Jammu & Kashmir High Court - Srinagar Bench
The Milk Producers Cooperative ... vs Union Of India & Others. on 26 March, 2018
Author: Sanjeev Kumar
Bench: Sanjeev Kumar
HIGH COURT OF JAMMU AND KASHMIR
AT SRINAGAR
OWP No.1076/2017
And
OWP No.1075/2017
Date of order: 26.03.2018
The Milk Producers Cooperative Marketing Processing Ltd., Chatripora & anr. v. Union of India & others.
Jammu and Kashmir Cooperative Union Ltd. (JKCUL) and anr. v. Union of India & others.
Coram:
Hon'ble Mr. Justice Sanjeev Kumar, Judge
Appearing Counsel:
For Petitioner(s) : Mr.A.H.Naik Sr. Advocate with
Mr. Zia A. Sheikh, Advocate in OWP No.1075/2017
Mr. M.A.Qayoom, Advocate in OWP No.1076/2017
For Respondent(s) : Mr. T.M.Shamsi, ASGI
Mr. Pranav Kohli, Advocate.
(i) Whether to be reported in Yes/No
Law Journals etc.
(ii) Whether approved for publication Yes/No
in Media/Press.
1. Since the issues of facts and law involved in these two petitions were identical, therefore, these petitions had been clubbed to be taken up for analogous hearing. It is for this reason, both the writ petitions were heard together and are being decided by a common judgment. However, for the sake of convenience, it would be sufficient to refer to the facts from OWP No.1076/2017.
2. The petitioner No.1, a Cooperative Society of Milk Producers of Chatripora Pulwama, registered under the Jammu & Kashmir Self Reliant Cooperative Act, 1999, is aggrieved by the communication of respondent No.1 dated 12.07.2017 whereby the Ministry of Defence has restricted the eligibility to enter into contract for supply of fresh Milk to the Army in the State of Jammu & Kashmir only to such Cooperative Milk OWP Nos. 1076/2017 & 1075/2017 Page 1 of 29 Societies/Federations belonging to the State of Jammu & Kashmir which are affiliated to National Cooperative Dairy Federation of India (NCDFI). The petitioner No.1 has sought writ of certiorari to quash the aforesaid communication as also a direction to the respondents to follow letter No. PC/RAKSHA/63061/Q/ST-5/5245/D(QS)/14 dated 10.08.2015 and to allow the petitioner No.1 to supply milk and milk products to the Military Forms located in the State of Jammu & Kashmir through Army Supply Corps. It may be noted that the petitioner No.2 who claims to be the similarly situated with petitioner No.1 came to be impleaded as party petitioner No.2 vide order dated 04.12.2017. The petitioner No.2 has not filed any separate pleadings and has adopted the pleadings of the petitioner No.1.
3. The facts giving rise to the filing of the instant petition, briefly stated, are:-
The petitioner-Society, as stated above, is a Cooperative Society of Milk Producers registered under the J&K Self Reliant Cooperative Society Act, 1999. The license in form "C" under the Food Safety and Standard Act, 2006 is also issued in favour of the petitioner-Society by the designated officer. The petitioner-Society is also registered under the Jammu & Kashmir Shops and Establishment Act, 1966 for the purpose of carrying the business of "collection of fresh milk". The petitioner-Society also claims to have obtained a certificate of provisional registration under the provisions of Goods and Services Tax Act, 2017.
Vide communication of Ministry of Defence dated 17.01.2005, the army authorities were authorized to procure their requirement of milk and milk products from NCDFI/State Milk Cooperative Federation/Government Milk Schemes. However, a few months later, the respondent No.1 vide its communication dated 13.05.2005 accorded sanction to extend the provisions OWP Nos. 1076/2017 & 1075/2017 Page 2 of 29 of communication dated 17.01.2005 in the case of Military Farms located in J&K to the J&K Dairy Producers, Processors and Marketing Cooperative Union Limited (JKDCUL), Jammu, a Cooperative Society registered with the Government of J&K. Subsequently, respondent No.1 vide its communication dated 23.11.2005 conveyed sanction of the President of India for conclusion of negotiated contract for supply of milk and milk products with NCDFI/ NDDB/State Cooperative Federation for a period of two years i.e. with effect from 01.10.2005 to 30.09.2007. It further transpires that in terms of subsequent letter dated 24.11.2005 issued by respondent No.1 to the Chief of Army Staff, New Delhi, sanction of the President of India was conveyed that Cooperative Milk Federations duly recognized by the Government of India, Ministry of Defence and belonging to the State of Jammu & Kashmir State will only be eligible to participate in the tendering for supply of Milk and Milk Products to Military Farms located in Jammu & Kashmir. In the aforesaid communication it was also provided that the quantities not supplied through local federations would be sourced through federations/cooperatives not belonging to J&K State who were NCDFI members.
