Writ Petition No.4911 of 2006

4th April, 2007

Petitioner Counsel: Shri. P. C. MADKHOLKAR
Respondent Counsel: Smt. NEETA JOG,Shri. RAJEEV MADKHOLKAR

Cases Cited:
Tata Cellular Vs. Union of India, (1994)6 SCC 651 [Para 20]
Tamil Nadu Education Department Ministerial and General Subordinate Services Association Vs. State of Tamil Nadu, (1980)3 SCC 97 [Para 20]
State of M.P. Vs. Nandlal Jaiswal, (1986)4 SCC 566 [Para 20]
State of Punjab Vs. Ram Lubhaya Bagga, (1998)4 SCC 117 [Para 20]
Balco Employees' Union (Regd.) Vs. Union of India, (2002)2 SCC 333 [Para 20]
State of Orissa Vs. Gopinath Dash, 2005 AIR SCW 6536 [Para 20]

JUDGMENT

R. C. CHAVAN, J. :- This petition in public interest is filed by Editor of a local newspaper to bring to the fore irregularities in awarding transportation contract for goods meant to be distributed in the targeted Public Distribution System (PDS).

2. Notices were issued to the respondents, who have appeared through the learned AGP.

3. We have heard both the learned Advocate for the petitioner, the learned AGP for respondents No.1 to 3-AF, and also the learned Advocate for the intervenor. In view of the issues raised, the petition is admitted and immediately taken up for final disposal by consent.

4. According to the petitioner, there are several irregularities in awarding contracts for transporting goods under the PDS, leading to heavy loss to the exchequer. Contracts for transportation of goods meant for distribution in the PDS were to expire on 31-5-2006. On 8-5-2006, the Government of Maharashtra issued a resolution enabling grant of extension of contracts to those contractors, who were willing to continue at the old rates for next three years. The Government Resolution further provided that in the districts where contractors were not ready for continuing on the old rates, fresh tender process should be initiated. However, on 9-5-2006, the Government stayed operation of this Resolution.

5. The petitioner's further contentions are as under :

This Resolution dated 8-5-2006 was challenged before Aurangabad Bench of this Court by filing Writ Petition No.4413 of 2006. In this Writ Petition, on behalf of the State, Shri. L. D. Vyas, Deputy Secretary, Food, Civil Supplies and Consumer Protection Department, filed an affidavit on 17-7-2006 enumerating that the Government had examined numerous factors involved in the matter and after following entire procedure of policy making, the Government had decided to grant extension of three years to the existing transport contractors in order to save substantial amount for the Government. According to the petitioner, on 9-5-2006 Shri. Vyas had himself informed by fax that the Government Resolution dated 8-5-2006 was stayed by the Government. In spite of this, Shri. Vyas did not mention this fact, i.e. of grant of stay, in his affidavit filed before Aurangabad Bench. On 24-7-2006, Shri. K. P. Bakshi, Secretary, Food, Civil Supplies and Consumer Protection Department, wrote to the Government Pleader at Aurangabad Bench that the Government Resolution dated 8-5-2006 had been stayed and the Government had decided to call for the fresh tenders and that this fact should be brought to the notice of the Court. A Government Resolution to this effect was issued on 5-8-2006. Accordingly, the Collectors of the districts initiated fresh tender process.

6. The petitioner further states that he collected figures for the fresh rates quoted and compiled a chart showing the probable loss, which would be caused to the exchequer, because of the fresh tender process. According to him, the loss of amounts to Rs.128.86 crores over a period from 2006 to 2009, the annual loss being Rs.42.95 crores would be suffered by the State due to new tendering process and policy adopted by the State. The petitioner alleges that astronomical hike in rates was secured at by a cartel of contractors, who, with the connivance of authorities, made the Government change its decision dated 8-5-2006 and issue a fresh notification dated 5-8-2006. He alleges that the same old contractors have submitted new tenders in new names by forming new partnerships, with registration numbers of vehicles to be used for transportation remaining the same. The petitioner further alleged that conditions No.14, 16 and 17 in the tender notification dated 5-8-2006 were meant for the benefit of few chosen contractors and to eliminate competition by preventing new contractors from participating in the tender process. Those conditions are as under :

"14. Regarding Tender, the ownership and control of the number of Trucks, should be confirmed as follows :

