Orissa High Court
M/S. Jaiswal Plastic Tubes Ltd vs State Of Orissa And Others ... Opp. ... on 16 November, 2012
Author: V.Gopala Gowda
Bench: V.Gopala Gowda
HIGH COURT OF ORISSA: CUTTACK
W.P.(C) Nos.22471 & 28896 of 2011
In the matter of applications under Articles 226 and 227 of the
Constitution of India.
(In W.P.(c) No.22471/2011)
M/s. Jaiswal Plastic Tubes Ltd.
And another ... Petitioners
-Versus-
State of Orissa and others ... Opp. Parties
For Petitioners : M/s. S. P. Mishra, Sr. Advocate,
P.K. Jena, S.P. Dalai, S.C. Sahoo,
N. Barik & L.N. Nayak.
For Opp. Parties : Mr. Ashok Mohanty, A. G.
M/s. Satyabrata Mohanty-1 &
T.K. Kamila ( For O.P.2)
(In W.P.(c) No.28896/2011)
M/s. Ganapati Pipes and .... Petitioners
Pvt. Ltd. and another
- Versus-
State of Orissa and others ..... Opp.Parties
For Petitioners : M/s. R.K. Rath, Sr. Advocate,
P. Rath & N. Barik.
For Opp. Parties : Mr. A. Mohanty, A.G. (for State)
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P R E S E N T:
THE HONOURABLE THE CHIEF JUSTICE SHRI V.GOPALA GOWDA
AND
THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA
Date of Judgement: 16.11.2012
B.N. Mahapatra, J.In both the writ petitions challenge has been made to the purported action of Managing Director, Orissa Lift Irrigation Corporation Ltd. ( in short, "OLIC"), opposite party no.2 in overriding the principles contained in the Orissa General Financial Rules (for short, "O.G.F.R.") of 2 Government of Orissa for the purchase of casing pipes, strainer with well cap through the "Tender Call Notice No. IT-12/20211-12-03/MD, OLIC dated 30.6.2011 by including the same for installation of Bore wells with VES and yield test under 'BKVY-Deep Bore Well Secha Karyakrama".
2. Mr. R.K. Rath, learned Senior Advocate and Mr. S.P. Mishra, learned Senior Advocate appearing for the petitioners in both the cases challenge the action of opposite party no.2 and opposite party nos.6 to 11 on the ground that the Tender Call Notice in Annexure-1 has been issued in clear violation of statutory provisions and with mala fide intention and without jurisdiction overriding the principles contained in the Industrial Policy Resolution,2007 ( for short, 'IPR, 2007') of Government of Orissa and Micro, Small and Medium Enterprise Development Policy, 2009 (in short, 'MSME' Policy, 2009') for the purchase of EPM Rate Contract items i.e. ISI Mark UPVC casing Pipes, as per IS: 12818/92. The petitioners are Small Scale Industrial Units duly registered under the Director of Industries, Opposite party no.5 and are also registered with the Director of Export Promotion and Marketing, opposite party no.3( for short, 'EPM') and Bureau of Indian Standards for manufacturing of PVC pipes and fittings of different diameters. Petitioner nos.1 & 3 are manufacturing PVC pipes and fittings from 15 mm to 250 mm diameters and usually from 15 mm to 150 mm diameter pipes are used for general purpose including the household purpose, but from 3 160 mm to 250 mm diameter pipes are mainly and exclusively required for Lift Irrigation Projects by the OLIC. After announcement by the Ministry of Fertiliser and Chemical of Govt. of India declaring Balasore District as a priority sector for Petrochemical i.e. Polymer based Industrial Cluster, all industries in this cluster have gone for modernization and technology up-gradation by investing substantial amount availing financial assistance from commercial banks. While considering financing to these Units, the Bank had taken into account purchases of PVC pipes by the OLIC thereby ensuring service of term loan with interest.
3. Mr. Rath submitted that the preamble of the Micro, Small and Medium Enterprises Development Act, 2006 provides for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith. Section 11 of the said Act provides for procurement preference policy. Section 30 of the Act empowers the State Government to make rules and pursuant to such the Government of Orissa in Industry Department came up with MSME Development Policy, 2009 which was approved by the State Cabinet in their 44th Meeting held on 1st February, 2009 and was published in the Official Gazette vide Notification No.351 dated 9.3.2009. Such MSME Development Policy, 2009 provides that the government shall endeavour to promote marketing of goods and services produced/provided by MSMEs. Paragraph 7.2 of such Policy provides 4 that the State Government will ensure that requirements of goods and services by Government Department and agencies under its control are procured from MSMEs.
