WP(C) 598/2008 BEFORE HON’BLE MR. JUSTICE B.K. SHARMA The challenge made in the writ petition is the manner and method in whic h the private respondents have been favoured with supply orders by the Govt. of Assam in the Education Department. The supply order pertains to supply of scienc e kits to upper primary school under award of 12th Finance Commission 2007-08. T he amount involved is Rs. 18.16 crores. Considering such huge amount involved an d the methodology adopted towards awarding the supply orders, the matter is of i mmense importance. It is the grievance of the petitioner’s Association that the supply orders have been issued in favour of the private respondents in a hush hu sh manner, de hors the transparency and without following the Govt. norms throug h tender system. 2. The petitioner is the Association consisting of members dealing with sci entific instruments. It is the Govt. registered society under the Societies Regi stration Act, 1860. Facts involved are narrated below. 3. By Annexure-B letter dated 06.11.07, the Managing Director, Assam Small Industries Development Corporation (in short ASIDC), (respondent No. 3), submitt ed the price list of science items alongwith the price of steel Almirah. Accordi ng to the letter, the samples of all the items alongwith specifications were als o sent. The letter was issued in reference to the Director of Elementary Educati on’s (Respondent No. 2) letter dated 17.10.07. Such a process started in view o f the approval of Rs. 18.16 cores by the Govt. of Assam for upgradation faciliti es to the Upper Primary Schools under the Award of 12th Finance Commission 2007- 08. 4. On receipt of the aforesaid letter from the respondent No. 3, the Direc tor of Elementary Education, Assam (respondent No. 2), by his Annexure-C letter dated 07.11.07 informed the Govt. in the Education Department (respondent No. 1) that science items and for preserving the same, steel Almirah, shall be procure d through tender or supplied through the Govt. Agency like ASIDC/AGMC as per Gov t. approval and be distributed through the concerned District Elementary Educati on officer. Request was made to sanction the aforesaid amount of Rs. 18.16 cores for implementation of the scheme approved by the authorities. The science items were to be provided to 5016 numbers of Govt. and provincialised Upper Primary S chools. 5. By Annexure-D letter dated 12.11.07 issued by the Govt. of Assam in the Education (Planning) Department, the Accountant General, Assam was intimated abo ut the sanction of the Governor of Assam to an amount of Rs. 18.16 corers for pu rchase of science kits under the scheme Up-gradation of School facilities at Mi ddle School level under the Directorate of Elementary Education, Assam under Awa rd of 12th Finance Commission during 2007-08 . While endorsing the copy of the s aid letter to the Director of Elementary Education, Assam (respondent No. 2), he was requested to purchase the science kits by observing all financial rules and procedure. Further intimation was that upon failure to do so, same would attrac t the provisions of AFRBM Act, 2005. 6. Immediately after the aforesaid letter dated 12.11.07, on the very next day, the respondent No. 2 by his Annexure-E letter dated 13.11.07 placed supply order with the ASIDC (respondent No. 3) for supply of science kits as per the l ist of items. Districtwise breakup of list of schools was also enclosed for dist ribution of items in District/Block headquarters. For receiving the items in ful l and good condition as per specification with sample approved by the Director o f Elementary Education Assam was stated to be available in the office of the con cerned Block Elementary Education Officer in rural area/Deputy Inspector of Scho ols in urban area /District Elementary Education Officer at the District Headqua rter and the Headmaster as well as the science teacher of the schools were to ve rify the items before issuing acknowledgment receipt of item. This will go to s how that even before receipt of the sanction order dated 12.11.07 for the afores aid amount of Rs. 18.16 crorers, the Director of Elementary Education, Assam had finalized the matter with the respondent No. 3 Corporation. One of the terms an d conditions was that all the terms will be as per The Assam Preferential Stores Purchase Act, 1989. The payment as per the said terms and condition was to be m ade by the Director on receipt of bills in Triplicate. 