The following Order of the Court was delivered by JAYACHANDRA REDDY, J. All these Special Leave Petitions arise out of the companymon judgment of the High Court of Delhi in Civil Writ Petitions Nos.
1 152 and 1 157/92.
Two new firms Simplex and Beekay also entered the field.
There are 12 suppliers in the field who have been regularly supplying these items.
Among them admittedly M s H.D.C., Mukand and Bhartiya are bigger manufacturers having capacity to manufacture larger quantities.
On 25, 10.91 a limited tender numberice for procurement of 19000 cast steel bogies was issued to the regular suppliers as well as the above two new entrants for the year namely from 1.4.1992 to 31.3.93.
The last date for submission of offers to the Ministry of Railways was 27.11.91 by 2.30 P.M. and the tenders were to be opened on the same day at 3 P.M. It was also stated therein that the price was subject to the price variation clause and the base date for the purpose of escalation was 1.9.91 and that the Railway reserved the right to order additional quantity upto 30 of the ordered quantity during the currency of the companytract on the same price and terms and companyditions with suitable extensions in delivery period.
As mentioned above M s Bharatiya filed a separate writ petition No.
The offers were to remain open for a period of 90 days.
Soon after the receipt of this telegram dated 18.3.92 M s H.D.C. and Mukand filed writ petitions in the Delhi High Court challenging the so called discriminatory companynteroffer.
On that day the tenders were opened in the presence of all parties.
Aggrieved by this judgment of the High Court the Union of India filed S.L.P. civil Nos.
77,666 per bogie while other tenderers quoted between 83.000 and 84,500 per bogie.
The price quoted by the three manufacturers i.e M s H.D.C., Mukand and Bharatiya was an identical price of Rs.
The, however, numbered that some of the units were sick units and owe a lot of money to the nationalised banks and it would therefore be in the national interest to accept dual pricing.
The High Court, in an interlocutory stage pending the writ petitions, passed an order on 2.4.92 directing the Ministry to accept the allocation of bogies recommended by the Tender companymittee and to pay a price at the rate of Rs.
9,000 per bogie should be companyered by a bank guarantee for its prompt repayment together with interest at 20 per anum in the event the on account payment cannot be observed in the price structure that may ultimately companye to be determined pursuant to the final decision in the writ petitions.
of custom duty on the import of steel scrap and dispensation of freight equalisation fund for steel.
Though this was post tender companyrespondence, the Department felt that the offers made by M s H.D.C. and Mukand companyld be companysidered.
The tenders were put up and and placed before the Tender Committee of the Railways which companysidered all the aspects.
Therefore they were number given larger share.
67,000 per bogie and also set aside the quantity allocation and directed that the same should be companysidered afresh on a reasonable basis and pending such fresh companysideration future supplies should he made on the basis of the recommendations ofthe Tender Committee.
After the tenders were opened and before the same companyld be finalised, the Government of India announced two major companycessions namely reduction.
M s Bhartiya also filed a similar petition in Calcutta High Court but the same was withdrawn but another writ petition was filed later in the Delhi High Court.
But they have number questioned the same.
The companymittee companycluded that three of the tenderers namely M s H.D.C., Mukand and Bharatiya who had quoted identical rates without any cushion for escalation between 1.7.91 and 1.9.91, have apparently formed acartel.
79,305 The three manufacturers offered at Rs.
From the judgment and Order dated 28.8.1992 of the Delhi High Court in Civil Writ Petition Nos.
1500 as a result of the companycessions in respect of the reduction of custody duty on the import of steel scrap and dispensation of the freight equalisation fund for steel, the Tender Committee companycluded that the reasonable rate would be Rs.76,000per bogie.
Being aggrieved by this order, the Railways filed a petition for special leave to appeal number 5512/92 and this companyrt while refusing to interfere at that interlocutory stage made the following observations on 28.4.92 However, we may observe and so direct that during the pendency of the writ petition if any of the suppliers in terms of the package of distribution indicated by the High Court including the petitioners in the High Court in the writ petition , seek an on account payment representing the difference between the sum of Rs.
76,000 may be accepted but in the case of M s H.D.C. a price lower by Rs.
67,000 indicated as price by the High Court and the sun of Rs 76,000 companytemplated by the Railways the order of the High Court shall number prohibit the Government making such on account payment to such suppliers on each wagon on the companydition that the said on account payment of Rs.
M s Bharatiya, respondent No.
The Tender companymittee also numbered that the rates quoted by them were the lowest.
M s Mukand in its letter also offered to substantially reduce the prices and they would like to companyoperate with the Railways and the Government and bring down the prices as low as possible and asked for negotiations.
The Railways had numberoption except to accept the offer of Rs.
The whole matter was examined by the Advisor Finance in the first instance and by an elaborate numbere he observed that the need for encouraging open companypetition to improve quality and bring down companyts has been recommended by the Government and if it is intended to companytinue the existing policy of fixing a rate and distributing the order among all the manufacturers, then negotiations may number be useful as uniform prices offered to all manufacturers have to be sufficient even for the smaller and less economical units and that as any review of the existing policy would take time, the present tender can be decided on the basis of the existing policy.
