Khoi Singnar vs The State of Assam and Others

K. Lahiri, J.—The expanding area of present-day Administrative Law is, Undoubtedly, in the field of social welfare, Yesterday''s privilege is today''s right. Government has assumed the responsibilities and taken care of its benefactor functions. Government is a gigantic fount which pours out largess on which depend a multitude of Indians in a large democratic country. Those dependant on "public largess" are merely clients, in a subordinate legal souse, yet it is precisely those dependants who are most in need of protection, as they have neither the resources nor the ability to protect themselves against "arbitrary administrative action" which the regulated business entities and the rich can afford. Government may withhold all benefits or privileges as it likes, but if it chooses to open largess to the public for social welfare, it cannot make them available in an arbitrary manner. To say that there is no "right" to something like Government contract should not mean that the agency of the Government may act arbitrarily (substantially or procedurally) against a person or that he is net entitled to challenge the "fairness" of the agency towards him in his particular case. "The privilege concept" so firmly ingrained has been discarded in the field of Government contracts, employment, largess, grant of license by the Supreme Court of India. Procedural safeguards for persons affected by "departmental decisions rendered after hearing" have been improved. Such tribunals have been closely blended with the general legal structures; even the process of departmental determination has been judiciaries. The functional stance of our Supreme Court reveals that administrative decisions have been animated and made more ingenious. Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, marks a watershed in the realm of Administrative Law, a sterling example of the Resourcefulness and creative ability of our Supreme Court. Liberal attitude towards the protection of individual rights from governmental incursions is manifest. The members of the tribunals, who are ordinarily Government officials, are no longer rated as a part of the machinery of administration, but are considered as machinery provided by law for adjudication. Undoubtedly, all such machinery cannot be forced into a straight-jacket uniformity yet their essential adjudicatory role has been underscored, their independent status established and their procedure tuned in the wave-length necessary for imparting administrative justice requiring them to give reasons. The Petitioner has projected this Writ application against such an Appellate Authority constituted glider Rule 9 of the Assam Settlement of Forest Coupes and Mahals by Tender System Rules, 1967, for short "the Rules", and complains that the authority has failed to perform its Adjudicatory role.

To appreciate the question of law involved, it is necessary to narrate the cognate and intrinsic facts which are set out:

The Petitioner belongs to the Karbi Tribe, a recognized Scheduled Tribe and is a permanent resident of village-Rangsoli in the district of Karbi Anglong, an Autonomous District in Assam. The Divisional Forest Officer Eastern Assam Wild-life at Bokakhat, for short, "the D.F.O." invited tenders for settlement of Kakojan Stone Quarry for the period commencing from August 1, 1979 to October 31.1982, fixing the last date of submission of tenders on 19.6.79 The Petitioner had late knowledge of the Notice and could submit his tender hurriedly on the last ate. He offered Rs. 35,111/- and expressed in his tender that he could not submit some of the requisite certificates for the reasons alluded, but undertook to produce them before the execution of the agreement. However, he produced his caste certificate to show that he ''belongs to the Karbi Tribe'' and submitted his sales Tax Clearance Certificate as well, Others, including Respondent No. 5, Badulal, submitted their tenders. Respondent No. 5 should not file his income tax Clearance Certificate along with his under but produced it at a later stage. It shows that he had no assessable income. His Sales Tax Clearance Certificate shows that he had no occupation. Respondent No. 5, however, produced a "certificate of his financial soundness". The certificate is an expression of opinion of the Sub-Deputy Collector that "the financial position of Respondent No. 5 is sound". The D.F.O, as required under the rules, prepared a comparative statement of tenders and recommended the case of the Petitioner for settlement. The recommendation runs thus:

Recommended for settlement of Kakojun Stone Quarry for the period From 1st of Aug. ''79 to 31st Oct. ''82 with. Shri Khoi Singnar at his highest offer at Rs. 35,111,00 subject to production of I.T.C. and S.T.C (submitted or 22.6.79) now enclosed with has latter.

The recommendation was made to the Additional Chief Conservator of Forests Respondent NO. 3 as he is the setting Authority in respect of such settlements. Respondent No. 3 passed an order that Badulal (Respondent No. 5) was the regular highest tendered and settled the quarry upon him. No reason was attributed why the recommendation of the D.F.O. was turned down nor is there any ''speaking order'' showing reason for rejection of the highest tender of the Petitioner. Respondent No. 3, notwithstanding due receipt of the notice of the Rule, has not turned, up before this Court to contest the proceedings, although he is the most interested person, The State, notwithstanding the directions from the Court has failed to produce some relevant records, namely, the records which were at the disposal of Respondent No. 3 while dealing with the tenders as well as the reports of the divisional Forest Officer and the Additional Chief Conservator of Forests referred to in the appellate order. A number of adjournments were granted to the Respondents for production of the documents but they have failed to produce them.

