Srmb Srijan Private Limited And ... vs Union Of India And Others
2023 Latest Caselaw 2438 Cal

                      In the High Court at Calcutta

                    Constitutional Writ Jurisdiction

                              Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya



                           W.P.A 9990 of 2020

                SRMB Srijan Private Limited And another
                                  Vs.
                      Union of India and others

                                  With

                           W.P.A 24267 of 2019

               SRMB Srijan Private Limited And another
                                  Vs.
              Central Public Works Department and others


     For the petitioners           :      Mr. Saptangsu Basu
                                          Mr. Arnab Das
                                          Mr. Amritam Mondal
                                          Ms. Epsita Bhattacharyya
                                          Mr. Vinay Kumar Chakraborty


     For the
     Respondent nos.1 to 5         :      Mr. Atarup Banerjee

Ms. Sarda Sha

Hearing concluded on : 16.03.2023

Judgment on : 11.04.2023

Sabyasachi Bhattacharyya, J:-

1. The petitioner no.1 is a Company and petitioner no.2 is an Executive

Director of the said Company. The present writ petition challenges

Clause 27.2 of the CPWD Works Manual, 2014 (for short, "the 2014

Manual"), as reincorporated in the CPWD Works Manual, 2019 and

lastly amended by Office Memorandums dated December 27, 2019

and January 8, 2020, as well as connected Office Memorandums.

2. The grievance of the petitioners is that in violation of the different

Notifications of the Union of India, Ministry of Steel, the respondent -

Central Public Works Department (CPWD) has introduced Clause 27.2

in the CPWD Works Manual, 2014 and reincorporated the same in the

2019 Works Manual.

3. It is submitted that as per the Notification dated April 24, 2015 issued

by the Government of India, Ministry of Steel, bearing 4(8)/2010-SD-I,

it was mentioned that steel producers of any capacity, irrespective of

process route, starting their operation from iron making using iron

ore, virgin or processed, with necessary refining facilities and

rolling/processing facilities, at a single location or else in multiple

locations provided that the entire gamut of iron and steel production,

from iron making to finished steel production, is owned by the same

company or its subsidiary company(ies), shall be classified as Primary

Steel Producers. Primary Producers having a minimum capacity of

one million tons per annum (1 MTPA) in terms of crude steel were

classified as Integrated Steel Producers, steel producers of any

capacity stipulated therein as Secondary Steel Producers as well as

other categories as Other Steel Producers.

4. In Clause 2 of the Notification, it was stipulated that the above

categorization/revised classification of steel producers should in no

way be seen as a certification of the quality of steel produced. Quality

certification would be as per the Bureau of Indian Standards (BIS) or

any other designated authorities as per the BIS Act.

5. Clause 3 provided that there will be no certification of the steel

producers by the Ministry of Steel or Joint Plant Committee (JPC).

The JPC will, however, maintain a list of different categories of

producers on the website to the extent possible, after exercising

necessary due diligence.

6. The same stipulations were reiterated in a communication dated

December 14, 2016 on the subject of classification of steel plants.

Apart from reiterating the Notification of May 12, 2016 and an Order

issued on August 9, 2016 regarding classification of steel plants, it

was stated that the list would be purely for statistical purpose and

would have no bearing on the quality of steel produced.

7. In the third paragraph of the said Communication, the Ministry of

Steel further stated that complaints/grievances are being received

from various organizations of steel industry that despite clear orders

not to classify steel producers as Main/Major/others by the Ministry,

user departments like CPWD/Railways, etc., are not changing their

procurement policies and continuing to offer a step-motherly

treatment to the products of smaller manufacturers. This is despite

the fact that products of smaller producers are as BIS standards and

are competitively priced. It was indicated that such steps would

ensure a level playing field to all producers/industry associations of

steel industry.

8. Again, on February 7, 2017, vide DO No.4(13)/2016, SD (I), the

Ministry of Steel stressed that the route of steel making, that is,

whether primary or secondary, ordinarily has no bearing on the

quality of steel. The PSUs and other organizations/bodies under the

administrative control of the Addressee-Ministry were requested to

sensitize and to ensure that suitable changes were made in the

Internal Procurement Guidelines.

9. It is relevant to mention that during the entire period, the petitioners

had been giving representations to all concerned regarding alleged

violation of the Notification and Orders of the Ministry.

10. It is submitted by the petitioners that in the CPWD Works Manual,

2019, some undisclosed conditions were incorporated in Clause

4.10.1 which are to be incorporated by the NIT. Such special

conditions, however, shall be framed keeping in view the Guidelines

issued by the Directorate from time to time which are available on the

CPWD website.

