WA 155/2009 BEFORE HON’BLE THE CHIEF JUSTICE (ACTG.) MR. A.K.GOEL HON’BLE MR. JUSTICE N.KOTISWAR SINGH [A.K.GOEL, CJ (ACTG.)] This order will dispose of WA Nos. 155/2009, WA 256/2008, WA 202/2008 an d WA 177/2008 as all the appeals arise out of a common judgment and order dated 10.6.2008 rendered by the learned Single Judge, quashing action of the Assam Sma ll Industries Development Corporation Limited (ASIDC), the appellant in WA 155/2 009, for supply of material to the Government with certain firms, without follow ing due procedure of law, thereby causing huge loss to the public revenue. 2. The writ petition was filed by the Assam Science Instrument Dealers Asso ciation stating that the 12th Finance Commission, 2007-2008 sanctioned grant of ‘18.16 crores for up-gradation to the facilities of the Upper Primary Schools in the State. The Director of Elementary Education by the letter dated 13.11.2007 allotted the work for supply of Science Kits to the ASIDC, purporting to follow the provisions of Assam Preferential Stores Purchase Act, 1989 ( the APSP Act). The said Act, in Schedule IV provides for following the procedure of tenders by advertisement in news papers for giving orders and constitution of Technical Com mittee to assess the rate for purchasing various articles. However, without foll owing the prescribed procedure and merely by putting notice on its notice board, the ASIDC placed the order for supplying of goods to 35 (thirty five) local fir ms at a much higher price and the market rates. In the process, loss was caused to the public revenue and level playing field was denied to other eligible suppl iers. 3. The writ petition was contested wherein it was not disputed that no tend er notice was published in any news papers. A short tender notice was issued in the Notice Board of the ASIDC on 21.10.2007. 6 (six) firms quoted the lowest rat es at which supply orders were issued to 35 (thirty five) local firms. The learn ed Single Judge, after noticing the relevant pleadings of the parties, considere d the question whether the decision making process in awarding the contract or s upply orders was valid. On due consideration, the question was answered in the n egative. The relevant discussion in the impugned order is quoted below:- 48. From the above, it is seen that the contractual orders have been placed with third party after approving the rates furnished by the respondent Corporati on. Such rates were obtained not through any advertisement and/or public notice, but simply by purported notice in the notice board of the Corporation confining the same only to the registered S.S.I. units/ suppliers of the respondent No.3 Corporation. As noted above, the notice was issued only for getting the rates an d not for supply orders. According to the respondents, altogether six firms res ponded to the said notice and submitted rates. Thereafter rates were finalised u pon a reference to the respondent Corporation and the orders were placed with th e Corporation which in turn awarded the supply orders to the third party. Thus, here is a case in which the third party is the beneficiary of the entire process without any active participation in the said process involving an amount of Rs. 18.16 crores. 49. A total reading of the facts and circumstances of the case, it appears t hat the respondents were in hurry and in the process they flouted all the norms and principles relating to distribution of State largesse. Instead of acting as a guardian of the finance of the State and the protector of the financial intere st of the State, all the respondents acted in collision towards defrauding the p ublic money. 50. The Director of Elementary Education, Assam himself has placed reliance on Annexure-R/2 letter dated 31.12.02 addressed to all the Govt. departments by the Chief Vigilance Commissioner, Assam. The letter has been pressed into servic e to justify the action in not taking recourse to tender process. By the said le tter, prevention of corruption in the Govt. department was emphasized. In paragr aph-G of the letter, it was emphasized that the prescribed procedure should be s trictly adhered to in awarding any contract for the execution of any work or sup ply of any article for Govt. use. The need for wider publicity of tender notice was emphasized. The Director has annexed the copy of the said letter only to put emphasis to the observation made in paragraph-H of the letter in which it has b een stated that if the purchase are made from Goivt. Agencies, lesser will be th e scope of corruption. The observation was made keeping in mind the products of the Govt. agencies and the names of the Govt. agencies were indicated in the let ter. 51. Contrary to the above direction of the Vigilance Commissioner, the respo ndent took recourse to purchase of science products from the private parties in the name of purchasing the same from the Govt. agencies, i.e. the respondent Cor poration. In the process, the respondents have defied the direction of the Govt. in its Annexure-D letter dated 12.11.0 directing the Director of Elementary Edu cation, Assam to purchase the science kits by observing all financial rules and procedure in force. It was indicated that upon failure to do so, same would attr act the provisions of AFRBM Act, 2005. There is also nothing to indicate that th e finance department of the Govt. of Assam was actively associated in the decisi on making process which was necessary considering the fact that the scheme was u nder the Award of 12th Finance Commission involving a huge amount of Rs.18.6 cro res. The entire process towards allotment of works was completed in no time. 52. It was a case of conferment of power together with a discretion which we nt to the authority to enable appropriate exercise of power and therefore, it wa s coupled with a duty to shun arbitrariness in its exercise and to promote the o bject for which the power was conferred which undoubtedly was public interest an d not individual or private gain, whims or caprices of any individual. It is wel l settled that every State action, in order to survive must not be susceptible t o the vice of arbitrariness which is the crux of Article 14 of the Constitution and basic to the rule of law, the system which governs us. Arbitrariness being o pposed to reasonableness is an anti thesis to law. In the instant case, the acti on of the respondents towards issuance of supply orders in favour of the third p arty is wholly unreasonable, unfair and not in accordance with the declared prin ciples. 