public authorities. In view of the above judgment cited by the learned counsel for the petitioner are of no assistance to them.
In the case of Ankit Pipes Private Limited, Jaipur and others, the Punjab and Hariyana High Court has considered the almost the same controversy as involved in the present case and has rightly held that the decision of the authorities for supply of AC pressure pipes manufactured by MAZA process does not call for any interference. We have no reason to disagree with the findings given in the aforesaid judgment.
In the case of Directorate of Education and others vs. Educomp Datamatics Ltd. and others, 2004 vol. 14, SCC page 19, their Lordships of the Supreme Court, while observing that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract and the Government must have a free hand in setting these terms, including pragmatic adjustments which may be called for by the particular circumstances, have held that the Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary discriminatory or malafide.
In the case of Master Marine Services (P) Ltd. vs. Metcalfe and Hodgkinson (P) Ltd. and another (2005) 6 SCC 138, the Hon''ble Supreme Court has cautioned that even when some defect is found in the decision making process, the Court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, should the Court interfere. Ultimately what prevail in the Court in such like matters is that while public interest is paramount, there should be no arbitrariness in the matter of award of contract and all participants in the tender process should be treated alike. The State or its instrumentality cannot arbitrarily choose any person it likes for entering into such relationship or to discriminate between persons similarly situated.
Thus the question for our consideration is as to whether the decision taken by the opposite parties to insert the impugned condition of supply of AC pressure pipes manufactured by MAZA process of certain diameters could be said to be arbitrary, irrational or actuated by malafides, warranting interference in judicial review.
From the records it is evident that the U.P. Jal Nigam vide its order dated 22.02.2006 had construed a three member committee under the chairmanship of Sri A. K. Srivastava, Chief Engineer (Rural/Purchase) to examine qualities control and utility of AC pressure pipes manufactured by MAZA as well as MAGNANI process and make its recommendation for the supply of the AC pressure pipes. The said committee had made the inspection on 10.04.2006 and submitted its report. As per the recommendation of the said expert committee the MAZA process of manufacturing AC pressure pipes was better in every aspect in comparison to MAGNANI process. The committee had, therefore, recommended that for class 15 and higher classes of 150 mm or more radius of AC pressure pipes MAZA process should be accepted and the AC pressure pipes manufactured to MAZA process should only be taken. Whereas the AC pressure pipes of less than 125 mm radius pipes manufactured by MAGNANI process may be accepted.
Mr. Prashant Chandra, learned Senior Advocate, has also not been able to point out any defect or deficiency in the recommendation made by the expert committee and there is no reason for us to disagree with the findings of the expert committee. The impugned decision dated 30.06.2009 of the Board of U.P. Jal Nigam is a policy decision which is in consonance with the recommendations of the aforesaid expert committee.
In view of above and in consonance with the dictum in the case of Ankit Pipes Private Ltd. (Supra), we are, therefore, of the opinion that the impugned condition cannot be said to be arbitrary or irrational or that the decision to insert condition or supply of AC pressure pipes of certain radius manufactured by MAZA process only, was taken with a view to oust the manufacturers of pipe using MAGNANI process as alleged by the petitioners. There is no reason to disbelieve the recommendations made by the expert committee appointed by the Jal Nigam to examine the quality condition and utility of AC pressure pipes manufactured by MAZA and MAGNANI process. The petitioners who are manufacturers of AC pressure pipe through MAGNANI process have not been totally excluded from the supply of AC pressure pipes as the respondents have taken a decision to allow the supply of AC pressure pipes of less than 125 mm radius manufactured by MAGNANI process as well.
For the foregoing reason the writ petition being devoid of merit is hereby dismissed in limine.