Supreme Court rules against discriminatory procurement policy, mandates fair public tenders

The Supreme Court found the policy decision mandating procurement of GE/EDC governor spares on a proprietary basis to be arbitrary and discriminatory, violating Article 14 of the Constitution. The rejection of the writ petitioner's tender was deemed arbitrary, effectively barring them from competition. The Court dismissed the appeals, directing future procurement through public tender without reference to the flawed policy, emphasizing fair and non-discriminatory procurement practices.

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Issues Involved:
1. Policy decision regarding procurement of GE/EDC governor spares.
2. Rejection of the writ petitioner's tender.

Summary:

Policy Decision Regarding Procurement of GE/EDC Governor Spares:
The Supreme Court examined the policy decision reflected in the letter dated 23.10.1992, which mandated procurement of GE/EDC governor spares on a proprietary basis from M/s. Engineering Devices and Controls Pvt. Ltd. (EDC). The Court noted that the policy was adopted without considering the fact that the writ petitioner had been supplying these spare parts to various Divisions of the Indian Railways for over 17 years. The Court held that the decision of the Board suffered from non-application of mind and was arbitrary and discriminatory, thus violating Article 14 of the Constitution. The Court emphasized that while policy decisions are generally not interfered with by courts, they must be scrutinized to ensure they are reasonable and non-discriminatory. The Court agreed with the High Court that creating a monopoly in favor of EDC was unreasonable and arbitrary.

Rejection of the Writ Petitioner's Tender:
The Supreme Court addressed the rejection of the writ petitioner's tender, noting that the Railways had the right to reject any tender without assigning reasons u/s Clause 16 of the Guidelines. However, the Court held that this power must be exercised reasonably and not arbitrarily. The Court found that the rejection of the writ petitioner's tender was arbitrary and that the writ petitioner had been effectively debarred from competing with EDC since 1992. The Court agreed with the High Court that the Railways' actions were in violation of Article 14 and that the policy creating a monopoly for EDC was flawed.

Conclusion:
The Supreme Court dismissed the appeals, directing that future procurement of spares for governors used in diesel locomotives should be done through public tender, with offers considered on their merits without reference to the policy in the letter dated 23.10.1992. The Court upheld the High Court's decision to quash the policy and emphasized the need for fair and non-discriminatory procurement practices.

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