V. Govindaraj vs The District Collector and Others

Shivappa, J.—The petitioner is seeking for a mandamus directing the respondent No. 1 to accept the tender of the petitioner at Rs.

10,13,000 in respect of Shop No. 3, Ward No. 10, Dindigul Town, Dindigul-Anna District.

The brief facts are: The petitioner along with others, paid earnest money deposit on 9.5.1995 to participate in the auction for the vending of

Indian made foreign liquor for the year 1995-96. The authorised officer received the amount and issued the receipt. The auction was scheduled to

9.5.1995. On that date, 150 persons intended to participate in the auction. The Sale Officer hand in glove with the 3rd respondent postponed the

sale to 12.30 p.m. which was originally scheduled to 10.00 a.m. The Sale Officer did not announce the successful bidder, which in the normal

course, he has to do. Petitioner quoted Rs. 10,13,000 earlier to the auction and his tender was not taken into consideration. Since the petitioner

and others prevented from bidding at the auction, immediately he complained to the Collector, Dindigul-Anna District about the arbitrary manner in

which the sale was conducted. The shop was again reauctioned on 26.5.1995. On that day also the same situation prevailed and the petitioner and

others were prevented from participating in the auction. Being aggrieved by the manner in which the auction was conducted by the Sale Officer, he

made representation to the District Collector on 26.5.95 and even in that letter he had informed and offered Rs. 10,13,000 for the shop in

question. The Collector immediately informed him that he would look into the matter and went to Kodaikanal for summer festival. Even to this

date, no action was taken. He has contended that he complied with Rules 7, 8 and 9 strictly. He intended to participate in the auction, but he was

unjustly prevented from participating in the auction. The Sale Officer failed to follow the procedure in conducting the auction and did not place the

sealed box where the tender covers are deposited. Nor did the Sale Officer demand from the intended parties whether they were desirous of

submitting any tender. The intending participants were not allowed either to bid at the auction or to submit tender and the Sale Officer interfered

with the right of the participants and restricted the right only to one mode, without resorting to calling for tenders. He further contended that his

offer was three times more than the 3rd respondent. There was no reason to prefer the 3rd respondent than the tender of the petitioner. The

Collector failed to take any action though immediately malpractices were brought to his knowledge and he did not exercise his powers under Rule

11(2) of the Tamil Nadu Liquor Retail Vending Rules (hereinafter referred to as ''the Rules''). The indiscreet attitude of the respondents affected

the State revenue and the vending for the excise year has gone for such an inadequate price and he contends that respondents 1 and 2 had acted

arbitrarily while parting with the privilege of the State and their action is opposed to principles of natural justice.

Respondent 1 has filed his counter alleging at paragraph 2 that there were 101 persons who remitted the E.M.D. for Shop No. 3 and only 12

persons amongst them have participated and the sale officer conducted the sale in a free and fair manner. It is also averred that the sale was

conducted in accordance with the rules and regulations. But at para 4, respondent No. 1 has stated that the petition dated 26.5.1995 was actually

received by the Collector on 30.5.1995. Before processing the petition, the petitioner moved the High Court and got an order of injunction on

30.5.1995 and the writ petitioner has not waited for the Collector''s order. At paragraph 6, it is alleged that re-sale was conducted on 26.5.1995

and the bid amount was Rs. 3,34,000. In the re-sale there were 251 persons deposited E.M.D. and only eight persons participated in the bid. The

sale is not yet confirmed and alleged that the writ petitioner has failed to deposit the E.M.D. on 26.5.1995 to participate in the re-auction. It is

stated that he remitted the E.M.D. only for the sale conducted on 9.5.1995 and further contends that he has not exhausted the remedy of appeal

and revision as provided under the relevant rules. He has also stated that he should have remitted the entire amount, if so desired by him by means

of a demand draft and enclosed along with his petition to the Collector to strengthen his claim that he was prepared to take the shop in auction for

Rs. 10,13,000 which he failed to do.

The impleading applicant more or less adopted in the same stand as has been contended by respondent No. 1.

In that reply, the petitioner has categorically asserted that he along with others was prevented from participating in the auction and the sale

officer did not take any steps to check the persons who were successful bidders in the earlier auction, who took strenuous steps to forbid, fresh

entrants. He also stated that he met the Collector in his Chamber along with his brother and he raised his objections in his letter and filed the

following documents viz., affidavit, tender form and a demand draft for Rs. 10,000 drawn on the State Bank of India in favour of the Collector, the

D.D. Number being 469786. He has further affirmed that the sale officer, while conducting the sale, joined hands with the erstwhile vendors and

his men and had made a mockery of the whole auction and the Collector as a responsible officer ought to have verified the statement by holding an

enquiry and he has failed to exercise his power under Rule 11(2) of the rules. He has also averred that respondent No. 4 and his men has caused

loss to the revenue and the State had suffered on account of the syndicate formation. Though the shops were capable of fetching more than 10

lakhs rupees, the respondents by not taking proper steps and in joining hands with the auction purchaser, had allowed the shops to be auctioned

for a song. Even to this date, the Collector has not taken any action on the representation filed by the petitioner.

