Hemant Khaitan vs Union of India (UOI)

Ruma Pal, J.—The Petitioners are all manufacturers and suppliers of various items of equipment required by the Department of Telecommunications (DOT for short). The Petitioners carry on their business in and around Calcutta. They have challenged the decision of D.O.T. to decentralise the purchase of some of the items required by it. The decision is reflected in two circulars dated November 6, 1997 and November 13, 1997.

Until 1974 the material required was procured through D.O.T.''s offices in Delhi. Since 1974 D.O.T. procured some items through New Delhi and some others through the Chief Manager (Telecom Stores) Calcutta. Under the new policy the power to procure some items required by D.O.T. has been delegated to the Chief General Managers who head Circles throughout the country. There are according to the Respondents, 24 circles including circles at Madhya Pradesh, Andaman Islands, Orissa, Pubjab, Rajasthan, Tamilnadu, Uttar Pradesh (East), Uttar Pradesh (West), West Bengal, Andhra Pradesh, Assam, Mumbai, Gujrat, Himachal Pradesh, Haryana, Kerala, Karnataka, Bihar, North Eastern region, Jammu & Kashmir and Calcutta.

The Petitioners have challenged the decentralisation policy sought to be effected by D.O.T. on the ground that it is arbitrary, uneconomic and opposed to public interest and therefore unconstitutional. According to the Petitioners, the change in the policy would be unimplementable administratively. It is submitted that it also would not be practicable for the manufacturers of the items in and around Calcutta to participate in the tenders which may be called for from other circles of D.O.T. all over the country.

The Respondents did not file any affidavit in opposition within time specified by Court and their prayer for extension of time to do so was rejected. They have produced the records in connection with the change of policy.

It appears from the records that ear-lier most of the items required by D.O.T. were purchased through tenders issued from Head Quarters at Delhi. Items relating to line stores and power plants of small sizes were being procured through the Chief General Manager, Telecom Stores, Calcutta. According to the Respondent''s records, decentralised procurement had already taken place in 1996 in respect of some items between 1991-92. The decision to decentralise purchase of certain further items by D.O.T. was taken after prolonged discussions. The Telecom Commission had held several meetings in 1996 in this regard. It was felt, in 1996, that power of procurement of smaller items should be delegated to the Chief General Managers of the circles and that the Head Quarters in Delhi of D.O.T. should spend more time on formulating policy and programmes. The matter was referred by the Commission not only to D.O.T. headquarters but also to the Chief. General Manager Procurement (TS), Calcutta as also the Finance Wing of D.O.T. The view of the various authorities were obtained. The pros and cons of the decentralisation policy in respect of the items proposed by the Commission were noted. It also appears from the records that some of the Chief General Managers (CGM for short) had asked for greater decentralisation of the procurement process. The urgency to decentralise was emphasised by the Department in view of the enhanced development targets. The Department also discussed the need to safeguard the procurement process including procurement after financial concurrence from Head Quarters, proper budgeting, proper forecast mechanism and-prohibition on downard delegation by C.G. Ms. of the powers of procurement. The decision of D.O.T. was to decentralise purchase of seventeen low cost but critical items. As the infrastructures in the circles throughout the country were not geared up sufficiently, only six of the seventeen items were decided to be decentralised.

It was in this background that the impugned circular dated November 6, 1997 was issued. The circular provides for the authorisation of the Chief General Managers to procure 5 items in accordance with the prescribed guidelines only for the year 1998-99. Financial instructions were also given with regard to the purchase of decentralised items. It was also made clear that the decentralised purchase decision had been taken by the Telecom Commission on an experimental basis. The circular was sent, inter alia, to all heads of Telecom Circles, the Chief General Manager (Telecom Stores), Calcutta and several other officers in the circles throughout the country.

By the second impugned circular dated November 13, 1997, six more items were allowed to be procured on decentralised basis strictly according to the terms and conditions as provided in the guidelines of November 6, 1997.

Pursuant to these circulars, on December 2, 1997 the office of the Chief General Manager, Telecom Stores, Calcutta issued the third circular impugned in these proceedings, on December 2, 1997, notifying that certain items would be procured by the Chief General Manager of circles directly.

