BAVA v. CORPORATION OF COCHIN — 1986 DIGILAW 187 (KER)

Judgment :- 1. Fort Cochin has to its credit a historic tradition and a geographical grandeur. At its northern tip, many thousands gather every day. There is a ferry. Along the month of the sea, people cross and re-cross from Vypeen to Fort Cochin and back. Many from the island ferry across to Fort Cochin, and travel beyond, in the trading concerns and commercial centres, and in numerous public offices. Central and State. Many cars and those who travel in them utilise the 'junkar' service at the same spot, for saving distance and time otherwise wasted by the circuitous route. Those who reach the spot and wait along may have a natural need to have a sip of tea or a bite at a snack. The Cochin Corporation which runs the ferry is mercifully alive to the need of the travelling public. A canteen is established for their benefit. It is rightly called "The Vypeen Bus Stand Canteen." 2. In tune with the desirable pattern of functioning, the Corporation invites tenders for running its stalls, shops or canteens. Vypeen is one such place in respect of which auctions are regularly and recurringly held. Respondent No. 4 was the successful bidder for the year 1985-86. The tender in that behalf was published on 23-1-1985. He submitted his tender on 15-2-1985. The sum offered was Rs. 13.080/-. The Taxation and Finance Committee considered that tender on 20-3-1985. The tender as recommended by the Committee was accepted by the Council on 28-3-1985. The agreement in that behalf was executed on 8-4-1985. 3. As the period of the agreement was to expire on 31-3-1986, steps were taken for the auctioning of the rights to run the various shops and stalls, including the Vypeen Bus Stand Canteen. The public notification in that behalf was published on 4-2-1986. The petitioner was the only tenderer: and he offered a sum of Rs. 15,600/-. The office noted those facts and submitted for further action of the A.R.O. The Deputy Commissioner also made his endorsement in the file on 1-3-1986 that only one tender from the petitioner for Rs. 15,600/- bad been received. 4. The petitioner has a serious complaint about the role of the 2nd respondent, Asst. Commissioner of the Corporation in relation to the treatment given to his tender. 15,600/- bad been received. 4. The petitioner has a serious complaint about the role of the 2nd respondent, Asst. Commissioner of the Corporation in relation to the treatment given to his tender. There are allegations about the callous attitude of the 2nd respondent and his arrogant assertion about bis disinclination to allow the running of the canteen on the basis of any tender. The petitioner projected his complaint by the written representation dated 3-3-1986, Ext. P2. This fact is not disputed in the counter-affidavit of the Corporation. There is no indication about any reply thereto given to the petitioner. (The files furnished by the Corporation also do not contain the complaint or the processing thereof.) The petitioner apparently had the hunch about a decision to favour the 4th respondent with an extension of the running of the canteen. He therefore moved this Court by filing this writ petition on 24-3-1986. Notice was served by special messenger on the respondents as ordered by this Court. The grant of a lease in favour of the 4th respondent was stayed by the order passed by this Court on 31-3-1986. The 4th respondent was, however, permitted to conduct the canteen on a temporary basis and subject to further orders of this Court. 5. Counter-affidavits have been filed on behalf on the Corporation. deposed to by the Commissioner himself and on behalf of the 4th respondent. The affidavit of the Corporation, gives a candid account of the various events connected with the Vypeen Canteen contract. Counsel for the Corporation also put forward his submissions consistent with that attitude of the Corporation. 6. The pleadings in the case and the files produced, establish the following facts. It would appear that the 4th respondent submitted a representation dated 24-101985. (This paper does not contain the seal of the Corporasioner unlike the earlier representation dated 6-4-1985) The Deputy Commission prepared an agenda slip of the council on 3-1-1986 referring to the above request. There was a recommendation for the extension of the period of contract at the enhanced rate of Rs. I5.000/-. It was this recommendation that was approved by the District Collector in his capacity as the council The 4th respondent was intimated about that decision on 4-31986. Though the agreement and the security bond executed by the 4th respondent had beer submitted to the Corporation on 7-3-1986. I5.000/-. It was this recommendation that was approved by the District Collector in his capacity as the council The 4th respondent was intimated about that decision on 4-31986. Though the agreement and the security bond executed by the 4th respondent had beer submitted to the Corporation on 7-3-1986. further formalities regarding the acceptance thereof and the communication in that behalf are not evident from the file. 7. In the meantime, in the file relating to the petitioner's tender, a note on 4-3-1986 is seen to have been prepared for rejecting the tender in the light of the decision of the Council dated 17-2-1986 for entrustment of the canteen to the 4th respondent. The agenda to the Council was prepared on 5-3-1986 and the District Collector in his capacity as the Council authorised the Commissioner to call the petitioner and the 4th respondent for negotiation. There is no further indication in that file about any further action taken for such negotiation. Presumably for the reason that this Court was in seisin of the matter, further proceedings have not been attempted either. 