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TMI Blog2019 (2) TMI 2028X X X X Extracts X X X X X X X X Extracts X X X X ..... and 304 of the Constitution. HELD THAT:- The policy decision of the Government can always be subjected to judicial review on the grounds of unreasonableness, discrimination, arbitrariness, perversity and mala fides. The impugned G.O.Ms.No.57 modifying the State-wise tender to that of a zone-wise tender does not contain any valid and acceptable reason necessitating/warranting modification of the earlier policy decision of G.O.Ms.No.264, by which, directions were given to float State-wise tenders. The impugned G.O.Ms.No.57 does not also contain any reason to come to the conclusion that zone-wise tenders will be more beneficial to the Government than State-wise tenders, as compared to G.O.Ms.No.264 especially when G.O.Ms.No.264 was confirmed by the Division Bench of this Court, vide judgment dated 25.04.2014 in W.A.Nos.574 and 776 of 2013 accepting the stand and reasoning put forth by the Government and the same was also affirmed by the Supreme Court vide order dated 13.04.2015 in SLP No.6375 of 2015. Further, the impugned G.O.Ms.No.57 has been issued within a short span of time i.e., within six working days and there is no nexus corresponding to the object sought to be achieved a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Sengottuvel COMMON ORDER Inasmuch as the issues involved in this batch of writ petitions are more or less identical, they were heard together and are decided by this common order. Reliefs sought:- 2.The petitioners, who are the food suppliers/small poultry farms with a capacity to produce less than one lac eggs per day, have called in question the validity of G.O.Ms.No.57 Social Welfare and Nutritious Meal Programme (SW 4-3) Department, dated 20.08.2018 (for short, G.O.Ms.No.57 ) and consequential tender floated by the second respondent vide notification in Roc.No.20304/NMP/2018 dated 20.08.2018. The petitioners in WP.Nos.26732, 26890 and 27059 of 2018 have also challenged the rejection of their technical bids submitted, pursuant to the earlier tender notification in Roc.No.4554/NMP/2018 dated 11.06.2018. Conspectus of facts:- 3.1 Before proceeding to note the submissions of the learned Senior Counsel appearing for the respective parties, it is but necessary to understand the background to the issuance of the impugned Government Order as well as the consequential tender notification. 3.2 The genesis of the mid-day meal scheme is traceable to Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der was notified on 24.07.2018, the technical bid of which was scheduled to be opened on 24.08.2018. 3.6 While so, based on a representation dated 14.08.2018 submitted by the Tamil Nadu Muttai Kozhi Pannaiyalargal Marketing Society, the Government passed G.O.Ms.No.57 revoking the earlier G.O.Ms.No.264 dated 17.10.2012 and replacing the State level annual tender system to zone-wise tender system for six months. Consequently, the second respondent floated the impugned tender notification dated 20.8.2018, which is challenged herein. Submissions:- 4.1 Mr.S.Parthasarathy, learned Senior Counsel appearing for the petitioner in WP.No.22878 of 2018 submitted that the policy of a single State-wise tender has proved to be a success, which was even acknowledged by the Government as recently as on 18.07.2018, when it came out with a Press release recognising the history behind the introduction of G.O.Ms.No.264 dated 17.10.2012. Further, the said Government Order has also received the express approval of this Court as well as the Supreme Court, whereas, the impugned G.O.Ms.No.57, which excluded the egg processing units from participating in the tender process, is unconstitutional a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to go from a State-wise tender to a District-wise tender for procurement of eggs for the Nutritious Meal Programme. Furthermore, the circumstances under which G.O.Ms.No.264 came to be enforced, have not been negated. Further, according to the learned Senior Counsel, the validity of a Government Order ought to be tested only on the basis of its contents and the Government cannot improve its case through its pleadings, as held by the Supreme Court in Mohinder Singh Gill v. Chief Election Commissioner [(1978) 1 SCC 405]. By stating so, the learned Senior Counsel sought to allow this writ petitionby quashing the impugned Government Order. 5.1 Mr.A.Thiagarajan, learned Senior Counsel appearing for the petitioner in WP.No.22888 of 2018 submitted that the decision taken by the second respondent is not a policy decision, but an executive order of the Government. He further submitted that the documents filed by the respondents would show that such decision was taken by the Minister for Social Welfare and Nutritious Meal Programme based on the representation dated 06.08.2018 given by the Tamil Nadu Muttai Kozhi Pannayalargal Marketing Society, which was registered only in the year 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; non-participation of the petitioner in the tenders from 2012 would not stand in their way from challenging the present impugned tender notification; the executive powers are co-extensive with the legislative powers of the State and hence, the respondents cannot pass an executive order, which creates an artificial restriction on Inter state trade and commerce; and such an arbitrary and unreasonable restriction has been held to be unconstitutional by the Apex Court in Jindal Stain steel Ltd v. State of Haryana [2017 12 SCC 1]. Thus, according to the learned Senior Counsel, the impugned Government Order, which prohibits participation of bidders from other States, is ultra vires Articles 19(1)(g) and 301 to 304 of the Constitution of India and the same is liable to be quashed. 7. Mr.K.M.Vijayan, learned Senior Counsel for the petitioner in WP.No.22956/2018 submitted that no opportunity was ever given to the agriculturists/small poultry farmers to present their case for implementing block level supply of eggs to the beneficiaries under the Noon Meal Programme. According to him, when the representation of the petitioner for floating block level tender was pending from 2013, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... always upto the standard expected by the respondents, the rejection of their bid on the ground that the undertaking affidavit and the no objection from the partners were not in the proper format, is arbitraryand illegal. 