M/S. Sona Spun Pipe Industries Ltd vs State Of Odisha on 15 October, 2020

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Orissa High Court

M/S. Sona Spun Pipe Industries Ltd vs State Of Odisha on 15 October, 2020

This writ petition has been filed by M/s. Sona Spun Pipe Industries Ltd. challenging the order under Annexure-12 dated 31.08.2018 passed by the Additional Chief Secretary to the Government of Odisha in the Department of Micro, Small & Medium Enterprises (hereinafter referred to as 'MSME') whereby the application of the petitioner for inclusion of Asbestos Cement Pressure Pipe in the rate contract list for MSMEs, has been -2- rejected. The petitioner has prayed to quash the said impugned order under Annexure-12 and to issue a writ of mandamus directing the opposite parties to approve the product of the petitioner for inclusion in the rate contract.

2. The case of the petitioner is that the petitioner is a limited liability Partnership Firm registered under the Indian Partnership Act, 1932, having its registered Office as well as the Factory at Gopiballavpur Road, Bankisole, Baripada in the district of Mayurbhanj. The petitioner purchased a sick unit from Odisha State Financial Corporation, Cuttack. The petitioner, being an MSME unit manufacturing Asbestos Cement Pressure Pipes (AC Pressure Pipes) was duly registered with the Directorate of Export Promotion & Marketing (hereinafter in short referred to as 'the DEP&M'), Odisha-opposite party No.2, for marketing assistance. The petitioner industry was registered with the Director of Industries and was granted DIC Production Certificate, Pollution Clearance and BUS marketing. The petitioner vide application dated 09.11.2027 under Anexure-1, applied to the DEP&M- opposite party No.2 for inclusion of its product i.e. AC Pressure Pipes in store item under the Rules for Rate Contract with Micro and Small Enterprises of Odisha, 2014 (hereinafter in short referred to as 'the Rules, 2014'). According to the petitioner, after receipt of the said application, the appropriate Sub-Committee of -3- EP & M constituted by the State Government selected the item of the petitioner for inclusion in Rate contract and accordingly the opposite party No.2 sent the proposal to the opposite party No.1 vide letter dated 26.12.2017 under Annexure-2 series for approval. As per the petitioner, the opposite party No.1 was required to give approval immediately enabling the DEP&M to issue the Rate Contract within sixty days from the date of application as per the EP&M Manual. The Additional Secretary of the opposite party No.1 by letter dated 06.02.2018 asked the opposite party No.2 as to how many MSME Units in Odisha are producing Asbestos Cement Pressure Pipes as per standard IS:1592/2003. Upon receipt of the said letter, the O.P. No.2 vide letter dated 15.02.2018 in turn required the Director of Industries and Directorate of Bureau of Indian Standard to intimate the details of MSME Units in respect of store items of AC Pressure Pipes. The Bureau of Indian Standard vide its letter dated 19.02.2018 conveyed the opposite party No.2 that the petitioner is the only unit in Odisha which is producing AC pressure pipes. Accordingly, the opposite party No.2 vide letter dated 04.04.2018 (Annexure-6) communicated the said information to the opposite party No.1 that petitioner is the only unit in the State of Odisha which manufacturing the said item. According to the petitioner, the opposite party No.1 due to gross malafide reasons kept the matter pending. It is stated by the petitioner that it has invested more than Rs.150.00 lakhs for -4- production of AC Pressure Pipes and due to such inaction of the opposite parties the petitioner firm has sustained heavy loss. It is further submitted that for the rate contract Govt. requirement of minimum Rs.2.00 lacs is necessary and the Engineer in Chief, Rural Water Supply & Sanitation (RWSS) Department vide letter dated 21.11.2017 (Annexure-7) has confirmed the requirement of Rs.44.64 lakhs in total per annum to the Directorate of EP & M., which is much more than the minimum requirement.

3. It is alleged by the petitioner that though the O.P. No.2 with the approval of O.P. No.1 has renewed the rate contract in favour of different units on 17.03.2018, 19.03.2018 and 24.05.2018 and has also approved the fresh rate contract of one unit on 24.05.2018, but it did not take any decision on the petitioner's matter. Therefore, the petitioner approached this Court by way of filing W.P.(C) No. 10707 of 2018 seeking issuance of a direction to opposite party No.1 to approve the product of the petitioner for inclusion in the rate contract. This Court by order dated 12.07.2018 disposed of the said writ petition with the following direction :

"Heard learned counsel for the petitioner as well as learned Addl. Government Advocate appearing for the State-opposite parties.

Though an application has been filed by the opposite parties seeking two months time to file counter affidavit, but as instructions have been received, learned Addl. Government Advocate has -5- consented for disposal of this writ petition at this stage.

The petitioner is registered as a small-scale industry and is claiming benefit under the Micro, Small and Medium Enterprises (MSME) Scheme of the State Government. The petitioner-firm produces Asbestos cement pressure pipes and is seeking its inclusion as an item in the rate contract. It is not disputed that the State Government is promoting the small scale industries through the MSME scheme. It is not understood as to why the decision on the application of the petitioner has not been taken by 5the opposite parties, especially when recommendation has already been made by the opposite party No.2 in the case of the petitioner. Learned Addl. Government Advocate states that the final decision has to be taken by the opposite party No.1-Additional Chief Secretary, MSME Department, Govt. of Odisha, Bhubaneswar.

In such view of the matter, we dispose of the writ petition with a direction that opposite party No.1 shall take a final decision in the case of the petitioner (which has already been recommended by opposite party No.2) as expeditiously as possible, but not later than four weeks from the filing of certified copy of this order. It is made clear that in case the recommendation of opposite party No.2 is not accepted, opposite party No.1 shall pass a reasoned and speaking order, in accordance with law. With the aforesaid observation and direction, the writ petition stands disposed of."

