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Dhar Cement Ltd. v/s State of Madhya Pradesh Thr. Secretary; Ministry of Irrigation Govt. M.P. Bhopal

    Madhya Pradesh 1770 Of 1992
    Decided On, 26 February 1993
    At, High Court of Madhya Pradesh
    For the Appearing Parties: R.S. Garg, T.N. Singh, Advocates.

Judgment Text
(1.) This order shall dispose of Misc. Petition No. 1770 of 1992 as also Misc. Petition No. 1852 of 1992 between the same parties as they raise substantially the same question namely a rational nexus between the quantity of cement required to be obtained by the impugned tenders and the condition of production capacity imposed in the tenders.

(2.) The petitioner is a limited company registered with the Registrar of companies and is employed in manufacture of ordinary portland cement with most modern technology with dry process suspension preheater with rotary kiln technology by which process more than 95% of cement is produced in our country and in the world. The petitioner contends that the cement produced by it conforms to the standard prescribed by the Bureau of Indian Standards under IS-269/1976 of which a copy of current certificate issued by the Bureau is Annexure P-1. The petitioner contends that it is supplying cement to various Government department including the present respondents 2 and 3. All these averments are not disputed in return filed by the respondents.

(3.) The main contention in both petitions raised by the petitioner is that in Misc. Petition No. 1770 of 1992 respondent No. 2 through its officer respondent No. 3 issued a tender notice dated 15-10-1992 (Annexure P-13) for supply of 4000 Metric Tonnes of cement to be supplied within a period of four months, while in Misc. Petition No. 1852 of 1992 the tender notice (Annexure P-13) dated 4-11-1992 issued by respondent No. 3 of respondent No. 2 in that case related to supply of 1000 M. Tonnes of portland cement and 4000 M. Tonnes of Portland posolana cement which supply was to be completed within a period of six months. Now the condition put in both the aforesaid tender notices about eligibility of those who can file tenders related to the production capacity to be at 4,00,000 tonnes per year in both cases. The petitioner contends that it undisputedly produces about 1,00,000 tonnes of portland cement per annum and consequently, with its capacity, which is undisputed, it could supply the quantity demanded in the tender notice (Annexure P-13) by a production of just 15 days when the period allowed for supply under the tender notices in the two cases is 4 months and 6 months respectively. The petitioner contends that vis-a-vis the quantity of 4000 M. Tonnes in one case and 5000 M. Tonnes in another to be supplied within the period of 4 months and 6 months respectively, the condition of production capacity of 4,00,000 M. Tonnes per year included in the tender notice Annexure P-13 is arbitrary and does not have any rational nexus with the quantity asked to be supplied under the tender notices and thus unfairly excludes the petitioners from filing tender in both the cases. The petitioner contends that this kind of arbitrary condition offends Article 14 of the constitution and discriminates the petitioner against big producers of 4,00,000 M. Tonnes per year without any reasonable classification. The petitioner, therefore, prays that this condition in both the tenders (Annexure P-13) should be quashed.

(4.) The return filed on behalf of the respondents in Misc. Petition No. 1770 of 1992 was requested to be taken as common in both the petitions. The only point raised in the return in paragraphs 14 to 18 and particularly in paras 16 and 17 is that the work to be done is of special significance requiring most modern technique and pre-cooled concrete and, therefore, in order to maintain uniform quality of best cement only major production units with capacity of 4,00,000 M. Tonnes were allowed to file tenders. It was denied that the respondents were prejudiced against the petitioner by contending that if the idea was to exclude the petitioner, a condition of production even of 500 M. Tonnes per day would have been sufficient. The condition has been stipulated at 1500 M. Tonnes only to permit major production units. The prayer of the petitioner was denied.

(5.) It is now settled law that unfair treatment by the State in discharging its administrative functions certainly violates the fundamental principle of fair-play even in administrative action, Ram and Shyam Company's case - AIR 1985 SC 1147. In a very recent decision, the Supreme Court, in the case of Food Corporation of India v. Kamdhenu, 1993 (1) SCC 71 held that non-arbitrariness in state action is necessary in the decision making process. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of powers as it is unrealistic, but provides for control of its exercise by judicial review.

(6.) The aforesaid principle of law laid down by the Supreme Court fully meets the very strong contention raised by the learned additional Advocate General on behalf of the respondents that the condition in the tender notice has been put by technical persons incharge of construction of a megaproject like Narmada Valley Development Corporation, in their own discretion and, therefore, such discretion is not open to challenge under Article 226 of the Constitution.

(7.) As referred to above, the Supreme Court clearly lays down that if the exercise of discretionary powers suffers from arbitrariness, it at once becomes subject to judicial review and cannot be permitted to stand in as much as it violates Article 14 of the Constitution of India.

(8.) Applying the aforesaid principle to the facts in hand, it is undisputed that the total demand in one case i.e. Misc. petition No. 1770 of 1992 in Annexure P. 13 is of 4000 M. Tonnes to be supplied in a period of 4 months and a demand of 1000 M. Tonnes of portland cement and 4000 M. Tonnes of portland posolans cement, total 5000 M. Tonnes to be supplied within a period of 6 months in the another (Misc. Petition No. 1852 of 1992). It is also not disputed in return by the respondents that the petitioner has capacity to produce 1,00,000 M. Tonnes per annum and that it certainly possesses the quality of cement as required by ISI for which current certificate (Annexure P-I) has been filed by the petitioner. Thus the respondents in fact did not oppose the petition on the ground of difference in quality but merely wanted to resist the petition by saying that it is left to them to put a condition to choose major producers of cement. This precisely is the point where the condition suffers from arbitrariness in the facts stated above because there is absolutely no rational nexus between the demand of 4000 M. Tonnes made in the tender and t

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he condition of production capacity of 4,00,000 M. Tonnes per annum imposed in the tender. The condition being arbirtrary cannot be allowed to stand and : has to be quashed. (9.) Both the petitions, therefore, succeed. In both cases the eligibility condition to be producers of 4,00,000 M. Tonnes of portland cement per annum is quashed. The respondents are directed to consider the tender of the petitioner in both cases. Needless to say that the respondents are certainly free to exercise their discretion reasonably with fair play in the matter of acceptance or rejection of tenders. The petitioner shall have costs from the respondents who will bear their own. Counsel's fee Rs. 2500/- in each petition. Petition allowed.