Andhra HC (Pre-Telangana)
Bhagyanagar Energy And Telecom Limited ... vs Bharat Sanchar Nigam Limited And Anr. on 18 March, 2003
Equivalent citations: 2003(3)ALD257, 2003(3)ALT389, AIRONLINE 2003 AP 24
Author: N.V. Ramana
Bench: N.V. Ramana
ORDER N.V. Ramana, J.
1. In both these writ petitions, the orders issued in Circular No. 218.1/2000-MMS, dated 10-7-2002, informing all the Chief General Managers of AH Territorial Circles/Metro Districts CGM TS/ALTTC/BRBRAITT, to procure Cable Jointing Kits only from indigenous manufacturers, who manufacture from the granules stage, is assailed.
2. The respondent-Bharat Sanchar Nigam Limited (BSNL), which a Government of India Enterprise, purchases Cable Jointing Kits for Polyethylene Insulated Jelly Filled Cables, which are used for laying underground cables for installation of telephone lines. Only those who possess Type Approval Certificate are entitled to participate in the tenders for supply of Cable Jointing Kits to the respondent. The petitioners, who possess Type Approval Certificate, are engaged in the supply of Cable Jointing Kits to the respondent for the last many years.
3. According to the petitioners, a Cable Jointing Kit has several components, which includes Heat Shrink Sleeve. The petitioners manufacture Heat Shrink Sleeves from the profiles imported from abroad. The cost of Heat Shrink Sleeve constitutes 12 to 15% of the total cost of Cable Jointing Kit. While so, the respondent issued a Circular which purports to lay down a policy. According to the said Circular, after a period of six months and one year from the date of issue of the Circular, 50% and 100% respectively of the total requirement of Cable Jointing Kits are to be procured from vendors who manufacture Jointing Kits indigenously from granule stage. This Circular is assailed in this writ petition as being arbitrary, irrational and contrary to the Export and Import Policy 2002-07 of the Government of India.
4. On behalf of the respondent, the Assistant General Manager (Legal) in the Office of the Chief General Manager, A.P. Telecom Circle, has filed counter affidavit stating that the Circular is the result of a policy decision taken to encourage domestic industry involved in the manufacture of Cable Jointing Kits from granule stage indigenously and to save precious foreign exchange. The impugned Circular seeks to dispense with the purchase and use of Cable Jointing Kits manufactured outside India. The purchase of Cable Jointing Kits by the respondent from its various vendors is a commercial transaction and the petitioners cannot dictate the respondent to pursue a policy which suits them. The respondent is entitled to change its policy according to its needs. It is not just the Heat Shrink Sleeve, but the whole of the Cable Joint Kit, is sought to be manufactured indigenously. The petitioners cannot have any grievance against the impugned Circular inasmuch one year time is being granted to them to fall in line with the Circular, and even the Type Approval Certificates of the petitioners, notwithstanding their not manufacturing Cable Jointing Kits indigenously from granule stage, are being renewed for a period of one year. The respondent cannot be estopped from revising its policies as no vested right of the petitioners is infringed. At any rate, the impugned Circular being the result of a policy decision, neither the petitioners can question the same nor this Court can interfere therewith.
