JAGANNATH UDYOG Vs. CHAIRPERSON CUM M

JUDGEMENT

(1.) The petitioner is a proprietorship concern owning a small scale industrial unit for manufacture of tractor-trailers and agricultural implements at the Industrial Estate at Madhupatna, Cuttack. The Industrial Unit of the petitioner is registered with the Export Promotion Organization of the State of Orissa (for short, `the E. P. M."). The Industrial Policy, 1996 of the Government of Orissa provided for purchase of store items by Government Departments and Agencies under the control of the State Government from industries located inside the State. Such purchases could be made from (i), exclusive list, (ii) rate contract holders, and (iii) through open tender. The provision in the Industrial Policy, 1996 relating to purchase from exclusive list read as follows :-

(2.) Mr. B. K. Mohanty, learned counsel for the petitioner, submitted that for the year 2000-2001, the O. S. F. D. C. had invited tenders for supply of two hundred numbers of tractor-trailers and agricultural implements and the petitioner's tender was the lowest and yet, the petitioner's tender was rejected by the O. S. F. D. C.. The petitioner moved this Court in O. J. C. No. 5613 of 2000 and this Court passed orders on 8-2-2000 directing the O. S. F. D. C. to consider the offer of the petitioner along with other eligible tenderers, but the O. S. F. D. C. placed orders for supply on other tenderers. The petitioner again approached this Court in O. J. C. No. 9022 of 2000 and by order dated 14-2-2000 this Court directed the O. S. F. D. C. to place orders for supply on the petitioner. Yet, the O. S. F. D. C. did not place any orders for supply on the petitioner. The petitioner again moved this Court in O. J. C. No. 3796 of 2001 and the Court directed the O. S. F. D. C. to place orders on the petitioner for supply of twenty-five numbers of trailers. When orders were again not placed, the petitioner filed O. J. C. No. 1851 of 2002 in which notices were issued by the Court. During the pendency of the said O. J. C. No. 1851 of 2002, orders were placed on the petitioner for supply of twenty-five numbers of trailers and the petitioner withdrew the said writ petition. Mr. Mohanty vehemently argued that the aforesaid facts would clearly show that the O. S. F. D. C. has been acting arbitrarily and in violation of right of the petitioner under Art. 14 of the Constitution. He cited the decision of the Supreme Court in Sterling Computers Limited v. M/s. M. and N. Publications Limited, 1993 (1) JT (SC) 187 wherein it has been held that even in contractual matters the public authority should not have unfettered discretion and the Courts have powers of judicial review to interfere if the exercise of discretion by the competent authority has not been bona fide. Mr. Mohanty submitted that the O.S.F.D.C. had placed orders with the petitioner for supply of twenty-five numbers of tractors at a price of Rs. 59,600/- per unit whereas the O. S. F. D. C. has decided to place orders with the Orissa Agro Industries Corporation at a price of Rs. 66,500/- per unit. This decision of the O. S. F. D. C. obviously will cost the public exchequer more and is contrary to the public interest. He cited the decisions of the Supreme Court in Asia Foundation and Construction v. Trafalgar House Construction (I) Ltd., 1997 (I) SCC 738, as well as Raunaq International Ltd. v. I. V. R. Construction Ltd., AIR 1999 SC 393, for the proposition that the Court can interfere in a decision relating to award of contract in the public interest. Mr. Mohanty further submitted that the decision of the O.S.F.D.C. to place orders for supply of trailers on the Orissa Agro Industries Corporation in the facts and circumstances suffers from irrationality or Wednesbury unreasonableness inasmuch as no reasonable or sensible person who had applied his mind to the question would have arrived at such a decision. He relied on the decision of the Supreme Court in Tata Cellular v. Union of India, 1994 (6) SCC 651 for the proposition that any award of contract by the administrative authority is subject to control by judicial review on the ground of irrationality. Finally, Mr. Mohanty argued that the Industrial Policy, 1996 and Industrial Policy, 2001 of the State Government have made clear representations that products of local industries with E. P. M. certificates will be purchased by the State Government and Agencies under the control of the State Government raising a legitimate expectation that the trailers and agricultural implements manufactured in the local industry of the petitioner with EPM certification will be purchased by the State Government and the Agencies under the State Government, such as the O. S. F. D. C. and the O. S. F. D. C. cannot deviate from such policy defeating the claim of the petitioner based on legitimate expectation and take a decision contrary to the policy and place orders with the Orissa Agro Industries Corporation which is not an industry manufacturing products with E. P. M. certification but is only a trader selling tractor-trailers and agricultural implements on commission. Mr. Mohanty cited the decision of the Supreme Court in Navjyoti Coo-Group Housing Society v Union of India, AIR 1993 SC 155; Food Corporation of India v. M/s. Kamdhenu Cattle Feed Industries, AIR 1993 SC 1601; Union of India v. Hindustan Development Corpn., AIR 1994 SC 988 and Punjab Communications Ltd. v. Union of India, 1999 (4) SCC 727 on the law relating to legitimate expectation. He also tried on the decision of the Queen's Bench Division in R. v. Jockey Club, ex parte RAM Racecourses Ltd., 1993 (2) All ER 225, and R. v. Ministry of Agriculture Fisheries and Food, ex parte Hamble (Offshore) Fisheries Ltd., 1995 (2) All ER 714, in which the law relating to the legitimate expectation has been discussed.

