Research › Browse › Judgment

Kerala High Court · body

1994 DIGILAW 34 (KER)

K. M. PAREETH LABBA v. KERALA LIVESTOCK DEVELOPMENT BOARD LTD.

1994-01-20

K.G.BALAKRISHNAN

body1994
ORDER K. G. Balakrishnan, J. - The first respondent, the Kerala Livestock Development Board Ltd. invited tenders for the disposal of trees in Block Nos. 1, IV and V of their farm at Mattupetti. It was stipulated that separate documents should have been submitted for each block of trees. The estimated value of the trees in Block Nos. I, IV and V were Rs. 10.02 lakhs, Rs. 5,03 lakhs and Rs. 7.40 lakhs respectively. Petitioner submitted tenders in respect of Block No. 1. Petitioner quoted an amount of Rs. 10,47,101/-. In respect of Block No. IV, the petitioner quoted Rs. 5,17,250/- and in respect of Block No. V, petitioner quoted Rs. 7,59,500/-. According to the petitioner the amount offered by the petitioner is higher than the estimated value of the trees and so the bidding of auction by the petitioner is legally valid but the 2nd respondent issued Ext. P. 1 notice to conduct fresh auction for Block Nos. I, IV and V without assigning any reason. Petitioner challenges Ex. P. 1 order. 2. A detailed counter-affidavit has been filed by respondents 1 and 2, the first respondent is a Government Company and in 1991 the first respondent took action to dispose of the standing Eucayptus trees in Block Nos. I, II and III by sealed quotations. Trees from Block Nos. II and III were disposed of. In respect of Block No. 1 there were II tenders and one Aliyar offered highest amount of Rs. 13,01,101/-. There was a past offer from M/s. Wood Traders, Kozhikode for Rs. 14.4 lakhs. Aliyar was asked to make negotiations but he was not willing. M/s. Wood Traders also did not come forward and it was under that circumstance it was decided to reauction. Petitioner offered only Rs. 10.51 lakhs for Block No. I. The second offer was by Aliyar for Rs. 10.50 lakhs. As regards Block Nos. IV and V, petitioner alone submitted tenders. The total offer received for the three blocks was Rs. 23,27,750/-. The fact that only two contractors participated in the quotation and the highest tender amount is only slightly higher than the estimated value and other relevant circumstances were considered and it was decided to invite fresh tenders. The mala fide conduct attributed by the petitioner is denied. The petitioner has no superior right to say that his offer should be accepted. The mala fide conduct attributed by the petitioner is denied. The petitioner has no superior right to say that his offer should be accepted. Petitioner has no legitimate expectation that his bid of auction would be confirmed by the respondents. The respondents pray for dismissal of the original petition. 3. O.P. 523 of 1994 is an original petition filed subsequently seeking almost the same reliefs claimed in O.P. No. 5895 of 1993. O.P. No. 523 of 1994 was filed on the eve when the respondents took steps to issue a re-tender. By Ext. P. 3 tender notification respondents 1 and 2 herein invited fresh tenders. This according to the petitioner is illegal, and in the original petition he claims that his earlier tender ought to have been accepted by respondents. I do not propose to summarise the pleadings in O.P. 523/1994, since they are almost the same contentions alleged in O.P. No. 5895 of 1993. 4. I heard the petitioner's counsel and also the counsel for the respondents. The counsel for the petitioner elaborately argued and cited several decisions to support his contentions. According to the petitioner's counsel, the rejection of the petitioner's tender was illegal and that the authorities should have accepted the same. The counsel for the respondents on the other hand contended that the tender submitted by the petitioner was rejected for valid reasons. It is pointed out that there was no competitive tenders and the respondent was entitled to seek for the highest price and the offer made by the petitioner was very much low than what had been expected by the respondents. The fact that the petitioner was the lone tenderer in respect of Block Nos. IV and V is not disputed. It is also not disputed that considering the offer made at the earlier time the total offer received for the three blocks was very much less. The question that is to be considered is whether the respondent was bound to accept the tender offered by the petitioner under the above circumstances. 5. Some of the decisions of the Supreme Court are relevant for the purpose, M/s. Star Enterprises v. City and Industrial Development Corporation of Maharashtra Ltd. (1990 (3) SCC 280), is a case where the appellants submitted tenders for the purchase of plots offered by the respondents for sale. 5. Some of the decisions of the Supreme Court are relevant for the purpose, M/s. Star Enterprises v. City and Industrial Development Corporation of Maharashtra Ltd. (1990 (3) SCC 280), is a case where the appellants submitted tenders for the purchase of plots offered by the respondents for sale. The appellants offer was the highest yet it was not accepted by the respondents. Appellants challenged this decision before the court. The Supreme Court held that : "The State is certainly entitled to look for the best deal with regard to its properties, In absence of any allegation of mala fides, it may be presumed that respondent 1 acted bona fide and in refusing to accept the highest offers of the appellants with regard to specific plots had been actuated by the consideration of looking for better offers for specific plots in the economic interest of respondent 1." Thus the Supreme Court declined to accept the contentions of the appellant therein. 6. The counsel for the petitioner contended that even in contractual matters the court has got power to interfere under Art. 226 of the Constitution. It is true that all auctions including the contractual dealings of statutory authorities are held to be subject to judicial review. This is accepted by the court in M/s. Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay (1979 (3) SCC 489 = AIR 1979 SC 1628). In subsequent decisions also this view was followed by the Supreme Court. Therefore it is true that this court can go into the question whether the respondent has committed any illegality in rejecting the tender offered by the petitioner. In matters of acceptance of tenders it is the boundant duty of the authorities to act fairly. One of the leading case on the subject is R. D. Shetty v. International Airport Authority of India (1989 (3) SCC 293 = AIR 1989 SC 1642). That was a case where the Airport authorities invited tenders for running a canteen. Appellant and R4 submitted tenders. Going on by the qualifications prescribed both were found ineligible as they had no five years experience. However, the 4th respondent's tender was accepted. Appellant alleges that this was in violation of principles of equality before law. That was a case where the Airport authorities invited tenders for running a canteen. Appellant and R4 submitted tenders. Going on by the qualifications prescribed both were found ineligible as they had no five years experience. However, the 4th respondent's tender was accepted. Appellant alleges that this was in violation of principles of equality before law. The court held in paragraph 12 of the judgment of the above cited case that; "The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege ....... It must, therefore, be taken to be law that 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 largesse, 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 norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences, etc. must be confined and structured by rational, relevant and non-discriminatory 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 not irrational, unreasonable or discriminatory." In the same decision at paragraph 25 the Supreme Court also held that : "The Government was not bound to accept the tender of the person who offered the highest amount and if the Government rejected all the bids made at the auction, it did not involve any violation of Articles 14 or 19(1)(g). 7. In another case reported in Haji T. N. Hussain v. Kerala Financial Corporation (AIR 1988 SC 157), the Supreme Court held that : "The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by, inviting tenders. 7. In another case reported in Haji T. N. Hussain v. Kerala Financial Corporation (AIR 1988 SC 157), the Supreme Court held that : "The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by, inviting tenders. Observance of the rule, not only fetches the highest price for the property but also ensures fairness in the activities of the State and pubic authorities The State and public authority should undoubtedly act fairly ......." 8. From the various decisions it is clear that the important question is whether the statutory authorities has acted fairly. In the instant case, I do not think that the rejecting the offer made by the petitioner, the respondent acted unfairly or against any principle. The respondent only wanted to get higher price for the public property and for which they cannot be blamed. There is no law which compels the respondents to accept the offer made by the petitioner. 9. The counsel for the petitioner further contended that the petition had a legitimate expectation that his tender would be accepted by the respondent as that was the lone tender submitted. I am not able to find any violation of principles of legitimate expectation in the instant case. It is true that the principle of legitimate expectation were applied in certain decisions by the Supreme Court. The scope and ambit of this principle is explained in detail in a well known decision of the House of Lords reported in CCSU v. Minister for the Civil Service (1984 All ER 954), Lark Boakill explained the principle of legitimate expectation as follows : "The principle may now said to be firmly entrenched in this branch of the law. As the cases show the principle is closely connected with a right to be heard. Such an expectation may take many forms. One may be an expectation of prior consultation. Another may be an expectation of being allowed time to make representations; especially where the aggrieved party is seeking to persuade an authority to depart from a lawfully established policy adopted in connection with the exercise of a particular power because of some suggested exceptional reasons justifying such a departure. One may be an expectation of prior consultation. Another may be an expectation of being allowed time to make representations; especially where the aggrieved party is seeking to persuade an authority to depart from a lawfully established policy adopted in connection with the exercise of a particular power because of some suggested exceptional reasons justifying such a departure. In the very same decision it is further explained that, "the principles of legitimate expectation could be invoked only in a case where the aggrieved person was deprived of some benefit or advantage which in the past had been permitted to be enjoyed until he was given reasons for its withdrawal and opportunity to comment on these reasons because he had received an assurance that it would not be withdrawn before he had been given the opportunity of making representation against the withdrawal, the appellant's legitimate expectation arising from the existence of a regular practice of consultation which the appellants could reasonably expect to continue gave rise to an implied limitation on the Minister's exercise of the power." 10. I do not think that the above principles can in any way be applied to the facts of the case. The principle of legstimate expectation would arise in a case where the petitioner was denied an opportunity of being heard in a case where he has got a right of hearing or the practice had been that before a decision is taken the affected parties would generally be heard. In the instant case the petitioner's tender was rejected and the petitioner was informed of that. There was no procedural illegality. The fact that there was limited number of tenders and there was no valid competition itself is a ground for rejecting the tender offered by the petitioner. Petitioner has no right to say that his tender should be accepted as it is only an offer and the rival contracting party shall not be forced to accept the offer made by the other party. 11. The counsel for the petitioner further contended that in the second notification respondents 1 and 2 had not given the approximate value of the trees as mentioned in Ext. F. 1 notification. This according to the petitioner is clear illegality and that respondents 1 and 2 wanted to withhold these details from the prospective tenderers. I do not find much force in this contention. F. 1 notification. This according to the petitioner is clear illegality and that respondents 1 and 2 wanted to withhold these details from the prospective tenderers. I do not find much force in this contention. The value of the trees could be assessed by the tenderers and they can quote the amount chosen by them. It is necessary that seller should fix the approximate value of the goods to be sold. It is open to the tenderers to quote their prices. Moreover this is a public sector undertaking and whatever decisions taken at the officers level is scrutinised by the Director Board. I do not think that Ext. P. 3 notification is either illegal or respondents 1 and 2 acted unfairly. The petitioner in this case submitted a tender and it was rightly rejected by the respondents 1 and 2. Both these original petitions are without merit and are dismissed. Petitions dismissed.