Andhra HC (Pre-Telangana)
Chandana Industries And Ors. vs Government Of Andhra Pradesh And Anr. on 17 March, 2003
Equivalent citations: 2003(2)ALD916
Author: G. Rohini
Bench: G. Rohini
ORDER G. Rohini, J.
1. This writ petition is filed seeking a writ of mandamus declaring the action of the respondents in issuing letter N0.29/1/02/0106/0106/UP, dated 10.1.2003 as arbitrary, illegal and violative of Articles 14 and 21 of Constitution of India and also contrary to G.O. Ms. No.48, dated 20.2.1999 and for consequential reliefs.
2. The petitioners who are 14 in number are all Small Scale Industrial Units. The case of the petitioners is that the Government of Andhra Pradesh issued G.O. Ms. No.48, dated 20.2.1999 directing all the local bodies and Government Undertakings to purchase 17 items listed there- under exclusively from the Registered Small Scale Industrial Units. It is one of the incentives extended by the Government in order to encourage the establishment of local Small Scale Industrial Units. In pursuance of G.O. Ms. No.48, the 1st respondent called for tenders for the purpose of finalisation of rates of the said 17 items mentioned thereunder. About 70 units, including the writ petitioners, participated in the said tender, and submitted their tenders for finalisation of the rate of the items. However, the petitioners are concerned only with item Nos.1 and 5 of the list of items mentioned in G.O. Ms. No.48 and also they quoted the rates for the said two items. According to the petitioners the 1st respondent finalised the rates and fixed the rates of various items which are components of items 1 and 5 of the list mentioned in G.O.Ms.No.48 and also entered into contracts with various Small Scale Industries on different dates. The petitioners pleaded that in the said contracts the 1st respondent excluded copper chokes of 20 and 40 watts which is one of the sub-items of list of item No.5 on the ground that the petitioners have not given their willingness to supply the said items at the rate contract approved prices. The said item was excluded since the lowest tenderer, in respect of the said item failed to enter into contract with the 1st respondent. That apart, after entering into rate contract in the month of November, 2002 with various Small Scale Industries, the 1st respondent issued letter dated 10.1.2003 calling upon the petitioners for negotiations. However, since the rate quoted was at the rock bottom price for their products, the petitioners made it clear that it would not be possible for them to reduce the rate any further. Thereupon the 1st respondent issued the impugned proceedings dated 10.1.2003 deleting all the items from the rate contract for the year 2002-2003. The petitioners also contended that though they made several representations to extend the period of contract for one year from the date of execution of the agreement and also for inclusion of item 6(c) in the rate contract, the 1st respondent did not accede to their request. In the circumstances, the writ petition is filed assailing the action of the respondents.
3. The respondents filed a detailed counter-affidavit and contested the writ petition. In the counter it is stated that the rate contract committee constituted under G.O. Ms. No.48 in its meeting held on 3.1.2003 decided to review the rates quoted by the rate contract holders in respect of 17 reserved items for the period 2002-2003 by limiting the increase in the rates to 15% of the rates that were fixed for the earlier year. The variation in rates found in excess of 15% of the rates quoted by the tenderers during the year 2002-2003 are to be negotiated. Accordingly letters were addressed to the rate contract holders for executing the rate contract agreements for the reserved items for negotiation of the rates. In pursuance thereof 70 retail contract holders attended the meeting held on 10.1.2003, but they refused to negotiate any reduction in the rates. Hence the rate contract committee discussed the matter in detail in its meeting held on 10.1.2003 at 3.00 p.m. and since the rate contract holders did not agree for negotiations and also gave unwillingness letters, it is decided to delete the said items from the rate contract for the year 2002-2003. Accordingly a letter dated 10.1.2003 was addressed to all the indenting departments/agencies/ Corporations intimating the decision of the rate contract committee about the deferment of the said items from the rate contract for the year 2002-2003. It is also stated that inadvertently the expression 'deleted' was used in the said letter instead of 'deferment'.
