SAHKAR OCTROI COMPANY v. RAJULA NAGAR PANCHAYAT — 1985 DIGILAW 270 (GUJ)

A. P. RAVANI, J. ( 1 ) ). This petition is directed against an order passed by the respondent No. 2- the Appellate Committee of the Amreli District Panchayat by which the resolution dated September 30, 1985 passed by respondent no. 1- Rajula Nagar Panchayat (hereinafter referred to as `the Panchayat) has been cancelled. Pursuant to the aforesaid resolution, the petitioner and respondent No. 1-Panchayat had entered into a contract for collection of octroi duty for a period commencing from 1-10-1985 to 31-12-86 (for 15 months ). Consequent upon the cancellation of the resolution, the contract would also stand cancelled. ( 2 ) ). The respondent No. 1 is a statutory autonomous Corporation constituted under the Gujarat Panchayats Act, 1961. The respondent no. 1-Panchayat is empowered to impose and levy certain taxes as per the provisions of the Act. As provided in Section 117 (8) of the Act, the Panchayat can collect octroi on animals, goods or both which may be brought within the limits of Nagar for consumption, use or sale therein. As per the provisions of Section 118 of the Act, the Panchayat can lease by public auction or by private contract the collecting of octroi duty. The Panchayat passed a resolution dated July 17, 1985 and decided to give contract of collection of octroi. The reason mentioned in the resolution provides interesting reading. It is stated in the resolution that the Panchayat was running Octroi Department and there was corruption in the administration thereof. That octroi income was not commensurate with the expenditure on Department and, therefore, after framing rules and regulations regarding the service conditions of the employees of the Panchayat as not to adversely affect them and with a view to see that the income from octroi is increased, the necessary contract be given after in forming the District Development Officer, Amreli. The Panchayat decided to give contract from the period commencing from October 1, 1985 to December 31, 1986 and also decided that for this purpose, notice be affixed on the notice board and the offer should be invited at least from more than 3 registered contractors. It is also mentioned in the resolution that in case of necessity, the ijara amount be decided even by negotiation. As per resolution, all the powers for entering into the contract were given to the executive committee of the Panchayat. It is also mentioned in the resolution that in case of necessity, the ijara amount be decided even by negotiation. As per resolution, all the powers for entering into the contract were given to the executive committee of the Panchayat. Pursuant to the aforesaid resolution, notice dated September 16, 1985 appears to have been affixed on the notice board of the Panchayat and the last date for submitting the offers was September 25, 1985 upto 3. 00pm. it is stated that on that day on account of insufficient corum, the meeting of the executive committee could not be held. It was adjourned to September 30, 1985. On the day offers were examined. In all there were five offers. The offer of the petitioner was highest, i. e. Rs. 16,51,000/ -. After negotiating with the petitioner, the contract was given for Rs. 17 lacs. It is contended that the petitioner and the Panchayat entered into the contract on the same day. ( 3 ) ). The respondents no. 3,4 and 5 preferred an appeal under the provisions of section 290 of the act before the district panchayat, Amreli. After hearing the parties, by its order dated 14/15-10-1985, the Appellate Committee of the District Panchayat held that resolution no. 4 of the executive committee dated September 30, 1985 by which the executive committee decided to give contract to the petitioner firm was illegal and, hence, ordered it to be cancelled. The appellate committee also found that the respondent no. 1 panchayat had flouted the direction given by way of stay order by the appellate committee and, therefore, the action under section 297 for supersession of the panchayat be taken. ( 4 ) ). The legality and validity of the aforesaid order is challenged by the petitioner firm, i. e. ijardar. It is contended that under the provisions of section 290 of the act, no appeal is maintainable and, therefore, the decision rendered by the Appellate committee of the District Panchayat is without jurisdiction and hence the impugned order is nullity. Section 290 of the act inter alia provides that an appeal shall lie to the District Panchayat against: any order or decision of the panchayat affecting any individual or institution. It is contended by the counsel for the petitioner that in the instant case, there was no order or decision of the panchyat and at any rate, the respondent no. Section 290 of the act inter alia provides that an appeal shall lie to the District Panchayat against: any order or decision of the panchayat affecting any individual or institution. It is contended by the counsel for the petitioner that in the instant case, there was no order or decision of the panchyat and at any rate, the respondent no. 3,4, and 5 who preferred the appeal were not the persons affected by the order or decision of the panchayat and, therefore, the appeal was not competent. ( 5 ) ). Appeal in a given case may not be filed by that particular individual. In the instant case, one of the appellants, i. e. respondent no. 4-Abbasji Jivaji Hathiyari is admittedly a member of the panchayat. In the opinion of one of its members, if the panchayat acts otherwise than in accordance with law, he would be imminently a most suitable person to file an appeal. Similarly, in the matter pertaining to the revenue of the panchayat, each and every resident of a gram or nagar concerned would be an individual affected by such decision. The respondents no. 3,4 and 5 are all residing within the area of respondent no. 1-Nagar Panchayat. Therefore, all of them are certainly the persons affected by the decision of the panchyat in respect of ijara of collection of octroi. Hence, the argument that the appeal at the instance of respondents no. 3,4, and 5 was not maintainable has got to be rejected. ( 6 ) ). The counsel for the petitioner submitted that in view of the provisions of section 294 of