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2012 DIGILAW 125 (JK)

Ahaar Consumer Products Pvt. Ltd. v. Union of India & Ors.

2012-03-28

HASNAIN MASSODI

body2012
1. The writ petitions, in view of the order dated 2nd November, 2011 in LPA No. 241 of 2011 and on agreement of learned counsel for the parties, are taken up for final disposal. 2. I have gone through the pleadings as also the record made available by learned Assistant Solicitor General of India. I have heard learned counsel for the parties. 3. The Government of India in December, 2009 after experimenting with procurement of Wheat and its grinding, packing at approved Flour Mills for use of Armed forces, went for a shift in its policy and decided to switch over to procurement of the Branded Wheat Atta Whole Meal from approved contractors. On 24th December, 2009, Under Secretary to the Government of India conveyed to the Chief of the Army Staff, New Delhi approval of the President of India to introduction of the revised procurement procedure of Wheat Atta Whole Meal for the Army. The respondents as Phase No. 1 decided to initially undertake a Pilot project at selected stations in each Command for procurement of branded Atta meeting ASC specifications through an Advertised Tender Enquiry from reputed registered/unregistered Vendors by concluding Short Term Agreements (STAs)/Local Purchase (LP). The Pilot project was expected to facilitate development of vendor base, establishment of price/rate pattern, refinement of procedures and set the stage to introduce the new policy to other stations in a graduated manner. The Pilot projects were to be followed by extension of revised procedure to maximum possible stations as feasible on an experimental basis for one year. 4. On 12th January, 2010, Procedure For Registration Of Vendors For Supply Of Wheat Atta Whole Meal For he Army was notified. In terms of procedure branded Wheat Atta Whole Meal meeting the stipulated ASC specifications would be procured by the Army, by concluding contracts at Command level, through an Advertised Tender Enquiry System. Suppliers/reputed vendors engaged in production/marketing/milling of reputed brand of Wheat Atta, having bona fide and quantifiable establishment, inventory and turnover to supply the contracted quantities in an uninterrupted manner and keen to supply Wheat Atta Whole Meal to Army, if meeting the laid down Quality Requirements (QRs) for registration, were free to get themselves registered as ASC Atta Contractors. The procedure laid down Quality Requirements (QRs) necessary for registration of vendors as ASC Atta Contractor. The procedure laid down Quality Requirements (QRs) necessary for registration of vendors as ASC Atta Contractor. The QRS included Average Annual Turnover, Assured Supply Commitment, Certification and Accredition of the Flour Mills/packaging and storage facilities as Hazard Analysis Critical Control Point (HACCP) Certified or certified for IS/ISO 22000:2005. The Contractor desirous to get registered as ASC Atta Contractor were to have a Wheat Atta brand name registered as a patent and available as such in the commercial market for last three years. It was decided to restrict the tender to ASC Atta Contractor so registered. 5. The respondents after inspection of the milling/packaging/storage facilities of all the contractors who expressed an interest in getting registered as ASC Atta Contractors and perusal of the documents produced by the contractors as registered following four aspirants as ASC Atta Contractors. 1. M/S Shakti Bhog Foods Limited Regd. Office 403-405,4th Floor Krishna Apra Business Square Netaji Subash Place, Delhi —110034. 2. M/s Victoria Food Private Limited 32, Lawrence Road, Industrial Area, New Delhi-35. 3. M/s Ahaar Consumer Products (P) Ltd. G-37, Group Industries, Lawrence Road, Delhi —110035. 4. M/s ITC Limited, Food Division, Pulkeshi Nagar, Bangalore-05. 6. The Northern Command of the Army on 9th March, 2011, floated a Tender Notice inviting Sealed Tenders (Request for Proposal/RFP) from aforementioned four registered ASC Wheat Atta Whole Meal Contractors/Firms for supply of branded Wheat Atta Whole Meal at various stations of the Northern Command for the period 1st April, 2011 to 31st March, 2012. The approximate requirements of branded Wheat Atta Whole Meal for various stations and the Stations where it was required were set out in the Tender Notice. 