9.1 Mr.M.S.Krishnan, learned Senior Counsel for the petitioner in WP.Nos.25142 and 26890 of 2018 submitted that the petitioner is supplying eggs to nutritious meal programme for the past 5 years under the State level annual tender; they are the Agmark licence holder of eggs and they have the sufficient grading capacity to supply to the mid-day meal programme. According to the learned Senior Counsel, there is no complaint received by the Government during the period of functioning the State level tender; G.O.Ms.No.264 brought back a time tested and efficient method of ensuring supply of eggs and the same was well reasoned, the validity and efficacy of which, were upheld by the Division Bench in WA Nos.574 and 776 of 2013 and was affirmed by the Supreme Court; and the speedy process of considering the representation made by the Tamil Nadu Muttai Kozhi Pannaiyalargal Marketing Society would clearly demonstrate the arbitrariness on the part of the respondents in pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a supplier of goods, who has a predominant activity rather than a poultry farmer and hence, the tender condition for the alleged reason of benefitting poultry farmers, has seriously compromised and jeoparadised the main object of supplying quality eggs to the noon meal centres for the benefit of children. The learned Senior Counsel also submitted that the previous tender notification permitted both the producers as well as the suppliers of eggs to be the tenderers and there was no stipulation as regards the capacity to produce 1 lakh eggs per day and therefore, any poultry farmer had the possibility to have a consortium with such other person, who had the pre-qualification and participate in the tender, which provided for an even platform for both egg producers and suppliers, whereas, the alleged and purported reasoning for modifying the methodology of the tender i.e. to benefit the poultry farmer, cannot and will not be achieved in terms of the conditions stipulated in the present tender and hence, the tender conditions in the present tender are arbitrary, unreasonable and discriminatory, insofar as they prevent the egg suppliers from participating in the tender. Adding further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .No.26282 of 2018 submitted that by the impugned G.O.Ms.No.57 as well as the tender notice, the second respondent has introduced new qualifications/conditions for the tenderers, which are highly arbitrary and contradictory to the spirit of the benefitting the poultry farmers/stake holders of the State of Tamil Nadu and also opposed to the Tamil Nadu Transparency in Tenders Act 1998 and the Rules 2000. She further submitted that both the conditions in Clauses 2(3) and 2(4) have no rationale and logic and it would not serve the purpose of restoring the zonal wise tender. Further, there is lack of transparency and bona fides in the process of floating the tender. That apart, Clause 2(5) stipulates that a tenderer can bid for a maximum of three zones only, either individually or by the way of consortium, which gives a scope of two monopolies in the State. Thus, according to the learned counsel, the tender condition is in no way giving any scope for the poor farmers like the petitioner to participate in the tender and hence, the same is liable to be quashed. 12. The respondents 1 and 2 filed a common counter affidavit in detail, in all the writ petitions, inter alia stating that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. Thus, according to the respondents, G.O.Ms.No.57 and the consequential tender notification are legally valid and the same call for no interference. 13.1 Reiterating the averments made in the counter affidavit, Mr.Vijay Narayan, learned Advocate General defended the impugned G.O.Ms.No.57 on behalf of the respondents 1 and 2. Pointing out the contents made in para 5 of G.O.Ms.No.57, he submitted that vide letter dated 07.08.2018, the remarks of the Commissioner of Social Welfare and the Director of Integrated Child Development Services Scheme have been called for, who, in turn, have submitted the merits and demerits of the State Level Annual Tender system and District/Zonal wise tender system. Thereafter, a meeting was convened in this regard by the Hon'ble Minister (SW and NMP) with the Chief Secretary to Government, the Additional Chief Secretary (Finance), the Principal Secretary (Social Welfare and Nutritious Meal Programme), the Commissioner of Social Welfare and the Director of Integrated Child Development Services Scheme, on 14.08.2018 to discuss the representation of the Tamil Nadu Muttai Kozhi Pannaiyalargal Marketing Society, Namakkal dated 06.08.2018 and arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d others [(1997) 9 SCC 495]; (iv) Union of India v. Kanndapara Sangatanda [2002 (10) SCC 226]; (v) Chairman MD, BPL Ltd v. S.P.Gururaja and others [2003(8) SCC 567]; (vi) Bannari Amman Sugars v. Commercial Tax officer and others [2005(1)SCC 625]; (vii) Association of Registration Plates v. Union of India and others [(2005) 1 SCC 679]; (viii) Shimnit Utsch India Private Limited and another v. West Bengal Transport Infrastructure Development Corporation Limited and others [(2010) 6 SCC 303]; (ix) APM Terminals B.V. v. Union of India and another [(2011) 6 SCC 756]; (x) Michigan Rubber (India) Limited v. State of Karnataka and others [(2012) 8 SCC 216]; (v) Bharti Airtel v. Union of India [2015 (12) SCC 1]; (xi) Essar Steel Limited v. Union of India and others [(2016) 11 SCC 1]; (xii) V.Lavanya v. State of Tamil Nadu [2017(1)SCC 322]; (xiii) JSW Infrastructure Limited and another v. Kakinada SeaportsLimited and others [(2017) 4 SCC 170]; (xiv) Combined Traders by its Managing Partners T.J.Cherian v. State of Tamil Nadu [1988 LW page 490]; (xv) International Data Management Ltd and others v. State of UP and others [1991 SCC All 404]. 