Calcutta High Court (Appellete Side)
Srmb Srijan Private Limited And Another vs Union Of India And Others on 11 April, 2023
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
In the High Court at Calcutta
Constitutional Writ Jurisdiction
Appellate Side
The Hon'ble Justice Sabyasachi Bhattacharyya
W.P.A 9990 of 2020
SRMB Srijan Private Limited And another
Vs.
Union of India and others
With
W.P.A 24267 of 2019
SRMB Srijan Private Limited And another
Vs.
Central Public Works Department and others
For the petitioners : Mr. Saptangsu Basu
Mr. Arnab Das
Mr. Amritam Mondal
Ms. Epsita Bhattacharyya
Mr. Vinay Kumar Chakraborty
For the
Respondent nos.1 to 5 : Mr. Atarup Banerjee
Ms. Sarda Sha Hearing concluded on : 16.03.2023 Judgment on : 11.04.2023 Sabyasachi Bhattacharyya, J:-
1. The petitioner no.1 is a Company and petitioner no.2 is an Executive Director of the said Company. The present writ petition challenges 2 Clause 27.2 of the CPWD Works Manual, 2014 (for short, "the 2014 Manual"), as reincorporated in the CPWD Works Manual, 2019 and lastly amended by Office Memorandums dated December 27, 2019 and January 8, 2020, as well as connected Office Memorandums.
2. The grievance of the petitioners is that in violation of the different Notifications of the Union of India, Ministry of Steel, the respondent -
Central Public Works Department (CPWD) has introduced Clause 27.2 in the CPWD Works Manual, 2014 and reincorporated the same in the 2019 Works Manual.
3. It is submitted that as per the Notification dated April 24, 2015 issued by the Government of India, Ministry of Steel, bearing 4(8)/2010-SD-I, it was mentioned that steel producers of any capacity, irrespective of process route, starting their operation from iron making using iron ore, virgin or processed, with necessary refining facilities and rolling/processing facilities, at a single location or else in multiple locations provided that the entire gamut of iron and steel production, from iron making to finished steel production, is owned by the same company or its subsidiary company(ies), shall be classified as Primary Steel Producers. Primary Producers having a minimum capacity of one million tons per annum (1 MTPA) in terms of crude steel were classified as Integrated Steel Producers, steel producers of any capacity stipulated therein as Secondary Steel Producers as well as other categories as Other Steel Producers.
4. In Clause 2 of the Notification, it was stipulated that the above categorization/revised classification of steel producers should in no 3 way be seen as a certification of the quality of steel produced. Quality certification would be as per the Bureau of Indian Standards (BIS) or any other designated authorities as per the BIS Act.
5. Clause 3 provided that there will be no certification of the steel producers by the Ministry of Steel or Joint Plant Committee (JPC). The JPC will, however, maintain a list of different categories of producers on the website to the extent possible, after exercising necessary due diligence.
6. The same stipulations were reiterated in a communication dated December 14, 2016 on the subject of classification of steel plants. Apart from reiterating the Notification of May 12, 2016 and an Order issued on August 9, 2016 regarding classification of steel plants, it was stated that the list would be purely for statistical purpose and would have no bearing on the quality of steel produced.
7. In the third paragraph of the said Communication, the Ministry of Steel further stated that complaints/grievances are being received from various organizations of steel industry that despite clear orders not to classify steel producers as Main/Major/others by the Ministry, user departments like CPWD/Railways, etc., are not changing their procurement policies and continuing to offer a step-motherly treatment to the products of smaller manufacturers. This is despite the fact that products of smaller producers are as BIS standards and are competitively priced. It was indicated that such steps would ensure a level playing field to all producers/industry associations of steel industry.
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8. Again, on February 7, 2017, vide DO No.4(13)/2016, SD (I), the Ministry of Steel stressed that the route of steel making, that is, whether primary or secondary, ordinarily has no bearing on the quality of steel. The PSUs and other organizations/bodies under the administrative control of the Addressee-Ministry were requested to sensitize and to ensure that suitable changes were made in the Internal Procurement Guidelines.
9. It is relevant to mention that during the entire period, the petitioners had been giving representations to all concerned regarding alleged violation of the Notification and Orders of the Ministry.
10. It is submitted by the petitioners that in the CPWD Works Manual, 2019, some undisclosed conditions were incorporated in Clause 4.10.1 which are to be incorporated by the NIT. Such special conditions, however, shall be framed keeping in view the Guidelines issued by the Directorate from time to time which are available on the CPWD website.
