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In the event of the total offered quantity by units situated in Zone-1 exceeds the tendered quantity of all the State/ Group State/Region lying in Zone-1, allocation of quantity shall be equally divided (unit-wise) amongst all the tenderers qualifying for preferential allotment and have quoted at the floor rate in that state/group state/region, subject to the offered quantity of such tenderers (unit-wise).

11. It was argued on behalf of the petitioners by Mr. Vikas Singh, Mr. Balbir Singh and Mr. Akhil Sibal, Senior Counsels, that the zoning policy put in place by the tender based on the respondents' creation of two zones is without any justification, and is contrary to public policy and places business units and manufacturers in Zone 2 at a disadvantage. This amounts to hostile discrimination, based on location of the business enterprise, inasmuch as it assures preference to units in zone 1 on the one hand, and does not confer equal preference to zone 2 units in the zone 2 areas. Such geographical allocation is not based on any cogent reasons and fosters differences.

13. It is argued that the impugned terms and conditions depicted that the Petitioners would get orders in Zone 1 only in case any tendered quantity of Zone 1 remained unallocated from the bids quoted by the manufacturers situated in the said Zone 1. Thus, as between two sets of bidders, an artificial geographical based discrimination, having no nexus with the object sought to be achieved by the tender policy, was created. It was argued in this context that the ratio of total quantity offered in Zone 1 and Zone 2 were almost 45%: 55%, however, the ratio of units situated in Zone 1 and Zone 2 were around 10%: 90%. This has resulted in difference (in allocable proportions of quantities to be given to suppliers) created by the UOI/OMC without any criteria or rationale. This difference is purely geographical, unsupported by any reasonable or tested classification premised on scientific or reasonable study. It has the results in treating equals, unequally and thus violates Article 14. It is further submitted that the NIT, on the basis of the UOI's new policy artificially creates or divides states like Eastern Uttar Pradesh and Eastern Madhya Pradesh based on no rational objective and criteria that has no sustainable basis. Furthermore, it is argued that the quantity wise allocation of 106,61,920 (for Zone 1 states, in aggregate) and 127,97,030 (for Zone 2 states) has no co-relation with the production capacity of manufacturers of the said two zones. In this context it is urged that as against the established manufacturing capacity available for Zone 1, i.e., 37,72,305 cylinders, the capacity of Zone 2 manufacturers - as on 31- 03-2017 was 4,07,51,943. This meant that the capacity of Zone 1 manufacturers to cater to demands of consumers in that zone was extremely limited. To require them to establish capacity within a short time to gear up to meet the colossal demand, even while shutting out established lines of supply from opportunity of carrying on business on equal terms, starkly violated the principle of equality of law, under Article 14 of the Constitution of India.

17. It is contended that the order of allotment criteria designed by the Respondents in terms of clause C of the special terms and conditions of the tender are illegal, biased and arbitrary as the order of allotment is designed in such a way that even though the bidders who are situated outside Zone 1 (including the Petitioners) bid for the same floor rates, they would not be considered. This amounts to hostile discrimination based on nothing more than geographical location. It is premised on a bland straightjacket assumption that all units in the two zones are different, which is factually baseless. Learned counsels submit that if indeed, the Respondents were to promote new units, granting preferences to such new entrants or manufacturers in both zones would have been logical and acceptable. However, by preferring zone 1 new entrants to the extent of granting dispensation even from mandatory licensing on the one hand, and not showing any preference to new entrants in zone 2 for similar treatment, or in regard to allocations (in zone 1) the Respondents have resorted to discrimination. Learned counsel submit that besides violating Article 14, such pure geographical classification violates Article 15 (1) and 19 (1) (d) of the Constitution of India. Learned senior counsel relied upon the judgments reported as D.S. Nakara Vs. UOI AIR 1983 SC 130; Mahabir Auto Mills v State of J & K 1996 (11) SCC 39, Sarbananda Sonowal v Union of India 2005 (5) SCC 665; State of Maharastra v Indian Hotels and Restaurants Association 2013 (8) SCC 519; Gharda Chemicals Limited vs. Central Warehousing Corporation, 118 (2005) DLT 159; National Council for Teachers Education v Shri Shyam Shiksha Prashikishan Sansthan & Ors 2011 (3) SCC 238 and Nidamarti Maheshkumar v State of Maharastra 1986 (2) SCC 534.