8. The facts narrated above will clearly show that the 4th respondent has no right now to continue the conduct of the canteen. Though be had been notified to signify his consent to the arrangement for continuing the conduct of the canteen at the enhanced rate and to produce the agreement and the security bond before 7-3-1986, there has not been any further communication to him accepting the agreement. 9. It is evident that in relation to a duty which the Corporation had to perform openly and publicity, two parallel proceedings happened to originate and continue. It is understandable that those at the higher levels were unable to cope up with the details of multi-farious transactions concerning the Corporation, in the absence of effective or intelligent assistance from the subordinate officers. The recommendation of the Commissioner or the resolution of the Council (the District Collector functions as the Council as noted earlier) have to be understood and assessed in that background. The mistakes committed by them can therefore be appreciated, even if not upheld. 10. The conflicting interest of the petitioner and the 4th respondent will have to be assessed in the back drop of facts and events indicated above. The mistakes committed by them can therefore be appreciated, even if not upheld. 10. The conflicting interest of the petitioner and the 4th respondent will have to be assessed in the back drop of facts and events indicated above. After due consideration of various aspects, and the role and rightful conduct of public functionaries as clearly sketched by judicial decisions on the topic, I am strongly of the view that the petitioner has a rightful cause and a claim for relief from this Court. 11. There cannot be any doubt that the Corporation, a statutory authority, a State within the meaning of Art.14 of the Constitution has to act fairly, reasonably and Rationally. It cannot deal with its assets secretly, unreasonably or unfairly. Public interest demands that manipulations, however, veiled or concealed they may be, are not allowed to distort its functioning, or contaminate its conclusions. Viewed from the larger angle, the Corporation would not ordinarily be justified to divagate from the right and proper path of inviting tenders, as it hitherto used to do, in respect of establishments similar to the Vypeen Canteen. The tender notification covers a wide range of establishments disbursed throughout the extensive area of the Corporation. They include cart stands and taxi stands, landing and mooring places, public markets and puramboke lands, fishing rights and fishing markets, bath rooms and public wells, comfort stations and slaughter house, and many others. Arguments such as those put forward in the 4th respondent's representation dated 24-10-1985 would be available in respect of many persons who have had the contract for the year 1985-86. Such arguments do not constitute a reasonable or rational ground for departing from the tender system conceived in larger public interest. If it can be good for one party, it can be as good in relation to the large number of others who too had participated in the auction for the previous year. If arguments advanced in private and processed in secret by the minor officials with their 'recommendations' are unwittingly accepted by the higher authorities, it can virtually subvert a salutary system and substitute it in its place one in which favouritism, nepotism and even corruption could be rampant. Such a pattern will be irreconcilably inconsistent with the legal and constitutional functioning of a public authority in a democratic polity. Such a pattern will be irreconcilably inconsistent with the legal and constitutional functioning of a public authority in a democratic polity. As is obvious from the facts and figures, it resulted in the Corporation receiving a lesser sum than what was obtainable under the open tender system. The resolution dated 17-2-1986, for extension of the contract in favour of the 4th respondent, is therefore clearly arbitrary, unreasonable and irrational. 12. A reference to the file would further demonstrate that the recommendation emanating apparently from the Deputy Commissioner, was one made recklessly and irresponsibly. The files will indicate that for the period from May to September, 1985. the 4th respondent had defaulted payment of rent aggregating to Rs. 5,450/- and this necessitated the issue of a notice threatening even distraint proceedings. The fact that there were arrears of defaulted rent (Rs. 3,270/-) even in November, 1985 is evident from the notice dated 14-11-1985. It is nearly two months subsequent to his request for continuance of the contract, that he cleared the arrears for the earlier period on 17-12-1985. It would therefore not be in the interest of the Corporation to entrust a defaulting contractor like the 4th respondent with the continuance of the canteen contract. Strangely enough, those who dealt with the file, missed these relevant factors, whether they missed such factors negligently or designedly, may merit further probe in the larger interest of the Corporation. Gross inefficiency or lack of probity should not be indifferently accommodated in the case of any public institution. 