Madhya Pradesh High Court
M/S Kutch Brine Chem Industries vs The State Of Madhya Pradesh on 22 July, 2013
Author: Vimla Jain
Bench: Vimla Jain
1
HIGH COURT OF MADHYA PRADESH PRINCIPAL SEAT
AT JABALPUR
W.P. No.8815/2013
M/s Kutch Brine Chem Industries
Vs.
State of M.P. & another
Present: Hon'ble Shri Rajendra Menon, J. &
Hon'ble Mrs. Vimla Jain, J.
______________________________________________________
Shri Siddharth Gupta, learned counsel for the petitioner.
Shri R. D. Jain, learned Advocate General with Shri
Shobhit Aditya, for the respondents.
__________________________________________________
ORDER
( 2272013 ) Per : Shri Rajendra Menon, J.
Challenging certain conditions enumerated in a notice inviting tender issued by the M.P. State Civil Supply Corporation on 20 th April, 2013, petitioner has filed this writ petition.
2. Petitioner claims to be a duly registered partnership firm engaged in the business of processing , manufacturing, sale and supply of Refined Iodized Salt (herein after referred as "RIS"). It is said that the petitioner's firms is currently supplying the said RIS salt to large number of private and multinational companies like the TATA and the 2 Reliance Group. The petitioner Company has given details of its credentials to show that it is a reputed firm for the product in question. It is further stated that the petitioner's firm possesses the Bureau of Standard Industries Grade and is a certified license holder, having been issued with the appropriate license by the Bureau of Indian Standards in accordance to the requirement of the Bureau of Indian Standards Act, 1986 (hereinafter referred to as "the Act of 1986"), the rules and regulations framed thereunder. It is also said that the firm possesses the requisite capacity for producing large quantity of this product and the production capacity of the petitioner's firm is said to be more than 1 Lac metric tonnes per annum. The requisite Certificate issued by the Bureau of Indian Standard, the license, the vouchers showing supply to M/s Tata Chemicals Ltd., Reliance Industries etc. and the Certificate of the firms financial capacity and turn over certified by the Chartered Accountant and the Certificate issued by the Directorate of Salt Commission, Government of India are all filed by the petitioner vide Annexure P/4 to P/6 to say that it is a reputed manufacturer of RIS.
3. It is said that the Government of M.P. issued a notice inviting tender vide Annexure P/1 for supplying about 90,000 Metric Tonne of RIS salt from various agencies for the period 10.5.2013 to 30.4.2014. In the said NIT issued certain minimum criterion to be fulfilled by the tenderer was specified in Clause 5 and the petitioner is aggrieved by certain conditions stipulated therein particularly in clause 6(4) and 6(7). Even though in the NIT the conditions are indicated in 3 Hindi but the petitioner has reproduced the same and for the sake of convenience in English the same read as under :-
"(a) Clause 6(7) of tender document, The applicant should have supplied RIS salt to State/ Central Government/ Multinational Companies for a period of at least 2 years, with minimum supply of 10,000 metric tonnes per annum of the RIS salt with "ISI marking " on it.
(b) Clause 6(4.1) of tender document : The applicant should have annual turnover of Rs.20 Crores in supply of "ISI marked " RIS salt.
(c) Clause 6(4) of tender document: The applicant should have annual production capacity of minimum 75000 metric tonnes per annum of "ISI marked " RIS salt.