7. Since the terms and conditions of the supply order placed with the respo ndent No. 3 Corporation itself mentioned that all terms and conditions will be a s per The Assam Preferential Stores Purchase Act, 1989, it will be pertinent to indicate here that the petitioner has alleged violation of the provisions of th e said Act by the respondents. The Act was introduced to encourage the growth of the industries in the State of Assam specially the Small Scale and Cottage In dustries by patronizing their products on preferential basis and to rationalize and the procedure of stores required by the State Govt., Govt. Institution, Go vt. Companies and the Govt. Undertaking. Section 7 (b) and (c) of Assam Preferen tial Stores Purchase Act, 1989 provide that: b) Items of stores mentioned in Schedule-II known as ’Reserved Items’ shall be p urchased by all requiring authorities from registered Industries. c) Items of stores mentioned in Schedule-III shall be purchased by requiring aut horities from ASIDC. ASIDC shall follow the guidelines regarding fixation of pri ce, commission etc. as laid down in office memorandum issued by Notification No. EE-61/88/I dated 28th March, 1988 as in schedule-IV 8) Annexure-A to Schedule-IV of the Act provides for steps to be taken by the Corporation to ensure reasonable and fair price of the items in the followin g manner. (II) Tenders will be invited by the Corporation by advertisement in three or fo ur local news papers in the three consecutive issues giving one month time to th e SSI unties. Tender papers will be issued by the corporation by realizing the c ost of papers from the intending tenderers. (III) The rates quoted will show the break up of cost of each items. (IV) A Technical Committee will be formed by the corporation with its own person nel and representatives, of the Directorate of Industries, Small Industries, Ser vices Institutes, Bureau of Indian State Public Analyst and any other agencies t hat the corporation deem proper. (V) The committee shall sit and examine the rate and fix most reasonable at a c ertain date. (VI) As the market price of every items of raw materials, labour, rent etc. are increasing every day, there shall be an increase factor of each items fixed by t he Technical committee. 9. As per the scheme of preferential purchase, all SSI Units with valid sto res purchase registration with the Directorate of Industries are eligible to the enrolled under the scheme, if its products fall under the enlisted items. 10. Schedule-IV of the Act deals with purchase of products manufactured by l ocal SSI units, ASIDC Ltd. and by Small Industries Development Corporation Ltd. The price of such SSI products will be fixed by the Technical Committee constitu ted by ASIDC Ltd., i.e. the respondent No. 3. The purchasing authority shall pay to the Corporation upto 5% as commission over the price of the Corporation. The reserved items are mentioned in Schedules - II and III. None of the science ite ms except the steel Almirah is included in Schedules-II and III. This is precise ly the reason as to why the petitioner has contended that the purchase of scien ce items in the garb of applying the provisions of the Act is an eyewash and co nsequently illegal. 11. When the petitioner could come to know about the aforesaid developments, by Annexure-F letter dated 20.12.07 under the Right to Information Act, it s ubmitted Annexure F letter dated 20.12.07 under the Right to Information Act to the Director of Elementary Education, Assam, (respondent No. 2), specifically a sking for information relating to purchase of scientific instrument including th e mode of purchase with details of tender, fixation of rate and the names of t he contractors with whom the supply orders have been placed. Such information wa s also sought for from the respondent No. 3 Corporation by Annexure-G letter of the same date, i.e. 20.12.07. 12. When no information was furnished, the petitioner by its letter dated 21 .01.08 (Annexure-H) addressed to the Commissioner, Assam Information Commission, requested for intervention in the matter. Thereafter by Annexure-I letter dated 25.01.08, the respondent No. 3 Corporation intimated the petitioner that the pr ice of science items was quoted by it as per the request of the Education Depart ment and thereafter, it was placed with supply order dated 13.11.07 (Annexure-E ) about which mention has been made above. As regards the information relating t o list of names of contractors to whom the supply orders had been awarded and th e status of procurement, it was indicated as follows: Against the department’s order as above, ASIDC placed its order for supply of t he required items amongst 35 Nos. of local firms, and the same are in the proces s of execution. Under Section 11 of the Right to Information Act, 2005, it is de cided not to disclose the names of contractors (third party) to whom supply orde rs have been placed, as they have submitted representations against such disclos ures. 13. By