It further transpires that vide communication dated 21.07.2006 issued by respondent No.1 to respondent No.3 the provisions of communication of respondent No.1 dated 17.01.2005 were also extended, in the case of Military Farms located in the State of J&K, to the petitioner No.1. In the year 2007 the respondent No.1 after obtaining sanction from the President directed the respondent No.3 to conclude negotiated contract for supply of Milk and Milk Products with NCDFI/NDDB/State Cooperative Milk Federations for a period of two years with effect from 01.10.2007 to 30.09.2009.OWP Nos. 1076/2017 & 1075/2017 Page 3 of 29
For almost three years the contracts were finalized in terms of communication dated 24.10.2007 and thereafter in terms of communication of respondent No.1 dated 10.05.2010 sanction of the president was conveyed for conclusion of negotiated contract with NCDFI/State cooperative Milk Federations/NDDB/J&K Dairy Producers Processors and Marketing Cooperative Unit Ltd. for supply of milk and milk products excluding cheese tinned, milk tinned and malted milk food. Again the provisions of letter dated 10.05.2010 for conclusion of negotiated contract with the aforesaid organizations were extended from 10.05.2013 to 30.09.2014 vide communication of respondent No.1 dated 16.07.2013. In terms of the aforesaid communication the responsibility of procurement and supply Milk and Milk products to the Army was handed over to the Army Supply Corps (ASC) and with as view to streamline the procurement procedure, the revised procurement policy was issued by the Quarter Master General's Branch, Integrated Headquarters, Ministry of Defence (Army) vide its communication dated 12.08.2014. Consequent upon issuance of letter dated 12.08.2014, the Army Authorities vide communication dated 13.10.2016 called upon the petitioner No.1 and two other milk producer Cooperatives to confirm the feasibility of supplying milk fresh to various stations/locations enumerated in the aforesaid communication. The petitioner No.1 vide its letter dated 29.10.2014 responded and informed the respondents that they were prepared to supply milk and milk products to the stations/locations indicated in the communication dated 13.10.2016. Then came the letter dated 10.08.2015 issued by respondent No.1 in supersession of its earlier letter dated 10.05.2010 and subsequent amendments made thereto vide letters dated 16.07.2013 and 24.09.2014. In the aforesaid letter respondent No.1 conveyed sanction of the President accorded for the conclusion of negotiated contract with NCDFI and its State Cooperative Milk Federations/NDDB OWP Nos. 1076/2017 & 1075/2017 Page 4 of 29 /J&K Dairy Producers/Processor/Marketing Cooperative Union, JKDCUL (for the State of J&K) and Delhi Milk Scheme (for Delhi area), for supply of milk and milk products. The letter aforesaid was stated to remain valid for a period of three years w.e.f. 01.10.2015. As is claimed by petitioner No.1, pursuant to the letter dated 10.08.2015, the negotiated contract was, inter alia, concluded with the petitioner No.1-Society as well.
It is also stated that vide communication dated 21.11.2015 issued by Headquarter Northern Command, Milk cooperatives other than the milk cooperatives of the State were also invited to participate in the negotiated contract for supply of milk and milk products in the State of Jammu & Kashmir. The aforesaid communication was challenged by the J&K State Cooperative Union in OWP No.1707/2014 which was disposed of by this Court vide order dated 29.12.2014 on the basis of the statement made by the learned counsel appearing for the respondents. It may be relevant to note that the respondents instead of contesting the aforesaid writ petition made a statement that the impugned communication had been withdrawn and the respondents had decided to act upon the communication dated 12.08.2014. It was also stated on behalf of the respondents that the respondents propose to adhere to the policy of Government of India indicated in its communication dated 30.05.2005 and 24.11.2005. Considering the statement of the learned counsel for the respondents, this Court disposed of the writ petition as having been rendered infructuous providing, however, that the respondents would not be allowed to wriggle out of the commitments, if any, made to the petitioner and were in force, as on that date. It is also pleaded on behalf of the petitioners that the respondents instead of adhering to the statement made by them and reflected in the order of this Court dated 29.12.2014 issued another communication on 31.01.2015 inviting NCDFI also in addition to the local milk producer cooperatives for conclusion of the negotiated OWP Nos. 1076/2017 & 1075/2017 Page 5 of 29 contract for the period from 01.03.2015 to 30.09.2015 for the stations/locations in the State of Jammu & Kashmir. The J&K Cooperative Union felt aggrieved and challenged the aforesaid communication in OWP No.308/2015 which was disposed of vide order dated 15.04.2015. The communication dated 31.01.2015 impugned in the writ petition was quashed and respondents were directed to consider the tenders/offers of such societies/federations only as belong to the State of J&K including the petitioner. The judgment aforesaid was thereafter reviewed vide order dated 16.04.2015 and the respondents were directed to allow not only the petitioner but also other cooperative societies registered in the State of J&K to submit their tenders.
4. In the aforesaid backdrop, the petitioners have assailed the communication dated 12.07.2017 whereby the sanction of the President has been conveyed for the conclusion of negotiated contract with NCDFI through its Cooperatives. Cooperative Milk Federations/Societies NDDB/J&K based cooperatives under NCDFI in the State of J&K only and Delhi Milk Scheme (for Delhi area) for supply of milk fresh and its products. The primary grouse of the petitioners against the order impugned is premised on the argument that in the face of communications of respondent No.1 dated 13.05.2005 and 24.11.2005 and the orders of this Court dated 29.12.2014 passed in OWP No.1707/2014 and order dated 15.04.2015 passed in OWP No.308/2015, the respondent No.1 could not have restricted the participation of only such milk federations/cooperatives of the State of J&K as were affiliated with NCDFI in the negotiated contract for supply of milk fresh and its products and providing further that the quantities not supplied through local federations of NCDFI would be sourced from NCDFI /federations/cooperatives situated outside the State of J&K. OWP Nos. 1076/2017 & 1075/2017 Page 6 of 29
5. I have heard the learned counsel for the parties and perused the record.
6. The learned counsel appearing for the petitioners assail the impugned communication, inter alia, on the ground that by virtue of impugned communication the negotiated contract for supply of milk and milk products has been decided to be concluded only with the J&K Cooperatives Milk Federations/Societies affiliated to NCDFI, insofar as State of J&K is concerned. He, therefore, submits that the aforesaid communication has the effect of depriving the other cooperative societies of the State of J&K including the petitioners of their right to enter into contract with the Army for supply of milk and milk products and thereby depriving the petitioner and its members of their livelihood. The impugned communication, submits learned counsel, violates the right of the petitioners guaranteed to them by Article 19 and 21 of the Constitution of India. It is further stated on behalf of the petitioners that the impugned communication cannot sustain in the face of judgment of this Court dated 15.04.2015 read with order dated 16.04.2015 passed in OWP No.308/2015 and review petition No.09/2015.
