Punjab Riceland Pvt. Ltd. And Anr. vs Food Corporation Of India And Anr.
2001 Latest Caselaw 1621 Del

JUDGMENT

Mukul Mudgal, J.

1. These are the miscellaneous applications for interim relief in the present writ petitions in which the petitioners have averred as follows:

The respondent No. 1, the Food Corporation of India(hereinafter referred to as 'the FCI') sought to sell the URS rice of 1998-99 crop. The said Scheme inter-alia required that if a party required stocks of Punjab, pertaining to 1998-99 crop from a particular depot, they were to submit their sealed bids between 20th March, 2001 to 23rd March, 2001, indicating the quantity, the dispatching depots and the tender rate. The petitioners submitted its bid qua depots in Punjab and deposited with its bid a sum of Rs. 1.45 crores as earnest money. Upon opening of tenders the petitioners' bid for 25,000 Metric Tonnes (hereinafter referred to as 'the MT') was found to be the highest in respect of each of the depots and the petitioners were, therefore, entitled to be granted the requisite quantities of rice bid for. Thereafter out of 25,000 MTs the petitioners received 2,200 MT of rice, upon paying the costs of Rs. 1.39 crores and the petitioners thereafter further received another quantity of 2000 MT of rice by paying Rs. 1.27 crores. Thus the petitioners had received a total of 4,200 MT of rice out of 25,000 MT of rice with the shortfall of 20,800 MT of rice. This writ petition has been filed as the remaining amount of 20,800 MT of rice has not been delivered to tem. The petitioners' further grievance is tat M/s Saraswati Trading Company (hereinafter referred to as 'the M/s Saraswati.'), a business rival of the petitioner No. 1-Company without participating in the tender process had made a slightly higher post-tender offer of about Rs. 30 per quintal more for the stocks intended for the petitioner No. 1-Company. It is further averred that at the behest of the M/s Saraswati, the remaining supply of the petitioners' was stopped and on 26.6.2001, the petitioners received a communication from the FCI in respect of 4 centres, i.e., B.C. Patiala, Sirhind, FSD Patiala & HGIV Patiala to lift the stocks by quoting rates higher then that quoted by the petitioners and equating those quoted by M/s Saraswati. The petitioners' plea is that this amounts to interfering and frustrating the tendering process by which the petitioners' tender has been accepted and part delivery made.

2. According to the learned counsel, for respondent No. 1 in C.W.No. 3986/2001, Shri Ajit Pudussery, the FCI's case apart from pleading that granting of relief in the writ petition would amount to specific performance of a contract and writ Court is not competent to do, so has inter alia relied upon a Letter dated 12th of June, 2001 issued by Ministry of Consumer Affairs, Food & Public Distribution, Department of Food & Public Distribution, Government of India which reads as follows:

"1-12/2001-Py.IV.

Government of India

Ministry of Consumer Affairs, Food And

Public Distribution

Department of Food & Public Distribution

*****

Krishi Bhawan, New Delhi-110001,

Dated the 12th June, 2001

To

The Managing Director,

Food Corporation of India,

16-20, Barakhamba Lane,

New Delhi-110001

Subject:- Disposal of URS Rice (1998-99 Crops) regarding.

*****

Sir,

I am directed to refer to you office letter No. 1/10/2001/old stocks/S.IV/Vol.III dated 4th June 2001 forwarding herewith your file No. 1-10/2001/old stocks/S.IV. Vol. II on the above subject and to say that the HLC should have decided the involved issue at its own level instead of referring it to the Ministry.

However, since the matter has been referred to the Ministry, this Ministry, is of the view that if the tenders have been accepted and acceptance has been communicated to the concerned parties, such tenders must be honoured. Exception to this, may, however be made in the case of the tenders received from the parties complained against by M/s Saraswati Trading Company, Naya Bazar, Delhi. Those parties may be asked to lift the stocks at the rate quoted by Ms Saraswati Trading Company. If they do not do so, the FCI may offer the stocks to other tenderers at the rate quoteod by the said company. Where tenders have been received but not accepted, the floor rate in those cases may be fixed at Rs. 625/- per Qtl (Rupees Six Hundred twenty five only) keeping in view the possibility of receiving higher rates.

The file sent by you is returned.

Yours faithfully,

Sd/-         

(GHAZALA MEENAI)

DIRECtor (FCI)

Telephone :3382709

FOR MANAGER (SALES)"

3. Mr. Pudussery, the learned counsel, appearing for FCI has, therefore, relies upon sub-section 6(2) of the Food Corporations Act, 1964 (hereinafter referred to as 'the Act') which reads as follows:

"The board of directors, in discharging its functions, shall act on business principles having regard to the interests of the producer and consumer and shall be guided by such instructions on questions of policy as may be given to it by the Central Government."

The learned counsel submits that the FCI was bound to honour the directions, issued by the Govt. of India through Letter dated 12.6.2001 under the provision of Section 6(2) of the aforesaid Act. Similar pleas were advanced by Shri Jagar Singh, the learned Counsel for FCI in C.W.No. 3987/01.

