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2010 DIGILAW 1436 (CAL)

Uma Enterprises v. STATE OF WEST BENGAL

2010-12-10

B.BHATTACHARYA, SAMBUDDHA CHAKRABARTI

body2010
JUDGMENT Bhaskar Bhattacharya, J. 1. THESE two Mandamus-Appeals were heard analogously as these appeals are directed against a common order passed by a learned single Judge of this Court by which His Lordship disposed of two writ applications heard analogously wherein the same process of tender was the subject-matter of the disputes. 2. THE facts giving rise to filing of these appeals may be summed up thus: 1) THE respondent No.3 issued a sale-notice offering to sell confiscated Sandal woods by public auction on March 12, 2010. 2) THE condition No.3 of the said sale notice was as follows: "THE bid will be exclusive of sales tax and other taxes and any dues of the government. The successful bidder after acceptance of his bid will have to deposit 25% of the sale value within 5 working days and corresponding sales tax, failing which the sale will be cancelled. The 25% of the sale value will be treated as security money till the balance revenue is paid by the purchaser. This will be forfeited in case balance revenue is not paid." 3) As the sale was held on March 12, 2010, according to the abovementioned condition, the successful bidders were required to deposit 25% of the sale price within March 2010 (within 5 working days). 4) It appears that some of the successful bidders were allowed to deposit the said 25% of the sale price beyond March 19, 2010. 5) Subsequently, two writ-applications were filed, one by Uma Enterprises, a proprietorship firm (hereinafter referred to as Uma) being W.P. No.571 of 2010 out of which A.P.O.TNo.327 of 2010 arises and the other, by one Efcalone Tie-up Pvt. Ltd., (hereinafter referred to as Efcalone) being W.P. No.556 of 2010 out of which the other appeal being A.P.O.T. No.348 of 2010 emerges. 6) According to Uma, it participated in respect of eight different lots out of total 25 lots of sandal woods put into auction and its representative, present at the time of auction, requested the officials conducting the auction to grant of relaxation of condition No.3 by giving extension of time to deposit the 25% of the sale price but such prayer was refused. As a result, he did not bid any further lest the security deposit was forfeited for non-compliance of the said clause and consequently, opted out of the bid. As a result, he did not bid any further lest the security deposit was forfeited for non-compliance of the said clause and consequently, opted out of the bid. Subsequently, when the writ-petitioner came to know that the relaxation of such time has been granted to some of the successful bidders by permitting them to deposit 25% of the sale price beyond March 19, 2010, the writ-application was filed alleging violation of Article 14 of the Constitution of India. According to Uma, if it was disclosed earlier that such relaxation would be given, it would give higher bid than the ones given by the successful bidders. 7) THE case of the Efcalon, on the other hand, was that during the course of auction, the participating bidders including the Efcalon, in the presence of the Respondent No.3, proposed that the time stipulated in condition No.3 for depositing 25% of the sale value should be extended from 5 days to 10 days as it was difficult to arrange for payment of such amount within 5 working days but such prayer was refused. Consequently, Efcalon decided not to participate in the process. If it was known that the time limit mentioned above would be extended, according to Efcalon, it would have participated in the bids. 8) The writ-applications were contested by the Respondent No.3 by filing an affidavit-in-opposition and apart from the plea that the writ- applications were liable to be dismissed on the ground of delay, mala fide intention, suppression of material facts etc., the defence of the Respondent No.3 regarding the alleged refusal of relaxation of time of payment of 25% of sale price on the date of auction was as follows: On March 12, 2010 the open bid took place and at the time of open bidding, all the 13 applicants requested the Divisional Forest Officer to relax the condition of deposit of 25% of the sale price within 5 days by extending the same to 10 days. The Divisional Forest Officer discussed the matter with the representative of the Customs Department, Directorate of Revenue Intelligence and thereafter, the Divisional Forest Officer relaxed the terms and conditions of Clause 3 of the said notice and extended the time to 10 days to all the participating bidders. Therefore, there has been no irregularity in the process of auction. 3. The Divisional Forest Officer discussed the matter with the representative of the Customs Department, Directorate of Revenue Intelligence and thereafter, the Divisional Forest Officer relaxed the terms and conditions of Clause 3 of the said notice and extended the time to 10 days to all the participating bidders. Therefore, there has been no irregularity in the process of auction. 