The Petitioner being aggrieved by the order of Respondent No. 3 preferred an appeal under Rule 8 of "the Rules," but he was not aware of the reasons for rejection of his highest offer At this stage, it is pertinent to state that the notification calling tenders provides that the provisions of "the Rules" shall be followed although the rules were superseded by "the Rules of 1977". The tender notice expressed that the members of the Scheduled Tribes ''would get preferential treatment in all spheres. The appeal was heard and disposed on 22.10.79, by a cryptic order. The appellate authority impliedly conceded that the Petitioner had offered the highest price and he was member of the Scheduled Tribe. However, no weight was given to those facts by the Appellate Authority.

I quote the relevant extracts from the appellate order:

Perused the report of the Divisional Forest Officer and the Additional Chief Conservator of Forests. it is certain that the Appellant did cot file all required document along with his tender form. The address given by the Appellant in bin tender paper was stated to be from Sibsagar but in his caste and Sales Tax Clearance Certificate h district stated to be Karbi Anglong. It is difficult to believe which one is true. Moreover, he has not submitted the financial soundness certificate. Hence, it is not known how is his financial soundness.

The Petitioner has questioned the validity of the settlement proceedings and Dr. M.K. Sarma has attacked the appellate order of Respondent No. 4. As alluded, Badulal, Respondent No. 5, has not entered appearance to contest the petition.

The first contention of the Petitioner has a strong force. Admittedly, the D.F.O. recommended the case of the Petitioner for settlement as it was the bounden duty of the Settling Authority to give reasons for not accepting the recommendation, more to, when the Petitioner was admittedly a member of the Schedule tribe entitled to get preferential treatments. Failure to consider and decide the contentions in appeal has rendered the order of the Appellate Authority invalid. The decision is liable to be struck down as "a purported decision". Further, the authority has failed to exercise jurisdiction vested in it by "the Rules" and the order is liable to be quashed.

The second contention of the Petitioner is that the impugned appellate order was grounded on non-existent reports of "the D.F.O." and Additional Chief Conservator of Forests. Their reports referred to in the impugned appellate order have not been produced before this Court. As such, they were non-existent. Therefore the impugned order, based on non-existent material, must be quashed. Learned Counsel for the Petitioner submits that the main reason (sic) not considering the case of the Petitioner was "non-submission of his financial soundness Certificate". The other grounds on which the appeal has been rejected bears no scrutiny. Dr. Sarma submits that the appellate decision is ''a purported decision subject to judicial review under Article 226 of the Constitution. Dr. Sarma contends that the appeal was rejected on two erroneous grounds: First, the authority wrongly held that the provision of Rule 6(4)(v) of "the Rules" was mandatory. Secondly the authority committed error apparent on the face of the record in concluding that the Petitioner was not entitled to settlement as he could not produce "a certificate of financial soundness".

The Settlements of the nature are not merely conferment of privileges but are conferment of rights. When an offer is thrown to the public to get such settlements in terms of the Notification and "Rules", the Settling Authority, cannot act arbitrarily, substantially or procedurally, The practice of Inviting, tenders from the public Is for the social welfare. Every qualified person has a right to get settlements and the order of settlement should not be arbitrary, unfair or vocative of the norms set by the Government in the tender forms. In America, the landmark case of Goldberg v. Kelly 397 US 254 (1970) has extricated the Courts from the restrictive web of the out-molded analytical concept that conferment of licenses to the public is a privilege and not a right. Indeed, it is inexact to think of welfare benefits as only privileges. Such benefits when offered is a matter of statutory entitlement for persons qualified to receive them and they arc more like ''property'' than a ''gratuity''. The decision brought revolutionary changes and caused a great impact on the State privilege cases. Before Goldberg (supra) the liquor license was, the best example of a State privilege, not protected by due process as it operated in the field inimical to the "public Welfare". The Supreme Court of America in Sugar man v. Dougal'' 413 US 634 (1973) reiterated", this Court has, now rejected the concept that Constitutional rights turn upon whether a governmental benefit it characterized as a ''right'' or as ''privilege'', Thus the privilege right dichotomy is in the process of being Completely eroded in America.