14. To bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.57 has been passed on rational, reasonable and subjective satisfaction not only to ensure the procurement of Agmark specification eggs for Nutritious Meal Programme, but also to encourage the poultry farmers having capacity, capability and financial viability to take part in the tender process and to supply fresh eggs at a reasonable price fixed by the department to prevent loss of revenue to the poultry farmers and to avoid the middlemen from making unjust enrichment by causing loss to the poultry farmers as well as to the department. He also submitted that as per the tender conditions, not only the tenderers, but also the other egg producers who are entering into agreement with the tenderers are also directly benefitted under the impugned tender system. To substantiate his arguments, he placed reliance on the following decisions: (i) Jagdish Mandal v. State of Orissa and others [(2007) 14 SCC 517]; (ii) Tejas Constructions and Infrastructure Limited v. Municipal Council, Sendhwa and another [(2012) 6 SCC 464]; (iii) Michigan Rubber (India) Limited v. State of Karnataka and others [(2012) 8 SCC 216]; (iv) Sanjay Kumar Shukla v. Bharat Petroleum Corporation Limited an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the tender conditions are fanciful, unworkable, onerous and in violation of the Act and also irrational, having no nexus with the object sought to be achieved and the whole object of the tender to promote competition, as claimed by the respondents, is totally baseless, as no promotion of the healthy competition is sought to be achieved between the tenders as major chunk of small farmers like that of the petitioner are still outside the realm of tenders called for by the respondents; there is no fair and equitable treatment of all the tenderers; hence, the questions of fairness, public confidence and interest; and transparency in the matter of procurement are all strikingly absent in the said tender. 18. Mr.P.S.Raman, learned Senior Counsel appearing for the petitioner in WP.Nos.22945 and 22946 of 2018 replied to the arguments of the learned Advocate General by stating that any reasonable restrictions in tenders in public interest have to be brought about only by way of amendment of the Act, which shall be introduced in the Legislature only; further, the right of the State to enter into contract as covered by Articles 298 and 299 of the Constitution is subject to Articles 301 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are all school going children, have been completely given a go by, which may be detrimental to their interest; further, the Government, while dealing with the State largess, cannot have the right to choose a buyer from a particular group of individual, which is against Article 14 of the Constitution of India. The learned Senior Counsel also submitted that one of the sound reasonings assigned by the Government in arriving at the earlier policy decision in 2012 is that in a single State level tender system, a firm and stable price could be fixed due to the fluctuating price of eggs, whereas, the present tender notification is a notification inviting six separate tenders, which will again bring instability in the price of eggs. Further, there was no reason assigned by the Government in the impugned G.O.Ms.No.57 as to how it seeks to achieve the object of a stable and firm price. The learned Senior Counsel further submitted that there was no rhyme or reason for speedy decision taken by the Government on the representation submitted by the Association. It is also submitted that the Government, in its press release dated 18.07.2018, has substantiated that there is no flaw in the existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same, had been providing avenue of business to a few egg producers only. Adding further, the learned Senior Counsel submitted that contrary to the stand taken by the Government in the earlier round of litigation, the present tender has been devised for promoting egg commerce and market to the poultry owners; it has been floated for supply of eggs for 6 months only without any nexus to the object sought to be achieved viz., ensuring uninterrupted competitive one price for one year for supply of quality eggs to the children; and procurement of very large quantity of eggs from Namakkal area and transportation of the same throughout Tamil Nadu to about 1 lakh centres are the major operations in the tendered work and not production of eggs and hence, there is no added advantage or benefit to the Government to justify the modification of the methodology of having State wise tender to zone wise tender and hence, it is arbitrary and unreasonable. According to the learned Senior Counsel, there was no study or report by the higher officials to arrive at the decision of zone wise tender and in the absence of there being any concrete material that zone wise tender will benefit poultry farmers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e freedom of contract. In other words, a fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) hut must be free of arbitrariness not affected by bias or actuated by mala fides. 6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (b) In Air India Ltd. v. Cochin International Airport Ltd. [(2000) 2 SCC 617], the Supreme Court observed as follows: 7.....The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well settled that while exercising the power of judicial review the court is more concerned with the decision-making process than the merit of the decision itself. In doing so, it is often argued by the defender of an impugned decision that the court is not competent to exercise its power when there are serious disputed questions of facts; when the decision of the Tribunal or the decision of the fact-finding body or the arbitrator is given finality by the statute which governs a given situation or which, by nature of the activity the decision- maker's opinion on facts is final. But while examining and scrutinising the decision-making process it becomes inevitable to also appreciate the facts of a given case as otherwise the decision cannot be tested under the grounds of illegality, irrationality or procedural impropriety. How far the court of judicial review can reappreciate the findings of facts depends on the ground of judicial review. For example, if a decision is challenged as irrational, it would be well-nigh impossible to record a finding whether a decision is rational or irrational without first evaluating the facts of the case and coming to a plausible conclusion and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the detriment of public interest. Thus, the law laid down by the Supreme Court in the aforesaid judgments is that the Courts can scrutinise the award of the contracts by the Government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. Further, the Supreme Court indicated that interference in the contractual matters is permissible, if decisionmaking process is illegal, irrational, arbitrary and procedural impropriety and it must meet the test of reasons and relevance. 23. After recollecting the correct approach under Article 226 of the Constitution while dealing with tender matters, this Court now, proceeds to examine the rival contentions made by the respective parties. At the outset, it would be pertinent to refer to the contents of the impugned G.O.Ms.No.57, which run thus: 1... 2... 3... 