5. The learned Counsel for the petitioner submits that the impugned Circular is irrational and is not guided by any sound reason, in that the Circular only prohibits import of profiles needed for manufacturing Heat Shrink Sleeves and requires them to be manufactured indigenously from granule stage, while the Circular does not bar the rest of the components of Cable Jointing Kit to be imported. To sustain his submission that when the policy decision is patently irrational, this Court in exercise of its power under Article 226 of the Constitution of India, can interfere with such irrational policy decision, he placed reliance upon some of the observations in Zippers Karmachari Union v. Union of India, . The learned Counsel for the petitioners submits that the cost of Heat Shrink Sleeve constitutes only 12 to 15% of the total cost of Cable Jointing Kit, and therefore, to say that by manufacturing the same indigenously, precious foreign exchange can be saved, is ridiculous, and not in consonance with the Export Import Policy 2002-07 of the Government of India, and more particularly when no restriction is placed on the import of adhesive which is available in abundance in the Indian market. He further submits that it is impossible for the suppliers to manufacture Cable Jointing Kits from granule stage indigenously for the reason that granules are not available in the Indian market and they have to be imported from abroad, and to manufacture granules indigenously, sophisticated machinery is required, which again has to be imported from abroad. According to the learned Counsel for the petitioners, when participation of foreign firms is allowed in the supply of Cable Jointing Kits, asking the suppliers to supply Cable Jointing Kits manufactured from granule stage indigenously, is irrational. At any rate, the impugned Circular runs counter to the Export Import Policy 2002-07 of the Government of India, and therefore, is liable to be set aside. In support of his contention that where the field is covered by a legislative policy, in the instant case, Export Import Policy 2002-07, it is not open for the executive to frame a policy in contravention thereto, the learned Counsel for the petitioners, placed reliance upon the decision of the Constitution Bench of the apex Court in Vasanlal Maganbhai v. State of Bombay, .
6. The learned Senior Standing Counsel for the Central Government supported the impugned Circular. He submits that the transaction between the petitioners and the respondent is purely a commercial one. The petitioners who are suppliers have no vested right to contend that the respondent is obliged to purchase the material supplied by them. They cannot dictate the respondent not to change its policy, and that even if it changes its policy, it should be in a manner which suits them. Merely because the legislative policy permits import of certain items, it does not mean that the respondent has to purchase only those Cable Jointing Kits that are imported and supplied by the petitioners. The policy issued in the impugned Circular is not irrational and is guided by reason. All the components of Cable Jointing Kits are manufactured in India, except the Heat Shrink Sleeve, and to ensure that the whole of the Cable Jointing Kit, including the Heat Shrink Sleeve, is manufactured indigenously, a decision to purchase Cable Jointing Kits manufactured from granule stage indigenously, has been taken. The purchase of Cable Jointing Kits manufactured indigenously not only encourages domestic industry, but also saves precious foreign exchange, which is in the interest of the national economy. It is not as if the respondent is the only organization that requires Cable Jointing Kits, there are other organizations which require Cable Jointing Kits, and if the petitioners are not in a position to match the requirements of the respondent, they are not precluded from supplying their Cable Jointing Kits to other organizations, which require them. Inasmuch as one year time has been given to the suppliers to fall in line with the Circular, and notwithstanding the fact of the petitioners not manufacturing the Cable Jointing Kits from granule stage indigenously, the respondent has decided to renew their Type Approval Certificates, and therefore, they cannot have any grievance against the impugned Circular. The impugned Circular being the result of a policy decision, this Court is precluded from interfering therewith.
7. Heard the learned Counsel for the petitioner and the learned Senior Standing Counsel for the Central Government for the respondent. The learned Counsel for the vacate stay petitioner adopted the arguments of the learned Senior Standing Counsel for the Central Government for the respondent.
8. Though allegations were made to the effect that the impugned Circular has been issued for extraneous reasons and to benefit a particular section of persons like that of the vacate stay petitioner, however, during the course of arguments, the learned Counsel for the petitioners withdrew the same, and therefore, there is no need to deal with the said issue. As a corollary, the limited question that arises for consideration in these writ petitions is whether, the impugned Circular issued by the respondent is irrational or is not guided by reason, warranting interference by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India.
9. Before proceeding to consider the above question, a brief reference may be made to the power of this Court to interfere with a policy decision of the Government. It is well settled law that framing of a policy is within the domain of the executive, and its right to change its policy from time to time having regard to the changed circumstances and the necessity of the times, cannot be called in question or interfered with. In State of Punjab v. Ram Lubhaya Bagga, , the apex Court while considering the question as to the entitlement of medical expenses of the employees of the Punjab Government in the light of the relevant rules and the Government policy, held as under:
It is not normally within the domain of any Court to weigh the pros and cons of the policy or to scrutinise it and test the degree of its beneficial or equitable disposition for the purpose of varying, modifying or annulling it, based on howsoever 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 a 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 belong 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.
