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Allahabad High Court · body

2008 DIGILAW 2179 (ALL)

MOHD. FAROOQ v. STATE OF UTTAR PRADESH

2008-10-24

A.P.SAHI, ASHOK BHUSHAN

body2008
JUDGMENT By the Court.—The petitioner runs a transport business and is a handling transport contractor, who has questioned the legality and validity of the order dated 31.3.2008, passed by the Director (Agriculture), Government of U.P., Lucknow, whereby the work order issued to the petitioner after conclusion of the contract with the respondent Nos. 3 and 5, has been cancelled on the grounds that it has been done unilaterally without any notice or opportunity to the petitioner being without jurisdiction with a view to favour the respondent No. 4. 2. The facts in brief that have given rise to this present petition are, that tenders were invited for the transportation of Seeds and Fertilizers by the Agriculture department for the year 2008-09. The petitioner and respondent No. 4 both submitted their tenders and the lowest rates offered were that by the respondent No. 4. The petitioner had offered the second lowest rate. The tenders were finalized in favour of the petitioner, as the Respondent No. 4 had been unable to furnish the original complete documents in respect of the proof of ownership of the vehicles that were to be deployed for the purposes of transportation. The tenders were invited vide advertisement dated 27.2.2008 and the work order was finalized accepting the bid of the petitioner on 1.3.2008. The formalities were completed by the petitioner on 18.3.2008 and the work order was issued on 1.4.2008. The impugned order was passed on 31.3.2008 whereafter the petitioner moved a complaint which was sought to be inquired into, on which comments were submitted by the Joint Director (Agriculture) on 29.4.2008 stating therein that the contract had been concluded in favour of the petitioner and further the stand taken by the Respondent No. 4 that he was not given an opportunity to submit his documents was incorrect. However, the Joint Director (Agriculture) sent an intimation to District Agriculture Officer, Pratapgarh, who ultimately on 30.4.2008 informed the petitioner that the work order in his favour has been cancelled. The order dated 31.3.2008 was, therefore, communicated to the petitioner through the order dated 30.4.2008 both of which are impugned in the present writ petition. 3. We have heard Sri C.K. Parekh, learned counsel for the petitioner, learned Standing Counsel for the Respondent Nos. 1, 2, 3 and 5 and Sri Ashok Nath Tripathi, learned Advocate for the Respondent No. 4. 4. 3. We have heard Sri C.K. Parekh, learned counsel for the petitioner, learned Standing Counsel for the Respondent Nos. 1, 2, 3 and 5 and Sri Ashok Nath Tripathi, learned Advocate for the Respondent No. 4. 4. It has been urged by Sri Parekh that in response to the tender, the petitioner had submitted all documents pertaining to the availability of the Trucks that were to be deployed for the purposes of transportation. The Respondent No. 4 had mentioned that he would make available his only Truck bearing registration No. USS­1834. Sri Parekh submitted that upon scrutiny of the documents, it was found that Respondent No. 4 had submitted only a photostat copy of the said registration papers and which was also not correct inasmuch as the petitioner had already surrendered the documents of his vehicle to the Regional Transport Officer, Pratapgarh, on 31.12.2007. In this view of the matter, the Respondent No. 4 did not fulfil the condition No. 4 of the terms & conditions of the advertisement inviting tenders inasmuch as the Respondent No. 4 was not the owner of any registered vehicle. He has further submitted that it was only on 2.5.2008 that the Respondent No. 4 succeeded in getting the vehicle released and, as such, according to terms & conditions of the tender, there was no registered vehicle available with the Respondent No. 4 so as to fulfil the terms & conditions for the acceptance of his tender. Sri Parekh has further invited the attention of the Court to paragraph 4 of the counter­affidavit filed by District Agriculture Officer on behalf of Respondent Nos. 1, 2, 3 and 5, wherein it has been clearly stated that since the Respondent Noo4 failed to fulfil and comply with the terms & conditions as contained in the tender notice, therefore, the petitioner, who was the second lowest tenderer, was awarded the contract vide order dated 1.3.2008. 5. The second submission of Sri Parekh is that the contract was concluded and the agreement was entered into on 18.3.2008 whereafter the petitioner obtained the work order and started functioning. 