Board of Councillors, Bhadreswar Municipality and Others vs Nihar Basu and Others

Pratap Kumar Ray, J.—Heard the learned advocates appearing for the parties.

Challenging the interim order dated 24th March, 2008 passed by the learned trial Judge in W.P. No. 5372 (W) of 2008, this appeal has been preferred by the Municipality.

By the impugned order the learned trial Judge restrained the effect of tender notice inviting the persons concerned to file their respective tenders for settlement of Ferry Ghat. By assailing said order, the appeal and stay application have been filed. Respective affidavits-in-opposition and reply have been filed with reference to the stay application. Though it was a challenge of the interim order as passed but while hearing the stay application, parties argued at length touching the merits of the appeal and the pending writ application.

In that view, we wanted to dispose of the writ application and appeal both by hearing the parties on the merits of the writ application and appeal.

Having regard to such, the writ application, stay application and the appeal on dispensing with the formalities have been taken up for final hearing.

It is the case of the writ petitioners that though they became the highest bidder in terms of the tender notice earlier issued for settlement of the Ferry Ghat, the concerned Municipality on cancelling the bids of the respective tenderers intended to proceed de novo by inviting fresh tender notice which is nothing but an arbitrary action. It has been whispered in the writ application that the very action of issuance of fresh tender notice on cancelling the bids of all tenderers including of the writ petitioner was nothing but to accommodate the person of their choice next time or other way to deprive the petitioner to have the settlement of the Ferry Ghat in pursuance of the highest bid as has been offered. The learned trial Judge upon hearing passed an interim order on 20th March, 2008 and subsequently on 24th March, 2008. Those interim orders which are annexed in the affidavit-in-opposition of the stay application read such:

"20.3.08. - Mr. Bhattacharjee, counsel for the petitioners, submits that the auction notice dated March 11, 2008 (at page 35) was issued by the Chairman of Bhadreswar Municipality, though the Chairman had no power to do that. His further submission is that the notice was issued without disclosing the source of power to initiate the auction process. It is pointing out that the notice in question was the third in succession. The last date for submitting tender papers has been fixed for March 24, 2008.

In my view, the questions raised by the petitioners should be examined in presence of the respondents who have not appeared, though I am told that notice was sent to them. In my opinion, till the matter is taken up for admission hearing, an appropriate interim order should be made.

For these reasons, I order that the matter shall be listed as motion on March 24, 2008, and that until further order the respondents shall not proceed in any manner on the basis of the impugned notice dated March 11, 2008. It is made clear that this interim order will be subject to further orders that may be made next day. List the matter as motion next Monday."

"24.3.08. - Mr. Bhattacharyya appears for the Municipality and prays for time to file opposition. He agrees that the question raised in the case requires consideration.

In view of the submission, I make the following order.

The respondents shall file opposition within two weeks; reply, if any, shall be filed by one week thereafter. The interim order made on March 20, 2008 shall remain in force till the disposal of the writ petition. It is made clear that on the basis of interim order made in the case the petitioners or any other person whose turn on the basis of any lease or otherwise comes to an end, will not be entitled to run the ferry in question. This does not mean that if such person is otherwise entitled to run the ferry, he will not be entitled to do so. This interim order is limited only to the issues connected with the auction notice dated March 11, 2008.

List the writ petition for final hearing after four weeks...."