(Emphasis supplied)
4. According to the petitioner the requirement of the tenderer being a manufacturer or supplier meeting the requirement of having manufactured, sold or supplied the salt with ISI marking is an arbitrary condition. It is said that the petitioner possesses the requisite statutory ISI grade and standard notified by the Bureau of Indian Standard in accordance to the Act of 1986, the rules and regulations framed therein and once the petitioner is a requisite license holder, licensed under the statute with a certifying license to manufacture and sell the product, the condition for insisting upon sale and supply of the product with ISI Marking as one of the eligibility condition is an arbitrary and unreasonable 4 reason only to exclude and debar the petitioner from the process of participating in the impugned tender process. The petitioner in sum and substance is aggrieved by the condition which stipulates that the salt being manufactured and supplied by the tenderer should be with "ISI marking". It is said that by debarring a licensed and authorized manufacturer and supplier who is duly authorized under the law to manufacture and supply the product who also meets all the other conditions of the NIT and to keep him away from competition only because he is not using the "ISI mark" on his product is an arbitrary devise and amounts to discrimination in the matter of consideration of equally situated manufacturers and creates a class within the manufacturer of RIS salt. It is stated that once the statutory provisions as contained in the Act of 1986 and the rules and regulations framed thereunder permit manufacture and sale of the RIS salt by a licensed manufacturer, who meet the ISI grade and standard, fixed and stipulated in the statute then the respondent State Government cannot distinguish between such a standard and licensed manufacturer from that of a manufacturer who uses the ISI mark which is nothing but a standard mark. Accordingly, contending that the stipulation contained in the tender document which insist upon the supplier using the ISI mark in the product is an arbitrary and illegal condition which cannot be imposed, this writ petition has been filed.
5. Shri Siddharth Gupta, learned counsel for the petitioner at length read the conditions of the tender and referred to the provisions of the Bureau of Indian Standards Act, 1986. The definition of Indian Standard, License 5 specification and Standard Mark as stipulated therein in Section 2 (g), (j), (s) and (t), took us through the functions of the Bureau as contemplated under Section 10, the procedure for inspection and requirement of specifying standard mark and tried to emphasize that once the certification and license as required under the Act of 1986 and the regulations of 1988 framed thereunder are fulfilled and when a licensee after following the procedure contemplated under regulation 3, 4 and 5 of the Bureau of the Indian Standard (Certification) Regulations 1988 (hereinafter referred to as " the regulations of 1988") is available i.e. a supplier or manufacturer like the petitioner, merely because the manufacturer or supplier is not using the Indian Standard Certification mark on the product namely "the ISI mark", it is said that prohibiting such a manufacturer amounts to discrimination and is unsustainable. Taking us through the manufacturing capacity, the process followed by the petitioner and the license and certificate granted by various authorities, it was said that the condition for insisting upon supply of salt with ISI marking is nothing but an arbitrary condition which cannot be upheld and as the said condition creates a discrimination, it is unsustainable. In support of his contention, he invites our attention to a judgment rendered by a Bench of this Court in the case of Gyan Singh Sisodia Vs. State of M.P. and others - 2010(3) MPLJ 324, Jespar I. Slong Vs. State of Meghalaya and others - 2004 (11) SCC pg. 485, Reliance Energy Ltd. and another Vs. Maharashtra State Road Development Corpn. Ltd. and others - 2007(8) SCC Pg. 1 and Meerut Development Authority Vs. Association of Management 6 Studies and another - 2009(6) SCC Page 171, to say that in a Government contracts even though the authority has a right to fix such terms and conditions for grant of contract which is normally beyond judicial review but once the condition so fixed is found to be discriminatory and violative of the requirement of Article 14 read with Article 19 (1)(g) of the Constitution, it amounts to a arbitrary condition and can be subjected to judicial review. It is emphasized by him by referring to the judgment rendered in the case of Reliance Energy Ltd. (supra) to say that the doctrine of "level playing field" is embodied in Article 19(1)(g) of the Constitution and if it is found that this principle is being enforced in an unreasonable manner only to exclude certain eligible person and to give preference to certain chosen one the decision becomes arbitrary and can be interfered with by the Court. Accordingly, it was emphasized by Shri Siddharth Gupta that even though the petitioner firm fulfills all the conditions stipulated in the tender document including the condition for meeting the annual turn over, annual manufacturing capacity etc. but it is held to be ineligible only because all these criterias are required to fulfilled with use of ISI marking on the product and as the use of ISI marking is being insisted upon in a unreasonable way, without any justification it is said to be arbitrary and interference is sought for.
