Research › Search › Judgment

Calcutta High Court · body

2006 DIGILAW 340 (CAL)

MA KALI FISH PRODUCTION GROUP v. DAMODAR VALLEY CORPORATION

2006-06-13

ARUN KUMAR MITRA

body2006
Arun Kumar Mitra, JJ. ( 1 ) THIS writ petition relates to Government contract. Facts in brief as made out in the writ petition are as follows: -In the year 1979 a tank measuring 13. 43 acres at Sibpur, District-Howrah under Damodar Valley Corporation GOMD-I has been leased out to Howrah Central Fishermen's Co-operative Society Ltd. for the purpose of pisciculture. In or about 14th September, 1984 Government enacted West Bengal Inland Fisheries Act, 1984 (hereinafter shortly termed as said Act ). On or about 16th September, 1996 Damodar Valley corporation executed a lease for five years for pisciculture of the tank-in-question in favour of Howrah Central Fishermen's Co-operative Society ltd. with five years renewal. Accordingly. Howrah Central Fishermen's co-operative Society Ltd. is now cultivating fish by act of pisciculture and is in possession thereof. ( 2 ) ON 19th November, 2001 tender was floated for lease of Damodar valley Corporation tank under GOMD- (1) DVC, howrah for using it for pisciculture and fishing. On the same date tender was submitted by the petitioners offering annual rental of Rs. 3,20,200/- p. a, along with terms and conditions mentioned therein and the Bank Draft of Rs. 50,000/- was also deposited as per the terms of the tender notice. On 20. 11. 2001 two persons were joined the tender - one the petitioners herein who quoted the rate @ Rs. 3,20,000/- p. a on the terms and conditions mentioned therein and another rashmoni Fishermen's Cooperative Society Ltd. , who gave tender of Rs. 61,200/- p. a. The respondent no. 6 herein has accepted the offer of the petitioners being the highest bid which is Rs 3,20,000/- p. a. Thereafter, on or about 10. 12. 2001 the Governor issued a notification in exercise of his power under Section 60 of West Bengal Land reforms Act, 1955 by amendment of West Bengal Land and Land Reforms manual, 1991. ( 3 ) THEREAFTER, the Chief Executive Officer, Howrah Fishermen's Cooperative Society Ltd. issued a certificate stating that he has been registered as fish Production Group by the Asstt. Director of Fisheries, Howrah under Memo no. 3-FPG-144 (Howrah) dated 30. 09. 1992. ( 4 ) ON or about 14. 01. 2002 Chief Executive Officer, Howrah Central fishermen's Co-operative Society Ltd. have lodged a written complaint before the I/c. Sibpur PS. , Howrah preceded by g. D. Entry No. 868 dated 11. 01. Director of Fisheries, Howrah under Memo no. 3-FPG-144 (Howrah) dated 30. 09. 1992. ( 4 ) ON or about 14. 01. 2002 Chief Executive Officer, Howrah Central fishermen's Co-operative Society Ltd. have lodged a written complaint before the I/c. Sibpur PS. , Howrah preceded by g. D. Entry No. 868 dated 11. 01. 2002 and the investigation has been carried out by the Police. ( 5 ) ON or about 14. 02. 2002 Additional District Magistrate/dllro, Howrah has issued a letter addressed to Additional Secretary, Damodar Valley corporation not to call open tender for lease of DVC tank. On the same date the District Magistrate, Howrah however, issued a letter for stopping the calling of tender for lease of DVC tank and the District Magistrate/collector, Howrah has also issued a letter to the respondent No. 6 herein for stopping the tender. ( 6 ) ON the above facts the petitioners preferred this writ application with the following prayers: -A. (i) To do and to proceed in accordance with law: (ii) To forbid from giving any effect to and/or further effect to any order, if any passed affecting the interest of the present petitioners; (iii) To give effect to the order already passed in favour of the petitioners accepting the tender in terms of the order dated 7. 2. 01 (Annexure "p-4" hereto) and to execute petitioners in respect of the tank in question subject to compliance of all formalities as required under the law; (iv) Not to grant any lease or largess in respect of the tank in question to any other person other than the petitioners; b. A writ of certiorari do issue commanding the respondents and each one of them to transmit all records relating to the present proceedings for the purpose of passing appropriate order in this regard and also for the purpose of quashing the order, if any passed, affecting the interest of the present petitioners and also for the purpose of giving effect to the order already passed in favour of the petitioners for granting largess in terms of the order dated 7. 12. 01 (Annexure 'p-4' hereto ). ( 7 ) AN application for addition of party was filed on behalf of Rasmoni fishermen's Co-operative Society Ltd. On 24. 07. 2002 Hon'ble Justice Pinaki chandra Ghose allowed the application of addition of party and issued the direction to file affidavits. 12. 01 (Annexure 'p-4' hereto ). ( 7 ) AN application for addition of party was filed on behalf of Rasmoni fishermen's Co-operative Society Ltd. On 24. 07. 