The decision to award contracts on nomination basis must be based on a sound, transparent, and perceptible policy available in the public domain, and any deviation from the norm of public tender must be founded upon a discernable policy. Violation of Article 14 of the Constitution in administrative decisions is amenable to judicial review and can be set aside if found to be violative.

DEBANGSU BASAK, J.

1. The petitioners have assailed the process of granting contracts on nomination basis to the respondent nos. 5 and 6 by the respondent no. 2 as also the decisions to do so.

2. Learned Senior Advocate appearing for the petitioners has submitted that, award of contract on nomination basis cannot be done. He has referred to (Caterpillar India (P) Ltd. v. Western Coal Fields Ltd. & Ors., (2007) 11 SCC 32) and submitted that, the Supreme Court had issued certain directions upon the Central Government requiring an exercise to be undertaken to find out whether, purchase preference can be given in the matter of award of contract to public sector enterprises or not. In terms of the directions issued by the Supreme Court in Catarpillar India (P) Ltd. (supra), the Central Government had formed a committee by a writing dated March 24/25, 2008. Such committee had submitted a report dated May 14, 2008. The report had dealt with the respondent no. 5. The report had noted, the respondent no. 5 is a separate legal entity. It had stated that, for a long time solution, the respondent no. 5 may be converted into a subsidiary of the respondent no. 2 or a joint venture of the respondent no. 2 along with other companies.

3. Learned Senior Advocate for the petitioners has submitted that, the respondent no. 6 by a writing dated January 29, 2008 had sought clarification from the Ministry of Steel as to whether award of slag processing on nomination basis to the respondent no. 5 was permissible or not. It sought guidelines from the Ministry of Steel by the writing dated January 29, 2008. Such a situation received the consideration of the Steel Minister which is referred to a writing of the Steel Ministry dated February 11, 2010 where the Steel Minister had expressed the view that, he was not entirely convinced about grant of contract on nomination basis although there were some merits in the contention for such grant. The Steel Minister had opined that, the matter should be referred to the Central Vigilance Commission (CVC) and their comments should be obtained as to whether respondent no. 2 can continue to award work to the respondent no. 5 on nomination basis or not. According to him, the Minister himself did not take a decision as to whether award of contract can be given on nomination basis to the respondent no. 5. In fact, the Minister expressed a view that the same should not be done. He has thereafter referred to the office memorandum dated April 23, 2010 issued by CVC. According to him, CVC by such office memorandum reviewed the Purchase Preference Policy for production services of Central Public Sector Enterprises in view of the judgment of the Supreme Court rendered in Caterpillar India (P) Ltd. (supra). By the office memorandum, CVC clarified that, awarding of contracts on nomination basis is different from price preference. Award of contract to the respondent no. 5 on nomination basis would not be correct. However, if a special dispensation for awarding works to the respondent no. 5 is justified then the Ministry has to obtain the approval of the Government of India.

4. Learned Senior Advocate appearing for the petitioners has referred to the views of CVC on award of contract on nomination basis. He has referred to the Office Memorandum dated October 20, 2003, Circular No. 15/5/06 dated May 9, 2006, Office Order No. 23/7/07 dated July 5, 2007, Circular No. 18/12/12 dated December 11, 2012, Circular No. 31/10/09 dated November 5, 2009 issued by CVC. He has also referred to the letters dated April 13, 2010 and March 16, 2010 written by the respondent no. 2 to CVC and submitted that, neither CVC nor the respondent no. 2 had taken a decision that, award of contract would be given on nomination basis.

5. Learned Senior Advocate for the petitioners has referred to the conduct of the respondent no. 2 with regard to award of contract for slag handling. He has submitted that, despite CVC requiring the respondent no. 2 to awar