Rajasthan High Court - Jaipur
M/S Translumina Therapeutics Llp vs State Of Rajasthan (2023:Rj-Jp:22694) on 6 September, 2023
Author: Inderjeet Singh
Bench: Inderjeet Singh
[2023:RJ-JP:22694]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Writ Petition No. 13758/2022
M/s Translumina Therapeutics LLP, Registered Office At Ground
Floor, Metro Tower, LSC, MOR Land, New Rajinder Nagar, New
Delhi-110060, Central Delhi, Delhi through its authorized
signatory.
----Petitioner
Versus
1. State Of Rajasthan, through its Chief Secretary, Govt.
Secretariat, Jaipur (Raj.)
2. Principal Secretary Department Of Medical Education,
Govt. Secretariat, Jaipur (Raj.)
3. Secretary, Department Of Health and Family Welfare,
Govt. Secretariat, Jaipur (Raj.)
4. Rajasthan State Health Assurance Agency, (Medical
Health and Family Welfare Services) through its Chief
Executive Officer, R.T.D.C. Headquarter (Swagtam Hotel
Premises), Railway Station, Jaipur.
5. Joint Chief Executive Officer (Medical Health and Family
Welfare Services), Rajasthan State Health Assurance
Agency, R.T.D.C. Headquarter (Swagtam Hotel Premises),
Railway Station, Jaipur.
6. Assistant Chief Executive Officer (Medical Health and
Family Welfare Services), Rajasthan State Health
Assurance Agency, R.T.D.C. Headquarter (Swagtam Hotel
Premises), Railway Station, Jaipur.
----Non-Petitioners/Respondents
Connected With S.B. Civil Writ Petition No. 13757/2022 Sahajanand Medical Technologies Ltd., Registered Office at Sahajanand Estate, Wakharia Wadi. Near Dabholi, Ved Road, Surat, Gujrat, 395004, through its authorized signatory.
----Petitioner Versus
1. State Of Rajasthan, through its Chief Secretary, Govt.
Secretariat, Jaipur (Raj.)
2. Principal Secretary Department Of Medical Education, Govt. Secretariat, Jaipur (Raj.)
3. Secretary, Department Of Health and Family Welfare, Govt. Secretariat, Jaipur (Raj.)
4. Rajasthan State Health Assurance Agency (Medical Health and Family Welfare Services) through its Chief Executive Officer, R.T.D.C. Headquarter (Swagtam Hotel Premises), Railway Station, Jaipur.
5. Joint Chief Executive Officer, (Medical Health and Family Welfare Services), Rajasthan State Health Assurance Agency, R.T.D.C. Headquarter (Swagtam Hotel Premises), (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (2 of 95) [CW-13758/2022] Railway Station, Jaipur.
6. Assistant Chief Executive Officer (Medical Health and Family Welfare Services), Rajasthan State Health Assurance Agency, R.T.D.C. Headquarter (Swagtam Hotel Premises), Railway Station, Jaipur.
---Non-Petitioners/Respondents Connected with S.B. Civil Writ Petition No. 14423/2022 Relisys Medical Devices Limited, Registered Office at Sy. No. 312, Pocharam Road, Mangalpally (v) Ibrahimpatnam (M), R R Dist-501510, Telangana through its authorized signatory.
----Petitioner Versus
1. State Of Rajasthan, through its Chief Secretary, Govt.
Secretariat, Jaipur (Raj.)
2. Principal Secretary Department Of Medical Education, Govt. Secretariat, Jaipur (Raj.)
3. Secretary, Department Of Health and Family Welfare, Govt. Secretariat, Jaipur (Raj.)
4. Rajasthan State Health Assurance Agency, (Medical Health and Family Welfare Services) through its Chief Executive Officer, R.T.D.C. Headquarter (Swagtam Hotel Premises), Railway Station, Jaipur.
5. Joint Chief Executive Officer (Medical Health And Family Welfare Services), Rajasthan State Health Assurance Agency, R.T.D.C. Headquarter (Swagtam Hotel Premises), Railway Station, Jaipur.
6. Assistant Chief Executive Officer, (Medical Health and Family Welfare Services), Rajasthan State Health Assurance Agency, R.T.D.C. Headquarter (Swagtam Hotel Premises), Railway Station, Jaipur.
----Non-Petitioners/Respondents For Petitioner(s) : Mr. Kamlakar Sharma, Senior Counsel assisted by Mr. Ramit Pareek Adv.
For Respondent(s) : Mr. M.S. Singhvi Advocate General assisted by Mr. Darsh Pareek Adv.
HON'BLE MR. JUSTICE INDERJEET SINGH Order 06/09/2023
1. In all these writ petitions since identical controversy is involved, therefore at the request of both the counsel for the (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (3 of 95) [CW-13758/2022] parties these writ petitions have been heard together and are being decided by the present common order.
2. At the request of the counsel for the parties, the facts have been noticed from S.B. Civil Writ Petition No.13758/2022 and the prayer made therein reads as under :-
"Therefore, the Petitioner most respectfully prays that writ petition filed by the petitioner may kindly be allowed with cost and :-
a) By appropriate writ order or direction, impugned order dated 12.08.2022 (Annex-18) passed by Respondent No.5 may kindly be quashed and set aside;
b) By appropriate writ order or directions, the Respondent state be directed to proceed and follow Public Procurement (preference to make in India) order, 2017 and to follow various officer memorandum and to not making USFDA approval a mandatory requirement;
c) By appropriate writ order or directions, the Respondent state be directed to not discriminate between companies, merely on the basis of Foreign Entity's Certifications;
d) By appropriate writ order or directions, the Respondent state be directed to follow and allow the participation of Petitioner Firm in the old package;
e) By appropriate writ order or directions, the Respondent state be directed to continue with the old mechanism (package list), wherein, no discrimination was being done on the basis of certification;
f) Any other appropriate writ, order or direction, which is considered just and proper in the facts and circumstances of the case, may kindly be passed in favour of the Petitioner to do the do the complete justice with the Petitioner."
3. From perusal of the above, it transpires that under challenge herein is the order dated 12.08.2022 passed by the respondents whereby the rates have been revised of the package namely Coronary Stent for PTCA-Drug Eluting (DCGI and Non US-
(Downloaded on 11/11/2023 at 07:51:38 PM)[2023:RJ-JP:22694] (4 of 95) [CW-13758/2022] FDA approved) which has been fixed @ Rs.12500/- per stent with further remarks that the claim shall be paid @ Rs.12500/- if the stent is DCGI approved and Non US-FDA Stent or as per actual cost of the stent whichever is lower, at the same time rates have also been revised of the package namely Coronary Stent for PTCA-Drug Eluting (DCGI and US-
FDA approved) which has been fixed @ Rs.23,625/- per stent with the furter remaks that the claim shall be paid @ Rs.23,625/- if the stent is DCGI approved and US-FDA approved Stent or as per actual cost of the stent whichever is lower.
4. Health is one of the top priority which a State Government apart from other factors has to take note of and arrange/provide the best medical facilities at its command to the citizens (patients) and in order to perform its duty the State Government time to time promulgates/executes and implements certain schemes with an object to provide better medical facilities to the citizens.
Considering the issue of health of the citizens and to provide them the better & qualitative facilities at the rates which could be reasonable to them, the Government in the State of Rajasthan in the larger public interest came out with a comprehensive scheme namely Mukhya Mantri Chiranjeevi Swasthya Bima Yojna (hereinafter to be referred as the "Scheme") under which a tripartite agreement was entered into the Rajasthan State Health Assurance Agency (hereinafter to be referred as "Assurance Agency"), Insurance Company and the empanelled hospitals where the citizen (patient) is desirous of taking the treatment. The (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (5 of 95) [CW-13758/2022] tripartite agreement indicates that there are three bodies/parties, in which the Assurance Agency is the authority on whose instructions & upon the terms and conditions prescribed by it in the public welfare, the medical treatment, facilities, medical devices to be implanted, are provided to the ailing patients; the insurance company is also one of the party in the said agreement and the next party is the hospital where the patient gets medical treatment and medical facilities and devices, are provided/implanted as per the need. The petitioner-companies, from the material which has come on record, appears to be the companies engaged in manufacturing and providing the medical devices/products and services as required, in all over the India and as averred in the petitions are working in this field for last so many years. As averred in the writ petitions, earlier the rate of the medical device/product which the petitioner-companies were supplying under the old package was Rs.31,600/- per Drug Eluting Stent (hereinafter to be referred as "DES"), which by the impugned order dated 12.08.2022 has been revised and fixed at Rs.12500/- per DES and this reduction in the rates of the DES has been made subject matter of challenge by the petitioner-
companies in the present writ petitions.
5. Learned Senior Counsel Mr. Kamlakar Sharma, appearing on behalf of the petitioners, submitted that they are having certificate of manufacturing medical devices including the DES from the Drug Controller General of India (hereinafter to be referred as "DCGI") which is the authority competent to certify about the quality of such medical devices/products. He further submitted that they are (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (6 of 95) [CW-13758/2022] supplying medical devices/products in more than 89 countries and nowhere discrimination has been made with regard to reimbursement. He further submitted that the coronary DES as mentioned in the list of essential medicines which the petitioner-
companies are manufacturing, the same are certified by the DCGI.
He further submitted that the respondents in fixing the condition have violated the circular issued by the Government of India whereby the States Governments were advised not to make mandatory conditions with regard to USFDA certification. He further submitted that the DESs being manufactured by the petitioner-companies are also certified from the State Government with regard to their quality. He next submitted that in the norms fixed by the National Pharmaceutical Pricing Authority there is no such classification with regard to the rates of DES. He further submitted that the action of the respondents in making such reduction in the rates with regard to reimbursement is arbitrary and total non-application of mind. He then submitted that the condition of certification from USFDA has not been mentioned in the tender document and the same came to be mentioned while making the reimbursement to the hospitals by the insurance company. The last argument raised by learned Senior Counsel is that the action of the respondents is highly discriminatory in nature as the respondent is making reimbursement at a higher price to the companies which are supplying the DES having USFDA certification whereas the reimbursement to non-USFDA companies is being made at a lower price. He further submitted that the petitioner-companies are abiding by the norms fixed by the DCGI (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (7 of 95) [CW-13758/2022] while the respondents are making difference in making reimbursement between USFDA approved companies and non-
approved USFDA companies.
6. In support of the contentions, learned senior counsel relied upon the following judgments :-
7. In the matter of M/s. Indian Medicines Pharmaceuticals Corporation Ltd. Vs. Kerala Ayurvedic Co-operative Society Ltd. & Ors., reported in Civil Appeal No.6693 & 6694 of 2022, decided on 03.01.2023, it has been held as under :-
2.0 Submissions 9 Mr Kaleeswaram Raj, counsel appearing for the first respondent urged the following submissions:
(i) Paragraph 4(vi) only depicts the establishments from which the medicines can be procured- i.e the whom question and not the how question:
(a) Paragraph 4(vi)(b) of the Operational Guidelines stipulates the establishments from which at least 50 percent of the medicines must be procured. The usage of the term 'or' indicates that all establishments mentioned in the paragraph are equally eligible to supply medicines as much as IMPCL; and
(b) While paragraph 4(vi)(b) does not stipulate that the procurement must be through a tender process, it does not mean that the process of tender cannot be read into the provision. If paragraph 4(vi)(b) is interpreted to allow procurement from any of the establishments mentioned without a tendering process, the same interpretation would also be applicable to paragraph 4(vi)(c). Also, this would mean that even for procurement from private (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (8 of 95) [CW-13758/2022] entities, there is no requirement of conducting a tender process.
(ii) The State of UP cannot arbitrarily prefer one of the eligible entities for the procurement of medicines. All the establishments mentioned in paragraph 4(vi)
(b) are recognised to be on an equal footing.
Therefore, procurement must be by a fair process in which all the eligible establishments are granted an opportunity to secure the procurement order;
(iii) It is an established principle that state largesse must be distributed by public auction save in exceptional situations having regard to the nature of the trade or where no reasonable substitute exists. There are no exceptional circumstances in the instant case that warrant the procurement of medicines only from IMPCL; and
(iv) The price of medicines procured from IMPCL is vetted by the Department od Expenditure, Ministry of Finance for the limited purpose of undertaking an audit. It is the National Pharmaceutical Pricing Authority that approves the prices of medicines. The Ministry of Finance does not have the power or the expertise to determine the prices of Ayurvedic medicines."
3.1 State Largesse: conflation of power and duty.
11 The welfare State plays a crucial role in aiding the realisation of the socioeconomic rights which are recognised by the Constitution. Social welfare benefits provided by the State under the rubric of its constitutional obligations are commonly understood in the language of 'largesse', a term used to describe a generous donation. Terming all actions of government, ranging from social security benefits, jobs, occupational licenses, contracts and use of public resources - as government largesse results in (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (9 of 95) [CW-13758/2022] doctrinal misconceptions. The reason is that this conflates the State's power with duty. The Constitution recognises the pursuit of the well-being of citizens as a desirable goal. In doing this the Constitution entrusts the State with a duty to ensure the well-being of citizens. Government actions aimed at ensuring the well-being of citizens cannot be perceived through the lens of a 'largess'. The use of such terminology belittles the sanctity of the social contract that the 'people of India' entered into with the State to protect and safeguard their interests.
3.2 Judicial review of government contracts:
extent and ambit.
14 Over the years, this Court has applied the non-
arbitrariness standard under Article 14 to test the validity of government action. In Ramana Dayaram Shetty v. International Airport Authority of India , a three-Judge Bench of this Court observed that the government does not have unlimited discretion in granting State largesse and it must act in fairness. In New Horizons Limited v. Union of India, the Department of Telecommunications, invited sealed tenders for printing, binding, and supply of telephone directories. While determining the validity of the eligibility criteria prescribed for tenderers, the Court observed that the State when entering into a contract does not stand on the same footing as a private person. The Court held that the government cannot act arbitrarily while dealing with the public, whether it is while giving jobs or entering into contracts. The relevant observations are extracted below:
17. At the outset, we may indicate that in the matter of entering into a contract, the State does not stand on the same footing as a (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (10 of 95) [CW-13758/2022] private person who is free to enter into a contract with any person he likes. The State, in exercise of its various functions, is governed by the mandate of Article 14 of the Constitution which excludes arbitrariness in State action and requires the State to act fairly and reasonably. The action of the State in the matter of award of a contract has to satisfy this criterion. Moreover a contract would either involve expenditure from the State exchequer or augmentation of public revenue and consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. The decisions of this Court, therefore, insist that while dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. It is, however, recognised that certain measure of "free play in the joints" is necessary for an administrative body functioning in an administrative sphere." 15 In Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries8 , this Court held that 'in the contractual sphere [...] the State and all its instrumentalities have to conform to Article 14 of the Constitution.' The respondent filed a writ petition before the High Court challenging the appellant's (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (11 of 95) [CW-13758/2022] refusal to accept the highest tender submitted by it for a stock of damaged rice. This Court held:
"7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decisionmaking process in all State actions. To satisfy this requirement of non- arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review."