7. It is pointed out by the learned counsel for the petitioners that in view of the categoric direction issued by this Court the respondents cannot be allowed to extend the offer for supply of milk fresh to any federations/Societies situated and registered outside the State of J&K. It is, thus, urged that the impugned communication has rendered the orders passed by this Court aforementioned as ineffective and redundant. It is further stated that in the State of J&K as on date, there is only one cooperative society, namely, J&K Milk Producers Cooperative Limited Milk Plant, Chashmeshahi, Srinagar which is affiliated to NCDFI and therefore, eligible to participate in the negotiated contract in terms of the impugned communication. It is, thus, submitted that all other cooperative societies OWP Nos. 1076/2017 & 1075/2017 Page 7 of 29 registered in the State of J&K but not affiliated with NCDFI have been rendered ineligible to participate in the negotiated contract and therefore, deprived of their right to livelihood. It is urged that the impugned communication besides being arbitrary and discriminatory also has the effect of depriving the petitioners of their right to trade and business as guaranteed to them under Article 19 of the Constitution of India, as applicable to the State of J&K. It is next contended by the learned counsel for the petitioners that by restricting the right of participation only to the State Cooperative/Federations affiliated to NCDFI, the respondents have created monopoly in favour of the Jammu & Kashmir Milk Producer Cooperative Ltd. which, claims learned counsel, is the only state cooperative having affiliation with NCDFI. This, in turn, has reduced the concept of negotiated contract illusory, as in the face of restrictions contained in the impugned communication only one state cooperative has remained in fray which, otherwise, is not in public interest.
8. It is pointed out that the stipulation in the impugned communication placing the aforesaid restriction is totally arbitrary as the respondents have not been able to demonstrate any object sought to be achieved by making such classification. He, therefore, submits that there is no rational basis in classifying the State Milk Federations into those having affiliation with NCDFI and, others having no such affiliation nor the classification has any nexus with the object sought to be achieved. In short, learned counsel submits that the impugned communication is hit by Article 14 of the Constitution of India and therefore, cannot sustain. On behalf of the petitioners, it is also claimed that in view of the communications of respondent No.1 dated 23.05.2005 and 24.11.2005 the petitioners invested huge sums to raise their infrastructure so as to meet the demand of supply to be made to the Army and thus altered their position to their detriment. The OWP Nos. 1076/2017 & 1075/2017 Page 8 of 29 respondents, therefore, cannot be allowed to wriggle out of their promise made through the aforesaid orders and put the petitioners to irreversible loss. In short, learned counsel for the petitioner submits that the respondents are estopped by their conduct to alter their position to the detriment of the petitioners. The doctrine of promissory estoppel, learned counsel for the petitioners submits, is fully attracted in the instant case.
9. Mr.A.H.Naik, learned senior counsel appearing for the petitioners in OWP No.1075/2017 has also argued mostly on the same lines. He, however, additionally submits that in the absence of any specific provisions in the Multi State Cooperative Society Act, 2002 (hereinafter referred to as "the Act of 2002) providing for affiliation of Cooperative Federations/Societies with NCDFI, the impugned condition in the communication dated 12.07.2017 has the effect of depriving the petitioners of their exclusive right to participate in the negotiated contract for supply of milk and milk products to Army units in the State of Jammu and Kashmir. Learned senior counsel also took this Court to the provisions of the Act of 2002 and the Rules framed thereunder to substantiate his submissions. He, however, submits that the impugned condition in the communication dated 12.07.2017 is tailor- made for J&K Milk Producers Co-operative Limited Milk Plant, Cheshmashahi, Srinagar which is virtually a stated owned cooperative. While elaborating his argument, learned counsel submits that the only provision in the Act of 2002 is Section 25 which provides eligibility and procedure for becoming a member of Multi State Cooperative Societies. The petitioners cannot afford to become the members of NCDFI, a Multi State Cooperative Society otherwise than by losing their registration as Cooperative Society under the provisions of Jammu & Kashmir Cooperative Societies Act, 1989 and J&K Self Reliant cooperative Societies Act, 1999. In a nutshell, submits learned senior counsel, the petitioners can, in no way, OWP Nos. 1076/2017 & 1075/2017 Page 9 of 29 participate in the contract in question and, therefore, have been absolutely barred to enter into contract for supply of milk and milk products to the Army units located in the State of J&K. Referring to the policy of Government of India manifested through its communications dated 23.05.2005 and 24.11.2005, learned senior counsel submits that the petitioners acting upon the representations contained in the aforesaid communication have invested huge sums to make their societies capable of meeting the demand of the Army in the State of J&K. He, however, submits that the aforesaid communications and the past conduct of the respondents have given rise to legitimate expectation in the minds of the petitioners and, therefore, the respondents cannot be allowed to take a U-turn and exclude the petitioners from participation in the contract by imposing totally unreasonable condition.
