C.K. Thakker, C.J.@mdashRule Mr. Iqbal Chagla, learned senior advocate with Mr. S.M. Gorwadkar, appear and waive service of rule on behalf of National Co-operative Consumers Federation of India Ltd. Mr. V.A. Gangal, learned counsel, appears and waives service of rule on behalf of Food Corporation of India and Senior Regional Manager, Food Corporation of India, in all petitions. The matters have been taken up for final hearing.
2. In all these petitions, an action taken by the Food Corporation of India (FCI) and Senior Regional Manager (FCI), respondent Nos. 2 and 3 in Writ Petition No. 7468 of 2002, of giving contract to National Co-operative Consumers Federation of India Limited (Federation), respondent No. 1 in Writ Petition No 7468 of 2002, is challenged. To appreciate the contentions raised in all the petitions, few relevant facts in the first petition i.e. Writ Petition No. 7468 of 2002 may now be stated.
Petitioner is a consumer of foodgrains for manufacture of flour from Food Corporation of India (hereinafter referred to as "FCI"). On 1st November, 2002, the first respondent-Corporation published an advertisement for sale of 70,000 M.Ts. wheat at Borivli and Manmad depots. The stock was "more than four years old" wheat. Respondent No. 2 intended to sell the said stock at the fixed rate of Rs. 621/- per quintal on "first come first served" basis which was to start from November 5, 2002 and to continue upto December 17, 2002. The petitioner being a bulk consumer from respondent No. 2 applied for the allotment of the said stock of wheat by offers dated November 16, 2002, November 26, 2002 and December 7, 2002. He offered price of Rs. 628/- per quintal. It was the case of the petitioner that no decision was taken by respondent No. 2 on the offers made by the petitioner. The petitioner was surprised that respondent No. 1 offered to pay Rs. 621/- per quintal on December 5, 2002 and stock of 90,000 M.Ts. of wheat was offered to respondent No. 1 by respondent No. 2 on December 9, 2002. The said order is annexed at Exhibit-E to the petition. Certain conditions were imposed in the allotment letter; such as the allottee should deposit 10 per cent price of the indented quantities as an earnest money with the Senior Regional Manager, Maharashtra, within ten days from the issue of the allotment letter; to prepare weekly schedule so that entire lifting of goods from the depots could be completed within 90 days, etc. It was stated that any default in depositing the cost of foodgrains or in lifting the quantities as per the schedule fixed would invite forfeiture of earnest money deposit without any notice and the remaining quantities would be offered to other buyers.
3. The petitioner stated that after few days of the receipt of the allotment letter, respondent No. 1 realised that the condition of deposit of 10 per cent of cost of goods was difficult to comply with. It, therefore, filed a petition being Writ Petition (St.) No. 48259 of 2002 in this Court for relaxation of condition of 10 per cent deposit as earnest money within ten days. The petition, however, was dismissed on December 18, 2002 holding that such a condition could be imposed by the Corporation. According to the petitioner, the last date for earnest money deposit was December 18, 2002. The respondent No. 1 failed to deposit the amount. The allotment order dated December 9, 2002 thus came to an end. The petitioner has stated that respondent No. 2 had issued orders to stop sale of wheat in open market in the State of Maharashtra on December 17, 2002. That decision was taken to benefit respondent No. 1 for clearing the stock sold it with huge profits by creating artificial shortage of commodity in the State. The officers of the first respondent collected moneys from various private profit making traders and agreed to sell allotted stock with huge profit instead of making the same available to public at large through co-operative network. With the help of private traders, respondent No. 1 deposited earnest money of Rs. 4.34 crores only instead of Rs. 5.6 crores. That amount was much less than the calculated 10 per cent earnest money deposit for 90,000 M.Ts. of wheat sold to respondent No. 1. The said amount, therefore, was liable to be confiscated as per the allotment letter dated December 9, 2002.
4. It is also the case of the petitioner that respondent No. 2 could not have allotted the entire wheat stock advertised on November 1, 2002, to respondent No. 1 The commodity was to be sold on "first come first served" basis. Petitioner had made two offer in November, 2002, that is, before the offer of the first respondent on December 5, 2002. Thus, the decision of respondent No. 2 to sell wheat was arbitrary, unreasonable and discriminatory. The decision was actuated with mala fide intention and oblique motive. No reasons were recorded for rejecting petitioner''s offer who was ready and willing to abide by all conditions. Again, so far as offer of the petitioner was concerned, it was for Rs. 628/- per quintal whereas the commodity which was sold to respondent No. 1 was for Rs. 621/- per quintal for the entire stock. Respondent No. 2 thus created a monopoly market fro respondent No. 1 which was contrary to state policy in allotting entire stock in Maharashtra to respondent No. 1 and also by ordering stoppage of sale of wheat in open market on December 17, 2002. By selling wheat to respondent No. 1 at the rate of Rs. 621/- per quintal, respondent No. 2 had caused loss to the tune of Rs. 50 lakhs to the public Corporation without there being any justifiable reason or legitimate ground.