3.2.1 Tender: a constitutional requirement? 21 The appellant-State contends that since in the present case, there is no involvement of 'State (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (12 of 95) [CW-13758/2022] largesse' and no disposal of State property, it was not bound to grant the contract to IMPCL through tender. It is argued that in such a situation, the High Court on a perusal of the relevant material, ought to have only scrutinised if there was an oblique motive involved in purchasing medicines from IMPCL. Government contracts involve expenditure out of the public exchequer. Since they involve payment out of the public exchequer, the moneys expended must not be spent arbitrarily. The State does not have absolute discretion while spending public money. All government actions including government contracts awarded by the State must be tested on the touchstone of Article 14.
22 The following principles emerge from the discussion above:
(i) Government action must be just, fair and reasonable and in accordance with the principles of Article 14; and
(ii) While government can deviate from the route of tenders or public auctions for the grant of contracts, the deviation must not be discriminatory or arbitrary.
The deviation from the tender route has to be justified and such a justification must comply with the requirements of Article 14.
3.4 Validity of award of government contract to IMPCL.
28 The letter indicates that there is no method to determine the ingredients and quality of Ayurvedic drugs. This would mean that there was no method to determine the quality of the medicines produced by IMPCL as well. The Ministry of Health and Family Welfare noted that it has decided to purchase Ayurvedic drugs only from IMPCL because the process is fair and is scrutinised by a representative of the Ministry of Finance. However, the first (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (13 of 95) [CW-13758/2022] respondent contends that the medicines procured from IMPCL are vetted by the Ministry of Finance for the limited purpose of undertaking an audit. At this juncture, it is necessary to note that IMPCL has been set up by the Government of India in collaboration with the Government of Uttarakhand. The Government of India holds 98.11 percent of the shares of IMPCL and 1.89 percent of the shares are held by the State Government. The letter issued by the Ministry of Health and Family Welfare indicates that merely because IMPCL is an establishment in which the Central Government has a major stake, it is assumed that there is no 'commercial interference' and the medicines are prepared according to classical texts using 'genuine raw materials'. 29 There is no material on record to support the submission that IMPCL is the only establishment among the establishments mentioned in paragraph 4(vi)(a) that manufacture good quality Ayurvedic drugs. In fact, paragraph 4(vi)(b) states that 50 percent of the grant-in-aid shall be used to purchase medicines from the units mentioned in the paragraph "keeping in view the need for ensuring quality of AYUSH drugs and medicines." This would indicate that the need for ensuring quality is subserved by all the sources mentioned there. Besides IMPCL, which is an establishment of the Government of India, paragraph 4(vi)(b) includes other establishments of the State Governments or co-operative societies. The contention that IMPCL does not have any commercial interest because it is an establishment developed by the Government of India is then equally applicable to other establishments prescribed in paragraph 4(vi)(b). 30 The argument that the procurement of Ayurvedic drugs from IMPCL would fall within the exceptional (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (14 of 95) [CW-13758/2022] circumstances (assurance of quality medicines) is erroneous. The submission of the appellant that IMPCL is the sole producer of quality Ayurvedic medicines is based on surmises and conjectures without any cogent material to support the claim.15 In fact, the notification of 2 January 2019 issued by the Ministry of AYUSH stipulates that 50 percent of the grant-in-aid has to be used to procure medicines from IMPCL or other Central/State PSUs' or pharmacies under the State-Governments and co- operatives. It is open to the appellant to procure medicines using any method other than tender, so long as it is not arbitrary. The claim of the appellant is that it deviated from the rule of tender because IMPCL is the only establishment that produces quality medicines. However, there is no material to substantiate the claim that IMPCL is the only establishment which manufactures 'quality' medicines to the exclusion of other establishments mentioned in paragraph 4(vi)(b). The appellant has been unable to discharge the burden placed on it by producing cogent material demonstrating that the procurement of medicines through nomination is warranted because of the existence of exceptional circumstances bearing on need for quality. The action of the appellants of procuring medicines only from IMPCL to the exclusion of the other establishments mentioned in paragraph 4(vi)(c) is arbitrary and violative of Article 14 of the Constitution."
8. In the matter of Ramana Dayaram Shetty Vs. International Airport Authority of India & Ors., reported in 1979(3) SCC 489, it has been held as under :-
10. Now, there can be no doubt that what paragraph (1) of the notice prescribed was a condition of (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (15 of 95) [CW-13758/2022] eligibility which was required to be satisfied by every person submitting a tender. The condition of eligibility was that the person submitting a tender must be conducting or running a registered 2nd class hotel or restaurant and he must have at least 5 years' experience as such and if he did not satisfy this condition of eligibility his tender would not be eligible for consideration. This was the standard or norm of eligibility laid down by the 1 st respondent and since the 4th respondents did not satisfy this standard or norm, it was not competent to the 1st respondent to entertain the tender of the 4th respondents.
It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them.
This rule was enunciated by Mr. Justice Frankfurter in Viteralli v. Seton 359 U.S. 535 : 3 L.Ed. 1012 where the learned Judge said:
An executive agency must be rigorously held to the standards by which it professes its action to be judged.
Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed. This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword.
This Court accepted the rule as valid and applicable in India in A.S. Ahluwalia v. Punjab MANU/SC/0363/1974: (1975)ILLJ228SC and in subsequent decision given in Sukhdev v. Bhagatram (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (16 of 95) [CW-13758/2022] MANU/SC/0667/1975 : (1975)ILLJ399SC Mathew, J., quoted the above-referred observations of Mr. Justice Frankfurter with approval. It may be noted that this rule, though supportable also as emanation from Article 14, does not rest merely on that article. It has an independent existence apart from Article 14. It is a rule of administrative law which has been judicially evolved as a check against exercise of arbitrary power by the executive authority. If we turn to the judgment of Mr. Justice Frankfurter and examine it, we find that he has not sought to draw support for the rule from the equality clause of the United States Constitution, but evolved it purely as a rule of administrative law. Even in England, the recent trend in administrative law is in that direction as is evident from what is stated at pages 540-41 in Prof. Waders Administrative Law 4th edition. There is no reason why we should hesitate to adopt this rule as a part of our continually expanding administrative law. Today with tremendous expansion of welfare and social service functions, increasing control of material and economic resources and large scale assumption of industrial and commercial activities by the State, the power of the executive Government to affect the lives of the people is steadily growing. The attainment of socio-economic justice being a conscious end of State policy, there is a vast and inevitable increase in the frequency with which ordinary citizens come into relationship of direct encounter with State power-holders. This renders it necessary to structure and restrict the power of the executive Government so as to prevent its arbitrary application or exercise.
Whatever be the concept of the rule of law, whether it be the meaning given by Dicey in his "The Law of the Constitution" or the definition given by Hayek in (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (17 of 95) [CW-13758/2022] his "Road to Serfdom" and "Constitution of liberty" or the exposition set-forth by Harry Jones in his "The Rule of Law and the Welfare State", there is, as pointed out by Mathew, J., in his article on "The Welfare State, Rule of Law and Natural Justice" in "Democracy, Equality and Freedom," "substantial agreement is in juristic thought that the great purpose of the rule of law notion is the protection of the individual against arbitrary exercise of power, wherever it is found".
It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes not difference whether the exercise of the power involves affection of some right or denial of some privilege.
9. In the matter of Food Corporation of India Vs. Kamdhenu Cattle Feed Industries, reported in (1993)1 SCC 71, it has been held as under :-
"7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet. There is no unfettered discretion in public law : A public authority possesses powers only to use them for public good. This impose the duty to act fairly and to adopt a procedure which is 'fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (18 of 95) [CW-13758/2022] interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness.
Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review."
10. In the matter of Caterpillar India Pvt. Ltd. Vs. Western Coal Fields Ltd. & Ors., reported in (2007) 11 SCC 32 it has been held as under :-
"8. We find that the basic challenge is that by imposing a condition like purchase preference no option is left and a monopoly is being created. The increase in effectiveness of PSEs cannot be done on a uniform policy without examination as to whether such protection is necessary for a particular PSE. It has to be examined individually as to whether any differential treatment is called for. It is pointed out that there may be no competition left if 10% margin is given. In essence, the submission is that the preference should be given PSE specific and the margin also has to be examined rationally.
9. We feel that these are the aspects which need to be considered by the concerned Ministries. We, therefore, direct that industry-wise assessment be done and if there is already cost effectiveness in any (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (19 of 95) [CW-13758/2022] PSEs there may not be any need for the preference being given. The examination should be on the line as to whether any preference is called for and what would be the margin of preference which would ensure level playing field. It should also be fixed specifically and while fixing the minimum amount it should be ensured that breaking of the quantity should be rational, so that there is no likelihood to introduce an element of uncertainty. If the object was to invite foreign direct investment, the impact of the preference on such investment has to be considered. It shall also be considered as to whether some amount of discretion as was given earlier has to be re-introduced. There cannot be certainly any rigid inflexible policy. Because of the substitution of the word 'may' by 'will' there is essentially reversal of the policy. Therefore, the applications are disposed of with the following directions:
(1) The exercise, as noted above, shall be undertaken by the concerned Ministry of the Central Government within a period of 4 months from today; (2) The interim arrangements operative presently shall continue till a fresh re-reconsideration is made by the concerned departments of the Government of India.
(3) The interim orders shall not be restricted to the petitioners, appellant and the respondents. It shall only be binding on the parties who are L-1 and L-2 in the concerned transaction. While fixing the norms, the capacity to delivery of the concerned PSEs and the competitors has also to be taken note of."
11. In the matter of Ashoka Smokelss Coal Ind. P. Ltd. & Ors. Vs. Union of India (UOI) & Ors., reported in (2007) 2 SCC 640, it has been held as under :-
(Downloaded on 11/11/2023 at 07:51:38 PM)[2023:RJ-JP:22694] (20 of 95) [CW-13758/2022] "75. The submission of the learned Additional Solicitor General to the effect that the policy decision of a State cannot be the subject matter of judicial review is stated to be rejected. E-Auction is not a policy decision of the Central Government. Such a policy decision on the part of the executive of the Central Government must be strictly construed in terms of Article 77 of the Constitution of India. Its exercise of such powers has nothing to do with the price fixation by a policy. The State while exercising its power under the Essential Commodities Act, fixes the price keeping in mind several factors, in particular the larger interest of the people. Price fixation of an essential commodity, therefore, is determined on the touchstone of public interest. While doing so the State is expected to follow a rational and fair procedure and for the said purpose may collect data, obtain public opinion, and may appoint an expert committee.
76. In the facts and circumstances of the case, however, the approach of the coal companies, who according to the Union of India had been given a free hand to determine its price for coal, is only earning profit. It has been accepted that three subsidiary companies and Coal India Ltd. who were sick companies, like Bharat Coking Coal Ltd. (BCCL), have started E-Auction. It has succeeded in its attempt to a great extent as the said coal companies are no longer sick companies. They have proceeded only to safeguard their own interests, as dealer and not as a State. Recourse to E-Auction had been taken primarily by way of a profit motive. No public opinion was sought for and no expert committee was appointed.
The statutory and constitutional duties had not been kept in view. Conveniently, while making the said policy decision, the coal companies did not remind themselves that as they are instrumentalities of the (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (21 of 95) [CW-13758/2022] State, they are bound to adhere to the Directive Principles of the State and the prime object for which the Nationalization Acts were enacted."
12. In the matter of Humanity and Ors. Vs. State of West Bengal & Ors., reported in (2011) 6 SCC 125, it has been held as under :-
"25. It has been repeatedly held by this Court that in the matter of granting largesse, Government has to act fairly and without even any semblance of discrimination. Law on this subject has been very clearly laid down by this Court in the case of Ramana Dayaram Shetty v. International Airport Authority of India and Ors. reported in MANU/SC/0048/1979:
1979 (3) SCC 489. A three-Judge Bench in the said decision has recognized that the Government, in a welfare State, is in a position of distributing largesse in a large measure and in doing so the Government cannot act at its pleasure. This Court perusing the new jurisprudential theory of Professor Reich in his article on "The New Property" (73 Yale Law Journal
733) accepted the following dictum contained therein:
The government action be based on standards that are not arbitrary and unauthorized.
26. This Court explained the purport of the aforesaid formulation by holding:
The government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licenses only in favor of those having grey hair or belonging to a particular political party or professing a particular religious faith. The government is still the government when it acts in the matter of granting largesse and it cannot act arbitrarily. It does not stand in the same position as a private individual.(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (22 of 95) [CW-13758/2022]
27. The aforesaid dictum in Ramana (supra) is still followed by this Court as the correct exposition of law and has been subsequently followed in many other decisions. In Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir and Anr. reported in MANU/SC/0079/1980:1980 (4) SCC 1, another three-
Judge Bench relied on the dictum in Ramana (supra) and held whenever any governmental action fails to satisfy the test of reasonableness and public interest, it is liable to be struck down as invalid. This Court held that a necessary corollary of this proposition is that the Government cannot act in a manner which would benefit a private party. Such an action will be contrary to public interest.
46. It is axiomatic that in order to achieve a bona fide end, the means must also justify the end. This Court is of the opinion that bona fide ends cannot be achieved by questionable means, specially when the State is involved. This Court has not been able to get any answer from the State why on a request by the allottee to the Hon'ble Minister for Urban Development, the Government granted the allotment with remarkable speed and without considering all aspects of the matter. This Court does not find any legitimacy in the action of the Government, which has to act within the discipline of the constitutional law, explained by this Court in a catena of cases. We are sorry to hold that in making the impugned allotment in favor of the allottee, in the facts and circumstances of the case, the State has failed to discharge its constitutional role. Recently this Court relying on Ramana (supra), Kasturi Lal (supra) and various other judgments summed up the legal position in Akhil Bharatiya Upbhokta Congress v. State of Madhya Pradesh and Ors. reported in MANU/SC/0345/2011 : JT 2011 (4) SC 311. The (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (23 of 95) [CW-13758/2022] relevant extracts from paragraph 31 (page 336 of the report) are excerpted below:
... Every action/decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well defined policy, which shall be made known to the public by publication in the Official Gazette and other recognized modes of publicity and such policy must be implemented/executed by adopting a non- discriminatory or non-arbitrary method irrespective of the class or category of persons proposed to be benefited by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence etc. by the State and its agencies/instrumentalities should always be done in a fair and equitable manner and the element of favoritism or nepotism shall not influence the exercise of discretion, if any, conferred upon the particular functionary or officer of the State."