4. These petitions were subsequently amended and the aforesaid directions pursuant to the Letter dated 12th of June, 2001 was also challenged and the Ministry of Consumer Affairs, Food & Public Distribution, Govt. of India (hereinafter referred to as 'the UOI') was also imp leaded as respondent No. 2 in both the petitions.

5. Mr. Jayant Bhushan, the learned counsel appearing for UOI, has submitted that since the rates quoted by M/s Saraswati were higher the public interest would be subserved by realisation of higher rates and the interest of the petitioners had also been kept in mind by giving the petitioner No. 1 a first option to purchase the rice at the rate, tendered by FCI. He has relied upon the judgments of the Supreme Court in State of Maharashtra and Ors. v. Prabhu ; M.P. Mittal v. State of Haryana and Ors. ; Divisional Forest Officer v. Bishwanath Tea Co. Ltd. to contend that a mandamus for specific performance could not be issued in the facts and circumstances of the present case. The learned counsel for the FCI further submitted that all other co-bidders Along with the petitioners had taken the goods at the price at which M/s Saraswati Trading Company had offered to pay. Mr. Bhushan submitted that in the even of the Court passing any interim order for release of rice, the difference between the rates, quoted by M/s Saraswati and those tendered by the petitioner No. 1-Company should be fully safeguarded.

6. Mr. Sandip Sethi, the learned counsel, appearing for the petitioners in reply has submitted that the writ petition maintainable as the petitioner has inter alia challenged the statutory order said to be passed under Section 6(2) of the Act on 12.6.2001 by the UOI. He submitted that since the impugned action of FCI was solely said to be based upon such statutory exercise of powder under Section 6(2) of the Act, a writ petition was certainly maintainable. He has further submitted that in any event the Order dated 12.6.2001 was an order on specific facts of the present case and was not a matter of policy visualized by Section 6(2) of the Act and could not in any event be sustained. Mr. Sethi, the learned counsel for the petitioners has submitted that acting at the behest of M/s Saraswati amounted to post-tender action which is clearly contrary to the public interest. He further submitted that M/s Saraswati is in a position where it did not undertook the risk of depositing the earnest money which is liable for forfeiture in event of the bidder not picking up the rice contracted for. The learned counsel for the petitioner submitted that the other co-bidders who tendered had bid for small quantities and were not materially affected by the rise in rates. However the petitioner No. 1 having made a bid for 25,000 M.T. was vitally affected by the rise in view of the high volumes bid by it.

7. I am of the view that considering the facts and circumstances of the case at this stage, the writ petition cannot be dismissed on the ground that the writ is not maintainable particularly when the petitioners seek to challenge the validity of the Order, passed Under Section 6(2) of the Act and indeed its efficacy. Exercise of such statutory powder can indeed be challenged by the petitioners and since the action of the FCI is avowedly based on the order passed by the UOI on 12.6.2001, the writ petition is certainly maintainable and cannot be dismissed on the preliminary plea. Furthermore prima facie the letter dated 12.6.01 impugned in these petitions in so far as it speaks of matching offers of M/s Saraswati does not appear to be a manifestation of any policy of the Government of India as envisaged by Section 6(2) of the Act. It appears to be a direction in a particular case. In fact if at all any policy is indicated, it is the honouring of tenders which policy is clearly in favor of the petitioners. Furthermore the impugned order apparently creates an anamolous situation where M/s Saraswati is placed in a position of advantage. Without participating in the tender process and furnishing any earnest money (which is liable to forfeiture in the event of petitioners not performing its obligations under its bid), M/s Saraswati has offered a slightly higher price upon coming to know of the rates, tendered by the petitioners. Furthermore the FCI had itself partly carried out the obligation under the tender by depositing 4200 MT out of the 25,000 MT of rice for the petitioners. The plea as to the benefits which may accrue to M/s Saraswati at the expense of the petitioners at the behest of the FCI also cannot be discounted at this stage. If the petitioners' plea of discrimination qua M/s Saraswati is upheld, violation of Article 14 may be established. Furthermore, the petitioners have made out a prima facie case in its favor and the balance of convenience is also in its favor particularly when the interests of FCI are being safeguarded by the interim order I propose to pass. Accordingly, I order that the petitioners/applicants as an interim measure are permitted to lift the balance of 20,800 MT of rice, subject to its furnishing the security to the satisfaction of the Registrar of this Court for the balance amount, i.e., the price bid for by the petitioners and the price offered y the FCI for the balance amount of 20,800 MT, till the disposal of the writ petitions. The remaining amount of 20,800 MT of rice be released to the petitioner No. 1 within 6 weeks of the acceptance of the security by the Registrar of this Court.

8. With these observations, the miscellaneous applications in both the writ petitions are accordingly disposed of.

9. CW. 3986/01: RULE.