5. It is also alleged by the petitioner that respondent No. 1 provides linkage between the producers and the wholesalers and consumers of foodgrains. It is involved in procurement and marketing of various consumers goods in bulk. The Government of India holds about 80 per cent of paid up share capital in respondent No. 1. According to the petitioner, it was shocking that the officers of the first respondent instead of distributing the stock through its public distribution network was trying to earn profit by selling such stock to flour mils at much higher rate in Maharashtra. The petitioner asserted that the first respondent sold wheat of private traders at the rate of rs. 681/- per quintal i.e. by earning profit of Rs. 60/- per quintal. Such agreements were entered into with SS Flour Mills, Poona Flour Mills, Uttam Flour Mills and Jitendra Traders. The said action is arbitrary, unreasonable and deserves to be interfered with by this Court. The petitioner, therefore, has prayed that the order dated December 9, 2002 be quashed and set aside and offer of the petitioner should be accepted by directing respondent No. 1 to deliver the goods to the petitioner.
6. Writ Petition No. 7469 of 2002 was filed by Uday Food Products and Ors. Similar grievance was voiced by the petitioners who were also interested in purchase of wheat at the rate of Rs. 621/- per quintal.
7. Writ Petition No. 7474 of 2002 was filed by Jaikrishna Roller Flour Mills Ltd. who had made offer on November 16, 2002 at the rate of Rs. 621/- per quintal.
8. Writ Petition (St.) No. 3540 of 2003 was filed by Khandesh Roller Flour Mills Pvt. Ltd. who had made offers on November 4, 2002, November 7, 2002 and November 25, 2002, at the rate of Rs. 621/- per quintal.
9. Writ Petition No. 203 of 2003 (Original Side) was filed by J.K. Roller Flour Mills (India) Pvt. Ltd. whose offers were of November 15, 2002, November 26, 2002 and December 7, 2002 at the rate of Rs. 626/- per quintal.
10. All the petitioners, therefore, have contended that the action taken by respondent- Corporation in favour of respondent-Federation was illegal, unlawful, arbitrary, unreasonable and prayed for quashing and setting aside it by directing the respondent-Corporation to take appropriate decision in accordance with law and by issuing allotment orders in their favour.
11. Notices were issued in Writ Petition No. 203 of 2003 (Original Side). The learned Vacation Judge on December 24, 2002, granted ad-interim relief in terms of prayer Clause (f) restraining the Corporation from giving effect to the allotment order dated December 9, 2002, in favour of respondent-Federation and also by directing respondent-Corporation to decide the applications of the petitioner, subject to deposit of Rs. 1.25 crores in this Court on or before January 8, 2003.
12. Similarly, in Writ Petition No. 7474 of 2002, the learned Vacation Judge on December 27, 2002 granted ad-interim relief in similar terms. All matters were thereafter placed for hearing.
13. An affidavit in reply is filed on behalf of respondent No. 2-Corporation. It was contended that all allegations about fraud, arbitrariness, illegalities, etc. were made without placing any material on record in support of such allegations. It was averred that the petitioners had suppressed material facts from the Court. Initially, an advertisement was issued on November 1, 2002 for sale of wheat by the Corporation under "Open Market Sales Scheme" of four years or more years old wheat stock in the State of Maharashtra in its godowns at Manmad and Borivli. But thereafter a decision to stop the open market sale was taken by the Corporation at its headquarters on November 11, 2002. On the same day, the decision was communicated to the Zonal Manager (West). Bombay and Senior Regional Manager, FCI, Maharashtra, Wide circulation was given to the said decision in English and other vernacular dailies dated November 14, 2002. Thus, from November 11, 2002, and in any case from November 14, 2002. there was no question of entertaining request from any intending purchaser of lifting of wheat under the open market sales scheme. As there was no scheme in force, no right had been accrued in favour of a person who had made offer after the said date.