We have in Ramana (supra) a sterling decision of our own Supreme Court which is more forward-looking and marks a watershed in the realm of ''administrative law''. In that decision yesterday''s privileges, have been turned to today''s right, by a magic touch. It has been ruled that the State is the repository of all rights in all forms of activities and it cannot like-private individuals, dispense such right to any person it pleases, without providing any norm and condition. Once it makes provisions as to the conditions of eligibility, qualifications, reservations, preferences, it is bound by the norms or conditions, or limitations imposed by it. The object of creating those non-discriminatory standards or norms is to compel the State agency not to depart from such standards or norms. If it does, its action is bound to be stamped us arbitrary. It cannot obliterate a qualification while making a settlement upon a person who lacks the qualification. A settlement which does not satisfy the condition of eligibility expressed in the rules or notifications invariably results in "unequal treatment". Persons lacking any such qualifications can legitimately complain that they could but did not submit their tenders under the impression that the eligibility standard prohibited them to submit tenders. It is now a settle rule, a rule of Administrative Law judicially involved by our Supreme Court. The enunciation of the norms or conditions are brakes against exercise of arbitrary power by I the executive authority. The State Policy is for the attainment of socio-economic justice in every sphere of activities. An ordinary citizen comes into relationship or direct encounter with the state power-holders in every field of its activities. The Government, in our, Welfare State is the regulator and dispenser of almost fall services and dispenser of a large number of benefits like jobs, Contracts, licenses, quotas, minor mineral rights etc. The benefits dispensed by the Government are the nation''s wealth. The Government is free, as a private individual, to select the recipients of its largess but the Government is still the Government and must be subject to restraint. Democratic Government cannot lay down arbitrary and capricious norms or standard for choice of person. In the matter of granting licenses or quotas or largess the Government cannot act arbitrarily as ft pleases. It must act within certain bounds structured by rational and non-discriminatory standards. Any departure from such norms and standards would be liable to be struck down, unless shown to be non-arbitrary and based on valid principles. The above principles have been drawn from Ramana (supra). It has been held therein that the challenge against such an order can be supported apart from Article 14 of the Constitution. I extract a pint from the judgment:

It has an independent existence apart from Article 14. It is a rule of Administrative Law which has been judicially evolved as a check against exercise of arbitrary powers by the executive authorities.

It follows, therefore, that whatever label may be given to the nature of settlement, namely, "privilege" or "license" or so called right", but it is a proceeding for enforcement of certain rights to the qualified persons who are entitled to get it and the validity of the settlement, if arbitrary and capricious, can be questioned by any person. The discretion to grant of largess by the Government is subject to two restrictions. First, the award must pass the test of reasonableness and public interest. Ordinarily all governmental actions, whether done under the authority of law or in exercise of executive power without making law, failing to satisfy the tests of reasonableness and public interest are liable to be struck down as invalid. Secondly, while selecting the recipients the Government is not at liberty, like a private individual, to pick and choose, as it likes. The governmental, action must be objective and impersonal, consistent and responsible. The validity of its action is liable to be tested on the touchstone of the principles of reasonableness, relevancy and the doctrine of equality judicially evolved as a rule of Administrative. Law running parallel with the doctrine of equality enshrined in Article 14. As such, I hold that the Petitioner can question the validity of the governmental action on any of the grounds alluded. The Petitioner- questions the validity of the order of the Appellate Authority as if, inter alia, on the ground that it has failed to discharge its duty, in ignoring the above principles.

The main reason for rejecting the appeal is non-production of certificate of financial soundness. The rule requiring production or "documents" evidence financial soundness Rule 6(4)(v), was held to be mandatory by the Authorities. The said clause of the Rule reads as follows:

Tender and its enclosures:

(1) **

(2) **

(3) **

(4) The tender shall be accompanied with the following documents namely:

(i) **

(ii) **

(iii) **

(iv) **

(v) Documents evidencing financial soundness of the tenderers.

(Emphasis supplied)