7. M/s Ahaar Consumer Products P) Ltd. - petitioner herein, responded to the Tender Notice signifying its intention to supply Whole Wheat Atta Meal at sixteen (16) Stations of Northern Command notified in the Tender Notice. The petitioner in view of the prices quoted bagged the contract. The parties formally entered into a contract/agreement and the petitioner commenced execution of the contract by making supply of Wheat Atta Whole Meal from its mill/facility at Lawrence Road, Delhi — 35. 8. The contract between the parties ran into rough whether when the petitioner decided to supply Wheat Atta Whole Meal from M/s Kash-Ind Roller Flour Meal, Narwal Bala, Jammu. 8. The contract between the parties ran into rough whether when the petitioner decided to supply Wheat Atta Whole Meal from M/s Kash-Ind Roller Flour Meal, Narwal Bala, Jammu. The petitioner insisted that it had entered into an agreement with M/s Kash-Ind Roller Flour Mills, Narwal Bala, Jammu, for supply of Wheat Atta Whole Meal to various stations of Jammu, Kashmir and Leh regions. The respondents refused to receive the supplies from M/s Kash-Ind Roller Flour Meal, Narwal Bala Jammu and insisted that the petitioner was under contractual obligation to make supplies of Wheat Atta Flour Meal from its Flour Mill/packaging/storage facilities from M/s Ahaar Consumer Products (P) Ltd. G-37, Group Industries, Lawrence Road, Delhi — 110035 and no other mill notwithstanding its commitments or arrangements with such Mill. 9. The refusal by the respondents to accept supplies from M/s Kash-Ind Roller Flour Meal, Narwal Bala Jammu constrained the Petitioner to file a writ petition on 07.07.2011 registered as OWP No. 814/2011. The petitioner inter alia sought a direction commanding the respondents to accept supplies from M/s Kash-Ind Roller Flour Meal, Narwal Bala Jammu. The petitioner also sought quashment of the communication dated 25th June, 2011 and 27th June, 2011 styled as "Warning No. 1" and "Warning No. 2", whereby the petitioner was asked to tender balance branded Wheat Atta Whole Meal and informed that in the event of his failure the branded Wheat Atta Whole Meal would be purchased from local market at the petitioner's risk and expenses. The respondents continued to refuse to receive supplies from M/s Kash-Ind Roller Flour Mills, Narwal Bala, Jammu, and issued communications from time to time between July-August, 2011, asking the petitioner to make supplies from its Mill at Delhi. The petitioner felt constrained to file yet another writ petition seeking quashment of the communications/warnings issued and praying for the relief sought in the earlier Writ Petition. The Writ Petition stands registered as OWP No. 1103/2011. 10. The respondents in their reply to the Writ Petitions have questioned the maintainability of the petitions on the ground that in presence of an express Arbitration Clause in the Contract/Agreement between the parties, the right course for the petitioner was to seek reference of the dispute to the arbitration and not to invoke writ jurisdiction of the Court. 10. The respondents in their reply to the Writ Petitions have questioned the maintainability of the petitions on the ground that in presence of an express Arbitration Clause in the Contract/Agreement between the parties, the right course for the petitioner was to seek reference of the dispute to the arbitration and not to invoke writ jurisdiction of the Court. It is pleaded that in terms of Contract entered into by the parties, the petitioner was under an obligation to supply Wheat Atta Whole Meal from his milling/packaging at Lawrence Road, Delhi-110035 and from no other mill or go for any out sourcing. Admitting that M/s Kash-Ind Roller Flour Mills, Narwal Bala, Jammu, was associated with milling and supply of Wheat Atta Whole Meal in Northern Command, it is insisted that the arrangement was confined to Wheat milling/grinding only and in operation till 15th May, 2011, i.e. when the decision as regards procurement of branded Wheat Atta Whole Meal was not taken and acted upon. The petitioner, it is pleaded cannot outsource or lease flour mill to fulfill its obligation under the contract, inasmuch as, such facility or mill has not been subjected to any inspection by the respondents to ensure that the facility fulfills Quality Requirements (QRs) and that such inspection was restricted to the petitioner's mill/package/storage facility at Lawrence Road, Delhi-110035. 