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CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 6966 OF 2021
1.
Surbhi Hatmag Vinkar
Audyogik Sahkari Sanstha maryadit (Surabhi
Handloom Weavers
Industrial Co-op. Society, Ltd.), Having its office at 1538, Near Marathi
School, Pethvadgaon, Tal: Hatkangale, Dist.: Kolhapur - 416112
2.
Shivaji Vasantrao Sutar, Age 48 years, Occ- Worker, R/at Savarkar Chowk, Peth Wadgaon, Hatkangale, Dist.: Kolhapur …Petitioners
~
1.
The State of Maharashtra, Through its Principal Secretary, Department of Industries, Energy and
Labour, Mumbai
2.
The Commissioner, Tribal Development, Maharashtra State, Nashik
Having office at Aadivasi Vikas Bhavan, 1st Floor, Ram Ganesh Gadkari Chowk, Old Agra Road, Nashik 422 002
Deputy Director, Industries, Directorate of Industries
Central Stores Purchase Organization
4.
Principal Secretary, Textile Department, Co-Operative, Marketing and Textile Department, Maharashtra State, Mantralaya,
(Industry), Directorate of Industries, New Administrative Building, Mumbai 400 032
6.
Principal Secretary, Tribal Development Department, Maharashtra State, Mantralaya,
Having its registered office at
“Shashank” 225/5958, Pantnagar
Garden View Co-Operative Housing
Society Ltd, Pantnagar, Ghatkopar
(East), Mumbai – 400 075
8.
The Union of India, Through Secretary, Ministry of Textile and Ministry of Micro, Small and
Medium Enterprises. …Respondents
Advocate, with Dr Abhinav
Chandrachud, i/b Sachin
Bharat Thorat. for respondent NO. 1-State
Mr SU Kamdar, Senior Advocate, with Akshay Shinde,‘B’ Panel
Counsel, SS Panchpor,AGP. for respondent no. 7 Mr LS Deshmukh.
8, Union of India
Ms Shehnaz Bharucha, with MM
Chunawala, i/b AA Ansari.
9, Intervenor
Ms Prachi Tatake, with Shyam
Singh, i/b Aniesh Jadhav.
DATED : 18th February 2022
ORAL JUDGMENT
1. The 1st Petitioner is a cooperative society of handloom weavers. It produces various types of handloom products such as sarees, dhotis, towels, napkins, bedsheets, bed covers, mattress covers, dress materials, chadars, and various bedding materials. The 2nd Petitioner works with the 1st Petitioner.
2. The 1st Respondent is the principal contestant. It is the State of Maharashtra through the Department of Industries, Energy and Labour. The 7th Respondent is the Federation society, the Maharashtra State Handloom Cooperative Federation Limited, through its Managing Director. The intervenor is the successful bidder at the e-tender in question. The other Respondents are the State Government’s tribal department and industries department.
3. In this Petition, the Petitioner assails an e-tender notice dated 9th June 2021 issued by the 2nd Respondent, the Commissioner of Tribal Department, Nashik. The challenge is limited to five of the eight items of the procurement tender, viz., (i) carpet (satranji) (ii) bed sheet (iii) chadar (iv) woollen blanket and (v) pillow cover. The first prayer asks that the e-tender notice be quashed. The second prayer is for a direction to the Respondents concerned to accept and purchase these articles from the 7th Respondent federation and a further direction to the 7th Respondent to purchase the articles required for supply from the Petitioner. These are the two principal prayers in the Writ Petition.
4. Very broadly stated, the case of the Petitioners is that they have been unlawfully, illegally, arbitrarily and unfairly excluded from the e-tender. The submission is that the procurement sought by the e- tender is of items that are exclusively reserved for handloom producers such as the Petitioner. There is statutory bar against the procurement of such items reserved for handloom production from persons other than those handloom manufacturers.
5. We have heard Dr Saraf, learned Senior Advocate for the Petitioners, and Mr Kamdar, learned Senior Advocate for the contesting Respondents, at some length. With their assistance we have considered the relevant documents on record.