4.In the meantime, the President, Tamil Nadu Muttai Kozhi Pannaiyalargal Marketing Society, Namakkal District in his representation 5th read above, has stated that the poultry farmers/stake holder of poultry industry are not able to participate in the present State Level Annual Tender System for the supply of eggs and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity eggs, allocation of funds, maintenance of accounts and settlement of bills, constitution of District/ Block Level Monitoring Committee etc., as in the Government order 1st read above shall be continued. v. The six zones shall be decided by the Tender Inviting Authority for the smooth implementation of the programme and the State Level Zone -wise Tender (six zones) shall be floated by the Tender Inviting Authority at the State Level by following Tamil Nadu Transparency in Tenders Act, 1998 Rules, 2000. vi. The Tender scrutiny committee shall decide the eligibility criteria in respect of the Technical Capabilities and other related basic requirements needed to participate in the tender, by following Tenders Act, 1998 Rules, 2000 and the Government Order first read above. 8... From a reading of the contents of the aforesaid Government Order, it becomes apparent that since the technical bids submitted by the six firms pursuant to the tender notification floated on 11.07.2018, were found to be technically not qualified, a fresh tender was notified on 24.07.2018 for procurement of eggs for the year 2018-19, the technical bid of which was scheduled to be opened on 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution. According to them, the classification made by the respondent authorities between the producers and suppliers of the eggs with regard to the object of the Scheme, is totally unreasonable, irrational, arbitrary and discriminative in nature; the decision to move away from a centralized State level tender to zone wise tender is also arbitrary, unfair and violative of the fundamental rights guaranteed under the Constitution. The learned Senior Counsel for the petitioners further submitted that the executive powers of the State are co-extensive with the legislative powers and the respondents cannot pass an executive order, which creates an artificial restriction on Inter-State Trade and Commerce; such an arbitrary and unreasonable restriction has been held to be unconstitutional in the judgment rendered by the Supreme Court in Jindal Stainsteel Ltd v. State of Haryana [(2017) 12 SCC 1]. Therefore, the impugned G.O and consequential tender notice, preventing the petitioners and others belonging to other States from participating in the tender process, amount to hostility, arbitrariness and discrimination and the same are liable to be quashed. 25.2 Adding further, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure. The contention now put forward as to the invalidity of the trial of the appellants has, therefore to be tested in the light of the principles so laid down in the decisions of this Court. (ii)The Supreme Court in EP Royappa v. State of Tamil Nadu, [AIR 1974 SC 555], held that Article 14 embodies a guarantee against arbitrariness. (iii)In AL Kalra v. P E Corporation of India, [AIR 1984 SC 1361], the Supreme Court held that Article 14 strikes at arbitrariness in executive/administrative action, because any action that is arbitrary must necessarily involve the negation of equality; one need not confine the denial of equality to a comparative evaluation between two persons to arrive at a conclusion of discriminatory treatment; an action per se arbitrary itself denies equal of protection by law. (iv)Union of India and another v. International Trading Company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have made it. But there has to be a word of caution. Something overwhelming must appear before the Court will intervene. That is and ought to be a difficult onus for an applicant to discharge. The courts are not very good at formulating or evaluating policy. Sometimes when the Courts have intervened on policy grounds the Court's view of the range of policies open under the statute or of what is unreasonable policy has not got public acceptance. On the contrary, curial views of policy have been subjected to stringent criticism. 18. As Professor Wade points out (in Administrative Law by H.W.R. Wade 6th Edition), there is ample room within the legal boundaries for radical differences of opinion in which neither side is unreasonable. The reasonableness in administrative law must, therefore, distinguish between proper course and improper abuse of power. Nor is the test Court's own standard of reasonableness as it might conceive it in a given situation. The point to note is that the thing is not unreasonable in the legal sense merely because the Court thinks it to be unwise. 19. In Union of India v. Hindustan Development Corporation, (1993) 3 SCC 499 : AIR 1994 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment that a public authority even in contractual matters should not have unfettered discretion and in contracts having commercial element even though some extra discretion is to be conceded in such authorities, the y are bound to follow the norms recognised by courts while dealing with public property. This requirement is necessary to avoid unreasonable and arbitrary decisions being taken by public authorities whose actions are amenable to judicial review. Therefore, merely because the authority has certain elbow room available for use of discretion in accepting offer in contracts, the same will have to be done within the four corners of the requirements of law especially Article 14 of the Constitution. In the instant case, we have noticed that apart from rejecting the offer of the writ petitioner arbitrarily, the writ petitioner has now been virtually debarred from competing with the EDC in the supply of spare parts to be used in the governors by the Railways, ever since the year 1992, and during all this while we are told the Railways are making purchases without any tender on a proprietary basis only from the EDC which, in our opinion, is in flagrant violation of the constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Constitution. It's principle has been well illustrated by several decisions of the Supreme Court, in particular Ramana Dayaram Shetty v. The International Airport Authority of India, (1979) 3 SCC 489: AIR 1979 SC 1628, Kasturi Lal Lakshmi Reddy v. The State of Jammu Kasmir (1980) 4 SCC 1: AIR 1980 SC 1992. This aspect is also illustrated and emphasised by the decision of the Supreme Court in Erusian Equipment and