4. Apart from quashing the supply orders and directing the State to procee d afresh in association with Finance Department by following due procedure, the learned Single Judge recommended to the Vigilance Commission/Department of State Government and the Finance Department to bring erring officials to book. It may be mentioned that though the proposed suppliers were not impleaded as parties, they filed MC No.760/2008 and put forward their view point as noted in paragraph s 29 to 33 of the impugned order of the learned Single Judge. 5. We have heard learned counsel for the parties and perused the records. 6. Learned counsel for the ASIDC has not been able to seriously assail the finding that supply orders were vitiated for want of following a transparent and fair procedure. His main grievance is that recommendations to the Vigilance Com mission/Department of State Government to bring erring officials to book on the assumption that their action was mala fide and calculated to cause wrongful loss to the State and wrongful gain to the private parties was not called for. Such a direction should have followed some adjudication and prima facie finding of gu ilt against the concerned officers. 7. Learned counsel for private suppliers assailed the finding that supply o rders were not vitiated as the procedure followed by submitting that by putting a short notice on the Notice Board was itself transparent and fair and did not c ause any loss to the public revenue. It was also submitted that in absence of th eir being impleaded as parties, the impugned order of the learned Single Judge w as liable to be set aside. 8. After due consideration of the submissions advanced by learned counsel, we are unable to hold that interference with the finding recorded by the learned Single Judge is in any manner uncalled for, as far as quashing of supply orders are concerned. 9. It is well settled that in dealing with the public revenue effort is to be made to get the best and fair deal and level playing field to be allowed to a ll eligible suppliers. Issuing tender notice is the rule, though not an invaria ble one. Compelling reason may necessitate departure. Reference may be made to the judgment of the Hon’ble Supreme Court in [(1979) SC 1628, Ramana Dayaram Sh etty v. International Airport Authority of India] wherein it was held as follows :- 12. &. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contract s or issuing quotas or licences or granting other forms of largess, the Governme nt cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. The power of discretio n of the Government in the matter of grant of largess including award of jobs, c ontracts quotas, licences etc. must be confined and structured by rational, rele vant and non-discriminatory standard or norm and if the government departs from such standard or norm in any particular case or cases, the action of the Governm ent would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle whic h in itself was not irrational, unreasonable or discriminatory. & 10. In M.I. Builders Pvt. Ltd. Vs. Radhey Shyam Sahu and others, (1999) 6 SC C 464, after referring to Rashbihari Panda v. State of Orissa ( 1969) 1 SCC 41 4, R.D. Shetty v. International Airport Authority of India (1979) 3 SCC 489, Kas turi Lal Lakshmi Reddy v. State of J & K (1980) 4 SCC 1, State of Haryana v. Jag e Ram (1983) 4 SCC 556, Ram and Shyam Co. v. State of Haryana (1985) 3 SCC 267 a nd Chenchu Rami Reddy v. Govt. of A.P. (1986) 3 SCC 391, the Hon’ble Supreme Cou rt observed in paragraph 45 of the judgment as follows: 45. & & & & & & & & & & 7. &.. Contract of such a magnitude could not have been awarded to the builder wi thout calling for tenders. There was no ground to depart from the settled norms. Decision of this Court in Sachidanan d Pandey v. State of W.B. (1987) 2 SCC 295, is no authority for the proposition that it was not necessary to invite tenders. That was a case relating to develop ment of tourism industry in the State of West Bengal. The case did not lay and r ule but was an exception thereto. In that case a lease was granted by the State Government to Taj Group of Hotels for construction of a five star hotel. This wa s challenged on various grounds in a writ petition filed under the banner of PIL . The writ petition was dismissed by the learned Single Judge of the High Court. On appeal, the Division Bench confirmed the judgment of the learned Single Judg e. The matter then came to this Court under Article 136 of the Constitution and leave was granted. One of the questions raised was regarding the lease which was granted by the State Government without inviting tenders or holding a public au ction. This Court posed the question if in pursuing the socio economic objective , the State is bound to invite tenders or hold a public auction. 11. In the present case, there was no compelling necessity to deviate from t he procedure of tender by due publication. A huge amount of ‘18.16 crores was i nvolved and there was no compulsion to give supply orders only to few firms with out due verification of the market rates. The distinction of giving orders to th e Government organizations to be executed through its employees and such orders being placed with the Government organizations for being executed through privat e parties is well known. The power of Government organizations cannot be allowed to be used when ultimate beneficiaries in the contract are the private parties. We thus uphold the direction for quashing the supply orders. 12. Coming now to the submissions against the direction for taking action ag ainst the erring officials, we are of the view that the said direction needs to be modified. It will be appropriate that before taking any further action, the m atter is to be looked into at department level by a Committee to be constituted by the Chief Secretary of the State of Assam which may look into the bona fides or otherwise of the concerned officers and the private firms. The Chief Secretar y may take further action in the light of the report of the Committee so constit uted. This may be done within 3 (three) months from the date of receipt of a cop y of this order. 13. Writ appeals stand disposed of accordingly.