6. Respondents have filed a detailed reply and Shri R. D. Jain, learned Advocate General submitted that the importance of insisting upon the supplier having a product with ISI marking is a policy decision taken by the State Government to ensure that certain process of check and 7 balancing is met with while the product is being used by the State Government. Shri R. D. Jain, learned Advocate General emphasized that the contract in question is given for the purpose of supplying 90,000 metric tonne of iodized salt to be supplied to common citizen, particularly in the rural areas of the State through the public distribution system. As the product is to be used by a common man and is to be distributed through a public distribution system, certain requirement of standard prescribed is to be adhered to and by referring to the Act of 1986, the rules and regulations framed thereunder, Shri R. D. Jain, learned Advocate General submitted that a standard mark given by the Indian Standard Institution is a certification mark specified by the Indian Standard Institute and when such a mark is specified in a product it is subject to certain inspection, test and process of scrutiny at various stages. He refers to the definition of "Standard Mark" as appears in Section 2(t) of the Act of 1986, the functions of the inspecting authority in the matter of prohibiting use of improper standard mark as contemplated under Section 11, the duties of an inspecting officer as contained in Section 25, the penalty for using improper standard mark as contained in Section 33, the requirement of the rule which contemplates payment of a fee for using the standard mark and establishment of laboratories for sampling of products with standard mark as contained in Section 10 of the Bureau of Indian Standards Rules, 1987 and argued that when a product is marked with an ISI marking which is given on the basis of form No.1 under regulation 3 of the Bureau of Indian Standards (Certification) Regulations, 1988, certain 8 statutory duty is imposed upon the supplier to maintain a particular standard and certain checking and inspecting powers are available under the rules to the statutory authority and therefore the standard of the product can be checked at any time. It is argued by him that the State Government has imposed this condition because a product with such a marking can be easily identified and put to testing and inspection in accordance to the statutory rules whenever required and as the interest of the common man in the matter of supply of iodized salt is involved, requirement of a higher standard to be maintained, is being insisted upon, which cannot be termed as arbitrary and illegal in any manner whatsoever. He invites our attention to a judgment of Gujarat High Court in the case of Hem Plast Health Care Pvt. Ltd. Baroda Vs. State of Gujarat and others reported in 1998 AIR (Guj.) 23 to say that even if a product is licensed under any other statutory provision like the Drugs and Cosmetics Act and Rules, as was in the case before Gujarat High Court, even then insisting upon an ISI marking as contemplated under the Bureau of Standard Act is a policy decision of the Government and if such a policy is followed by the Government, the same cannot be interfered because there is some purpose and rational behind such a policy. Thereafter, inviting our attention to the following judgments of the Supreme Court in the case of Association of Registration Plates Vs. Union of India - 2005 AIR (SC) 469, Directorate of Education & Ors. Vs. Educomp Datamatics Ltd. & Ors. - 2004 AIR (SC) 1962, Shri R. D. Jain, learned Advocate General argued that scope of judicial review in such matters is limited only to prevent an 9 arbitrary, unreasonable decision being taken and to avoid favoritism to certain class of people. It is said that if a decision is taken in furtherance to a policy of the State Government which has certain rational behind it, the same cannot be termed as arbitrary or illegal.
7. Shri Siddharth Gupta, learned counsel for the petitioner refuted the aforesaid and submitted that the petitioners are being discriminated upon as the use of the standard mark as contemplated in the Act of 1986 is optional as far as supply of salt is concerned. Referring to Section 14 of the Act he submits that Salt is not a notified item or industry under the schedule to Section 14 and once it is an optional item, the petitioner can very well sell the product without the marking being displayed and the insistence upon the product being marked by the State Government and the consequential act of debarring the petitioner from participating in the process of tender on such consideration is said to be illegal.