10. Per contra, learned counsel appearing for respondent Nos. 1 to 4 Mr. Tahir Majid Shamsi, ASGI and Mr. Pranav Kohli, appearing for respondent No.5 have justified the impugned communication. The writ petitions have been opposed by the respondents on the ground that award of government contracts fall in the realm of public policy and the same cannot be made subject matter of challenge in a writ petition under Article 226 of the Constitution of India. Mr. Shamshi, therefore, submits that since the award of contract is akin to distribution of public largesse and same is required to be awarded as per the law and the policy of the government which affords equal opportunity to all bidders. Acceding to the contention of the petitioners would be, in short, creating monopoly in favour of the petitioners. Elaborating his argument, learned ASGI submits that as a matter of national policy, only the cooperative members registered with NCDFI have been authorized to supply milk and milk products to Indian Army in all States including the State of Jammu & Kashmir. It has always been a government OWP Nos. 1076/2017 & 1075/2017 Page 10 of 29 policy even prior to 2005 to procure milk from NCDFI affiliated cooperative Societies/State Federations. However, the members concerned of the dairy cooperatives of the J&K State have been adequately accommodated in the Government Policy issued from time to time. He, however, submits that as per the policy of the government of India issued from time to time including the one reflected in the impugned communication, the dairy milk cooperatives based in Jammu & Kashmir only have been made eligible for supply of milk and milk products to Indian Army in the J&K State. By virtue of impugned communication, the only condition prescribed is that Jammu & Kashmir Milk Cooperatives ought to be affiliated with NCDFI before it is permitted to participate in the negotiated contract for supply of milk to the army authorities in the State of J&K. This, argues learned counsel, has been done to ensure that only such cooperatives are permitted to supply milk and milk products to Indian Army which are incorporated for primary goal of empowering and benefitting the farmers, and to encourage development of dairy industry at village and district levels rather than operating for commercial considerations only. He rebuts the arguments of the learned counsels for the petitioners by urging that there is no bar or prohibition for the J&K Cooperatives to become member of the NCDFI nor by becoming member of NCDFI, the petitioners would lose their registration in the State as is sought to be projected by the petitioners. He, thus, submits that the apprehension of the petitioners in this regard is totally misplaced, for, a similarly situated Milk Producers Cooperative i.e. JKMPCL which is also a society registered under the J&K Self Reliant Cooperative Act, 1999 is already a member of NCDFI and has become such member without losing its registration in the State. He, therefore, submits that the condition contained in the impugned communication/policy of the Government of India does not absolutely exclude the petitioners from participation and competing in the OWP Nos. 1076/2017 & 1075/2017 Page 11 of 29 contract but only regulates their participation by providing a condition which is easy to fulfil. He, therefore, argues that the condition in the impugned policy which is vehemently assailed by the petitioners is not the one which is impossible to be complied with. That being so, urges learned counsel for the respondents, the arguments of the learned counsel for the petitioners that the impugned policy is arbitrary and creates monopoly in favour of the JKMPCL are totally misconceived.
11. Learned counsel appearing for respondent No.5, however, submits that the writ petition which primarily challenge the policy decision of the Government of India is not maintainable, unless it is shown that the policy is arbitrary and actuated by mala fide considerations. The policy decision of the Government cannot be subjected to judicial review on the ground that these decisions are biased and incorrect and that there could be more appropriate and better alternative. It is pointed out by the learned counsel for the respondent that the condition requiring the affiliation of petitioners-Societies with NCDFI is well achievable and, therefore, does not violate Article 19 and 21 of the Constitution of India, as argued by the learned counsel for the petitioners.
12. Both sides have relied upon the case laws in support of their respective submissions. The case law cited by the learned counsels for the parties which is germane to the resolution of dispute raised in these petitions alone has been noticed and discussed.
13. From the arguments of learned counsel for the parties, following issues crop up for determination in this case:-
i) What is scope of interference of the Court in exercise of its writ jurisdiction in the policy decision of the Government?OWP Nos. 1076/2017 & 1075/2017 Page 12 of 29
ii) Whether the policy decision of the Government of India conveyed to the Chief of Army Staff, New Delhi vide impugned communication is illegal, irrational, arbitrary and violative of Article 14 of the Constitution of India.
iii) Whether the condition contained in the impugned communication dated 12.07.2017 restricting the eligibility of cooperative federations/societies affiliated to NCDFI only to participate in tendering process for supply fresh milk to the Indian Army in the State of J&K has the effect of creating monopoly in favour of JKMPCL, a State owned dairy cooperative registered in the State of J&K and, therefore, offends Article 14 of the Constitution of India.
iv) Whether the earlier policy decision of the Government of India reflected in the communications dated 13.05.2005 and 24.11.2005 amounts to extending a representation to the petitioners that they, for all times to come, would be allowed to participate in the tendering process for allotment of contract for supply of milk and milk products to the Army in the State of J&K and whether acting on such representation, the petitioners have acted to their detriment. In short, whether the plea of promissory estoppel or legitimate expectation pressed into service by the petitioners is sustainable in the facts and circumstances of this case.
v) Whether the condition in the impugned communication providing for mandatory affiliation of the petitioners and other federation/societies of the J&K with NCDFI as a condition precedent for entering into contract with the army in the State for supply of milk is the one which is achievable and not something which is impossible to achieve.OWP Nos. 1076/2017 & 1075/2017 Page 13 of 29
The arguments of learned counsels have mainly rallied around these issues.
14. Coming to the scope of interference by this Court in policy matters, it is now firmly settled that the power of judicial review would not extend to determining the correctness of policy decision of the Government or to indulge into exercise of finding out whether there could be more appropriate or better alternatives. The framing of a policy and taking a particular policy decision depends upon various factors, the consideration whereof falls in the domain of experts and the Court would be loathe to interfere with such decision. This, however, would not mean that all policy decisions taken by the Government are immune from judicial review. If the policy decision is found to be arbitrary, mala fide or tailor-made to suit a person or class of persons, the same could be judicially reviewed by constitutional courts. If the policy decision is found not backed by cogent material and there is no application of mind in arriving at such decision, the same can also be held to be arbitrary or irrational. However, if the decision is taken bona fide in larger public interest the Court has to respect such decision of the executives, for the policy making is in the domain of the executive. The policy decisions could also be made subject matter of judicial review, if these are contrary to the Constitution or any statutory provisions.