6. That there is a reservation for handloom production is not contentious. The Handlooms ( Reservation of Articles for Production ) Act of 1985, states that it is Act specifically to reserve certain articles for the exclusive production by handloom and for matters connected therewith. In Section 2(b) of this Act, a handloom is defined as any loom other than a power loom. A power loom is correspondingly defined in Section 2(d) as a loom which is worked by power as defined in Clause 2(g) of the Factories Act
1948. Section 3(1) of the Handloom Reservation Act is an enabling provision. It permits that some items can be reserved for handloom production. It opens with a non-obstante clause regarding the Industries (Development and Regulation) Act 1951. If, after considering recommendations by an advisory committee (under the Handlooms Reservation Act), and if it feels it necessary for the protection and development of the handloom industry, the Central Government may periodically make orders reserving any article or class of articles exclusively for handloom production. These orders must be published in the Official Gazette. Section 5 makes it explicit that where there is a Section 3 order, the articles or class of articles covered by that order cannot, from the date of reservation, be produced other than by handlooms. This schema completely ringfences such notified reserved articles or class of articles for handloom production. In other words, production exclusivity is assured to the handloom industry for Section 3 notified articles or classes of articles.
7. There is an order of 3rd September 2008 issued by the Ministry of Textile Department and duly gazetted under SO2160 (E) which provides for precisely such a reservation for exclusive production by handlooms up to the range specified in that table. The articles include sarees, dhotis, towels, bed covers and bedding materials and so on. Blankets and Kambals are shown in Item 8 of this list. Column 3 of the list specifies the “range” reserved for exclusive production. For instance, against Item 1 of a saree there is a description of the content of the fabric, what permissible combination can be used, the warp and weft, the border and so on. Against blanket in Item 8, the column 3 range says that the blanket means a thick fabric made of wool of about 34 microns and above with a fabric surface produced in a certain manner from natural Gray or Black wool or a combination and of any size or weave. A kambal is separately defined in broadly similar terms. The explanation says that this does not include a blanket kambal made of shoddy yarn, i.e. a cheaper class of woollen yarn made from reused or recycled wool and synthetic brands. There is another such Government Order of 23rd March 2012.
8. With this broad framework, had the Petitioners been able to show that the procurement proposed in the e-tender is of items exclusively reserved for handlooms, but that this procurement was being sought from persons or entities other than handloom manufacturers, then, very possibly, some intervention might have been justified. As we shall presently see, that is not established at all. Indeed, far from it: the Respondents are able to demonstrate the procurement sought is from other reservations, i.e., of items reserved to Micro, Small and Medium Enterprises (“MSMEs”) and Khadi. No handloom-reserved article is the subject matter of the e-tender.
9. Mr Kamdar first submits that, just as there is an express reservation in favour of handloom manufacturers, there are express reservations for MSMEs and Khadi manufacturers. Each of these reservations is also exclusive. He points out that the order under Section 3 of the Handlooms Reservation Act is not global covering every and all type of, say, blanket. There are blankets, bedding materials, carpets etc that do not fit the range description in the Handloom Reservation Act or its orders, but are also available with other specifications and which fall within the description of items reserved either for khadi or MSMEs.
10. He draws our attention first to page 221 which is the tender document itself. This, he submits, is based on a procurement policy. We will turn to that shortly. At page 231 as part of the general clause 5 regarding bid preparation, we find qualification criteria. Clause 5.[1] says that the bidding process will be in two stages. First there has to be a technical qualification and then the financial bid. This is the usual pattern in all bids. Clause 5.1.[1] at page 231 is crucial to a determination of this case. It reads thus: “5 BID PREPARATION 5.[1] Qualification Criteria 5.[1] Bidding process will be in two stages mainly Technical Qualification and Financial bid. The price bid of the Bid will be opened only of those Bidders who shall fulfil the qualification criteria mentioned below and also other details in the bid documents, viz. 6.[5] of the Bidder Document. 5.1.[1] E-Bid for procurement from micro and small scale manufacturers of mattresses (coirmats) & Bedding Material and from Maharashtra State Khadi and Village Industries Board. (Emphasis added)
11. There is no ambiguity about this condition in the tender. It clearly means that the tender is for procurement from MSMEs and from the Maharashtra State Khadi and Village Industries Board. Necessarily, this means that the procurement from MSME and Khadi Industries can only be of items shown not to be reserved for handloom manufacturers. Indeed, this is the bedrock of Mr Kamdar’s response to this Petition.