8. We have heard learned counsel for the parties at length and perused the documents and the material available on record in the light of the requirement of statutory rules and regulations and the law with regard to scope of interference into matters of tender. That apart, it may also be indicated that both the parties at the time of hearing referred to various such tenders issued by various other States like Punjab, Andhara Pradesh, Jharkhand etc. to say that such conditions are insisted upon or not insisted upon by various State. If required, we will refer to the said submissions at a later stage.
109. From the narration of the facts as are indicated herein above and on going through the totality of circumstances, it is clear that even though petitioner is a manufacturer of the RIS salt and fulfills most of the conditions stipulated in the NIT but the main grievance of the petitioner is that because the State Government is insisting upon the supplier using and supplying the product with ISI marking which procedure is not being followed by the petitioner, the petitioner comes out with a case of discrimination. Shri Siddharth Gupta, learned counsel for the petitioner and Shri R. D. Jain, learned Advocate General took us through the Act of 1986 and the rules and regulations framed thereunder. Section 2(g) of the Act of 1986 defines "Indian Standard" to mean the standard established and published by the Bureau of Indian Standard, in relation to any article or process indicative of certain quality and specification of such an article or process. Thereafter, Section 2(j) defines what is a "license" which is granted under Section 15 of the Act to use the Indian Standards Certification Mark and also give particulars of Indian Standard Certification Mark which can be used in a product. The specification with regard to quantity, weight, grade etc. of a product which is defined in Section 2(s) and the "Standard Mark" is defined in section 2(t) to mean the Bureau of Indian Standards Certification mark or the Indian Standards Institution Certification Mark specified by the Indian Standards Institution . Section 10 of the Act of 1986 contemplates the functions of the Bureau and the Bureau is empowered to specify standard marks and control its use and misuse.
11Section 11 prohibits improper use of the standard mark and Section 15 contemplates a provision for licensing. Similarly the Rules of 1987 and the Regulations of 1988 are framed and a complete reading of these statutory provisions goes to show that a particular standard is fixed for each product or item and the standard has to be met in accordance to the requirement of statutory rules and regulations. Section 14 of the Act of 1986 speaks about compulsory use of Standard Mark for articles and process of certain scheduled industries. Admittedly, salt manufacturing is not a scheduled industry and, therefore, Shri Siddharth Gupta emphasized that displaying of standard mark is not requirement of the Act of 1986. However, Shri R. D. Jain, learned Advocate General submitted that when such a standard mark is obtained by a manufacturer and the mark is displayed on the product, certain procedure for inspection and testing the quality and quantity of the product as contemplated under the Act and rule comes into force and this ensure maintenance of a particular quality and in that regard Shri R. D. Jain, learned Advocate General refer to Section 25 of the Act of 1986 and the rules and regulations pertaining to establishment and maintenance of laboratories with regard to testing and sampling of product with the standard mark.
10. From the aforesaid, it is clear that even though the petitioner may be under law entitled to manufacture and supply the product namely the RIS salt without displaying the ISI mark but the question is can the State Government insist upon the product to be supplied to them be marked with an ISI marking?
1211. Normally, if there is no rational justification for so insisting upon the act of the State Government can be termed as arbitrary and interfered with but if there is some rational behind insisting on such a condition being fulfilled and if the condition is being implemented as a policy of the State Government in public interest, the scope of judicial review permissible under law prevents this Court from interfering into such a policy matter.
12. That being the position, it would be appropriate for us to examine the reasons given by Shri R. D. Jain, learned Advocate General and to see as to whether the insistence upon ISI marking being demanded by the State Government is a reasonable policy decision or not.