From these pleadings, the points that arise for consideration are: Whether the action of the respondents 1 and 2 not allowing the petitioner and

other intending applicants to participate in the auction is arbitrary and opposed to the principles of natural justice and whether the petition is liable

to be dismissed for want of locus standi and not exhausting the alternative remedy?

In the matter of sale of public property the dominant consideration is to secure the best price for the property to be sold. This can be achieved

only when there is maximum public participation in the process of sale and every body has an opportunity of making an offer. Public auction after

adequate publicity ensures participation of every person who is interested in purchasing the property and generally secures the best price. But

many times it may not be possible to secure the best price by public auction when the bidders join together so as to depress the bid or the nature

of the property to be sold is such that suitable bid may not be received at public auction. In that event, the other suitable mode for selling of

property can be by inviting the tenders. In order to ensure that such sale by calling tenders does not escape attention of an intending participant, it

is essential that every endeavour should be made to give wide publicity so as to get the maximum price. The Government action must satisfy the

test of reasonableness and public interest. Unlike private individual, State cannot act as it pleases in the matter of giving largess and deal with any

person in its absolute discretion. Respondents 1 and 2 have accepted the bid for a lesser amount, which is wholly disadvantageous to the State and

involve considerable loss of revenue to the State. The price realised at the auction is so less when compared to the offer of the petitioner, if the

respondents have allowed all the applicants to participate, the State would have got the higher price. The State must endeavour to obtain the

highest price subject, of course, to any other overriding considerations of public interest. Otherwise, giving licence to vend to a selected individual

at a lesser price would be arbitrary and contrary to the public interest. In Kasturi Lal Lakshmi Reddy, Represented by its Partner Shri Kasturi Lal,

Jammu and Others Vs. State of Jammu and Kashmir and Another, , the Supreme Court has held that where any governmental action fails to satisfy

the test of reasonableness and public interest and is found to be wanting in the qualities of reasonableness or lacking in the element of public

interest, it would be liable to be struck down as invalid.

The property of the State is a socialist property, which would imply that it is a property of the community and every citizen of this country has

vital interest in its effects, use and legitimate disposal. But where disposal is for augmentation of revenue and nothing else, the State is under an

obligation to secure the best market price available in the market economy. Surreptitiously, a few individuals scored a march over many and

obtained vend for a lesser amount compared to the offer made by the petitioner, which indicates that respondents 1 and 2 have not bothered to the

loss of revenue to the State. When the petitioner petitioned to the Commissioner immediately, he being the authority under the Rules, ought to have

intervened. In Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, , the Supreme Court has held ""that the action of

the 1st respondent in accepting the tender of the 4th respondent who did not satisfy the standard or norm, was clearly discriminatory since it

excluded other persons similarly situate from tendering for the contract and it was arbitrary and without reason. Acceptance of the tender was

invalid as being violative of the equality clause of the Constitution as also of administrative law inhibiting arbitrary action"". It has been further held as

follows:

Where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting

other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its

action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. The power of discretion of the Government in the

matter of grant of largess including award of jobs, contracts etc., must be confined and structured by rational, relevant and nondiscriminatory

standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would

be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle

which in itself was non-irrational, unreasonable or discriminatory.

In Fertilizer Corporation Kamgar Union (Regd.), Sindri and Others Vs. Union of India (UOI) and Others, , the pertinent observation may be

extracted.

We want to make it clear that we do not doubt the bona fides of the authorities, but as far as possible, sales of the public property, when the

intention is to get the best price, ought to take place publicly. The vendors are not necessarily bound to accept the highest or any other offer, but

the public atleast gets the satisfaction that the Government has put all its cards on the table"". Public auction with open participation and a reserved

prices guarantees public interest being fully subserved....

Therefore, the sale officer in the instant case, without giving an opportunity to raise the bid and without resorting to look even to the tender

which is more than the reauction price, shows not only the petitioner but others were also prevented from participating in the auction. But an unfair

treatment was given to the petitioner and other intending bidders by the respondents 1 and 2 in discharging the administrative functions thereby

violating the fundamental principle of fair play in action.

