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b) The issue of Purchase Preference Policy (PPP) in respect of public sector undertakings was raised for the first time only to defend the position taken by the respondent No. 2. The PPP requires at least three conditions to be fulfillled:
(i) The Public Sector Undertakings (PSE) should be subject to the same qualification process as any other bidder.
(ii) Minimum value addition of 20% by the CPSE.
(iii) Value of the contract between Rs. 5 crores and 100 crores.

With regard to condition (ii) the learned Counsel for the petitioner submitted that the issue of value addition not arising was an erroneous assumption, since the tender itself contemplates that the process is of manufacture by use of the following explicit terminology:

e) Additionally, learned Counsel for Respondent No. 1 Union of India, Ms. Gitanjali Mohan submitted that the PPP is applicable since the 20% increase as envisaged in the PPP is an option to be exercised solely at the discretion of respondent No. 2 and is essentially a contingency and because Salem Steel Plant is a unit of SAIL. The relevant portion of the PPP has been reproduced below:
(iv) A minimum vale addition 20% by the CPSEs/subsidiary companies by way of manufacturing and/or service would be pre-requisite for availing of purchase preference.

The learned Counsel for the respondent No. 3 in this regard also submitted that the above paragraph of the PPP was to be read with Clause (vi) of the PPP which reads as follows:

(vi) PSEs should be subject to the same qualification process as any other bidder. If the PSC does not meet the minimum qualifications, it should be subject to disqualification. However, in suitable cases, the purchaser/clients may relax the condition of 'net worth' from the list of minimum qualifications.

5. With respect to the PPP for products and services of Central Public Sector Enterprises (CPSEs) which was valid up to 31st March 2008, certain modifications and conditions had been brought into force. The relevant portions have been extracted below:

Accordingly, other things being equal, purchase preference will be granted to the CPSEs at the lowest valid price bid (L-I) if the price quoted by the CPSE is within 10% of the LI price. The salient features of the maodified Purchase Preference Policy are as under:
(i) PPP will continue for a further period of three years with clear stipulation and it will be terminated with effect from 31.3.2008.
(ii) PPP support will be extended to the contracts of the value of Rs. 5 crores and above but not exceeding Rs. 100 crores. If civil works are included as part of the contract for supply of goods and/or if the contract is a turnkeys contract, such contracts would also be covered by the PPP, subject to the condition that the total value of the contract does not exceed Rs. 100 crores.