(A) There should be minimum 10 Trucks owned by the Tenderer or in case of partnership organisation, on the name of the Partner and under his control, there should be minimum 15 trucks (Heavy Goods vehicles). It would be essential for the Tenderers, those who have participated in the Tender for more than one district, they should have 10 trucks for every district of their own and apart from this 15 trucks under their control. Owned trucks should be on the name of the Tenderer, prior to the period of three months of submitting the tender. This is applicable also for the partner of partnership firm. Similarly, it would require that the Tenderer should have no his name 10 Trucks on Partner's name during the complete period of Contract. Regarding Truck's ownership, attested copy, attested by Dy. Regional R.T.O. Officer, should be attached to the Tender.

(B) Regarding partnership organisations, when the organisation will require the truck for the transportation of food grains, that time they will make available their trucks, stating this, every partner should execute individually an affidavit.

(C) Regarding Co-operative Societies, the trucks owned by the Director/Member, would be taken into consideration. For that, whenever the organisation will require the trucks for the transportation of food grains, they will make available their trucks, stating this, every director/member should execute individually an affidavit.

(D) While executing an Agreement, the 10 trucks provided by the Tenderer, should not be in use for the transportation of food grains, in other district. Similarly they should not be used for any other contract/agreement. If it is observed, the Tender will be disqualified and cancelled.

(E) It is required to attach an Affidavit stating therein that the 10 trucks owned by the Tenderer and 15 trucks under the control of the Tenderer are not in use in any other district for the contract. This Affidavit should be attached to the Tender."

"16. That the Additional District Collector/Controller of Rationing & Director, Civil Supply, Mumbai shall demand the following Original Bank Guarantee and Solvency Certificate alongwith the Tenders. The Bank Guarantee should be taken only of the Scheduled and Nationalised Bank.

Yearly Transportation Expenses of the Certificate Districts	Solvency	Bank Guarantee
Less than Rs.1 Crore	1/3rd or minimum of Rs.20 Lacs.	15%
Between 1 to 2 Crores	1/3rd or minimum of Rs.35 Lacs.	15%
More than Rs.2 Crores	Rs.50 Lacs	15% or not more than Rs.50 Lacs.

That if the Solvency Certificate is in the name of Partner of Co-operative Society's Director/Member or any other person, then take the Undertaking with all consequences jointly and severally responsible consent letter from the holder of the Solvency Certificate in respect of revenue."

"17. In is necessary to submit the Certificate in respect of experience and terms and conditions thereof by the Transport Contractors. However, such Certificate shall be issued in respect of the work done of the Central Government, State Government or Semi-Government Offices and Institutions. That no experience in the Private work shall be taken into consideration.

SUGGESTION FOR EXPERIENCE CERTIFICATE :

(A) Three years experience of the transportation work is necessary.

Out of the said three years' experience, any one of the experience should be as under:

Transport expenses of the District.	Period
Less than one Crore	Experience Certificate in respect of Transport contract of Rs.30 Lacs.
Rs.1 to 2 Crores	Experience Certificate in respect of Transport Contract of Rs.60 Lacs.
Rs.2 to 3 Crores	Experience Certificate in respect of Transport Contract of Rs.75 Lacs.
More than Rs.3 Crores	Experience Certificate in respect of Transport Contract of Rs.1 Crore.

(B) That the Experience Certificates standing in the name of Partners in respect of Partnership Firms and in respect of Co-operative Societies, in the name of their Directors and Members shall be treated as valid. However, instead of the Certificates in the name of Partnership Firm/Co-operative Societies or more than that then the said Certificates in the names of Partners/Directors/Member shall be treated and taken into consideration and on the basis if the same, if the Contractor is sanctioned, then such Partners/Directors/Member shall be the Office-bearers of such institute and any of such Partner/Director/Member if left the Society then the contract granted to them shall be treated as cancelled and the Competent Officer shall have the right to do the same."

The petitioner pointed out that condition of experience was meant to favour only the existing contractors since there had been no fresh tendering for considerable period in past.

7. The petitioner, therefore, prayed for :

(i) calling for record and proceedings pertaining to issuance of Government Resolutions dated 8-5-2006 and 5-8-2006,

(ii) quashing and setting aside the notification dated 5-8-2006, and

(iii) declaring the entire process of tendering in pursuance of such notification to be illegal, bad and unconstitutional.