4. When the aforesaid order was not complied with by the opposite party No.1, petitioner filed CONTC No. 1460 of 2018 before this Court. After receiving the notices on the contempt petition, opposite party Nos. 1 & 2 sought clarification from the opposite party No.3-Engineer in Chief, RWSS Department. The opp. party No.3 on 31.08.2018 issued the clarification, but it is -6- alleged by the petitioner, that he manipulated the same at the instances of the opposite party Nos. 1 & 2 and issued two letters with the same dispatch numbers 7607, both are of dated 31.08.2018. While in point No.3 of the first letter it was mentioned that this item can be included in rate contract for use in PWS Contract, but in subsequent letter point No.3 was that at present there is no requirement of AC Pressure Pipe. Case of the petitioner is that on the basis of the said fabricated and manufactured document, the opposite party No.1 without considering the recommendations under Annexure-2 has rejected the application of the petitioner vide impugned order dated 31.08.2018 and refused to include the product of the petitioner in the rate contract. Hence this writ petition.

5. Shri P.P. Choudhury, learned Sr. Advocate appearing on behalf of the petitioner submitted that the impugned order has been passed in gross violation of the direction issued by this Court vide order dated 12.07.2018 in W.P.(C) No. 10707 of 2018, which required the opposite party No.1 to decide the representation of the petitioner on the basis of the recommendation of opp. party No.2 dated 26.12.2017, and in case the recommendation of O.P. No.2 is not accepted, the O.P. No.1 was required to pass a reasoned and speaking order, in accordance with law. But a bare perusal of the impugned order dated 31.08.2018 under Annexure-12, clearly -7- shows that the O.P. No.1 has nowhere mentioned about the earlier recommendation made by the Sub-Committee as well as O.P. No.2 and further no reasons have been assigned for not considering the recommendation made by O.P. No.2. Therefore, the impugned order, being an unreasoned and non-speaking order and in violation of earlier order passed by this Court, is liable to be quashed. By placing reliance upon the judgments of the Supreme Court in S.P. Kapoor (Dr.) Vs. State of H.P., (1981) 4 SCC 716, and Bahadursingh Lakhu Bhai Gohil Vs. Jagdish Bhai M. Kamalia & Ors., (2004) 2 SCC 65, learned Sr. Advocate for the petitioner contended that it is a settled position of law that where an administrative authority undertakes any action in undue haste, the malafides can very well be presumed and the same is violative of Article 14 of the Constitution of India. Learned Sr. Advocate argued that though the O.P. No.1 has rejected the application of the petitioner by order dated 31.08.2018, however, during the pendency of this writ petition, an additional ground for rejecting the application has been introduced in the counter filed by opposite party No.3 raising apprehension of health-hazard likely to be caused by the item of the petitioner. On this aspect, learned Sr. Advocate for the petitioner, relying upon the decisions of the Supreme Court in Commissioner of Police, Bombay Vs. Gordhan Das Bhanji, AIR 1952 SC 16; and Mohinder Singh Gill & Anr. Vs. The Chief Election Commissioner, New Delhi, AIR -8- 1978 SC 851, submitted that the validity of an order can be adjudicated only on the grounds mentioned in the said order and the respondents cannot be permitted to add or supplement reasons to justify the order impugned on a later stage of proceedings.

6. Shri P.P. Choudhury, learned Sr. Advocate argued that opposite party No.1 has committed grave illegality in not considering the recommendations made by the Sub-Committee constituted by the Government regarding the suitability of the store-item of the petitioner i.e. AC Pressure pipes for inclusion in Rate contract fold. The reason mentioned by the O.P. No.1 that AC Pressure Pipe is not a repetitive demand, is contrary to the recommendations of the CPHEEO Manual, published by the Ministry of Housing and Urban Affairs (MoH&UF). The Ministry of Drinking Water & Sanitation vide O.M. dated 30.09.2015 directed all the Principal Secretaries/Secretaries and Engineer in Chief/Chief Engineer In-charge of RWSS of all the States to ensure adherence and implementation of recommendation of CPHEEO Manual in designing transmission and distribution pipe network for water and selection of corresponding pipe materials. Reiterating the earlier correspondence and said OM dated 30.09.2015, the Ministry of Drinking Water & Sanitation again issued communication to all Principal Secretaries/Secretaries of RWSS -9- Department of all State/UTs informing that most of the Rural Water Supply Schemes are lying defunct and ineffective owing to failure in following adequate design procedures and hence it was directed that strict adherence and implementation on the recommendations prescribed in CPHEEO Manual in designing treatment plants, transmission and distribution pipe network for water and selection of relevant pipe material must be ensured. In view of that order, the State of Odisha was also required to follow the said Manual which recommends AC Pressure pipe in the water distribution projects, but the same has not been followed in the instant case. Further, on an earlier occasion the O.P. No.3 vide its communication dated 21.11.2017 clearly mentioned that the requirement of different size of AC Pressure Pipe under the Department is Rs. 44.64 lakhs in total per annum. The said term "in total per annum" very much reflects the repetitive demand of AC Pressure Pipe in the State of Odisha, whereas as per the Rules of Rate Contract, the minimum requirement/limit for inclusion of store item was purchase amount of Rs.2.00 lakhs per annum only. Therefore, in his letter dated 31.08.2018 issued by the O.P. No.3 to O.P. No.2, it was clearly mentioned that "However, if this is included in EP&M rate contract we may use in PWS projects as recommended by CPHEEO manual regarding use of pipe materials in water supply projects".

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7. Learned Sr. Counsel argued that Rule 7(iii) of the Rules, 2014 clearly provided that "Rate contract should be concluded on receipt of three minimum offers. In case of less than three tenders/offers are received, rate contract for the item can be concluded if there is valid DGS&D rate contract for price comparison or on the basis of costing rate collected by DEP&M." The DEP&M has already included store-item in Rate Control fold of more than 15 single units under above clause. Further, rates of AC pressure pipe are very much available in open market in the State of Odisha, such as in Schedule of Rates (SoR) of Govt. of Odisha. Authorised dealers of the manufacturing units of other States of the said item, are dealing in the State of Odisha and all the rates have already been provided by the petitioner to O.P. Nos. 1 & 2 for their ready reference. It is contended that DGS&D was abolished in 2017 and the same was replaced by GeM, wherein the rate of AC pressure pipes are readily available in the portal of GeM. Further, the Rate Contract considering GeM rate for other item of single unit has also been awarded by the DEP&M. Therefore, the petitioner unit is qualifying the requirement under the Rules of rate contract criteria. Considering the GeM rate, other items have also been included in rate contract but in case of the petitioner, the O.P. No.1 has considered the DGS&D rate as criteria, which has already been abolished much prior to the impugned order. -11- Therefore, it is a case of clear non-application of mind by the O.P. No.1 while passing the impugned order.