15. The Supreme Court in the case of State of Punjab and others v. Ram Lubhaya Bagga and others; (1998) 4 SCC 117 while dealing with scope of judicial review in policy matters of the Government in paragraph No.25 held thus:-
"25.Now we revert to the last submission, whether the new State policy is justified in not reimbursing an employee, his full medical expenses incurred on such treatment, if incurred in any hospital in India not being a Government hospital in Punjab. Question is whether the new policy which is restricted by the financial constraints of the State to the rates in OWP Nos. 1076/2017 & 1075/2017 Page 14 of 29 AIIMS would be in violation of Article 21 of the Constitution of India. so far as questioning the validity of governmental policy is concerned in our view it is not normally within the domain of any court, to weigh the pros and cons of the policy or to scrutinize it and test the degree of its beneficial or equitable disposition for the purpose of varying modifying or annulling it, based on however sound and good reasoning, except where it is arbitrary or violative of any constitutional, statutory or any other provision of law. When Government forms its policy, it is based on number of circumstances on facts, law including constraints based on its resources. It is also based on expert opinion. it would be dangerous if court is asked to test the utility, beneficial effect of the policy or its appraisal based on facts set out on affidavits. The Court would dissuade itself from entering into this realm which belongs to the executive. It is within this matrix that it is to be seen whether the new policy violates Article 21 when it restricts reimbursement on account of its financial constraints."
16. Similarly in the case of Ugar Sugar Works Ltd. v. Delhi Administration and others; (2001) 3 SCC 635 the Supreme Court in paragraph No.18 held as under:-
"18. The challenge, thus, in effect, is to the executive policy regulating trade in liquor in Delhi. It is well settled that the Courts, in exercise of their power of judicial review, do not ordinarily interfere with the policy decisions of the executive unless the policy can be faulted on grounds of mala fide, unreasonableness, arbitrariness or unfairness etc. Indeed, arbitrariness, irrationality, perversity and mala fide will render the policy unconstitutional. However, if the policy cannot be faulted on any of these grounds, the mere fact that it would hurt business interests of a party, does not justify invalidating the policy. In tax and economic regulation cases, there are good reasons for judicial restraint, if not judicial deference, to judgment of the executive. The Courts are not expected to express their opinion as to whether at a particular point of time or in a particular situation any such policy should have been adopted or not. It is best left to the discretion of the State." (Emphasis supplied)
17. The observations made by the Supreme Court in paragraph Nos. 92, 93 and 98 in the case of Balco Employees Union (Regd.) v. Union of India and others; (2002) 2 SCC 333 are noteworthy in the context of question that has arisen in these petitions. These are as under:-
"92. In a democracy, it is the prerogative of each elected Government to follow it's own policy. Often a change in Government may result in OWP Nos. 1076/2017 & 1075/2017 Page 15 of 29 the shift in focus or change in economic policies. Any such change may result in adversely affecting some vested interests. Unless any illegality is committed in the execution of the policy or the same is contrary to law or mala fide, a decision bringing about change cannot per se be interfered with by the Court.
93. Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution. In other words, it is not for the Courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is the Parliament and not the Courts. Here the policy was tested and the Motion defeated in the Lok Sabha on 1st March, 2001.
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98. In the case of a policy decision on economic matters, the Courts should be very circumspect in conducting any enquiry or investigation and must be most reluctant to impugn the judgement of the experts who may have arrived at a conclusion unless the Court is satisfied that there is illegality in the decision itself."
18. From the aforesaid judgments of the Supreme Court, it is apparent that there has been consistent view of the Supreme Court with respect to scope of interference in the policy decisions of the Government in the writ jurisdiction. In the relatively recent judgment of the Supreme Court in the case of Parisons Agrotech Private Limited and another v. Union of India and others; (2015) 9 SCC 657 , the Supreme Court after taking note of the series of judgments rendered on the subject in paragraph No.14 observed thus:-
"14. No doubt, the writ court has adequate power of judicial review in respect of such decisions. However, once it is found that there is sufficient material for taking a particular policy decision, bringing it within the four corners of Article 14 of the Constitution, power of judicial review would not extend to determine the correctness of such a OWP Nos. 1076/2017 & 1075/2017 Page 16 of 29 policy decision or to indulge into the exercise of finding out whether there could be more appropriate or better alternatives. Once we find that parameters of Article 14 are satisfied; there was due application of mind in arriving at the decision which is backed by cogent material; the decision is not arbitrary or irrational and; it is taken in public interest, the Court has to respect such a decision of the Executive as the policy making is the domain of the Executive and the decision in question has passed the test of the judicial review."
19. From the analysis of the aforesaid judgments rendered by the Supreme Court in series of cases, it is now firmly settled that the scope of interference in the policy decision of the Government is well defined and circumscribed by the parameters laid down from time to time. The policy decisions of the Government are not immune to challenge in the writ jurisdiction and the judicial review in the policy matters of the Government is not absolutely barred. However, the Courts would be loathed to interfere in the policy decisions of the Government, unless such decisions are totally irrational, arbitrary or mala fide. The decision of the democratic government governed by Rule of law including its policy decisions must conform to Article 14 of the Constitution of India. The Government by its policy decisions cannot meet out invidious discrimination to a citizen or class of citizens, more so when such decisions pertain to distribution of public largesse. Such policy decision, if tailor-made to suit a person or class of persons for the purpose of conferring state largesse can also be well subjected to judicial review. However, the policy decisions taken by the government bona fide and in larger public interest cannot be judicially reviewed on the ground that these decisions are not correct or that a better decision could have been taken by the government nor would the judicial scrutiny extend to the determination of the merits of such decisions as while exercising the power of judicial review in such matters, the Court does not act as an appellate authority nor it is within the domain of the Court to direct or advise the executives in the matter of policy or to summarize qua any matter which under the OWP Nos. 1076/2017 & 1075/2017 Page 17 of 29 Constitution lies within the sphere of legislature or executives. So long as the authorities laying down policy decisions do not transgress their constitutional limits or statutory power, such decisions cannot be found fault with and subjected to judicial scrutiny. The Court would not interfere in the policy decision of the Government even if these do not appear to be agreeable to the Court.
20. In the backdrop of this legal position and being fully aware of scope of judicial review, I have ventured to appreciate the arguments of learned counsel for the parties for determination of the issues raised.