13. The tender in question and the purpose of the tender goes to show that the State Government proposes to supply refined iodized salt to common man through the public distribution system spread over the entire State particularly in remote villages and rural areas and the requirement is of more than 90,000 metric tonne per year. Refined iodized salt is is used as a food item and is a common man's daily requirement not only as a food item but it also has certain medicinal value, as iodized salt is required to be given to children, particularly in the villages, the Government has formulated a policy that supply of such salt shall be made through public distribution system and now it is insisting upon a condition that a manufacturer should be one supplying this product with ISI marking and should having been doing so for the last two years. In insisting so, the State Government wants to ensure 13 that the product with an ISI marking can be easily identified and it can be put to such a testing and processing of inspection as contemplated under the Bureau of Indian Standards Act, 1986 and Rules of 1987 and Regulations of 1988 framed thereunder so that the quality of the product being supplied can be maintained and monitored. If that be the rational behind the Government insisting upon such a condition being fixed, we cannot hold the decision to be arbitrary as this policy is being implemented by the State Government in this regard in the interest of general public of the State.
14. The case of Hem Plast Health Care Pvt. Ltd., Baroda (supra) decided by the Gujarat High Court is somewhat similar to the present situation. In that case a product was being manufactured on the basis of the license and condition stipulated in the Drugs and Cosmetics Act, 1940 and the rules framed thereunder. Product was duly licensed and was being manufactured in accordance to the requirement of the Drugs and Cosmetics Act but the Government of Gujarat insisted that the goods sold should have ISI mark certification and without the same the goods cannot be sold. It was found that under Section 14 of the Act of 1986 the product did not warrant statutory certification as it was not a scheduled item but after taking note of the fact that the product was a cosmetic product which could have harmful effect on the person who uses it, the Government came out with a case that it is a policy decision of the Government that such a product should bear ISI mark Certificate issued by the Standard Institutes and this was upheld by the Gujarat High Court by saying that the policy decision taken by the State 14 Government in public interest with regard to the product being ISI mark is nothing but an additional precaution by the Government to protect the interest of the users of the product and holding the same to be a policy decision interference was not to be made. In the present case also, identical scenario exists. Government wants to supply the salt in question to the people of the State either on subsidized rate or free of cost through the public distribution system and to ensure that salt is supplied by meeting a particular standard and to ensure supply to be made of a particular quality, it is being insisted upon that the product should be manufactured and sold with ISI marking and all such suppliers who sells the product without ISI marking are debarred from participating in the process of tender. The intention of the Government in insisting upon existence of ISI marking for supply of the product apart from being a policy decision of the State Government is a reasonable, fair and justifiable action is in the interest of the public at large and this Court cannot term the same to be illegal or arbitrary in any manner what so ever manner. Merely because petitioner is being thrown out from consideration, the decision cannot be termed as arbitrary when the purpose of the policy and the intention of the State Government in imposing such a condition is found to have a rational and justifiable cause.
15. Accordingly, we are unable to accept the contention of the petitioner that the decision is arbitrary, it violates Article 14 and 19 (1)(g) of the Constitution or in any manner whatsoever interfere with the right of the petitioner to carry on business. Decision does not create any 15 discrimination, it is reasonable decision taken in the interest of public at large and we see no reason to interfere into the matter.
16. During the course of hearing both the parties referred to various tenders in this regard issued by various State to say that in some of the State such a condition is being insisted upon whereas in other State such a condition was not insisted upon. Each State has its own right to take a policy decision and if some of the State like Punjab and Andhara Pradesh, Jharkhand etc. have taken a policy decision for incorporating similar condition and if other State like Rajasthan does not incorporate such condition, this Court cannot interfere into the matter as it is the subjective satisfaction of the State concerned and in the absence of any case of discrimination or violation of Article 14 being made out, on this ground such policy decision cannot be interfered with by this Court.
17. Accordingly in the facts and circumstances of the case, we see no reason to interfere into the matter. The petition is therefore, dismissed.
(Rajendra Menon) (Mrs. Vimla Jain)
Judge Judge
mrs.mishra