8. In reply to the additional grounds taken by the opposite party No.3 raising apprehension about health hazard from the AC Pressure Pipe, it is submitted by Sri P.P. Choudhury, learned Sr. Advocate that the said ground is wholly misconceived and against all scientific studies and mandate issued by the WHO/Government of India and judgment of the Hon'ble Supreme Court of India. In this regard, he placed reliance upon the judgment of the Supreme Court in Kalyaneshwari Vs. Union of India & Ors., (2011) 3 SCC 287, wherein it has been held that "the asbestos product only contains 8-10% asbestos fibre and the rest is cement (50%), clay (30-35%) and fly ash, wood pulp etc. which are not considered harmful for human health." Indian Council of Medical Research (ICMR) in the last line of the letter dated 06.10.2013 under Annexure-27, clearly stated that "Therefore from the available literature, there does not appear to be any health hazard from asbestos cement pipes used for drinking water". He also relied on the Annexure-29, a study of WHO, wherein it is concluded that there is no need to establish a guideline for asbestos in drinking water. By making the above submission, it is contended by the learned Sr. Advocate for the petitioner that the impugned order passed by the opposite party -12- No.1 is an outcome of complete non-application of mind, mala fide and non-speaking order violating the direction of this Court dated 12.07.2018 and hence it is required to be quashed and set aside.

9. Per contra, Shri M.S. Sahoo, learned Addl. Government Advocate on behalf of the State-opposite parties, submitted that the impugned order dated 31.08.2018 has been passed by the O.P. No.1 in accordance with Rules, 2014 registered with the Director of EP & M, Odisha which came into force on 19.06.2014. The grievance of the petitioner that the opposite parties have fabricated the letter dated 31.08.2018, is totally misleading and it is emphatically denied. It is submitted that adoption of rate contract system in the Government procurement is in the form of a market support to MSME of the State, as has been provided under para 13.1 of the Industrial Policy Resolution (IPR), 2007. The resolution of the MSME department published on 19.06.2014 i.e. the Rules of Rate Contract, 2014, in Chapter-II para-4(i) provides that any good or service for which rate contract exists shall be mandatorily procured following the rate contract system and shall not be procured by any other means. The later part i.e. "and shall not procured by any other means" is an exception to the principle of procurement by State Government that the best products should be purchased at the most suitable price in an open and transparent bidding process. The system of rate contract is in the -13- nature of an incentive/support as an exception to the principle of equal treatment to all goods' manufacturers or service providers as far as procurement by the State is concerned. It is submitted that method of selection of the items/services of the rate contract is provided at Rule 5(i), (ii), (iii) and (iv) of the Rules, 2014. Since the rate contract is governed by the specific statutory Rules and is in the nature of an incentive to the particular manufacturer at the cost of other manufacturers, it has to be strictly interpreted as has been laid down by the Constitution Bench of the Supreme Court in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Co. & Ors. (2018) 9 SCC 1. The Supreme Court at paragraph 62 of the said judgment observed that 'a person invoking exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision.'. It has further been observed at para-66 that "...thus, exemption notification should be interpreted strictly, the burden of proving applicability would be on the assessee to show that his case comes within parameters of the exemption clause or exemption notification."

10. Learned Addl. Government Advocate submitted that applying the above principle to the instant case, the petitioner has to satisfy the criteria prescribed in Rule-5 of the Rules, 2014 and the main criteria which the petitioner has to satisfy are (i) AC -14- pressure pipe is in repetitive demand and is in common use, and

(ii) Annual requirement of AC pressure pipe is of substantial quantity and value. In the case at hand, the findings given by the O.P. No.3 even in Annexure-11-A the letter dated 31.08.2018, which is relied upon by the petitioner, is opposed to the above criteria as it has been specifically stated therein that "(i) A.C. pressure pipe as per IS:1592/2003 are not in repetitive demand or requirement, and (ii) No such pipes were purchased by these organization till yet". It is emphatically denied that the recommendation under Rule 5(iv) is in the nature of a binding diktat and has to be mandatorily accepted by the Government in the MSME Department. Such contention of the petitioner has no statutory basis. The recommendation to the Government has to be at the most considered in accordance with the Rate Contract Rules, 2014 and the IPR, 2007. In this connection, learned Addl. Government Advocate placed reliance on para 13.1(a) of the IPR, 2007, which provides that comprehensive review of the rate contract purchase list and exclusive purchase list, shall be undertaken by a Committee consisting of Secretary, Industries Department, Director, EP&M, Director of Industries and the representatives of Industries Association, who shall submit their recommendations for Government approval in Industries Department. Refuting the allegation of the petitioner that the opposite party No.1 has passed the impugned order violating the -15- direction issued by this Court dated 12.07.2018, it is submitted by the learned AGA that this Hon'ble Court in the said order has not held that the recommendation of the O.P. No.2 is final and no other decision is to be taken by O.P. No.1, rather the Court has directed the O.P. No.1 to pass a reasoned and speaking order, if the recommendation of the O.P. No.2 is not accepted. Therefore, the O.P. No.1 in obedience to the order of this Court and after considering the relevant provisions of the Rules, 2014 and IPR, 2007 and clarifications given by Engineer-in-Chief, RWSS passed the impugned order by assigning the reasons. Hence, the allegation of the petitioner in this regard is not acceptable and liable to be rejected.