21. Vide communication dated 17.01.2005 respondent No.1 authorized the Indian Army to procure their requirement of milk and milk products from NCDFI/State milk cooperative federation/government milk schemes. This scheme was later on extended to JKDCUL, the petitioner in OWP No.1075/2017, in the case of military forms located in Jammu & Kashmir vide communication of Government of India, Ministry of Defence dated 13.05.2005.
22. It is also not in dispute that vide communication dated 23.11.2005 issued by respondent No.1 the sanction of the President of India for conclusion of negotiated contract with NCDFI/NDDB/State Cooperative Milk federations for a period of two years i.e. 01.10.2005 to 30.09.2007 was conveyed to the army authorities. This was followed by another communication of the respondent No.1 dated 24.11.2006 whereby Cooperative Milk Federations duly recognized by the Govt. of India, Ministry of Defence and belonging to the State of Jammu and Kashmir were made only eligible to participate in the tendering for supply of milk and milk products to Military Farms located in the State of J&K. In the aforesaid communication it was also provided that the quantities not supplied through OWP Nos. 1076/2017 & 1075/2017 Page 18 of 29 local federations shall be procured from federations/cooperatives not belonging to Jammu & Kashmir who are NCDFI members. It is by virtue of this communication for the first time the Cooperative Milk Federations duly recognized by the Government of India, Ministry of Defence and belonging to the State of J&K only were conferred the exclusive right for supply of milk and milk products to military farms located in the State of J&K. In essence, the Government of India in its wisdom created monopoly in favour of the Cooperative Milk Federations of the State insofar as supply of milk and milk products to the military forms in the State of Jammu & Kashmir was concerned. This was a unilateral policy decision of the government aimed at boosting the cooperative movement in the field of dairy in the State of J&K.
23. It is also not disputed before me that in terms of communication dated 21.07.2006 issued by respondent No.1, the provisions of communication dated 17.01.2005 were also extended to the MPCMPL i.e. petitioner No.1 in OWP No.1076/2017. It is, thus, clear that writ petition in OWP No.1075/2017 and petitioner No.1 in OWP No.1076/2017 are both duly recognized by the Government of India, Ministry of Defence for the purposes of entering into contracts with the army in the State of J&K for supply of milk and milk products. Therefore, it is clear that in terms of letter dated 24.11.2005 issued by respondent No.1 followed by another letter of respondent No.1 dated 26.07.2006, the petitioner No.1 in OWP No.1076/2017 and petitioner No.1 in OWP NO.1075/2017 were conferred the exclusive privilege of entering into negotiated contract for supply of milk and milk products to the military farms located in the State of J&K. This policy stated to have remained in-vogue till the year 2010. On 10.05.2010, respondent No.1 came up with a fresh sanction of the President of India for conclusion of negotiated contract with different cooperative federations OWP Nos. 1076/2017 & 1075/2017 Page 19 of 29 including JKDCUL. The policy reflected in the aforesaid communication was provided to remain valid for a period of three years with effect from the date of issuance of the letter and was to be reviewed thereafter based upon the experience of supply of cooperative federations named in the letter in terms of reliability, reasonableness of rates and the availability of milk and milk products from outside the cooperative sector.
24. The provisions of the policy promulgated vide communication dated 10.05.2010 was further extended to 30.09.2014 on the same terms and conditions. The petitioners did not face any difficulty and continued to participate in the tendering process in terms of the policy of respondent No.1 issued from time to time on the subject. The right of the petitioners to participate in the tendering process to the exclusion of all other cooperative milk federations remained intact till issuance of communication dated 21.11.2014 by respondent No.5 whereby besides the dairy cooperative federations registered in the State of Jammu & Kashmir, the other dairy milk federations based outside the State of J&K too were invited to participate for supply of milk and milk products to various stations of Northern Command located in the State of Jammu & Kashmir. This was contested by the Jammu & Kashmir State Cooperative Union in OWP No.1707/2014. When the matter came up for consideration before the Court, the respondents stated that the impugned communication dated 21.11.2014 had been withdrawn and the respondents had decided to act upon earlier communication issued on 12.08.2014. Taking note of the submission made by the respondents, the writ petition was disposed of as having been rendered infractuous. In the aforesaid order it was also provided that the respondents would not be allowed to wriggle out of the commitments, if any, made to the petitioner in the aforesaid writ petition. In view of the aforesaid decision of this Court the writ petitioner in OWP No.1732/2014 also withdrew their writ petition.
OWP Nos. 1076/2017 & 1075/2017 Page 20 of 29From here it would transpire that the respondents who had decided to deviate from its earlier policy of providing exclusive privilege to the milk cooperative federations registered in the State of J&K to participate in the tendering process for supply of milk and milk products to army authorities in Jammu & Kashmir conceded and the Court was assured that the respondents would adhere to its earlier policy and thus, restricts the participation only to the milk cooperative federations of State of J&K insofar as supply to the army in the State of J&K was concerned.
25. So far so good, but there came another communication of the respondent No.5 dated 31.01.2015 whereby apart from dairy milk federations of the State of J&K, National Cooperative Dairy Federations of India Limited (NCDFI) too was invited to participate in the negotiated contract for supply of milk and milk products for the period from 01.03.2015 to 30.09.2015. This communication also became subject matter of challenge in this Court in OWP No.308/2015. This Court after considering the rival contentions allowed the writ petition vide order dated 15.04.2015 and quashed the communication dated 31.01.2015 insofar as it pertained to the participation of outside cooperative milk federations. Accordingly, a direction was issued to the respondents to consider the tenders/offers of such societies/federations which belonged to the State of Jammu & Kashmir.