Annexure-J letter dated 18.01.08, the respondent No. 2 also furnished the information to the respondent No. 1, in reference to the aforesaid letter d ated 20.12.07. A copy of the letter was also furnished to the petitioner. As ag ainst the column, procedure of utilization of funds and status of unutilized of funds, it was intimated that the work was allotted to the respondent No. 3 Cor poration for implementation of the scheme and utilization of fund. As regards th e mode of purchase with details of tender notice etc., it was informed that the same was as per approved quotation received from ASIDC Ltd vide letter dated 0 6.11.07. As regards the list of names of the contractors to whom the supply orde rs had been awarded, same was indicated as Managing Director, ASIDC. 14. According to the petitioner, the price quoted by the respondent No. 3 fo r the science items is much higher than the present market rate. The grievance o f the petitioner is that the respondent No. 2 without first fixing the price an d inviting tenders could not have placed the order with the respondent No. 3 for such huge amount of Rs. 18.16 cores. The petitioner has annexed Annexure-K comp arative statement of itemwise, rate supply and the present market rate. Accordin g to the petitioner, on an earlier occasion the respondent No. 2 allotted such w ork orders through tender system and following due procedure. Further plea of th e petitioner is that the items being not within the purview of the aforesaid Act of 1989, the respondent No. 2 was not authorized to place the work order with the respondent No. 3 and even if the said items are said to be within the purvie w of the Act, the laid down procedure having not been followed, the impugned act ion on the part of the respondents is liable to be interfered with. It is on rec ord that the respondent No. 3 Corporation has placed the orders for supplying t he items with 35 numbers of firms, some of whom according to the petitioner, are not even registered SSI Units. 15. In the aforesaid comparative statement, the petitioner has indicated t he present market rate vis-à-vis the approved rate quoted by the respondent Corp oration. By furnishing such comparative statement, it has been contended that th ere is huge variation in the price and in the process public money has been sip honed. Annexure-K finds mention in paragraph-21 of the writ petition which is q uoted below: 21. That, the petitioner begs to state vide letter dated 06.11.07 the respon dent No. 3 submitted their rate of science items for middle school at higher pri ces than the present market rate and without fixation of price and tender the co ntract for supply of scientific instrument amounting to Rs. 18.16 crores was all otted to the respondent No. 3. The comparative statement of present market rate for scientific items for middle school and the rate of ASIDC Ltd. is huge differ ence. 16. In reply to the aforesaid paragraph-21, the reply furnished by the Direc tor of Elementary Education in his affidavit is as follow: 16. That with regard to the statement made in paragraph 21 of the writ petit ion, the deponent offers no comment. 17. In the affidavit filed by the respondent No. 3 Corporation also there is no denial of the aforesaid specific allegation made by the petitioner. Except a simple denial. Dealing with the said allegation, the respondent Corporation ha s only referred to the procedure adopted without highlighting anything regarding specific allegation made by the petitioner that there is huge variation of pric e accepted by the respondent Corporation towards placing the supply orders with that of the market price. 18. In the pleadings of the private respondents also, there is no denial of the aforesaid stand of the petitioner. 19. It is in the aforesaid backdrop of the case, the grievance of the petit ioner is that the respondents have acted illegally towards placing the supply or ders and in not taking recourse to the laid down procedure in such matter, whic h according to the petitioner, resulted in their deprivation in participation in the tender process. Their prayer is for setting aside and quashing of Annexure- E order dated 13.11.07 and for a direction to the respondents to initiate the en tire process afresh following the due procedure required to be followed in such matter. 