4. The State Government in Finance Department has already amended Appendix 6 of the Orissa General Financial Rules of Vol.II before Rule-1 inserting therein that in respect of items of stores for which Rate Contract has been entered into by the Director of Export Promotion and Marketing, purchase of such items by all Departments of government, quasi-government Agency and State owned Corporations should be only from sources with whom such Rate Contract has been entered into by placing order in accordance with para 17 of the procedure outlined in Government of Orissa, Industries Department Office Memorandum dated 27th February, 1973. The Rate Contract system was introduced at the behest of OLIC and RWSS Department, Government of Orissa and the said system of rate contract for PVC pipes for SSI is in force since last twenty five years. The rate contract is now in the domain of opposite party no.3. The rate contract system in respect of specific store items not in the exclusive list and manufactured by the local small scale industrial units were finalised by the DEPM. This was done on the basis of competitive offers received from local units, cost structure obtained from these offers, market price of similar items and other consideration relevant to fixing the price of the product. Periodic 5 extensions were granted by the DEPM extending the validity of rate contract with these local MSMEs.
5. Mr. Rath submitted that in spite of the decision of the Government to support the manufactures of PVC pipes having rate contract, the Board of Directors in their 156 th meeting resolved to implement the "Turnkey" system in execution of Lift Irrigation Projects sanctioned by different funding agencies in order to abolish the store system. In view of such resolution, the SSI Units are deprived of supplying the casing pipes and strainer. The M.D., OLIC-opposite party no.2 by adopting indirect method in violation to IPR MSME policy and OGFR Rules as laid down by the Government is trying to procure the same from outside manufacturers through open tender. Manufacturing capacity of all the rate contract holders taken together is adequate enough to meet the annual requirements. As per para 20.31 of the IPR, 1996, the State Government Departments and agencies under the control of the State Govt. will purchase E.P. & M. rate contract items from the rate contract holders small scale Industries at the price fixed in the rate contract without inviting tender. The Chief Secretary of the State by his letter No.VII EMM- 14/93-17(225)/I (EPM) dated 5.7.1993 addressed to all the Departments of Govt./All Heads of the Departments/all State owned Corporations/all Collectors directed that they should procure their store items from the rate contract holders at the price fixed in the rate contract and they should not go for inviting tenders. The said letter 6 also reveals that the OGFR (Rule 1 in Appendix -6, Vol. II) also provides for such procedure. The Director of Industries, Orissa- opposite party no.5 wrote letter No. IP-V-20/2011, 9913 dated 25.7.2011 addressed to the Managing Director, OLIC -opposite party no.2 regarding purchase of PVC pipes from SSI Units as the entrepreneur has apprehended that the contractor may purchase the required PVC pipes from any manufacturer outside Orissa in this type of tender. By the Tender Call Notice the petitioners are indirectly debarred from participating in open tender issued by the MD, OLIC, opp. party no.2 because the petitioners being EPM rate contract holding units and having already given their offer for casing pipes to the Director EPM-opp. party no.3, the petitioners cannot participate in the tender having once submitted the offer for finalisation of the rate contract and as such in an indirect and clandestine way opp. party no.2 is trying to debar the petitioner from participating in open tender.
6. Prior to issuance of Tender Call Notice in Annexure-1, the Executive Engineers of OLIC, Sambalpur, Jajpur Road and Baripada floated tenders for execution of L.I. Projects on turnkey basis to the general contractors on 7.2.2010, 1.2.2010, and 14.1.2010 respectively which was challenged by the Orissa PVC Pipe Manufacturers' Association by filing a writ petition in W.P.(C) No. 3869 of 2010 disposed of on 29.10.2010 and while disposing of the aforementioned writ application, this Court held that procurement of goods by opposite party no.3 on the basis of the resolution passed 7 under Annexure-3 cannot be termed as illegal and therefore, the petitioner cannot ask for quashing of Annexures-3, 4 & 5 and accordingly, dismissed the writ petition. But in the similar circumstances, when the Director of Health Services, State Drug Unit, Orissa called for tender vide letter No.11106 dated 28.10.2009 in contravention of the policy decision of the State Government i.e. Industrial Policy Resolution, 2007 and MSME Development Policy, 2009, the same was challenged by the Utkal Pharmaceutical Manufacturers' Association in W.P.(C) No.18494 of 2009 which was disposed of on 3.3.2011 quashing the tender call notice under Annexure-7, so far as it relates to 31 items of drugs and medical consumables and those items which were excluded from tender call notice for being procured from the local SSI units/MSMEs under the rate contract system.