8. The petitioner sought a direction to initiate departmental action against erring Government servants, who might have participated in a conspiracy to cause loss to the Government. He also sought a direction for an enquiry into the role of Shri. Sunil Tatkare, Minister, Food, Civil Supplies and Consumer Protection Department.

9. On behalf of respondent No.1 State of Maharashtra, an affidavit-in-reply to the petition was filed on 13-10-2006 by Shri. N. L. Tadose, Deputy Secretary, Food, Civil Supplies and Consumer Protection Department. He stated that the contracts were extended from time to time and lastly were sought to be extended by Resolution dated 8-5-2006. This Resolution was challenged before Aurangabad Bench by one M/s. Atlas Transport Company by filing Writ Petition No.4413 of 2006. Five other petitions were also filed before Aurangabad Bench challenging the Resolution dated 8-5-2006. The Government had also received several representations in this behalf. The Government, therefore, decided to revert to its original policy of awarding contract for transporting foodgrains by inviting tenders. Since the existing contracts were to expire on 31-7-2006 and since the process of re-tendering would have taken some time, an undertaking was given before Aurangabad Bench that the Government would continue with the existing contractors for a period of two months at the same rate. In pursuance of such undertaking, the Court passed appropriate orders on 28-7-2006. The Government issued a Resolution on 5-8-2006 for fresh tendering. Extension for this time of two months was sought and such extension was again granted by Aurangabad Bench on 6-10-2006.

10. The conditions in Government Resolution dated 5-8-2006 were challenged by several petitions before Aurangabad Bench, which allowed the challenge only to the extent of permitting tenderers to submit tenders without bank guarantee. A petition before the Principal Bench bearing Writ Petition No.5954 of 2006, consisting of same challenges as in this petition, was also withdrawn stating that the petitioner would like to pursue the petition at Nagpur. According to the respondent-State, in view of the undertaking given before Aurangabad Bench, which led to passing of order dated 28-7-2006 by Aurangabad Bench, the respondent had to start the process of inviting fresh tenders and to complete it within the time-limit granted. According to the respondent, the tenderers, who had quoted high rates were called for negotiation and after negotiation they have reduced their rates. Since the rates are still high, they have not yet been accepted. The respondent contends that no loss is caused to the exchequer due to new tendering process and that, therefore, considering collective effect of state-wide effect of transport charges, the petitioner was not entitled to any relief claimed.

11. The pleas raised by the Government in another affidavit filed by Shri. N. L. Tadose, Deputy Secretary to the Government, dated 14-12-2006, could be summed up as under :

(a) Increase in the price of transportation is imperative over passage of time,

(b) Even in the districts where existing contracts have continued, an increase of 5% per annum on account of increased prices of diesel, has been allowed,

(c) The basic policy of the Government has always been of floating tenders and not continuing existing contracts,

(d) Government Resolution dated 8-5-2006 was an exception to the said policy,

(e) Not all existing contractors were willing to have the contracts extended on the same terms, and

(f) Government Resolution dated 5-8-2006 was in tune with the basic policy of tendering and was duly issued in the name of the Governor after following appropriate procedure and, therefore, was unassailable.

Shri. K. P. Bakshi, Secretary to Government, by his affidavit dated 14-12-2006 confirmed the contents of affidavit of Shri. Tadose. Shri. Tadose had filed a further affidavit on 8-1-2007. Shri. Taharabadkar, Under Secretary to Government, had also filed an affidavit on 9-11-2006.

12. Subsequent pleadings by parties are principally about the developments leading to finalisation of tenders in the process of retendering, which, it is not necessary to recount.

13. We have heard Shri. P. C. Madkholkar, the learned Advocate for the petitioner, Smt. Neeta Jog, the learned AGP for the respondents, and Shri. R. C. Madkholkar, the learned Advocate for the intervenor.

14. The learned Advocate for the petitioner pointed out that condition of experience imposed by the respondents while calling for fresh tenders was obviously meant for favouring the existing contractors. The petitioner had alleged that the participants in the fresh tender process were the same old contractors with cosmetic changes in partnership structure and, therefore, had sought information about the partnership and the vehicle numbers which the partnership professed to own or control. However, these details have not been furnished by the State.