11. Vide Notification dated February 17, 2021, the CPWD issued modified guidelines for use of reinforcement bars in structures. In Point 4 of the same, it has been particularly mentioned that certain private companies like SAIL, RINL, TATA, JSW, JSPL are preferred makers for procurement of steel.
12. Despite the repeated deprecation by the Ministry of mention of private companies as preferred manufacturers, the CPWD merely omitted specific names of manufacturers but has modified the guidelines in their works manual to suit the exclusive selection of only certain large 5 operators in the field, thereby contravening the stipulation in the Government Notification that there has to be a level playing field for all manufacturers.
13. Pursuant to the said Guidelines, the CPWD has been approving names of only a few manufacturers, thereby meting out preferential treatment.
14. In this context, the petitioner places reliance on the following judgments:
(i) (2007) 8 SCC 1 [Reliance Energy Ltd. and another Vs. Maharashtra State Road Development Corpn. Ltd. and others]
(ii) (2009) 6 SCC 171 [Meerut Development Authority Vs. Association of Management Studies and another].
15. It is submitted that in view of such arbitrary and capricious act of the CPWD, contrary to public interest, there is ample scope for this Court to interfere under Article 226 of the Constitution of India.
16. Learned counsel for the respondents argues that the petitioners cannot both approbate and reprobate in the same breath. The petitioners applied for approval as steel producer on December 11, 2017 on the basis of the CPWD Office Memorandum dated September 11, 2017, but upon failing to fulfill the requirements, they requested for inclusion of an old method of refining iron-ore in the basic criteria list to get empanelment as an approved steel producer for CPWD.
17. It is further argued that the CPWD Works Manual has been issued in consonance with fundamental principles of service delivery, customer focus, efficiency, transparency, fairness, competition, economy and 6 accountability and efforts have been made to cover all major aspects of construction and maintenance in a user-friendly manner. All the approved enlisted steel manufacturers, it is contended, are abiding by the guidelines introduced by the CPWD. The CPWD, it is argued, cannot be directed to change or modify its guidelines in the interest of a single company, that is, the petitioner no.1, which would cause injustice to all the existing enlisted steel manufacturers.
18. A perusal of the Government Notifications indicates that the CPWD Manual of 2012 mentioned names of specific primary producers in the special conditions for steel contained in Clause 27.2. However, in the same Clause of the 2014 Manual, other producers as approved by CPWD who are using iron-ore as basic raw materials/input and having crude steel capacity of 2.0 million tons per annum were also included within the fold of consideration.
19. Vide Notification No. 4(8)/2010-SD-I dated April 24, 2015, a revised classification of steel producers/processors was issued by the Ministry of Steel, Government of India. While defining Category 'I', that is, 'Primary Steel Producers', the Ministry included steel producers of any capacity, irrespective of process route, starting their operations from iron making using iron-ore, virgin or processed, with necessary refining facilities and rolling/process facilities at a single location or multiple locations, provided that the entire gamut of iron and steel production, from iron making to finished steel production, is owned by the same company or its subsidiary companies.
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20. The second class of 'Integrated Steel Producers' were merely primary producers having minimum capacity of 1 MTPA in terms of crude steel. 'Secondary Steel Producers' were defined under Class III to be producers of any capacity comprising certain criteria. Class IV envisaged Other Steel Producers who are not covered under the above categories and classifications.
21. However, importantly, Class II of the said Notification clarified that the above categorisation of steel producers should in no way be seen as a certification of the quality of steel produced. Quality certification, it was specified, would be as per the Bureau of Indian Standards (BIS) or any designated authority as per the BIS Act.
22. It was also made clear that there would be no certification of the steel producers by the Ministry of Steel or JPC, the latter maintaining only a list of different categories of producers on the website.
23. Thus, it is clear from the Notification dated April 24, 2015 that the classification/categorisation of producers was merely for the records and were in no way connected to the quality of steel produced. The certification of quality would only be as per the BIS Standards.
24. Even while defining Primary Steel Producers in Clause I, the Ministry specified that such classification included steel producers of any capacity, starting their operations from iron making using iron-ore. However, it was also a cardinal feature thereof that such classification would be irrespective of process route.
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25. Hence, process route was deprecated in the Notification of the Ministry as a yardstick of quality, which could only be certified as per BIS Standards.