20. In the affidavit filed by the respondent No. 2, i.e. the Director of Ele mentary Education Assam, has justified his action. According to him, keeping in mind the priorities on academic and administrative aspects of the school system, he has to allot works to ASIDC, Assam Govt. Marketing Corporation, Co-operative Societies etc. All such activities, if are to be directly undertaken by him, t he Directorate will have to have a separate marketing division or technical divi sion under its control, he contends. According to him, the allotment of works to the respondent No. 3 Corporation is a better choice. In the affidavit he has al so emphasized on the need and objectives of the scheme and as to how the aforesa id process was undertaken. As regards the quality check of the items, he has men tioned about the committee constituted of which he was the Chairman and Deputy D irector of Elementary Education, Assam was the Member Secretary. Other two membe rs are the Sr. Finance and Accounts Officer and Finance and Accounts Officer of the Directorate. According to him, the committee was also represented by some ex perts. 21. As regards the procedure adopted by the respondent No. 3 Corporation, th e Director has contended that the said Corporation made local advertisement for supply of science items and received price quotations from six firms. Thereafter , the Corporation made a comparative statement and offered lowest price to the r egistered firms having registration. It has been contended that as per the prov isions of the APSP Act, steel Almirah alone is the reserve item. However, accord ing to him the other items although not covered by the Act, may also be purcha sed through the ASIDC. 22. As regard the price of items, it has been stated that the rate quoted by the respondent No. 3 Corporation may be slightly higher than the Guwahati marke t rate because of inclusion of transportation cost, delivery cost etc. According to the Director, the rates quoted by the petitioner is not correct and that the re may be great variation in price for items with different specification and q uality. 23. The Director has mentioned about Annexure-R/2 letter dated 31.12.02 issu ed by the Chief Vigilance Commissioner on the subject of purchase of articles by the Govt. from the private parties by which it was emphasized that purchase co uld be made from the Govt. agencies to avoid corruption. The whole emphasis of t he Director in his affidavit is on the steel Almirah included as one of the item s under the Act, 1989, but as regards the other items, he has contended that suc h small items in fragments could not be allotted to multiple firms. According to him in case of allotting the works to multiple firms, the cost of transportati on would have multiplied causing loss to the State Exchequer. 24. Upon reference to Annexure-R/3 dated 07.10.06, the Director has contende d that for some other items/chemicals/crafts etc., another Directorate namely, t he Directorate of Secondary Education, has placed the order to another Govt. Co rporation, namely Assam Govt. Marketing Corporation Ltd. (AGMC). He has justifi ed his action by stating that it was necessary to allot the whole works to a Gov t. Marketing Association so that normal activities of the Directorate relating t o priority programmes like implementation of universalistion of elementary educa tion, mid-day meal, rationalization of teachers and text book distribution, scho ol development, inspection, monitoring etc. are not hampered. According to him t he procedure adopted was transparent and it did not involve any illegality. 25. In response to the Statements made in paragraph 26 of the Writ petition that even if it is held that the scientific items are within the purview of the APSP Act, the respondents are bound to follow the procedure envisaged in the Act , the Director has made the following statement in paragraph 21 of the affidavit . 21. That with regard to the statements made in paragraph 26 of the writ petitio n, the deponent while reiterating and reaffirming the statements stated above, b egs to state that in case of choice of firms, the Government marketing agency ha ving mandatory preferential store and purchase right is the most prudent choice. The whole process is transparent and the choice was judicious . 26. In the affidavit in opposition filed by the respondent No. 3 Corporation , the above stand of the Director has been reiterated. In paragraph-5 of the af fidavit, it has been stated that the Director of Elementary Education, Assam by his letter dated 17.10.07 requested the Corporation and the Assam Govt. Marketi ng Corporation to submit the price of different science items on urgent basis as required for upgradation facilities to Upper Primary Schools under the 12th Fin ance commission 2007-08. On receipt of the said letter, the Corporation invited tenders from Entrepreneurs/Suppliers through short tender notice published in th e notice board of the / Corporation. Against the tender notice, altogether 8 (e ight) Entrepreneurs/Suppliers collected tender documents and altogether 6 (six) tenderers alongwith samples of the articles submitted their papers. 