15. The learned Advocate for the petitioner pointed out that the affidavit dated 8-1-2007 filed by Shri. N. L. Tadose, Deputy Secretary to the Government, discloses in para A of the specific pleadings that extensions had been granted to existing transport contractors by Government Resolutions dated 10-9-1988, 12-4-1999, 24-4-2000, 5-5-2000 and 19-5-2000. Again in the year 2001, extension was granted to transport contracts in nine districts for five years on an experimental basis. In para B of the specific pleadings, the same affidavit recites that in May, 2006, the Government was considering grant of further extension for three years to the existing contractors. He, therefore, submitted that the term requiring a tenderer to have experience was obviously to favour the existing contractors. Though it is not strictly necessary to go into this aspect, suffice it to say that the experience insisted upon in Clause 17 of Government Resolution dated 5-8-2006 is only experience of transportation for Government and not necessarily experience of transporting goods for the Public Distribution System. Therefore, this contention cannot be accepted.

16. Interestingly, while the petitioner alleged that the Government Resolution dated 5-8-2006 was meant for favouring the existing contractors, the Government too, in para 1 of affidavit dated 8-1-2007 by Shri. Tadose, alleged that the petition was filed, in order to protect the interest of existing contractors, who already have adequate rates under the existing contracts and, therefore, did not wish to face competitive bidding !

17. In order to comprehend the controversy brought to the fore by arguments painstakingly advanced by both the learned Advocates for the petitioner and the learned AGP for the respondent-State, it may be useful to refer to some details which have been brought before this Court.

18. A booklet titled "Performance Evaluation of Targeted Public Distribution System (TPDS)" issued by the Planning Commission in March, 2005 was placed for the perusal of the Court. It appears from the booklet that a study was conducted in order to find out as to how the Public Distribution System worked. The highlights of the study on page (xi) show that the Government of India spends Rs.3.65 through budgetary food subsidies to transfer Re.1 to the poor. On page (ii), it has been mentioned that over 36% of the budgetary subsidies on food is siphoned off the supply chain and another 21% reaches the APL (Above Poverty Line?) households. As far as the State of Maharashtra is concerned, it may be seen from the affidavit dated 8-1-2007 filed by Shri. Tadose, Deputy Secretary to the Government, that a contractor engaged in transportation of goods for the Public Distribution System transports goods ranging from 3000 to 12000 M.Ts. every month. The total amount of sugar transported for Public Distribution System per month is about 10000 M.Ts. and foodgrains are about 1 lakh M.Ts. These goods are worth not less than Rs.100 crores per month and each contractor handles goods worth Rs.3 to 4 crores per month. Annexure R-10 to the affidavit dated 14-12-2006 filed by Shri. Tadose shows that yearly average expenditure of transportation of goods in the Public Distribution System for the year 2003-2006 was about Rs.84.59 crores. This gives an idea of the magnitude of the operation carried out by the State in ensuring that the goods meant to be distributed to the beneficiaries under the Public Distribution System reach them at proper time.

19. It may be seen from the Government Resolution dated 5-8-2006 that transportation of goods under the Public Distribution System involves transportation within the district and inter-district transportation. For transportation within the district, the base rates have been prescribed at Rs.25 per tonne per kilometer for 0 to 2 kilometers, Rs.5 per tonne per kilometer for 2 to 10 kilometers, Rs.4 per tonne per kilometer for 10 to 50 kilometers and Rs.2.5 per tonne per kilometer for distances beyond 50 kilometers. For inter-district transportation, the base rate is Rs.2.5 per tonne per kilometer. The learned Advocate for the petitioner filed the charts from time to time to show as to what were the rates quoted by the tenderers in various districts. These rates have been mostly far in excess of the base rates prescribed in the Government Resolutions. By and large, they are also in excess of the rates as per the existing contracts which have been continued. These rates have come down to some extent after negotiation, as reflected in the charts. According to the petitioner's assertion, had the Court not intervened in the matter, the Government would have spent a sum of Rs.53.23 crores per annum in excess of what it now is liable to spend. The Government too was asked to give its own computation in the like manner and according to Annexure R-1 to the reply dated 2-2-2007 filed by Shri. N. L. Tadose to Civil Application No.270 of 2007, the difference between the tender rates and existing rates is about Rs.34,66,594/- per month, which comes to about Rs.40 crores per annum. On behalf of the State, a pursis was filed on 2-3-2007 enclosing therewith two charts depicting comparative figures of expenses upon tendering and continuation of the existing contracts. It shows that in 14 districts, upon re-tendering, there is a saving of about Rs.59,99,389/- per month, whereas in 13 districts, there would be an extra burden of Rs.80,31,497/- per month. In addition to this, there seem to be some more districts, figures whereof are not furnished, as the tendering process was incomplete due to offers being higher than rates prevailing in immediate past and tenderers did not agree to reduce. The process has remained incomplete, since this Court had permitted the State Government to proceed with tenders where the offer amount was less than previous rates. Given these figures, examination of the change in policy of the Government is not just of academic importance, but has a significant material bearing on the resources of the State.

