The Maharashtra Rajya Sahakari Sakhar Karkhana Limited, a federation of the State's cooperative sugar factories, has challenged the State Government's December 1997 decision to introduce a ``rate-contract'' system for the purchase of items from sugar factories.

Machinery has been purchased by sugar cooperatives since 1994 in the following manner: The petitioner formed a committee to place orders for the purchase of machinery worth upto Rs 25 lakh. The Director of Sugar was authorised to permit the purchase of machinery between Rs 25 lakh and Rs 40 lakh.

The State-level Purchase Committee was to deal with matters involving expenditure of more than Rs 40 lakh. However, in March 1996, the Commissioner of Sugarissued directions that his prior approval was necessary even for purchases that were less than Rs 25 lakh. This was opposed by the petitioner, but reiterated in a decision by the State in December 1997.

According to this decision, the commissioner of Sugar was to prepare a list of separate spare parts and chemicals needed by cooperative sugar factories.

The State would have to approve the list, call for tenders for the various items and when the tenders were approved by the State Government, the sugar cooperatives were to mandatorily purchase these items from these manufacturers and at rates at which the tenders were accepted.

The federation, however, found the decision arbitrary and impractical and approached the Government against it. Since not a word was said on this and the plan not implemented till recently, the petitioners believed the State was veering around to their point of view.

However, an advertisement issued by the Government in March this year called for tenders for machinery parts insugar factories. The counsel for the petitioners argued before Justices A V Sawant and R J Kochar that the order was unconstitutional as it took away the cooperatives' freedom to conduct the business of producing sugar. He also argued that while entering into deals with manufactures, there may be a chance of getting lower rates through bargaining, which is absent when such a mandatory order is passed by the State Government.

In fact, Justice Kochar wondered whether the State wanted to ``curb corruption or was it only shifting the centre of corruption''. To this, Advocate General C J Sawant said the State wanted to curb corruption since it was noticed that most of the time, when the board members went to purchase such goods, they always returned, ``with the same kind of watches on their wrists''. The State has been asked to file an affidavit on the matter by June 16.

The matter will come up for hearing on June 21.