State contracts must be awarded fairly, ensuring public interest and avoiding arbitrariness, as mandated by Article 14 of the Constitution.

1. On 29-12-1995 it was decided and directed that this petition be disposed of finally at the motion hearing stage, without being formally admitted to hearing.

2. On Oct. 19, 1995 respondent No. 2, Excise Commissioner, J. and K. issued a notice inviting tenders (NIT for short) for and on behalf of the Governor of the State inviting tenders for the supply of 6 lakhs and 17 lakhs bulk litres of Rectified Spirit (94.4%) and above at Room temperature of 15 degree Celsius and of ISI 'A' Grade Quality) which was required for the Excise Warehouse, Jammu for the Alcohol year 1995-96. In response to this NIT, various parties submitted their tenders. We are, however, concerned with the tenders submitted by six parties, the details whereof have been given in para 6 of the petition. The names if these parties and the rates quoted by them are as under : -

3. It appears that even before the controversy had started, M/s. Ranson Industries, the lowest tenderer practically backed out from the rate quoted by it (Rs. 9.99 per bulk litre). Even though the backing out was conditional inasmuch as it by addressing a communication on 21-11-1995 informed the Government that by mistake, inadvertence and oversight had wrongly quoted the rate of Rs. 9.99 per bulk litre by ignoring 12.5% price preference stipulation. Instead of, therefore, sticking to the original rate of Rs. 9.99 per bulk litre, M/s. Ranson Industries offered the Rate of Rs. 11.75 per bulk litre. As will be seen later, even this offered rate of Rs. 11.75 per bulk litre was still lowest amongst the rates offered by all the tenderers.

4. Respondent No. 3 M/s. Kashmir Distillery Pvt. Ltd. had offered the rate of f Rs. 12.47 per bulk litre and was No. 3 in the order of lowest rates offered by the tenderers. It appears that respondents Nos. 1 and 2, perhaps because of the backing out of M/s. Ranson Industries and perhaps on being informed that the rates of molasses, raw material out of which rectified spirit is manufacture had fallen down heavily in the market, decided to make efforts by negotiations for reduction of the rates offered by the tenderers. The Departmental Purchase Committee (DPC for short) comprising of the Excise Commissioner, Deputy Excise Commissioner (Executive), Jammu, Deputy Director, Accounts and Treasuries, Jammu, Deputy Excise Commissioner, Warehouse, Jammu and Joint Director, Industries and Commerce, Jammu thus started the process of negotiations with the tenderers mentioned above for bringing down the rates quoted by them. As indicated above, the representatives of M/s. Ranson Industries had quoted the rate of Rs. 11.75 based on negotiations, after backing out from the original quoted rate of Rs. 9.99. The next in line, M/s. Krishan Baldev Pawa, on negotiations quoted the rate of Rs. 12.45 per bulk litre as against the rate of Rs. 12.70 per bulk litre.

5. Then the turn of respondent No. 3 M/s. Kashmir Distillery Pvt. Ltd. came. Initially this respondent refused to alter or revise the rate originally quoted in the tender (Rs. 12.47 per bulk litre) but on again being negotiated, agreed to bring down the rate by 7 paisa to make it to Rs. 12.40 per bulk litre. He definitely told the DPC that he was not in a position to further lower down his rates at any cost. It is worthwhile to refer to the minutes of the meeting of the DPC held on 22-11-1995 to understand the situation in which respondent No. 3 was approached for bringing down the rates and his reaction to the same