The question is whether in these circumstances the Court will, under Article 226 of the Constitution interfere with the decision of the Department of Telecommunication to decentralise the purchase of some items.

Undoubtedly, the Court exercising jurisdiction under Article 226 can interfere with the framing of or change in a policy decision but it does so with caution. Applying the principles deducible from the decisions cited by the Petitioners no such interference is warranted in this case.

The ''one imperative of the Constitution implicit in Article 14 is that if [the Executive] does change its policy, it must do so farily. and should not give the impression that it is acting by any ulterior criteria or arbitrarily'' Col. A.S. Sangwan Vs. Union of India (UOI) and Others, .

The Court have not defined arbitrariness exhaustively. However, there appears to be two forms of arbitrary action judicially recognised, viz., substantive and procedural.

Instances of substantive arbitrariness would be where an action or policy is evolved for an ''ulterior criteria'' or for an object not relevant to the exercise. Where there is no principle at all underlying the executive action/policy would be another instance: Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others, Similarly the court will interfere where the policy decision is so unreasonable that no authority could reasonably have taken it. Associated Provincipal Picture House Ltd. v. Wednesbury Corporation 1947 (2) All E.R. 680; Tata Cellular Vs. Union of India,

A procedural arbitrariness might exist in cases for example where the authorities take a decision without hearing parties who would be deprived of a benefit or right by reason of the formulation or change in policy N.C.G.H. Society and Ors. v. Union of India 1993 S.C. 155, Col. AS. Sangwan v. Union of India (Supra): Council of Civil Services Union v. Minister of Civil Service (1984)3 AIR 935.

The burden of proving arbitrariness is on the persons alleging it unless the policy is ex facie unreasonable. This view was iterated by the Supreme Court in Srilekha Vidyarthi v. State of Uttar Pradesh (Supra).

No doubt, it is true, as indicated by us earlier, that there is a presumption of validity of the State action and the burden is on the person who alleges violation of Article 14 to prove the assertion. However, where no plausible reason or principle is indicated nor is it discernible and the impugned State action, therefore, appears to be ex facie arbitrary, the initial burden to prove the arbitrariness is discharged shifting onus on the State to justify, its action as fair and reasonable. If the State is unable to produce material to justify its action as fair and reasonable, the burden on the person alleging arbitrariness must be held to be discharged.

Applying these principles to the facts this case, it cannot be said that the change in the policy is arbitrary. The move towards decentralisation of purchases keeping in view the growing need for telecom material and equipment all over the country cannot, without more, be described as unreasonable. The Petitioners have not been able to discharge the onus cast on them to show that the action of decentralisation of purchase is uninformed by reason. On the other hand from the figures relied upon by the Petitioners themselves, it is clear that the demand for telecommunication equipments is nationwide. Decentralisation or a policy whereby local needs are to be determined and decided locally cannot be said to be alien to the concept of good administration.

It is clear from the records that the decision to decentralise the purchase of certain commodities was not an overnight decision for any ulterior object. The decision was taken consciously over a period of time after prolonged discussion at all levels and considering the pros and cons and with an application of mind. The approach of the Department has been cautious keeping in view the possible financial implications and the lack of infrastructural facilities on the one hand and the possible increase in efficiency bysuch decentralisation on the other. The caution is also reflected in the guidelines laid down, the empowerment of only senior officers to complete the tendering process and the decision to review the policy in the light of the experience gathered from the implementation after one year.

The economics of a decision are not for this Court to decide nor is the Court in a position to determine the relative profitability of the new policy vis-a-vis the existing one. To adopt the language in Associated Provincial Picture House Ltd. v. Wednesbury Corporation (Supra):

The subject matter with which the condition deals is one relevant for its consideration. It has considered it and come to a decision on it. Theoretically it is true to say - and in practice it may operate in some cases - that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere. That, I think, is right, but that would require overwhelming proof, and in this case the facts do not come anywhere near such a thing. Counsel in the end agreed that his proposition that the decision of the local authority can be upset if it is proved to be unreasonable, really meant that it must be proved to be unreasonable in the sense, not that it is what the court considers unreasonable, but that it is what the court considers is a decision that no reasonable body could have*come to, which is a different thing altogether. The court may very well have different views from those of a local authority on matters of high public policy of this kind. Some courts might think the reverse. All over the country, I have no doubt, on a thing of that sort honest and sincere people hold'' different views. The effect of the legislation is not to set up the court as an arbiter of the correctness of one view over another. It is the local authority who are put in that position and, provided they act, as they have acted here, within the four corners of their jurisdiction, the court, in my opinion, cannot interfere.''