5. The second submission of Sri Parekh is that the contract was concluded and the agreement was entered into on 18.3.2008 whereafter the petitioner obtained the work order and started functioning. It has been submitted by Sri Parekh that the impugned order dated 31.3.2008 takes recourse to clause 20 of the terms & conditions of the contract for exercising the power to cancel the contract of the petitioner which is founded on an erroneous assumption, inasmuch as the Director (Agriculture), Uttar Pradesh, does not enjoy any such power under clause 20 aforesaid. It is urged that the said clause provides for the redressal of any dispute arising under the contract by the Joint Director (Extension), Allahabad Region, Allahabad, and in case the Contractor is aggrieved by the decision of the said authority, then the dispute will be referable to the Joint Director of Agriculture (Supply) or (Seeds & Distribution), Directorate of Agriculture, Lucknow, who shall be the sole arbitrator to decide the dispute. 6. It has further been submitted that as a matter of fact, the Director of Agriculture, Uttar Pradesh, has treated the request of the Respondent No. 4 to be an Appeal for which there is no provision either under the terms of notice of tender or under the contract. It is submitted that the Respondent No. 2 could not have travelled beyond the terms of contract to either entertain any such appeal nor did he enjoy any jurisdiction to render any adjudication on a complaint made by the Respondent No. 4. 7. Thirdly, Sri Parekh has urged that the Respondent No. 4 was not even a party to the contract and, therefore, even otherwise he could not have approached any of the authorities referred to in clause 20 for arbitration as the dispute raised by him was not one which could be described as one to be under the contract. 8. The last submission of learned counsel for the petitioner is that apart from the aforesaid merits of the case, the order dated 31.3.2008 passed by the Respondent No. 2 is clearly in violation of principles of natural justice inasmuch as the petitioner was neither given any notice or opportunity prior to passing of the impugned order. 9. 8. The last submission of learned counsel for the petitioner is that apart from the aforesaid merits of the case, the order dated 31.3.2008 passed by the Respondent No. 2 is clearly in violation of principles of natural justice inasmuch as the petitioner was neither given any notice or opportunity prior to passing of the impugned order. 9. The learned Standing Counsel, on the other hand, has submitted that since the tender of the Respondent No. 4 was the lowest and he had subsequently submitted the documents with regard to his proof of ownership of the vehicle, therefore, the Respondent No. 2 keeping in view the interest of the government passed the impugned order and hence the same does not call for any interference. 10. Sri Ashok Nath Tripathi appearing for the Respondent No. 4, urged that in view of any dispute, the respondent No. 2 had the jurisdiction to proceed under clause 20 and, therefore, having come across the rightful claim of the petitioner, the Respondent No. 2 in the interest of public revenue and also in view of the fact that the offer of Respondent No. 4 was the lowest, entertained the same, as such, no illegality has been committed by Respondent No. 2 in accepting the offer of Respondent No. 4. Sri Tripathi has relied on the decision in the case of Rajasthan Housing Board and another v. G.S. Investments and another, (2007) 1 SCC 477 , to urge that the Apex Court has ruled that the State and its Corporations, Instrumentalities and Agencies are under a public duty to be fair and the freedom of contract between the State and any contracting party should be subject to the financial interest of the State. He contends that the order does not call for any interference and the writ petition deserves to be dismissed. 11. Having heard learned counsel for the parties and having perused the Affidavits exchanged between them, we find that the order impugned dated 31.3.2008 (Annexure-7 to the writ petition) does not appear to have been passed after giving any opportunity to the petitioner. Further, the authority entertained a complaint behind the back of the petitioner and also admitted certain documents filed by the Respondent No. 4 behind the back of the petitioner to rescind his contract. Further, the authority entertained a complaint behind the back of the petitioner and also admitted certain documents filed by the Respondent No. 4 behind the back of the petitioner to rescind his contract. This, in our opinion, was a clear violation of the principles of natural justice and the said recourse was not open to the Respondent No. 2. 