In the instant case, the uncontraverted facts are that he gave earnest money deposit to participate in the auction at the earliest point of time but

he was not allowed to participate, so also some others. Immediately, on 26.5.1995, the petitioner along with his brother complained to the

Collector. His earlier earnest money deposit amount was not returned. When he complained about the illegalities, irregularities of arbitrary manner

in which they were prevented or the non-compliance with the principles of natural justice, the Collector or the Commissioner did not act on the

complaint. The petitioner has mentioned in his application that he was prepared to take the shop in question for Rs. 10,13,000 but this was not at

all looked into. This aspect is a glaring instance to show that the respondents 1 and 2 have ignored the interests of the revenue of the State. The

business interests of the petitioner might have goaded the petitioner to expose the unsavory deal. But the fact remains but for the petitioner, the

community''s interest sacrificed by the respondents indulging in huge loss to public exchequer would have gone unnoticed. The very fact that the

petitioner is seriously agitating this petition without loss of time and auction is not yet confirmed, is a fact situation, which goes to show that if he

would have been allowed to participate, the State would have got a higher revenue. Apart from all other aspects, the very fact that the petitioner

was ready to offer Rs. 10,13,000 against the present bid and his attempt to meet the Collector in this regard and his pursuing this writ petition

clearly show that the shop would certainly fetch a higher revenue than the present one. The non-opening of his tender wherein he has offered Rs.

10,13,000 to the shop in question shows that the procedure of tender was not considered at all. The method adopted in settling the matter behind

the back of those who are interested and anxious in competing the auction, is unjustified and has resulted in the loss of revenue to the State. It is

true that this Court on an earlier occasion in Writ Appeal No. 781 of 1995 has taken the view that normally auction should not be set aside, if

there is a fairness in auction, parties are allowed to participate and higher price was secured to the privilege of the State. But in the instant case,

that is not the situation. It is a case of preventing the petitioner and others from participating in the auction, though they gave the earnest money

deposit. It is a case of omission to take action under Rule 11(2). It is a case of promoting and assisting the syndicate by joining hands with them to

the loss of revenue to the State. Therefore, the action of the respondents 1 and 2 is arbitrary and without reason.

When their right to participate is prevented, the petitioner is an aggrieved person, can always maintain the petition. He being the person

deprived of an opportunity of participating in the auction, having done all at his command to participate, when prevented he is justified in

approaching this Court. In a similar situation in K. Soosalrathnam Vs. The Divisional Engineer, National Highways Circle, Tirunelveli and others, ,

this Court has held as under:

Petitioner intending participant making all efforts for obtaining schedule - Tender schedule refused to him illegally - writ petition against - can be

maintained by him being an aggrieved party.

The next question remains for consideration is whether the petition is liable to be dismissed for non-exhausting the alternative remedy?

In Ram and Shyam Company Vs. State of Haryana and Others, , the Supreme Court has held as under:

Originally, it is true that the court has imposed a restraint in its own wisdom on its exercise of jurisdiction under Article 226 where the party

invoking the jurisdiction has an effective, adequate alternative remedy. More often, it has been expressly stated that the rule which requires the

exhaustion of alternative remedies is a rule of convenience and discretion rather than rule of law. At any rate it does not oust the jurisdiction of the

court. Where the order complained against is alleged to be illegal or invalid or being contrary to law, a petition at the instance of person adversely

affected by it, would lie to the High Court under Article 226 and such a petition cannot be rejected on the ground that an appeal likes to the Higher

Officer or the State Government. An appeal in all cases cannot be said to provide in all situations an alternative effective remedy keeping aside the

nice distinction between jurisdiction and merits.

In the instant case, respondents 1 and 2 have failed to take any action or pass any order on the representation of the petitioner, given by his

brother. Any appeal to the same person amounts, to exercising the right in futility and it will not be an effective and beneficial remedy. Therefore,

there is no force in the contention that the petition is liable to be dismissed for not exhausting the remedy of appeal as provided under the Rules.

Keeping in view the interest of the State and procedural unfairness and the arbitrary manner in which the petitioner and other intending bidders

were prevented from participating and in view of the offer made by him, three times more than the highest bid of the 4th respondent, the only

option open to the court would be to direct a fresh auction, that too, in a situation when the auction is not yet confirmed. For the reasons stated

above, I make the following order: The re-auction held on 26.5.1995 is set aside. Respondents 1 and 2 are directed to conduct re-auction after

due publication, required under the Rules, allowing the petitioner and all persons, whoever comply with the requirements of the Rules and intend to

participate. If in the re-auction, in the event of the highest bid not being more than what has been offered by the petitioner, it shall be confirmed in

favour of the petitioner, since he has sought for a direction to accept his tender for Rs. 10,13,000 in respect of Shop No. 3, Ward No. 10. That

serves the object of the Rules viz., to realise the highest price in the interests of revenue of the State. The writ petition is allowed. Rule is made

absolute. Parties to bear their own costs.