26. In the backdrop of aforesaid facts, learned counsels appearing for the petitioners in both the writ petitions submit that the respondent No.1 could not have changed the policy and provide that the affiliation of the State Cooperative Federations to the NCDFI was sine qua non for participating in the tendering process for supply of milk and its products to the army in the State of Jammu & Kashmir. It is, thus, vehemently contended that the OWP Nos. 1076/2017 & 1075/2017 Page 21 of 29 condition imposed in the impugned policy decision of the government requiring mandatory affiliation with NCDFI before being declared eligible to participate in the tendering process besides being illegal and arbitrary, is contrary to the concluded judgment passed by this Court in OWP No.308/2015.
27. The arguments of the learned counsels for the petitioners that the offending condition in the impugned policy is violative of the direction issued by this Court dated 15.04.2015 in OWP No.308/2015 are without any merit. The offending condition in the impugned communication has only restricted the participation in the tendering process for supply of milk and milk products to the army in the State of Jammu and Kashmir only to the cooperative milk federation/societies based in the State of Jammu & Kashmir and therefore, the monopoly in the matter of supply of milk to the army in Jammu & Kashmir which was created in favour of the milk cooperative federations/societies in the State of Jammu & Kashmir vide communication of respondent No.1 dated 24.11.2005 has remained intact. The Government of India, Ministry of Defence, however, has provided for mandatory affiliation of such societies with the NCDFI, respondent No.5 herein. It has come on record that one such cooperative federation, that is, JKMPCL is affiliated to NCDFI and therefore, eligible to participate in the tendering process. The condition aforesaid which has been assailed by the petitioners cannot be said to be in violation of the judgment rendered by this Court in OWP No.308/2015, rather the communication impugned is in compliance thereof.
28. In view of the settled position of law discussed herein above, the Government which has the authority to frame a policy has the authority to amend, modify or withdraw the same and such decision is best left to the OWP Nos. 1076/2017 & 1075/2017 Page 22 of 29 government which has to take into consideration various relevant factors in the matter of framing of its policies. The aforesaid condition which mandates the milk cooperative federation/societies of the State to seek affiliation with NCDFI before participating in the tendering process also cannot be said to be arbitrary or irrational. The respondent No.1 in its reply affidavit has spelt out reasons for engrafting such condition in the policy of Government of India, Ministry of Defence promulgated vide communication dated 12.07.2017, impugned in these writ petition. NCDFI is a Multi-State Co-operative Society registered under the Act of 2002 with an object to promote the dairy industry and to coordinate, help, develop and facilitate the working of dairies etc. The NCDFI's function, besides aforesaid objects, is to undertake to collaborate with the Government, national and international organizations in formulating policies and programmes of cooperative orientation for developing different facets of dairy enterprise. It's another function is to encourage milk procurement through cooperatives, so that the entire surplus milk in the country may be procured from the producers exclusively by cooperatives and also to organize, operate and monitor inter- state and inter-regional movement of milk and milk products etc. Being a Multi State Cooperative Society registered under the Act of 2002 its membership is, inter alia, open to an individual, Multi-State Cooperative Societies or any Cooperative Society.
29. The procedure for becoming a member of a Multi- State Cooperative Society like NCDFI is given in Section 25 of the Act of 2002. In terms of Section 26 of the Act of 2002, a Cooperative Society may, instead of becoming a permanent member of the Multi-State Cooperative Society, become a nominal or associate member provided the same is provided by the Bye-laws of the concerned Multi-State Cooperative Society. So far as NCDFI is concerned, in terms of its Bye-laws, eligible cooperative societies OWP Nos. 1076/2017 & 1075/2017 Page 23 of 29 can apply for admission as a member either as regular member or associate member. It is then seen that the NCDFI by its laws has made a provision for admission of a person or society as its associate member also. Such member is not required to subscribe to the share capital of the NCDFI nor it is required to participate in its administrative affairs. In short, there is found no prohibition in the Act of 2002 or the Rules framed thereunder for the petitioner-Societies to be either a permanent member or associate member of NCDFI. The word "affiliation" used in the impugned communication only signifies that the petitioner-Societies are not necessarily required to be permanent members of NCDFI but it would be sufficient, if they are admitted as associate members of the NCDFI so as to enable them to participate in the tendering process for the supply of milk and milk products to the Army in the State of J&K.
30. The contention of the learned senior counsel appearing for the petitioners in OWP No.1075/2017 that in case the petitioner seeks affiliation with NCDFI and is admitted as member thereof, they would lose their registration in the State of J&K is also not well founded. Neither the provisions of the Act of 2002 or the Rules framed thereunder nor any provision of Jammu & Kashmir Cooperative Societies Act, 1989 and J&K Self Reliant Cooperative Act of 1999 contain such provision. As a matter of fact and as admitted by both the sides before this Court, JKMPCL, a State based Cooperative Milk Federation, is already a member of the NCDFI with its registration in the State of J&K intact. It is also not disputed that the aforesaid Society is similarly situated with the petitioners. That apart, the impugned communication containing the offending clause cannot be said to cast upon the petitioners an obligation which is impossible to be fulfilled. It is, thus, held that the condition aforesaid in the impugned communication is neither arbitrary nor irrational nor is tailor-made to suit a particular person or OWP Nos. 1076/2017 & 1075/2017 Page 24 of 29 set of persons but is rather in larger public interest. The affiliation with NCDFI is to encourage the State based Cooperative Milk Federations to be part of national movement and therefore, cannot be said to be against public interest. I also do not find that the condition impugned calling upon the petitioners to have affiliation with NCDFI first before exclusively participating in the tendering process for supply of milk to the army in the State of Jammu & Kashmir is, in any manner, in violation of the direction issued by this Court in OWP No.308/2015. In the year 2015 when the aforesaid writ petition was decided by this Court, the army authorities had admittedly gone beyond the scope of policy decision of the Government of India, Ministry of Defence which had provided the State based Cooperative Milk Federations exclusive privilege to deal with the army in the State of J&K in the matter of supply of milk and milk products. It is in this context, the judgment came to be passed in OWP No.308/2015. However, nothing prevented the respondent No.1 to change, modify or even withdraw its policy. So long as the policy is not found to be irrational, arbitrary or mala fide, the same cannot be made subject matter of judicial review in the writ jurisdiction.
