B.P.JEEVAN REDDY, J. - (1.) This writ petition calls in question the validity of a letter dated 30/11/1990 written by the Secretary to Government of U.P. addressed to heads of Government departments, public corporations and other local bodies. Through this letter, the Secretary to Government conveyed the decision of the Government that all the departments of the Government, public corporations and other local authorities in the State should obtain the electronic goods specified in the letter from M/s. Uptron (India) Ltd., alone. M/s. Uptron (India) Ltd., is a company incorporated under the Companies Act owned and controlled by the Government of U.P. and engaged in the manufacture of electronic goods. The first petitioner M/s. International Data Management Ltd. is a public limited company having its registered office at New Delhi and engaged inter alia in manufacture and sale of electronic goods mentioned in the impugned letter. The petitioners challenge the validity of the said letter on several grounds, namely, violation of Arts. 19(1)(g) and 301 of the Constitution of India. It is also alleged that the impugned decision of the Government is also violative of the equality clause enshrined in Art. 14 of the Constitution. Case of the Petitioner : The first petitioner has its factory at Bombay. It is one of the leading manufacturers of Mainframe Computers, mini-computers and other electronic goods. Its business is spread over the entire country including the State of U.P. The second petitioner is a partnership firm registered with the Registrar of Firms of U.P. while the third petitioner is a citizen of India. The first petitioner carries on its business through petitioner Nos. 2 and 3. The departments of the Government, public corporations and local authorities are increasingly purchasing and using electronic goods for a more efficient discharge of their functions and so does the Government of U.P. It has set apart Rs.3.50 crores during the current financial year for purchase of computers and other electronic equipments. These purchases were hitherto made on a rate contract system. The rate contracts were determined by the Commissioner and Director of Industries after inviting tenders. In response to the tender notices dated 20/09/1990, called by the Commissioner and Director of Industries, U. P. petitioners submitted their tenders for approval and determination of rate contract for supply of computers and other electronic goods. The fourth respondent (M/s/ Uptron India Ltd.) and several other manufacturers and dealers submitted their tenders which were finalised on 16/02/1991. The fourth respondent (M/s. Uptron India Ltd.), however, declined to supply goods at the rates so approved while the petitioners and other manufacturers were prepared to do so. When the petitioner contacted the departments of the Government for supply of the said goods it was apprised of the impugned Government decision. The petitioners were told that they would purchase their requirements only from M/s. Uptron (India) Ltd. and from no one else. By the impugned decision the Government of U. P. has created monopoly in favour of M/s. Uptron (India) Ltd. which is violative of the fundamental right guaranteed to the petitioners by Art. 19(1). It is equally violative of the guarantee enshrined in Arts. 301 and 14 of the Constitution and is liable to be quashed. M/s. Uptron (India) Ltd., is not a department of Government. It is one of the several manufacturers of electronic goods in the country. It could not alone be preferred over other manufacturers, more particularly when it is not prepared to supply the goods at the approved rates but proposes to charge higher rates. Strong reliance is placed by the learned counsel for the petitioners on a decision of a bench of Andhra Pradesh High Court in Mahindra and Mahindra Ltd. v. State of Andhra Pradesh, AIR 1986 Andh Pra 332.
(2.) The fourth respondent (M/s. Uptron India Ltd.) has filed a counter-affidavit with the following averments : The fourth respondent (M/s. Uptron (India) Ltd.) is a subsidiary company of U. P. Electronic Company Ltd., which is a Government company wholly owned and controlled by the State of U. P. Its entire paid up capital of Rs. 31.02 crores is provided by the State of U. P. It manufactures a wide range of electronic goods and spends a substantial amount on research and development. It markets not only the goods manufactured by it but by its sister companies. For the year 1989-90 its turn-over was Rs. 210 crores. Only a small amount of Rs. 3.13 crores of this turnover came from the sale of goods manufactured by other companies. It employs a large pool of technical, scientific and other personnel and it has acquired a high reputation for the quality and performance of its products throughout the country. It has entered into several technology transfer agreements with various reputed international companies like Toshiba of Japan, Unisys of U.S.A., J.S. Telecom of France and many other countries. In 1979, the Uptron (India) Ltd., was given a status of R and D House by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. Its products have also received several meritorious awards. It has established a large number of service centres all over the country. In Uttar Pradesh it has got twelve factories and a large number of service centres. The approval of rate contract by the Commissioner and Director of Industries does not amount to a completed contract to purchase goods. It is only approval of rates. Such approval does not bind the Government to purchase goods of any particular manufacturer whose rates may have been approved. It is open to the Government to purchase the goods from any of the manufacturers at those rates. It is denied that the impugned order is the result of any manoeuvering on the part of the fourth respondent. The impugned order does not create any monopoly in favour of M/s. Uptron (India) Ltd. The total market of electronic goods in India is Rs. 1391 crores, out of which the share of U. P. Government is only Rs. 3 crores. Even if the petitioners and other manufacturers are excluded from this market of Rs. 3 crores, the remaining market of Rs. 1091 crores is still open to them both in the State of U. P. and all over the country. The impugned decision of the Government does not also violate Arts. 301 and 14 of the Constitution.
(3.) A rejoinder affidavit is filed by the petitioners wherein they have denied the fourth respondent's claim of high quality of its products. It is asserted that because of its inferior quality M/s. Uptron (India) Ltd., has been steadily losing market to other computers. The investment in R and D by the fourth respondent is nothing peculiar to it; every manufacturer does it. Petitioner No. 2 has service centres all over the country including five centres in U.P. The impugned decision of the Government of U. P. practically nullifies the rate contracts. If the electronic goods are purchased only from chosen manufacturers there was no point in inviting tenders for approval of rate contracts or in approving the rate contracts. The products of the fourth respondent carry a price tag which is 30 per cent higher than the price charged by the petitioners and other similar manufacturers. Because it is unable to compete with other manufactures it has pressuriesed the Government of U. P. to take the above decision. As a matter of fact the fourth respondent was earlier disqualified by the Commissioner and Director of Industries. Though the said disqualification withdrawn later, it shows that fourth respondent is not above committing mal-practices.;