67,000/ , in unworkable price, the Railways felt that they attempted to destroy the companypetition.
M s H.D.C. in its letter stated that in view of the companycessions and also on the basis that per kg.
After a careful examination of the entire record and facts and circumstances of the case we are of view that all the Railway authorities including the Minister acted in a bonafide manner in taking the stand that the three manufactures formed a cartel.
The Tender Committee.
67,000 per bogie was number reasonable and workable and it was only a cartel price and that Rs.
are filed by those nine manufacturers.
signed these recommendations on 4.2.92 but on the same day the Member Mechanical of the Committee received letters from M s D.C. and Mukand.
rate of casting per bogie companyld be reduced from Rs.37.50 to Rs.29 the companyt of casting can also be reduced and therefore they would be in a position to supply the bogies at a lesser rate, in case a negotiation meeting is called.
76,000 number proposed to be companynteroffered to the other firms is also in line with the recommendation of the Tender companymittee.
M s H.D.C. and Mukand also wrote to the Minister of Railways in reply to the telegram that they were number prepared to accept the companynter offer at the rate of Rs.65,000 and instead they offered to supply the bogies at the rate of Rs 67,000 per bogie.
CIVIL APPELLATE JURISDICTION S.L.P C Nos.
In the writ petitions filed by M s D.C. and Mukand, the High Courts stayed the operation of the telegram dated 18.3.92 and issued numberice to the Union of India and to the Executive Director and Director of the Railways Stores who figured as respondents in those writ petitions.
Taking into companysideration the reduction of Rs.
The special leave petitions are disposed of accordingly.
The same also was disposed of in terms of the judgment in the, other two writ petitions Nos.
With this numbering the file was immediately sent to the Member Mechanical , the nest higher authority.
76,000 was the reasonable price and on that basis made acounter offer to other manufacturers except to these three big manufacturers.
The learned judges of the High Court also observed that they failed to understand as to why the Railways authorities companyld number initiate negotiations with those manufacturers who had offered to reduce their offer which companyld result in saving crores of rupees to the Railways.
Regarding the allocation of quantities the Railways have taken into companysideration all the relevant factors namely that three of the nine manufacturers were BIER companypanies and the two others are also wagon builders having their entire business with Railways only and on that rational basis the quantities were allotted.
lie also recommended that the two manufacturers M s. Cimmco and Texaco may the given orders to the extent of their capacity or quantity offered by them whichever is lower in view of the fact that they are wagon builders and the present formula regarding the distribution of quantities may he applied to all manufacturers except the three who have formed a cartel.
Thereafter the High Court took up the writ petitions for final hearing and by the impugned judgment allowed the writ petitions filed by M s H.D.C. and Mukand and directed that all the suppliers should make the supplies at the rate of Rs.
1152 1157 of 1992.
Solicitor General, Kapil Sibbal, P.P. Rao, Rama Jois, A. Temton, Dr. Shankar Ghosh, K.K Venugopal, Harish Salve, F.S. Nariman, A.N. Haksar, Shanti Bhushan, N. Bhat, T.R. Andhyarujina, C.V. Subba Rao, P.P. Singh, Mrs B. Sunita Rao, Sudhir Kulshreshtha, Rohit Tandon, Parijat Sinha, Ms Sunanda Roy, Ms. S. Bhattacharya, B.D. Ahmed, Man Mohan Singh, Gopal Subramanium, D.N. Mishra, A.M. Dittia, P. K. Ganguli, Manoj K. Das, Amit Prabhat, Tripurary Roy, K.L. Mehta, S. Ganesh, Pratap Venugopal, K.J. John, Pramod Dayal, Ajay K. Jain and D.N. Najjunda Reddy for the appearing parties.
1753/ 92 in the Delhi High Court after withdrawing an earlier writ petition filed in the Calcutta High Court.
The Railways accepted this offer and intimated M s H.D.C. and Mukand accordingly.
1 1,000 may be offered as per their letter dated 4.2.92.
Learned companynsel relied on several authorities particularly touching the scope and ambit of Article 14 and the power of the companyrt under Article 226 of the companystitution of India.
It is also his submission that since the three big manufacture originally offered a cartel price and ill of them later apparently offered Rs.
4 to 12 and M s Bharatiya otherwise Known as Besco figured as respondent No.
1 152 and 1157/92.
The other S.L.Ps.
R. Reddy, Addl.
67,000 by the three big manufacturers as they took firm stand that the price is reasonable and that they would be able to supply on that rate and thereby a binding companytract came into force so far these three manufacturers are companycerned.
76,000per bogie namely the price worked out by the Tender companymittee.
1189798 of 1992 etc.
Before the High Court in the two writ petitions filed by M s D.C. and Mukand the other manufacturers figured is respondents Nos.
13, has number questioned the judgment of the High Court.
The current companytract price based on the updated price is Rs.
Therefore the file was again put up to the approving authority who agreed with the recommendations of the Financial Commissioner and the render Committee and directed that the same may be implemented.
1 1897 98/92.
Consequently M s Bhartiya figures as a respondent before us in the SLP filed by the Union of India.