14. It was also stated that on account of huge surplus of foodgrains in central pool godowns of FCI were overflowing. A High Level Committee consisting of representatives of Ministry of Food, Commerce, Railways and Finance of the Government of India decided to sell and dispose of four or more years old stock all over India in various States including the State of Maharashtra. The stock was sold by tender process which included quantity of 61, 948 M. Ts. of wheat from FCI godowns in the State of Maharashtra. The procurement cost and incidental expenses paid by the FCI godowns in the State of Maharashtra. The procurement cost and incidental expenses paid by the FCI for nearly a period of four years was far higher than the rates received in the said tender. In the meantime, fresh stock was also coming and four and more years wheat stock was also accumulating in various godowns of FCI. Therefore, again the High Level Committee held its meeting in July, 2002 and decided to dispose of balance wheat stock in the State of Maharashtra to the extent of about 1,85,000 M.Ts. in its depots of Manmad, Borivli, Bhivandi and Wardha Depots. Tenders were invited by giving public notices and offers which were received upto August 12, 2002 were opened on the same day. On September 10, 2002, the High Level Committee approved the sale of wheat in favour of all tenders at cut off price. For the State of Maharashtra, cut off price was Rs. 621/- per quintal and rate quoted at Rs. 621/- per quintal was accepted. The goods were accordingly sold. The Regional Office of Maharashtra, however, was still left with a huge quantity of nearly 1,60,000 M.Ts. It was, therefore, decided to give a counter offer to all tenders who had quoted Rs. 621/- per quintal with the condition that 5 per cent of the total cost of indented stock would have to be deposited as security deposit as per the Model Tender From. The goods were to be lifted within 30 days from the date of allotment. Still a large quantity of about 1,20,000 M.Ts. of wheat remained undisposed. The High Level Committee, therefore, decided that the remaining stock should be disposed of through open sale at pre-fixed price of Rs. 621/- per quintal to any buyer on the condition that the total cost to be deposited before lifting the stock within a period of six weeks from November 5, 2002 onwards till December 17, 2002. The response was poor and only about 2,500 M.Ts. of stock of wheat was lifted all over Maharashtra and that too only from Borivli godown. Taking into account the above fact, the Headquarters took a decision to stop open market sale of wheat in Maharashtra. That decision was taken on November 11, 2002, and wide publicity was given. With effect from November 11, 2002, thus open market sale of four or more years old wheat in the State of Maharashtra was totally stopped. Some of the petitioners who had agreed to purchase small quantity of goods and deposited the requisite amount had been allotted the stock as per such deposit.
15. The High level Committee, in its meeting dated November 7, 2002, decided to revise/review the procedure for liquidating stock in larger volume of 20,000 M.Ts. or more with a revised procedure of deposit of earnest money deposit to the extent of 10 per cent of the total cost of quantity to be lifted at a rate of 3000 M.Ts. per week and to complete lifting within 90 days. At that stage, respondent No. 1-Federation which is also a subsidiary of Ministry of Consumer Affairs of the Government of India and under the administrative control of the said Ministry gave an offer to lift the entire balance stock on the terms and conditions of FCI. The High Level Committee, therefore, decided to accept the offer of respondent-Federation in its meeting dated December 9, 2002 to allot the entire balance quantity as per the offer of respondent-Federation dated December 5, 2002. The action taken by respondent No. 2 thus cannot be said to be illegal or unreasonable. It is also stated that after the dismissal of the petition filed by the respondent-Federation, it deposited the total earnest money deposit of Rs. 4,36,80514/-. The said deposit even exceeded the required earnest money deposit. According to respondent-Corporation, therefore, its action can neither be said to be illegal, improper nor otherwise arbitrary or unreasonable. It, therefore, prayed for dismissal of the petitions.
16. An affidavit in reply is also filed by the Branch Manager of respondent No. 1, inter alia, contending that the petitions filed by the petitions were not maintainable and they were liable to be dismissed. It was also stated that on December 20, 2002, a Division Bench of this Court did not grant any ad-interim relief in Writ Petition No. 7468 of 2002. Similarly, in order two matters also, no ad-interim order was passed. In the circumstances, no ad-interim relief could have been granted to the learned Vacation Judge in similar petitions. It was also submitted that the case pleaded by all the petitioners in all the petitions was substantially the same. The petitioners also appeared to be closely associated and were acting in concert with a pre-determined objective of falsely preventing sale of goods by respondent No. 2 to respondent No. 1 under a legally enforceable contract. The bona fides of the petitioners were also questioned.