3. THE learned single Judge, as it appears from the order impugned, relied upon the decision of the Supreme Court in the case of B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd. reported in (2006) 11 SCC 548 by quoting only a part of paragraph 66 of the said judgment and held that, even though a condition in a tender notice may be mandatory, yet, for some reason or the other, if such condition is either relaxed or modified to suit the intending bidders and all of them are notified and given the benefit of relaxation/modification, a bidder, who reaps benefit thereof and participates in the bids, cannot subsequently, on becoming unsuccessful, turn round and contend that the relaxation/modification is bad. According to His Lordship, only that party who does not express intention to bid having regard to the onerous condition, not knowing that the same would be relaxed/modified prior to auction, has the right to challenge the relaxation /modification and that such was not the case before His Lordship. His Lordship further held that the allegation in the writ-applications that during the auction, the prayer of relaxation by the bidders was rejected was not proved as the necessary averments in support of such allegation was supported by the affidavit of persons who were not present at the time auction and thus, could not be relied upon. The learned Judge, consequently, dismissed the writ-applications. 4. BEING dissatisfied, these two appeals have been filed. It appears from record that the Respondent No.3 having taken a preliminary objection as to maintainability of these appeals in the absence of the successful bidders, another Division Bench of this Court, in the past, directed the appellants to implead all the successful bidders as, parties to these appeals and consequently, those persons are made parties and notice has also been served. 5. IT may also be noted here that the entire records relating to the auction were placed before the Appellate Court and inspection to those was given to the learned counsel for the appellants. 5. IT may also be noted here that the entire records relating to the auction were placed before the Appellate Court and inspection to those was given to the learned counsel for the appellants. 6. MR. Kishore Dutta, the learned Advocate appearing on behalf of Uma and MR. Soumen Sen, the learned Advocate appearing on behalf of the Efcalon, the two appellants, have made the following submissions in support of their respective appeal: 1) The learned single Judge erred in law in misinterpreting the decision of the Supreme Court in the case of B.S.N. Joshi and Sons Ltd. (supra) by totally overlooking the fact that clause 3 of the tender notice was mandatory in nature and could not even be relaxed by the Divisional Forest Officer. 2) The finding of the learned single Judge that the relaxation was done in the presence of the appellants was contrary to the materials on record because the records placed before the Appellate Court does not show existence of any such order of relaxation claimed in the affidavit of the State. 3) The learned single Judge disbelieved the version of the appellants that there was no relaxation by applying the strict principle of verification of pleading for the purpose of scrutinizing the pleadings of the writ- petitioners but totally ignored the fact that the affidavit-in-opposition by the Respondent No.3 was also affirmed by a person who was not present at the time of auction and he allegedly heard the material fact averred therein from the then Divisional Forest Officer. Therefore, such averment was also based on hearsay. 4) At any rate, after the production of the records before this Court, there is no trace of doubt that no order of relaxation had ever been passed and thus, in the absence of any order relaxing the time limit mentioned in clause 3 of the notice, the acceptance of the 25% of the sale price beyond 5 days from the date of auction was without jurisdiction and the bid of those successful bidders are liable to be cancelled. Mr. Mr. Subrata Mukhopadhya, the learned Junior Standing Counsel, appearing on behalf of the Respondent No.3 has opposed the aforesaid contentions advanced by the learned counsel for the appellants and his submissions may be summed up thus: 1) The writ-application filed by Uma is not maintainable as it is a proprietorship firm and a proprietorship firm has no legal entity. 2) The writ-petition filed by Uma is liable to be dismissed for suppression of material fact that prior to moving the writ-application, the earnest money was taken back on April 8, 2010. 3) The writ-application of Uma should also be dismissed on the ground of delay of 48 days in moving the writ-application from the date of auction as the said period of delay is inordinate one. 4) Uma participated in the auction of 8 lots and those goods have already been taken away by the successful bidders before the grant of interim order and as such, no effective relief can be given to Uma. 5) In spite of knowledge of the names of the successful bidders, those persons not having been made parties, the writ-applications out of which these appeals arise are liable to be dismissed. 