10. In Krishan Kakkanth v. Govt. of Kerala, , the judgment of the High Court of Kerala, upholding the constitutional validity of a Circular issued by the Secretary to Government of Kerala with regard to supply of pumpsets and accessories to farmers of their choice, was challenged. The apex Court while dismissing the appeals, observed as under:
... Where a right is conferred on a particular individual or group of individuals to the exclusion of others, the reasonableness of restrictions has to be determined with reference to the particular circumstances relating to the trade or business in question. Canalisation of a particular business in favour of a specified individual is reasonable where vital interests of the community are concerned or when the business affects the economy of the country.
11. It was further held by the apex Court as follows:
To ascertain unreasonableness and arbitrariness in the context of Article 14 of the Constitution, it is not necessary to enter upon any exercise for finding out the wisdom in the policy decision of the State Government. It is immaterial whether a better or more comprehensive policy decision could have been taken. It is equally immaterial if it can be demonstrated that the policy decision is unwise and is likely to defeat the purpose for which such decision has been taken. Unless the policy decision is demonstrably capricious or arbitrary and not informed by any reason whatsoever or it suffers from the vice of discrimination or infringes any statute or provisions of the Constitution, the policy decision cannot be struck down. It should be borne in mind that except for the limited purpose of testing a public policy in the context of illegality and unconstitutionality, Courts should avoid "embarking on uncharted ocean of public policy".
12. From the aforesaid decisions, it is clear that it is not for the Court to go into the wisdom of the policy decision and judge its pros and cons and say whether it is beneficial or equitable, and it shall not interfere with the policy decision unless it is demonstrated and shown that the policy decision taken is capricious or arbitrary or is not informed by any reason or if it suffers from the vice of discrimination or infringes any provisions of the statute or the Constitution. Even if the policy favours a particular class of persons or individuals, the Court shall not interfere, if the policy seeks to protect the vital interests of the community and does not affect the economy of the country.
13. We shall now consider as to what is 'irrationality' and whether the policy decision taken by the respondent in the impugned Circular is so 'irrational' that no sensible person, on application of his mind, could have arrived at the decision arrived in the impugned Circular, in the light of the power of this Court to interfere with a policy decision, as stated above.
14. It is well accepted principle that in the field of Administrative Law, an administrative action, is subjected to judicial review, on three grounds namely, illegality, irrationality and procedural impropriety. 'Irrationality' according to the plain dictionary meaning connotes that which is not logical or reasonable. 'Irrationality' as a ground for judicial review, deals with the question whether the decision arrived at by the authority upon applying his mind is so unreasonable that no sensible or prudent man, would have arrived at such a decision, [See (Tata Cellular v. Union of India . Pursuant to the doctrine evolved in Associated Picture House v, Wednesbury Corporation, (1947) 2 All ER 640, the term 'Irrationality' came to be known as 'Wednesbury unreasonableness'. It is in this context, we have to consider the question whether the policy decision taken by the respondent in the impugned Circular is irrational, in the light of the material placed before this Court.
15. The learned Senior Standing Counsel for the Central Government produced the Note File relating to the emanation of the impugned Circular. I have gone through the Note File, A reading of the entire Note File would disclose that the Telecom Commission in the year 1994 itself had desired that Cable Jointing Kits should be procured directly from manufacturers so as to eliminate poor quality. With a view to implement the desire of the Telecom Commission, it was decided to frame a policy for the procurement of Cable Jointing Kits manufactured indigenously from granule stage. The impugned policy decision to procure Cable Jointing Kits manufactured indigenously from granule stage, was not take overnight by a single individual, but it was taken after long deliberations with experts and a hierarchy of officers connected with the subject, including those of the Technical and Quality Assurance Departments. It may be expedient to extract some of the observations made by the Director (MMS) at Note 4/N on the procurement of Cable Jointing Kits manufacture indigenously from granule stage, which read thus:
During 1994, Telecom Commission has decided to procure Jointing Kits only from those firms who have facility to manufacture Heat Shrinkable Sleeves (Ref 5/C).