26. Again, the Communication of the Ministry of Steel vide No.4(13)/2016-SD(I) dated December 14, 2016 reiterated a Notification of May 12, 2016 and also the Order issued on August 9, 2016, for stressing that no steel producers would be classified/certified as Integrated, Primary, Secondary, Main, Major or other producers by the Ministry of Steel or JPC and the listing would be purely for statistical purpose and would have no bearing on the quality of steel produced. It was also mentioned that it is up to the users to ascertain the quality of the steel products to be procured as per relevant standards.
27. The said Communication also highlighted the fact that despite the scrapping of classification as Main/Major/Others by the Ministry, the CPWD/Railways, etc., were not changing their procurement policies and continue to offer a step-motherly treatment to products of smaller manufacturers, despite the fact that products of smaller producers were meeting BIS standards and were competitively priced. The Ministry also highlighted that a level playing field to all producers should be ensured.
28. Again, in DO No. No.4(13)/2016-SD(I) dated February 7, 2017, the Ministry of Steel communicated to several other Ministries of the Government that there was no classification in terms of Primary and Secondary producers. It was also highlighted that the route of steel 9 making, that is, whether Primary or Secondary, ordinarily has no bearing on the quality of steel, which is dependent on the mandatory BIS certification requirement. It was also stipulated that the concerns of quality of steel can easily be addressed by insisting on BIS certified steel products and that the Internal Procurement Guidelines of the PSUs and other organizations under the administrative control of the Ministries should make suitable changes in the Internal Procurement Guidelines.
29. Despite the same, the CPWD continued to lay stress on the manufacturing process and route of production. In fact, vide Communication dated January 3, 2019 made to the petitioner no.2 on behalf of petitioner no.1, the Executive Engineer (TAD), CSQ, CPWD intimated that the petitioner no.1 could not be approved for supply of steel for CPWD projects, since the details furnished by it did not fulfil the manufacturing process as mentioned in Annexure-I of OM No.DG/CPWD Works Manual/356 dated September 11, 2017, issued by the CPWD Directorate. The said Annexure-I indicated the modified provision of Clause 27.2 of the CPWD Manual. However, even in the modified provision, the refining technology necessary for eligibility of approval was fixed to certain specific technologies such as the DRI- EAF, BF-BOF and COREX-BOF.
30. Thus, the process of manufacturing of steel was stipulated to standards not approved by the Ministry of Steel in its D.O. dated February 7, 2017, where it was specifically mentioned that the "route of steel making", that is, whether primary or secondary, ordinarily has 10 no bearing on the quality of steel and the BIS certification was the only yardstick of quality.
31. It is seen from the Office Memorandum dated December 27, 2019 issued by the CPWD that, in Clause 3(d) thereof, the refining technologies for manufacturing steel and TMT bars were restricted to BF-BOF, COREX-BOF and DRI-EAF routes.
32. The question which arises is whether the CPWD Guidelines can be tainted as arbitrary and in derogation of the guidelines of the Ministry of Steel.
33. Clause 27.2 of the CPWD Works Manual, stipulating 'Special conditions for steel', underwent an evolution over the years.
34. In the 2012 Manual, certain large operators, such as SAIL, TISCO and RINL, were specifically named as primary producers.
35. Again, in the 2014 Manual, 'primary steel producers' were exemplified by names of certain specific producers such as SAIL, Tata Steel Ltd., RINL, Jindal Steel & Power Ltd. and JSW Steel Ltd. "or any other producer as approved by the CPWD" who were using iron ore as the basic raw material/input and having crude steel capacity of 2.0 Million tonnes per annum (mtpa) and above.
36. In the Notification issued by the Ministry of Steel dated April 24, 2015, however, 'Primary Steel Producers' were defined to be steel producers of any capacity, irrespective of process route, starting their operations from iron making using iron ore, virgin or processed, with necessary refining facilities and rolling/processing facilities, at a single location or else in multiple locations provided that the entire gamut of iron and 11 steel production, from iron making to finished steel production, is owned by the same company or its subsidiary company(ies) and certain other criteria.
37. In Clause 2 of the April 24, 2015 Notification, it was categorically mentioned that the categorisation of steel producers into primary, integrated, secondary and other should in no way be seen as a certification of the quality of steel produced. Quality certification, it was stipulated, would be as per the Bureau of Indian Standards (BIS) or any other designated authorities as per the BIS Act.
38. Clause 3 provided that there will be no certification of the steel producers by the Ministry of Steel or Joint Plant Committee (JPC). JPC will, however, maintain a list of different categories of producers on the website, to the extent possible, after exercising necessary due diligence. The list will be updated on annual basis, based on the data on capacity and production, etc. to be submitted by the steel producers to JPC for statistical purpose.