6) The learned single Judge rightly disbelieved the case of the appellants that the prayer of relaxation was refused as the allegations contained in the affidavit were verified by persons having no personal knowledge and should be taken to be no pleading in the eye of law. 7. MR. Mitra, the learned Advocate appearing on behalf of one of the added parties, submits that his client deposited the required amount within the time fixed in the conditions and as such, so far the lots allotted to his client are concerned, the writ-petitioners cannot have any grievance. 8. MR. Samanta, the learned Advocate appearing on behalf of the other successful bidder who has been made party before this Court adopts the submission of MR. Mukhopadhay and further contends that all other successful bidders having lifted their lots, his client alone who has been injuncted from lifting the goods should not suffer when in respect of the selfsame transaction, the others standing in the same position are not affected. Therefore, the first point that arises for determination in this appeal is whether the Clause 3 is mandatory in nature. 9. Therefore, the first point that arises for determination in this appeal is whether the Clause 3 is mandatory in nature. 9. IN order to appreciate the said question, it will be profitable to refer to the Clauses 3 to 6 of the conditions of sale which are quoted below: "3. The bid will be exclusive of sales tax and other taxes and any dues of the government. The successful bidder after acceptance of his bid will have to deposit 25% of the sale value within 5 working days and corresponding sales tax, failing which the sale will be cancelled. The 25% of the sale value will be treated as security money till the balance revenue is paid by the purchaser. This will be forfeited in case balance revenue is not paid. "4. The successful bidder will have to enter into an agreement with government. This agreement will have to be signed in the auction hall. "5. The balance revenue of the lot including sales tax have to be paid in full within 30 days from the date of auction failing which the agreement will be liable for termination. "6.lf the balance revenue is not paid with in stipulated date, revenue may be accepted at the discretion of the undersigned with the approval of Chief Conservator of Forests/Head Quarters and Land Affairs. On special circumstances a later date of payment may be allowed on payment of surcharge of 1% of the balance amount per 30 days. However the purchaser will have no right to claim such extension after the extended time of payment of balance revenue has expired. Extension period will not in any case be allowed to exceed two months from the dated of auction." 10. FROM a plain reading of the aforesaid clauses there is no room for doubt that the time-limit mentioned in Clause 3 is mandatory and the concerned officer is not vested with any right to extend the same although the balance 75% amount can be paid beyond the stipulated period to a maximum extent of two months from the date of auction subject to the conditions of additional payment mentioned therein and that too with the approval of the Chief Conservator of Forest/Head Quarters and, Land Affairs. If in a given document, in some of the conditions, there is specific power of relaxation whereas in respect of some other, there is none, the conditions for which no relaxation is indicated should be held to be mandatory and not subject to relaxation. Moreover, the power of relaxation in respect of deposit of the balance 75% amount has been given to the concerned officer with the approval of the Chief Conservator of Forest, Head Quarters and Land Affairs. In these cases, it is not even the assertion of the Respondent No.3 that the said higher authority has approved such relaxation in respect of Clause 3 on that very day of auction. We, therefore, hold that the time period mentioned in Clause 3 was mandatory and could not be extended even by the approval of the Chief Conservator of Forest as indicated in respect of Clause 6. The next question would be, in such a situation, what will be the effect of the alleged order of relaxation, if at all, on the process of auction. The said question has been answered by the Supreme Court in the very case of B.S.N Joshi and Sons Ltd. (supra) relied upon by the learned single Judge in the following words: "66. The said question has been answered by the Supreme Court in the very case of B.S.N Joshi and Sons Ltd. (supra) relied upon by the learned single Judge in the following words: "66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarised as under: (i) if there are essential conditions, the same must be adhered to; (ii) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully; (iii) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing; (iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction; (v) when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with; (vi) the contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority; (vii) where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint." (Emphasis supplied by us). 