11. With regard to allegation of the petitioner that the letter dated 31.08.2018 has been fabricated subsequently by the opposite party No.3, learned AGA contended that the said allegation is completely misleading and baseless. The opp. Party No.3, at paragraphs 5 & 6 of his counter affidavit has given the details of the circumstances leading to issuance of two letters, which have been marked as Annexures-11 and 11A and to substantiate his bonafide, the opp. Party No.3 has placed on record the details of deliberations in the note sheet of the Department as Annexure-B/3, (at page 201-202 of the paper book), which on examination becomes crystal clear disproving the -16- misleading allegation of the petitioner about the manufactured letter. Further, the reasons assigned by the opp. Party No.1 in the impugned order regarding not using A.C. Pressure pipe by the Department, also find place in the Note-sheet dated 31.08.2018 of the O.P. No.3, placed under Annexure-B/3. Besides above, learned AGA submitted that no such pipes were purchased by the Department till date. Note sheet also clearly specify that AC pressure pipe as per IS 1592/2003 are not in repetitive demand/requirement by this department and the Department is using pipe materials considering all aspects of hydraulic characteristics, strength of pipe, suitability, durability, pressure rating, different conditions of topography, geology and other prevailing local conditions, leakage, cost effectiveness as laid down by the CPHEEO manual as well as the guidelines prescribed by the Ministry of Drinking Water and Sanitation, Govt. of India. 12 Shri M.S. Sahoo, learned Addl. Government Advocate, relying on the judgment of the Supreme Court in Central Coal Field Ltd. & Anr. Vs. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622, submitted that the issue of acceptance or rejection of a bid of a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. Therefore, applying this ratio, it is submitted that the present matter is also required to be looked into from the -17- point of view of the State that would be entering into rate contract with the intending manufacturers. Since the decision making process is governed by a set of Rules i.e. Rules, 2014 and IPR, 2007, the Rules have to be given a meaning and necessary significance. Placing reliance on another judgment of the Supreme Court in Tata Cellular Vs. Union of India (1994) 6 SCC 651, it is submitted that the Courts should show judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned, but the decision-making process can certainly be subject to judicial review. In this regard, reliance is also placed on judgments of the Supreme Court in Jagdish Mandal Vs. State of Orissa (2007) 14 SCC 517, subsequently followed in Michigan Rubber (I) Ltd. Vs. State of Karnataka, (2012) 8 SCC 216, and in Municipal Corporation, Ujjain & Anr. Vs. B.V.G. Indian Ltd. & Ors., (2018) 5 SCC 461.

13. Learned AGA concluded his argument by submitting that in the case at hand, the reasons given by the experts, as they find place at page-201-202 of the paper book, cannot be faulted with. Regarding the order dated 31.08.2018 nothing has been pointed out by the petitioner to show that a responsible authority acting reasonably and in accordance with the Rules, 2014 read with IPR 2007, could not have reached such decision. Lastly, it is -18- submitted that if the decision making process adopted by the authority, which has resulted in the impugned order before this Court, is evaluated applying the principles laid down by the Supreme Court referred to above, the decision taken by the administrative authority is rational, bonafide, and is a decision which any responsible authority acting reasonably in accordance with the relevant law could have reached. Therefore, it is prayed that the petitioner having not made out a case and trying to mislead the court, the petition is liable to be dismissed.

14. We have given our anxious consideration to rival submissions, gone through the cited judgments and examined the materials on record.

15. The impugned order dated 31.08.2018 which has been challenged by the petitioner was passed by the opp. Party No.1 in compliance of the order of this Court dated 12.07.2018, as referred above, in an earlier writ petition filed by the petitioner. The contention of the learned counsel for the petitioner is that the impugned order has not been passed in conformity with Rules 4 & 5 of the 2014 Rules. In order to appreciate the rival arguments in the correct perspective, it is necessary to quote the Rules 4 & 5 of 2014 Rules, which read as under:

"4. (i) To provide marketing support to Micro & Small Enterprises(MSEs) of the State in Govt. procurement Rate Contract system has been stipulated in Para 13.1 -19- of IPR 2007 and Para 7.2(b) of Odisha MSME Development Policy 2009. Any Goods or Services for which subsisting rate contract exists shall be mandatorily procured following the rate contract system and shall not be procured by any other means.

(ii) List of goods and services to be reserved for procurement from MSEs via rate contract system shall be prepared by Director, EP & M taking into account the quantity and quality of goods being manufactured and services being provided by the local MSEs and the requirement of Government Departments and Agencies under their control. The Purchasing Organisations under concerned Departments of State Govt. shall furnish a details list of items i.e. goods/services to be brought under the purview of rate contract system by Director, E.P. & M.

(iii) Rate Contract in respect of specific store items/services not in the exclusive list and manufactured/provided by the local MSE shall be finalized by the Directorate of Export Promotion and Marketing on the basis of competitive offers/tenders called from them. The State Govt. Departments and Agencies under the control of the State Govt. shall purchase the rate contract items and avail services from the rate contract holding micro and small enterprises at the rate contract price without inviting tender.

The Rate Contract items/services against which rate is fixed by Director, E.P&M. cannot be tendered by the agencies/organisations under State Government. Rate Contract items/services shall not be included in -20- the composite tender without prior approval of Secretary MSME on recommendation of Director, EP&M.

5. SELECTION OF THE ITEMS/SERVICE FOR RATE CONTRACT:

The main criterion for selecting any item/service for rate contract shall be:-

(i) The item/service is in repetitive demand and is in common use and its price is not subject to frequent market fluctuations.

(ii) If the annual requirement of any stores/services is not of substantial quantity and value, such stores/services may not be selected for rate contract.

The minimum requirement of stores/services shall not be less than Rs.2,00,000/- per annum in the Government Sector.

(iii) If any goods/services are found obsolete or no more in demand, it may be eliminated/excluded from rate contract duly approved by the Govt. in MSME Department after consultation with the stakeholders of the goods/services.

(iv) The selection of store/service for rate contract shall be examined and recommended by a Sub-

Committee consisting of Director as its Chairman, Representative of Director of Industries, Odisha, Cuttack as its Member, Representative of OSIC Ltd., Cuttack as its Member, Representative of the Purchasing Department as its Member and Deputy Director (Marketing) Office of the DEP&M, Odisha as its Member-Convener vide Industries Department No. -21- I-SI-80/2007/IND-17045, dt. 19.11.2009. The selection of store(s)/services shall be made from among the Micro and Small Enterprises located in the State and registered with the Directorate of E.P&M. In addition to the above one representative of Industries Association on rotation basis shall be members of the Sub-Committee for selection of items for Rate Contract."

