M/S Divine Food Industries Through Its Signatory Vishnu Bhagwanrao Rai Mule vs. Department Of Food And Public Distribution Through Its Deputy Secretary And Others

Held

The Court held that the petitioner's averments regarding the arbitrariness and irrationality of the eligibility criteria (PQ3 and PQ4) were vague and lacked specific material evidence. The Court found no basis to conclude that stipulating a turnover of over INR 100 crores and relevant experience of at least Rs. 65 crores was arbitrary or irrational, merely because it might exclude smaller suppliers. The Court also found that the petitioner failed to demonstrate that the impugned conditions were tailor-made to suit a specific entity or class of entities for extraneous reasons. Regarding the alleged violation of operational guidelines, the Court observed that the guidelines primarily dealt with the supply of FRKs through PDS at the district level and did not relate to procurement policy. The Court failed to understand how these guidelines would prevent individual states from devising their own procurement policies. The Court distinguished the present case from the precedent cited by the petitioner (M/s K.K. Vidyut, Ahmednagar), noting significant differences in facts and circumstances. The Court reiterated that in contractual matters, judicial review under Article 226 should be exercised with inhibition in the absence of specific pleadings and material demonstrating mala fides or extraneous considerations. Therefore, the writ petition was dismissed in limine.

Facts

The petitioner, M/s. Divine Food Industries, a micro, small, and medium enterprise, filed a writ petition challenging a tender notice dated December 27, 2022, issued by the respondents for the supply of Fortified Rice Kernel (FRK) with three micronutrients for the seasons 2022-23 Kharif and 2023-24 Kharif and Rabbi. The petitioner was aggrieved by two specific qualification criteria: PQ3, requiring a minimum turnover of INR 100 crores in any one of the last three financial years, and PQ4, requiring experience in manufacturing and supplying micronutrient-fortified food/meal/rice kernels of a minimum of Rs. 65 crores (excluding tax/GST) to a government organization in any one of the last five financial years. The petitioner also objected to the prohibition of consortiums and joint ventures. The petitioner argued that these criteria were arbitrary, irrational, and designed to favor specific entities, such as the Maharashtra State Consumer Federation, and were contrary to central government operational guidelines.

Key Issues

1. Whether the qualification criteria PQ3 (turnover of INR 100 crores) and PQ4 (relevant experience of Rs. 65 crores) in the impugned tender notice dated 27.12.2022 are arbitrary and irrational, violating Article 14 of the Constitution of India, as argued by the petitioner? 2. Whether the impugned tender notice, by imposing stringent eligibility criteria and prohibiting consortiums/joint ventures, is contrary to the operational guidelines issued by the Government of India for the distribution of Fortified Rice Kernel (FRK) through the Public Distribution System (PDS), as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the turnover and experience criteria were "cumbersome" and "tailor-made" to exclude entities like itself, a registered MSME with prior experience supplying FRKs to the Telangana State Civil Supplies Corporation. They contended that these criteria were arbitrary and irrational, lacking a nexus with the object of procuring FRKs, and were designed to favor specific contractors. The petitioner also claimed the tender conditions violated central government operational guidelines, specifically clause 1.2, by opting for a state-level tender instead of decentralization. Respondents' Arguments: The learned AGP's arguments are not explicitly detailed in the provided text, but the Court's reasoning indicates a defense of the tender conditions. The Court noted the petitioner did not provide specific material to demonstrate the arbitrariness of the criteria or that only a particular entity would be eligible.