17. On merits, it was contended that an advertisement was issued by respondent No. 2 on November 1, 2002, informing public at large that the Corporation was intending to sell approximately 70,900 M.Ts. of wheat of four years or more old lying at Borivli and Manmad at the rate of Rs. 621/- per quintal. By another advertisement, dated November 14, 2002, however, the previous advertisement dated November 1, 2002 was suspended. Thereafter the second respondent could not have considered any offer made by any party, since the offer was no more in force. It, therefore, cannot be contended that the petitioners had any right after the decision dated November 11, 2002 published on November 14, 2002. The first respondent applied to the second respondent to allot 90,000 M.Ts. of wheat at the rate of Rs. 621/- per quintal vide its letter of offer dated December 5, 2002 which was accepted vide letter dated December 9, 2002 on the terms and conditions mentioned therein. As soon as the offer was accepted, a valid and legally enforceable contract came into existence between respondent No. 2 and respondent No. 1 and the petitioners have no right to challenge such a contract arrived at between two parties. In any case, a writ petition would not be maintainable as there is neither violation of fundamental right nor of legal right. They also cannot argue that since respondent No. 1 has sold commodity to other traders, the contract validly entered into between the parties should not be enforced. Action of respondent No. 2 could not be said to be arbitrary or unreasonable. No monopoly was created nor Article 14 could be said to be violated. It was, therefore, submitted that the petitions were liable to be dismissed.
18. By filing affidavit in rejoinder, the petitioners have reiterated what was stated in the petitions and controverted all averments made and contentions raised in the affidavits in reply by respondent No. 1 as well as respondent No. 2.
19. We have heard the learned counsel for the parties.
20. From the facts stated in the affidavits as also the documentary evidence placed on record and in the light of what was stated by the Corporation and the Federation, in our opinion it cannot be said that the action taken by Corporation in accepting the offer of respondent No. 1-Federation and in selling the commodity to it can be held to be illegal or in any way arbitrary or unreasonable. It is true that on November 1, 2002, an advertisement was issued for sale of wheat by the Corporation lying at Borivli and Manmad depots on "first come first served" basis. It is also true that it was from November 5, 2002 upto December 17, 2002. From the affidavit in reply filed on behalf of respondent No. 2, it is clear that the offers which had been received from various bidders in pursuance of the above advertisement had ben accepted by the Corporation. The goods were accordingly supplied. In view of the fact, however, that substantial portion of the commodity could not be disposed of in pursuance of the above advertisement and there was heavy cost as also that fresh stocks as to come in the godowns of Corporation, the High Level Committee decided to cancel sale of wheat as per the advertisement dated November 1, 2002 under "Open Market Sales Scheme". Wide publicity was given to the said decision dated November 11, 2002 and it appeared in various newspapers like Times of India (English), Navbharat Times (Hindi), Maharashtra Times (Marathi) and Mumbai Samachar (Gujarathi) on November 14, 2002. Thus, after November 11, 2002 and in any case after November 14, 2002, no party could have insisted upon the "Open Market Sales Scheme" as advertised on November 1, 2002 or to claim any benefit on that basis. The offers made prior to November 11/14, 2002, had been accepted and goods had been supplied as per the affidavit filed by Respondent No. 2.
21 . So far as the petitioners of Writ Petition Nos 7468 of 2002, 7469 of 2002, 7474 of 2002 and 203 of 2003 (Original Side) are concerned, they have made offers after November 14, 2002. IN our opinion, therefore, the contentions raised on behalf of the Corporation is well founded and must be upheld that after November 14, 2002, the open market sales scheme as offered by respondent No. 2 was no more in force and hence it was not obligatory on respondent No. 2 to consider those offers and to accept them. The said action can neither be said to be illegal nor improper. Non- acceptance of offer would not make respondent No. 2 responsible or liable in any manner whatsoever.
22. Regarding Writ Petition (St.) No. 3540 of 2003, it is no doubt true that according to the petitioner, offers were made by the petitioner, Khandesh Roller Flour Mills Pvt. Ltd., on November 4, 2002 and November 7, 2002 i.e. during the period when the open market sales scheme was subsisting. But as stated in the affidavit in reply in Writ Petition No. 7468 of 2002, all offers which had been made by the indenting purchasers before the scheme was cancelled had been accepted. It is pertinent to note that a complaint is made by the petitioner in the present petition which was filed by the petitioner only on January 24, 2003. No complaint whatsoever was made at any time before that date alleging that even though the petitioner wanted to purchase wheat as per the "Open Market Sales Scheme" floated on November 1, 2002., and though offers were made within the stipulated period, no action was taken by the second respondent and the stock was not supplied. In view of the fact that thereafter a decision was taken by the High Level Committee and the goods were sold by respondent No. 2 to respondent No. 1, in our opinion, no relief can be granted in the present petition in favour of the said petitioner. We may, however, hasten to add that if the petitioner feels that his legal and valid offers of November 4 and 7, 2002 had not been accepted by the FCI, it is open to the said petitioner to take appropriate actions against FCI and disposal of this petition would be no bar of such action.