11. The short controversy arising out of the pleadings relates to the competence/entitlement of the petitioner to lease a mill/outsource the contract. Whether the petitioner in terms of the contract can procure Wheat Atta Whole Meal from leased/outsourced flour mills and package facilities is the question that needs to be answered, of course, on the basis of the contract executed by the parties and the background material thereto. 12. In terms of Para 3 (c) of PROCEDURE FOR REGISTRATION OF VENDORS FOR SUPPLY OF WHEAT ATTA WHOLE MEAL FOR THE ARMY dated 12th January, 2010, a vendor in order to get registered as ASC Contractor and eligible for participation in tender process for supply of Wheat Atta Whole Meal should have his/her/their own integrated milling/packing and storage facilities or procure Wheat Atta Whole Meal from leased/outsourced flour mills and packaging facilities. However, milling/packing/storage facilities whether owned by the vendor or leased/outsourced must in terms of "Procedure" satisfy the following requirements i.e. i) all the facilities and processes involved should have been inspected at the prescribed intervals by the civil, medical/health authorities for the last three years, ii) the facilities should be in operation for production of Wheat Atta Whole Meal for last one year, iii) the flour mills/packaging and storage facilities should be accredited as Hazards Analysis Critical Control Point (HACCP) certified or certified for IS/ISO 22000:2005. 13. It follows that the scope is left in the "Procedure For Registration Of ASC Contractors" for Leasing/outsourcing flour mill and packaging facilities. The contractor registered as ASC Contractor has a right to supply Wheat Atta Whole Meal from his own integrated milling/packing and storage facilities or procure it from leased/outsourced flour mills. However, in order to avail the choice/option to supply from leased/outsourced flour mill, the ASC approved Contractor who bags the contract, should have informed the respondents at the time he approached the respondents with his application to register him as ASC Contractor that he proposed to procure Wheat Atta Whole Meal from a leased/outsourced flour mill/packaging facilities so that the respondents were given an opportunity to inspect the flour mill proposed to lease or get it inspected or to ask for documents that were necessary to record satisfaction, that such flour mill or packaging facility satisfies the Quality Requirements (QRs) for registration. It is only after the respondents are satisfied that such leased/outsourced mills conforms to the Quality Requirements (QRs) for registration that the contractor is registered as Approved ASC Atta Contractor. The registration in terms of the "Procedure" does not only refer to brand name but also the Mill/packaging/storing facility where branded Wheat Atta Whole Meal is milled/packed and stored. 14. The petitioner, in the circumstances, was required to inform the respondents at the time the petitioner approached the respondents with a request to register him as ASC Atta Contractor that the petitioner proposed to procure Wheat Atta Whole Meal from M/s Kash-Ind Roller Flour Mills, Narwal Bala, Jammu, so that the respondents were made aware of the intention of the petitioner well in time and would ensure that the M/s Kash-Ind Roller Flour Mills, Narwal Bala, Jammu satisfied the Quality Requirements (QRs) necessary for registration. It is only after the lease/outsourcing of a mill/packaging/storing facility proposed by the petitioner was approved by the respondents that the petitioner would have a right to make supplies from the leased/outsourced mill and packaging facility. 15. In the present case, the petitioner after it was registered as an ASC Contractor for supply of Wheat Atta Whole Meal for the first time vide letter dated 20th December, 2010, informed the Director General of Supplies and Transport -Respondent No. 3, that as it had supplied branded Wheat Atta Whole Meal (Ahaar Brand) under Pilot project to FSD, Udhampur and RHSD, Pathankot for the period from 1st August, 2010 to 21st August, 2010, from its leased/outsourced mill at Jammu (M/s Kash-Ind Roller Flour Meal, Narwal Bala Jammu) it be permitted to supply under annual contract from the leased/outsourced mill and that the leased mill was fulfilling the parameters of ASC approved contractors. The request was reiterated in Communication dated 8th February,2011 addressed to the Respondent No. 3. However, the petitioner vide his communication dated 9th April, 2011, gave an undertaking that the supplies would be made from petitioner's mill approved by Army Headquarters, Delhi, in the case, contract is awarded to the petitioner. 