Harish Kumar Seth v. Eastern Coalfields Limited & Ors.

The Judgment of the Court was delivered by

Jayanta Kumar Biswas, J.:— The Court:- The petitioner in this WP under art.226 dated December 24, 2010 is seeking the following principal relief:

“a) a writ in the nature of Mandamus asking the respondents, their men, agents and subordinates as to why the said circular for imposition of such unreasonable clauses should not be quashed and/or set aside forthwith.”

The circular referred to in prayer (a) is at p.62 It is dated November 25, 2010 and it was issued by the Sr. Manager, (MM/S) of Eastern Coalfields Limited (in short ECL) to “Area Stores Officer, All Areas of ECL, (Except: Rajmahal, S.P Mines & Sonepur-Bazari Area).” It was regarding “Eligibility Criteria for Mining Timber Transport Contract.”

The part of the circular questioned by the petitioner is quoted below:

“9. The Bidder should not be an Agent of West Bengal Forest Development Corporation Limited.

The intending bidders should submit:

1. A “No relation Certificate” stating that none of their relation/family member is/are employed in ECL/CIL or any of it's subsidiary company.

2. An affidavit (executed before an Executive Magistrate) to the extent that the intending bidder does not own a Saw-mill any where either in the name of the bidder or any of his/her relation/firm participating in the tender or any of its' partners.

On the issue of whether to exclude or include the Saw-mill owner from participating in the tender of “Mining Timber Transport Contract”. It has also been approved that:

The Saw-mill owner will not be allowed to participate in the tender of “Mining timber Transportation Contract.

You are hereby requested to include the said criteria in NIT at the time of issuance of tender for Timber Transportation Contract.”

The petitioner's case is this. He is a partner in a firm called M/s. Tulshidas G. Sheth. The firm is an agent of the West Bengal Forest Development Corporation Limited (in short WBFDC) and also a sawmill owner. It successfully participated in tenders floated by ECL for Mining Timber Transport Contract (in short MTTC). Because of the unreasonable clause mentioned in the circular it is no longer eligible to participate in any tender floated by ECL for MTTC.

The prohibition against participation of an agent of WBFDC and a sawmill owner in ECL tenders for MTTCs has been questioned on the grounds that it is an unreasonable prohibition imposed for undisclosed reasons.

Mr Basu appearing for the petitioner has argued as follows. The prohibition being a product of irrational and irrelevant considerations cannot be sustained. There is absolutely no reason to apprehend that the quality of the timbers, if transported under an MTTC by an agent of WBFDC or a sawmill owner, may be a casuality; for under the Transit Rules the MTTC timbers are hammer marked by Forest Officers. Not a single incident of malpractice by an agent of WBFDC or a sawmill owner has been cited.

He has relied on the decision in Akhil Bhartiya Upbhokta Congress v. State of M.P, (2011) 5 SCC 29 and the West Bengal Forest-Produce Transit Rules, 1959.

Relying on Global Energy Ltd. v. Adani Exports Ltd., AIR 2005 SC 2653, a Single Bench decision of this Court dated July 27, 2011 in W.P No. 10007 (W) of 2011 (Sri Ashim Kumar Chakraborty v. Union of India), and a high-powered committee report, Mr Dutta appearing for the respondents has submitted that the prohibition put by the respondents, who possessed the power to determine terms and contentions of their tenders, cannot be questioned under art.226; for the scope of judicial review in such a case as this is very limited.

For recommending a uniform practice in all areas of ECL for MTTCs, ECL constituted a high-powered committee. The three members of the committee were: 1. CGM(IED), ECL, 2. GM(Finance) I/c, ECL and 3. HOD(CMC), ECL. The committee was also requested to suggest whether a sawmill owner should be permitted to participate in ECL tenders for MTTCs.

The committee submitted a report dated October 21, 2010; the observation of the committee recorded in the report is quoted below:

“Observation: The Committee has deliberated in detail on considering the existing system of awarding the work of timber transportation from a few Areas of ECL viz. Bankola Area, Pandaveswar Area, Sodepur Area, Kunustoria Area & Kenda Area (a comparative study report has been enclosed in Flag - A). Further the committee has also enquired in BCCL where it has been found that departmental trucks are used to transport timber from Forest Department. (A letter, as received, from Depot Officer, Regional Store, Laikdih, CV Area, BCCL vide BCCL/RSLD/1222/10-11, dated 04.10.2010 has been enclosed in Flag-B).”

The committee recommended, inter alia, that an intending bidder should have valid trade licence indicating engagement in Mining Timber Transportation business; that the bidder should not be an agent of WBFDC; and that for “the sake of securing greater safety & production of the mine, ensuring procurement of good quality timber and avoiding incidental, mal-practices, the Saw-mill owner should not be allowed to participate in the tender” for MTTCs.

There cannot be any dispute about the soundness of the proposition that a State action must not be guided by irrational or irrelevant considerations. In this case it is evident that a high-powered committee has taken a conscious decision to prohibit participation of two specific classes in ECL tenders for MTTCs; the two classes are: (i) agents of WBFDC; and (ii) the sawmill owners.

Mining timbers are purchased by ECL from WBFDC that has its own agents and one of them is the firm in which the petitioner is a partner. The firm is also a sawmill owner. It is not exclusively engaged in Mining Timber Transportation business. In other words, it is not engaged only in timber transportation business. For transportation of its mining timbers what ECL needs is a transporter engaged in Mining Timber Transportation business.

The question is whether ECL's decision to prohibit participation of the two calsses in its tenders for MTTCs is unreasonable.

The decision in Global Energy Ltd. v. Adani Exports Ltd., AIR 2005 SC 2653 was given after considering the decisions in Tata Cellular v. Union Of India., (1994) 6 SCC 651; Air India Ltd. v. Cochin International Airport Ltd., AIR 2000 SC 801; and Directorate of Education v. Educomp Datamatics Ltd., AIR 2004 SC 1962.

On the basis of the decision in Directorate of Education v. Educomp Datamatics Ltd., AIR 2004 SC 1962 it can be said that tender conditions that exclude a class of tenderers are not invalid for the reason that they deprive a class of the opportunity of participating in the process; but that what is to be seen is whether the decision to incorporate them is arbitrary or discriminatory or actuated by malice.

In this case a high-powered committee has closely examined the matter - evidently a policy matter. The persons examining the matter are experts. Their views concerning mining safety cannot be lightly treated. Mining safety is not a matter that can be compromised. The recommendations to prohibit participation of the WBFDC agents and the sawmill owners were not made targeting any WBFDC agent or sawmill owner.

Since all the agents of WBFDC and the sawmill owners face the same prohibition, there is no reason to say that it is discriminatory. Agents of WBFDC and sawmill owners who may also be engaged in Mining Timber Transportation business and the persons who are engaged only in Mining Timber Transportation business from distinctly separate classes. Hence the allegation that the decision to prohibit the formers' participation in ECL tenders for MTTCs is discriminatory is baseless.

The decision to prohibit participation of the WBFDC agents and the sawmill owners in ECL tenders for MTTCs cannot be said to be unreasonable. It is not for this Court to decide whether absence of the prohibition would have been fair, wiser or logical. This is the principle stated in Educomp. ECL needs a mining timber transporter. Its experts running the mines are best placed to decide who should be permitted to participate in its tenders for the work. Circumstances considered by them were not extraneous.

For these reasons, I dismiss the WP. The CAN shall be deemed to be disposed of. No costs. Certified xerox.