16. The petitioner has relied on Sub-Clause (iii) of Rule 4, according to which Rate Contract in respect of specific store items/services, not in the exclusive list and manufactured/ provided by the local MSE, shall be finalized by the Directorate of Export Promotion and Marketing on the basis of competitive offers/tenders called from them. The State Govt. Departments and Agencies under the control of the State Govt. shall purchase the rate contract items and avail services from the rate contract holding micro and small enterprises at the rate contract price without inviting tender. It is revealed from the record that the Joint Secretary to Government in the MSME Department, while considering the representation of the petitioner in compliance to the direction issued by this Court in W.P.(C) No. 10707 of 2018, vide letter No. 4992 dated 3.8.2018, asked the Director, EP&M to furnish chronological history relating to store item AC Pressure Pipes as per IS: 1692/2003. On the basis of the said letter, the Director of EP&M vide its letter No. 5487 dated 04.08.2018 -22- inquired from the Engineer in Chief, RWSS with regard to selection of the item in question. In reply to the said query of the Director, EP&M, the Engineer-in-Chief, RWSS, Odisha vide its letter No. 7146 dated 16.08.2018 intimated as under:

:....With reference to your letter resting on above noted subject, it is to intimate that "Asbestos Cement Pressure Pipes as per IS:1592/2003 has not been used by this organization but the said pipes were used in one water supply project which has not yet been commissioned. Further it is needless to say that all the water supply works has been executed through turnkey tenders wherein the contractors/executing agencies are procuring the pipe materials i.e. HDPE/UPVC/DI/GI/MS pipes with proper quality testing of materials by the Quality Assurance Wing of CIPET."

17. Again the Director, DP&M, Odisha vide letter dated 30.08.2018 sought clarification from the Engineer in Chief, RWSS, regarding annual requirement of AC Pressure Pipes for selection of the item. Relevant portion of the said letter reads as under:

"...I would therefore request you that, kindly clarify whether the :

(i) Asbestos Cement Pressure Pipe as per IS: 1592/2003 is in repetitive demand/requirement.

(ii) If in repetitive demand please intimate the annual purchases of last two years.

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(iii) If in repetitive demand what is the total requirement value of the item per annum.

This may please be treated as MOST URGENT in view of the court matter and a clarification may be intimated by return mail."

18. In reply to the said letter, the Engineer-in-Chief, RWSS vide his letter dated 7607 dated 31.08.2018 intimated the Director, DP&M as follows:

"With reference to above, the point wise clarification, as sought for are given hereunder:

                i. Asbestos      Cement       Pressure       Pipe   as    per
            IS:1592/2003        are    not   in     repetitive   demand    or

requirement. The pipe materials used in Piped water supply projects according to the geo-hydrological condition of the concerned area.

                ii. No   such     pipes      were     purchased     by    this
            Organisation till yet.

iii. At present there is no such requirement of A.C. Pressure Pipes."

19. The petitioner has disputed the genuineness of the aforesaid letter dated 31.08.2018 stating that another letter on the same date i.e. 31.08.2018 and with same dispatch number was issued by the Engineer in Chief, RWSS. The contents of the said letter, relied on by the petitioner, reads as under:

"With reference to the above, the point wise clarification, as sought for is given here under:

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1. Asbestos Cement Pressure Pipe as per IS:1592/2003 are not in repetitive demand or requirement. The pipe materials used in Piped water supply projects according to the geo-hydrological condition of the concerned area.

2. No such pipes were purchased by this Organisation till yet.

3. However, if this is included in EPM rate contract we may use in PWS projects as recommended by CPHEO manual regarding use of pipe materials in Water supply projects."

20. However, this aspect of the matter has been amply clarified by the opposite parties in their counter affidavit asserting that the letter is not fabricated or manufactured subsequently. It is not in dispute that both the letters originated from the Engineer- in-Chief, RWSS on the same date. Be that as it may, on scrutiny of both the letters, it is apparent that the first two clarifications issued in both the letters are same, namely, '(1) Asbestos Cement Pressure Pipe as per IS:1592/2003 are not in repetitive demand or requirement. The pipe materials used in Piped water supply projects according to the geo-hydrological condition of the concerned area, and (2) No such pipes were purchased by this Organisation till yet'. But the only dispute raised by the petitioner is with regard to clarification No.3 i.e. at Annexure-11A which is relied by the petitioner wherein it is mentioned that "However, if this is included in EPM rate contract we may use in PWS projects as -25- recommended by CPHEO manual regarding use of pipe materials in Water supply projects.", but in Annexure-11 it is mentioned that "At present there is no such requirement of AC Pressure pipes." This discrepancy has been explained by the opposite party No.3- Engineer -in-Chief, RWSS in paragraph 5 of his counter affidavit, in the following terms:

"On the same day i.e. on 31.08.2018, there was a vivid discussion with the fellow Engineers of the organization regarding feasibility of inclusion of AC pressure pipes in PWS Schemes. After threadbare discussion, it could be ascertained that traces of Asbestos fiber present in the AC pressure pipes may get into the water flowing through the pipes. This asbestos contaminated water can have Carcinogenic effect and may be a hazard when used. In this regard an article found online by Mr. Laure Serafin is annexed herewith and marked as Annexure-A/3 and the copy of the Note- sheet showing decision for modification of the earlier letter No. 7607 dated 31.08.2018 is also annexed herewith and marked as Annexure-B/3 for kind perusal of the Hon'ble Court. Hence the letter issued earlier during the day was modified with the self same (e-dispatch) number and intimated to The Director, EP&M regarding non-requirement of AC Pressure Pipes. As such the allegation of the petitioner regarding fabrication of the letter issued by the E.I.C. by the O.P. NO.2 is not correct and is hereby denied. As a matter of fact availability of both the letters shows that no -26- manipulation has been done rather the things remain as it is."

21. It would be evident from the aforesaid that the Engineer in Chief, RWSS issued the another letter in view of the subsequent discussion made with the team of Engineers and in terms of the conclusion reached in that discussion, which is evident from the later part of the Note sheet drawn on 31.08.2020 in the Office of Engineer-in-Chief, RWSS, placed at page 202 of the record, which reads as under:

"It is further discussed with departmental Officers that A.C. Pressure Pipes are having Carcinogenic effect for which we may not encourage for use of A.C. Pressure pipes in drinking water supply. Accordingly, the revised letter is issued with the same number as there was no net connection available at that time for e-dispatch in another number."

