SIDDHARTHA TUBES LTD Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) THIS order shall also dispose of M. P. No. 366 of 1990. The petitioner No. 1 in this petition is a company incorporated under the Companies Act. It has a factory at Sarangpur, district Rajgarh. The Company manufactures black and galvanised steel pipes and tubes in its aforesaid factory at Sarangpur. It is a medium scale industry with a licensed and installed capacity of 25000 metric tonnes per annum. The petitioner No. 2 is the Director of the petitioner No. 1 Company. According to the petitioners, the Government of Madhya Pradesh gave definite assurances to the medium and large scale industries in Madhya Pradesh, wherein it was started that a scheme will be prepared to give preference for purchase by the State Government Departments of goods produced by the medium and large scale industries. In accordance with the aforesaid policy, the State Government provided in the Stores qurchase, Acquisition, Custody and Accounts Rules incorporated in the Madhya Pradesh Financial Code, Part 2, Schedule 5, wherein priorities have been specified in the matter of purchase. According to the Purchase rules, the first priority was given to the products manufactured by the Small Scale Industries and second priority was given to the medium and large scale industries in Madhya Pradesh on condition that the quality and price of the product is comparable to other States. A preference of ISI mark is also mentioned in the rules. As such, in accordance with the afore-mentioned rules, some items were specified for being reserved for purchases through the M. P. Laghu Udyog Nigam Ltd. (hereinafter referred to as MPLUN) from the small scale and medium and large scale units in the State. These items have been mentioned in Annexure-B. In Annexure-B item No. 42 mentioned the Steel Pipes and fittings and item No. 115 mentioned Mild Steel Pipes. Therefore, the petitioners were assured of purchase of its product by the Government Departments including the Public Health Engineering Department. There has been a long standing practice of the government to make purchases from Small, Medium and Large Scale Industries as clarified in Annexure-B to the Rules through MPLUN, which is a Government Company. The MPLUN accordingly invited tenders by Annexure P-3 wherein first priority was to be given to the small scale manufacturers of Madhya Pradesh and the second, priority to be given to medium and large scale industries of the Madhya Pradesh. The tenders were considered by the Committee of seven persons wherein M. D. , MPLUN, Bhopal, E in C PHED, Bhopal, two CE, PHED, OGM (Mkt.) MPLUN, SE, Tube Well Bhopal and GM (Tech.) MPLUN participated. The Committee fixed the rates of mild steel GI Pipes and tubes which were circulated vide its circular Annexure P-4. The petitioners were also invited by MPLUN to enter into contract vide telegram dated 8-12-1989. These rates were finalised pertaining to GI pipes. But the petitioners apprehended that the State Government was trying to purchase the same item on higher rate from outside manufacturers

(2.) THE grievance of the petitioners is that the Public Health Engineering Department was acting against the general policy of the State and is also flouting a specific decision of the Cabinet Sub-Committee, wherein it was decided to purchase GI pipes for drought relief work till June 1990 through the MPLUN. A copy of the circular dated 18-14990 is Annexure P-6. As such, the Department of PHE was not free to act contrary to the policy formulated by the Committee and there is every attempt to purchase the GI pipes from outside the State, and an order has already been placed by the Chief Engineer, Zone No. 1 PHE, Raipur to one Company of New Delhi. As such, action of the officers of the PHE is extremely arbitrary, unjust and improper and they are acting against the policy of the State in not placing the order through MPLUN to manufacturers according to the priority fixed by the rules. The State is also barred by the principles of promissory estoppel in deviating from the policy decision. When the representations to the officers of the Government remained futile, the petitioners have filed this petition. Therefore, it has been prayed by the petitioners that the respondents be directed to purchase mild steel GI pipes items from the small scale industries and medium and large scale industries in Madhya Pradesh through MPLUN as per the Government policy.

(3.) THE petition was considered for admission on 28-2-1990, wherein a show cause notice was issued to the respondents to show cause against the admission and ad interim writ was issued restraining the Government from making purchase from outside the State. On 26-3-1990 six interveners sought permission to intervene by filing an application wherein they averred that as the manufacturers represented by the petitioners are located outside the State of Madhya Pradesh and they have been affected by the stay order granted on 19-2-1990; they sought permission to intervene on the ground that the petitioners are on approved rate contract from the Director General, Supplies and Disposal, Government of India (hereinafter referred to as DGSD) which is a Apex body for purchasing all materials for the Central and State Governments. The rates are fixed by the DGSD after inviting tenders and according to the interveners the only course open to the State Government is to purchase the goods through the DGSD. It has also been pleaded that purchase from MPLUN is highly inconvenient and bound to cause delay in supply of goods. The GI pipes are not manufactured by small scale industry and are not covered by serial No. 42 of Annexure-B. As a long standing practice, the purchases were only made through the DGSD. It has also been pleaded that the decision of the Cabinet dated 18-1-1990 is of no avail to the petitioners. Actually on 26-2-1990 the Government has taken decision that the GI pipes be purchased through DGSD both from inside and outside the State. They also prayed for the vacation of the stay order. Actually if MPLUN is held to be the sole body authorised to sell the GI pipes then it will benefit only two Companies in the State and these Companies cannot meet the demand of the Government.