13. In the matter of Kasturi Lal Lakshmi Reddy, Represented by its Partner Kasturi Lal, Jammu and Ors. Vs. State of Jammu and Kashmir and Ors., reported in (1980) 4 SCC 1, it has been held as under :-
"9. There were in the main three grounds on which the validity of the Order was assailed on behalf of the petitioners. They were as follows: (A) That the Order is arbitrary, malafide and not in public interest, inasmuch as a huge benefit has been conferred on the 2nd respondents at the cost of the State.
(B) The Order creates monopoly in favour of the 2 nd respondents who or a private party and constitutes unreasonable restriction on the right of the (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (24 of 95) [CW-13758/2022] petitioners to carry on tapping contract business under Article 19(1)(g) of the Constitution. (C) The State has acted arbitrarily in selecting the 2nd respondents for awarding tapping contract, without affording any opportunity to others to compete for obtaining such contract and this action of the State is not based on any rational or relevant principle and is therefore, violative of Article 14 of the Constitution as also of the rule of administrative law which inhibits arbitrary action by the State.
We shall examine these grounds in the order in which we have set them out but, before we do so, we may preface what we have to say by making a few preliminary observations in regard to the law on the subject.
10. It was pointed out by this Court in ''Ramana Dayaram Shetty v. The International Airport Authority of India and Ors. MANU/SC/0048/1979 :
(1979)IILLJ217SC that with the growth of the welfare state, new forms of property in the shape of Government largess are developing, since the Government is increasingly assuming the role of regulator and dispenser of social services and provider of a large number of benefits including jobs, contracts, licences, quotas, mineral rights etc. There is increasing expansion of the magnitude and range of governmental functions, as we move closer to the welfare state, and the result is that more and more of our wealth consists of these new forms of property. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. The law has however not been slow to recognise the importance of this new kind of wealth and the need to protect (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (25 of 95) [CW-13758/2022] individual interest in it and with that end in view, it has developed new forms of protection. Some interests in Government largess, formerly regarded as privileges, have been recognised as rights, while others have been given legal protection not only by forging procedural safeguards but also by confining, structuring and checking Government discretion in the matter of grant of such largess. The discretion of the Government has been held to be not unlimited in that the Government cannot give largess in its arbitrary discretion or as its sweet will or on such terms as it chooses in its absolute discretion. There are two limitations imposed by law which structure and control the discretion of the Government in this behalf. The first is in regard to the terms on which largess may be granted and the other, in regard to the persons who may be recipients of such largess.
11. So far as the first limitation is concerned, it flows directly from the thesis that, unlike a private individual, the State cannot act as it pleases in the matter of giving largess.
Though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by him, it is always open to him under the law to act contrary to Ms self-interest or to oblige another in entering into a contract or dealing with his property. But the Government is not free 10 act as it likes in granting largess such as awarding a contract or selling or leasing out its property. Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (26 of 95) [CW-13758/2022] or in and unprincipled manner; it has to be exercised for the public good. Every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the Government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either best, it would be unconstitutional and invalid.
12. Now what is the test of reasonableness which has to be applied in order to determine the validity of governmental action. It is undoubtedly true, as pointed out by Patanjali Shastri, J. in State of Madras v. V.G. Rau MANU/SC/0013/1952:
1952CriLJ966 that in forming his own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judge participating in the decision, would play an important part, but even so, the test of reasonableness is not a wholly subjective test and its contours are fairly indicated by the Constitution. The concept of reasonableness in fact pervades the entire constitutional scheme. The interaction of Articles 14, 19 and 21 analysed by this Court in Maneka Gandhi v. Union of India MANU/SC/0133/1978 : [1978]2SCR621 , clearly demonstrates that the requirement of reasonableness runs like a golden thread through the entire fabric of fundamental rights and, as several decisions of this Court show, this concept of reasonableness finds its positive manifestation and (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (27 of 95) [CW-13758/2022] expression in the lofty ideal of social and economic justice which inspires and animates the Directive Principles. It has been laid down by this Court in E.P. Royappa v. State of Tamil Nadu MANU/SC/0380/1973 : (1974)ILLJ172SC and Maneka Gandhi's case (supra) that Article 14 strikes at arbitrariness in State action and since the principle of reasonableness and rationality, which is legally as well as philosophically an essential element of equality or non-arbitrariness, is projected by this Article, it must characterise every governmental action, whether it be under the authority of law or in exercise of executive power without making of law. So also the concept of reasonableness runs through the "totality of Article 19 and requires that restrictions on the freedoms of the citizen, in order to be permissible, must at the best be reasonable. Similarly Article 21 in the full plenitude of its activist magnitude as discovered by Maneka Gandhi's case, insists that no one shall be deprived of his life or personal liberty except in accordance with procedure established by law and such procedure must be reasonable, fair and just.
The Directive Principles concretise and give shape to the concept of reasonableness envisaged in Articles 14, 19 and 21 and other Articles enumerating the fundamental rights. By defining the national aims and the constitutional goals, they set forth the standards or norms of reasonableness which must guide and animate governmental action. Any action taken by the Government with a view to giving effect to any one or more of the Directive Principles would ordinarily, subject to any constitutional or legal inhibitions or other over-riding considerations, qualify for being regarded as reasonable, while an action which is inconsistent (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (28 of 95) [CW-13758/2022] with or runs counter to a Directive Principle would incur the reproach of being unreasonable.
15. The second limitation on the discretion of the Government in grant of largess is in regard to the persons to whom such largess may be granted. It is now well settled as a result of the decision of this Court in Ramana D. Shetty v. International Airport Authority of India and Ors (supra) that the Government is not free like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well established that the Government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. Where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with some standard or norm which is not arbitrary, irrational or irrelevant. The governmental action must not be arbitrary or capricious, but must be based on some principle which meets the test of reason and relevance This rule was enunciated by the Court) as a rule of administrative law and it was also validated by the Court as an emanation flowing directly from the doctrine of equality embodied in Article 14. The Court referred to the activist magnitude of Art 14 as evolved in E.P. Royappa v. State of Tamil Nadu (supra) and Maneka Gandhi's case (supra) and observed that it must follow "as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (29 of 95) [CW-13758/2022] anyone, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non-discriminatory ground." This decision has reaffirmed the principle of reasonableness and non-arbitrariness in governmental action which lies at the core of our entire constitutional scheme and structure.
14. In the matter of New Horizons Limited & Ors. Vs. Union of India (UOI) & Ors, reported in (1995) 1 SCC 478, it has been held as under :-
"19. At the outset, we may indicate that in the matter of entering into a contract, the State does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. The State, in exercise of its various functions, is governed by the mandate of Article 14 of the Constitution which excludes arbitrariness in State action and requires the State to act fairly and reasonably. The action of the State in the matter of award of a contract has to satisfy this criterion. Moreover a contract would either involve expenditure from the State exchequer or augmentation of public revenue and consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. The decision of this Court, therefore, insist that while dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (30 of 95) [CW-13758/2022] licenses or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. It is, however, recognized that certain measure of "free play in the joints" is necessary for an administrative body functioning in an administrative sphere See : Ramanna Dayaram Shetty v. The International Airport Authority of India MANU/SC/0048/1979 : (1979)IILLJ217SC ; Kasturi Lal Lakshmi Reddy v. State of J&K MANU/SC/0079/1980 : [1980]3SCR1338 ; Fasih Chaudhary v. Director General, Dooradarshan MANU/SC/0154/1988 : [1988] 3 SCR 282 at p. 286; Sterling Computers Ltd. v. M&N Publications Ltd. and Anr. (supra); Union of India v. Hindustan Development Corporation MANU/SC/0219/1994.
21. "Wednesbury Principle of reasonableness" to which reference has been made in principle (5) aforementioned is contained in Associated Provincial Picture Houses Ltd v. Wednesbury Corporation [1948] 1 KB 223. In that case Lord Greene M.R. has held that a decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the Court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. In Tata Cellular (supra) this Court, has mentioned two other facets of irrationality:
(1) It is open to the court to review the decision-
maker's evaluation of the facts, The Court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-
(Downloaded on 11/11/2023 at 07:51:38 PM)[2023:RJ-JP:22694] (31 of 95) [CW-13758/2022] maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld.
(2) A decision would be regarded as unreasonable if it is partial and unequal in its operation as between different classes."
15. In the matter of Reliance Energy Limited & Ors. Vs. Maharasthra State Road Development Corporation & Ors., reported in (2007) 8 SCC 1, it has been held as under :-
"22. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of "non- discrimination". However, it is not a freestanding provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". In includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nine-Judges in the case of I.R. Coelho v. State of Tamil Nadu MANU/SC/0595/2007 : AIR2007SC861 , Article 21/14 is the heart of the chapter on fundamental rights. It covers various aspects of life. "Level playing field" is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest. In the world of globalization, competition is an important factor to be kept in mind. The doctrine of "level playing field" is (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (32 of 95) [CW-13758/2022] an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally-placed competitors are allowed to bid so as to subserve the larger public interest. "Globalization", in essence, is liberalization of trade. Today India has dismantled licence-raj. The economic reforms introduced after 1992 have brought in the concept of "globalization".
Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g) . Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field". According to Lord Goldsmith - commitment to "rule of law" is the heart of parliamentary democracy. One of the important elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional.
23. In the case of Union of India Anr. v. International Trading Co. and Anr. MANU/SC/0392/2003 :
AIR2003SC3983 , the Division Bench of this Court speaking through Pasayat, J. had held:
14. It is trite law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (33 of 95) [CW-13758/2022] of reasonableness, it would be unconstitutional.
15. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give impression that it was so done arbitrarily or by any ulterior criteria.
The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the state, and non-arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.
24. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This "legal certainty" is an (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (34 of 95) [CW-13758/2022] important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of "level playing field".
25. In the case of Reliance Airport Developers (P) Ltd. v. Airports Authority of India and Ors. MANU/SC/4912/2006 : (2006)10SCC1 , the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision-making power and he must give effect to it otherwise it may result in illegality. The principle of "judicial review" cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers, "but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however, such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (35 of 95) [CW-13758/2022] norm/standard should be clear. As stated above "certainty" is an important aspect of rule of law. In the case of Reliance Airport Developers (supra), the scoring system formed part of the evaluation process. The object of that system was to provide identification of factors, allocation of marks of each of the said factors and giving of marks had different stages. Objectivity was thus provided.
16. In the matter of Nitisha Vs. Union of India, reported in (2021) 15 SCC 125, it has been held as under :-
"48. We must clarify here that the use of the term 'indirect discrimination' is not to refer to discrimination which is remote, but is, instead, as real as any other form of discrimination. Indirect discrimination is caused by facially neutral criteria by not taking into consideration the underlying effects of a provision, practice or a criterion.
49. The facts of this case present an opportune moment for evaluating the practices of the Respondents in evaluation for the grant of PC. In this segment of the judgment, we will first outline the theoretical foundations of the doctrine of indirect discrimination. We will then survey comparative jurisprudence concerning the doctrine, with a view to understand its key constituents and the legal questions surrounding its application, namely the evidentiary burden to be discharged to invoke the doctrine and the standards of justification to be applied. We will then offer a roadmap for understanding and operationalizing indirect discrimination in Indian anti-discrimination law.
50. In evaluating direct and indirect discrimination, it is important to underscore that these tests, when applied in strict disjunction from one another, may end up producing narrow conceptions of equality (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (36 of 95) [CW-13758/2022] which may not account for systemic flaws that embody discrimination. Therefore, we will conclude this Section with an understanding of a systemic frame of analysis, in order to adequately redress the full extent of harm that certain groups suffer, merely on account of them possessing characteristics that are prohibited axles of discrimination. F.6 Evolving an analytical framework for indirect discrimination in India:
66. A study of the above cases and scholarly works gives rise to the following key learnings. First, the doctrine of indirect discrimination is founded on the compelling insight that discrimination can often be a function, not of conscious design or malicious intent, but unconscious/implicit biases or an inability to recognize how existing structures/institutions, and ways of doing things, have the consequence of freezing an unjust status quo. In order to achieve substantive equality prescribed under the Constitution, indirect discrimination, even sans discriminatory intent, must be prohibited.
67. Second, and as a related point, the distinction between direct and indirect discrimination can broadly be drawn on the basis of the former being predicated on intent, while the latter is based on effect (US, South Africa, Canada). Alternatively, it can be based on the fact that the former cannot be justified, while the latter can (UK). We are of the considered view that the intention versus effects distinction is a sound jurisprudential basis on which to distinguish direct from indirect discrimination. This is for the reason that the most compelling feature of indirect discrimination, in our view, is the fact that it prohibits conduct, which though not intended to be discriminatory, has that effect. As the Canadian (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (37 of 95) [CW-13758/2022] Supreme Court put it in Ontario HRC (supra), requiring proof of intention to establish discrimination puts an "insuperable barrier in the way of a complainant seeking a remedy.54 It is this barrier that a robust conception of indirect discrimination can enable us to counteract.
68. Third, on the nature of evidence required to prove indirect discrimination, statistical evidence that can establish how the impugned provision, criteria or practice is the cause for the disproportionately disadvantageous outcome can be one of the ways to establish the play of indirect discrimination. As Professor Sandra Fredman notes, "Aptitude tests, interview and selection processes, and other apparently scientific and neutral measures might never invite scrutiny unless data is available to dislodge these assumptions.55 Consistent with the Canadian Supreme Court's approach in Fraser (supra), we do not think that it would be wise to lay down any quantitative thresholds for the nature of statistical disparity that must be established for a claimant to succeed. Equally, we do not think that an absolutist position can be adopted as to the nature of evidence that must be brought forth to succeed in a case of indirect discrimination. The absence of any statistical evidence or inability to statistically demonstrate exclusion cannot be the sole ground for debunking claims of indirect discrimination. This was clarified by the European Court of Human Rights in a case concerning fifteen Croatians of Roma origin claiming racial discrimination and segregation in schools with Roma-only classes. In assessing the claims of the fifteen Croatians, the court observed that indirect discrimination can be proved without statistical evidence56. Therefore, statistical evidence demonstrating patterns of exclusion, can be one of (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (38 of 95) [CW-13758/2022] the ways to prove indirect discrimination.