2002 Hon'ble Justice Pinaki chandra Ghose allowed the application of addition of party and issued the direction to file affidavits. ( 8 ) THE petitioners moved this writ petition on the grounds that the respondents by not granting lease in favour of the petitioners violated Article 14 of the Constitution of India. The petitioners also took a ground that the respondent authorities by negotiating for settling the tank with a third party adopted pick and choose policy and abused power. ( 9 ) THE petitioners actually prayed for setting aside the grant of lease to the other party. ( 10 ) BEING added as party/respondent, said Rashmoni Fishermen's co-operative Society filed affidavit-in-opposition. There in the said affidavit they made out the following facts: -A Co-operative Society under the name and style of Jorhat Duillya unsuni FCS Ltd. was registered with the Directorate of Fishery and ex-officio Additional Registrar of Co-operative Societies, West Bengal on 3rd July, 1978 under No. 1 of Howrah in the District of Howrah having the following area of members of the Society, viz. Jorhat Duillya Anchal unsuni Mouja Andul Mouri Mashila Banipur Anchal and Podrah Anchal. Bye-laws including the name of the said registered Society was changed and/or amended whereby the name of the said Joint Duillya FCS Ltd. was changed and/or amended by the name of Rashmoni FCS Ltd. The said change of Bye laws and the name of the Society was approved and amended Registration Certificate bearing Registration No. DF/10a of 1995-96 dated 22nd January, 1996 has been granted in favour of the said RFC Society Ltd. Duillya Howrah which has been functioning as such Society since then. The said added respondent annexed a copy of the Registration Certificate along with their affidavit-in-opposition. ( 11 ) THE Society i. e. Rashmoni has been working also for obtaining tenders for the ponds etc. on lease and for pisciculture development, for protection of employment of the unemployed youth and other members of the Society. The said added respondent annexed a copy of the Registration Certificate along with their affidavit-in-opposition. ( 11 ) THE Society i. e. Rashmoni has been working also for obtaining tenders for the ponds etc. on lease and for pisciculture development, for protection of employment of the unemployed youth and other members of the Society. ( 12 ) THE respondent No. 1 Damodar Valley Corporation has a tank underground - -1 DVC Howrah being a tank for pisciculture and for the said purpose the DVC, respondent No. 1 issued tender notice for lease of the said tank for the use for pisciculture and fishing as per their tender notice dated 5th november, 2001. The last date for submission of tender by the intending tenderers was fixed on 19th November, 2001 and the date of opening was fixed on 20th November, 2001 at 3-00 p. m. There was another condition that earnest money of Rs. 50,000/- to be deposited by Demand Draft in favour of Accounts officer of DVC, Mython along with the tender papers submitted by every tenderer. ( 13 ) THE petitioners submitted tender and also the added respondent No. 9 rashmoni FCS. Ultimately, Rashmoni Fishermen's Co-operative Society Ltd. was allotted tender and given possession. ( 14 ) INITIALLY, a writ petition was moved without making Rashmoni Cooperative a party respondent. Accordingly, Rashmoni Co-operative filed an application for addition of party and Hon'ble justice Pinaki Chandra Ghose by order dated 24. 07. 2002 allowed the application for addition of party. Thereafter, rashmoni Co-operative filed an application for vacating the interim order of status quo and on the said application affidavit-in-opposition and affidavit-in-reply was filed respectively by the petitioners and Rashmoni Co-operative. The petitioners and said Rashmoni Co-operative filed supplementary affidavits Smt. Jharna Dutta is personally made party/respondent no. 6. The said Smt. Dutta is the Deputy Chief Engineer (Electrical), gomd-I of DVC. Allegation of mala fide were leveled against Smt. Dutta. ( 15 ) AS stated earlier, Rashmoni Co-operative was allotted tender and they took possession. Now, it is the case of the petitioners that the petitioners are the highest bidder and the authorities cannot make negotiation with Rashmoni co-operative in a surreptitious manner and well at the back of the petitioners. ( 16 ) THE petitioners stated that he deposited earnest money of rs. Now, it is the case of the petitioners that the petitioners are the highest bidder and the authorities cannot make negotiation with Rashmoni co-operative in a surreptitious manner and well at the back of the petitioners. ( 16 ) THE petitioners stated that he deposited earnest money of rs. 50,000/- and he was the highest bidder also and as such he should have been given the contract. ( 17 ) ON behalf of Smt. Jhama Dutta, personally affidavit-in-opposition was filed. It was stated in the opposition that the petitioners did not perform the formalities as specified. The earnest money was due to be paid through Bank draft but the petitioners submitted a cheque of Rs. 20,000/- on Bank of Baroda and Rs. 30,000 through a Demand Draft and as such the petitioners deviated from the conditions. ( 18 ) IT was stated in the opposition that the offer of the petitioners was however, highest and the offer of the added-respondent was