1. With a view to ensure that industrialization is made in the State of Jammu and Kashmir, industrial policies have been framed and approved by the State Government from time to time. Vide Government Order No. 21-Ind. of 2004 dated 27th of Jan. 2004, the State Government has framed a new Industrial Policy under which various incentives have been provided to the existing and new small scale industrial units set up in the State. As per clause IV of the earlier Industrial Policy of 1998-2003, issued vide Govt. order No. 202-Ind of 1998 dated, 27th of May 1998, package of price preference has been given upto 15% of the price to the Small Scale Industrial Units in all Government Purchases except in the case of items brought on the negative list. So far as the package of incentive under the new Industrial Policy of 2004 is concerned, it applies to all the industrial units established after 31st of Jan. 2004 and all existing units. As per clause 3.7 of the Industrial Policy of 2004, the price/purchase preference to the Small Scale Industrial units has been given as under:
“Price/Purchase preference:
(i) Upto 15% price preference shall be available on the landed cost of the product to the local SSI Units in all Government purchases. The price preference shall also apply in case of any goods purchased by the public sector undertakings/Boards purchased for their own non-commercial use.
Explanation.
A local SSI Units will be entitled to upto 15% price preference viz-a-viz lowest tendered rates by an outside Unit, which means that if the rates quoted by a local SSI unit is within the difference of 15% between the rates as quoted by local Units and lowest outside tender, the orders shall be placed with local Unit. In other words a Unit holder shall be entitled to payment as per his quoted rate provided the same is within the maximum limit of 15% of the lowest quoted rate by an outsider unit holder.”
2. Learned Counsel for the petitioner submits that petitioner is a Small Scale Industrial Unit and is engaged in the manufacture of electric conductors. It is stated that the said unit was set up in the State of Jammu and Kashmir on the promise extended by the Government of Jammu and Kashmir for providing different incentives from time to time. It is submitted that in pursuance of the industrial policy, the respondents invited tenders for the supply of different conductors including ACSR Weasel 0.03 vide NIT No. SE/EPC-1/17/2005-2006 and ACSR Squirrel 0.02 against NIT No. SE/EPC-1/16/2005-2006. The petitioner being eligible Small Scale Industrial Unit also participated in the tender process. It is stated that the petitioner claimed the incentives available to the Small Scale Industrial Units in accordance with the Industrial Policy as applicable on the date of issuance of the tender notice, its opening and placing of the order.
3. The grievance of the petitioner Unit is that the decision taken by the official respondents in placing the purchase order for Weasel and Squirrel conductors to the private respondent No. 9 is contrary to the mandate of the Industrial policy of 1998-2003 issued vide Government Order No. 202-Ind of 1998 and is also not in accordance with the Industrial Policy of 2004 issued vide Government Order No. 21-Ind of 2004 dated 27th of Jan. 2004. It is stated that in terms of the price preference clause of the Industrial Policy of 1998-2003, the price preference is to be given to the local Small Scale Industrial Units upto 15% in a Government purchase except in case of items which are brought on the negative list. It is stated that the difference between the rates quoted by petitioner and the private respondent for ACSR (0.03) Weasel Conductor and ACSR (0.02) Squirrel Conductor comes within 15% price rate as per the price preference clause of the Industrial Policy, and therefore, the action of official respondents in placing the orders for 1/3rd quantity of Weasel/Squirrel Conductors with respondent No. 9 is not in accordance with the Industrial policy. It is further stated that a unit like respondent No. 9 which is set up outside the State of Jammu and Kashmir is not entitled to the incentives. It is further contended that in terms of the circular issued on 4th of Oct. 2000 by the State Government regarding the purchase/price preference for SSI units, while finalizing the purchase of items/products manufactured by the registered industrial units of the State, all Government departments/organisations have to give purchase/price preference to the locally manufactured items by the Small Scale Industrial units set up in the State.