69. Fourth, insofar as the fashion in which the indirect discrimination enquiry must be conducted, we think that the two-stage test laid down by the Canadian Supreme Court in Fraser (supra) offers a well-structured framework of analysis as it accounts for both the disproportionate impact of the impugned provision, criteria or practice on the relevant group, as well as the harm caused by such impact. It foregrounds an examination of the ills that indirect discrimination seeks to remedy.
70. Fifth and finally, while assessing the justifiability of measures that are alleged to have the effect of indirect discrimination, the Court needs to return a finding on whether the narrow provision, criteria or practice is necessary for successful job performance.
In this regard, some amount of deference to the employer/Defendant's view is warranted. Equally, the Court must resist the temptation to accept generalizations by Defendants under the garb of deference and must closely scrutinize the proffered justification. Further, the Court must also examine if it is possible to substitute the measures with less discriminatory alternatives. Only by exercising such close scrutiny and exhibiting attentiveness to the possibility of alternatives can a Court ensure that the full potential of the doctrine of indirect discrimination is realized and not lost in its application.
17. In the matter of Omega Elevators Vs. Union of India & Ors., W.P. (C)2060 and 4043/2021, decided by Delhi High Court on 04.06.2021, it has been held as under :-
"DISCUSSION
1) Since the legal issues raised arise in the same factual background, vis, that the Respondents in (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (39 of 95) [CW-13758/2022] both the petitions have invited tenders for supply and installation of lifts of specified brands, which does not include the brand of the petitioner's lifts, we have heard the submission in both the petitions at the same time and proceed to decide them by this common judgment.
2) We have heard the arguments of Mr. Bhargav Hasurkar, learned counsel for petitioner and Mr. Satya Ranjan Swain, Sr. Panel Counsel for Respondent No. 2 in W.P.(C) 2060/2021, and Mr. Ruchir Mishra, learned counsel for Respondent No. 1 in W.P.(C) 4043/2021 and considered the judgments cited.
3) The mandate of Article 14 of the Constitution of India is most relevant and mandates that there should be no arbitrariness in state action. It has been held in Ramana Dayaram Shetty v.
International Airport Authority of India MANU/SC/0048/1979 : (1919) 3 SCC 489:
"21. This rule also flows directly from the doctrine of equality embodied in Article 14. It is now well- settled as a result of the decisions of this Court in E.P. Royappa v. State of Tamil Nadu [MANU/SC/0380/1973 : (1974) 4 SCC 3: (1974) 2 SCR 348] and Maneka Gandhi v. Union of India [MANU/SC/0133/1978 : (1978) 1 SCC 248] that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory: it must not be guided by any extraneous or irrelevant considerations, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (40 of 95) [CW-13758/2022] is projected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and nondiscriminatory. This principle was recognised and applied by a Bench of this Court presided over by Ray, C.J., in Erusian Equipment and Chemicals Ltd. v. State of West Bengal where the learned Chief Justice pointed out that "the State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting .... A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling .... It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods".(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (41 of 95) [CW-13758/2022] It must, therefore follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non- discriminatory ground."
And also in New Horizons Ltd. v. Union of India MANU/SC/0564/1995 : (1995) 1 SCC 478, where the court observed the following, "17. At the outset, we may indicate that in the matter of entering into a contract, the State does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. The State, in exercise of its various functions, is governed by the mandate of Article 14 of the Constitution which excludes arbitrariness in State action and requires the State to act fairly and reasonably. The action of the State in the matter of award of a contract has to satisfy this criterion. Moreover a contract would either involve expenditure from the State exchequer or augmentation of public revenue and consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. The decisions of this Court, therefore, insist that while dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (42 of 95) [CW-13758/2022] largesse, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. It is, however, recognised that certain measure of "free play in the joints" is necessary for an administrative body functioning in an administrative sphere."
4) Article 14 speaks of equality before law and equal protection of the laws. Equality of opportunity applies to matters of public contracts. Unlike an individual, the State cannot choose to exclude persons by discrimination. In matters of floating a tender, awarding a contract, the State has to satisfy the criterion of fairness and reasonableness.
5) In order to pass the test of permissible classification, two conditions must be fulfilled, namely,
a) The classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the groups; and
b) That the differentia must have rational nexus to the objects sought to be achieved.
6) In fact, earlier judgments of High Courts of different states in the case of the petitioner 'itself have found such a categorization/condition unsustainable in law. In Ms. Omega Elevators v. Union of India, WP Nos. 11478 & 11481 of 2019 which was a similar matter to the one before us, currently, the Telangana High Court held that 'there should be some rational nexus between the basis of classification and the object intended to be achieved by the respondents. When there is no such glaring difference between the lift manufacturers mentioned in Group-I with that of the petitioner, the said (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (43 of 95) [CW-13758/2022] categorization is unsustainable in law: The court further stated that it was within its ambit to review the conditions posed by the respondents when it includes brand specifications by relying on the judgment as held by the Hon'ble Supreme Court in Union of India v. N.S. Rathnam MANU/SC/0806/2015 : (2015) 10 SCC 681, wherein the court held as follows:
"13. It is, thus, beyond any pale of doubt that the justifiability of particular notification can be tested on the touchstone of Article 14 of the Constitution. Article 14, which is treated as basic feature of the Constitution, ensures equality before the law or equal protection of laws. Equal protection means the right to equal treatment in similar circumstances, both in the privileges conferred and in the liabilities imposed. Therefore, if the two persons or two sets of persons are similarly situated/placed, they have to be treated equally. At the same time, the principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position. It would mean that the State has the power to classify persons for legitimate purposes. The legislature is competent to exercise its discretion and make classification. Thus, every classification is in some degree likely to produce some inequality but mere production of inequality is not enough. Article 14 would be treated as violated only when equal protection is denied even when the two persons belong to same class/category. Therefore, the person challenging the act of the State as violative of Article 14 has to show that there is no reasonable basis for the differentiation between the two classes created by the State. Article 14 prohibits class legislation and not reasonable classification.(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (44 of 95) [CW-13758/2022]
14. What follows from the above is that in order to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differential which distinguishes persons or things that are grouped together from others left out of the group; and (ii) that, that differential must have a rational relation to the object sought to be achieved by the statute in question. If the Government fails to support its action of classification on the touchstone of the principle whether the classification is reasonable having an intelligible differentia and a rational basis germane to the purpose, the classification has to be held as arbitrary and discriminatory. In Sube Singh v. State of Haryana [MANU/SC/0472/2001 : (2001) 7 SCC 545], this aspect is highlighted by the Court in the following manner:
"10. In the counter and the note of submission filed on behalf of the appellants it is averred, inter alia, that the Land Acquisition Collector on considering the objections filed by the appellants had recommended to the State Government for exclusion of the properties of Appellants 1 and 3 to 6 and the State Government had not accepted such recommendations only on the ground that the constructions made by the appellants were of 'B' or 'C' class and could not be easily amalgamated into the developed colony which was proposed to be built. There is no averment in the pleadings of the respondents stating the basis of classification of structures as 'A', 'B' and 'C' class, nor is it stated how the amalgamation of all A' class structures was feasible and possible while those of 'B' and 'C' class structures was not possible. It is not the case of the State Government and also not argued before us (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (45 of 95) [CW-13758/2022] that there is no policy decision of the Government for excluding the lands having structures thereon from acquisition under the Act. Indeed, as noted earlier, in these cases the State Government has accepted the request of some landowners for exclusion of their properties on this very ground. It remains to be seen whether the purported classification of existing structures into 'A', 'B' and 'C' class is a reasonable classification having an intelligible differentia and a rational basis germane to the purpose. If the State Government fails to support its action on the touchstone of the above principle, then this decision has to be held as arbitrary and discriminatory. It is relevant to note here that the acquisition of the lands is for the purpose of planned development of the area which includes both residential and commercial purposes. That being the purpose of acquisition, it is difficult to accept the case of the State Government that certain types of structures which according to its own classification are of 'A' class can be allowed to remain while other structures situated in close vicinity and being used for same purposes (residential or commercial) should be demolished. At the cost of repetition, it may be stated here that no material was placed before us to show the basis of classification of the existing structures on the lands proposed to be acquired. This assumes importance in view of the specific contention raised on behalf of the appellants that they have pucca structures with RC roofing, mosaic flooring, etc. No attempt was also made from the side of the State Government to place any architectural plan of different types of structures proposed to be constructed on the land notified for acquisition in support of its contention (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (46 of 95) [CW-13758/2022] that the structures which exist on the lands of the appellants could not be amalgamated into the plan."
18. We are conscious of the principle that the difference which will warrant a reasonable classification need not be great. However, it has to be shown that the difference is real and substantial and there must be some just and reasonable relation to the object of legislation or notification. Classification having regard to microscopic differences is not good. To borrow the phrase from the judgment in Roop Chand Adlakha v. DDA [MANU/SC/0413/1988 : 1989 Supp (1) SCC 116 :
1989 SCC (L & S) 235 : (1989) 9 ATC 639] : "To overdo classification is to undo equality."
7) Then again in Omega Elevators v. National Health Mission, WP-12880-2018, the Madhya Pradesh High Court held that 'the condition that certain specific manufactures or the distributors of such manufacture alone would participate in the tender process is arbitrary and does not provide a level playing field to all the manufactures. Consequently such condition is set aside: Learned counsels for the Respondents have not been able to distinguish these decisions on the relevant and germane facts. In our view, they are squarely attracted to the facts of the two cases being dealt with by us, and we find ourselves in respectful agreement with the principles on which they are founded.
14) The reliance placed by the respondent on the judgment in Delite Kom Limited (Supra) is misconceived. The High Court in para 15 of the judgment had held that 'there must be a special reason, as mentioned in the Circulars, for selecting a particular brand and once that pre-condition is fulfilled, Respondents No. 1 to 3 can fix the terms and conditions of the contract: The Court further (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (47 of 95) [CW-13758/2022] observed that while it recognized that Godrej & Boyce is a reputed brand, however, it does not mean that other companies, which may be equally good should be excluded from consideration. This would stifle private enterprise and competition which would be to no one's advantage. It was found that the Consumer i.e. the Delhi High Court had not chosen the specific brand for any special reasons or features after being made aware of the availability of other similar brands, and after evaluation of the features of all the brands available.
15) In the facts of the present cases as well, the respondents have not given any special/specific reasons for limiting the tender to five manufacturers of lifts. There is nothing in the counter affidavits, tender conditions or anything urged before us, to show any particular specifications/features which the five manufacturers named in the tender could only comply with. The respondents have failed to show as to why the petitioner was not equally good to participate in the tender, or as to why it should be excluded from consideration. Pertinently, the respondents have laid down the technical specifications in the tenders in question, and any prospective bidder, who satisfies those specifications should be able to participate in the tendering process. The acts of the respondent in limiting the tender to five named manufacturers is clearly indicative of creating a syndicate and excluding the petitioner in the matter of public procurement without any reason or justification. The same cannot be permitted. It is clearly arbitrary and discriminatory without any disclosed rationale.
16) In the present cases, the acts of the respondents smacks of arbitrariness and unreasonableness. The factum of floating the tender (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (48 of 95) [CW-13758/2022] and restricting it to four/five manufacturers does not meet the twin test of permissible classification as enunciated by the Supreme Court in NS Rathnam Case (Supra).
17) The factum of the lift installed by the petitioner in Ghaziabad being a reason for its exclusion also does not meet the test of Article 14 of the Constitution of India. The respondents have neither given a Show Cause Notice to the Petitioner, nor passed any order blacklisting the Petitioner. In effect, without taking steps to blacklist the Petitioner
- which action, if taken, would have been opened to judicial scrutiny, the Respondents have sought to treat the petitioner as blacklisted. This is not permissible.
19) In this view of the matter, the action of the respondent in floating the tenders, limited to their particular brands, and ousting the petitioner is hit by Article 14 of the Constitution of India.
20) It will also be necessary to refer and rely on the directions/communications issued by the Government of India from time to time.
21) The Ministry of Commerce and Industry, Govt. of India on 29.05.2019 came up with an order regarding Public Procurement (Preference to Make in India), Order 2017 bearing No. P-45021/2/2017-PP (BE-II).
22) Clause 10 of the order reads as under:
Specifications in Tenders and other procurement solicitations:
a. Every procuring entity shall ensure that the eligibility conditions in respect of previous experience fixed in any tender or solicitation do not require proof of supply in other countries or proof of exports.(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (49 of 95) [CW-13758/2022] b. Procuring entities shall endeavour to see that eligibility conditions, including on matters like turnover, production capability and financial strength do not result in unreasonable exclusion of local suppliers who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness of the supplier.
d. ....
25) A bare perusal of the entire set of office orders/letters, clearly demonstrate the shift and the intent of the Govt. of India to:
a. Desist from specifying manufacturers in matters of public procurement through tender. b. To ensure that there is no unreasonable exclusion of local suppliers who would otherwise be eligible, beyond what is essential for ensuring quality or credit worthiness of the suppliers.
26) The actions of the respondents in specifying five manufacturers to participate in the tender and excluding the other suppliers/prospective bidders, such as the petitioner are clearly violative of the order dated 29.05.2019 of the Ministry of Commerce and Industry, Govt. of India. In none of the counter affidavits, it has either been alleged or shown to us that no other supplier/prospective bidder, such as the petitioner, meets the eligibility criteria on matters of turnover; production capability; financial strength, or; technical specification and capability.
27) In this view of the matter, the action of the respondent in limiting the tender to five manufacturers and excluding the petitioner cries foul of the order dated 29.05.2019 passed by M/o Commerce and Industry, Govt. of India and order No. DG/SE TAS(E)/Enlist. Rules-Lifts-A/03 dated 10.01.2019 passed by CPWD.(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (50 of 95) [CW-13758/2022]
28) The letter of the Principal Secretary to the Prime Minister dated 03.01.2019, further clears the misconceptions, if any, when it clarifies that indicating foreign make/brands in the tender, and thereby excluding local manufactures and service providers, is in violation of Public Procurement (Preference to Make in India), Order 2017 and Rule 144(i)(b) of General Financial Rules 2017. In fact, said letter states that indicating foreign makes or brands in a tender is a restrictive and discriminatory eligibility criteria aimed at excluding local manufacturers/service providers which should be avoided."