12. Despite this, Dr Saraf endeavours to show that even items reserved for handloom are being swept in, but handloom manufacturers are being cut out by limiting the procurement to MSMEs and Khadi. Our attention is drawn to Clause 3 of a Corrigendum at page 346. According to Dr Saraf, this results in an exclusion of Khadi from the tender document. We are unable to see how this assists the Petitioners. The question is not whether Khadi is or is not included. It is whether handloom manufacturers are excluded. The Petitioners are handloom manufacturers. They can hold no brief for the Khadi sector. The task of the Petitioners is to show that the tender is in violation of the handloom reservation policy and order.
13. In any case. the Corrigendum permits the tendering authority to procure the items from suppliers and dealers of MSMEmanufactured products. There is no ‘deletion’ of Khadi from the tender at all.
14. As an attempt in this direction, Dr Saraf on instructions draws our attention to Item 2 page 202. Now this is part of the State Government procurement policy which is set out from page 64. This is the revised manual of office procedure for procurement by Government departments. Appendix 17 is a list of items reserved for procurement from MSMEs in accordance with paragraph 5.14 of the revised procurement policy. Paragraph 5.14 is set out at page 168 and reads thus: “5.14 Reservations and facilities for products manufactured from Micro, Small & Medium Enterprises As per facilities given with order dated 23.03.2012 by Ministry of Micro, Small & Medium Enterprises, of Central Government, the 24 number of products are reserved for procurement from registered Micro, Small & Medium Enterprises, (Appendix-17). The tender process should be accorded for the purchase of these items. In such tenders, only Micro, Small & Medium Enterprises or Maharashtra State Small Industries Development Corporation can participate. If the Procurement office invites composite tender for the items mentioned in Appendix-17, and there are chances that Micro & Small Industries unable to participate in the tender, the reserved items can be grouped and separate tenders should be published for every group. Accordingly, while procuring 100% procurement of reserved items from Micro & Small Scale Industries, 20% of purchases should be reserved from the manufacturers belonging to scheduled caste & scheduled tribes. Maharashtra State Small Industries Development Corporation can also participate in the said tender proceedings. The said reservation will be limited for a specific time period and review of the same will be made in accordance with competent monitoring procedures. With reference to the Honourable Prime Minister’s Task force Committee for promoting MSME industries, in scenarios where this MSME’s participate in the tender process and if the subject matter of procurement is not reserved, it is advise to give 20% quantity reservation to MSME for only the products manufactured by them in the total order at L-1 price and out of 20%, 4% should be reserved for procurement from scheduled caste and scheduled tribes entrepreneurs.”
15. The corresponding Appendix 17 at page 202 has a list of as many as 230 items. Dr Saraf says that all the items in the e-tender are not covered by this list of reservations for MSMEs. Consequently, his submission is that the procurement of the others must default to those items reserved for handlooms. We are unable to accept this submission. The procurement policy has distinct lists. Appendix 17 is the MSME list from page 202. There is a corresponding list for khadi at page 211, which lists distinct items. The items reserved for handloom are also separately defined in the Appendix 19 of the procurement policy at page 210.
16. Mr Kamdar first points out that the MSME list from page 202 includes every single one of the eight items that are sought to be procured. A selective reading by the Petitioner is of no assistance. Bed sheets are at Item 21. Coirmats and mattress are at Item 38. Woollen blankets are at Item 46. Items 160 is in relation to cotton pillows and Item 173 is in relation to cotton rugs, also called satranjis or carpets.
17. At page 246 in Annexure A is a list of the eight items that are sought to be procured in the present e-tender. These eight items are listed below. Annexure A: List of Items The propose list all Bedding Materials as stated here in. Sr. No. Particular Estimated Quantity 1 Foam Coir Mattress (bunk bed) 40682 Nos.