22. If we look into the earlier part of the Note Sheet of the Engineer-in-Chief of the same date at Annexure-B/3, it appears that the Engineer-in-Chief right from the beginning has given the opinion regarding non-requirement of AC Pressure Pipe at the present in the Department. The first part of the Note-sheet dated 31.08.2020 reads as under:

"The Director EPM has sought clarification regarding annual requirement of AC Pressure Pipes as per IS 1592/2003 for selection of the item.

In this connection the following points may be seen.

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 AC pressure pipe as per IS 1592/2003 are not in repetitive demand/requirement by this department. The Department is using pipe materials considering all aspects of hydraulic characteristics, strength of pipe, suitability, durability, pressure rating, different conditions of topography, geology and other prevailing local conditions, repair & maintenance, soil characteristics, surcharge load, losses of water by leakage, cost effectiveness as laid down by the CPHEEO manual as well as the guidelines prescribed by the MODWS, GOI.

 The AC Pressure pipes are not used by the Department due to following reasons:-

1. Not suitable for high pressure application under gravity flow;

2. Not suitable as it cannot sustain heavy traffic load;

3. Not applicable in pumping and high pressure mains;

4. Pipes cut on site need machining to correct diameter for joining;

5. Heavy and brittle;

6. Susceptible to impact damage;

7. Underground pipe location is difficult;

8. Leakage detection is complicated;

9. Installation of fittings and its reparation is complicated;

10. Shorter length so relatively more number of joints per unit length required;

11. Replacement is a major problem."

 No such pipes were purchased by this Department till date.

 Further the existing SSI unit is not in the hand of this department as they are regulated by Industrial Policy/MSME Department of the Government.

 At present, there is no such requirement of AC pressure pipe."

23. Further, we if closely examine the earlier letter of Engineer-in-Chief, RWSS, Odisha dated 16.08.2018, in which he -28- had given clarification to the Director of EP&M pursuant to the query made by the Joint Secretary, MSME Department vide letter dated 3.8.2018, it would be evident that in the said letter also the Engineer-in-Chief had clarified the issue in the same terms that "Asbestos Cement Pressure Pipes as per IS:1592/2003 has not been used by this organization but the said pipes were used in one water supply project which has not yet been commissioned. Further it is needless to say that all the water supply works have been executed through turnkey tenders wherein the contractors/executing agencies are procuring the pipe materials i.e. HDPE/UPVC/DI/GI/MS pipes with proper quality testing of materials by the Quality Assurance Wing of CIPET."

24. The contention of the petitioner that since the Sub- Committee had recommended regarding the suitability of the store- item of the petitioner i.e. AC Pressure pipes for inclusion in Rate contract fold, and as per Rule 5(iv) of the Rules, 2014 the said recommendation and also in view of earlier order of this Court dated 12.07.2018 was required to be accepted by the authority, cannot be countenanced. This Court in the said order clearly mentioned that "in case the recommendation of opposite party no.2 is not accepted, opposite party no.1 shall pass a reasoned and speaking order, in accordance with law." Even otherwise, the petitioner has not established that the opposite party No.1 is -29- bound to accept the recommendation of the Sub-Committee for inclusion the item in rate contract. In our view, it is for the Government to take a decision, after examining all the aspects of the matter and not merely only on the basis of the recommendation made by the Sub-Committee, which of course can be one of the inputs for taking a decision. No where it has been stipulated, either in the Rules, 2014, or IPR, 2007 or other relevant documents produced, that it is mandatory to accept the recommendation of the Sub-Committee.

25. The opposite party No.1 in the impugned order dated 31.08.2018, taking into consideration the various letters and clarification issued by the authorities as detailed out in the afore- quoted note sheet, has decided as under:

"Whereas, DEP&M has also submitted that Engineer-in-Chief, RWSS, Odisha, Bhubaneswar vie his letter No. 7146 dated 16.08.2018 has intimated that Asbestos Cement Pressure Pipe as per IS:

1592/2003 has not been used by his organization, but the said pipes were used in one Water Supply Project which has not yet been commissioned. All the water supply works has been executed through turnkey tenders wherein the contractors/executing agencies are procuring the pipe materials i.e. HDPE/UPVC/ DI/GI/MS pipes with proper quality testing of materials by the Quality Assurance Wing of CIPET.

Whereas, Under Rule-9(IV) of Rules of rate contract for Micro, Small and Medium Enterprises, 2014 registered with the Directorate of EPM, Odisha "All Indenting Officers of Government Department/Agencies shall intimate their annual requirement of store items to the DEP&M by 31st May of every year. But no indent has been received from any Government Department/Agency for the current -30- financial year before going for the rate contract of the store item "Asbestos Cement Pressure Pipe".

Whereas, further, DEPM vide his letter No. 6206 dated 31.08.2018 has informed that the product namely, AC Pressure Pipes as per IS No. 1592/2003 do not meet the criteria as required for the rate contract under the Clause 5(i) and (i) of Rules of Rate Contract with Micro & Small Enterprises, Odisha, 2014. He has enclosed the clarification he has received vide letter No. 7607 dated 31.08.2018 from EIC, RWSS, as per which, i. Asbestos Cement Pressure Pipe as per IS:1592/2003 are not in repetitive demand or requirement. The pipe materials used in Piped water supply projects according to the geo-

hydrological condition of the concerned area.

                ii. No such pipes        were   purchased   by   this
                Organisation till yet.

iii. At present there is no such requirement of A.C. Pressure Pipes."

Whereas, as per the reports of DEP&M, Odisha the applicant unit is a single unit, its item namely "Asbestos Cement Pressure Pipe as per IS:1592/2003"

is not in repetitive demand or requirement and there is also no requirement of the A.C. Pressure Pipes as reported by the Engineer-in-Chief, RWSS and there is no valid DGS&D rate contract available, the application submitted by the petitioner M/s. Sona Spun Pipe Industries Ltd., SH-19, Gopiballavpur Road, Kankisole, Post. Baripada, Dist. Mayurbhanj for rate contract of Asbestos Cement Pressure Pipe does not meet the criteria under the clause 5(i) and (ii) of Rules of Rate Contract with Micro & Small Enterprises, Odisha, 2014 and hence, rejected."