18. In the matter of Karnataka Industrial Areas Development Board & Ors. Vs. Prakash Dal Mill & Ors., reported in (2011) 6 SCC 714, it has been held as under :-
"18. The Board being a State within the meaning of Article 12 of the Constitution of India is required to act fairly, reasonably and not arbitrarily or whimsically. The guarantee of equality before law or equal protection of the law, under Article 14 embraces within its realm exercise of discretionary powers by the State. The High Court examined the entire issue on the touchstone of Article 14 of the Constitution of India. It has been observed that the fixation of price done by the Board has violated the Article 14 of the Constitution of India. It is correctly observed that though Clause 7(b) permits the Board to fix the final price of the demised premises, it cannot be said that where the Board arbitrarily or irrationally fixes the final price of the site without any basis, such fixation of the price could bind the lessee. In such circumstances, the Court will have the jurisdiction to annul the decision, upon declaring the same to be void and non-est. A bare perusal of (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (51 of 95) [CW-13758/2022] Clause 7(b) would show that it does not lay down any fixed components of final price. Clause 7(b) also does not speak about the power of the Board to revise or alter the tentative price fixed at the time of allotment. The High Court has correctly observed that Clause 7(b) does not contain any guidelines which would ensure that the Board does not act arbitrarily in fixing the final price of demised premises. Since the validity of the aforesaid Clause was not challenged, the High Court has rightly refrained from expressing any opinion thereon.
19. Even though the Clause gives the Board an undefined power to fix the final price, it would have to be exercised in accordance with the principle of rationality and reasonableness. The Board can and is entitled to take into account the final cost of the demised premises in the event of it incurring extra expenditure after the allotment of the site. But in the garb of exercising the power to fix the final price, it can not be permitted to saddle the earlier allottees with the liability of sharing the burden of expenditure by the Board in developing some other sites subsequent to the allotment of the site to the Respondents. The Respondents have placed on record sufficient material to show that acquisition and development of land in the industrial area has been in phases. Some areas and segments are fully developed and others are in different stages of development. Sites and plots have been allotted at different times and locations. Thus, it cannot be said that all the allottees form one class. Earlier allottees having sites in fully developed segments cannot be intermingled with the subsequent allottees in areas which may be wholly undeveloped. Such action is clearly violation of Article 14. We are also of the opinion that the Board (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (52 of 95) [CW-13758/2022] can not be permitted to exercise its powers of fixing the final price under Clause 7(b) at any indefinite time in the future after the allotment is made. This would render the word "as soon as" in Clause 7(b) wholly redundant. As noticed earlier, in the present case, the Board has sought to fix the final price after a gap of 13 years. Such a course is not permissible in view of the expression "as soon as"
contained in Clause 7(b).
20. In our opinion, the High Court correctly concluded that the fixation of final price by the Board is without authority of law. It violates Article 14 of the Constitution of India being arbitrary and unreasonable exercise of discretionary powers."
19. In the matter of Meerut Development Authority & Ors.
Association of Management Studies & Ors., reported in (2009) 6 SCC 171, it has been held as under :-
"23. In Tata Cellular (supra) this Court observed that "Judicial quest in administrative matters is to strike the just balance between the administrative discretion to decide matters as per government policy, and the need of fairness. Any unfair action must be set right by judicial review."
24. In Chief Constable of North Wales Police v. Evans (1982) 3 AIIER 141, Lord Hailsham stated:
"The underlying object of judicial review is to ensure that the authority does not abuse its power and the individual receives just and fair treatment and not to ensure that the authority reaches a conclusion which is correct in the eyes of the court."
25. Large numbers of authorities have been cited before us in support of the submission that even in contractual matters the State or "other authorities"
are bound to act within the legal limits and their (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (53 of 95) [CW-13758/2022] actions are required to be free from arbitrariness and favourtism. The proposition that a decision even in the matter of awarding or refusing a contract must be arrived at after taking into account all relevant considerations, eschewing all irrelevant considerations cannot for a moment be doubted. The powers of the State and other authorities are essentially different from those of private persons.
The action or the procedure adopted by the authorities which can be held to be State within the meaning of Article 12, while awarding contracts in respect of properties belonging to the State, can be judged and tested in the light of Article 14. Once the State decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14. These principles are settled by the judgments of this Court in the cases of Ramana Dayaram Shetty v. International Airport Authority of India MANU/SC/0048/1979 : (1979)IILLJ217SC , Kasturi Lal Lakshmi Reddy v. State of J & KMANU/SC/0079/1980 : [1980]3SCR1338 , Ram and Shyam Co. v. State of Haryana MANU/SC/0017/1985 : AIR1985SC1147 , Mahabir Auto Stores v. Indian Oil Corporation MANU/SC/0191/1990 : [1990]1SCR818 , Sterling Computers Ltd. v. M & N Publications MANU/SC/0439/1993 : AIR1996SC51 and A.B. International Exports v. State Corporation of India. 2000(3) SCC 553 Executive does not have an absolute discretion, certain principles have to be followed, the public interest being the paramount consideration."
20. In the matter of Ashok Kumar Behal & Ors. Vs. Union of India & ors, Civil Writ No.3267, 3198, 3456 of 1991, decided (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (54 of 95) [CW-13758/2022] by the High Court of Delhi on 25.08.1993, it has been held as under :-
"29. The unilateral revision of land rate/ premium whereby affecting the price of flats without any reasons is arbitrary and unreasonable. The action of the DDA in revising the estimate on that basis otherwise than on the terms of the original contract is, Therefore, illegal and is liable to be quashed. We hold that by revising land rate/land premium the DDA in fact has varied the terms of pre-contractual stage, Therefore the respondent is not immune from proceedings under Article 226 of the Constitution. We hold that this writ is maintainable as it deals with the stage which alter the parameter of statutory stage in the contract."
21. In the matter of Mahabir Auto Stores & Ors. Vs. Indian Oil Corporation & Ors., reported in AIR 1990 SC 1031, it has been held as under :-
"8. The High Court after exhaustively dealing with the rival contentions came to the conclusion that viewed from diverse angles, the appellants had sought the specific performance of certain alleged contract. It was also held that the said alleged contract was neither precise, nor definite nor certain nor was capable of being made certain. It was not certain, in this case, as to how much goods were required and for how long were these required and at what consideration, these were all uncertain and vague, it was submitted. It was held by the High Court that for a Writ of mandamus the appellants should have a legal right to enforce the performance of alleged duty by the respondent and since no right was shown to exist by the appellants for selling the continuous supply of the lubricants (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (55 of 95) [CW-13758/2022] whatsoever indefinitely for future and no corresponding legal duty was imposed on the respondent to supply, the Writ of mandamus was not maintainable. In those circumstances the Writ Application was dismissed as not maintainable.
10. We have heard learned Counsel Dr. L.M. Singhvi as well as Mr. Salve exhaustively. Further affidavits were filed and documents produced before us. It was sought to be urged by Dr. Singhvi that the respondent was an instrumentality of State and as such the question involved was whether an instrumentality of State can suddenly, arbitrarily, unreasonably, without any relevant factors and without any notice and determination or proceeding stop supplies of products which, according to him, had been supplied more than 1 crore 11 lacs liters/kg of product continuously and uninterruptedly over a period of more than 18 years. Dr. Singhvi suggested that the respondent IOC is an instrumentality of State under Article 12 of the Constitution. From the nature of the business carried on by the appellants, it was manifest to us that the supply of the lubricants of the type with which the respondent had a monopoly, could be carried on by the appellants only as the supplier from the respondent. That business was not possible otherwise. The respondent had monopoly in that respect. This aspect is important. The respondent firm was supplying from 1965 to 1983 large quantities of lubricant oil and from 1983 onwards till 1989 supplies were continued on the interim order of the High Court of Delhi. Supplies were stopped suddenly on 27th May, 1983. There is no dispute that no intimation was given, no notice was given, no query or clarification sought for and there was no adjudication as such. It was held that (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (56 of 95) [CW-13758/2022] the appellant firm was not entitled to supply, the stoppage of supply in May 1983 was, therefore, bad. The appellant further contended that the case of the respondent-company IOC was never made known or revealed prior to the Counter Affidavit in the High Court of the appellants. The contention urged on behalf of the appellants was that this is patent violation of all canons of natural justice, fair play and reasonableness. It is submitted that natural justice and reasonableness of the procedure are enshrined under Article 14 of the Constitution.
11. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in Mis Radha Krishna Agarwal and Ors. v. State of Bihar and Ors., MANU/SC/0053/1977 : [1977]3SCR249 .
It appears to us, at the outset, that in the facts and circumstances of the case, the respondent-company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ under Article 14 can be checked. See Mis Radha Krishna Agarwal v. State of Bihar, (supra) at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (57 of 95) [CW-13758/2022] its actions in its manifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant consideration, it depends upon facts and circumstances of a particular transaction whether hearing is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a Governmental action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. In this connection reference may be made to E.P. Royappa v. State of Tamil Nadu and Anr., MANU/SC/0380/1973 : (1974)ILLJ172SC ; Maneka Gandhi v. Union of India and Anr., MANU/SC/0260/1975 : [1976]102ITR1(SC) ; A jay Hasia and Ors. v. Khalid Mujib Sehravardi and Ors., MANU/SC/0498/1980 : (1981)ILLJ103SC ; R.D. Shetty v. International Airport Authority of India and Ors., MANU/SC/0263/1979 : 1979CriLJ905 and (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (58 of 95) [CW-13758/2022] also Dwarkadas Marfatia and sons v. Board of Trustees of the Port of Bombay, MANU/SC/0330/1989 : [1989]2SCR751 . It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case.
22. It is not our decision which is important but a decision on the above basis should be arrived at which should be fair, just and reasonable and consistent with good government-which will be arrived at fairly and should be taken after taking the persons concerned whose rights/obligations are affected, into confidence. Fairness in such action should be perceptible, if not transparent.
23. The Judgment and the Order of the High Court are, therefore, set aside and the direction and order as aforesaid are substituted and the application made to the High Court is disposed of on the aforesaid terms. In the facts and circumstances of the case, there will be no order as to costs."
22. In the matter of Omega Elevators Vs. Indian Institute of Technology, Writ Petition (M/S) No.814 of 2023, decided by the High Court of Uttarkhand at Nainital on 06.07.2023, it has been held as under :-
(Downloaded on 11/11/2023 at 07:51:38 PM)[2023:RJ-JP:22694] (59 of 95) [CW-13758/2022] "4. The case of the petitioner is that since the petitioner was interested in participating in the tender in question, the petitioner vide representation dated 21.01.2023, made to the respondent, lodged their protest against limiting the participation in the tender by only the aforesaid few brands/ makes of lift. The petitioner also referred to the judgment of the High Court of Delhi, in the petitioner's own case, wherein a similar limitation of makes/ brands of lift by the tender inviting authority was quashed and set-aside by the High Court of Delhi, in Writ Petition Nos. 11478 and 11481 of 2019.
8. Learned counsel for the petitioner has taken us through the judgment of the High Court of Delhi in W.P. (C) No.2060 of 2021 and W.P. (C) No.4043 of 2021, decided on 04.06.2021. The Division Bench of the High Court of Delhi (of which, one of us, Vipin Sanghi, J. was a Member, as a Judge of the High Court of Delhi), in relation to a similar tender, where the makes/ brands of lift were restricted, quashed the tender, as being discriminatory and arbitrary.
10. We, accordingly, allow this petition and hold that the action of the respondent in limiting the tender to only the few named makes/ brands of lift was completely arbitrary, discriminatory, as well as in the teeth of the Government Orders referred to hereinabove."
23. Shri M.S. Singhvi, Learned Advocate General assisted by Mr. Darsh Pareek Adv., appearing on behalf of the respondents opposed the writ petitions and submitted that there is concealment on the part of the petitioners as they have not mentioned the correct facts in the writ petitions. He further submitted that some of the petitioners are supplying the DES to (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (60 of 95) [CW-13758/2022] the Tamilnadu Medical Service Corporation Ltd., at much lower price than the present one in the instant matters i.e. Rs.12500/-
which the petitioner-companies are getting here in the State of Rajasthan. He further submitted that highly disputed questions of facts are involved in these matters which are not supposed to be examined by this Court under Article 226 of the Constitution of India and the petitioners have no locus-standi to file the present writ petitions as there is no contract between the petitioners and the answering respondents. He further submitted that it has been held by the Hon'ble Supreme Court in the catena of judgments that the scope of judicial review is very limited and no violation of any Statute/Act/Rules has been committed by the respondents while fixing the price for reimbursement towards the DES. He further submitted that the policy decision was taken by the respondents in public interest, particularly in the interest of the patients about fixing the ceiling of reimbursement just to give better quality DES to the patients at a reasonable price within the State of Rajasthan. He further submitted that fixation of the price in these matters is not governed by any statutory law and the same is solely within the domain of the State Government. He further submitted that neither the insurance company nor the hospitals have been made party to the present writ petitions. He further submitted that there is no privity of contract between the State and the petitioners therefore they have no legal right to file the present writ petitions. He further submitted that one of the petitioner has applied for certification from USFDA. He also (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (61 of 95) [CW-13758/2022] submitted that in absence of new facts being pleaded in the writ petitions, the same cannot be argued before this Court.
24. In support of the contentions, learned Advocate General relied upon the following judgments.
25. In the matter of Vascular Concepts Ltd. Vs. State of Maharasthra through Director of Health Services & Ors., reported in 2014 SCC Online Bom 485, it has been held as under :-
"30. In the present case, we are unable to justify any interference. When the tender was initially floated the technical specifications required the Stents to have USFDA approval and CE mark. Subsequently, at the meeting of pre-bid held on 30th August, 2013, some of the bidders suggested that the State should change the specifications of USFDA approval and CE mark to USFDA approval or CE mark. This request was forwarded to the Purchase Committee which considered the request at its meeting on 24th September, 2013 and accepted the suggestion and changed the specification from USFDA approval and CE mark to USFDA approval or CE mark. Thereafter, the expert committee appears to have added and recommended one more specification, namely, DCGI approval in addition to the USFDA approval or the CE mark requirement. The expert committee on 12th November, 2013 has exercised its discretion in general public interest with a desire to ensure that nothing is left to chance. The Respondents No. 1 and 2 have accepted the recommendation and acted upon it. Thus, DCGI approval indicates an additional technical requirement which further ensures that the quality of Stents used are also certified by the (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (62 of 95) [CW-13758/2022] DCGI notwithstanding its approval by USFDA and CE mark. In fact DCGI approval does not put the Stents approved by USFDA or CE marked on a higher pedestal. On the other hand the DCGI puts final its stamp of approval on Stents that are already approved by the USFDA or CE marked.