39. Thus, we see that in the Notification dated April 24, 2015, while defining 'Primary Steel Producers', the process route of producing steel was rendered irrelevant. Steel producers "of any capacity, irrespective of process route" were included.
40. Moreover, the categorisation into primary, secondary, etc. was dissociated from quality of steel produced; the latter being certified only as per BIS specifications.
41. In its Circular to several ministries dated December 14, 2016, the Ministry of Steel highlighted the step-motherly treatment being meted 12 out to the products of smaller manufacturers on the basis of classification as Integrated, Primary, Secondary, Main, Major and Other Producers, which was deprecated and BIS standards and competitive price were stressed upon as the relevant factors to ensure a level playing field to all producers.
42. Even vide the reminder dated February 7, 2017 [ D.O. No. 4(13)/2016- SD(I) ], which referred to the letter dated December 14, 2016 regarding Notification of the Ministry of Steel dated May 12, 2016 and also the Order issued on August 9, 2016 on the Classification of Steel Plants in the country, it was reiterated that the route of steel making has no bearing on the quality of steel and that the mandatory BIS Certification requirement easily addressed the concerns regarding quality of steel.
43. However, in its communication dated January 15, 2018 to the petitioners, the CPWD reiterated as checkpoints and sought particulars by laying stress on specific routes such as DRI-EAF, BF- BOF and COREX-BOF routes, coining the term "refining process" to label the process routes of steel manufacture.
44. Even as per the modification of Clause 27.2 pertaining to the special conditions of steel in the Office Memorandum dated June 29, 2017 issued by the CPWD, the Selection Criteria of steel manufacturers contained mandatory adherence to the same particular routes, that is, DRI-EAF, BF-BOF and COREX-BOF, camouflaging them as "refining technologies".
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45. A closer scrutiny of the CPWD documents clearly shows that the said "refining technologies" are identical with the "process routes", which were rendered redundant as indicators of quality of steel vide Notification dated April 24, 2015 of the Ministry of Steel, Government of India, as reiterated in the communication to several other Ministries dated December 14, 2016.
46. The Office Memorandum of the CPWD dated December 27, 2019 clearly described DRI-EAF, BF-BOF and COREX-BOF as routes or refining technologies for manufacturing steel and TMT Bars.
47. Such criteria are, therefore, in gross violation of the various Circulars of the Ministry of Steel, whereby quality of steel was divorced from 'process routes' and tagged only with 'BIS specifications'.
48. The crux of the Ministry of Steel directives is that the steel produced should be of BIS quality and ought to be competitively priced. The Ministry has repeatedly laid stress on providing a level playing field for steel manufacturers of all sizes, provided they meet the basic criteria.
49. However, by introducing and re-introducing specific process routes of steel manufacturing (in the garb of 'refining technologies') as basic eligibility criteria for participation in the tenders floated by the CPWD, the CPWD has been ensuring that, despite meeting BIS standards of quality and offering competitive pricing, small steel producers are been left in the lurch. Thus, the CPWD is seeking to achieve indirectly what it could not do directly, that is, restrict the eligible steel producers to the large players and exclude several other competent smaller competitors.
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50. The CPWD is an instrumentality of the Central Government and discharges public functions. As an employer, it cannot proceed in an arbitrary manner by nipping competition from small producers at the eligibility stage itself.
51. Although it is well-settled that the purchaser has a discretion in selecting the quality of steel, organisations like the CPWD who operate in the public domain have to have a transparent and uniform mode of selection, in consonance with the directives of the concerned Ministry of the Government which specifically concerns steel.
52. Having flouted such norms and standards, the impugned Clause 27.2 of the CPWD Works Manual of 2014, as re-adopted by it in 2019, is patently vitiated, being arbitrary and biased towards certain particular large operators, thereby encouraging cartelization and monopolistic practices.
53. Hence, WPA 24267 of 2019 and WPA 9990 of 2020 are allowed on contest, thereby quashing the modified Clause 27.2 of the CPWD Works Manual of 2014, as reincorporated in the CPWD Works Manual of 2019, and consequential Memorandums issued by the CPWD. The Central Public Works Department (CPWD) is directed to implement the Notification of the Ministry of Steel, Government of India dated May 12, 2016, the Order dated August 9, 2016 and the reminders of the said Ministry dated December 14, 2016 and February 7, 2017.
54. There will be no order as to costs.
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55. Urgent certified server copies, if applied for, be issued to the parties upon compliance of due formalities.
( Sabyasachi Bhattacharyya, J. )