A.M.Ahmadi, J. - (1.) This group of writ petitions which are brought under Article 226 of the Constitution relate to certain goods handling contracts given by the western Railway Administration in respect of the Sabarmati BG-MG Group 63, Bharat- pur BG-MG Group 37 and the Hapa Transhipment point. The petitioners of these petitions claim to have experience and expertise in carrying out goods handling work for the Railway Administration. Their grievance is that as the contracts in respect of the aforesaid three transhipment points were given or extended without inviting open tenders, they were prevented from competing which they were entitled to as citizens of India and. therefore, the Railway Administration had acted in violation of their constitutional rights. They, therefore, pray that the contracts executed in respect of the aforesaid transhipment points should be quashed and the railway administration should be directed to grant fresh contracts in accordance with the normal open tender system.
(2.) The contract in respect of the Sabarmati transhipment point is given to M/s. Universal Goods Handling Company. The contract in respect of the Bharatpur Transhipment point is execut ed in favour of M/s. Chirag & Company. Though the contracts for these two points are separate, composite petitions Nos. 171, 2161, 2162 and 3572 all of 1981 have been filed bv different petitioners, albeit on identical grounds, challenging the grant of contracts to the aforesaid two parties. Similarly two petitions Nos. .1786 and 2394 of 1981 have been filed challenging the grant of Hapa Transhipment contract to M/s. Lotus Handling Company. The facts leading to these petitions, briefly stated, are as under:- Re : Sabarmati BG-MG Group 63 Contract. In the year 1975 the Western Railway invited tenders for goods handling contract in respect of the Sabarmati Transhipment point. Tenders were received from several contractors but the contract was ultimately given to Messrs Universal Goods Handling Company. The said contract was for a period of three years but after the said period expired, the Western Railway, instead of inviting fresh tenders, extended the period of the contract by another three years i. e. up to 15th Mar 1981, plus 121 per cent above the fixed schedule of rates. Before the extended period of the contract expired, the contractor wrote a letter dated 6th Sept. 1980 to the Chief Commercial Superintendent, Western Railway. Bombay, stating that because of the constant rise in prices and the increase in expenditure for recruitment and maintenance of labour, it was not possible for him to complete the contract at the existing rates. The contractor, therefore. requested that either the rates should be increased reasonably or the letter should be treated as three months' notice under Clause I (i) of paragraph 2 of the contract. On receipt of this letter the Railway Administration was required to decide whether to negotiate with the contractor for the increase in rates or to treat the contract as terminated on the expiry of the notice period. The Chief Commercial Superintendent recommended to the General Manager as under, vide his Note dated 17th Sept. 1980, Annexure II to his affidavit in-reply in Special Civil Application No. 171 of 1981 -- "6. It is the normal policy to invite fresh tenders a few months before the expiry of the contract, and when under special circumstances, it is necessary to extend the contract this is done on the existing rates and terms. The existing contract as already mentioned is due to expire on 15-31981. The case for negotiation does not have a precedent and is to be considered in the light of the factors explained in the then CCS's note at NPS 33 to 38. 7. In the circumstances and as the performance of the present Contractors -- Messrs Universal Goods Handling Company, Ahmedabad, has been satisfactory and the railway connot afford to risk entrusting the handling work at this major transhipment point to inexperienced contractors, who may not have the resources and capability to match the fluctuations in the traffic we may in the interest of the Administration, if GM approves, hold negotiations with the Contractor for a reasonable settlement of the rates. If the proposal holding negotiations with the Contractors is approved by GM, it would be necessary to nominate a Negotiation Committee for the purpose." The General Manager agreed with this recommendation and appointed a Negotiation Committee consisting of three high ranking officers. The Negotiation Committee held discussions with the contractors on as many as four occasions and submitted its report, (Annexure III to the affidavit-in-reply in Special Civil Application No. 171 of 1981) recommending as under:- "11.5. The Committee agreed that Sabarmati being the most vulnerable transhipment point on this railway, the transhipment arrangements would have to be on a very sound basis as any upset in its working would have far-reaching repercussions on the operations and earnings of this railway. It is, therefore, necessary to select a very experienced and resourceful contractor so as to ensure that the handling work does not suffer on any account but would go on smoothly all the time. The economy in the rates alone cannot, therefore, form the guiding factor in deciding the award of contracts of this type. 12. In the circumstances, the Committee feel that the offer of Messrs Universal Goods Handling Co. Ahmedabad at +390% above the Schedule of Rates which is +121.72% as compared to the rates accepted at +121% above the schedule of rates in the year 1975 and + 84.16% above as compared to the escalated rate of +155.07% above the Schedule of Rates applicable for the period from 6-7-1980 to 15-8-1980, is reasonable. The annual value of the contract estimated is Rs. 45,00,348-41 paise. The Committee, therefore, recommend that the fresh contract be awarded to Messrs Universal Goods Handling Co. Ahmedabad at this rate on a single tender basis with the following conditions existing in their current contract:-- (i) Additional rate of +40% allowed in the existing contract for direct transhipment of coal contained in one BOX wagon into 3 MG covered wagons both at transhipment platforms and at dump site as existing in the current contract should be continued. (ii) Similarly, for lifting of coal from the dump site and loading into 3 MG covered wagons, an extra rate of +60% as allowed in the existing contract should be continued. (iii) For transhipment of general goods falling under items d (l), d(3) and d(4) in the ratio of 4 MG wagons into 3 BG wagons, the Contractors should be paid +50% extra as existing in the current contract. (iv) The adjustment of rates both on Schedule Rates as well as percentage rate accepted would be done on monthly basis based on Consumer Price Index figures maintained for Ahmedabad centre but actual payment/adjustment will be made every quarter treating the Consumer Price figures of October 1980 as the base." This decision was submitted to the Railway Board for its approval. The Board accorded approval by its letter dt. 18th Dec. 1980. Accordingly, a new contract for three years with the revised rates became effective from 1st January 1981.
(3.) The petitioners contend that if the Railway Administration had followed the normal open tender system, they as well as others were prepared to offer far lower rates than those allowed to the present contractor, which would have resulted in a substantial savins to the public exchequer. According to the petitioners the officers of the Railway Administration were for some oblique reason out to favour the contractor of their choice and the entire exercise of appointing a Negotiation Committee and seeking the prior sanction of the Board was nothing but window dressing. That is why, contend the petitioners, the timely warning given by Shri Amar-singh Rathwa, Member of Parliament, to the Railway Minister fell on deaf ears. They, therefore, contend that by refusing to invite offers at per the normal practice the Railway Administration deprived the petitioners of their legal and constitutional right to enter into a fair competition to secure the contract in question. They, therefore, prav that the mala fide action of the Railway Administration reserves to be set at nought so that their favoured contractor does not unjustly enrich himself at the cost of the public excheouer. The Bharatpur BG-MG Route Wo. 37 contract.;