4. So far as the deletion of item 6 (c) from the approved list is concerned, it is stated that the rates quoted by the eligible tenderers were placed before the Rate Contract Committee together with comparative statements indicating the lowest rates quoted. The rate contract committee on 30.10.2002 considered the same and decided to fix up the rate of copper choke of 20 and 40 watts at Rs.65.20 quoted by M/s Rayalaseema Electricals Company and the said unit was called upon to execute the rate contract agreement, if they are willing to supply the material at the rate fixed by the rate contract committee. However, the unit holders expressed their willingness for execution of the rate contract agreement for all the electrical items except the sub-item, 20/40 watts Copper Choke since the rate fixed by the rate contract committee is very low. They also made an application for revising the rate of Copper Choke at Rs.105.98 Ps instead of Rs.65.20 Ps. The rate contract committee decided not to alter the rates and accordingly rejected the request of the said unit holder in its meeting held on 30.10.2002.
5. With regard to the period of rate contract for one year, the 1st respondent pleaded that in the rate contract agreement entered into with the rate contract holders, it has been clearly mentioned that the agreement is valid upto 31.3.2002. Thereafter, the petitioners are eligible to participate in the rate contract for the next year. Hence according to the respondents the contentions of the petitioners are misconceived and untenable and they are not entitled to the relief as prayed for.
6. I have heard the learned Counsel for the petitioners Sri A. Sudarshan Reddy and the learned Government Pleader for the respondents.
7. The learned Counsel for the petitioners contends that the action of the 1st respondent in deleting the items from the rate contract frustrates the very object of G.O. Ms. No.48 wherein certain incentives were granted by the Government to the Small Scale Industries. It is further contended that neither the rate contract agreement nor G.O. Ms. No.48 empowers the 1st respondent to call for any further negotiations after the execution of the rate contract agreements and therefore the impugned proceedings are arbitrary and illegal. The further contention of the learned Counsel is that though the petitioners have quoted the rates in pursuance of the Tender notice dated 29.5.2002, there was abnormal delay of 8 months in finalizing the rates by the 1st respondent and therefore the rate contract shall be valid for a period of one year from the date of execution of the agreements, but not till 31.3.2003 as claimed by the 1st respondent. The learned Counsel also vehemently contended that the action of the respondents in not taking into consideration the rate quoted by the 2nd lowest tenderer in fixing the rate for item 6(c) of approved list cannot be justified.
8. On the other hand, the learned Government Pleader appearing for the respondents at the outset contended that the rights and obligations arising out of the contracts executed between the parties cannot be enforced by invoking the jurisdiction under Article 226 of the Constitution of India and on that ground alone the writ petition is liable to be dismissed. The further contention of the learned Government Pleader is that the petitioners having participated on their own in pursuance of the tender notification and having entered into agreements in which it is clearly stated that the period of contract is only upto 31.3.2002, are not entitled to raise any objection either as to the duration of the contract or with regard to the validity of the terms and conditions of the agreement. The learned Government Pleader while placing reliance upon Clause 2.3 of the agreement contends that in view of the specific clause for termination of the agreement, the action of the respondents in deleting certain items from the rate contract cannot be said to be arbitrary. He also contended that the Rate Contract Committee constituted under G.O. Ms. No.48 is an expert body which decided to review the rates after careful consideration of several aspects and three is absolutely no justifiable reason to interfere with the rates so fixed for the year 2002-2003 which is coming to an end by 31.3.2003.
9. A perusal of the malarial on record shows that State Government issued G.O.Ms.No.48, Industries and Commerce (SSI) Department dated 20.2.1999 approving a scheme whereunder the existing marketing assistance scheme has been modified to a rate contract system. It is one of the policy incentives to give further boost for the growth of small scale sector. As per the said scheme the Government Departments will place orders on any of the units participating in the rate contract and the amount will be paid by the Departments to the supplier unit on delivery of the items. Under the said G.O. Ms. No.48 the Government empowered the Commissioner of Industries to finalise the rate of the 17 reserved items stated thereunder every year by way of rate contract system. A committee for finalisation of the rates has also been constituted under G.O. Ms. No.48 which is headed by the Commissioner of Industries as Chairman and consists of representatives of three major indenting departments.