31. It is case of the State that the Stents being imported pursuant to this tender are to be used by the State in the hospitals under Rajiv Gandhi Arogya Yojana to provide relief to the patients whose income is below Rs. 1,00,000/- per annum. The State in its endeavor to ensure that best possible equipment is obtained for discharge of its social responsibility has, therefore, taken a decision in public interest. The Petitioner can hardly be heard to assail such motive let alone allege malafide, arbitrariness in providing for the best possible specifications. This clubbed with the fact that almost all other equipment forming subject matter of tender, also require USFDA approval or CE mark leaves no manner of doubt that Respondents No. 1 and 2 had no malafide intention nor did they act in an arbitrary manner while issuing technical specifications. Annexure to tender E-142/12-13 also required bids from primary manufacturers. The Petitioner does not claim to be a primary manufacturer of Stents. 42 items forming subject matter of the tender are listed on internal Page 9 of the tender document. The Stents proposed to be supplied by the Petitioner appears at Item No. 14. Leaving aside item Nos. 1, 38, 39 and 40, the other 38 items required USFDA approval and CE mark prior to change made at pre-bid meeting.
32. In the circumstances, the Petitioner has failed to establish that the State has acted in arbitrary or malafide manner or in manner that can be said to (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (63 of 95) [CW-13758/2022] be against public interest. To provide the best possible devices and equipment for the purpose of its public health programme, the State opted for stringent technical requirements. No fault can be found for imposing these specifications.
26. In the matter of Pandit M.S.M. Sharma Vs. Shri Sri Krishna Sinha & Ors., reported in AIR 1959 SC 395, it has been held as under :-
"33. The next argument urged by learned advocate for the petitioner is that, after the House had referred the matter to the committee of privileges, nothing was done for about one year, and after such a lapse of time the committee has suddenly work up and resuscitated the matter only with a view to penalise the petitioner. In paragraph 17 of the petition the charge of mala fides is thus formulated :-
"17. That the Committee of Privileges aforesaid is proceeding against the petitioner mala fide with a view to victimise and muzzle him since the petitioner has been through his newspaper unsparingly criticising the administration in the State of Bihar of which opposite party No. 1 is the Chief Minister."
It will be noticed that the allegation of mala fides is against the Committee of Privileges and not against the Chief Minister and, therefore, to controvert this allegation an affidavit affirmed by the Secretary to the Bihar Legislative Assembly has been filed. In the affidavit in reply reference is made to certain issues of the Searchlight indicating that charges were being made by the paper against the Chief Minister and the suggestion is that it is at the instance of the Chief Minister that the Committee has now moved in (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (64 of 95) [CW-13758/2022] the matter. This is a new allegation. That apart, the Chief Minister is but one of the fifteen members of the committee and one of the three hundred and nineteen members of the House. The Committee of Privileges ordinarily includes members of all parties represented in the house and it is difficult to expect that the Committee, as a body, will be actuated by any mala fide intention against the petitioner. Further the business of the Committee is only to make a report to the House and the ultimate decision will be that of the House itself. In the circumstances, the allegation of bad faith cannot be readily accepted. It is also urged that the Chief Minister should not take part in the proceedings before the Committee because he has an interest in the matter and reference is made to the decision in Queen v. Meyer (L.R. (1876) 1 Q.B.D. 173. The case of bias of the Chief Minister (respondent 2) has not been made anywhere in the petition and we do not think it would be right to permit the petitioner to raise this question, for it depends on facts which were not mentioned in the petition but were put forward in a rejoinder to which the respondents had no opportunity to reply."
27. In the matter of Jigya Yadav (Minor) through Guardian/Father Hari Singh Vs. CBSE & Ors., reported in (2021) 7 SCC 535, it has been held as under :-
"178. The next issue for consideration is whether it is proper for the High Courts to issue mandamus to the CBSE for correction of certificates in complete contravention of the Byelaws, without examining the validity of the Byelaws. For issuing such directions, reliance has been placed upon Subin Mohammed MANU/KE/2575/2015 : 2016 (1) KLT 340, wherein the Court noted that the case does not involve (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (65 of 95) [CW-13758/2022] correction of a typographical nature, as permissible in the Byelaws, but went on to uphold the right of the student to apply for changes on the basis of statutory certificate. It observed thus:
37. Therefore, we have to proceed on the basis that the bye law of CBSE cannot be applied to the fact situation. But to reconcile the date of birth entry in the mark sheet with that of the entry in the statutory certificate, the candidates should not be left without any remedy. Their right to approach the Court for redressing their grievance cannot be ruled out.
180. The law regarding the writ of mandamus is settled. The foremost requirement for issuance of mandamus is the existence of a legal right against a body which is either a public body or a non-public body performing a public function. In Binny Ltd.
MANU/SC/0470/2005 : (2005) 6 SCC 657, this Court summed up the principle thus:
29. Thus, it can be seen that a writ of mandamus or the remedy Under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public or to compel public/statutory authorities to discharge their duties and to act within their bounds. It may be used to do justice when there is wrongful exercise of power or a refusal to perform duties. This writ is admirably equipped to serve as a judicial control over administrative actions. This writ could also be issued against any private body or person, specially in view of the words used in Article 226 of the Constitution. However, the scope of (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (66 of 95) [CW-13758/2022] mandamus is limited to enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action. Sometimes, it is difficult to distinguish between public law and private law remedies.
According to Halsbury's Laws of England, 3rd Edn., Vol. 30, p. 82, 1317. A public authority is a body, not necessarily a county council, municipal corporation or other local authority, which has public or statutory duties to perform and which perform those duties and carries out its transactions for the benefit of the public and not for private profit.
There cannot be any general definition of public authority or public action. The facts of each case decide the point.
28. In the matter of State of Kerala Vs. Kandath Distilleries, reported in (2013) 6 SCC 573, it has been held as under :-
"30. Legislature when confers a discretionary power on an authority, it has to be exercised by it in its discretion, the decision ought to be that of the authority concerned and not that of the Court. Court would not interfere with or probe into the merits of the decision made by an authority in exercise of its (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (67 of 95) [CW-13758/2022] discretion. Court cannot impede the exercise of discretion of an authority acting under the Statute by issuance of a Writ of Mandamus. A Writ of Mandamus can be issued in favour of an applicant who establishes a legal right in himself and is issued against an authority which has a legal duty to perform, but has failed and/or neglected to do so, but such a legal duty should emanate either in discharge of the public duty or operation of law. We have found that there is no legal duty cast on the Commissioner or the State Government exercising powers under Section 14 of the Act read with Rule 4 of the 1975 Rules to grant the licence applied for. The High Court, in our view, cannot direct the State Government to part with its exclusive privilege. At best, it can direct consideration of an application for licence. If the High Court feels, in spite of its direction, the application has not been properly considered or arbitrarily rejected, the High Court is not powerless to deal with such a situation that does not mean that the High Court can bend or break the law. Granting liquor licence is not like granting licence to drive a cab or parking a vehicle or issuing a municipal licence to set up a grocery or a fruit shop. Before issuing a writ of mandamus, the High Court should have, at the back of its mind, the legislative scheme, its object and purpose, the subject matter, the evil sought to be remedied, State's exclusive privilege etc. and not to be carried away by the idiosyncrasies or the ipse dixit of an officer who authored the order challenged. Majesty of law is to be upheld not by bending or breaking the law but by strengthening the law."
29. In the matter of State of U.P. & Ors. Vs. Uttar Pradesh Rajya Khanij Vikas Nigam S.S. & Ors., reported in (2008) 12 SCC 675, it has been held as under :-
(Downloaded on 11/11/2023 at 07:51:38 PM)[2023:RJ-JP:22694] (68 of 95) [CW-13758/2022] "45. Again, in our considered opinion, it was incumbent on the employees to show the right of absorption of retrenched employees in Government Department or other Public Sector Undertakings. The petitioners had prayed for a writ of mandamus which presupposes a legal right in favour of the applicant.
Such right must be a subsisting right and enforceable in a Court of Law. There must be corresponding legal duty on the part of the respondent-Corporation or Government which required the Corporation or Government 'to do that which a statute required it to do'. No such right of absorption has been shown by the petitioners. Nor any such corresponding duty of the respondents could be shown to the High Court by the employees. As noted above, the case of the Corporation was that the retrenched employees could be absorbed only in accordance with statutory rules framed under proviso to Article 309 of the Constitution. No such direction of absorption of all employees, hence, could be issued by the High Court. The High Court failed to appreciate all these relevant considerations. Even the application by which the Corporation sought to place on record statutory rules was rejected by the Court and a writ of mandamus was issued.
46. It is well settled that a Court of Law can direct the Government or an instrumentality of State by mandamus to act in consonance with law and not in violation of statutory provisions. Unless a Court records a finding that act of absorption of all employees of the Corporation either in Government Department or in any other Public Sector Undertaking is in accordance with law, no writ can be issued. Therefore, even on that ground, the directions of the High Court deserve to be set aside."
(Downloaded on 11/11/2023 at 07:51:38 PM)[2023:RJ-JP:22694] (69 of 95) [CW-13758/2022]
30. In the matter of The Rajasthan State Industrial Development and Investment Corporation & Ors. Vs. Diamond and Gem Development Corporation Ltd. & Ors., reported in (2013) 5 SCC 470, it has been held as under :-
"21. It is evident from the above, that generally the court should not exercise its writ jurisdiction to enforce the contractual obligation. The primary purpose of a writ of mandamus, is to protect and establish rights and to impose a corresponding imperative duty existing in law. It is designed to promote justice (ex debito justiceiae). The grant or refusal of the writ is at the discretion of the court. The writ cannot be granted unless it is established that there is an existing legal right of the applicant, or an existing duty of the Respondent. Thus, the writ does not lie to create or to establish a legal right, but to enforce one that is already established. While dealing with a writ petition, the court must exercise discretion, taking into consideration a wide variety of circumstances, inter-alia, the facts of the case, the exigency that warrants such exercise of discretion, the consequences of grant or refusal of the writ, and the nature and extent of injury that is likely to ensue by such grant or refusal.
22. Hence, discretion must be exercised by the court on grounds of public policy, public interest and public good. The writ is equitable in nature and thus, its issuance is governed by equitable principles. Refusal of relief must be for reasons which would lead to injustice. The prime consideration for the issuance of the said writ is, whether or not substantial justice will be promoted. Furthermore, while granting such a writ, the court must make every effort to ensure from the averments of the writ petition, whether there (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (70 of 95) [CW-13758/2022] exist proper pleadings. In order to maintain the writ of mandamus, the first and foremost requirement is that the petition must not be frivolous, and must be filed in good faith. Additionally, the applicant must make a demand which is clear, plain and unambiguous. It must be made to an officer having the requisite authority to perform the act demanded. Furthermore, the authority against whom mandamus is issued, should have rejected the demand earlier. Therefore, a demand and its subsequent refusal, either by words, or by conduct, are necessary to satisfy the court that the opposite party is determined to ignore the demand of the applicant with respect to the enforcement of his legal right. However, a demand may not be necessary when the same is manifest from the facts of the case, that is, when it is an empty formality, or when it is obvious that the opposite party would not consider the demand."
31. In the matter of In Re: Special Reference No.1 of 2012, reported in (2012) 10 SCC 1, it has been held as under :-
"146. To summarize in the context of the present Reference, it needs to be emphasized that this Court cannot conduct a comparative study of the various methods of distribution of natural resources and suggest the most efficacious mode, if there is one universal efficacious method in the first place. It respects the mandate and wisdom of the executive for such matters. The methodology pertaining to disposal of natural resources is clearly an economic policy. It entails intricate economic choices and the Court lacks the necessary expertise to make them. As has been repeatedly said, it cannot, and shall not, be the endeavour of this Court to evaluate the efficacy of auction vis-à-vis other methods of disposal (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (71 of 95) [CW-13758/2022] of natural resources. The Court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a constitutional mandate. We may, however, hasten to add that the Court can test the legality and constitutionality of these methods. When questioned, the Courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as to which methods are ultra vires and intra vires the provisions of the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court would not hesitate in striking it down."
32. In the matter of Ramjas Foundation & Ors. Vs. Union of India (UOI) & Ors., reported in (2010) 14 SCC 38, it has been held as under :-
"21. The principle that a person who does not come to the Court with clean hands is not entitled to be heard on the merits of his grievance and, in any case, such person is not entitled to any relief is applicable not only to the petitions filed under Articles 32, 226 and 136 of the Constitution but also to the cases instituted in others courts and judicial forums. The object underlying the principle is that every Court is not only entitled but is duty bound to protect itself from unscrupulous litigants who do not have any respect for truth and who try to pollute the stream of justice by resorting to falsehood or by making misstatement or by suppressing facts which have bearing on adjudication of the issue(s) arising in the case."(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (72 of 95) [CW-13758/2022]
33. In the matter of Bhaskar Laxman Jadhav Vs. Karamveer Kakasaheb Wagh Education Society, reported in (2013) 11 SCC 531, it has been held as under :-
"44. It is not for a litigant to decide what fact is material for adjudicating a case and what is not material. It is the obligation of a litigant to disclose all the facts of a case and leave the decision making to the Court. True, there is a mention of the order dated 2nd May 2003 in the order dated 24th July 2006 passed by the JCC, but that is not enough disclosure. The Petitioners have not clearly disclosed the facts and circumstances in which the order dated 2nd May 2003 was passed or that it has attained finality."
34. In the matter of Sciemed Overseas Inc. Vs. BOC India Ltd., reported in (2016) 3 SCC 70, it has been held as under :-
"27. In the first instance, the work order was issued to Sciemed on 25th July, 2007 but this was not disclosed to the High Court when it disposed of W.P.(C) No. 4203 of 2007 on 31st July, 2007. Had the factual position been disclosed to the High Court, perhaps the outcome of the writ petition filed by BOC would have been different and the issue might not have even travelled up to this Court. Furthermore, apparently to ensure that work order goes through, a false or misleading statement was made before this Court on affidavit when the matter was taken up on 14th March, 2008 to the effect that the work was nearing completion. It is not possible to accept the view canvassed by learned Counsel that the false or misleading statement had no impact on the decision rendered by this Court on 14th March, 2008. We cannot hypothesize on what transpired in the proceedings before this Court nor can we imagine what could or could not have weighed with this Court when it rendered its decision on 14th March, (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (73 of 95) [CW-13758/2022] 2008. The fact of the matter is that a false or misleading statement was made before this Court and that by itself is enough to invite an adverse reaction.