20. The learned Advocate for the petitioner submitted that scope of judicial review in such a case would be restricted to the parameters laid down in Tata Cellular Vs. Union of India, reported in (1994)6 SCC 651, that is, restricted to examining the decision-making process. Thus, what would come up for scrutiny before the Court is the process of decision-making and not the decision itself. If the decision was reached by following the prescribed procedure, the policy would be unassailable. The learned AGP did not contradict and in order to illustrate the scope of judicial review in such matters, relied on the decisions of the Supreme Court in Tamil Nadu Education Department Ministerial and General Subordinate Services Association and others Vs. State of Tamil Nadu and others, reported in (1980)3 SCC 97; State of M.P. and others Vs. Nandlal Jaiswal and others, reported in (1986)4 SCC 566; State of Punjab and others Vs. Ram Lubhaya Bagga and others, (1998)4 SCC 117; Balco Employees' Union (Regd.) Vs. Union of India and others, reported in (2002)2 SCC 333 and State of Orissa and others Vs. Gopinath Dash and others, reported in 2005 AIR SCW 6536.

21. We have carefully gone through these decisions. As held by the Apex Court in para 77 of the judgment in Tata Cellular Vs. Union of India, the duty of the Court is to confine itself to the question of legality and the concern of the Court should be :

Whether a decision-making authority :

1. exceeded its powers ?,

2. committed an error of law,

3. committed a breach of the rules of natural justice,

4. reached a decision which no reasonable tribunal would have reached or,

5. abused its powers.

The Court then added that the grounds upon which the administrative action is subjected to judicial review could be classified as under :

(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety.

The Wednesbury principle referred to in this paragraph adopted, from the judgment of Court of appeal in England in Associated Provincial Picture Houses Ltd. Vs. Wednesbury Corpn., was elucidated in para 79 of the judgment in Tata Cellular's case. The case had arisen out of a decision of the local authority to permit performances on Sundays only upon the condition that no child under the age of 15 years should be admitted to any entertainment, whether accompanied by an adult or not. The Court of Appeal had applied the principle of irrationality or unreasonableness, which has come to be known as Wednesbury principle.

22. After a review of several English as well as Indian judgments on the question of reasonableness, the Supreme Court in Tata Cellular's case summed up the principles in para 94 as under :

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In order words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

23. The learned Advocate for the petitioner submitted that applying the parameters in Tata Cellular's case, it would be clear that the action of the State is thoroughly irrational, unreasonable and, therefore, unsustainable. His learned adversary, referring to the judgment of the Supreme Court in State of M.P. and others Vs. Nandlal Jaiswal and others, pointed out that in complex economic matters, every decision is empiric and based on experimentation, or what one may call 'trial and error method' and, therefore, the validity of such decisions cannot be tested on any rigid 'a priori' considerations or on the application of any strait-jacket formula. She submitted that the Government is entitled to make pragmatic adjustments which may be called for by particular circumstances and that the Court cannot strike down the policy decision taken by the Government because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The learned AGP submitted that as held by the Supreme Court in para 34 of its judgment in State of M.P. and others Vs. Nandlal Jaiswal and others, the Court can interfere only if the policy decision is patently arbitrary, discriminatory of mala fide.

24. By our order dated 17-10-2006, we had specifically asked the Government to acquaint us with the decision-making process that preceded issuance of the Government Resolution dated 5-8-2006. We had also sought the record pertaining to issuance of the Government Resolutions dated 8-5-2006, 9-5-2006 and 5-8-2006. In our order dated 19-12-2006, we had also observed that the Government had failed to file para-wise reply to the allegations made.