18. Mr Kamdar submits that these items are all covered by one or other of the entries in Appendix 17. Not one of these items in his submission falls in the reserved handloom list. Foam coir mattresses (bunk bed or single bed) at Items 1 and 2 above are to be found in Item 38 of the MSME list. Carpets or satranjis at Item 3 of the tender procurement list at page 246 are covered by Entry 173 of the MSME list. Bedsheets are similarly covered by Item 21 of the MSME list. There may be some misunderstanding as regards the word chadar. The Petition at page 13 itself says that the chadar that is reserved for handlooms is a garment to be covering the lower and upper part of the body. This is not the procurement that is sought in the e-tender. The chadar spoken of in the e-tender is a bedcover and is part of the bedding. Woollen blankets are specifically mentioned at MSME list at Item 46 and pillow covers fall in Entry 160 of the MSME list.
19. The descriptions in the procurement policy in Appendix 19 for handloom reservation do not correspond to the Annexure A tender list of items. We reproduce Appendix 19 and its table so that there is no ambiguity whatsoever. “6.19 Appendix 19 List Of Items Reserved For Purchase From Maharashtra State Handloom Corporaton/Mahasangh (Mahatex) (See Para 5.16) Sr.No. Institution Produced Item A Maharashtra State Handloom Corporation/ Mahasangh (Mahatex)
1. Saree.
2. Dhoti.
3. Towel, Napkin, Angawastram
4. Loongi.
5. Khas, Bedsheet, Bed Cover, Mattress Cover, Furnishings Including tapestry up Hosiery.
6. Jama Kalam Dari and Duret.
7. Dress Material.
8. Barrack Blanket, Kambal or Kambali
9. Shawl, Loi, Maflar, Fans etc.
10. Woolen Cloth (Woolen Tweed).
11. Chadar, Mankhla/Fanik. Note: Particulars of the above items should be as per Central Govt. Handloom Reservation Act, 1985 and thereafter Amendment dtd. 26th July, 1996.”
20. The note at the foot of page 210 makes it clear that particulars of these items are as per the Handlooms Reservation Act of 1985 and is 26th July 1996 amendment.
21. Mr Kamdar also submits that what is being procured is a set of bedding items that are not covered by the handloom reservation, but are all covered by the reservations for MSME or Khadi (as the case may be) and in conformity with the Bureau of Indian Standard specifications.
22. According to Dr Saraf, Appendix 19 of the Procurement Policy is based on the Government Order of 23rd March 2012. In our view, this will make no difference at all once it is established that the procurement in the tender is as per the reservations for MSME and Khadi in the policy, and in terms of their distinct Appendices.
23. Therefore, it is only if the Petitioners are able to demonstrate that e-tender proposes something that is in direct violation of the Handloom Reservation Act as amended, read with orders made under that Act, that there is a slightest possibility of interference.
24. Mr Kamdar is correct in saying that the Petition proceeds entirely only on the submission of a handloom reservation. There is no challenge in the Petition that the Petitioners do not qualify for the tender. It is also not shown that the tender is not as per the MSME or Khadi reservation or is a deviation from the MSME or Khadi reservation. Mr Kamdar’s submission is that what the Petitioners really want is to escape the limitations of their own reservation and to participate in a tender that is reserved for MSMEs and Khadi, although this is impermissible according to the policy. At the same time, the Petitioners will resist the participation of MSMEs and Khadi in any tender that might came hereafter and reserved solely for handloom. As he somewhat colourfully put it, the Petitioners’ submission is that ‘what is ours is ours, but what is theirs is also ours.’ In any such challenge, he submits, equitable considerations will undoubtedly also have a role to play.
25. There is one fundamental legal principle that will also come in the way of the Petitioners. The e-tender seems to us to be entirely based and predicated on a Government policy, i.e. the procurement policy. There is no challenge to that policy at all. To accept the submission of the Petitioners would be to obliterate the intelligible differentia that are provided in that policy itself and to render it entirely otiose. This kind of exclusive reservation for MSME, Khadi and handloom itself is a form or classification. It is not open to persons to merely challenge such a tender unless it is shown that the tender is contrary to some policy or to some statute. In turn, the policy itself cannot be challenged unless it is shown that there are no intelligible differentia. To put it conversely, it is settled law that once the Government is able to establish that there are indeed intelligible differentia, and a rational nexus is shown between the classification and the object and purpose of the policy, a challenge to a policy must fail.
