JUDGMENT :

K. Jayachandra Reddy, J.

1. By our order dated 14th January, 1993 (reported in AIR 1994 Supreme Court 980) while disposing of these special leave petitions we gave our conclusions and we proposed to deliver the detailed judgment at a later stage giving all the reasons in support of those conclusions. We hereby deliver the detailed judgment.

2. In our earlier order we stated the relevant facts and the issues involved in a concised form. However, we think it appropriate and necessary to refer to some of them for a better appreciation of the reasons in their proper perspective.

3. Every year the Railway Board enters into contracts with the manufacturers for the supply of cast steel bogies which are used in turn for building the wagons. Cast steel bogies come under a specialised item procured by the Railways from the established sources of proven ability. There are 12 suppliers in the field who have been regularly supplying these items. Two new firms Simplex and Beekay also entered the field. Among them admittedly M/s. H.D.C., Mukand and Bharatiya are bigger manufacturers having capacity to manufacture larger quantities. On 25-10-91 a limited tender notice for procurement of 19000 cast steel bogies was issued to the regular suppliers as well as the above two new entrants for the year namely from 1-4-92 to 31-3-93. The last date for submission of offers to the Ministry of Railways was 27-1 1-91 by 2.30 P.M. and the tenders were to be opened on the same day at 3 P.M. It was also stated therein that the price was subject to the price variation clause and the base date for the purpose of escalation was 1-9-91 and that the Railways reserved the right to order additional quantity up to 30% of the ordered quantity during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period. The offers were to remain open for a period of 90 days. On that day the tenders were opened in the presence of all parties. The price quoted by the three manufacturers i.e. M/s. H.D.C., Mukand and Bharatiya was an identical price of Rs. 77,666/- per bogie while other tenderers quoted between 83,000/- and 84,500/- per bogie. After the tenders were opened and before the same could be finalised, the Government of India announced two major concessions namely reduction of custom duty on the import of steel scrap and dispensation of freight equalisation fund for steel. The tenders were put up and placed before the Tender Committee of the Railways which considered all the aspects. The Committee concluded, that three of the tenderers namely M/s. H.D.C., Mukand and Bharatiya who had quoted identical rates without any cushion for escalation between 1-7-91 and 1 -9-91, have apparently formed a cartel. The Tender Committee also noted that the rates quoted by them were the lowest. Taking into consideration the reduction of Rs. 1500/-as a result of the concessions in respect of the reduction of customs duty on the import of steel scrap and dispensation of the freight equalisation fund for steel, the Tender Committee concluded that the reasonable rate would be Rs. 76,000/- per bogie. On the question of distribution of quantities to the various manufacturers the Tender Committee decided to follow the existing procedure. The Tender Committee signed these recommend actions on 4-2-92 but on the same day the Member (Mechanical) of the Committee received letters from M/s. H.D.C. and Mukand. M/s. H.D.C. in its letter stated that in view of the concessions and also on the basis that per kg. rate of casting per bogie could be reduced from Rs. 37.50 to Rs. 29/- the cost of casting can also be reduced and therefore they would be in a position to supply the bogies at a lesser rate, in case a negotiation meeting is called. M/s. Mukand in its letter also offered to substantially reduce the prices and they would like to co-operate with the Railways and the Government and bring down the prices as low as possible and asked for ne