the act, resolution of the panchayat can be challenged before the district development officer concerned. In the instant case, the executive committee of the panchayat has passed resolution. Therefore, according to him, the only proper remedy available to the respondents no. 3,4, and 5 was to challenge the legality and validity of the resolution before District Development Officer under section 294 of the act. The provisions of section 294 of the act operate altogether in a different field. The very wordings of the section indicate that the power is conferred upon the superior authority with a view to see that in certain emergency situation, the power may be exercised and orders of urgent nature may be passed. In subsection 1 of sec. The provisions of section 294 of the act operate altogether in a different field. The very wordings of the section indicate that the power is conferred upon the superior authority with a view to see that in certain emergency situation, the power may be exercised and orders of urgent nature may be passed. In subsection 1 of sec. 294, it is provided that if the execution of any order or resolution of a subordinate panchayat or doing of anything which was about to be done or which was being done by or on behalf of the panchayat is unlawful, the superior authority may in writing suspend the execution or prohibit the doing thereof. This, it should be clear that the superior auhtority is clothed with the powers of suspending the execution or prohibit the doing of certain things which may appear to him to be unlawful. ( 7 ) ). The counsel for the petitioner submitted that under the provisions of section 118 of the act, the respondent no. 1 panchayat could give contract for the collection of octroi duty by private contract. According to him, there was nothing on record to show that the contract given was to adversely affect the panchayat and, therefore, it was not necessary to cancel the resolution pursuant to which contract was given. The learned counsel appearing for the panchayat has also supported the petitioner on this score. He has also submitted that the panchayat has followed necessary procedure as required under the provisions of the act. Thus, he has also supported the arguments made by the counsel for the petitioner. ( 8 ) ). Nobody denies the powers of the panchayat to give octroi ijara by private contract. The point is, whether the panchayat could have exercised this power arbitrarily and by excluding other eligible persons from entering into the arena of contest. The power conferred upon the panchayat has got to be exercised reasonably and in the best interest of the panchayat. ( 9 ) ). IT may be noted that the general body of the panchayat passed resolution on July 30, 1985 and decided to give contract for collection of octroi for a period of 15 months commencing from October 1985 to December 31, 1986. ( 9 ) ). IT may be noted that the general body of the panchayat passed resolution on July 30, 1985 and decided to give contract for collection of octroi for a period of 15 months commencing from October 1985 to December 31, 1986. It is not made clear either by the petitioner or by the respondent Panchayat as to what steps were taken by the Panchayat between the period commencing from the date of passing of this resolution and the date of notice, i. e. September 16, 1985. Why did the panchayat wait for more than one and half months? What was the necessity for the panchayat to restrict the invitation of offers only to the registered irajdars. The notice itself is not put on record either by the petitioner or by the panchayat. Therefore, it is to be presumed that the notice which may have been placed on the notice board would have been according to the resolution passed by the panchayat. Therefore, it is clear that the panchayat thought it fit to invite offers only from registered irajdars. It is not shown who are these registered irajdars and who approved them as such. As stated by the learned counsel for the respondent no. 2 and by the counsel for resp. no. 3,4 and 5, the respondent-panchayat did not give octroi ijara for last 20 years and it was for the first time that octroi ijara was given by the panchayat. This statement is not controverted by the counsel for the respondent-panchayat or by the counsel for the petitioner. ( 10 ) ). The respondent no. 2 has stated in its order that the proceedings for giving the contract for collection of octroi was not lawful. Inter alia, it is stated that no public notice was given in the newspapers inviting tenders and that the tenders were not received by registered post, but were received on the same date in person and that tenderers were not required to pay any deposit amount and the provisions of the rules pertaining to the financial matters have not been followed. ( 11 ) ). On overall consideration of the matter, the appellate committee thought that even the contract executed between the petitioner and the respondent-panchayat was bogus and sham and that it was executed on a stamp paper which in all probability might have been obtained subsequently. ( 11 ) ). On overall consideration of the matter, the appellate committee thought that even the contract executed between the petitioner and the respondent-panchayat was bogus and sham and that it was executed on a stamp paper which in all probability might have been obtained subsequently. Even the proceedings of the panchayat pertaining to this particular chapter have been found to be doubtful. Moreover, one does not know whether in the notice affixed on the notice board, it was mentioned that the salary of the staff of the panchayat would paid by the panchayat. The appellate committee has rightly held that one of the terms of contract which provided that the salary of the staff of the panchayat would be paid by the panchayat appears to be against the aforesaid reasons and on overall consideration of the entire matter, the appellate committee has rightly come to the conclusion that the panchayat had acted arbitrarily and illegally in the matter of giving contract to the petitioner. ( 12 ) ). The counsel for the respondent-panchayat submitted that even if there are some irregularities or illegalities, the decision of granting contract to the petitioner should not