11. WE have already pointed out that there exists no record of any relaxation even illegally granted by the then Divisional Forest Officer although his successor has affirmed affidavit before the Court stating that he heard such fact from his predecessor. 11. WE have already pointed out that there exists no record of any relaxation even illegally granted by the then Divisional Forest Officer although his successor has affirmed affidavit before the Court stating that he heard such fact from his predecessor. The learned single Judge, as it appears from the order impugned, did not go into such question and believed the assertion of the present Divisional Forest Officer based on his hearsay knowledge although His Lordship was not prepared to believe the assertion of the deponent of the writ-petition on the ground of defective pleading. At any rate, in view of the fact that the original records have been called and those do not reflect any such relaxation, we are left with no other alternative but to accept the contention of the appellants that in these cases, no relaxation is permissible and in fact, no such relaxation was given and the story of relaxation narrated in the affidavit of the Respondent No.3 is not borne out by the records. 12. ONCE we believe the case made out by the writ-petitioners which is also supported by the records even produced by the State, in our opinion, this is a fit case, where this Court should grant relief to the writ-petitioners to the extent it is permissible if those are still possible in accordance with law. So far Uma is concerned, we find that it had participated in the auction for 8 different lots and those have already been lifted and removed by the successful bidders before grant of any interim order. In such circumstances, it is not possible to give any relief to Uma as Uma even did not make those successful bidders in respect of those 8 lots parties nor did it pray for injunction restraining those persons from removing the goods. Thus, no effective order now can be passed in this appeal in favour of Uma in view the nature of the goods involved which cannot be recovered back in the same shape. 13. AS regards Efcalon, its case, however, squarely falls within the ratio of the decision of the Supreme Court in the case of Ramanna Dayaram Shetti v. International Airport Authority of India reported in AIR 1979 SC 1628 as indicated in paragraph 34 of the judgment quoted below: "34. 13. AS regards Efcalon, its case, however, squarely falls within the ratio of the decision of the Supreme Court in the case of Ramanna Dayaram Shetti v. International Airport Authority of India reported in AIR 1979 SC 1628 as indicated in paragraph 34 of the judgment quoted below: "34. It is, therefore, obvious that both having regard to the constitutional mandate of Article 14 as also the judicially evolved rule of administrative law, Respondent 1 was not entitled to act arbitrarily in accepting the tender of Respondents 4, but was bound to conform to the standard or norm laid down in, para 1 of the notice inviting tenders which required that only a person running a registered IInd Class hotel or restaurant and having at least 5 years' experience as such should be eligible to tender. It was not the contention of the appellant that this standard or norm prescribed by Respondent 1 was discriminatory having no just or reasonable relation to the object of inviting tenders, namely, to award the contract to a sufficiently experienced person who would be able to run efficiently a Ilnd Class restaurant at the airport. Admittedly the standard or norm was reasonable and non-discriminatory and once such a standard or norm for running a IInd Class restaurant should be awarded was laid down, Respondent 1 was not entitled to depart from it and to award the contract to Respondents 4 who did not satisfy the condition of eligibility prescribed by the standard or norm. If there was no acceptable tender from a person who satisfied the condition of eligibility, Respondent 1 could have rejected the tenders and invited fresh tenders on the basis of a less stringent standard or norm, but it could not depart from the standard or norm prescribed by it and arbitrarily accept the tender of Respondents 4. When Respondent 1 entertained the tender of Respondents 4 even though they did not have 5 years' experience of running a Ilnd Class restaurant or hotel, it denied equality or opportunity to others similarly situate in the matter of tendering for the contract. When Respondent 1 entertained the tender of Respondents 4 even though they did not have 5 years' experience of running a Ilnd Class restaurant or hotel, it denied equality or opportunity to others similarly situate in the matter of tendering for the contract. There might have been many other persons, in fact the appellant himself claimed to be one such person, who did not have 5 years' experience of running a Ilnd Class restaurant, but who were otherwise competent to run such a restaurant and they might also have competed with Respondents 4 for obtaining the contract, but they were precluded from doing so by the condition of eligibility requiring five years' experience. The action of Respondent 1 in accepting the tender of Respondents 4, even though they did not satisfy the prescribed condition of eligibility, was clearly discriminatory, since it excluded other persons similarly situate from tendering for the contract and it was also arbitrary and without reason. The acceptance of the tender of Respondents 4 was, in the circumstances, invalid as being violative of the equality clause of the Constitution as also of the rule of administrative law inhibiting arbitrary action." (Emphasis supplied by us). 