11. Vide Notification dated February 17, 2021, the CPWD issued modified

guidelines for use of reinforcement bars in structures. In Point 4 of

the same, it has been particularly mentioned that certain private

companies like SAIL, RINL, TATA, JSW, JSPL are preferred makers for

procurement of steel.

12. Despite the repeated deprecation by the Ministry of mention of private

companies as preferred manufacturers, the CPWD merely omitted

specific names of manufacturers but has modified the guidelines in

their works manual to suit the exclusive selection of only certain large

operators in the field, thereby contravening the stipulation in the

Government Notification that there has to be a level playing field for all

manufacturers.

13. Pursuant to the said Guidelines, the CPWD has been approving names

of only a few manufacturers, thereby meting out preferential

treatment.

14. In this context, the petitioner places reliance on the following

judgments:

(i) (2007) 8 SCC 1 [Reliance Energy Ltd. and another Vs.

Maharashtra State Road Development Corpn. Ltd. and others]

(ii) (2009) 6 SCC 171 [Meerut Development Authority Vs. Association

of Management Studies and another].

15. It is submitted that in view of such arbitrary and capricious act of the

CPWD, contrary to public interest, there is ample scope for this Court

to interfere under Article 226 of the Constitution of India.

16. Learned counsel for the respondents argues that the petitioners

cannot both approbate and reprobate in the same breath. The

petitioners applied for approval as steel producer on December 11,

2017 on the basis of the CPWD Office Memorandum dated September

11, 2017, but upon failing to fulfill the requirements, they requested

for inclusion of an old method of refining iron-ore in the basic criteria

list to get empanelment as an approved steel producer for CPWD.

17. It is further argued that the CPWD Works Manual has been issued in

consonance with fundamental principles of service delivery, customer

focus, efficiency, transparency, fairness, competition, economy and

accountability and efforts have been made to cover all major aspects

of construction and maintenance in a user-friendly manner. All the

approved enlisted steel manufacturers, it is contended, are abiding by

the guidelines introduced by the CPWD. The CPWD, it is argued,

cannot be directed to change or modify its guidelines in the interest of

a single company, that is, the petitioner no.1, which would cause

injustice to all the existing enlisted steel manufacturers.

18. A perusal of the Government Notifications indicates that the CPWD

Manual of 2012 mentioned names of specific primary producers in the

special conditions for steel contained in Clause 27.2. However, in the

same Clause of the 2014 Manual, other producers as approved by

CPWD who are using iron-ore as basic raw materials/input and

having crude steel capacity of 2.0 million tons per annum were also

included within the fold of consideration.

19. Vide Notification No. 4(8)/2010-SD-I dated April 24, 2015, a revised

classification of steel producers/processors was issued by the Ministry

of Steel, Government of India. While defining Category 'I', that is,

'Primary Steel Producers', the Ministry included steel producers of any

capacity, irrespective of process route, starting their operations from

iron making using iron-ore, virgin or processed, with necessary

refining facilities and rolling/process facilities at a single location or

multiple locations, provided that the entire gamut of iron and steel

production, from iron making to finished steel production, is owned by

the same company or its subsidiary companies.

20. The second class of 'Integrated Steel Producers' were merely primary

producers having minimum capacity of 1 MTPA in terms of crude

steel. 'Secondary Steel Producers' were defined under Class III to be

producers of any capacity comprising certain criteria. Class IV

envisaged Other Steel Producers who are not covered under the above

categories and classifications.

21. However, importantly, Class II of the said Notification clarified that the

above categorisation of steel producers should in no way be seen as a

certification of the quality of steel produced. Quality certification, it

was specified, would be as per the Bureau of Indian Standards (BIS)

or any designated authority as per the BIS Act.

22. It was also made clear that there would be no certification of the steel

producers by the Ministry of Steel or JPC, the latter maintaining only

a list of different categories of producers on the website.

23. Thus, it is clear from the Notification dated April 24, 2015 that the

classification/categorisation of producers was merely for the records

and were in no way connected to the quality of steel produced. The

certification of quality would only be as per the BIS Standards.

24. Even while defining Primary Steel Producers in Clause I, the Ministry

specified that such classification included steel producers of any

capacity, starting their operations from iron making using iron-ore.

However, it was also a cardinal feature thereof that such classification

would be irrespective of process route.

25. Hence, process route was deprecated in the Notification of the

Ministry as a yardstick of quality, which could only be certified as per

BIS Standards.

