Sigma Rail Systems Private ... vs Research Designs & Standards ...
2023 Latest Caselaw 3483 Cal

                  IN THE HIGH COURT AT CALCUTTA
                      Constitutional Writ Jurisdiction
                              Appellate Side


Present :-
The Hon'ble Justice Moushumi Bhattacharya


                           W.P.A 1050 of 2023

                Sigma Rail Systems Private Limited & Anr
                                      vs.
 Research Designs & Standards Organization, Ministry of Railways & Ors.




For the petitioners                             :   Mr. Kishore Datta, Sr. Adv.
                                                    Mr. Jishnu Saha, Adv.
                                                    Mr. Sakya Sen, Adv.
                                                    Mr. Somdutta Bhattacharyya, Adv.
                                                    Mr. P. Roy Chowdhury, Adv.
                                                    Ms. Roshni Deepta Acharya, Adv.
                                                    MR. Dhruv Chadha, Adv.

For the respondent nos. 1 to 3/RDSO         :       Mr. Pranit Kumar Roy, Sr. Adv.
                                                    Mr. Pratip Mukherjee, Adv.
                                                    Ms. Sarda Sha, Adv.
                                                    Ms. Atmaja Bandyopadhyay, Adv.



Last Heard on                                   :   02.05.2023.



Delivered on                                    :   17.05.2023.
                                         2




Moushumi Bhattacharya, J.

1. The petitioner no. 1 is a manufacturer of a signalling device referred to

as MSDAC which is installed to detect movement of trains. The petitioners'

signalling equipment is required to be approved by the respondent no. 1

Research Designs and Standards Organisation (RDSO), Ministry of

Railways, before the equipment is sold to the Railways.

2. The petitioners claim, through learned counsel, that all the

parameters for approval were obtained by the petitioners as per the RDSO

Specification prior to the petitioner no. 1 being enlisted as a vendor. It is

also the petitioners' case that the petitioners' products have been inspected

and approved on 69 earlier occasions by the Executive Director of RDSO,

Kolkata/respondent no. 3 and no complaint was ever made by the

respondents or by any of the Zonal Railways in respect of the said products.

3. The facts relevant to the matter would appear from the following

paragraphs.

4. The petitioner no. 1 manufactures the MSDACs once an order is

placed by the Railways and thereafter places the equipment for inspection.

The respondent no. 3 was the authority who carried out the inspection of

the petitioners' products on all previous occasions, in terms of clause 11.4.1

of the RDSO Specification. The format of inspection is referred to as the

Acceptance Test Proforma (ATP) which is part of the records. The records

indicate that the Railways have always given a positive feedback with regard

to the petitioners' products. There are no contemporaneous letters to show

that the RDSO or any of the Railways made any complaint with regard to

the petitioners' products.

5. The correspondence exchanged between the parties shows that the

petitioners' products were rejected for the first time on 9.11.2022 on the

ground that MSDAC does not comply with clause 5.4.3 of the RDSO

Specification Version 3.0. This however appears to be a pre-determined

rejection since the inspection of the products was actually carried out on

10.11.2022, which is a day after the recorded rejection. Both these

documents are part of the records. This was followed by a letter of

14.11.2022, addressed to the respondent no. 1, where the Executive

Director, RDSO Kolkata complained that the petitioners' products were not

compliant with clauses 5.4.3 and 5.3.7 of the RDSO Specification. The letter

however accepted that the tests were not included in the ATP.

6. Significantly, RDSO replied to this by a letter of 15.11.2022

specifically stating that clause 5.4.3 had been examined in respect of the

resetting; that the Specification did not restrict the number of evaluators to

be used to achieve the track section-wise resetting preparatory

reset/conditional hard reset; compliance of clause 5.3.7 had been submitted

by the petitioners at the time of approval and that inspection of material

submitted by the petitioners should be carried out as per the RDSO

approved Test Format as was being done earlier. A letter of 15.12.2022 from

the North East Frontier Railways/respondent no. 4 also stated that clause

5.4.3 of the RDSO Specification does not specify the use of number of

evaluators and further stated that the resetting process may involve two

evaluators.