It is difficult to fathom bow the appellate authority readied the conclusion that Respondent No. 5 had complied with the so-called mandatory provision of Clause (v) of Rule 6(4). If the Rule is mandatory substantial compliance will not do. On perusal of Rule 6, it appear clear that a distinction has been made between "certificates" and "documents". Respondent No. 5 produced a "certificate" but no "document", to bear up his financial stability. Clause (v) mandates production of "documents evidencing financial soundness of the tendered" which implies that the tenderness are required to produce documents like patta, sale deed or some such documents evidencing their financial puissance. Other clauses in Rule 6(4), namely, Clauses (ii), and (iv) speak about production of "certificates" whereas, Clause (v) mandates production of "documents". Admittedly, Respondent No. 5 produced a "certificate" of a Sub-Deputy Collector. It is not "document" as envisaged under Clause (v), on strict construction of the so-called mandatory provision. Respondent No. 5 might have substantially compliance with the provision of the law, bur substantial compliance is no compliance if the Rule is held to be mandatory Under these circumstances. It must be held as contended, that the Petitioner as well as Respondent No. 5 sailed in the same boat as neither did produce "documents evidencing financial soundness". This vital aspect was completely over looked by the authorities below. However, this is of no consequence as I hold that the provision of Clause (v) is directory, for the following reasons: (a) The Clause provides the form or manner in which something is to be done and no legal consequence of failure to observe the prescription has been prescribed. (b) There is nothing to show that substantial compliance will invalidate (a) tender. (c) It is true that a compulsive word shall is there in Rule 6 but the compulsive word roust take its meaning in accord with the legislative intent. Considering the subject matter, its importance in relation to the general object intended to be secured, namely, to ascertain as to whether the tendered is financially sound to prosecute the contract work, as well as the function of Rule 7, which provides that the authority calling tender may ask for other particulars to elicit information about the financial soundness, if it is in doubt, takes out the compulsive fierce and renders it non-obligatory, (d) The necessary retirements occupy the field, which may be characterized as minor and non-essential, One of the touch-stones to determine whether a requirement is essential or not is to consider the consequences of the failure to follow the provision and if the requirements are minor and not urgent in nature and character, the interpretation must be that the provision is directory.

I have no hesitation in arriving at the conclusion that Rule 6(4)(v) is optional and not mandatory. By Rule 7, the authority calling for other particulars from intending tenderness may call for any other particulars "with a view to identify the tendered or to elicit information about his financial soundness". There is a binding decision of this Court in Muffasin Ali Barbhuiyan v. State of Assam AIR 1971 Gau. 171 (DB) where it has been held that Rule 6(4)(v) is directory. Under these circumstances, I hold that the authorities below have'' committed error of law in assuming that non-production of "certificate of financial soundness" was fatal. The impugned order of the appellate authority is bad as it rejected the appeal of the Petitioner assuming Clause (v) to be mandatory.

The Appellate Authority has co-extensive power with that of the authorities below. If it had any difficulty to identify the tendered as it had expressed in its order it could have proceeded in accordance with Rule 7 to pinpoint the identity of the Petitioner as well as to call for other particulars for eliciting from the Petitioner all about his financial soundness, as well. If we look at the recommendation made by the authority calling for the tender, "the D.F.O.", we find that lie recommended the Petitioner and had no doubt about the identity of the Petitioner or his financial soundness. In the instant case, the authority below including the Appellate Authority has completely over looking Rule 7 which provides that in the event of any difficulty to identify the tendered or to elicit information, it could have called upon the Petitioner to satisfy the doubts it had in its mind at the time of hearing. In any view of the matter, the rejection of the appeal on account of non-production of the certificate was vocative of Rule 6(4)(v) read with Rule 7 and the authorities below acted illegally in assuming Rule 6(4)(v) to be Mandatory. Therefore, I hold that the authorities below have committed errors apparent on the face of the record in holding that the Petitioner was not entitled to settlement as he did not or could not produce a "certificate" of financial soundness and over-looked the recommendation made by the D.F.O., who must have had satisfied himself under Rule 7, as to the Identity of the identity of the Petitioner and about his financial soundness.

The segment of the order where the appellate authority doubted the identity of the Petitioner is a finding which on the admitted facts and circumstances of the case, a person property lustrated in law could not have arrived at. It has not been contested before this Court that the Petitioner is a resident of village Rangsoli in the district of Karbi Anglong which falls right on the border of the Sibsagar district. The nearest Post Office (sic) Nomaligor, which is in the district of Sibsagar. Accordingly, his sale Max certificate the Post Office was shown as Nomaligor. On top of everything the authority calling for tender had to doubt as to the identity of the Petitioner. The decision (sic)idered by the Appellate Authority in so far as the identity of Petitioner was made without giving the Petitioner any opportunity to establish his identity.

Upon the whole I quash the impugned order or the appellate authority and remit the matter back to it. The appellate authority shall afford reasonable opportunities to the Petitioner as well as Respondent No. 5 to place their cases and permit them to produce necessary certificates and documents, if so required by the authority and shall consider the effect of the provisions of "the Rules" as well as the norms or conditions of the tender notice about the preferential treatment to the members of the Scheduled Tribes and dispose of the appeal in accordance with law, within a month from the date of receipt of the records.

Before parting, I would observe that it is essential for the Authority to bear in mind the nature and character of the right of tenderers, in such settlements as well as the duties and obligation of tribunals to dispense responsible administrative justify as set forth in the judgment.

In the result, the application is allowed. However, there will be no order as to costs.