28. In Suo Moto Proceedings Against R. Karuppan, Advocate MANU/SC/0338/2001 : (2001) 5 SCC 289 this Court had observed that the sanctity of affidavits filed by parties has to be preserved and protected and at the same time the filing of irresponsible statements without any regard to accuracy has to be discouraged. It was observed by this Court as follows:
13. Courts are entrusted with the powers of dispensation and adjudication of justice of the rival claims of the parties besides determining the criminal liability of the offenders for offences committed against the society. The courts are further expected to do justice quickly and impartially not being biased by any extraneous considerations. Justice dispensation system would be wrecked if statutory restrictions are not imposed upon the litigants, who attempt to mislead the court by filing and relying upon false evidence particularly in cases, the adjudication of which is dependent upon the statement of facts. If the result of the proceedings are to be respected, these issues before the courts must be resolved to the extent possible in accordance with the truth. The purity of proceedings of the court cannot be permitted to be sullied by a party on frivolous, vexatious or insufficient grounds or relying upon false evidence inspired by extraneous considerations or revengeful desire to harass or spite his opponent. Sanctity of the affidavits has to be preserved and protected (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (74 of 95) [CW-13758/2022] discouraging the filing of irresponsible statements, without any regard to accuracy.
35. In the matter of Yashwant Sinha & Ors. Vs. Central Bureau of Investigation & Ors., reported in (2020) 2 SCC 338, it has been held as under :-
"16. Insofar as the aspect of pricing is concerned, the Court satisfied itself with the material made available. It is not the function of this Court to determine the prices nor for that matter can such aspects be dealt with on mere suspicion of persons who decide to approach the Court. The internal mechanism of such pricing would take care of the situation. On the perusal of documents we had found that one cannot compare apples and oranges. Thus, the pricing of the basic aircraft had to be compared which was competitively marginally lower. As to what should be loaded on the aircraft or not and what further pricing should be added has to be left to the best judgment of the competent authorities."
36. In the matter of Union of India (UOI) & Ors. Vs. CIPLA Ltd. & Ors., reported in (2017) 5 SCC 262, it has been held as under :-
"90. The submission made by the Appellants in that case was that even though "price fixation is neither the function nor the forte of the court, it is neither concerned with the policy nor the rates. But the court cannot deny to itself the jurisdiction to enquire into the question, in appropriate proceedings, whether relevant considerations have gone in and irrelevant considerations kept out of the determination of the price.
91. In that context and in response to the submission made, this Court drew a distinction between price fixation governed by statutory considerations and price (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (75 of 95) [CW-13758/2022] fixation governed by non-statutory considerations. It was held that on this basis Union of India v. Cynamide India Ltd. and Another MANU/SC/0076/1987 : (1987) 2 SCC 720 was distinguishable since it dealt with price fixation based on statutory considerations. In a case of price fixation having its origin on non-statutory materials the scope of judicial scrutiny would be far less. It was said in paragraph 15 of the Report as follows:
This Court was examining [in Cynamide India] the scope of judicial scrutiny in the matters of price fixation where it was governed by statutory provisions. The scope of judicial scrutiny would be far less where the price fixation is not governed by the statute or a statutory order. Where the legislature has prescribed the factors which should be taken into consideration and which should guide the determination of price, the courts would examine whether the considerations for fixing the price mentioned in the statute or the statutory order have been kept in mind while fixing the price and whether these factors have guided the determination. The courts would not go beyond that point. In the present appeals, there is no law, or any statutory provision laying down the criteria or the principles which must be followed, or which must guide the determination of rates of royalty. No doubt, any arbitrary action taken by the State would be subject to scrutiny by the courts because arbitrariness is the very antithesis of Rule of law. But this does not mean that this Court would act as an Appellate Authority over the determination of rates of royalty by the Government..... It is open to (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (76 of 95) [CW-13758/2022] the Government to fix such price as it thinks appropriate having regard to public interest, which inter alia, may include interest of revenue, environmental, ecology, the need of mills and the requirements of other consumers. The price is not to be fixed keeping in mind the requirements of the mills alone."
37. In the matter of Sai Bhaskar Iron Ltd. Vs. A.P. Electricity Regulatory Commission, reported in (2016) 9 SCC 134, it has been held as under :-
"29. The scope of interference in judicial review in such matters reserved for expert bodies is limited. The court cannot substitute its opinion. It has been laid down by this Court that price fixation is not the function of the court. This Court in Pulak Enterprises (supra) has discussed the scope of interference in such a matter thus:
29. The significance of the question as to whether fixing the rate of fuel surcharge is a legislative function or a non-legislative function is that if the function is held to be legislative, in the absence of any provision in that regard the principles of natural justice would not be applicable and the scope of judicial review would also be limited to plea of discrimination i.e. violation of Article 14 of the Constitution of India. As a general proposition, the law on the point is settled.
30. In Prag Ice and Oil Mills v. Union of India MANU/SC/0493/1978 : (1978) 3 SCC 459 a seven-Judge Bench of this Court by majority observed: (SCC p. 490, para 52)
52. ... In the ultimate analysis, the mechanics of price fixation has necessarily to be left to the (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (77 of 95) [CW-13758/2022] judgment of the executive and unless it is patent that there is hostile discrimination against a class of [persons], the processual basis of price fixation has to be accepted in the generality of cases as valid.
31. The legal position was reiterated in Rohtas Industries Ltd. v. Bihar SEB MANU/SC/0168/1984 : (1984) Supp. SCC 161 and Kerala SEB v. S.N. Govinda Prabhu and Bros. MANU/SC/0288/1986 : (1986) 4 SCC 198 wherein it was observed, " 'price fixation' is neither the forte nor the function of the court"
32. As regards the nature of the function, in Saraswati Industrial Syndicate Ltd. v. Union of India MANU/SC/0075/1974 : (1974) 2 SCC 630 the Court had observed (at SCC p. 636, para
13) that "price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material". It should not, therefore, give rise to a complaint that Rule of natural justice has not been followed in fixing the price. In Prag Ice and Oil Mills v. Union of India MANU/SC/0493/1978 : (1978) 3 SCC 459 the Court observed: (SCC p. 482, para 37)
37. We think that unless, by the terms of a particular statute, or order, price fixation is made a quasi-judicial function for specified purposes or cases, it is really legislative in character.... A legislative measure does not concern itself to the facts of an individual case.
It is meant to lay down a general Rule applicable to all persons or objects or transactions of a particular kind or class.
(Downloaded on 11/11/2023 at 07:51:38 PM)[2023:RJ-JP:22694] (78 of 95) [CW-13758/2022]
33. In Union of India v. Cynamide India Ltd. MANU/SC/0076/1987 : (1987) 2 SCC 720 this Court held that except in cases where it becomes necessary to fix the price separately in relation to individuals, price fixation is generally a legislative act, the performance of which does not require giving opportunity of hearing. Following passage from the judgment may usefully be noticed: (SCC pp. 734-35, para 5)
5. ... legislative action, plenary or subordinate, is not subject to Rules of natural justice. In the case of parliamentary legislation, the proposition is self-evident. In the case of subordinate legislation, it may happen that Parliament may itself provide for a notice and for a hearing--there are several instances of the legislature requiring the subordinate legislating authority to give public notice and a public hearing before say, for example, levying a municipal rate--in which case the substantial non-observance of the statutorily prescribed mode of observing natural justice may have the effect of invalidating the subordinate legislation. ... But, where the legislature has not chosen to provide for any notice or hearing, no one can insist upon it and it will not be permissible to read natural justice into such legislative activity. Reference may also be made to a Constitution Bench decision in Shri Sitaram Sugar Co. Ltd. v. Union of India
34. In a sense, fixing rate of fuel surcharge under Clause 16.10 of the tariff notification is different from fixing the tariff Under Section 49 of the Act. Fuel surcharge is undoubtedly a part of tariff. But fixing rates of consumption charges or the guaranteed charges or the fixed charges (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (79 of 95) [CW-13758/2022] or the delayed payment surcharge, etc. and fixing rates of fuel surcharge do not stand on a par. Though rates of consumption charges, etc. are based on objective materials, there is enough scope for flexibility in fixing the rates. It also involves policy to fix different rates for different categories of consumers. Such is not the position with the fuel surcharge.
35. Clause 16.10.1 specifies the categories coming in the net of the levy and Clause 16.10.3 provides the formula. In simple words, the formula envisages addition of units generated or purchased and increased average cost of fuel and average unit rate of purchase rates and division of the total by the quotient is the average fuel surcharge per unit (expressed in terms of paise) described by denominator S1 in the formula. The whole exercise, it would appear, involves arithmetical accounting. There is no scope for exercise of any discretion or flexibility. This distinction, however, does not help the Petitioners. It rather goes against them because if fixing rate of fuel surcharge is just an arithmetical exercise, giving opportunity of hearing would hardly serve any useful purpose.
30. In National Thermal Power Corporation Ltd. (supra), this Court has observed that price fixation is legislative in character. In PTC India Ltd. (supra) also, this Court has held that fixation of tariff like price fixation is legislative in character. The functions of the Commission have been held to be adjudicatory, advisory and legislative. The powers and functions enumerated Under Section 178 of the Act of 2003 confer wide powers upon the Commission (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (80 of 95) [CW-13758/2022] to frame Regulations which cannot be said to be ultra vires.
31. This Court in Association of Industrial & Electricity Users (supra) has observed that the court has not to act as an appellate authority and laid down the scope of judicial interference in such matters thus:
11. We also agree with the High Court that the judicial review in a matter with regard to fixation of tariff has not to be as that of an Appellate Authority in exercise of its jurisdiction Under Article 226 of the Constitution. All that the High Court has to be satisfied with is that the Commission has followed the proper procedure and unless it can be demonstrated that its decision is on the face of it arbitrary or illegal or contrary to the Act, the court will not interfere. Fixing a tariff and providing for cross-
subsidy is essentially a matter of policy and normally a court would refrain from interfering with a policy decision unless the power exercised is arbitrary or ex facie bad in law.
32. No doubt about it that Section 26(9) and Sections 61 and 62(4) of the Act of 2003 contain an embargo on variation of tariff more than once in a financial year. Negative words are prohibitory and are ordinarily used as legislative devise to make a statute imperative as laid down by this Court in M. Pentiah and Ors. v. Muddala Veeramallappa and Ors. MANU/SC/0263/1960 : AIR 1961 1107 and as emphasized by this Court in Mannalal Khetan and Ors. v. Kedar Nath Khetan and Ors.
MANU/SC/0060/1976 : 1977(2) SCC 424.
However, there is a positive mandate as to FSA variation which cannot be ignored and has to be (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (81 of 95) [CW-13758/2022] given full effect. While doing so there is no variation of tariff as contemplated under the aforesaid provisions. Mechanism of determination of tariff is different."
38. In the matter of Essar Steels Ltd. Vs. Union of India (UOI) & Ors., reported in (2016) 11 SCC 1, it has been held as under :-
"57. The next major contention advanced on behalf of the Appellants is that since the communication dated 06.03.2007 is not a legislative action, hence price of RLNG could not have been fixed by virtue of that, and that it must be viewed more suspiciously as it is for the benefit of only one entity, viz., RGPPL. We are unable to agree with this contention. Various cases have been cited by the Appellants to show that price fixing is a legislative function. The same does not come to the rescue of the Appellants, because they have not appreciated in their entirety in a proper perspective.
39. In the matter of Rayalaseema Paper Mills Ltd. & Ors. Vs. Govt. of A.P. & Ors., reported in 2003 (1) SCC 341, it has been held as under :-
"15. This Court was examining the scope of judicial scrutiny in the matters of price fixation where it was governed by statutory provisions. The Scope of judicial scrutiny would be far less where the price fixation is not governed by the statute or a statutory order. Where the legislature has prescribed the factors which should be taken into consideration and which should guide the determination of price, the courts would examine whether the considerations for fixing the price mentioned in (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (82 of 95) [CW-13758/2022] the statute or the statutory order have been kept in mind while fixing the price and whether these factors have guided the determination. The courts would not got beyond that point. In the present appeals, there is no law, or any statutory provision laying down the criteria or the principles which must be followed, or which must guide the determination of rates of royalty. No doubt, any arbitrary action taken by the State would be subject to the scrutiny by the courts because arbitrariness is the very antithesis of rule of law. But this does not mean that this Court would act as an appellate authority over the determination of rates of royalty by the government. Government is the owner of the products. While it had agreed to supply a particular quantity every year for specified period, it had never agreed to supply at a particular rate; not did it stipulate with the mill owners the basis upon which it would determine the rates of royalty. It is open to the government to fix such price as it thinks appropriate having regarded to public interest, which inter alia, may include interest of revenue, environmental, ecology, the need of mills and the requirements of other consumers. The price is not to be fixed keeping in mind the requirements of the mills alone."
40. In the matter of Kerala State Electricity Board Vs. S.N. Govinda Prabhu & Bros. & Ors., reported in 1986 (4) SCC 198, it has been held as under :-
"10. We may also refer here to the decision of the Privy Council in Madras and Southern Mahratta Railway Company Ltd. v. Bezwada Municipality MANU/PR/0060/1944 which (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (83 of 95) [CW-13758/2022] affirmed the Judgment of the Madras High Court in Madras and Southern Mahratta Railway Company Limited v. The Municipal Council Bezwada ILR 1941 Mad 897. One of the questions there raised was whether in the absence of rules made by the State Government, the Municipal Council was entitled to determine the capital value of property in the face of a provision which stated, Provided that such percentage or rates shall not exceed the maxima, if any, fixed by the Local Government and that the capital value of such lands shall be determined in such manner as may be prescribed.