31. The argument of Mr. Altaf Naik, learned senior counsel, that the impugned communication has the effect of creating monopoly in favour of JKMPCL which is single state based dairy cooperative affiliated to NCDFI is totally fallacious and self defeating. As a matter of fact, the Government of India has already created a monopoly in favour of the State based Cooperative Milk Federations and the same is well within the domain of the Government of India. The condition of having affiliation with the NCDFI laid down in the impugned communication is only regulatory in nature and well achievable and nothing stops the petitioners for seeking such affiliation with the NCDFI. This can be done by the petitioners by either becoming a OWP Nos. 1076/2017 & 1075/2017 Page 25 of 29 permanent or associate member of the NCDFI. As already held, neither the Act of 2002 nor the Rules framed thereunder place any restriction on the petitioners to seek such affiliation/association. Rather the Bye-laws of respondent No.5 lay down elaborate procedure for becoming a permanent or the associate member of the federation. The condition imposed in the impugned communication is, therefore, well achievable and does not put any unreasonable restriction on the rights of the petitioners to engage freely in its trade or activity. The impugned condition is, therefore, not monopolistic in character but only regulates the limited monopoly already created in favour of the petitioners. The reliance put on the judgment of Supreme Court rendered in Rasbihari Panda v. State of Orissa; (AIR 1969 SC 1081) is totally misplaced.
32. That neither the doctrine of promissory estoppel nor the doctrine of legitimate expectation are attracted in the given facts and circumstances of the case. In the first place there was never any unequivocal promise extended to the petitioners that they would be allowed to participate in the tendering process to the exclusion of outside cooperative milk federation/societies for all times to come. The Government had been coming up with policy from time to time and it is no doubt true that keeping in view the peculiar circumstances in the State and to provide boost to the diary cooperatives of the State, the Government of India, in its wisdom, restricted the zone of participation in the tendering process only to the approved milk federations based in the State of Jammu & Kashmir. And secondly, it is observed that the Government has not backed out of its promise made way back in the year 2005. The policy of the Government, as on today, is also to allow only the State based Cooperative Milk Federations duly approved by the Government of India to participate in the tendering process for supply of milk and milk products to the army in the State of Jammu & Kashmir to the OWP Nos. 1076/2017 & 1075/2017 Page 26 of 29 exclusion of all others. The condition requiring such state based federations have affiliation with NCDFI, which otherwise is a achievable condition, is only regulatory in nature and does not amount to unreadable restriction on the fundamental right of petitioners to carry on the trade of dairy guaranteed to them under Article 19(1) (g) of the Constitution of India.
33. That apart, the petitioners have not been able to demonstrate that it is in pursuance of the policy decision of the Government of India taken in the year 2005, the petitioners established their dairy cooperatives or that they infused substantial funds to improve their infrastructure. In the absence of specific pleading in this regard, such plea, otherwise, cannot be accepted. This is besides the point that in the given facts and circumstances of the case, neither doctrine of estoppel nor legitimate expectation is attracted in this case. The law on the subject too is well settled that the Government is well within its right to deviate from its stated policy, if the same is required in larger public interest. The supervening public interest would, thus, override the claim based on promissory estoppel. The legitimate expectation is still a weak right capable of being defeated in larger public interest (see. Monnet Ispat and Energy Ltd. v. Union of India; (2012) 11 SCC 1).
34. Lastly, the contention of the learned counsel for the petitioners in OWP No.1076/2017 is that despite petitioner No.1 having applied to respondent No.5 for admitting it to be the member, no decision thereon has been taken by respondent No.5. It is pointed out by the learned counsel that as per Sub-Section (4) of Section 25 of the Act of 2002, if no such decision is taken within a period of four months from the date of receipt of application, it shall be deemed that the application has been rejected. This aspect has been highlighted by the petitioner by filing supplementary affidavit.
OWP Nos. 1076/2017 & 1075/2017 Page 27 of 2935. In response to the aforesaid submission of the learned counsel for the petitioners, respondent No.5 has stated that the issue with regard to admitting the petitioner No.1 as member of the NCDFI, respondent No.5, is still under consideration and the same has not been either accepted or refused formally.
36. Be that as it may, the fact remains that, if the petitioners or for that matter any other cooperative milk federation eligible in terms of Section 25 of the Act of 2002 submit application to respondent No.5, the same is required to be disposed of within a stipulated period of four months. Needless to say that such decision of respondent No.5 is judicially reviewable.
37. In view of the aforesaid, I do not find any merit in both these petitions and consequently challenge to the impugned communication fails. However, it is provided that in case the petitioners approach respondent No.5 for admission as permanent/associate member within a period of two weeks from the date of this order and their applications are found to conforming to the provisions of the Act of 2002 and the Rules framed thereunder as also the Byelaws of respondent No.5, the same shall be considered on the analogy of JKMPCL and disposed of within two weeks from the date of receipt of such applications by speaking orders, to be communicated to the petitioners within one week thereof.
38. The order of status quo granted by this Court on 26.07.2017 shall remain in force for the aforesaid period of five weeks.
39. Both the writ petitions stand disposed of in terms of the above.
(Sanjeev Kumar) Judge Srinagar 26/03/2018 Vinod.
OWP Nos. 1076/2017 & 1075/2017 Page 28 of 29Judgment is pronounced by me in terms of Rules 138(3) of the Jammu & Kashmir High Court Rules, 1999.
(M.K.Hanjura)
Srinagar Judge
26 /03/2017
OWP Nos. 1076/2017 & 1075/2017 Page 29 of 29