7. Mr. Rath further submitted that the decision making process adopted by opp. party no.2 in issuing the tender call notice vide Annexure-1 is fraught with procedural infirmities as the same cannot override a policy decision of the Government, which has the sanction and approval of the State Cabinet in their 44th Meeting held on the 1st February, 2009. The decision to issue the tender call notice vide Annexure-1 has been taken at the behest of the opp. party no.2, whereas the MSME Development Policy, 2009 has been formulated through an elaborate consultative process involving all stake-holders including Industries Associations, Financial Institutions, Experts and 8 Government Departments concerned. Opposite party No.2 being an instrumentality of the State and a delegate cannot ride roughshod over the decision of the Govt. of Orissa. IPR has been formulated with approval of the State Cabinet and is the declared policy of the State Govt. Therefore, any departure of the same in the public interest can only be made by the State Cabinet or any authority so authorised by the State Cabinet. The rate contract for PVC pipes for SSI Units was introduced at the behest of the Water Resources Department, Govt. of Orissa and has been in force since the last 25 years and there has been no complaint or adverse report by the Water Resources Department, Govt. of Orissa. As per EPM Policy of the Government of India, the MSMEs have obtained ISO and ISI Certification. In the back drop of these facts, the decision-making procedure adopted by opp. party no.2 in excluding the PVC pipes being supplied by the MSMEs on rate contract into the list of items of the tender call notice under Annexure-1 smacks of mala fide. The use of the words "Any other means" in clause 7.2(b)(ii) of MSME Development Policy, 2009 clearly precludes purchase of rate contract item in the guise of comprehensive/turnkey tender. The tender notice vide Annexure-1 imposes a tender cost fee of Rs.10,000/- plus VAT @4% (non- refundable) which is in contravention of the Orissa MSME Development Policy, 2009.
8. Mr. Mishra, learned Senior Advocate placing reliance upon the judgment of Hon'ble Supreme Court in Shivdeo Singh and 9 others v. State of Punjab and others decided on 8th February, 1961 submitted that the petitioner, who was not a party in the previous writ petition can maintain the present writ petition.
9. Mr. Ashok Mohanty, learned Advocate General submitted the tender call notice under Annexure-1 has not been floated for procurement of PVC pipes directly. The said tender is for installation of Bore wells with VES & Yield Test under "BKVY-Deep Bore Well Secha Karyakrama". According to the learned Advocate General, since the tender is not for procurement of PVC pipes, all the arguments advanced by the petitioners referring to different IPRs including IPR , 2007 and Orissa MSMEs Development Policy, 2009 are not applicable. The IPR, 2007 and MSMEs Development Policy, 2009 provide for procurement of PVC pipes from the EPM rate contract holders. Therefore, the prayer made in the writ petition is misconceived. Learned Advocate General referring to Office Memo dated 11.12.1995 of the Government of Orissa in Finance Department submitted that C.& A.G. reports contain data relating to misappropriation defalcation, theft, pilferage and large scale irregularisations of store materials, purchased by Engineering Departments which possibly result in huge loss of Government money. Due to prolonged storage of some materials, these at times have to be disposed of. Sometimes it is noticed that the inventory level in the stores in a Department does not commensurate with the budget provision. Thus public funds are being blocked in many cases. With a view to avoid these situations, 10 Government have been pleased to decide that with effect from 1.4.1996, there will be no purchase of departmental store materials nor booking of materials to show utilisation of budget provision. It will be the responsibility of the contractor to purchase stores and utilise them in the work. Therefore, the future agreements with the contractors should be executed accordingly and necessary modifications to the agreement form would be made.
