JUDGMENT:

Dr. ARIJIT PASAYAT, J.

Leave granted in SLP (C) No. 24219/2003.

The point involved in these cases essentially is the purchase preference given to Public Sector Enterprises (in short the PSEs). The petitioners have made a grievance that

the key players in the market are petitioners-Caterpillar and Bharat Earth Movers Ltd. Most important purchaser for all these are coal fields, for example Western Coalfield and its subsidiaries-Coal India Ltd. They are invariably the purchasers in respect of earth moving machines. Prior to 1992 price preference was given to PSEs. Post 1992 purchase preference was given and the lowest and the second lowest bidders were being described as L-1 and L-2. Purchase orders were issued by the Coal India Ltd., broadly in the ratio of

60/40 and the L-2 was required to match the L-1 price. The language used earlier was "may" as indicated by Circular dated 13.1.1992. The purchase preference policy was extended by office memorandum dated 15.3.1995 for a further period of two years. It was further extended till 21.3.2000 by office memorandum dated 31.10.1997, subject to purchase being in excess of Rs.5 crores. By office memorandum dated 14.9.2000, the policy was extended till 31.3.2002. However, the minimum value of purchase was brought down to rupees one crore. By office memorandum dated 14.6.2002, the policy was extended till 31.3.2004 and the scheme was made valid for purchase of rupees five crores and above. By office memorandum dated 26.10.2004, which extended the policy for one year upto 31.3.2005 retrospectively from 1.4.2004. By office memorandum the policy was extended for a period of three years retrospectively with effect from 18.7.2005. The word may was substituted by the word will by this office memorandum. According to the petitioners the intention was to give somewhat longer period for stabilizing all PSEs. It never intended to create any monopoly. Grievance is made that by substitution of the word may by the word will is arbitrary. The word may gives a wider

option to the tenderers and all the tenderers were on a level playground without any unnecessary protection to any of the parties. It is pointed out that on 15.3.1995 office memorandum was issued extending the time to purchase preference upto 31st March, 1997. It was further re-introduced for a period of three years upto 31st March, 2000. Again, it was extended upto 31st March, 2002. By further office memorandum dated 14th June, 2002 the existing purchase preference is for products and services to central public sector enterprise was extended by two years upto 31st March, 2004. The legality of the office memorandum dated 14th June, 2002 is challenged contending that it is arbitrary and affects the legitimate expectation of the various parties. In fact it creates a monopoly and the policy without any sanctity of law. The respondents opposed the petition primarily on the ground that there is no substance in the allegations. Benefit is not given only in respect of the parties covered by these petitions. The office memorandum dated 13.1.1992 was issued by the Department of Public Enterprises, Ministry of Industry, Government of India stating that in respect of granting price preference to PSEs, Government may grant purchase preference to PSEs by price quoted by them which is less than 10% of the lowest price other conditions being equivalent. It was stated that the policy was valid for three years period as transaction within which PSEs were to adjust to the global new business environment and improve competitiveness efficiency.

The above purchase preference policy was extended on 15.3.1995 for a further period of 2 years and it was stated that the said extension was final and the earlier policy would automatically lapse. During 1997 the purchase preference was further extended upto 31.3.2000. This was in relation to purchases in excess of Rs.5 crores. By the office memorandum dated 14.9.2000 the policy was extended till 31.3.2002 and th