16. Furthermore, the respondents while communicating their decision to the petitioner under No. 61580/REGN/Q/ST-4 dated 3rd December, 2010, to register the petitioner as an approved ASC Atta Contractor for supply of Ahaar brand of Wheat Atta Whole Meal to Army and that the petitioner was allotted Registration No. 61580/REGN/ACPL/003/2010, sufficiently made it clear that milling/packing and storage facilities were to be carried out from the mill premises namely Ahaar Consumer Products Pvt (P), Ltd. G-37 Lawrence Road, New Delhi-110035. 17. The respondents in the said background vide Communication No. 61850/Ahaar/Q/ST-4 dated 15th July, 2011, while responding to the petitioner's request for permission to make supply from its leased/outsourced flour Mill at Jammu (M/s Kash-Ind Roller Flour Meal, Narwal Bala Jammu) asked the petitioner to refer to HQ Letter No. 61590/REGN/Q/ST-4 dated 13th December, 2010. The aforesaid communication implied that the lease agreement was not brought to the notice of the respondents before the petitioner was registered as ASC approved A tta Contractor and that the registration granted had reference to petitioner's milling and packing facility at Lawrence Road, Delhi -110035 and no other leased or outsourced facility. 18. The aforesaid communication implied that the lease agreement was not brought to the notice of the respondents before the petitioner was registered as ASC approved A tta Contractor and that the registration granted had reference to petitioner's milling and packing facility at Lawrence Road, Delhi -110035 and no other leased or outsourced facility. 18. So viewed, the petitioner does nothave a right to supply Wheat Atta Whole Meal from any milling/packaging and storage facility other than the facility owned by it and situated at Lawrence Road, Delhi -110035. The petitioner cannot draw support from any part of the Tender Notice Contract or the Revised procedure for registration to claim a right to supply Wheat Atta Whole Meal from its leased/outsourced mill/packaging and storage facility, inasmuch as, petitioner's registration is restricted to his own mill at New Delhi-110035. The documents placed on file by the Petitioner to substantiate its claim that the leased/outsourced mill namely M/s Kash-Ind Roller Flour Meal, Narwal Bala Jammu satisfied Quality Requirement (QRs) and that the petitioner was well within its right under the contract to make supplies from the leased/outsourced mill, do not extend support to the petitioner's case. It is important to note that all these documents relate to the period when the new "Procedure" was not in vogue and annual contract granted in consequence of the Tender Notice dated 9th March, 2011 allotted to the petitioner. The documents referred to the period when the respondents either procured wheat and get it milled in different flour mills in the country or the respondents decided to go for Pilot Project pave way for annual contract to the ASC approved Atta Contractor. It is equally important to note that the annual contract was not opened to one and all but restricted to the four ASC approved Atta Contractors whose mills/packaging/storage facility was inspected and found to satisfy the requisite standards. 19. The above discussion apart, the contract executed by the parties has an expressed provision that obligates the parties to amicably settle any dispute, disagreement or question arising out of or relating to construction or performance, and any dispute which cannot be settled amicably to refer it to the Arbitration in accordance with the procedure laid down in the Arbitration Clause of the Agreement. The petitioner instead of rushing to the Court invoking its writ jurisdiction ought to have taken steps for amicable settlement of the dispute and thereafter, asked for its reference to the Arbitration. In presence of the Arbitration Clause, the writ petition is not maintainable. Reference in this regard may be made to case law reported as State of U.P. and ors. v. Bridge & Roof Company (India) Ltd. (1996) 6 SCC168, Orissa Agro Industries Corporation Ltd. v. Bharati Industries, 2005 AIR (SCW) 5715, New Century Communications & Ors v. Union of India and ors. 2009 (Supp.) JKJ HC-578, City and Industrial Development Corporation v. Dosu Aardeshir Bhiwandiwala & Ors. (2009) SCC 571. 20. For the reasons discussed above, the Writ Petitions are bereft of any merit and, are accordingly, dismissed. Interim direction, if any, is vacated.