26. Contention on behalf of the petitioner that validity of the impugned order ought to be adjudicated only in view of the ground mentioned in the order and the opposite parties cannot be permitted to add or supplement additional reasons to justify the impugned order on a later stage raising apprehension about health-hazard from AC Pressure Pipes, cannot be countenanced for -31- the reason that the documents/records which are relied by the opposite party No.1 in his order and which are also produced before this Court, reveal that the team of Engineers threadbare discussed all those aspects. In this regard, the decision relied upon by the petitioner in Kalyaneshwari (supra) also does not in any manner apply to the facts of the present case, because here the dispute is whether the order of the opposite party No1 refusing to enlist the item of the petitioner in the rate contract is justified or not. The Supreme Court in that case noted that as of now there is no law banning use of asbestos in manufacturing processes despite its adverse effects on human health. But it is not for the Court to legislate and ban an activity under relevant laws. The Supreme Court held that since the matter falls within the domain of legislature, which has already taken steps for enacting necessary laws, there is no justification for banning manufacturing of asbestos. On doubts being raised whether "controlled use" can be effectively implemented even with regard to secondary exposure to asbestos, the Supreme Court held that these circumstances require Government of India and State Governments to examine the matter. The Supreme Court however observed that white asbestos which is highly carcinogenic is imported in India without any restriction while even its domestic use is not preferred by exporting countries. Therefore, there is an urgent need for a total ban on import and use of white asbestos and promoting use of -32- alternative materials. The Supreme Court in that case while declining to grant the prayers made in the writ petition, issued certain directions aimed at ensuring strict regulatory controls and reviewing safeguards for asbestos industry and ensuring healthcare of workers engaged therein by reaffirming directions earlier issued in the case of Consumer Education and Research Centre v. Union of India, reported in (1995) 3 SCC 42.

27. The famous "Wednesbury Case" Associated Provincial Picture Houses Ltd. Vs. Wednesburry Corpn., (1948) 1 KB 223:

(1947) 2 All ER 680, is considered to be landmark in so far as the basic principles relating to judicial review of administrative or statutory direction are concerned. In the said judgment, it has been observed by Lord Greene M.R. that "It is clear that the local authority are entrusted by Parliament with the decision on a matter which the knowledge and experience of that authority can best be trusted to deal with. The subject-matter with which the condition deals is one relevant for its consideration. They have considered it and come to a decision upon it. It is true to say that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere".

28. In Tata Cellular (supra), the Supreme Court while dealing with scope of judicial review in the matter of administrative decision, has observed as under:

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"71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justifiable and the need to remedy any unfairness. Such an unfairness is set right by judicial review.

72. Lord Scarman in Nottinghamshir County Council v. Secretary of State for the Environment, 1986 AC 240 at 251 proclaimed : 'Judicial review' is a great weapon in the hands of the Judges; but the Judges must observe the constitutional limits set by our parliamentary system upon the exercise of this beneficent power."

73. Observance of judicial restraint is currently the mood in England. The judicial power of review is exercise to rein in any unbridled executive functioning. The restraint has two contemporary manifestations. One is the ambit of judicial intervention; the other covers the scope of the Court's ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action.

74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application of judicial review is made, but the decision making process itself."

29. The Supreme court in Municipal Corporation, Ujjain & Anr. Vs. B.V.G. Indian Ltd., & Ors., (2018) 5 SCC 462, while dealing with the scope of judicial review by the High Court, held that the modern trend points to judicial restraint in administrative action, the Court does not sit as a Court of Appeal but merely reviews the manner in which the decision was made, and further that the judicial review of administrative action is intended to prevent arbitrariness. If the process adopted or decision made by the authority is not malafide, not intended to favour someone and -34- is neither arbitrary nor irrational, and if it cannot be concluded that no responsible authority acting reasonably could have reached such a decision and if the public interest is not affected, no interference should be made under Article 226 of the Constitution. Relevant paragraphs of the report, containing such observations are reproduced hereunder:

"10. The modern trend points to judicial restraint in administrative action. The Court does not sit as a Court of Appeal but merely reviews the manner in which the decision was made. The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted, it will be substituting its own decision without the necessary expertise which itself may be fallible. The government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or a quasi-administrative sphere. However, the decision must not only be tested by the application of the Wednesbury principle of reasonableness, but must also be free from arbitrariness and not affected by bias or actuated by mala fides."

xxx xxx xxx

14. The judicial review of administrative action is intended to prevent arbitrariness. The purpose of judicial review of administrative action is to check whether the choice or decision is made lawfully and not to check whether the choice or decision is sound. If the process adopted or decision made by the authority is not mala fide and not intended to favour someone; if the process adopted or decision made is neither so arbitrary nor irrational that under the facts of the case it can be concluded that no responsible authority acting reasonably and in accordance with relevant law could have reached such a decision; and if the public interest is not affected, there should be no interference under Article 226.

xxx xxx xxx -35-

44. As rightly contended by respondent No. 3, a statutory authority granting licences should have the latitude to select the best offer on the terms and conditions prescribed. The technical expert in his report categorically stated that, "All the above aspects demand high level of Technicalities and Expertise rather than just depending on lowest financial price quote for a material transport." As clarified earlier, the power of judicial review can be exercised only if there is unreasonableness, irrationality or arbitrariness and in order to avoid bias and mala fides. This Court in Afcons Infrastructure (AIR 2016 SC 4305) (supra) held the same in the following manner: "13. In other words, a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional Court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional Court.

xxx xxx xxx

64. Thus, the questions to be decided in this appeal are answered as follows:

(64.1) Under the scope of judicial review, the High Court could not ordinarily interfere with the judgment of the expert consultant on the issues of technical qualifications of a bidder when the consultant takes into consideration various factors including the basis of non-performance of the bidder;"

30. In M.P. Gangadharan & Anr. Vs. State of Kerala & Ors., (2006) 6 SCC 162, the Supreme Court considered a question as to whether a Family Court can be shifted from one place to another within the area of its jurisdiction. The Court while discussing the scope of judicial review in such administrative functions, observed that the constitutional requirement for judging the question of reasonableness and fairness on the part of the statutory authority must be considered having regard to the -36- factual matrix obtaining in each case. It cannot be put in a straight-jacket formula. It must be considered keeping in view, the doctrine of flexibility. Before an action is struck down, the court must be satisfied that a case has been made out for exercise of power of judicial review. Referring to the recent development of law, the Court further observed that 'We are not unmindful of the development of the law that from the doctrine of Wednesbury Unreasonableness, the court is leaning towards the doctrine of proportionality. But in a case of this nature, the doctrine of proportionality must also be applied having regard to the purport and object for which the Act was enacted'.

