IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC FRIDAY, THE 18TH APRIL 2008 / 29TH CHAITHRA 1930 WP(C).No. 8318 of 2007(M) --------------------------------------- PETITIONER: --------------------- MANI SAMUEL, PROPRIETOR, JOHN SAMUEL BROTHERS, M.G.ROAD, THIRUVANANTHAPURAM. BY ADV. SRI.P.RAVINDRAN (SR.) RESPONDENTS: -------------------------- 1. GOVERNMENT OF KERALA, REP. BY ITS CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. 2. SECRETARY, STORE PURCHASE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 3. KERALA STATE SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION (SIDCO), SANTHI NAGAR, THIRUVANANTHAPURAM. 4. DIRECTOR OF HIGHER SECONDARY EDUCATION, SANTHI NAGAR, THIRUVANANTHAPURAM. R1 BY GOVERNMENT PLEADER SRI. P.N. SANTHOSH R3 BY SRI.R.T.PRADEEP, SC, SIDCO THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19/02/2008, THE COURT ON 18/04/2008 DELIVERED THE FOLLOWING: Kss WPC.NO.8318/2007 M APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE G.O.PROVIDING FOR COLLECTION OF SERVICE CHARGE FOR SIDCO DTD. 17/06/83. EXT.P2: COPY OF THE GOVERNMENT ORDER INCORPORATING PARA 57 (10(a) IN THE STORES PURCHASE MANUAL DTD. 11/11/86. EXT.P3: COPY OF THE GOVERNMENT ORDER CLARIFYING THIS POSITIONS DTD. 19/05/03. EXT.P4: COPY OF THE G.O. GRANTING EXTENSION DTD. 8/2/05. EXT.P5: COPY OF THE ORDER DTD.1/03/2006. 4TH RESPONDENT'S EXHIBITS: EXT.R4(A): COPY OF THE PROCEEDINGS NO.FIN.C3/2409/2005/HSE DTD. 24/01/06 OF THE DIRECTOR OF HIGHER SECONDARY EDUCATION. EXT.R4(B): COPY OF THE PROCEEDINGS NO.FIN.C3.2409/I/2005/HSE DTD. 25/02/2006 OF THE DIRECTOR OF HIGHER SECONDARY EDUCATION. EXT.R4(C): COPY OF THE PROCEEDINGS NO.FIN.C1/12554/03/HSE DTD. 20/02/2007 OF THE DIRECTOR OF HIGHER SECONDARY EDUCATION. /TRUE COPY/ P.S.TO JUDGE Kss ANTONY DOMINIC, J. ------------------------------------ W.P.(C) 8318 of 2007 ------------------------------------- Dated: APRIL 18, 2008 JUDGMENT The prayer in this writ petition is to require respondents 1 and 2 to purchase laboratory equipments, furniture, sports goods and other articles required for Government educational institutions strictly in accordance with paragraph 57(a)(1) of the Store Purchase Manual. There is a further prayer to direct the Director of Higher Secondary Education to ensure that the laboratory equipments, sports goods etc. purchased by the Government Educational Institutions from SIDCO are products manufactured by SSI Units registered with SIDCO. 2. Petitioner is a dealer in stationery materials, laboratory equipments, sports items and other goods used mainly in schools and other educational institutions. Petitioner contends that the 3rd respondent is a public sector undertaking of the Government of Kerala which was incorporated as a company with the objective for assisting the SSI Units in the State. Various orders have been WP(C) 8318/07 Page numbers issued by the Government of Kerala giving relaxation to the 3rd respondent from the procedure laid down in the Store Purchase Manual while effecting purchases. 3. In so far as this case is concerned, the Government Order that is relevant is Ext.P3 which, inter alia, provides relaxation from paragraph 57(a) (1) of the Store Purchase Manual with purchase of wooden/steel furniture/hospital/lab equipments manufactured in the premises of SIDCO and the local SSI Units of the State registered with SIDCO. Thus, it is obvious that the relaxation granted is confined to the goods manufactured in the premises of SIDCO or by SSI units registered with SIDCO. 4. While the position was remaining as above, petitioner alleges that some of the officials of the 3rd respondent had fixed a deal with certain businessmen for the supply of articles to the Government and Government institutions at prices that were mutually agreed between them. It is stated that without inviting tenders, such large purchases have been effected for the supply to various Government educational institutions and that by playing such a fraud, these businessmen are making unmerited profit. It is WP(C) 8318/07 Page numbers on this basis that the writ petition has been filed seeking a direction that respondents 1 and 2 should require that purchases effected shall be strictly in accordance with paragraph 57(a)(1) of the Store Purchase Manual. 