Chemicals Ltd v. State of West Bengal, (1975) 1 SCC 70: AIR 1975 SC 266. In short the principal is this. While purchasing goods for meeting its requirement, the State (as defined in Art.12, which would include public sector corporations, local authorities and Government companies owned and controlled by a Government) should not discriminate between a citizen and citizen. It must give equal opportunity to all to sell their goods or for that matter to enter into contract/agreements for sale of goods with the Government. It cannot prefer one over other unless public interest so demands. The Government no doubt has a discretion in this matter, but it is not unlimited or arbitrary. It must be exercised in public interest. It would be sufficient if we refer the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Mannalal Jain's case, AIR 1962 SC 386 (supra), the petitioner could not carry on business in food grains except under license and that was denied to him on the ground that the Government wishes to confine the said licenses only to co-operate societies. The relevant statutory order did not provide for creation of such a monopoly. No such deprivation or exclusion is present in this case. The petitioners are free to sell their goods not only throughout the country but also in the State of UP. The total market of electronic goods in the UP is Rs.16 crores out of which the purchase by the Government is only Rs.3 crores. The petitioners business does not consist only in selling to the Government nor is it a case where they cannot carry on their trade or business unless they are permitted to sell to the Government. We must say with all due respect at our command that the decision of Andhra Pradesh High Court in Mahindera Mahindra, AIR 1986 Andh Pra 332 (supra), is not correct in so far as it holds that Art. 301 was violated by the impugned order in that case. The said conclusion was arrived at by the said Court purporting to apply the ratio of Ibrahim's case (1970) 1 SCC 386 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the freedom to carry on trade or business and then to determine whether the restriction is' reasonable or not. It is the direct impact of the restriction on the freedom to carry on trade that has to be kept in view and not the ancillary or incidental effects of the governmental action on the freedom to carry on trade. (Emphasis supplied) It has also been indicated that prima facie it appears that petitioners business or trade as coal merchants is in no way interfered with by the Railways by not being able to provide transport facilities. Railway is not the only means of transport. There are other means of transport by which coal can be transported by the petitioners to their respective place of business. Even assuming that the direct impact of the policy laid down by the Railway administration pursuant to the orders of the Central Government under Section 27A results in denial of the allotment of wagon to the petitioners, the restriction will none-the -less be reasonable because petitioners are not wholly denied the allotment of wagons. (Emphasis Supplied) 27.The reasonableness of restriction is to be determined in an objective manner and from the standpoint of the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it will deal. 34.It has already been indicated that in Vikalad's case (supra), it has been held by this Court that infringement of fundamental right under Article 19(1) (g) must have a direct impact on the restriction on the freedom to carry on trade and not ancillary or incidental effects on such freedom to trade and not ancillary or incidental effects on such freedom to trade arising out of any governmental action. It has also been held in that case that unless the trader or merchant is not wholly denied to carry on his trade, the restriction imposed in denying the allotment of wagon in favour of such trader or merchant to transport coal for carrying put trading activities does not offend Article 19(1) (g) of the Constitution. No restriction has been imposed on the trading activity of dealers in pump sets in the State of Kerala including northern region comprising eight districts. Even in such area, a dealer is free to carry on his business. Such dealer, even in the absence of the said circular, cannot claim as a matter of fundamental right guaranteed under Article 19(1) (g) that a farmer or agriculturist must enter into a business deal with such trader in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or business. At the same time, Article 304(b) empowers the State Government to impose such reasonable restrictions on the freedom of trade, commerce or intercourse, with or within that State, as may be required in the public interest, but, a bill for this purpose has to be introduced or moved in the Legislature only with the previous sanction of the President. Such being the legal position, the classification made by the respondent authorities between the producers and suppliers of eggs is certainly unreasonable. Similarly, the embargo on the egg producers from outside Tamil Nadu is absolutely unfair, arbitrary and also discriminatory. Further, there was no rational nexus between the differentia made and the object to be achieved. That apart, the decisions relied on by the respondents, cannot be applicable to the facts of the present case, as the same stand in a different footing. In such view of the matter, applying the ratio laid down by the Supreme Court that the Executive should only adopt rational means while entering into contracts and if rationality is not present, the Courts can intervene, this Court comes to the conclusion that the classification made in the impugned G.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterfered with. What was only necessary to be seen was as to whether there had been fair play in action. 26.3 This Court finds some bona fides in the contention made on the side of the petitioners, in regard to the pace at which the Government has travelled to process the said representation, the dates and event ofwhich, for better appreciation, are narrated hereunder: 06.08.2018 - Tamil Nadu Muttai Kozhi Pannaiyalargal Marketing Society made a representation requesting to call for tenders District/Zone/Region wise to help poultry farmers. 07.08.2018 The Commissioner, Social Welfare Department gave his remarks on the said representation. 09.08.2018 The Director, Integrated Child Development Services Scheme gave his remarks on the said representation. 