It is the submission of the appellants before us by producing the relevant records of the Municipality that on 4th March, 2008 the Municipality unanimously resolved to cancel all the bids of the respective tenderers and to keep the settlement of Ferry Ghat in suspended condition and subsequently they decided to invite fresh tender. The reason assigned to cancel the bids of all tenderers was non-satisfactory bid amount in comparison to the earlier years when the bid amount was higher as offered by the highest bidder at that time. It is accordingly the submission of Mr. Mitra, learned senior advocate, appearing for the Municipality/appellants that the writ application itself has no legal foundation for interference as the factual matrix as detailed therein does not invite exercise of power of this Court under Article 226 of the Constitution of India. It has been further contended that there was no arbitrary or discretionary action committed by the Municipality in rejecting the bids of all tenderers and thereafter to invite a fresh tender with the object to fetch the highest amount of money which has a public element and public interest. The learned advocate for the respondent/writ petitioners has opposed this appeal and also supported his writ application on the ground that the Municipality to accommodate individual person of their choice whose bid amount is less than the writ petitioners had taken such a step to cancel the bids of all tenderers and to invite the fresh tender. It is the further submission that the action is mala fide on the part of the Municipality and it is also arbitrary and unreasonable as the public authority is required to perform their duties on due regard to the Constitutional provisions of Articles 14 and 19.

The learned advocate for the respondent/writ petitioners has relied upon the judgments, namely, New Horizons Limited and Another Vs. Union of India (UOI) and Others, Master Marine Services Pvt. Ltd. Vs. Metcalfe and Hodgkinson Pvt. Ltd. and Another, and Reliance Energy Limited and Another Vs. Maharashtra State Road Development Corporation Ltd. and Others, to contend that there was a breach of Article 14 by not choosing the highest bidder. Before adverting to the point as raised on the foundation of the pleading of the writ application, the basic principle of law relating to the public auction and the tender is required to be discussed.

It is a settled legal position that in absence of statutory provision the highest bidder has no legal right to have his bid accepted and it is the discretion of the authority even to accept the lower bid because it is within the domain of contractual field as the Government is at liberty to enter into the contract with whomsoever they desire. Reliance may be placed to the judgment passed in the case K.N. Guruswamy Vs. The State of Mysore and Others, It is also a settled legal position that under the general rule, a Government invites tender for a contract and thereby it reserves right to reject even the highest amount because the Government has a liberty to choose any person for a contract. Reliance may be placed to the judgment passed in the case State of Uttar Pradesh and Others Vs. Vijay Bahadur Singh and Others, and the case of State of Orissa and Others Vs. Harinarayan Jaiswal and Others, But those legal propositions are with a rider as discussed in the case Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, wherein the views expressed in the case C.K. Achuthan Vs. The State of Kerala and Others, relating to the general law about the Government''s discretion to choose anybody was narrowed down subject to judicial review satisfying the test of fairness and reasonableness as has been observed in the Tata Cellular Vs. Union of India, subsequently.

The judicial review of the administrative action so far as the matters within the domain of contractual field wherein the public authority is a party could be done in a case where the factual foundation leads to satisfaction of all ingredients to identify the arbitrary and discretionary action in the angle of Articles 14 and 19 of the Constitution of India read with Article 21 being the golden triangle of the Constitution and within the basic structure of composition of the Constitution in terms of the case I.R. Coelho (dead) by Legal Representatives v. State of Tamil Nadu, reported in (2007) SCC 1. The breach of Article 14 is sine qua non to exercise the power of judicial review and the pleading in such type of case always to this effect that a person has been chosen for grant of contract by exercising discretion wrongly, as it appears from the views expressed by the Apex Court in the case Radhakrishna Agarwal and Others Vs. State of Bihar and Others, and Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal and Another, . The judicial review is permissible if the terms of condition laid down in the tender notice is breached or violated in terms of the judgment Ramana Dayaram Shetty (supra) or the action is unreasonable or contrary to the public interest in the angle of the views expressed in the case Harminder Singh Arora v. Union of India, reported in (1989) 3 SCC 247 or in a case where secrecy was followed in terms of the judgment of the case Ram and Shyam Company Vs. State of Haryana and Others, In the Harminder Singh Arora (supra) and in the Ramana Dayaram Shetty (supra) the Court held "it is open to the Government to adopt a policy other than the settlement of a contract by tender hence after tenders have been invited, Government remains free to reject all tenders received and enter into direct negotiation with any person including one of the tenderers". The same view has been reiterated in the case reported in Food Corporation of India Vs. M/s. Kamdhenu Cattle Feed Industries, (3 Judges Bench). It has been opined therein in paragraph 10 that highest tenderer cannot claim any right to have his tender accepted in view of the fact that while inviting tenders, the authority reserves the right to reject all the tenderers and can decide the matter on negotiation. There is a rider in the case Ramana Dayaram Shetty (supra) and Harminder Singh Arora (supra) that if the Government does not reject all the tenders, it cannot make any discretion in favour of any of the tenderers.