5. Respondents 1, 2 and 3 have filed separate counter affidavits. Of the counter affidavits what is important is the affidavit filed by the 3rd respondent. In paragraph 11 of the counter affidavit filed by the 3rd respondent, it is stated that they had placed orders with 12 of its registered units for the supply of laboratory equipments and hospital equipments for the year 2006-07. It is also stated that subsequent to the order passed by this court on 13th of March, 2007, directing that there shall be no purchase except in accordance with Ext.P3 Government Order, the SIDCO had conducted an enquiry to ascertain whether the goods were supplied by the units which are actually manufacturers of the goods supplied. It is stated that the enquiry revealed that the 12 units which had supplied the goods were not actually manufacturing the goods, but were only dealers of those goods. It is stated that in view of this, in deference to the order dated 13th of March, 2007, the SIDCO had WP(C) 8318/07 Page numbers not disbursed the amount of Rs.19,78,367/- which is due to the aforesaid 12 units for the supply that they had made. 6. Thus, from the facts it is obvious that relaxation as per paragraph 57(a)(1) of the Store Purchase Manual is available only to those SSI Units which manufactured the goods in the premises of the SIDCO and to those SSI Units which are registered with SIDCO. Thus, the benefit of relaxation is available only to manufacturers and not to dealers. In this case, admittedly goods have been purchased not from the manufacturers, but from dealers and this position is confessed by the 3rd respondent in paragraph 11 of its counter affidavit. Certainly the procedure adopted by the 3rd respondent is erroneous. If at all it wanted to procure goods from dealers, as they have admittedly done, they could have done so only after inviting tenders as prescribed in the Store Purchase Manual. This has not been done. Therefore, the officials of the 3rd respondent who have arranged for the supply from the dealers, taking advantage of the relaxation provided for manufacturers are liable to be faulted for the action that they had taken. This is all the more so for the reason that such supplies were effected at prices WP(C) 8318/07 Page numbers fixed on negotiations between themselves. The bona fides of the officials of the 3rd respondent leaves much to be desired. 5. Irrespective of all these, the fact remains that the 12 dealers who have supplied the goods to the 3rd respondent which, in turn, has supplied goods to the various educational institutions etc. are not made parties to this writ petition. Substantial amounts are due to the aforesaid suppliers and if, for the fault that the officers of the 3rd respondent have committed, the payments due to the suppliers are to be withheld, this court will be passing such a direction without having the affected parties on the party array. That will also lead to a situation where the beneficiary of such an order will be the 3rd respondent who itself has created such a situation. In view of this, although I do not approve the conduct of the 3rd respondent and its officials in arranging supply from dealers who are not manufacturers, giving the benefit of relaxation from paragraph 57(a)(1) of the Store Purchase Manual, I do not wish to interdict the 3rd respondent from releasing payments to the 12 suppliers whose names are given in paragraph 11 of the counter affidavit filed by it. WP(C) 8318/07 Page numbers Accordingly, this writ petition is disposed of directing that only SSI Units which are actual manufacturers are entitled to the relaxation as provided in Ext.P3 Government Order. It is clarified that it will be open to the 3rd respondent to release payment to the suppliers whose names are mentioned in paragraph 11 of the counter affidavit filed by it. No costs. ANTONY DOMINIC, JUDGE mt/-