25. Shri. N. L. Tadose, Deputy Secretary to the Government, by his affidavit dated 14-12-2006, outlined the chronology of events. He has enclosed with his affidavit all the relevant documents. His affidavit shows that on 27-4-2006, the then Secretary A. Ramkrishnan made a noting pointing out that in 9 districts, transport contracts had been extended from time to time from 1998-1999. These contractors had been given price escalation and neutralization in fuel price hike from time to time as per the Government Resolution dated 29-3-2001. These contracts were to expire on 31-5-2006. His note further mentions that in 14 districts, one extension without any price escalation had been given to transport contractors and this too was to expire on 31-5-2006. Fresh tenders had been finalized in 6 districts for the year 2003-2006 and these districts were also due for fresh tendering on 31-5-2006. In 19 districts, the contractors were willing to continue for a further period of three years, but some of them had asked for price escalation and neutralization of fuel price hike as per the Government Resolution dated 29-3-2001. The contractors in 10 districts were not willing for continuation.

26. The note of Shri. A. Ramkrishnan dated 27-4-2006 then recounts that the rates of transportation had gone up because of Supreme Court's decision putting a restriction on loading the trucks and also because of fuel price hike. He expected sizable number of districts to opt for fresh tendering, though, he suggested that decision granting extension to existing contractors could be taken provided no escalations were admissible and rates were frozen as on 1-4-2006. The note mentions that this arrangement would need the concurrence of the Chief Minister. The endorsements thereon show that the Principal Secretary was on leave and Shri. L. D. Vyas, Deputy Secretary, got telephonic approval of the Principal Secretary on 5-5-2006. The Minister, respondent No.2 herein, had approved the note and so had the Chief Minister, though initials of both of them do not bear any date.

Further endorsements on this note, however, show that on 9-5-2006 the implementation of the Government Resolution dated 8-5-2006 was stayed as per the Minister's direction. This endorsement also bears the signatures of Shri. L. D. Vyas, Deputy Secretary, and the Principal Secretary and the initials of the Chief Minister.

27. Shri. Tadose had annexed with his affidavit dated 8-1-2007 copy of the affidavit filed by Shri. L. D. Vyas, Deputy Secretary, before Aurangabad Bench in Writ Petition No.4413 of 2006, which is at page 350 of the compilation. Shri. Vyas elaborates and justifies the Government Resolution dated 8-5-2006. In para 6 of affidavit dated 17-7-2006, Shri. Vyas has referred to the factors devising policy for transport contracts. He has also given reasons as to why contracts are awarded district-wise. The affidavit of Shri. Vyas is marked by the refrain that in the matter of economic policies, there cannot be a strait-jacket formula and the Government must necessarily have sufficient room for formulating its policies and reviewing them from time to time and be guided by the larger public interest of serving people.

28. In this affidavit filed before Aurangabad Bench, Shri. Vyas has highlighted following prominent factors :

(a) There existed fears of illegal disposal of food-grains by transport contractors, who quote low rates.

(b) In para 19 of his affidavit, he specifically stated that the Government felt that fresh tendering would lead to substantial increase in the rates.

(c) In para 22, he stated that the interest of the State required the Government to continue the existing contractors.

(d) Government had taken a decision dated 8-5-2006 after considering all pros and cons (In clause (v) at page 248 of the compilation).

(e) The rules of the business of the Government require a Minister to take a decision that the Secretary merely advises.

(f) The notings of the Officers are not the Government decisions.

(g) The decision to continue the existing contractors was taken after following usual procedure [In clause (ix)].

(h) The Government wanted to withdraw the stay dated 9-5-2006 and implement the Government Resolution dated 8-5-2006 [In clause (xv)].

(i) The Government decided not to invite tenders but to ask the existing contractors to continue to work on the existing rates (In para 26).

It is worthy of note that this affidavit filed by Shri. Vyas on 17-7-2006 before Aurangabad Bench.