13. Theoretically, there may not be a compulsion for the Corporation to accept a tender. It does not, however, follow that in the absence of proper and justifiable reasons, tenders duly submitted in response to public notification, should be lightly discarded. Such an attitude will wreck the system itself. Though in given situations, the authority, for valid reasons, can take a decision ignoring the tender submitted, the rejection of a tender, which offered a substantially higher amount than in the preceding year, cannot be ignored or turned down. The Corporation which found a sum of Rs, 15,000/- acceptable, cannot possibly find an offer of Rs. 15,600/- unattractive. The address of the petitioner itself indicates that he is a person already engaged in the running of a tea shop. The Corporation which found a sum of Rs, 15,000/- acceptable, cannot possibly find an offer of Rs. 15,600/- unattractive. The address of the petitioner itself indicates that he is a person already engaged in the running of a tea shop. The only ground mentioned for the rejection of his tender is the decision of the Council to extend the contract of the 4th respondent. That decision as already held above, is invalid, being arbitrary and unreasonable. In those circumstances, the petitioner is entitled to a declaration that his tender is liable to be accepted by the Corporation. I accordingly hold that the Corporation is in the circumstances, bound to accept the tender submitted by the petitioner and take further steps for entrusting the conduct of the canteen with him. 14. Counsel for the 4th respondent submitted that be was running the canteen in the very same place for the last four years, that he had large number of employees under him and bad considerable investment in the equipment of the canteen. Most of these arguments were available in relation to the year 1984-85. During that year too, the Corporation had decided to invite tender. Only one tender was received by the Corporation that year also; that of the petitioner. That fact notwithstanding, the decision of the Corporation was to accept that tender. It cannot be said that the investment in a canteen with a limited space, is unduly high. That apart, that is not a valid argument sufficient to discontinue the very tender system. As noted earlier, viewed from the point of view of his performance during the past year also, there was no justification for permitting bis continuation for the tenuous reasons urged in his representation. 15. The 4th respondent urged a legal contention to sustain the benefit secured almost secretly. Based on the decision in Life Insurance Corporation of India v. Escorts Ltd., (1986) 1 SCC 264, it was contended that in a matter relating to contract, this Court would not ordinarily interfere. In particular, the passage in Para.103 of that decision was relied on. It is difficult to understand that decision as overruling the principles clearly and firmly laid down in Ramana Dayaram Shetty v. The. International Airport Authority of India, AIR. 1979 SC 1628. In particular, the passage in Para.103 of that decision was relied on. It is difficult to understand that decision as overruling the principles clearly and firmly laid down in Ramana Dayaram Shetty v. The. International Airport Authority of India, AIR. 1979 SC 1628. That principle which is basic and fundamental to the functioning of a public authority now has its deep roots in the Indian administrative jurisprudence. It has to be remembered that the question pointedly and directly arose in Shetty's case. The dictum laid down therein, unless expressly overruled, has binding effect on all Courts in India. The principle has been applied repeatedly, and approvingly, by the Supreme Court itself, in large number of decisions. To cite only a few: 1. Kasturilal Lakshmi Reddy v. State of J. & K. (1980) 4 SCC 1. (Bhagwati, Tulzapurkar and Pathak, JJ.) 2. Gujarat State Financial Corporation v. Lotus Hotels (P) Ltd., (1983) 3 SCC 379. (Desai & Misra, JJ.) 3. B. M. Minhas v. Indian Statistical Institute, (1983) 4 SCC 582 (P. N. Bhagwati & R. B. Misra JJ.), 4. Rohtas Industries Ltd., v. Chairman, Bihar State Electricity Board, 1984 (Supp.) SCC 161 (D. A. Desai & V. Balakrishna Eradi, JJ.). 5. Ram & Shyam Co., v. State of Haryana, AIR 1985 SC 1147. (Desai & Baharul Islam JJ.). 6. Olga Tellis v. Bombay Municipal Corporation, AIR 1986 SC 180 (A constitutional Bench of five judges presided over by Chief Justice Y. V. Chandrachud.) The principle has been applied by Courts all over India, for about a decade now. Even the public authorities have realised the implication of the salutary principles underlying the decision, and have adjusted their attitudes to fit in with the ideal functioning in tune with the rule of law. Any suggestion to scuttle a proper and legal functioning of public authorities, has to be strongly turned down. I have therefore no hesitation whatever in rejecting the above submission of the 4th respondent. 16. In the result, I allow the original petition, the decision dated 17-2-1986 to entrust the running of the canteen with the 4th respondent is quashed. Respondents 1 to 3 are directed to accept the tender of the petitioner and to take further steps for the conduct of the canteen on the basis of the acceptance of the tender. 16. In the result, I allow the original petition, the decision dated 17-2-1986 to entrust the running of the canteen with the 4th respondent is quashed. Respondents 1 to 3 are directed to accept the tender of the petitioner and to take further steps for the conduct of the canteen on the basis of the acceptance of the tender. In as much as the 4th respondent has been continuing the conduct of the canteen on the basis of the interim orders passed by this Court, he will be given two weeks' further time for the winding up of his existing establishment and the surrender of the canteen to the Corporation. This period would give him sufficient interval to seek further remedies by way of appeal, if he is inclined to do so. Ordinarily, the petitioner would have been entitled to the costs in the case. However, the authorities of the Corporation, at least those in the higher level, have contributed to the confusion. Though this bad originated in the representation of the 4th respondent, it had (erroneously though) found acceptance by the Corporation. Having regard to all these circumstances, I direct the parties to bear their respective costs.