10. Placing reliance on the decision of the Supreme Court in the case of Fida Hussain & others v. Mordabad Development Authority and another, AIR 2011 SC 3001 learned Advocate General submitted that a decision of this Court is binding when the same question is raised again before this Court and reconsideration cannot be pleaded on the ground that relevant provisions etc. were not considered by the Court in the former case.
Further, placing reliance upon the decision of Sow Chandra Kante v. Sk.Habib, (1975) 1 SCC 674 submitted that a review of a judgment is a serious step and reluctant resort to it is proper except where a glaring omission or patent mistake or like grave error has crept in earlier by judicial fallibility. A mere repetition, through different counsel, of old and overruled arguments, a second trip over ineffectually covered ground or minor mistakes of inconsequential import are obviously insufficient. The very strict need for compliance with these factors is the rationale behind the insistence of counsel's certificate which should not be a routine affair or a habitual step. 11
11. On the rival contentions of the parties, the questions that arise for consideration of this Court are as follows:
(i) Whether the tender floated under Annexure-1 is a tender for execution of works contract on turnkey basis or a contract for procurement of PVC pipes?
(ii) If the answer to question no.(i) is that tender under Annexure-1 is for execution of work on turnkey basis and not for procurement of PVC pipes, then whether the relief sought for in the writ petitions can be granted to the petitioners ?
(iii) Once a decision attained finality in favour of a party/litigant whether the Court while hearing the writ petition of other nature can issue any direction which can have effect of taking away the impact of final decision in earlier case ?
12. Since question Nos. (i) & (ii) are interlinked, they are dealt with together. So far question no.(i) is concerned, perusal of tender call notice dated 30.6.2011 floated under Annexure-1 clearly reveals that it is a tender for installation of bore wells with VES & yield test under "BKVY-Deep Bore Well Secha Karyakrama". The said tender is a contract work. The contractors of such categories have registered themselves with State Government/contractors of equivalent grade/ registered with Central Government/MES/Railways for execution of civil works and reputed agency/firms and companies who have to procure definite proof from the appropriate authority. The bidders having relevant experience with reference to work are eligible to submit fees in respect of works mentioned in the tender papers. Thus, 12 it clearly reveals that the tender is floated for execution of work on turnkey basis. It is not a tender for procurement of PVC pipes from any manufacturer or supplier. Therefore, various IPRs including IPR, 2007 and the Orissa MSME Development Policy, 2009 have no application so far the work intended to be executed on turnkey basis under Annexure-1 is concerned. Thus, the relief sought for in both the writ petitions cannot be granted to the petitioners.
13. So far question No.(iii) is concerned, since in a similar writ petition being W.P.(C) No.3869 of 2010 (Orissa PVC Pipes Manufacturers' Association v. State of Orissa and others) this Court dismissed the said writ petition on 29.10.2010 with reference to clause (7) of the MSME Development Policy, 2009, in the present writ petition this Court cannot take a contrary decision nullifying its earlier decision.
14. Apart from above, the earlier judgment of this Court dated 29.10.2010 passed in W.P.(C) No.3869 of 2010 was not brought to the notice of this Court while this Court disposed of the W.P.(C) No.18494 of 2009 on 3.3.2011 in Utkal Pharmaceuticals Manufacturers Association's case. Moreover, in Utkal Pharmaceuticals Manufacturers Association's case tender was floated for supply of drugs and medical samples directly from the suppliers. But in the instant case tender was not floated for direct purchase of PVC pipes. In the present case, tender under Annexure-1 is floated for execution of work on turnkey basis. There is no tender for purchase of PVC 13 pipes. Therefore, the decision of this Court in Utkal Pharmaceuticals Manufacturers Association's case is also not applicable and is of no help to the petitioners in the instant case.
15. The Allahabad High Court in the case of Rustom Khusro Sapurji Gandhi v. Amrit Abhijat and others, AIR 2007 Allahabad 149 (FB) held as under :
" ..... We have no doubt that legally once a decision has attained finality in favour of a party/litigant, no other co-ordinate Bench while hearing a Public Interest Litigation or a writ petition of other nature can issue any directions, which could have the effect of taking away the impact of the final decision without impleading the affected party, who has obtained the decision which has attained finality, or even after impleading such party. The reason is that a co-ordinate Bench cannot sit in appeal and pass a judgment or issue a direction taking away the impact of a decision, which has attained finality, as that would virtually mean a coordinate Bench sitting in appeal over the final decision of another Bench of the same strength."
