Lawfarm Team
in Consumer Law Corporate Law RTI and PIL Contracts Law Civil Law Constitutional Law Labour Law
Asked June 01, 2016

Imposition of restriction on Companies to provide goods

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My company supplies various products to rail wheel factory , Bangalore. RWF imports products from china like mold blank which is a very costly item. But when a public tender was floated for one product, RWF imposed a condition that only indian manufacturers can take part in this tender. HOW CAN THIS BE LEGALLY CORRECT AS MANY MFRS HAVE DEALERS AND DISTRIBUTERS WHO INVEST IN THE COMPANY AND TAKE PART IN TENDERS ON THEIR BEHALF. THESE DEALERS ARE NOT BEING CONSIDERED WHICH IS THEIR DEMOCRATIC RIGHT. PL LET ME KNOW IF A PIL CAN BE FILED TO OVERTHROW THIS RULE.

Answer 1

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Shreya Mishra
Firstly, the Central Vigilance Commission(CVC) of India, in a study about tenders and contracts, has recognized that often tenders have restriction clauses on them, which seek to limit the people participating in the tender process and other similar restrictions. 1 There is a purpose behind such restrictions. It is mainly done to narrow the competition and in some cases, to avoid frivolous companies to participate in the tender so that only reliable and big companies participate. 2 The restriction in this case seems to be on similar lines- to ensure that only Indian manufacturers get the opportunity to participate in the tender process. Now you cannot file a PIL as it would be against a private body. PIL can only be filed against government or state agencies or against a private body only even making government agency as a party to the PIL. 3 But if you have sufficient grounds to believe that this restriction is unreasonable, you can file a case. However, in the case of Union Of India (Uoi) And Anr. vs International Trading Co., 4 the court held that any reasonableness of restriction should be determined in an objective reasonable manner, just because a restriction seems harsh, does not mean it is unreasonable. The underlying purpose of the restriction should be analysed, if it is for public good or seems reasonable according to trade practises, then it would not be deemed fair. Therefore, go ahead with the case only if you can prove that this restriction is unreasonable and will do more harm than good.   1 http://cvc.nic.in/COMMON%20IRREGULARITIES.pdf 2 http://www.cci.gov.in/sites/default/files/presentation_document/p4.pdf 3 http://www.legalserviceindia.com/article/l171-Public- Interest-Litigation.html 4 (2003) 5 SCC 437 https://indiankanoon.org/doc/178226192/ Paragraph 24.
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