4. Official respondents have filed objections in which it has been pleaded that the petitioner has been found eligible for 2/3rd of the distribution of the quantity and as per the policy decision cannot claim 1/3rd of the distribution also. It is stated that the Government Order No. 344-PDD of 1999 to which challenge is thrown by the petitioner, in case is not implemented, then no industrial unit will be entitled to claim any benefit under the industrial policy and the whole quantity in that eventuality will go to the lowest successful bidder which is respondent No. 9 in the present case. It is stated that in case the policy regarding placing of order with an outside unit is withdrawn even though the said unit is the lowest bidder, then there will be a deterioration of quality and no unit from outside the State will participate in any future tender process and this will not be in accordance with the law. It is further stated that the Department has received 39 tenders for ACSR Squirrel (36 from local SSI units and 3 from outside firms) and 40 tenders for Weasel (42 local SSI units and 7 from outside the State). It is stated that respondent No. 9 has been found to be the lowest tenderer and thus the purchase committee has approved to place the purchase order with the said respondent for 1/3rd quantity and this has been done in accordance with the Government order No. 344-PDD of 1999; referred to above.
5. Private respondent No. 9 has also filed objections stating therein that the said respondent has been determined to be the lowest L.I tenderer and in terms of Government Order No. 344-PDD of 1999, the official respondents are fully competent to place orders for supply of 1/3rd of the material required from the lowest bidder.
6. I have heard learned counsel for the parties and perused the record.
7. Admitted.
8. The short point which is to be considered in this petition is whether the decision taken by the Purchase Committee in placing the order for purchase of 1/3rd of the material with the lowest bidder i.e respondent No. 9 is contrary to the Price Preference Clause of the Industrial Policy.
9. In the present case, as per the Industrial Policy of 1998-2003 issued vide Government Order No. 202-Ind of 1998 dated 27th of May 1998, the price preference is to be given to the small scale Industrial units upto 15% in the Government purchase except in the case of items which are brought on the negative list. In terms of Government Order No. 344-PDD of 1999 dated 16th of Aug. 1999, the State Government has modified the Industrial Policy of 1998 regarding supplies to the Power Sector. This Government Order is being reproduced below:—
“Government of Jammu and Kashmir Civil Sectt.: Power Development Department
Subject: Price Preference to SSI Units under Industrial Policy of 1998-Modification for supplies to Power Sector.
……………………………………….
Government Order No. 344-PDD of 1999 Dated: 16-8-1999
In partial modification of Govt. order No. 10-IND of 1995 dated 19-1-1995 issued by the Industries & Commerce Department the Power Development Department is authorized to place orders for the supply of one third of the materials required with the lowest or successful bidders.
By Order of the Government of Jammu and Kashmir.
Addl. Secy. to Government Power Development Department.”
10. A perusal of the aforesaid order shows that it is in terms of the said order, the official respondents have taken the decision in placing the supply order of 1/3rd of the material with the respondent No. 9 being the lowest bidder. This decision seems to have been taken by the Government in order to avoid monopoly of the local Small Scale Industrial Units so that while submitting the tender, they may not pool among themselves and chose to impose their own terms and conditions. This decision further seems to have taken by the Government in order to save the revenue, to keep the contract price under check and to maintain a healthy competition. Price preference/incentive is nothing but is a concession granted to the local industrial units which is the discretion of the State Government. The Government has the power to amend, alter, modify or delete any clause pertaining to grant of any incentive to the industrial units in terms of the Industrial policy framed by the Government. The modification clone by the Government vide Order No. 344-1999, noticed above, in the present case, in my opinion, is not inconsistent with the Original Policy decision and has been done keeping in view the interest of the State.