16. The Hon'ble Supreme Court in the case of Khoday Distilleries Ltd. and another v. Registrar General, Supreme Court of India; (1996) 3 SCC 114 held that in a case where substance of the challenge is to the correctness of the decision on merits after it has become final, there could be no question of invoking Art. 32 of the Constitution to claim reconsideration of the decision on the basis of its effect in accordance with law.
17. Therefore, in view of the above judicial pronouncement and otherwise also the writ petitions are not maintainable. 14
18. Before parting with the case, we feel it appropriate to observe that undisputedly the petitioners are manufacturers of PVC pipes and fittings for different diameters. P.V.C. pipes from 15 mm diameters to 150 mm diameters are meant for general use including the household purpose. But PVC pipes from 160 mm to 250 diameters are mainly and exclusively required for Lift Irrigation Project by the Orissa Lift Irrigation Corporation Ltd.-Opp. Party No.2. Undisputedly, various Industrial Policies are floated by the Government to support small scale industries and under the MSMED Act protection is also given to micro small and medium enterprises. The MSMED Act was enacted with an intention for facilitating the promotion, development and enhancing the competitiveness of MSM Enterprises. Section 11 of the MSMED Act is as follows:
"Procurement Preference Policy:- For facilitating promotion and development of Micro and Small enterprises, the Central Government or the State Govt. may, by order notify from time to time, preference policies in respect of procurement of goods and services, produced and provided by Micro and small enterprises by its Ministries or Departments, as the case may be, or its aided institutions and public sector enterprises."
19. In the instant case, since tender under Annexure-1 is floated for execution of the work on turnkey basis, the decision is left to the contractor to procure PVC pipes from any manufacturer, supplier and not necessarily from the petitioners who are EPM rate contract holders. At this juncture, it is necessary to refer to the letter dated 16.8.2011 addressed to the Director, E&PM, Principal Secretary 15 to Government in Water Resources Department for favour of kind information which reads as follows :
"1. Please find enclosed copy of letters received from Director of Industries, Orissa, Director, E&PM, Orissa, PVC Pipe Manufacturers' Association and Ganapati Pipes and Industries Pvt. Ltd.
2. This is regarding tender call notice issued by Orissa Lift Irrigation Corporation Ltd., for PVC Casing Pipes on turnkey basis.
3. Under this process there is no scope for the successful bidder to buy the PVC pipes from local MSMEs. The tender condition does not stipulate any such clause.
4. It is understood that almost 70% of the tender value is of the PVC pipes, confirming to IS standards which is a rate contract item. As per the IPR, the State Government Departments and the Agencies under the control of State Government shall purchase the rate contract items from the rate contract holding Small Scale Industries (SSI) at the rate contract price without inviting tenders.
5. Under these circumstances, you may kindly issue appropriate instructions to Orissa Lift Irrigation Corporation to cancel the tender and advise them to place order on the rate contract firms of Orissa. As an alternative a stipulation may be incorporated in the tender asking the successful bidder to purchase pipes from local rate contract holders.
Grateful for early action.
Sd/-
(T. Ramachandru) Principal Secretary Principal Secretary to Govt.
Water Resources Deptt.
Memo No. 287/PRS-I, dated 16 August, 2011.
Copy forwarded to the P.S. to Hon'ble Minister; Industries/Director of Industries, Orissa/Director, E&PM for favour of kind information".16
20. Needless to say that State and its instrumentalities should not exercise or resort to unfettered, and uncontrolled discretion at the cost of the public interest and public policy. While dealing with the public whether by giving job or entering into contracts or licence or any form of State largesse, the State or its instrumentality should not adopt a decision making process to arrive at a decision which will frustrate the beneficial schemes and enactments floated/made by the State.
21. Therefore, whenever the State or its instrumentality goes for execution of any contract on turnkey basis they must see that a stipulation may be incorporated in the tender and contract asking the successful bidder to purchase materials necessary for execution of work contract from local rate contract holders having ISI mark so that the interest of SSI Units and M.S. enterprises is protected.
22. With the aforesaid observation, the writ petitions are dismissed. No order as to cost.
...............................
B.N. Mahapatra,J.
V. Gopala Gowda, C.J. I agree.
..............................
Chief Justice
Orissa High Court, Cuttack
The 16th November, 2012/ssd.