23. Regarding sale by respondent No. 1 to private traders, no doubt, it was contended by the petitioners that it was a profiteering business undertaken by respondent No. 1 which was not in the larger public interest. It should not, however, be forgotten that once we hold that the action of respondent No.2 in selling the stock to respondent No. 1 was legal and valid and in accordance with the terms of contract entered into between the parties, subsequent steps taken by respondent No. 1 in selling such goods to other persons cannot be interfered with by this Court in exercise of extraordinary jurisdiction under Article 226 of the Constitution of India. It also cannot be said that by selling goods to respondent No. 1, respondent No. 2 has committed any illegality. The contention raised on behalf of the petitioners, therefore, has no force and cannot be upheld.
24. It was then urged that even if earlier scheme was not in force and offers made by the petitioners after November 11/14, 2002 could not have been considered under that scheme, while disposing the stock under the present scheme, the petitioners ought to have been called by the respondent- Corporation before selling such stock to the respondent-Federation and ought to have afforded equal opportunity to all parties.
25. In our opinion, however, the submission of Mr. Chagla is well founded that it was not a tender process and, hence, there was no occasion to follow the procedure of consideration of different rates quoted by different bidders, calling them for participating in the process and to finalise the bid. When at a pre-determined price, the respondent-Federation had shown its readiness to purchase the goods, by accepting such offer, the respondent-Corporation had neither acted illegally nor capriciously and the petitioners cannot make grievance against such action.
26. Last but not the least. Pursuant to the "Open Market Sales Scheme", respondent No. 1-Federation itself had made an offer to purchase the stock of wheat vide its letter dated November 26, 2002 at the rate of Rs. 625/- per quintal. The said letter is on record (page 86 of W.P.No. 7468 of 2002). In that letter, it was stated that the first respondent was interested and prepared to purchase 70,900 M.Ts. or the entire quantity of wheat lying at Borivli and Manmad FCI depots. It was then stated:
"We would like to refer you that though we have quoted the rate of Rs. 6250/-MT, we are prepared for negotiation of rate."
From the above letter, therefore, it is clear that on November 26, 2002, the first respondent had shown its willingness to purchase the entire quantity of wheat from respondent No. 2 Corporation. It is also clear that it had quoted the rate of Rs. 625/- per quintal and was "prepared for negotiation of rate". It is no doubt true that the above offer was in response to "Open Market Sales Scheme" declared by respondent No. 2 on November 1, 2002 which had come to an end from November 11/14, 2002 and hence the letter dated November 26, 2002 could not be said to be binding on respondent No. 1 nor it would create any obligation on respondent No. 2 to sell wheat under "Open Market Sales Scheme". It also cannot be successfully contended that again when an offer was made by respondent No. 1 on December 5, 2002, the said respondent was bound by the rate quoted in its letter dated November 26, 2002 as the said scheme was no more in force. At the same time, however, that fact was relevant and eloquent. Respondent No. 1 is the "State" within the meaning of Article 12 of the Constitution, under the superintendence and control of the Ministry of Consumer Affairs (Central Government, New Delhi) and hence it is expected of respondent No. 1 to act fairly, equitably and reasonably. It is also on record that in November, 2002 as well as in December, 2002, offers were made by the petitioners to purchase wheat at the rate of Rs. 625/-, Rs. 626/- and Rs. 628/- per quintal. Mr. Chagla, learned Senior Advocate appearing for respondent-Federation, did not dispute the above factual position. In the circumstances, in our view, it would be appropriate, if we direct respondent No. 1 to pay to respondent, if we direct goods purchased at the rate of Rs. 628/- per quintal which, in our considered opinion, would be in the larger public interest. Such payment will be made within thirty days from today.
27. For the foregoing reasons, all the petitions are deserved to be disposed of and are accordingly disposed of. So far as the prayers sought by the petitioners are concerned, since no illegality can be said to have been committed by respondent No. 2 in selling stock of wheat to respondent No. 1, they are not entitled to any relief. Regarding respondent No. 1, considering totality of facts and circumstances, in the light of offers made by various intending purchasers as also respondent No. 1 itself, we direct the first respondent to pay for the stock of wheat at the rate of Rs. 628/- per quintal to respondent No. 2. Rule is thus discharged in all petitions. In the facts and circumstances, however, there shall be no order as to costs. Ad-interim relief is hereby vacated.
28. The amount which has been deposited as per order passed by the learned Vacation Judge on December 24, 2002 is ordered to be refunded to the petitioner in Writ Petition No. 203 of 2003 (Original Side).
Certified copy expedited.