It can be seen from the comments of DDG (RC), TEC vide 12/C that though the decision is to procure Jointing Kits only from manufacturers who has facility to manufacture sleeves, it was not insisted upon to whether manufacturing should be from granules or from profiles. From the list of vendors as provided by TEC, it can be seen that most of the vendors continued to import profiles from other countries. It can also be seen from reply received from QA (Ref 14-15/C) that only two vendors are having in-house facility to manufacture profiles from granule stage indigenously.
It is a general policy that manufacturers who are having good infrastructure, good quality system has to be given weightage for supply of the material to DoT.
TEC and QA are requested to provide their comments about quality, durability and the method of manufacture of sleeves from gruanules stage. The reply received from QA is placed at 21-23/C for perusal please.
It was stated by QA that the sleeves made from granules will be good if the raw materials are properly mixed and manufacturer has technical know-how for compounding and in-house facility for compounding.
Proposal is submitted for consideration, and if approved, a Board memo will be prepared for consideration of BSNL Board please.
16. The draft memo, as envisaged in the above Note, was placed for approval before the Director (Plg) BSNL, Director (Fin) BSNL, DDG (MM-II), Dir (MMS), ADG(STI), AD (ST-I) Before, approving the memo, the details as regards the requirement, production capacity of vendors and the quality, was called for. It was reported that in all there were 20 vendors, and that only three vendors are having capacity to manufacture Cable Jointing Kits from granule stage. The total requirement of Cable Jointing Kits of all the circles is 46,543,500, while the manufacturing capacity of all the 20 manufacturers is 4,58,48,756 and the manufacturing capacity of indigenous manufacturers in 1,22,23,505. From the above figures it is clear that the indigenous manufacturing capacity is nearly three times more than the requirement of the respondent. Insofar as quality aspect is concerned, it was reported by Quality Assurance that performance wise, there is no difference between the two types of Heat Shrink Sleeves, those manufactured indigenously from granule stage indigenously and those imported.
17. It would be pertinent to extract the following observations made by the Hon'ble Minister of State for Communications and Information Technology, from the Note File at Note 25/N, dated 18-3-2002, which reads:
The then MOC had given order on my observations and it seems that has not been implemented neither the reason for non-implementation has been submitted before us. The clarification had been submitted only after more than two years and that too after repeated reminders in respect of this. It has been observed from the order of the then MOC that he has given sufficient time for manufacturer of Heat Shrinkable Sleeves to indigenise the production from granule stage. If the quality is the same as the imported Heat Shrink Sleeves then we should consider to encourage indigenous manufacturing, which will save foreign exchange etc. It is also to note that when prices of all telephone equipments are going down, the prices of jointing kits have not come down proportionately because it seems that there are only few manufacturers at present. I hope that once we give sufficient time and request all the manufacturers to produce sleeves indigenously from granule stage, there will be many more manufacturers. In view of the above, necessary action as per earlier orders may kindly be taken by BSNL immediately. TEC & QA may be asked to finalize the specifications accordingly.
18. The reasons that weighed heavily for the procurement of Cable Jointing Kits from indigenous manufacturers from granule stage, as can be seen from the above Note, are that there is no quality difference in the Heat Shrink Sleeves manufactured indigenously and those imported. Though there is slump in the prices of telephone equipment, the prices of Cable Jointing Kits continued to remain constant without showing any signs of sliding down, the reason being that only few persons are involved in the production. To top it all, it was felt that if indigenous manufacturing of Cable Jointing Kits from granule stage is encouraged, not only domestic industry will benefit, but precious foreign exchange, which is otherwise used for importing Cable Jointing Kits, will be saved, apart from making use of the otherwise idle human resource.