11. In G.B Mahajan v. The Jalgaon Municipal Council, AIR 1991 SC 1153, the Apex Court has held as under:—
“……….There is, no doubt, a degree of public accountability in all Government enterprises. But, the present question is one of the extent and scope of judicial review over such matters. With the expansion of the State's presence in the field of trade and commerce and of the range of economic and commercial enterprises of Government and its instrumentalities there is an increasing dimension to Government concern for stipulating efficiency, keeping costs down, improved management methods, prevention of time and cost over-runs in projects, balancing of costs against time-scales, quality control, cost-benefit ratios etc. In search of these values it might become necessary to adopt appropriate technique of management of projects with concomitant economic expediencies. These are essential matters of economic policy which lack adjudicative disposition, unless they violate constitutional or legal limits on power or have demonstrable pejorative environmental implications or amount to clear abuse of power. This again is the judicial recognition of administrator's right to trial and error, as long as both trial and error are bona fide and within the limits of authority…..”
…………..In regard to Courts and policy we might recall the following words of a learned author:
“The Courts are kept out of the lush field of administrative policy, except when policy is inconsistent with the express or implied provisions of a statute which creates the power to which the policy relates or when a decision made in purported exercise of a power is such that a repository of the power, acting reasonably and in good faith, could not have made it. In the latter case, ‘something overwhelming’ must appear before the Court will interview. That is, and ought to be, a difficult onus for an applicant to discharge. The Courts are not very good at formulating or evaluating policy Sometimes when the Courts have intervened on policy grounds, the Court's view of the range of policies open under the statute or of what is unreasonably policy has not won public acceptance. On the contrary, curial views of policy have been subjected to stringent criticism. In the world of politics, the Court's opinions on policy are naturally less likely to reflect the popular view than the policies of a democratically elected Government or of expert administrators………”
12. In AIR 1994 SC 988, Union of India v. Hindustan Development Corpn., their Lordships of the Apex Court have held as under:
“The avowed policy of the Government particularly from the point of view of public interest is to prohibit concentration of economic power and to control monopolies so that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and to ensure that while promoting industrial growth there is reduction in concentration of wealth and that the economic power is brought about to secure social and economic justice.”
13. In AIR 1996 SC 11, Tata Cellular v. Union Of India., the Apex Court has laid down the guidelines regarding review of the action of an administrative authority in contractual matters. In paragraph 85, their Lordships have held as under:
“It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose of the exercise of that power will be struck down.”
14. In AIR 1999 SC 1801, Punjab Communications Ltd. v. Union of India, it has been held as under:—
“The change in policy can defeat a substantive legitimate expectation if it can be justified on Wednesbury reasonableness. The decision maker has the choice in the balancing of the pros and cons relevant to the change in policy. It is, therefore, clear that the choice of the policy is for the decision maker and not for the Court. The legitimate substantive expectation merely permits the Court to find out if the change in policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made.”
15. In (2000) 2 SCC 617 : (AIR 2000 SC 801), Air India Ltd. v. Cochin International Airport Ltd., it has been observed as under:
“The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can its own terms of invitation to tender and that is not open to judicial scrutiny…..”
16. In view of the settled proposition of law that the tendering process by the Government department for supply of a particular item is purely a commercial activity like that a private party, it should ordinarily not be interfered with unless there is an element of arbitrariness, favouritism or mala fide.
17. In the instant case, as observed above, the State Government, keeping in view the interest of the State has modified the original Industrial policy vide Government Order No. 344-PDD of 1999 dated 16th of Aug. 1999, vide which the Power Development Department has been authorized to place orders for the supply of one third of the material required with the lowest or successful bidder which in the present Case is respondent No. 9. This modification, in my view has been done to protect the financial interest of the State and the power exercised in this regard has been exercised for a collateral purpose. If the entire supply is placed with the local units, then, as observed above, it will lead to a monopoly by the local units and they will dictate their own terms and conditions which will not be in the interest of the State.
18. For the reasons mentioned above, this petition is found to be without merit and is dismissed along with connected CMPs. Interim order, if any, shall stand vacated.
Petition dismissed.
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