JUDGMENT
Thottathil B. Radhakrishnan, J.
1. Petitioner has a valid registration with the Stores Purchase Department of the Government of Kerala. This is evidenced by Ext.P1.
2. By Ext.P2, the first respondent invited quotations, including for supply of electrical goods. Sl. No. 9 in the said notice relates to supply of streetlighting equipments. The bidders were to quote the rate for supply of equipments required for rectifying faulty tube lights for one year.
3. The petitioner submitted his quotation pursuant to the said notice and his was the lowest quotation.
4. He filed this Writ Petition alleging that the work is likely to be awarded to the third respondent, who had quoted a much higher rate on the ground that the petitioner had not deposited earnest money as demanded in Ext.P2. Petitioner’s contention is that he, being a person registered with the Stores Purchase Department, is entitled to have his quotation considered without depositing any earnest money.
5. As of now, there is an interim order passed on 3-2-2005, to the effect that the stay of all proceedings pursuant to Ext.P2 notice, that was granted on 20-12-2004 is clarified to the effect that the Panchayat is permitted to accept only the first lot of the estimated lots to be supplied by the third respondent, whose bid is stated to have been accepted. It is also made clear in the said order that the said arrangement was subject to the result of this Writ Petition.
6. Counter affidavits have been placed on record by the second respondent Panchayat and by the third respondent. A reply affidavit is also filed.
7. As per the Stores Purchase Manual, persons who are registered with the Stores Purchase. Department are entitled to exemption from depositing earnest money for tenders in respect of Stores for which they have registered as suppliers of stores. However, this exemption will not be given in the case of tenders for Rate/Running contracts. By Government circular dated 22-2-2003, the said Stores Purchase Manual is made applicable to the local authorities also. It is urged on behalf of the petitioner that the issue at hand is directly covered in favour of the petitioner by two Bench decisions of this Court in W.A. No. 131 of 2005 and W.A. No. 1574 of 2004. «
8. The learned counsel for the Panchayat relied on the decision of a learned Judge of this Court in General Electrical & Engineering Co. v. Chief Engineer (Projects) and Ors. (1973 K.L.T. 321) rendered relying on the decision of the Apex Court in C.K. Achuthan v. The State of Kerala and Ors. . It was held in that decision that the Stores Purchase Manual issued by the Government is only for guidance of the subordinate officers and any alleged violation of such instructions does not call for interference by this Court. The learned counsel for the petitioner, in my view, rightly, points out that the ratio of the decision in Achuthan’s case (Supra) has been watered down by the Apex Court in various decisions including in Ramana Dayaram Shetty v. The International Airport Authority of India and Ors. .
9. The learned counsel for the Panchayat contended, further, that the tender conditions cannot be challenged in a Writ Petition under Article 226 because it is in the realm of contracts. He sought reliance on the decision of the Apex Court in W.B. State Electricity Board v. Patel Engineering Co. Ltd. and Ors. (2001) 2 S.C.C. 451. This contention does not stand, for the simple reason that the petitioner is not challenging any term of the contract or invitation to bid, as evidenced by Ext.P2, but urges that he is the beneficiary of an exemption provided by the Stores Purchase Manual and that he is exempted from the term in Ext.P2, as to earnest money deposit. His such right is not one referable to the realm of contracts and, in my considered view, is one justiciable under Article 226 of the Constitution of India. The objection of the Panchayat on this count is hence over-ruled.
10. In W.A. No. 131 of 2005, this Court dealt with Clause 27 (c) of the Stores Purchase Manual and held that going by the definition of the Running contract in Clause 61 thereof, there was no Running contract available in that case. The Bench, therefore, upheld the decision of the learned Single Judge. In W.A. 1574 of 2004, it was noticed that the Local Self Government Institutions were directed to strictly follow the conditions in the Stores Purchase Manual and therefore they are bound to follow the same.
11. Even according to the petitioner, the rate and period are specified. The petitioner’s specific contention is that approximate quantity is not fixed and therefore it is not a Running contract. It is urged on behalf of the Panchayat that Ext.P2 discloses the invitations of offer for a Running contract since the rate, period and approximate quantity are specified.