second highest. It was stated in the affidavit of DVC that after finding the irregularities in the offer of the petitioners although the amount of offer as quoted by it was highest. DVC by its letter dated 7th December, 2001 sought the petitioners' clarification as to whether the petitioners are agreeable to the terms and conditions as contained in the tender paper. ( 19 ) IT is also stated in the affidavit-in-opposition that after waiting for a considerable period the offer of the petitioners was not accepted. The earnest money was not deposited in accordance with the terms and conditions as contained in the said tender notice and on the contrary the only remaining tenderer was the added-respondent whose offer was strictly in accordance with the terms and conditions and it also furnished Rs. 50,000/- as earnest money by Bank Draft. Having no other offerer, there was no alternative open to DVC other than negotiating with the added-respondent in respect of the said tank. The DVC accordingly, negotiated with the added respondent by increasing the lease rental by a writing dated 14th January, 2002 to which the added-respondent agreed by its writing letter dated 17th January, 2002. By virtue of such negotiation the annual lease rental increased to rs. 5 lakhs for five years and this was the position of the tender. ( 20 ) ON the above background the learned Counsel for the petitioners mr. By virtue of such negotiation the annual lease rental increased to rs. 5 lakhs for five years and this was the position of the tender. ( 20 ) ON the above background the learned Counsel for the petitioners mr. Haradhan Banerjee submitted that DVC authorities, especially Smt. Jharna dutta, the respondent No. 6 in a mala fide and arbitrary manner allotted the tender in favour of the added-respondent. ( 21 ) MR. Banerjee submitted that his client fulfilled all the criterion of the tender notice. His client deposited earnest money and initially his client was the highest bidder. Mr. Banerjee submitted that this is vtolation of the provisions of article 14 of the Constitution of India. In this context Mr. Banerjee relied on a supreme Court decision reported in 2000 Vol. (5) SCC, 287, Monarch infrastructure (P) Lid. v. Commissioner, Ulhasnagar Municipal Corporation and ors. ). Mr. Banerjee submitted that in this judgment the Hon'ble Apex Court has observed that normally, in a Government contract the Court should not interfere but if there is arbitrariness in 'state' action then the judicial review is called for. in the instant case the petitioners claim that he has fulfilled all the conditions given in the tender notice but said respondent No. 6 Smt. Jharna Dutta behind the petitioners continued negotiation with rashmoni Co-operative. On the date of opening of the tender there cannot be negotiation with another party leaving out the highest bidder. ( 22 ) ON the other hand the learned Counsel for the respondent DVC and the added-respondent submitted that two are contestants in the field. The tender deposited by one i. e. the petitioners suffer from irregularity and naturally, it is obvious that the authority started negotiation with the second party. In this case there was direction to deposit security money by way of Bank Draft but the petitioners committed irregularity by not depositing Rs. 50,000/- through Demand draft. Accordingly, the authorities made negotiation with the Rashmoni Cooperative and the bid was raised from Rs. 3 lakh to Rs. 5 lakh and Rashmoni co-operative agreed to that and deposited a further sum of Rs 50,000/- as additional security. Naturally, the authority was right in executing lease with rashmoni Co-operative. 50,000/- through Demand draft. Accordingly, the authorities made negotiation with the Rashmoni Cooperative and the bid was raised from Rs. 3 lakh to Rs. 5 lakh and Rashmoni co-operative agreed to that and deposited a further sum of Rs 50,000/- as additional security. Naturally, the authority was right in executing lease with rashmoni Co-operative. ( 23 ) THE learned Counsel further submitted that the petitioners filed the writ petition subsequently, obtained an order of status quo and in fact that order goes in favour of the added-respondent inasmuch as prior to passing of that order by the Court the lease agreement was executed by the DVC with rashmoni Co-operative. ( 24 ) IN the above position of facts let us see the position of law that is what the Apex Court observes in such circumstances. ( 25 ) LET us find out what the Hon'ble Apex Court observes in its famous decision in M/s. Radhakrishna Aggarwal and Ors. v. State of Bihar and Ors. ( AIR 1977 SC 1496 ). In this judgment in Paragraph-23 the Apex Court observed that when there is breach of conditions then the Government need not have to give any chance to the tenderer for his fault and cancellation of the contract is right in this case. The observations made in Paragraph- 23 of the said decision is quoted herein below: -"23. A rather desperate argument which has been addressed to us on behalf of the appellants is that they were entitled to an opportunity to show-cause against the cancellation of the leases. It was urged on the strength