The High Court, in that case had observed, and we agree with what had been said:
We cannot accept the contention of the
appellant that, merely because the Local
Government has not prescribed the manner in which the capital value should be determined, the municipal council is deprived of the power of levying the tax under Section 81(3) ...the omission of the rule-making authority to frame rules cannot take away the right of the municipal council to levy tax at the rate mentioned in the notification issued under Clause 3. If, for instance, the Local Government refrained from prescribing the manner in which the value of such lands should be determined, it cannot, we think, be said that the municipal council has no power at all to levy the tax at a percentage of the capital value merely because the method of determining the capital value has not been prescribed by the Local Government. If the Local Government does not prescribe it, (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (84 of 95) [CW-13758/2022] then the municipal authority is free in our opinion to fix it in any manner it chooses. We are of the view that the failure of the Government to specify the surplus which may be generated by the Board cannot prevent the Board from generating a surplus after meeting the expenses required to be met. Perhaps, the quantum of surplus may not exceed what a prudent public service undertaking may be expected to generate without sacrificing the interests it is expected to serve and without being obsessed by the pure profit motive of the private entrepreneur . The Board may not allow its character as a public utility undertaking to be changed into that of a profit motivated private trading or manufacturing house. Neither the tariffs nor the resulting surplus may reach such heights as to lead to the inevitable conclusion that the Board has shed its public utility character. When that happens the Court may strike down the revision of tariffs as plainly arbitrary. But not until then. Not, merely because a surplus has been generated, a surplus which can by no means be said to be extravagant. The court will then refrain from touching the tariffs. After all, as has been said by this Court often enough 'price fixation' is neither the forte nor the function of the court.
11. The occasional excursions that have been made into that field were at the request and by the agreement of the parties. This was made clear by a Constitution Bench of seven judges of this Court in Prag Ice and Oil Mills v. Union of India MANU/SC/0493/1978 : 1978CriLJ1281a where it was said:(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (85 of 95) [CW-13758/2022] "It is customary in price fixation cases to cite the oft quoted decision in Premier Automobiles Ltd. v. Union of India which concerned the fixation of price of motor cars. It is time that it was realized that the decision constitutes no precedent in matters of price fixation and was rendered for reasons peculiar to the particular case. At page 535 of the Report Grover, J., who spoke for the Court, stated at the outset of the judgment.
"Counsel for all the parties and the learned Attorney General are agreed that irrespective of the technical or legal points that may be involved, we should base our judgment on examination of correct and rational principles and should direct deviation from the report of the Commission which was an expert body presided over by a former judge of a High Court only when it is shown that there has been a departure from established principles or the conclusions of the Commission are shown to be demonstrably wrong or erroneous."
By an agreement of parties the court was thus converted into a Tribunal for considering every minute detail relating to price fixation of motor cars. Secondly, as regards the escalation clause the Court recorded at page 543 that it was not disputed on behalf of the Government and the Attorney General accepted the position, that a proper method should be devised for escalation or de-escalation. Thirdly, it is clear from page 544 of the Report that the Learned Attorney- General also agreed that a reasonable return must be allowed to the manufacturers on their investment. The decision thus proceeded partly on an agreement between the parties and (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (86 of 95) [CW-13758/2022] partly on concessions made at the Bar. That is the person why the judgment in Premier Automobiles (supra) cannot be treated as a precedent and cannot afford any appreciable assistance in the decision of price fixation cases.
The position was again clarified in Rohtas Industries v. Bihar State Electricity Board (supra):
As pointed out by this Court in Prag Ice & Oil Mills and Anr. v. Union of India, in the ultimate analysis, the mechanics of price fixation is necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of person, the processual basis of price fixation is to be accepted in the generality of cases as valid."
41. In the matter of Jindal Stainless Ltd. & Ors. Vs. State of Haryana & Ors., reported in 2017(12) SCC 1, it has been held as under :-
"140. The legal position as to the approach that courts adopt towards fiscal measures while examining their constitutional validity is fairly well settled by a long line of decisions of this Court. The law on the subject is so well settled that it calls for no elaborate discussion of the same. Courts have almost universally accepted the principle that keeping in view the inherent complexities of fiscal adjustments and the diverse elements and inputs that go into such exercise a greater latitude is due to the legislature in taxation related legislations. It is unnecessary to refer to all the decisions in which this Court has conceded such play at the joints to the legislature. Reference to some of the (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (87 of 95) [CW-13758/2022] decision of this Court should in our opinion suffice. In Mafatlal v. Union of India MANU/SC/1203/1997 : 1997(5) SCC 536 in a separate but concurring opinion Paripoornan, J. held:
343.....In the matter of taxation laws, the Court permits a great latitude to the discretion to the legislature. The State is allowed to pick and choose districts, objects, persons, methods and even rate for taxation if it does so reasonably. The Courts view the laws relating to economic activities with greater latitude than other matters. [See Collector of Customs v. Nathella Sampathu Chetty and Anr. MANU/SC/0089/1961 : AIR 1962 SC 316; Khyerbari Tea Co. Ltd. and Anr. v. State of Assam and Ors.
MANU/SC/0048/1963 : AIR 1964 SC 925; R.K. Garg v. Union of India and Ors.
MANU/SC/0074/1981 : AIR 1981 SC 2138; Gauri Shanker and Ors v. Union of India and Ors. MANU/SC/0010/1995 : (1994) 6 SCC 349 and Union of India and Anr. v. A. Sanyasi Rao and Ors. MANU/SC/0326/1996 : (1996) 3 SCC 465] etc.
141. Reference may also be made to the Constitution bench decision of this Court in Khandige Sham Bhat v. Agrl. ITO MANU/SC/0189/1962 : AIR 1963 SC 591 where this Court declared that a law may facially appear to be non discrimination and yet its impact on persons and property similarly situate may operate unequally in which event, the law would offend the equity clause. This implies that facial equality is not the only test for determining whether the law is constitutionally (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (88 of 95) [CW-13758/2022] valid. What is equally important is the impact of the legislation. This Court held:
7...Though a law ex facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law offends the equality clause. It will then be the duty of the court to scrutinise the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat persons who appear to be similarly situate differently; but on investigation they may be found not to be similarly situate. To state it differently, it is not the phraseology of a statute that governs the situation but the effect of the law that is decisive. If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment. Taxation law is not an exception to this doctrine vide Purshottam Govindji v. B.M. Desai, and Kunnathat Thathuni Moopil Nair v. State of Kerala. But in the application of the principles, the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the legislature to classify is of "wide range and flexibility" so that it can adjust its system of taxation in all proper and reasonable ways."(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (89 of 95) [CW-13758/2022]
42. In the matter of Indian Oil Corporation Limited Vs. State of Bihar & Ors., reported in 2018(1) SCC 242, it has been held as under :-
"25. When it comes to taxing statutes, the law laid down by this Court is clear that Article 14 of the Constitution can be said to be breached only when there is perversity or gross disparity resulting in clear and hostile discrimination practiced by the legislature, without any rational justification for the same. (See The Twyford Tea Co. Ltd. and Anr. v. The State of Kerala and Anr., MANU/SC/0405/1970 : (1970) 1 SCC 189 at paras 16 and 19; Ganga Sugar Corporation Ltd.
v. State of Uttar Pradesh and Ors., MANU/SC/0397/1979 : (1980) 1 SCC 223 at 236 and P.M. Ashwathanarayana Setty and Ors. v.
State of Karnataka and Ors., MANU/SC/0360/1988 : (1989) Supp. (1) SCC 696 at 724-726)."
43. In the matter of Biraji & Ors. Vs. Surya Pratap & Ors., reported in 2020(10) SCC 729 it has been held as under :-
"8. Having heard the learned Counsels on both sides, we have perused the impugned orders and other material placed on record. The suit in Original Suit No. 107/2010 is filed for cancellation of registered adoption deed and for consequential injunction orders. In the adoption deed itself, the ceremony which had taken place on 14.11.2001 was mentioned, hence it was within the knowledge of the Appellants-Plaintiffs even on the date of filing of the suit. In the absence of any pleading in the suit filed by the Appellants, at belated stage, after evidence is closed, the Appellants have filed the application (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (90 of 95) [CW-13758/2022] to summon the record relating to leave/service of Ramesh Chander Singh on 14.11.2001 from the Rajput Regiment Centre Fatehgarh. It is fairly well settled that in absence of pleading, any amount of evidence will not help the party. When the adoption ceremony, which had taken place on 14.11.2001, is mentioned in the registered adoption deed, which was questioned in the suit, there is absolutely no reason for not raising specific plea in the suit and to file application at belated stage to summon the record to prove that the second Respondent-Ramesh Chander Singh was on duty as on 14.11.2001. There was an order from the High Court for expeditious disposal of the suit and the application which was filed belatedly is rightly dismissed by the Trial Court and confirmed by the Revisional Court and High Court.
44. In the matter of Bacchaj Nahar Vs. Nilima Mandal & Ors., reported in 2008(17) SCC 491, it has been held as under :-
"13. The object of issues is to identify from the pleadings the questions or points required to be decided by the courts so as to enable parties to let in evidence thereon. When the facts necessary to make out a particular claim, or to seek a particular relief, are not found in the plaint, the court cannot focus the attention of the parties, or its own attention on that claim or relief, by framing an appropriate issue.
As a result the defendant does not get an opportunity to place the facts and contentions necessary to repudiate or challenge such a claim or relief. Therefore, the court cannot, on finding that the plaintiff has not made out the case put forth by him, grant some other relief. The (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (91 of 95) [CW-13758/2022] question before a court is not whether there is some material on the basis of which some relief can be granted. The question is whether any relief can be granted, when the defendant had no opportunity to show that the relief proposed by the court could not be granted. When there is no prayer for a particular relief and no pleadings to support such a relief, and when defendant has no opportunity to resist or oppose such a relief, if the court considers and grants such a relief, it will lead to miscarriage of justice.
Thus it is said that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief."
45. In the matter of Union of India (UOI) & Ors. Vs. VKC Footsteps India Pvt. Ltd, reported in 2022(2) SCC 603, it has been held as under :-
"73. Equality, it has been stressed in the above submission, cannot be cabined, cribbed and confined. Differentiating between goods and services, it has been urged, is not permissible and does not have a reasonable nexus to the object sought to be achieved. There is an evident difference in the rates at which goods and services are taxed but, according to the submission, this is not a provision for revenue harvesting. Finally, on this limb of submission, it has been urged that the wide latitude which is available with the legislature in the case of fiscal legislation is only where a revenue harvesting measure is involved. The twin test of reasonableness and the nexus with the object (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (92 of 95) [CW-13758/2022] sought to be achieved must be demonstrated. The nexus (a) must be based on the object of the legislation alone; and (b) indicate a discernible principle which emanates from the classification. With the clarification on inputs by the Ministry of Finance, it is urged that no discernible principle emerges.
76. (iii) In matters of classification, involving fiscal legislation, the legislature is permitted a larger discretion so long as there is no transgression of the fundamental principle underlying the doctrine of classification. In Hiralal Rattanlal (supra), Justice KS Hegde, speaking for a four judge Bench observed:
20. It must be noticed that generally speaking the primary purpose of the levy of all taxes is to raise funds for public good. Which person should be taxed, what transaction should be taxed or what goods should be taxed, depends upon social, economic and administrative considerations. In a democratic set up it is for the Legislature to decide what economic or social policy it should pursue or what administrative considerations it should bear in mind. The classification between the processed or split pulses and unprocessed or unsplit pulses is a reasonable classification. It is based on the use to which those goods can be put.
Hence, in our opinion, the impugned classification is not violative of Article 14.(Downloaded on 11/11/2023 at 07:51:38 PM)
[2023:RJ-JP:22694] (93 of 95) [CW-13758/2022]
80. The Court held that the principle of equality does not preclude the classification of property, trade, profession and events for taxation- subjecting one kind to one rate of taxation and another to a different rate. The State may exempt certain classes of property from any taxation at all and impose different specific taxes upon different species which it seeks to regulate. The Court held:
27. "Perfect equality in taxation has been said time and again, to be impossible and unattainable. Approximation to it is all that can be had. Under any system of taxation, however, wisely and carefully framed, a disproportionate share of the public burdens would be thrown on certain kinds of property, because they are visible and tangible, while others are of a nature to elude vigilance. It is only where statutes are passed which impose taxes on false and unjust principle, or operate to produce gross inequality, so that they cannot be deemed in any just sense proportional in their effect on those who are to bear the public charges that courts can interpose and arrest the course of legislation by declaring such enactments void." "Perfectly equal taxation", it has been said, "will remain an unattainable good as long as laws and government and man are imperfect." 'Perfect uniformity and perfect equality of taxation', in all the aspects in which the human mind can view it, is a baseless dream."
46. Heard counsel for the parties and perused the record.
47. These writ petitions filed on behalf of the petitioners deserve to be dismissed for the reasons; firstly in the entire writ petitions (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (94 of 95) [CW-13758/2022] there is no privity shown of contract between the petitioners and the respondents rather the contract was for reimbursement of the DES, tripartite contract for which was entered into between the State Agency, Insurance Company and the hospitals where the patient is to be treated; secondly there is no allegation of mala fide levelled by the petitioners in the writ petitions and no person by name has been impleaded as party by which it can be said that the impugned order has been passed just to favour any individual person/entity; thirdly USFDA approved DES are of better quality products and one of the petitioner has also applied for certification from USFDA which shows that the petitioners are inclined to have the certificate; fourthly the decision taken by the respondents is in public interest for providing better quality of DES to the citizens (patients) within the State of Rajasthan and the object behind revising the rates appears to be that more & more patients may be treated by the hospitals and such DES can be implanted to the ailing patients; fifthly, according to the additional affidavit filed on behalf of the respondents the petitioners are supplying the DES at a lower price to the Tamilmnadu Medical Service Corporation @ Rs.7950/- which is less than the claim being received in the State of Rajasthan i.e. @ Rs.12500/- and lastly in view of what has been discussed here-in-above, the petitioner-companies have failed to make out a case of arbitrariness of the Government in taking such a decision of reduction in the price of the DES and that being so the argument of petitioners' counsel of there being discrimination is not sustainable and deserves rejection, therefore under the facts and circumstances and from perusal of the (Downloaded on 11/11/2023 at 07:51:38 PM) [2023:RJ-JP:22694] (95 of 95) [CW-13758/2022] material which has come on record, in my considered view no case is made out for interference by this Court under Article 226 of the Constitution of India.
48. In that view of the matter, the writ petitions are dismissed.
Copy of this order be separately placed in each connected file.
(INDERJEET SINGH),J VIJAY SINGH SHEKHAWAT /40 (Downloaded on 11/11/2023 at 07:51:38 PM) Powered by TCPDF (www.tcpdf.org)