Appellate Court Upholds State's Clause in Purchase Order, Rejects Challenge

The appellate court allowed the appeal and set aside the judgment of the Writ Court, ruling in favor of the State of Jammu & Kashmir (now Union Territory of J&K). It found no fault with Clause 13(v) of the purchase order, holding that it was not discriminatory or violative of Article 14 of the Constitution of India. The court determined that the writ petitioners lacked standing to challenge the clause as they were not parties to the contract and had accepted its terms willingly. The appeal outcome favored the State, upholding the validity of the disputed clause in the purchase order.

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Issues Involved:
1. Validity of Clause 13(v) of the purchase order.
2. Alleged discrimination against the writ petitioners.
3. Appropriateness of the writ petition as a remedy for impeaching a contractual obligation.
4. Locus standi of the writ petitioners to challenge Clause 13(v).

Summary:

1. Validity of Clause 13(v) of the purchase order:
The intra-court appeal by the State of Jammu & Kashmir (now Union Territory of J&K) challenges the judgment of the learned Single Judge, which quashed Clause 13(v) of the purchase order. The clause required SICOP to pass the benefit of MODVAT in respect of excise duty to the purchasing department. The Writ Court found this clause discriminatory and violative of Article 14 of the Constitution of India.

2. Alleged discrimination against the writ petitioners:
The writ petitioners, small scale industrial units (SSI) in Jammu, argued that similar supply orders issued to other SSI units, both within and outside the State, did not contain a clause akin to Clause 13(v). The Writ Court agreed with this contention, noting that the supply orders to outside manufacturers did not include such a clause, thereby establishing discrimination. However, the appellate court found that each contractual transaction is independent and governed by its own terms and conditions, and thus, no discrimination was established.

3. Appropriateness of the writ petition as a remedy for impeaching a contractual obligation:
The Writ Court initially dismissed the writ petition, reasoning that the writ petitioners had already charged the cost of raw materials, including excise duty, and that a writ petition was not an appropriate remedy to challenge a contractual obligation. The Supreme Court remanded the matter to the High Court to determine if the benefit of the MODVAT scheme had been allowed to other similarly situated industries but not to the writ petitioners.

4. Locus standi of the writ petitioners to challenge Clause 13(v):
The appellate court noted that the writ petitioners were strangers to the contract between the appellant No. 2 and SICOP and thus had no locus to challenge Clause 13(v). The court emphasized that the clause was a result of negotiations and was part of a concluded contract, which the writ petitioners had accepted with their eyes wide open.

Conclusion:
The appellate court found no fault with Clause 13(v) or Clause (ii) of the special conditions of the purchase orders issued by SICOP to the writ petitioners. The court held that the writ petitioners failed to establish any discrimination and that the impugned condition was neither unconscionable nor in violation of any statutory provision. Consequently, the appeal was allowed, and the impugned order of the learned Writ Court was set aside.

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