19. From the above material placed before this Court, by no stretch of imagination, it can be said that the policy issued in the impugned Circular is irrational or without sound reason, or that it runs contrary to the Export Import Policy 2002-07, warranting interference by this Court therewith, and therefore, reliance placed by the learned Counsel for the petitioner upon the decision of the apex Court in Zippers Karmachari Union v. Union of India, (supra) is of no avail. Though it was contended by the learned Counsel for the petitioner that the policy decision taken in the impugned Circular runs contrary to the Export Import Policy 2002-07, the learned Counsel has not placed the Export Import Policy 2002-07 before this Court. Be that as it may, even if the Export Import Policy 2002-07 permits import of Cable Jointing Kits, it does not mean that the respondent are bound to purchase the imported Cable Jointing Kits only. It is in the realm of the respondent to purchase the type of material required by them, and the petitioners being only suppliers, cannot be permitted to have any say in the matter. Hence, reliance placed by the learned Counsel for the petitioner on the decision of the apex Court in Vasanlal Maganbhai v. State of Bombay, (supra) has no application to the facts of the present case.
20. In view of the submission made by the learned Senior Central Government for the Central Government that the impugned Circular seeks to procure whole of the Cable Jointing Kits manufactured indigenously from granule stage, the contention of the petitioners that the impugned Circular is irrational for it seeks to manufacture Heat Shrink Sleeve alone indigenously from granule stage, which constitutes 12 to 15% of the total cost of the Cable Jointing Kit, cannot be sustained.
21. The policy issued in the impugned Circular is a general policy and is not intended to exclusively benefit any particular person or group of persons. The policy has been framed keeping in view various factors, namely requirement of the respondent, indigenous production capacity of the suppliers, and the quality difference between those imported and those manufactured indigenously. It is not as if the impugned Circular is made applicable only to petitioners with an intention to exclude them from participating and supplying Cable Jointing Kits to the respondent, nor is it the case of the petitioners that they are precluded from supplying their imported Cable Jointing Kits to other organizations, which require them.
22. The nature and type of material to be procured by a person according to his required specifications, is essentially a matter exclusively within his domain. Be it noted that the purchase of Cable Jointing Kits by the respondent from the petitioners is purely a commercial transaction. When the impugned Circular requires that the suppliers should supply Cable Jointing Kits manufactured indigenously, the suppliers have no other alternative, but to supply the Cable Jointing Kits, according to the requirements of the Circular. In arriving at such commercial policy decision, it should be assumed that such decision has been taken having regard to several factors, the price of the item sought to be purchased, whether they are available locally or required to be imported, whether the goods supplied match the required specifications, whether the person from whom the material is to be procured has the capacity to supply in the required numbers without delay, and to the required quality standards, whether the suppliers will be in a position to rectify the defects etc.
23. Merely because the impugned policy eliminates the participation of the petitioners from tendering, it does not mean that the petitioners are estopped from supplying the Cable Jointing Kits to other organizations. Irrespective of whether the suppliers are capable of supplying 50% or 100% of the Cable Jointing Kits indigenously, it is stated by the learned Counsel for the respondent, that the Type Approval Certificates of the petitioners are being renewed. The petitioners are not prohibiting in tendering for the supplies. The impugned Circular is general in nature. It is not as if the impugned Circular is being implemented in toto immediately, thus excluding the petitioners from participating in the supply of Cable Jointing Kits completely. The impugned Circular is sought to be implemented in two phases. It states that after a period of six months and one year respectively from the dare of its issuance, 50% and 100% of the total requirement of Cable Jointing Kits, shall be procured only from indigenous manufacturers. The petitioners and other suppliers are given a year's time to equip themselves with the required machinery, to meet the requirements of the impugned Circular for manufacturing Cable Jointing Kits indigenously from granule stage. Further, the Type Approval Certificates are also being renewed.
24. Upon going through the Note File produced by the learned Senior Standing Counsel for Central Government, I am fully satisfied that that the policy decision taken in the impugned Circular to procure Cable Jointing Kits manufactured indigenously from granule stage, is not irrational and is guided with reason. It is not the decision of a single individual, but of a hierarchy of officers, pursuant to the decision taken by the Telecom Commission in the year 1994, with a view to encourage domestic industry and save precious foreign exchange, which ultimately goes to make the economy strong.
25. In the premises, the writ petitions fail, and they are accordingly dismissed. No costs.