29. In the context of observations made by us in our orders dated 17-10-2006 and 19-12-2006, we have examined the record produced by the State before us with the affidavit of Shri. Tadose, Deputy Secretary to the Government. The noting dated 24-7-2006 initialed by the Section Officer in the Department of Food, Civil Supplies and Consumer Protection (produced as Exhibit R-6 with the first affidavit and R-VII with the second affidavit of Shri. Tadose) makes a reference to the affidavit of Shri. Vyas dated 17-7-2006. It then goes on to recite that the Secretary had a talk with the Minister and that the Government Pleader was to be informed to convey to the High Court on 25-7-2006 that the Government intended to float fresh tenders for all 29 districts. Below the note signed by the Section Officer, it is mentioned that the Under Secretary and the Deputy Secretary were on tour. Shri. Bakshi, the Secretary of the Department, had endorsed that as per the discussion with the Minister, the letter had been issued and copy thereof had been placed for perusal. This endorsement bears the date 24-7-2006. The note was then initialed possibly by the Minister.

30. The petitioner had produced at page 54 the letter written on 24-7-2006 by Shri. Bakshi, Secretary to the Government, to Shri. Eknath Sawant, Government Pleader at Aurangabad Bench, informing the Government Pleader to inform the High Court that the Government had decided to call for fresh tenders.

31. It is clear that on 17-7-2006 when Shri. Vyas filed his affidavit before Aurangabad Bench, the Government had taken a considered stand that continuing the existing contractors was in the interest of the Government and floating fresh tenders was not. The note dated 24-7-2006 does not indicate the decision-making process, which preceded the discussion between the Secretary and the Minister, and merely records that the Secretary had a talk with the Minister and the Government Pleader was to be informed that the Government proposed to float fresh tenders. It is not in any manner a disputed proposition that before 24-7-2006, the Government had not reached a policy decision of rescinding/cancelling its policy decision proclaimed through Government Resolution dated 8-5-2007. This sudden change in the policy from 17-7-2006 to 24-7-2006, that is within seven days, that too without observing the scruple of arriving at decision for cancelling a concluded policy decision, is not explained anywhere. This dynamism in policy-making baffles us, while we do not in any manner doubt the power to change its executive decision.

32. In para 5 of the affidavit dated 14-12-2006 filed by Shri. Tadose, Deputy Secretary, before this Court, he stated that while issuing the Government Resolution dated 8-5-2007, Financial Adviser had not been consulted. In the said para, Shri. Tadose mentions that the Government issued the Resolution dated 8-5-2006 with the hope that most of the contractors would work on the same rate, but does not give any specific reason for staying the said Government Resolution on 9-5-2006. In para 6 of the said affidavit, Shri. Tadose states that extension to the existing contractors was an exception to the rule, implying that tendering, being the rule, did not require any procedure of decision-making. In fact it was urged before us by the learned AGP that since tendering was the rule, doing away with the exception made by Government Resolution dated 8-5-2006, did not imply any decision-making exercise. The fact, however, remains that the Government has not produced for the perusal of the Court the procedure adopted and the decision-making process undertaken before issuing Resolution dated 5-8-2006. If tendering was the rule and extension to existing contractors was an exception, the mere cancellation of the Government Resolution dated 8-5-2006 should have been sufficient to revive the rule of tendering. Therefore, the necessity of issuing a fresh Government Resolution dated 5-8-2006 without any decision to issue such a Resolution is enigmatic.

33. The Government has not clarified as to exactly what is the procedure followed in taking decisions. But, if the note, which preceded issuance of the Government Resolution dated 8-5-2006 is taken to depict the standard procedure, the decision-making seems to have moved through various tiers of bureaucracy and culminated in approval by the Chief Minister. Even while staying the Resolution by note dated 9-5-2006, the approval of the Chief Minister seems to have been obtained. If this was so, it is not clear as to why the same procedure was not followed while deciding to inform the Government Pleader on 24-7-2006 that the Government proposes to call for fresh tenders. And, the crowning irony is that the Government has not produced any noting to show as to when decision to issue Resolution dated 5-8-2006 was taken and what procedure was followed while issuing such a Resolution.