26. Again, the Communication of the Ministry of Steel vide

No.4(13)/2016-SD(I) dated December 14, 2016 reiterated a

Notification of May 12, 2016 and also the Order issued on August 9,

2016, for stressing that no steel producers would be

classified/certified as Integrated, Primary, Secondary, Main, Major or

other producers by the Ministry of Steel or JPC and the listing would

be purely for statistical purpose and would have no bearing on the

quality of steel produced. It was also mentioned that it is up to the

users to ascertain the quality of the steel products to be procured as

per relevant standards.

27. The said Communication also highlighted the fact that despite the

scrapping of classification as Main/Major/Others by the Ministry, the

CPWD/Railways, etc., were not changing their procurement policies

and continue to offer a step-motherly treatment to products of smaller

manufacturers, despite the fact that products of smaller producers

were meeting BIS standards and were competitively priced. The

Ministry also highlighted that a level playing field to all producers

should be ensured.

28. Again, in DO No. No.4(13)/2016-SD(I) dated February 7, 2017, the

Ministry of Steel communicated to several other Ministries of the

Government that there was no classification in terms of Primary and

Secondary producers. It was also highlighted that the route of steel

making, that is, whether Primary or Secondary, ordinarily has no

bearing on the quality of steel, which is dependent on the mandatory

BIS certification requirement. It was also stipulated that the concerns

of quality of steel can easily be addressed by insisting on BIS certified

steel products and that the Internal Procurement Guidelines of the

PSUs and other organizations under the administrative control of the

Ministries should make suitable changes in the Internal Procurement

Guidelines.

29. Despite the same, the CPWD continued to lay stress on the

manufacturing process and route of production. In fact, vide

Communication dated January 3, 2019 made to the petitioner no.2 on

behalf of petitioner no.1, the Executive Engineer (TAD), CSQ, CPWD

intimated that the petitioner no.1 could not be approved for supply of

steel for CPWD projects, since the details furnished by it did not fulfil

the manufacturing process as mentioned in Annexure-I of OM

No.DG/CPWD Works Manual/356 dated September 11, 2017, issued

by the CPWD Directorate. The said Annexure-I indicated the modified

provision of Clause 27.2 of the CPWD Manual. However, even in the

modified provision, the refining technology necessary for eligibility of

approval was fixed to certain specific technologies such as the DRI-

EAF, BF-BOF and COREX-BOF.

30. Thus, the process of manufacturing of steel was stipulated to

standards not approved by the Ministry of Steel in its D.O. dated

February 7, 2017, where it was specifically mentioned that the "route

of steel making", that is, whether primary or secondary, ordinarily has

no bearing on the quality of steel and the BIS certification was the

only yardstick of quality.

31. It is seen from the Office Memorandum dated December 27, 2019

issued by the CPWD that, in Clause 3(d) thereof, the refining

technologies for manufacturing steel and TMT bars were restricted to

BF-BOF, COREX-BOF and DRI-EAF routes.

32. The question which arises is whether the CPWD Guidelines can be

tainted as arbitrary and in derogation of the guidelines of the Ministry

of Steel.

33. Clause 27.2 of the CPWD Works Manual, stipulating 'Special

conditions for steel', underwent an evolution over the years.

34. In the 2012 Manual, certain large operators, such as SAIL, TISCO and

RINL, were specifically named as primary producers.

35. Again, in the 2014 Manual, 'primary steel producers' were exemplified

by names of certain specific producers such as SAIL, Tata Steel Ltd.,

RINL, Jindal Steel & Power Ltd. and JSW Steel Ltd. "or any other

producer as approved by the CPWD" who were using iron ore as the

basic raw material/input and having crude steel capacity of 2.0

Million tonnes per annum (mtpa) and above.

36. In the Notification issued by the Ministry of Steel dated April 24, 2015,

however, 'Primary Steel Producers' were defined to be steel producers

of any capacity, irrespective of process route, starting their operations

from iron making using iron ore, virgin or processed, with necessary

refining facilities and rolling/processing facilities, at a single location

or else in multiple locations provided that the entire gamut of iron and

steel production, from iron making to finished steel production, is

owned by the same company or its subsidiary company(ies) and

certain other criteria.

37. In Clause 2 of the April 24, 2015 Notification, it was categorically

mentioned that the categorisation of steel producers into primary,

integrated, secondary and other should in no way be seen as a

certification of the quality of steel produced. Quality certification, it

was stipulated, would be as per the Bureau of Indian Standards (BIS)

or any other designated authorities as per the BIS Act.

38. Clause 3 provided that there will be no certification of the steel

producers by the Ministry of Steel or Joint Plant Committee (JPC). JPC

will, however, maintain a list of different categories of producers on

the website, to the extent possible, after exercising necessary due

diligence. The list will be updated on annual basis, based on the data

on capacity and production, etc. to be submitted by the steel

producers to JPC for statistical purpose.