12. Clauses 27(c) and 61 of the Stores Purchase Manual are immediately relevant. They are as follows:
"Clause 27(a)- xxx xxx xxx (b)- xxx xxx xxx
(c)- Firms whose names are on the register of approved suppliers kept by the Stores Purchase Department and who are registered with the Director General of Supplies and Disposals. New Delhi are exempted from furnishing earnest money for tenders in respect of stores for which they have registered as suppliers of stores. But this exemption will not be given in the case of tenders for Rate/Running contracts.
xxx xxx xxx
xxx xxx xxx
Clause 61– In the case of articles which cannot be stocked conveniently in the departmental store with safety and convenience, the system of running contracts should be adopted. A Running Contract is a contract for the supply of an approximate quantity of stores at a specified price during a certain period. The approximate requirements of a number of indentors for the period in question are combined by the Department and the contract provides that any of these indentors may demand his requirements at any time or at specified periods during the currency of the contract either direct from the firm or by indent on the Department. In terms of the conditions governing these contracts, the purchaser has the right to take a certain quantity (usually 25 per cent) over or below approximate quantity mentioned in the contract. Drawals against these contracts should be carefully watched and the guaranteed quantity (usually 75 per cent of the contractual quantity) taken up before the expiry of the contract.”
(Emphasis supplied)
13. In W.A. No. 131/2005, this Court noticed that going by the definition of Running Contract as stated above, three cumulative conditions have to be satisfied for a transaction to become a Running Contract. The Division Bench enumerated the said conditions as follows:
“(a) the contract should be for supply of an approximate quantity of stores;
(b) the contract should be for supply of stores at a specified price;
(c) the contract should be for supply of stores during a certain period.”
14. Though the learned counsel for the Panchayat argues that the approximate quantity has been stated in Ext.P2, I am not inclined to accept the said contention. What is stated in Ext.P2 at Sl. No. 9, is that the equipments will have to be supplied to rectify faulty tubelights. during one year. One fails to understand as to what will be the yardstick on which a person intending to quote would rely to decipher the approximate quantity of supply. This means that there is no quantity fixed in Ext.P2 regarding Item No. 9, at least in approximation, so that an ordinarily prudent man dealing in such materials will be able to understand the quantity for which he has to quote. This takes the proposed contract in question out of one being a Running contract as defined in Clause 61 of the Stores Purchase Manual.
15. In the said circumstances, the learned counsel for the Panchayat argued that in such event, the proposed contract is a Rate contract as defined in Clause 63 of the Stores Purchase Manual and that Rate contracts are also exempted from the operation of Clause 27(c). This argument takes me to Clause 63 of the Stores Purchase Manual which reads as follows:
“A Rate Contract is a contract for the supply of stores at specified rates during the period covered by the contract. No quantities are usually mentioned in the contract, and the contractor is bound to accept any order which may be placed upon him at the rates specified within the contract period. As a reciprocal consideration, the Government undertakes to order from the contract all stores under the contract which are required to be purchased, subject to certain reservations for submitting prices to competition and for dividing the contract between one or more contractors.”
A reading of the aforesaid Clause will show that the tender should be for supply of Stores which are identified by name in the tender notice itself. I say so because the identity of the type of goods or articles to be supplied is relevant for a Rate contract though no quantity need be prescribed since the contractor is bound to accept any order which may be placed upon him for such goods at the rates agreed by him within the contract period. This means, there has to be consensus ad idem between the parties as to the identity of the actual nature of the goods or articles which have to be supplied. Referring to Ext.P2, it can be seen that the work at Sl. No. 9 of which we are concerned, relates to supply of all such materials as are required for rectification of faulty tubelights. This is not a Rate contract going by the definition in Clause 63.
16. In this context, it is apposite to read Clause 64 of the Stores Purchase Manual, which is as follows:
“Clause 64 – Rate contracts should be settled for such articles as are required frequently by many Departments during the course of an year for which the quantity cannot be forecast. Rate Contracts also may be settled for one year or shorter definite period. Intending Officers can draw their requirement direct from the contractors as and when required. Steel furniture, steel cupboards and safes, clocks and timepieces, sewing machines, etc., are some of the items coming under this group.”
(Emphasis supplied)
A reading of Clause 64 will also show that Rate contracts will have to be settled for such settled articles. This means that the identity of the articles is crucial. Therefore, the contract in question is not a Running contract.
17. For the foregoing reasons, I hold that the invitation of bid for the item at Sl. No. 9 of Ext.P2 is neither for a Running Contract nor for a Rate contract and therefore it is not exempted from the purview of Clause 27(3) of the Stores Purchase Manual.
18. Therefore, the writ petitioner’s tender ought to have been considered and accepted even without deposit of the earnest money since nobody has a case that he is not one who is registered for the purpose of the application of the Stores Purchase Manual, his tender, the lowest, was rejected only on the ground which was illegal.
In the result, the Writ Petition succeeds and respondents 1 and 2 are directed to award the works covered by Ext.P2 (Sl. No. 9) to the petitioner. However, the amounts due for the goods supplied by the third respondent following the interim order dated 3-2-2005 and utilised till this day, shall be paid to him. The remaining goods, if any, supplied by the third respondent shall be duly returned to him by the Panchayat. The petitioner will be entitled to carry out the remaining supply.
Writ Petition is allowed as above. No costs.