27. Although in the affidavit mention has been made about publication of sho rt tender notice in the notice board inviting tenders from the Entrepreneurs/ Su ppliers giving an impression that such invitation was open to all, but on perusa l of the purported short tender notice, it appears that same was confined only t o the registered S.S.I. units/ suppliers with the Corporation. Further, by the s aid notice, only the rates were invited and not for supply order. It has been ad mitted that except steel Almirah all other items are not reserved and governed u nder APSP Act, 1989 and that the said Act is not applicable to the items involve d. 28. In paragraph-11 of the affidavit, it has been stated that upon acceptanc e of the rate of science kits, orders were placed with 35 local firms and the s ame are in process of execution. It has been admitted that names of those firms were not disclosed as the said contractors submitted representation against such disclosures apprehending danger to life and properties. 29. The private respondents have filed Misc. case No. 760/08 for vacating th e interim order passed in the writ petition. In the application they have justif ied the action of the respondents towards issuance of the supply orders. Annexur e-A series annexed to the Misc. case are their registration certificates. In t he Misc. case they have reiterated the stand of the official respondents in thei r affidavits. They have stated that work orders have been issued to them and the y started the process of manufacturing and procurement of the goods for executi on of the supply orders. However, because of the interim order passed, they coul d not do so. 30. According to them, the official respondents have placed work orders with them following due procedure. Their stand is that the Govt. of Assam in the Edu cation Department collected the rates of the science items from the Assam Govt. Marketing Corporation and Assam Small Industries Development Corporation with a view to encourage the said Govt. undertakings as well as to make them financiall y viable in the public interest. Their further stand is that such a course of ac tion was adopted to steer clear the fake and bogus firms inasmuch as the said t wo public sector Corporations have their own registered firms. According to them the respondents Corporation after public tender collected the rates of various items and forwarded the same to the Education Department. Thereafter, the Educat ion Department allotted work order to the respondent Corporation which in turn p laced the supply orders with 35 firms including the private respondents which ar e the registered S.S.I. units. 31. According to the private respondents, the aforesaid Corporation, to enc ourage the growth of industries of Assam specially the small and cottage industr ies, took measures ancillary thereto. They have termed the action of the Corpora tion as beneficial measures. Their stand is that in the competitive market, the S.S.I. units like them cannot survive only with the supply of goods/articles res erved in the aforesaid Act. 32. It has been contended by the private respondents that they being the S.S .I. units, are entitled to preferential treatment and that the members of the pe titioner’s Association being not so, they have no locus standi to file the writ petition so as to challenge the supply orders. In paragraph- 15 of the applicati on, it has been stated that the private respondents should not be made to suffer for any minor and/or technical irregularity in the process of awarding the con tract to them. According to them, some of the members of the petitioner’s Associ ation are also the beneficiaries of similar procedure in the past. 33. The private respondents have filed an additional affidavit to highlight the above aspects of the matte relating to the contention that some of the membe rs of the petitioner’s Association are the beneficiaries of the same procedure a dopted in the past. Upon a reference to the present budgetary provision for supp ly of science kit under the Award of 12th Finance Commission, the private respon dents have contended that the supply order was awarded to the Assam Govt. Market ing Corporation Ltd. by the Director of Secondary Education, Assam following the same procedure as in the instant case. The Corporation allotted the work orders to various firms including some of the members of the writ petitioner’s Associa tion. In this connection, they have mentioned M/s. Brite Way Stores and M/s. Mul ti Science who are the members of the petitioner’s Association. Thus, according to the private respondents, some of the members of the petitioner’s Association being the beneficiaries