So far as the principle which to be considered and looked into in dealing with the public auction, the Apex Court has considered the issue very recent in the case reported in (2007) 8 SCC 78 under the cause title Agarwal Modi Enterprises (P) Ltd. v. New Delhi Municipal Council wherein as many as nine judgments have been relied upon to hold that it not only ensures fair price and maximum return but also militates against any allegation of favouritism on the part of Government authorities while given grant for disposing of public property and it is accepted by the Court of law as a transparent means of disposal of public property.

Having regard to the aforesaid settled principle of law as discussed if we put the factual foundation of this case on acid test of those judgments, the result would be nothing but dismissal of the writ application. It is an admitted fact that the Municipality rejected the bids of all the tenderers and not only the writ petitioners alone and also it is another fact admitted that Municipality had not selected anybody by negotiation or otherwise to settle the ferry but intended to issue a fresh tender notice for the sole reason to fetch more income of the Municipality from the Ferry Ghat. The reason as assigned accordingly has satisfied public interest test. From the fact the Court is no where finding any arbitrary or discretionary action of the Municipality to face the wrath of Articles 14, 16 and 21.

Even on the point of mala fide as urged by the learned senior advocate, Mr. Bhattacharya, appearing for the writ petitioners, we are of the view that there is no foundation of such mala fide. It is a basic principle of law that mala fide point to be dealt with and considered if and only if there is a firm foundation of facts pleaded in the angle of the judgment delivered by the Apex Court in the case Rajendra Roy v. Union of India, reported in (1993) SCC 148 and the person against whom mala fide as alleged is impleaded in the proceeding as a party by name in terms of the views expressed by the Apex Court in the case I.K. Mishra Vs. Union of India and Others, and J. N. Banavalikar v. Municipal Corporation, Delhi, reported in (1995) (suppl.) 4 SCC 89.

In the instant case, on scrutiny of the pleadings of the writ application it appears that there is no whisper of mala fide action against anybody by impleading him as a party in the proceeding save and except a mere vague allegation, accordingly Court is not taking judicial notice of such allegation. Furthermore, as the action of the Municipality on the touchstone of Articles 14, 16 and 21, the golden triangle, is not being considered by us as illegal, arbitrary or discretionary. The question of mala fide issue also has no relevancy for adjudication even.

The judgments as referred to by Mr. Bhattacharya, learned senior advocate for the writ petitioners have no applicability in the instant case as in those cases the Court passed the views by scrutinizing the Constitutional provision of Article 14 on factual matrix pleaded therein, namely, choosing of a person, namely, the tenderer by denying the right of a highest bidder. Practically those judgments are against the writ petitioners.

Having regard to our findings and observations, we are accordingly of the view that there is no merit in the writ application for judicial review of the action impugned.

The writ application stands dismissed.

All interim order stand vacated.

The appeal succeeds.

The stay application accordingly stands disposed of.

On the fact of the case, however, there will be no order as to costs.

Since the impugned tender notice has automatically breathed last due to efflux of time, we are accordingly directing the concerned authority of the Municipality/appropriate authority under the law to issue fresh tender notice inviting tenderers and to complete the process of public auction as early as possible.

Registry is directed to incorporate the order of dismissal of the writ in the writ file being W. P. No. 5372 (W0 of 2008.

Let Xerox certified copy of this order, if applied for, be given to the learned advocates appearing for the parties expeditiously.

Manik Mohan Sarkar, J.

I agree.