14.08.2018 The Minister for Social Welfare and Noon Meal Programme chaired a meeting with the concerned authorities to discuss the representation given a week earlier and decided to implement the same. 20.08.2018 Impugned G.O. Came to be passed cancelling the earlier tender called at state level and directing zonal tenders for six months. 20.08.2018 - On the same day, tender notification came to be publish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est known to the respondents; though it is the stand of the respondents that the tender has been floated with a view to safeguard and support the egg producers of the State, in reality, it is just against the small egg producers like those of the petitioners, who are simply left at the mercy of the large players and are eagerly awaiting the decision of the State to encompass within its fold by framing appropriate tender conditions, in order to enable the petitioners to participate in the tender. The learned Senior Counsel for the petitioners further contended that the reservation or restriction, if any, based on some policy or principle, should be formed by the respondent authorities with the object of prohibiting monopolistic tendency and encouraging healthy competition with reasonableness and non-arbitrariness, whereas, the qualifying condition prescribed in the tender notice with regard to eligibility of tenderers, is nothing but arbitrary and unreasonable, as it would only give way for monopolising the business, which would otherwise be against the public interest. In Union of India v. Hindustan Development Corporation, (1993) 3 SCC 499), the Supreme Court held thus: 11.The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side stations in the coal belt and restricting loading of coal in wagons from the stations categorised as GX and introducing preferential Traffic Schedule, in their cumulative effect resulted in total ban on transport of coal by Railways at their instance and such actions were violative of Articles 14 and 19(1) (g) of the Constitution. Repelling such contention, it has been held by this Court that whenever the court is called upon to examine the complaint that restrictions imposed on the freedom to carry on trade are unreasonable, it is necessary to find out what is the trade and business of the complainantpetitioner and to what extent the restriction, if any, is imposed upon the freedom to carry on trade or business and then to determine whether the restriction is' reasonable or not. It is the direct impact of the restriction on the freedom to carry on trade that has to be kept in view and not the ancillary or incidental effects of the governmental action on the freedom to carry on trade. (Emphasis supplied) It has also been indicated that prima facie it appears that petitioners business or trade as coal merchants is in no way interfered with by the Railways by not being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual has been held reasonable by this Court where vital interests of the community are concerned or when the business affects the economy of the country (P.T.C.S Vs. R.T.A. AIR 1960 SC 801: Meenakshi Mills Vs. Union of India, AIR 1979 SC 366 and Lala Harichand Seroa Vs. Mizo District Council and Anr, 1967(1) SCR 1012). 32.It may be indicated that although a citizen has a fundamental right to carry on a trade or business, he has no fundamental right to insist upon the Government or any other individual for doing business with him. Any government or an individual has got a right to enter into contract with a particular person or to determine person or person with whom he or it will deal. 34.It has already been indicated that in Vikalad's case (supra), it has been held by this Court that infringement of fundamental right under Article 19(1) (g) must have a direct impact on the restriction on the freedom to carry on trade and not ancillary or incidental effects on such freedom to trade and not ancillary or incidental effects on such freedom to trade arising out of any governmental action. It has also been held in that case that unless the trader or merchant is not wholly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the business affects the economy of the country. (See Parbhani Transport Co-operative Society Ltd. v. Regional Transport Authority, Aurangabad and Others, AIR (1960) SC 901; Shree Meenakshi Mills Ltd. v. Union of India, AIR (1974) SC 365; Hari Chand Sarda v. Mizo District Council and Another, AIR (1967) SC 829; Krishnan Kakkanth v. Government of Kerala and Others, AIR (1997) SC 128 and Union of India and Another v. International Trading Co. and Another, [2003] 5 SCC 437. 27.3 This Court considered the rival submissions. It is settled law that the Government is not free to act as it likes in granting largess; whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society; the constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good; every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest; every action taken by the Government must be in public interest; the Government cannot act arbitrarily and wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 20(2) of the Rules is not followed, then the tender is liable to be quashed and it is not open for the respondents to claim that the conditions are in the frame of policy making and hence, the tender notification dated 20.08.2018 is liable to be quashed. The learned Senior Counsel for the petitioners further contended that the impugned G.O.Ms.No.57 contemplates the supply of eggs and the tender is for a period of six months only and therefore, the respondent authorities have to advertise and follow the procedure for the tendering process every six months, which is going to cost enormous expenditure to the State exchequer, which was sought to be avoided in the centralized system, as per the statement of the respondent authorities in the earlier writ petitions. It is also submitted that Clause 2(13) specifies that eggs should be delivered directly to the Anganwadi/Noon Meal Centres; each zone has nearly 15,000 centres (approx.) and totally one lakh centres located all over the State, to which a minimum of 250-500 eggs (approx.) will have to be supplied twice a week; as such, ensuring prompt supply of the requisite quantity of eggs requires a central delivery system involving suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and Rule 11 (1) of the Rules, if the value of the tender is more than Rs.50 crores, the tender notice should be published in the Indian Trade Journal. Under the Act, the aforesaid objects are sought to be achieved by looking at the whole tender process in a three dimensional setting. All the provisions of the Act and the Rules are aimed at taking care of (i) the best