This view was approved by the Supreme Court in Sreelekha Vidyarthi(Supra):

The scope of judicial review is limited as indicated in Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay, to oversee the State action for the purpose of satisfying that it is not vitiated by the vice of arbitrariness and no more. The wisdom of the policy or the lack of it or the desirability of a better alternative is not within the permissible scope of judicial review in such cases. It is not for the Courts to recast the policy or to substitute it with another which is considered to be more appropriate, once the attack on the ground of arbitrariness is successfully repelled by showing that the act which was done, was fair and reasonable in the facts and circumstances of the case.''

Merely because a policy has been existing for several years (23 years according to the Petitioners), is no reason not to change it nor does the mere fact of change indicate arbitrariness. This has specifically been recognised by the Supreme Court in Col. A.S. Sangwan v. Union of India (Supra).

A policy once formulated is not good for ever; it is perfectly within the competence of the Union of India to change it, rechange it, adjust it and readjust it according to the compulsions of circumstances and the imperatives of national considerations...it is entirely within the reasonable discretion of the Union of India. It may stick to the earlier policy or give it up.

No secret was made of the change in policy. The circulars were widely circulated.

But the Petitioners complain that the Petitioners should have been taken into confidence before the policy was changed. There is no authority for such submission.

In N.C.G.H. Society and Ors. v. Union of lndia(Supra): Co-operative societies has challenged a change of policy which resulted in total deprivation of the benefit of allotment of land for a particular group. By change in the criteria for allotment of land the right of the allotment was lost to the group. In this background the Supreme Court said that the new policy decision should not have been implemented without making such change in the existing criterion for allotment known to the group so that they could make proper representation to the concerned authorities for consideration of their view point. The theory is that a person''enjoying a right or benefit has a legitimate expectancy that it would continue and therefore should in fairness be heard when the right or benefit is sought to be done away with.

In Srilekha Vidyarthi''s case(Supra) the Petitioners'' appoi itmentt had been cancelled. In other words, they had been totally deprived of their right to employment on the basis of a change in the policy.

In the present case by the change the Petitioners are not being deprived of any benefit. Decentralisation of the tender process for supply of telecommunications material does not mean that the Petitioners will not be able to participate in the tender process. They may do so much in the manner as manufacturers and suppliers in other parts of India have participated when the tendering process was limited to Calcutta. Inconvenience in participation does not amount to deprivation. There is no question of defeating any right of the Petitioners. On the other hand it would appear that the Government is seeking to act with an even handedness by allowing the tendering process for local supplies to be held locally.

The decision in Col. A.S. Sangwan v. Union of India(Supra) was rendered in connection with claims of two officers of the army to be as Brigadier. It was contended that there was an earlier policy made in exercise of the general executive power Of the Union of India relating to promotions to the post of Brigadier. It had been made known and had been acted upon. It was argued that it would be arbitrary to depart from earlier policy overnight without a reformulation of the policy and making it known to all concerned quarters of the army.

The Supreme Court said:

Of course, now that there are contestants and rival points of view, it may not be improper for the Central Government to take into consideration any legitimate representation regarding the formulation of policy that affected persons like the Petitioner and the third Respondent may make.

In other words if the State Government took into consideration the representation made by the concerned parties, it would not make such action arbitrary. This cannot be construed as a mandate on the authorities to hear persons who may be affected by a change of policy before effecting the change.

In Council of Civil Services Union v. Minister for the Civil Services,(Supra) the House of Lords was considering a case where labour unions had protested against the failure of the government to consult them prior to effecting change in the condition of their services. There was an established practice which was deviated from. There was no such established practice of consultation with manufacturers and suppliers prior to decentralisation of the purchasing process of telecommunication materials on which the Petitioner can legitimately base a claim of prior consultation.

There is as such neither any substantive nor procedural arbitrariness in this case. That being so the challenge to the policy of the D.O.T. must fail.

For the reasons aforesaid I dismiss the writ application without any order as to costs.