34. In the background of assertions in the affidavit of Shri. L. D. Vyas, Deputy Secretary to the Government, filed before Aurangabad Bench on 17-7-2006 that the Government had decided to continue existing contracts after considering all pros and cons, the volte-face within seven days of this affidavit is unexplained and, therefore, could be said to smack of arbitrariness. It is also clear from the non-production of record pertaining to issuance of Government Resolution dated 5-8-2006 that the procedure which was followed while issuing Government Resolution dated 8-5-2006, was not followed before issuing the Resolution dated 5-8-2006. Therefore, Government Resolution dated 5-8-2006 cannot be upheld, since it has not been shown to have been issued after following proper procedure and after the Government having examined all the aspects of the matter. It seems to have been a fall-out of some discussion between the Secretary and the Minister, wherein it was decided to state before Aurangabad Bench of this Court that the Government proposed to call for fresh tenders. The process of decision-making which should have preceded authorization for making such a statement before Aurangabad Bench has been kept away from the Court, for reasons best known to respondent-State. In view of this, applying the principles laid down in Tata Cellular's case and other decisions referred to above, the Resolution dated 5-8-2006 would have to be quashed and set aside as having been issued without following the proper procedure. Also, the sudden volte-face from the stand in affidavit dated 17-7-2006 of Shri. Vyas, Deputy Secretary to the Government, the decision dated 24-7-2006 smacks of arbitrariness and may have been induced by facts which are extraneous as are not borne out by record.

35. We have already referred to the magnitude of activities involved in ensuring that food subsidies reach the rightful beneficiaries. We have also pointed to the fact acknowledged by the Planning Commission itself that for transferring every rupee to the poor, the Government of India has to spend Rs.3.65. When the Government is aware of the problem, it should be reasonable to expect the Government to formulate policies in order to ensure that the budgetary allocation meant for subsidizing the poor actually reaches them with minimum overhead expenditure. Endeavour ought to be to evolve a channel which will connect the source to destination directly. While there can be no doubt that 'maximum good of maximum numbers' may be a good policy, it does not follow that in order to secure maximum good of maximum numbers, the canal of public distribution should take so many turns and twists that what actually reaches the destination a fraction of what is released. A Ministry to oversee Public Distribution System with offices spread over till Taluka levels, has a cost of its own. Simple question of transportation becomes complex with several loops and bends requiring amounts to be spent for activities like calling tenders, processing them, overseeing the work of transportation and processing the bills of transport contractors.

36. Shri. Baba Siddiqui, Minister of State for Food, Civil Supplies and Consumer Protection, in his letter dated 21-9-2006, which has been filed by the petitioner on record at page 206, laments that the tender process was so devised to deprive ordinary transport contractors from participation in the tender process. The Government Resolution dated 29-3-2001 seems to provide for assistance to the transport contractors to purchase vehicles from the grants made available from the Central Government for Public Distribution. Thus, it seems that one scheme of Public Distribution System for providing food-grain support to persons below poverty line, is being implemented as a multi-target missile for hitting the targets of upliftment of transport contractors, fair price shop owners and may be many others. This increases the cost of whole scheme, and while common man carries an impression that a huge amount is being spent for providing foodgrain subsidy to him, in fact, the funds allocated subsidize a host of other activities.

37. We have no doubt that the various aspects of finalizing transport contracts for Public Distribution System, which were unfolded in course of hearing of this petition, would be duly considered by the State while re-formulating its policy in this behalf. We are sure that the State has not forgotten that its own State Road Transport Corporation with its network touching most of the villages on a daily basis may also be available for carrying goods meant for Public Distribution System to villages, may be at a competitive cost, at least till the State can give a final shape to its policy for transportation of Public Distribution System goods in a manner which would be most economic. This may also give a fresh lease of life to a system which serves common man even in remote places.

38. In view of this, we quash and set aside the notification dated 5-8-2006 and direct the respondent-State to re-formulate its policy after following the prescribed procedure and considering all pros and cons of the matter. However, this would not affect contracts already entered into with leave sought from the Court. In the remaining districts, the Government may make transitory arrangement with due regard to the need to save public money, till the State re-formulates its policy.

39. The learned Advocate for the petitioner submitted that the petitioner has painstakingly brought to the fore the inadequacy in the decision-making process, which preceded Government Resolution dated 5-8-2006 and, therefore, the petitioner may be adequately compensated in costs. We believe that for a public spirited individual, the satisfaction of saving taxpayer's money should be a greater reward than recovery of a few bucks he spent for a public cause and, therefore, we do not propose to award any costs.

40. In view of this, rule is made absolute in the above terms in the light of prayer clause (b). No order as to costs.

Petition allowed.