interests of the procuring entity (for whose benefit the tender is floated), (ii) the perspective of those who eventually lose in the race, and (iii) the perception of the public about the manner in which the whole exercise was undertaken. Once these underlying principles behind the Act and the Rules are violated, then, this Court has to exercise its power under Article 226 of the Constitution to interfere with the same. Rule 11(3) states that the tender ought to be published in an All India Newspaper, the reason being that Act and Rules visualize participation from all over the country, since the object of the Act and Rules is for wider participation so as to make the tender process more competitive. As such, this Court is of the view that the provisions of Section 9(3) and Rule 11(1) are mandatory and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of interference of the Court in the policy decision of the Government is very limited. The learned Advocate General for the respondents submitted that the Court cannot embark upon wisdom of policy choices and it is for the Government to look into the impact, if any, of its policy on the public. To substantiate his stand, the learned Advocate General cited the following decisions. (i)In P.T.R. Exports v. Union of India [1996(5) SCC 268], it was held by the Supreme Court thus: 3. In the light of the above policy question emerges whether the Government is bound by the previous policy or whether it can revise its policy in view of the changed potential foreign markets and the need for earning foreign exchange? It is true that in a given set of facts, the Government may in the appropriate case be bound by the doctrine of promissory estoppel evolved in Union of India Vs. Indo-Afghan Agencies [(1968) 2 SCR 366]. But the question revolves upon the validity of the withdrawal of the previous policy and introduction of the new policy. The doctrine of legitimate expectations again requires to be angulated thus: whether it was revised by a policy in the public interest or the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfying the conditions required in the scheme. The High Court, therefore, was right in its conclusion that the Government are not barred by the promises or legitimate expectations from evolving new policy in the impugned notification. (ii)In Union of India v. Kannadapara Sangatanda, [2002 (10) SCC 226], the proposition of law laid down is as under: There is no basis for the High Court coming to the conclusion that the decision of the Union Cabinet was vitiated on account of legal mala fides. Merely because an administrative decision has been taken to locate the headquarters at Bangalore, which decision is subsequently altered by the same authority, namely, the Union Cabinet, cannot lead one to the conclusion that there has been legal mala fides. Why the headquarters should be at Hubli and not at Bangalore, is not for the court to decide. There are various factors, which have to be taken into consideration when a decision like this has to be arrived at. Assuming that the decision so taken is a political one, it cannot possibly give rise to a challenge on the ground of legal mala fides. A political decision, if taken by a competent authority in accordance with law, cannot pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos.574 and 776 of 2013 along with WP.No.13320 of 2013 and has also been affirmed by the Supreme Court vide order dated 13.04.2015 in Special Leave to Appeal (C) No.6375 of 2015 and hence, the impugned G.O.Ms.No.57, subsequently issued, is unwarranted and hence, the same is liable to be quashed, whereas, it is the stand of the respondents that G.O.Ms.No.57 is only supplement/complement of the earlier G.O.Ms.No.264 and the averments made in the counter affidavit in the earlier round of litigation cannot be taken into consideration for testing the validity of the present G.O.Ms.No.57. In support of the same, the learned Advocate General placed reliance on the decision of the Supreme Court in V.Lavanya v. State of Tamil Nadu, [2017(1) SCC 322], wherein, it was observed as under: 27. In the earlier round of litigation (in Writ Petition No. 30425 of 2012 and Writ Petition No.22407 of 2013), Government of Tamil Nadu took a categorical stand that they would not compromise on the quality of the teachers. After referring to the said stand of the State Government in its counter affidavit before the Division Bench, in paras (38) to (40) of the judgment, Madurai Bench observed that the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Division Bench of this Court, in detail, which are profitably reproduced hereunder. The Division Bench, at para 28 of its judgment, raised the following questions for determination: (i) Whether G.O.Ms.No.264, Social Welfare and Nutritious Meal Programme (NMP-3) Department, dated 17.10.2012, has been issued on a proper consideration of relevant aspects and due application of mind. (ii) Whether the conditions prescribed in the impugned tender notification dated 18.2.2013, are unreasonable, irrational and open to challenge? (iii) Whether the amendment of prayer sought for by the appellants, can be allowed? (iv) Whether W.P.No.13320/2013 is maintainable? 30.3 Thereafter, the Division Bench, at para 29(i) to 29(v) of its judgment, elaborately considered the reasons and circumstances under which, the earlier G.O.Ms.No.264 came to be passed and its pros and cons, which run thus: 29 (i) QUESTION No.(i):- 29 (i) The first respondent has written a letter dated 14.5.2012, to the Director of Social Welfare regarding restructuring of tender and sought to clarify the following points: 1) Egg prices show huge monthly or weekly variations. Hence better price discountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost at district level may be reduced and more organisations will participate in the tender and disadvantageous are that separate arrangement has to be made to monitor the supply and quality of egg and if any court case is filed for any reason in State Level Tender, the distribution of eggs in all districts will be affected. In paragraph No.5 of the said Government Order, the Principal Secretary/Special Commissioner, ICDS Scheme, has stated that the centralized tender system will bring savings in advertisement cost and saves time for calling and finalizing the tender at all district levels and cartelization can be avoided in the system and the system has disadvantageous also like creation of monopoly in egg trade due to huge production capacity and the cost and this will eliminate small and medium poultry farmers. In paragraph No.6 of