10. In pursuance of G.O. Ms. No.48, the 1st respondent issued tender notice dated 25-2-2002 inviting tenders from the registered small scale industrial manufacturing units in Andhra Pradesh for supply of the reserved items mentioned thereunder on rate contract basis to Government indenting departments, agencies etc., for the year 2002-2003. In pursuance thereof several small scale industrial units including the petitioners submitted their tenders quoting rates of several reserved items mentioned in G.O. Ms. No.48, the Rate Contract Committee taking into consideration the lowest rates quoted as well as other relevant factors fixed the rates for different items/sub-items and those units who gave their consent for the said rates entered into separate rate contract agreements with the Rate Contract Committee for supply of the items as per the list enclosed to the agreements.
11. It is pertinent to note that the writ petitioners are concerned only with items 1 and 5 of the reserved items under G.O. Ms. No.48 and as per the agreements they entered with the Rate Contract Committee, the petitioner units have been enrolled in the approved rate contract holders list for supply of specified items to the Government departments/Corporations/Organisations at the rate contract prices. The said list was also communicated by the 1st respondent to all the Government indenting departments instructing them to place indents as per their requirements directly on the units listed in the approved rate contract holders list for supply of the items at the rate contract approved prices.
12. That being the factual background, now I shall proceed to consider the contentions that are raised by the petitioners assailing the action of the respondents.
13. Firstly the contention of the petitioners is that the respondents are not justified in excluding one of the electrical sub-items viz., 20/40 watts copper chokes from the rate contract agreements. Their further contention is that the rate of the said item indicated at Serial No.6 (c) at Rs.65.20 Ps is very less compared to the manufacturing cost of the said item which would be around Rs.85/-. The case of the respondents is that the eligible units who have executed their agreements expressed their unwillingness for supply of the said electrical sub-item at the rate fixed by the Rate Contract Committee i.e., Rs.65.20 Ps which was arrived at on the rate quoted by the lowest tenderer one M/s Rayalaseema Electricals. Though the petitioners contended that the Rate Contract Committee ought to have taken into consideration the next lowest rate quoted by M/s Kusuma Hara Electricals at Rs.98/- the same was not accepted by the Rate Contract Committee and therefore, the said item was deleted from the list of approved items holding that the petitioners are not eligible to supply the said item.
14. It is pertinent to note that the Rate Contract Committee is an expert body constituted in pursuance of the scheme enunciated in G.O.Ms.No.48. When an expert body taking into consideration all the relevant material and particularly on the basis of the rate quoted by the lowest tenderer has fixed a rate, this Court will not in exercise of jurisdiction under Article 226 of the Constitution of India substitute its own opinion for that of the expert body. The Court does not have the expertise in the matter to decide what would have been the correct rate in respect of the said item. Similarly, there is no justifiable reason to compel the expert body to accept the rate quoted by the next lowest tenderer. In the counter filed by the respondents it is explained that item 6 (c) had to be deleted since the unit which initially quoted the lowest rate of Rs.65.20 Ps failed to enter into the agreement and subsequently opted for revising the rate quoted by them at much higher price. The Rate Contract Committee having considered the entire matter decided not to accept the second lowest rate since the claim of the unit holder that the rate was quoted by them initially by mistake was found to be not justified. It is well settled that the State while awarding contract may not accept the offer even though it happens to be the highest or the lowest. If such decision is not arbitrary nor it is vitiated by any mala fides, it is not amenable to judicial review under Article 226 of the Constitution of India. In the light of the reasons stated in the counter-affidavit and in the absence of any allegation attributing mala fides, I do not find any merit in the contention of the petitioners that the action of the respondents in not accepting the rate offered by the 2nd lowest tenderer and consequently deleting the said item 6 (c) is arbitrary or illegal.