of A. K. Kraipak v. Union of India, 1970 (1) SCR 457 : AIR 1970 sc 150 that the distinction made between administrative and quasi-judicial action is thin and a vanishing one. This argument appears to us to be wholly irrelevant inasmuch as a question of the distinction between an administrative and quasi-judicial decision can only arise in the exercise of powers under statutory provisions. Rules of natural Justice are attached to the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of parties, When a contract is sought to be terminated by the Officers of the State, purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of a statutory power at all. " ( 26 ) ANOTHER judgment was discussed in this context i. e. Monarch infrastructure (P) Ltd. (supra ). In this judgment also the Hon'ble Apex Court observed that if terms and conditions of the tender is not fulfilled the authority is right in rejection of the tender for non-fulfillment of these terms. Paragraph-13 of this judgment is quoted hereinbelow for convenience of discussion: -"13. Now it is necessary to consider the case of Ramchand mahadeo Rao. One of the conditions to make offer is regarding the earnest money deposit for a sum of Rs. 1. 70 crores in the form of a crossed demand draft/pay order or cash Ramchand Mahadeo Rao got prepared a cheque for Rs. 1. 70 crores as required from the bank and submitted the tender just before the expiry of the time on 19. 4. 2000. He further alleges that in haste and confusion he misplaced the demand draft and was in wrong impression that-a mere photocopy of the draft duly notarized will be sufficient and, therefore, they submitted photocopy of the demand draft along with other relevant documents. The conditions of the "notice inviting tender" is that the same should be accompanied by a demand draft/pay order or cash and in no other form. It is (sic not) clear from the statement made by him as to in what manner he could gather an impression that a photocopy of the demand draft duly notarized would be sufficient nor could it be said (sic denied) that it is naive to accept a mere statement that the demand draft for a sum of Rs. 1. 70 crores obtained for the purpose of submitting the same along with tender documents could be misplaced in the manner suggested in the application. Therefore, the Municipal Corporation is justified in rejecting the tender offer made by Ramchand Mahadeo Rao as not fulfilling the conditions of the Tender notice. " ( 27 ) IN this context Tata Cellular v. Union of India ( AIR 1996 SC. 11 ) celebrity judgment can also be referred to which says mere power to choose cannot be termed arbitrary. Government has an interest in selecting the best only use of such power for collateral purposes is interdicted by Article 14. The observations made in Paragraph- 85 of this judgment is quoted hereinbelow: -"85. 11 ) celebrity judgment can also be referred to which says mere power to choose cannot be termed arbitrary. Government has an interest in selecting the best only use of such power for collateral purposes is interdicted by Article 14. The observations made in Paragraph- 85 of this judgment is quoted hereinbelow: -"85. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. " ( 28 ) SAME principle has been adopted by one of our learned Single Judge in the case of Birendra Prasad Singh v. The State of West Bengal and Ors. , 2003 (1) WBLR (Cal) 151. Here, of course the tender money was deposited long after the schedule date and the learned judge observed that this is gross irregularity. ( 29 ) IT is, therefore, settled law that Government can select anybody to the best of its interest unless it jeopardises Government interest. In the instant case there was irregularity in deposition of the tender that is security money which was not deposited as per the direction in the tender notice. The government or especially the respondent No. 6 acted to the best interest of the government inasmuch as the respondent No. 6 through negotiation increased the bid money from Rs. 3 lakh to Rs. 5 lakh. The respondent No. 6 watted for clarification from the writ petitioners but the same were not available and as such the respondent No. 6 had no option but to negotiate with the added respondent. 3 lakh to Rs. 5 lakh. The respondent No. 6 watted for clarification from the writ petitioners but the same were not available and as such the respondent No. 6 had no option but to negotiate with the added respondent. ( 30 ) WHEN there is irregularity in deposition of the security money the government has got the right to reject such a tender and to select the other person; that apart it cannot be said to be violation of Article 14 inasmuch as the action taken by the authorities has not good nexus with the object which the government wanted to fulfill. ( 31 ) IN the above view of the matter it does not appear that respondent no. 6 acted in mala fide or with bias in allotting the tender in favour of the added-respondent. ( 32 ) THE writ petition is, therefore, dismissed. The pending application being C. A. N. No. 7993 of 2002 is also disposed of herewith. In the facts and circumstances there will be no order as to costs.