26. We are fortified in this view by a very recent decision of the Supreme Court delivered just yesterday, 17th February 2022, in Satyadev Bagaur and Ors v the State of Rajasthan and Ors.[1] In this decision, after reviewing the settled law on the subject including the decisions in Krishnan Kakkanth v Government of Kerala & Ors,[2] and Sher Singh & Ors v Union of India & Ors,[3] the Supreme Court held in paragraph 16:
16. It is trite that the Courts would be slow in interfering in the policy matters, unless the policy is found to be palpably discriminatory and arbitrary. This court would not interfere with the policy decision when a State is in a position to point out that there is intelligible differentia in application of policy and that such intelligible differentia has a nexus with the object sought to be achieved.
27. In this case, there is no challenge to the policy. The only challenge is to an e-tender based on the policy, and which Mr Kamdar has shown to be squarely within the frame of that unchallenged policy.
28. In this context it would be appropriate to reproduce paragraph 15 of the policy: “15. As per the facilities given by Ministry of Micro, Small & Medium Enterprises, of Central Government with order dated 23.02.2012; the 241 number of products are reserved for procurement from registered Micro, Small & Medium Enterprises (Appendix-17). The tender process should be accorded for the purchase of these items. In such tenders, only Micro, Small & Medium Enterprises or Maharashtra State Small Industries Development Corporation can participate. If the Procurement office invites composite tender for the items mentioned in Appendix-17, and there are chances that Micro, & Small Industries unable to participate in the tender, the reserved items can be grouped and separate tenders should be published for every group. Since, Micro and Small Industries cannot compete with large companies and the 241 items are reserved for Micro and Small Enterprises, the large companies should not participate in tender. As per provision in Appendix-8 of purchase policy, the micro and small, medium enterprises registered under MSMED Act-2006 are exempted from paying tender form fee and earnest money deposit (EMD). Government Boards/Corporations/Undertakings and Micro, Small and Medium Enterprises registered manufacturers and suppliers are exempted from the tender form fee and Earnest money deposit. This will be mandatory to all procuring offices.”
29. In our view this is not only entirely clear and unambiguous but itself provides and sets out the intelligible differentia in question. Further, this policy statement is reproduced almost verbatim in paragraph 5.14 of the Revised Procurement Policy handbook, extracted above.
30. Mr Kamdar has already submitted that the e-tender in question does not purport or intend to procure items reserved for handloom manufacturers as per the Government’s policy and Handloom Reservation Act (and the orders under that Act). So that there is not the slightest ambiguity in the matter, we asked Mr Kamdar to take instructions as to whether he could make a specific statement. Mr Kamdar has in fact written and signed instructions. The statement has been authorised in an internal communication from the Government to the Tribal Department. We take this on record. The statement that Mr Kamdar makes is also taken on record. We have on our own suggested certain additions to this statement. Mr Kamdar has instructions to agree to these changes. The final statement made on instructions by Mr Kamdar, with the necessary changes, reads thus: “Under the e-tender dated 9th June 2021 which is annexed at Exhibit “E” to the Petition, the 2nd Respondent will not procure any product with the prescribed specifications which is reserved to the extent provided under the Handlooms (Reservation of Articles for Production) Act 1985 read with the order dated 3rd September 2008 issued by the Ministry of Textiles in exercise of Section 3(1) of the said Act 1985, and the 2nd Respondent will only be procuring all eight products specified under the said tender which fulfil the specifications prescribed in the BIS (Bureau of Indian Standards) as per Clause 5.1.[1] of the tender read with the Corrigendum at page 347 of the Petition paper book.”
31. In addition, the 2nd Respondent agrees and undertakes that it will procure the eight items only from MSME and from Maharashtra State Khadi and Village Udyog Mandal.
32. These statements have to be accepted.
33. In view of this we see no merit in the Petition. It is rejected. In the facts and circumstances of the case there will be no order as to costs.
34. Dr Saraf has instructions to apply for a continuation of the interim stay granted on 1st November 2021. We are unable to accept this submission for more than one reason. Not only have we found no merit in this Petition, but what is sought to be achieved by the etender is in the public interest and for supply of bedding materials in tribal districts including Government ashrams and hospitals. Prolonging the stay adversely affects the public interest, including those in tribal areas. The application is rejected. We vacate the previous interim order of 1st November 2021 forthwith. of this order. (Madhav J. Jamdar, J) (G. S. Patel, J)