15. The second contention of the petitioners is that since the agreement was entered into on 18.11.2002 they should be permitted to continue the rate contract for a period of one year from the date of the agreement. On the face of the agreement the said contention appears to be fallacious. The rate contract agreements which were signed by the petitioners contain a specific clause regarding the duration of the contract. Clause 2.1 specifically states that the rate contract shall remain in force from the date of entering into agreement for a period of one year i.e.. upto 31.3.2003. The petitioners having voluntarily signed the said agreements cannot seek any direction from this Court for modification of the terms of the contract on any ground whatsoever.
16. Then the only other contention which requires consideration is whether the respondents are justified in deleting certain reserved items from the rate contract under the impugned proceedings dated 10.1.2003. Whereas the petitioners contended that after executing the contracts the respondents are not entitled to call upon the petitioners for negotiations for further revision of the rates fixed and therefore, the impugned proceedings dated 10.1.2003 deleting some of the items on the ground that they have not agreed for negotiation of rates, is arbitrary and illegal, the case of the respondents is that it has come to the notice of the Rate Contract Committee that some of the rates quoted as lowest are unreasonably higher than the rate of supply for earlier years and the Rate Contract Committee on a careful consideration decided to revise the rates to meet the inflationary requirements. For the said reasons on 10.1.2003, a meeting was held with the rate contract holders for negotiating reasonable price for some of the items for the period 2002-2003 by limiting the increase in the rates to 15% of the rates that were fixed during the year 2000-2002. In the said meeting the variation in the rates found in excess of 15% of the rates were negotiated, but since the rate contract holders refused for any reduction it has been decided by the Rate Contract Committee to delete certain items from the rate-contract for the year 2002 and 2003. Accordingly the impugned proceedings dated 10.1.2003 have been issued informing all the indenting departments about the deletion of the said items.
17. There is no dispute that the contracts entered into by the respondents with the petitioners are not in exercise of any statutory power as such and they are not statutory contracts. All the rights and liabilities of the parties are regulated by the terms and conditions of the agreement itself. It is a voluntary act on the part of the parties. The case of the respondents is that Clause 2.1 entitles the respondents to terminate the contract and therefore, the action of the respondents in deleting some of the items cannot be said to be arbitrary nor contrary to the terms agreed upon between the parties. Be that as it may. Even assuming that the action of the respondents in deleting some of the items from the purview of the rate contract agreements is in breach of terms and conditions agreed upon, the relief sought by the petitioners is nothing but enforcement of terms and conditions of a non-statutory contract which cannot be granted by this Court in exercise of jurisdiction under Article 226 of the Constitution of India. Obviously the matter does not involve enforcement of any statutory right. The law is well-settled that in a case of a concluded contract voluntarily entered into between the parties where the terms and conditions are not regulated by any statute as such, the obligations which arise out of such contract cannot be dealt with under Article 226 of the Constitution of India.
18. In the circumstances, I am of the view hat the relief as sought by the petitioners cannot be granted. Though the learned Counsel for the petitioners contended that the 1st respondent invited fresh tenders for fixing the rates for the deleted items, a perusal of the said notification shows that the said notification is in respect of the fixation of rates for the year 2003-2004, the validity period of the rate contract being upto 31-3-2004. Since I have already held that the contention of the petitioners that they are entitled to continue for a period of one year from the date of execution of the agreements in their favour cannot be accepted, I do not find any infirmity in the action of the respondents in inviting fresh tenders for the year 2003-2004. It is open to the petitioners to participate in the said tenders and the respondents shall consider the tenders if any submitted by the petitioners without being influenced by any one of the observations made in this order.
19. The Writ Petition is accordingly dismissed. No costs.