39. Thus, we see that in the Notification dated April 24, 2015, while

defining 'Primary Steel Producers', the process route of producing steel

was rendered irrelevant. Steel producers "of any capacity, irrespective

of process route" were included.

40. Moreover, the categorisation into primary, secondary, etc. was

dissociated from quality of steel produced; the latter being certified

only as per BIS specifications.

41. In its Circular to several ministries dated December 14, 2016, the

Ministry of Steel highlighted the step-motherly treatment being meted

out to the products of smaller manufacturers on the basis of

classification as Integrated, Primary, Secondary, Main, Major and

Other Producers, which was deprecated and BIS standards and

competitive price were stressed upon as the relevant factors to ensure

a level playing field to all producers.

42. Even vide the reminder dated February 7, 2017 [ D.O. No. 4(13)/2016-

SD(I) ], which referred to the letter dated December 14, 2016 regarding

Notification of the Ministry of Steel dated May 12, 2016 and also the

Order issued on August 9, 2016 on the Classification of Steel Plants in

the country, it was reiterated that the route of steel making has no

bearing on the quality of steel and that the mandatory BIS

Certification requirement easily addressed the concerns regarding

quality of steel.

43. However, in its communication dated January 15, 2018 to the

petitioners, the CPWD reiterated as checkpoints and sought

particulars by laying stress on specific routes such as DRI-EAF, BF-

BOF and COREX-BOF routes, coining the term "refining process" to

label the process routes of steel manufacture.

44. Even as per the modification of Clause 27.2 pertaining to the special

conditions of steel in the Office Memorandum dated June 29, 2017

issued by the CPWD, the Selection Criteria of steel manufacturers

contained mandatory adherence to the same particular routes, that is,

DRI-EAF, BF-BOF and COREX-BOF, camouflaging them as "refining

technologies".

45. A closer scrutiny of the CPWD documents clearly shows that the said

"refining technologies" are identical with the "process routes", which

were rendered redundant as indicators of quality of steel vide

Notification dated April 24, 2015 of the Ministry of Steel, Government

of India, as reiterated in the communication to several other Ministries

dated December 14, 2016.

46. The Office Memorandum of the CPWD dated December 27, 2019

clearly described DRI-EAF, BF-BOF and COREX-BOF as routes or

refining technologies for manufacturing steel and TMT Bars.

47. Such criteria are, therefore, in gross violation of the various Circulars

of the Ministry of Steel, whereby quality of steel was divorced from

'process routes' and tagged only with 'BIS specifications'.

48. The crux of the Ministry of Steel directives is that the steel produced

should be of BIS quality and ought to be competitively priced. The

Ministry has repeatedly laid stress on providing a level playing field for

steel manufacturers of all sizes, provided they meet the basic criteria.

49. However, by introducing and re-introducing specific process routes of

steel manufacturing (in the garb of 'refining technologies') as basic

eligibility criteria for participation in the tenders floated by the CPWD,

the CPWD has been ensuring that, despite meeting BIS standards of

quality and offering competitive pricing, small steel producers are

been left in the lurch. Thus, the CPWD is seeking to achieve indirectly

what it could not do directly, that is, restrict the eligible steel

producers to the large players and exclude several other competent

smaller competitors.

50. The CPWD is an instrumentality of the Central Government and

discharges public functions. As an employer, it cannot proceed in an

arbitrary manner by nipping competition from small producers at the

eligibility stage itself.

51. Although it is well-settled that the purchaser has a discretion in

selecting the quality of steel, organisations like the CPWD who operate

in the public domain have to have a transparent and uniform mode of

selection, in consonance with the directives of the concerned Ministry

of the Government which specifically concerns steel.

52. Having flouted such norms and standards, the impugned Clause 27.2

of the CPWD Works Manual of 2014, as re-adopted by it in 2019, is

patently vitiated, being arbitrary and biased towards certain particular

large operators, thereby encouraging cartelization and monopolistic

practices.

53. Hence, WPA 24267 of 2019 and WPA 9990 of 2020 are allowed on

contest, thereby quashing the modified Clause 27.2 of the CPWD

Works Manual of 2014, as reincorporated in the CPWD Works Manual

of 2019, and consequential Memorandums issued by the CPWD. The

Central Public Works Department (CPWD) is directed to implement the

Notification of the Ministry of Steel, Government of India dated May

12, 2016, the Order dated August 9, 2016 and the reminders of the

said Ministry dated December 14, 2016 and February 7, 2017.

54. There will be no order as to costs.

55. Urgent certified server copies, if applied for, be issued to the parties

upon compliance of due formalities.

( Sabyasachi Bhattacharyya, J. )