12. The recital contained in the impugned order drawing support from clause 20 of the terms of notice of the tender also appears to be misplaced, inasmuch as, the said clause provides for redressal of a dispute under the contract by the Joint Director of Agriculture (Extension), Allahabad Region, Allahabad. The impugned order has been passed by the Director (Agriculture), who does not appear to have been conferred with any such power under clause 20. 13. Secondly, the said clause provides for an arbitration before the Joint Director of Agriculture (Supply) or (Seeds & Distribution), Directorate, Lucknow. The said authority also does not appear to have undertaken any exercise and which, in our opinion, could not have been undertaken unless and until there was a dispute under the contract which had already been entered into between the petitioner and the authorities of the Agriculture department. The said clause could be invoked only by the parties to the contract and not by the Respondent No. 4, who is not a party to the contract. 14. It is to be further noted that under the terms of notice of the tender and under the contract, there is no such provision for any rectification subsequently at the instance of a third party. The respondents themselves admit in their counter-affidavit that the Respondent No. 4 did not fulfil the terms & conditions on the date when the tenders were finalized. In our opinion, there is no provision for allowing the rectification of any such deficiency subsequent to the finalization of the contract. The contract finalized in favour of the petitioner did not stipulate any term or condition that the same could be cancelled, in the event, the respondent No. 4 subsequently fulfilled the criteria under the terms of notice of tender or upon removal of any such deficiency by him. On the contrary the terms provided for in the tender notice prohibit the raising of any such dispute on account of such deficiency as per Clauses 4 and 5 of the same. On the contrary the terms provided for in the tender notice prohibit the raising of any such dispute on account of such deficiency as per Clauses 4 and 5 of the same. The Respondents, therefore, were precluded from even entering into this controversy and in our opinion the said dispute was self invited by the Respondent No. 2, which was impermissible in law. Even otherwise, the rectification was obtained by the Respondent No. 4 much after the tenders had been finalized. 15. From the facts as brought on record, it appears that the move of the Respondent No. 4 was treated to be an appeal. From the terms of notice of tender and other documents, we do not find any such clause which may empower the Respondent No. 2 to entertain any such appeal. This would be reading something alien into the terms of notice of tender and the contract which was never stipulated therein. Neither the respondent No. 2 nor this Court can alter the terms of the tender or the contract through any instrument of interpretation. 16. Coming to the submission raised by Sri Tripathi that the matter involves public revenue, suffice is to say, that once the contract has been entered into, then the same can be rescinded and cancelled only in accordance with law and not otherwise, more so, when it had already been acted upon. The counter-affidavit on behalf of the Respondents, in short, practically supports the report of the Joint Director of Agriculture, Allahabad Division, Allahabad, dated 29.4.2008, wherein the bona fides of the Respondent No. 4 have been doubted. Apart from this, the decision relied upon by the respondent in the case of Rajasthan Housing Board (supra) was a matter where the auction proceedings had not yet been finalized and the State Government issued a direction staying all further proceedings relating to the auction of plots that were involved in that matter. The case does not appear to be an authority on the proposition presently involved in the case and, therefore, has no application on the facts of this case. 17. The case does not appear to be an authority on the proposition presently involved in the case and, therefore, has no application on the facts of this case. 17. The reasons aforesaid, therefore, leave no room for doubt that the petitioner was non-suited on erroneous assumptions of fact and law, and the Respondent No. 4 could not be awarded a fresh contract arising out of the same tender by the Respondent No. 2 which, in our opinion, amounts to acting contrary to the terms of notice inviting tenders. This is clearly violative of Article 14 of the Constitution of India. 18. For the foregoing reasons, we are of the opinion that the order impugned dated 31.3.2008 as communicated by letter dated 30.4.2008 (Annexures-7 and 10 to the writ petition respectively) are unsustainable in law and are, accordingly, set aside. The writ petition is, accordingly, allowed with nosorder as to costs. ————