the Government Order, all the above mentioned issues among others, were discussed by the Chief Secretary with the Principal Secretaries, Finance Department, Social Welfare and Nutritious Meal Programme Department and Special Commissioner for ICDS on 30.8.2012, and data collected, were critically analyzed and based on detailed deliberation, decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Principal Secretary/ Special Commissioner of Integrated Child Development Services Scheme Chairman The Director of Social Welfare Member Joint/Deputy Secretary, Finance Department Member Joint Director/Deputy Director, Animal Husbandry Department, Chennai Region Member Chief Accounts Officer, o/o Integrated Child Development Services Scheme Member VI. In order to satisfy the requirement of Rule-24 of the Tamil Nadu Transparency in Tender Rules 2000, Special Commissioner of Integrated Child Development Services scheme may constitute a Tender scrutiny Committee within the Department so as to act as per rule-24(1) and rule 24(2). VII. The matters such as allocation of funds, maintenance of accounts and coordination of various aspects of the scheme and its field level monitoring will vest with the Director of Social Welfare. VIII. The Principal Secretary/Special Commissioner, Integrated Child Development Services scheme should work out the detailed tender conditions with due regards to pre qualifications, technical specifications, technical capabilities, financial conditions, experience and production capacities, penal provision and all other relevant details through tender scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment vide its U.O.No. 58024/SW/2012, Dated : 16.10.2012. 29(iv) After passing of the said Government Order, the Department of Integrated Child Development Services Scheme has floated Tender document in Tender No.Roc.3566/NMP/2012 for procurement of 60,00,000 eggs (hen) per day as per AGMARK specification for a period of one year to the beneficiaries all over Tamil Nadu under Puratchi Thalaivar Dr. M.G.R. Nutritious Meal Programme and under Integrated Child Development Services Scheme. The contents of the said tender document read that there are 24 references and Annexures I to X have to be filled up by the intending bidders. The issuance of tender is governed by the Tamil Nadu Transparency in Tenders Act, 1998, and the Rules framed thereunder and in case of any conflict between the terms and conditions in the tender document and the above said statute, the statute shall prevail. Clause 2 speaks about the qualifying conditions and as per Clause 2(i), the tenderer should be producer or supplier of eggs (hen) as per AGMARK specifications and should have been supplying eggs (hen) or any other food materials (any date before the publication of tender) and the tenderer should possess AG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government for ensuring supply of huge quantity of quality eggs on time without any hiccups as the successful tenderer has to deliver 60 lakhs eggs (hen) per day to various centres. 30.4 Ultimately, the Division Bench, at paras 33 and 34, concluded as under: 33.This Court on a threadbare analysis and exhaustive consideration of all the rival submissions and the materials placed before it, is of the considered view that the official respondents have kept in mind the public interest and adopted fair procedure in floating State wide tender and awarded contract in favour of the respondents 5 and 6 viz. M/s.Natural Food Products and Suvarnabhoomi Enterprises Pvt. Ltd. This Court has also taken into consideration the submissions made on behalf of the official respondents that the contract awarded pursuant to the impugned tender notification dated 18.2.2013, is coming to an end on 30.4.2014, and so far no major complaints have emanated in respect of the quality of the articles supplied, and delivery schedule and is of the considered view that the writ appeals as well as the writ petition lack merit and deserve dismissal. 34.In the result, the writ appeals are dismissed confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as the decision making process of the respondent authorities is bristled with mala fides, arbitrariness and perversity and they have intended to favour someone and hence, this Court will have to exercise its power under Article 226 of the Constitution to interfere with the impugned G.O as well as the tender notice. 32. Several other decisions have been cited before this Court by both sides. However, whatever are relevant for the decision of this Court are referred. Findings:- 33.1 The policy decision of the Government can always be subjected to judicial review on the grounds of unreasonableness, discrimination, arbitrariness, perversity and mala fides. The impugned G.O.Ms.No.57 modifying the State-wise tender to that of a zone-wise tender does not contain any valid and acceptable reason necessitating/warranting modification of the earlier policy decision of G.O.Ms.No.264, by which, directions were given to float State-wise tenders. The impugned G.O.Ms.No.57 does not also contain any reason to come to the conclusion that zone-wise tenders will be more beneficial to the Government than State-wise tenders, as compared to G.O.Ms.No.264 especially when G.O.Ms.No.264 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrary action by the State. Hence, issuance of G.O.Ms.No.57, ie., zone-wise tender and the terms of the subsequent Notification excluding the egg traders and suppliers like that of the petitioners, are colourable exercise of power and are unreasonable, arbitrary, irrational and discriminatory and also violative of Article 19(1)(g) of the Constitution. It is nonetheless important to mention here that the public interest is paramount; there should not be any arbitrariness in the tender matters; all the participants in the tender process should be treated alike and there should not be any discrimination and unreasonableness. 33.2 In view of the aforesaid findings, the impugned G.O.Ms.No.57 is liable to be quashed. Consequently, the tender notice dated 20.08.2018 is also liable to be quashed, as a result of which, the relief sought in W.P.Nos.26732, 26890 and 27059 of 2018 questioning the rejection of their technical bids due to some discrepancies, need not to be gone into in detail by this Court. Disposition: 34.(i)The impugned G.O.Ms.No.57 and the consequential tender notice dated 20.08.2018 are quashed and W.P.Nos.22878, 22888, 22945, 22946, 22956, 24369, 25142, 25284 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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