7. Notwithstanding the above certifications, the RDSO sent a letter to the

petitioners on 2.1.2023 stating that the Vigilance Cell had advised

Independent Safety Assessment (ISA) certification and testing of the

MSDACs in Indian conditions to ensure passengers safety, and that the

product inspection of the petitioners equipment would be withheld till the

ISA certification and testing is complete.

8. The petitioners approached the Court at this stage. The petitioners

were given interim protection by an order dated 9.2.2023 and the RDSO was

directed to file a Report regarding the number of evaluators and the

acclimatization of the petitioners' equipment to Indian condition. The

interim order contains certain findings including on the RDSO's letter of

15.11.2022 stating that the Specification did not restrict the number of

evaluators and that the petitioners had conformed with clauses 5.4.3 and

5.3.7 of the Specification and further that the impugned action of

withholding product inspection was contrary to the RDSO Vendor

Guidelines of 30.12.2022. The RDSO was also directed to continue with the

products inspection of the petitioners without prejudice to its rights and

subject to the final decision in the Writ Petition in the manner which had

been followed by the RDSO before the inspection was stopped.

9. The petitioners thereafter filed a contempt proceedings on RDSO's

alleged non-compliance of the direction dated 9.2.2023, which was later

agreed to be disposed of in favour of the final hearing of the writ petition.

10. Several documents were produced by the parties before the final

hearing of the writ petition which includes an Inspection Report of the

petitioners' products pursuant to inspections held on 29.03.2023 and a final

Report in the form of an affidavit was filed by the respondent nos. 1 to 3 in

reply to the petitioners' affidavit-in-reply. It appears from the totality of the

documents filed before the Court that the issue is of the petitioners' alleged

non-compliance and violation of clauses 5.4.3, 5.3.7 and 5.0.5 of the RDSO

Specification.

11. Clause 5.4.3 relates to track section wise resetting as preparatory

reset or conditional hard reset. The Specification does not mention the

number of evaluators to be used and the letters from the respondents dated

15.11.2022 and 26.11.2022 clarified that there is no restriction on the

number of evaluators to be used for achieving both types of resetting. The

letter of 26.11.2022 also stated that the petitioners are in compliance with

clause 5.4.3 of the RDSO Specification. The contents of this letter is also

reiterated by a letter of the North East Frontier Railways dated 15.12.2022.

It is undisputed that the Executive Director of RDSO, Kolkata, respondent

no. 3, tested and approved the petitioners' products using two evaluators on

69 previous occasions spread over a period of 3 years.

12. Since there has been no change in the products manufactured by the

petitioners which all along conformed to the ATP, the sudden refusal on the

part of the RDSO and respondent no. 3 to inspect the petitioners' products

is untenable and contrary to the conduct expected of a statutory authority.

13. Moreover, the so-called "joint inspection" which took place on

10.11.2022 was done unilaterally by the respondent no. 3. As stated earlier,

the alleged non-conformity Report was issued a day earlier on 9.11.2022.

The petitioners' bona fides would also appear from a letter dated 22.2.2023

whereby the petitioners offered to supply extra evaluators at no additional

cost in keeping with the requirements of the Railways. The petitioners have

also enclosed a document to show that the signalling equipment produced

by the petitioners' competitors at various places all over the country use two

evaluators and that such equipments have been approved by the RDSO.

14. The other area of alleged non-compliance is clause 5.3.7 of the RDSO

Specification. The letters of RDSO dated 15.11.2022 and 26.11.2022 have

already clarified that the petitioners are in compliance with the clauses of

the RDSO Specification including clause 5.3.7. The letter of 26.11.2022

further states that the joint inspection carried out on 11.11.2022 by the

Executive Director RDSO is not appropriate considering the Specification

clause. It is also significant that the respondent no. 3 admitted in his letter

dated 14.11.2022 addressed to the RDSO that the tests conducted to check

compliance are not part of the approved ATP.