(3.) Mr. A. K. Rath, learned counsel for opposite party No. 1, on the other hand, relying on the counter-affidavit filed by the opposite party No. 1, submitted that the O.F.S.D.C. is an independent body corporate and is a financial institution providing loans to Scheduled Castes and Scheduled Tribes beneficiaries for setting up different income generating sources of their own to enhance their socio-economic standards. The O. S. F. D. C. takes loan from the National Scheduled Castes and Scheduled Tribes Financial Development Corporation (in short, "the N. S. F. D. C."), another agency for the purpose of providing loans to the SC and ST beneficiaries in the State. During the current financial year, initially a loan for forty numbers of trolley units and thereafter a loan for another forty numbers of trolley units were sanctioned by the N.S.F.D.C. Hence, a total number of eighty trolley units are to be purchased for SC and ST beneficiaries during the current year. Mr. Rath vehemently argued that since trolley units are to be purchased for the SC and ST beneficiaries and not for the use of the O. S. F. D. C., the provisions of the Industrial Policy of the Government of Orissa, 2001 for purchase of stores by the State Government and agencies from local agencies with E. P. M. certification do not really apply to such purchases of trolley units for the SC and ST beneficiaries. Mr. Rath further submitted that for the current year, the O. S. F. D. C. has taken a decision to purchase the tractor-trailers and agricultural implements from the Orissa Agro Industries Corporation, a Government Organization, as the said Corporation can provide after-sales service in a different workshop located throughout the State of Orissa. He submitted that if the O.S.F.D.C. places orders with the petitioner which is at Cuttack then the SC and ST beneficiaries residing in the districts like Koraput and Sundargarh shall not get the facility of after-sales service from the petitioner whereas they can get such facility of after-sales service from the Orissa Agro Industries Corporation. He argued that the O.S.F.D.C. has thus taken a decision to place the orders for supply of eighty units of tractor-trailers and agricultural implements with the Orissa Agro Industries Corporation in the interest of the SC and ST beneficiaries and such decision taken in the interest of the SC and ST beneficiaries should not be interfered with by the Court. He referred to the letters of intent of the N. S. F. D. C. dated 5th of November, 2001 and 19th of November, 2001 and the terms and conditions for sanction of term loan assistance to the O. S. F. D. C. for providing financial assistance towards the purchase of tractor trailer enclosed therewith to show that the purchase of trolley units are for the SC and ST beneficiaries and not for the requirements of the O. S. F. D. C. In reply to the submission of Mr. Mohanty that the price offered by the petitioner for each unit is much lower than the price of Rs. 66.500/- per unit at which orders are to be placed with the Orissa Agro Industries Corporation, Mr. Rath submitted that the difference between the two prices is only marginal and for this marginal difference, the SC and ST beneficiaries will get much more benefits in terms of after-sales service and repairs in the workshop of the Orissa Agra Industries Corporation.