31. In Maharashtra Land Development Corporation & Ors. Vs. State of Maharashtra & Anr., (2011) 15 SCC 616, the Supreme Court observed that the Wednesbury principle of reasonableness has given way to the doctrine of proportionality. As per the Wednesbury principles, administrative action can be subject to judicial review on the grounds of illegality, irrationality or procedural impropriety. The principle of proportionality envisages that a public authority ought to maintain a sense of proportion between particular goals and the means employed to achieve those goals, so that administrative action impinges on the individual rights to the minimum extent to preserve public interest. It was held by the Court that administrative action ought to bear a -37- reasonable relationship to the general purpose for which the power has been conferred. Any administrative authority while exercising a discretionary power will have to necessarily establish that its decision is balanced and in proportion to the object of the power conferred. The test of proportionality is concerned with the way in which the decision maker has ordered his priorities, i.e. the attribution of relative importance to the factors in the case. It is not so much the correctness of the decision that is called into question, but the method to reach the same. If an administrative action is contrary to law, improper, irrational or otherwise unreasonable, a court competent to do so can interfere with the same while exercising its power of judicial review. It was further held that, the principle of proportionality therefore implies that the Court has to necessarily go into the advantages and disadvantages of any administrative action called into question. Unless the impugned administrative action is advantageous and in public interest such an action cannot be upheld. At the core of this principle is the scrutiny of the administrative action to examine whether the power conferred is exercised in proportion to the purpose for which it has been conferred.

32. It is the settled legal proposition that normally the Constitutional Court should be slow to interfere with the opinion expressed by the team of Experts. The Supreme Court in -38- G. Sundarrajan Vs. Union of India, (2013) 6 SCC 620, after referring to the Constitution Bench of the Supreme Court in University of Mysore Vs. C.D. Govinda Rao, AIR 1965 SC 491, held that "normally, Court should be slow to interfere with the opinion expressed by the Experts and it would normally be wise and safe for the courts to leave the decisions to experts who are more familiar with the problems which they face than the courts generally can be which has been the consistent view taken by this Court".

33. In Federation of Railway Officers Association Vs. Union of India, (2003) 4 SCC 289, the Supreme Court has observed that "in examining a question of this nature where a policy is evolved by the Government, judicial review thereof is limited. On matters affecting policy and requiring technical expertise, Court would leave the matter for decision of those who are qualified to address the issues. Unless the policy or action is inconsistent with the Constitution and the laws or arbitrary or irrational or abuse of the power, the Court will not interfere with such matters". Therefore, when technical questions arise and experts in that field have expressed various views and all those aspects have been taken into consideration by the Government in deciding the matter, the Court should restrain from interfering with the same when there is no malafide or unfairness.

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34. The petitioner has filed this writ petition seeking issuance of a writ of mandamus to the Government in the MSME Department for inclusion of its product i.e. AC Pressure Pipe in the rate contract list. True it is that the decision arrived at by the opposite party No.1 in the impugned order is subject to judicial scrutiny by this Court as to whether it falls within the domain of any illegality or unreasonableness and if it is so, this Court can interfere. However, this Court in exercise of power of judicial review has a limited scope to direct the Government to include a specific item of a particular industry in the rate contract list. In the instant case, the Engineer-in-Chief, RWSS Department and its team of Engineers, who are having expertise about the use and requirement of AC Pressure Pipes have vividly discussed on those aspects, which is apparent from the Note- sheet dated 31.08.2018 under Annexure-B/3, as quoted above, as to why the AC Pressure Pipes are not being used by the Department and why there is no requirement of such items, and communicated the said clarifications to the authority. The authority, while taking the decision, has taken into consideration all such clarifications. Therefore, this Court does not deem it appropriate to interfere with such decision making process of the Government, which it has taken relying on the opinion of various technical experts.

-40-

35. In our view, the decision as to whether a particular item is required to be included in the rate contract list is completely within the domain of the Government and the decision has to be taken by the competent authority after due application of mind to relevant considerations in accordance with law. Unless the order impugned appears to be malafide, contrary to law, improper, irrational or otherwise unreasonable, this Court in exercise of power of judicial review would not be justified to interfere in such a decision. After examining the matter from all perspectives, we do not see any arbitrariness, impropriety or illegality in the impugned order, which has been passed by the authority referring to relevant provisions of Rules 2014, IPR, 2007 and on the basis of various clarifications received from the different authorities, who are having expertise in the field. Examined from the standpoint of Wednesbury's principle of unreasonableness, it cannot be said that the impugned decision is such which no reasonable person of ordinary prudent on given material could have arrived at. Even applying the doctrine of proportionality, it cannot be said that the competent authority in passing the impugned order has not maintained the sense of proportion between the goals and the means employed to achieve those goals, inasmuch as, the impugned order has a reasonable relationship to the general purpose for which it has been passed. Whatever material has -41- been placed on record clearly establishes that the impugned decision is balanced and in proportion with the object of the power conferred upon the decision making authority.

36. In view of foregoing discussions, we do not see any cogent reasons to interfere in this matter. The writ petition being devoid of merit, is liable to be dismissed and is accordingly dismissed.

There shall be no order as to costs.

        (DR. B.R. SARANGI)                     (MOHAMMAD RAFIQ)
              JUDGE                              CHIEF JUSTICE




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