Conveyor Belt Manufacturers ... vs Govt. Of India Through Secretary, ...
2002 Latest Caselaw 166 Del

JUDGMENT

Madan B. Lokur, J.

1. The Appellant is aggrieved by an order dated 7th January, 2002 passed by a learned Single Judge of this Court in CM No.152/2002 in CW No.7077/2001.

2. The averment of the Appellant in the writ petition (which is still pending admission) is that Respondent Nos.3 to 5 invited a Request for Quotation (RFQ for short) on 6th January, 2001 in respect of their requirement for conveyor belts. This RFQ pertained to the period 2001-2002 and provided for a "purchase preference" to Public Sector Undertakings (PSUs) allegedly to the detriment of the members of the Appellant. The RFQ did not provide for a "price preference" (as it allegedly should have) for small scale industries such as the members of the Appellant. In other words, it is alleged that the members of the Appellant were losers on both counts, that is, they were not given any "price preference" while their competitors/PSUs got a "purchase preference".

3. In the pending writ petition, the Appellant moved the aforesaid miscellaneous application because on 26th December, 2001, Respondent Nos.3 to 5 issued another RFQ for the period July, 2002 to June, 2003 for which quotations were to be tendered by 28th January, 2002. This fresh RFQ also made a provision for "purchase preference" but no protection was given to small scale units. It was prayed in the miscellaneous application that Respondent No.5 should be directed to amend the RFQ to bring it in conformity with Government guidelines, by deleting the clauses detrimental to the interests of the Appellant.

4. The learned Single Judge did not grant any ex-parte relief to the Appellant and posted the application for 5th March, 2002, which resulted in an appeal being filed under Clause X of the Letters Patent.

5. Given the urgency in the matter, we heard learned counsel for the parties on 25th January, 2002 when orders were reserved.

6. Since only an interim issue is before us, we are not inclined to go into the meat of the matter lest it prejudice the Appellant in the hearing of its writ petition.

7. However, in order to appreciate the controversy it is necessary to know what is "purchase preference" and "price preference".

8. The concept of "purchase preference" is spelt out in Office Memorandum dated 19th January, 1993 (which is not on record). Reference is, however, made to it in Office Memorandum dated 31st October, 1997 and Office Memorandum dated 14th September, 2000. The policy of purchase preference provides for a preference in supply of goods and services to Government departments and PSUs, if the price quoted by the supplying PSU is within 10% of the lowest valid price, other things being equal (subject to a minimum value added content).

9. According to learned counsel for the Appellant, the bid of the PSU has to be within 10% of the negotiated bid of the lowest tenderer and not within 10% of the original bid of the lowest tenderer. It was contended that the award of contracts in favor of Respondent No.6 (a PSU) for the earlier RFQ was not correct since the bid of Respondent No.6 was not within 10% of the lowest negotiated bid. Whether the bid of the PSU has to be within 10% of the lowest negotiated bid or the lowest tendered bid is a matter of interpretation which will have to be decided by the learned Single Judge.

10. However, the apprehension of learned counsel for the Appellant is that for the RFQ dated 26th December, 2001, Respondent Nos.3 to 5 will again adopt an erroneous interpretation and will consider the bid of a PSU if it is within 10% of the lowest tendered bid and will thereby favor the PSU to the detriment of the members of the Appellant.

11. Prima facie, we are not inclined to accept the interpretation given by learned counsel for the Appellant. The bid given by the lowest tenderer provides a fixed benchmark to ascertain if the bid of the PSU comes within the 10% limit postulated by the Office Memoranda. If the bid does come within the 10% limit, then the purchase preference policy will operate, else not. But, if the negotiated price is taken as the benchmark (as contended by learned counsel for the Appellant) then the bid of the PSU will be tested against a variable figure depending upon the negotiations. This creates an uncertain benchmark because of possible fluctuations. The state of flux would permit the lowest tenderer to reduce its bid on negotiation in such a manner as to ensure that the PSU does not come within the 10% limit for availing the purchase preference.

12. It is possible though, to obviate any uncertainty resulting from the negotiated bid, that the PSU is also given an opportunity to lower its bid to claim purchase preference.

13. All this only indicates that the issue raised is debatable and can certainly not be resolved so easily.

14. Consequently, on this aspect, we are of the view that the Appellant has not made out a strong prima facie case to enable it to obtain an ex-parte order.

15. The case of the Appellant with regard to price preference is based on a letter dated 28th August, 2000 issued by the Government of India. This letter suggests that the facility of price preference up to 15% over the quotation of large-scale units should be extended to small scale industries. One of the reasons for this is that "the financial resources at the disposal of small-scale units are limited."

16. It was explained to us by the learned Additional Solicitor General that what this means is that contracts be awarded to small-scale units at a rate which is up to 15% over and above the lowest rate. It was submitted that the awarding of a contract is a purely commercial decision and Respondent No.3, which is already in the red cannot be compelled to take a commercially unviable decision which will put it further in the red.

17. Learned counsel for the Appellant did say that his client was not insisting on a price preference, but that in the overall context, the decisions of Respondent Nos.3 to 5 which are being questioned are resulting in the virtual annihilation of the members of the Appellant.

18. Frankly, it is not for us to sit in judgment over the policy decisions of Respondent Nos.3 to 5, more so when it concerns their commercial enterprise. It is entirely for them to decide how best to manage their commercial affairs within the governmental policy. There may be minor variations here or there within the overall framework depending upon the exigencies of the situation. Surely, they are entitled to this much of play in their decisions.

19. In any event, pending the disposal of the miscellaneous application, the learned Single Judge has adequately protected the members of the Appellant by permitting Respondent Nos.3 to 5 "to place orders on the Petitioner in case they find the Petitioner eligible for price protection in terms of their policy and in terms of the tender conditions."

20. Quite apart from this, the Supreme Court has laid down in Tata Cellular v. Union of India, the principles of judicial review to be adopted in dealing with matters of this kind. Conclusion (d) in paragraph 94 of the Report is as follows:-

"The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts."

21. The RFQ is nothing but a synonym for a notice inviting tender. As held by the Supreme Court, the terms thereof are not open to judicial review. This conclusion has, of course, to be understood in the context of the other principles deduced by the Supreme Court, in dealing with such matters.

22. So far as the present case is concerned, we have not been shown any mala fides, bias or arbitrariness which would vitiate the RFQ called by Respondent Nos.3 to 5. Indeed, as is apparent from the facts of the case, the members of the Appellant have responded to the RFQ as it is, and cannot now be permitted to challenge its terms.

23. For all these reasons, we are not inclined to interfere with the impugned order.

We would, therefore, dismiss the appeal but while doing so, it is clarified that any expression of opinion or finding rendered is only for determining whether the impugned order is correct or not. What the final order on the miscellaneous application will be is not within our contemplation.

24. There will be no order as to costs.