have been interfered with by the respondent no. 2 and this court also should see to it that ultimately the respondent no. 1- the panchayat has acted in the best interest of the respondent-panchayat. Now, this submission may be examined. Before granting the contract, the respondent-panchayat took into consideration the figures of collection of octroi duty during the proceeding period of three to five years. According to the aforesaid figures, maximum income from octroi was in the vicinity of Rs. 11 lacs and in the year 1985, the total collection of octroi was not likely to exceed Rs. 12 lacs. Therefore, it was submitted that when the contract was given for Rs. 17 lacs, it should prima facie be held that the panchayat has not acted against the interest of the people of the nagar. Apparently, this submission is based on jugglery of statistics. The present contract is given for a period of 15 months. The collection of octroi depends on the entry of goods within the limits of Nagar. More and more goods will be imported within the limits of Nagar during the period when season starts. Normally, the months of season would be October, November, December, January and some part of February. The present contract is given for a period of 15 months. The collection of octroi depends on the entry of goods within the limits of Nagar. More and more goods will be imported within the limits of Nagar during the period when season starts. Normally, the months of season would be October, November, December, January and some part of February. More than 70% of the business in small towns is done during these four months only. This is a matter of common sense and everyday experience of life. For arriving at the inference, no research is required to be made or no evidence is required to be looked into. If anyone wants to prove that the things are otherwise, he must bring concrete proof on record. In the instant case, both the counsels for the petitioner and the respondent were asked to explain this particular phenomenon and they have not been able to show that the collection of octroi would not be to the maximum extent during the aforesaid period of three to four months. Therefore, in the instant case, what has actually happened is that apparently the contract is given for 15 months, but in reality, it is for two years, or at any rate, it is a contract for a period of 21 months if not more. In this view of the matter, it cannot be said even on merits that the contract given to the petitioner by respondent no. 1-panchayat is in the best interest of the panchayat. ( 13 ) ). As stated hereinabove, the respondent no. 1 had decided to give the contract as far back as on July 30, 1985. There was ample time for the respondent no. 1 to give public notice and invite tenders. Though it may be open to the panchayat to give contract by way of private contract, such a course should be avoided by public bodies so that it may not be exposed to the charge of favourism and / or arbitrary action. In the instant case, there were certain circumstances which have been indicated hereinabove which lead to the inference that the respondent-panchayat has acted arbitrarily and illegally and probably with a view to exclude many people from entering into the arena of competition. ( 14 ) ). In the instant case, there were certain circumstances which have been indicated hereinabove which lead to the inference that the respondent-panchayat has acted arbitrarily and illegally and probably with a view to exclude many people from entering into the arena of competition. ( 14 ) ). At this stage, the counsels for the respondents have drawn my attention to the averments made in para 7 and 8 of the petition. It appears that in the same subject-matter, the petitioner has filed Regular Civil suit no. 338/85 in the court of learned Civil Judge, Sr. Dn. , Amreli and has prayed for a permanent injunction restraining the Nagar Panchayat and the district Developmet officer from canceling the contract and also from causing obstructions in recovery and collection of octroi by the petitioner. It is unfortunate that my attention has been drawn to this fact at the fag end of the judgement. In this position, I have arrived at the decision that the order passed by the respondent no. 2- the Appellate Committee of Amreli district Panchayat is legal and valid. It is also held that the resolution dt. September 30, 1985 passed by the respondent no. 1 is illegal and void. In the view of the matter, the suit filed by the petitioner should not survive. The petitioner should not have availed of the parallel proceedings in two different forums with regard to the same subject matter. In fairness to the court, the petitioner ought to have withdrawn the suit before proceeding with the final hearing of this petition. However, now, if the petitioner withdraws the suit, it would be better. In case the petitioner does not withdraw the suit, it is hoped that the respondents will appraise the trial court of the decision of this court and submit an application to dispose off the suit as not being maintainable at law. It is hoped that trial court or the appellate court ever the matter is pending will see to it that under the protection of the over passed by it, the petitioner and the panchayat should not be allowed to operate the contract which has been entered into pursuant to the resolution date. September 30, 1985 passed by the Executive committee of the resp. no. September 30, 1985 passed by the Executive committee of the resp. no. 1-Nagar Panchayat which has been held to be illegal and void; meaning thereby the petitioner should not be allowed to collect octroi duty under the protection of the orders of the lower courts. This observation is necessary because this High Court has held in the petition filed by the petitioner that the order passed by the Appellate Committee of Amreli District Panchayat is perfectly legal and valid. ( 15 ) ). In above view of the matter, the order passed by the respondent no. 2 is not required to be interfered with. Hence, the petition is rejected. Office is directed to send immediately a copy of this judgement to the learned District Judge, Amreli and to the Civil Judge, D. Amreli. ( 16 ) ). Rule discharged with no order to costs. Rule discharged. .