15. The respondents have further alleged the violation of clause 5.0.5 of

the RDSO Specification. This is a new ground taken in the final Report in

the form of affidavit filed by the respondent nos. 1-3. The materials placed

before the Court show that the testing for clause 5.0.5 of the Specification

which requires the push trolley wheels to not be counted by MSDAC is also

covered since the tests for compliance of clause 5.0.5 have successfully been

conducted in laboratory conditions by the RDSO before giving approval of

the petitioners' equipment. There was a further field testing of the

equipment by the RDSO after approval and also by the respondent no. 3 on

69 earlier occasions. The tests were conducted by using standard wheel

diameter of 450 mm and the product was passed in accordance with the

ATP. The documents disclosed subsequently however show that the

Executive Director RDSO tested the equipment using a non-standard wheel

diameter of 560 mm which is not permitted since the RDSO itself has

specified uniform dimensions for trolley wheels used by the Indian Railways.

Moreover, the joint testing of the petitioners' products by the Southern

Railways and the South East Central Railway on 6.3.2023 and 10.3.2023

respectively, found the equipment to be satisfactory and the MSDAC units

were found to be in compliance with the RDSO Specification including

clause 5.0.5.

16. A significant fact which was taken into account by the Court at the

time of passing the interim order dated 9.2.2023 was the trigger for the

sudden volte face of the RDSO. Records show that the inspection of the

petitioners' products was stopped on a complaint received by a person

holding himself out to be an Advocate of Supreme Court. RDSO's conduct of

acting upon this stray compliant is contrary to the Indian Railways Vigilance

Manual and the Central Vigilance Commission Guidelines and stopping of

the inspection was also contrary to the RDSO Vendor Guidelines in this

regard.

17. It may also be pertinent to mention that the petitioner no. 1 sells its

equipment directly to the Railways at a cost of Rs. 300000/unit while its

competitors sell the same to traders who resell the equipment to the

Railways at Rs. 700000/unit. Hence resulting in an annual loss of

approximately Rs. 1100 crores to the Railways for 30,000 units of MSDAC

purchased by the Railways every year. The inexplicable refusal of the

respondents to inspect the petitioners' products and in essence render them

unviable without due cause, given that the petitioners' products have passed

the tests 69 times previously and by the same authorities, smacks of mala

fides. The presumable object of the entire exercise of refusing the inspection

of the petitioners' products is to prevent the petitioners from supplying the

equipment directly to the Railways and force the petitioners to route the

same through traders at a substantial higher price.

18. The arguments made by learned counsel appearing for the Railways

on the technical aspects of the matter including deployment of evaluators

according to detection points is outside of the pleadings and beyond the

RDSO Specification as well as the ATP.

19. WPA 1050 of 2023 is accordingly allowed and disposed of by by

cancelling the report dated 9.11.2022 and alleged joint report dated

10.11.2022. The respondent nos. 1, 2 and 3 are accordingly directed to

commence the inspection within a period of 7 days from today in accordance

with Specification framed by the RDSO and the ATP applying the identical

procedure for testing/inspection and with the same frequency as was being

done in the 69 prior occasions before the impugned documents dated

9.11.2022 and 10.11.2022 were issued. The petitioners' equipment shall be

inspected by the RDSO and respondent no. 3 within a period of 7 days as

directed from the date of this judgment.

20. Learned counsel appearing for the respondent no. 1 prays for stay of

the operation of the Judgment. Considering the facts and circumstances

discussed in the judgment and the proceedings where contempt initiated by

the petitioners was shelved for hearing of the main writ petition, the prayer

for stay is considered and refused.

Urgent photostat certified copies of this judgment, if applied for, be

supplied to the parties upon fulfillment of requisite formalities.

(Moushumi Bhattacharya, J.)