14. EFCALON is, therefore, entitled to a part of the relief claimed in the writ- application only in respect of those lots where the successful bidders failed to deposit the 25% of the sale-price within 5 working days. However, those successful bidders who have already removed their lots before passing of the interim order in these proceedings will not be covered by this order as at this stage this Court cannot ask them to return those logs in the same condition. We do not find any substance in the contention of Mr. Mukhopadhay that this writ-application should fail as the writ-petitioner has withdrawn the earnest money. Efcalon did not participate in the bid under the impression that Clause 3 would not be relaxed. The question of withdrawal of earnest money would have been a relevant factor in a case where the writ-petitioner claimed to be the lawful highest bidder and disputes the decision of the authority declaring somebody else to be the highest bidder. 15. Efcalon did not participate in the bid under the impression that Clause 3 would not be relaxed. The question of withdrawal of earnest money would have been a relevant factor in a case where the writ-petitioner claimed to be the lawful highest bidder and disputes the decision of the authority declaring somebody else to be the highest bidder. 15. THE delay in moving the writ-application has definitely stood in the way of Efcalon in getting the entire relief claimed in the writ-application and for that reason it is entitled to the part relief in respect of the logs which are still available for re-auction. But the delay cannot be ground in this case for dismissing the writ-application altogether when we have found that there has been gross irregularity in the process of auction and the Respondent No.3 has made deliberate wrong statement in the affidavit that the order of relaxation had been passed although no such order is available on record and it is also not possible to lawfully relax the said condition No.3. To dismiss the writ-application in its entirety would amount to supporting the illegal action of the Respondent No.3 although such action is still capable of rectification in respect of the available lots. 16. WE are unable to accept the contention of Mr. Mukhopadhay that for the sake of state-revenue we should not interfere in this writ-application. It appears that the aforesaid submission, if accepted, would benefit those successful bidders who illegally got relaxation of Clause 3 although there is no such relaxation order on record and at the same time, such relaxation is not permissible. After our findings about the illegality committed by the Respondent No.3, we cannot permit those illegal beneficiaries to reap such benefit when some of the logs are still in the hands of the Respondent No.3. The Respondent No.3 is directed to cancel those bids for violation of the Clause 3 and forfeit their earnest money for non-compliance of such condition. WE thus propose to preserve the state-revenue with the above direction. We are also not impressed by the submission of Mr. The Respondent No.3 is directed to cancel those bids for violation of the Clause 3 and forfeit their earnest money for non-compliance of such condition. WE thus propose to preserve the state-revenue with the above direction. We are also not impressed by the submission of Mr. Samanta that his client should be permitted to remove the logs after having found that his clients bids were liable to be cancelled for non-compliance of the above condition No.3 and that the Respondent No.3 has made wrong statement in the affidavit as regards relaxation and that such relaxation is not permissible. 17. THUS, in respect of the logs where the successful bidders have deposited the 25% of the sale-price in violation of condition No.3 should be re-auctioned. The Respondent No.3 is directed to cancel the bids where there has been violation of the condition No.3 in respect of those lots which have not been removed yet and to confiscate the earnest money in respect of those bidders. Similarly, if there is violation of condition No.6 in respect of final payment in relation to any successful bid, the Respondent No.3 is directed to realise the penal amount as provided in that clause for delayed payment even in respect of the lots which have been lifted by the successful bidders. 18. THUS, the W.P. No.556 of 2010 and A.P.O.T. No.348 of 2010 are allowed to the extent indicated above. The other writ-application and the appeal filed by Uma are dismissed for the reason disclosed earlier. In the facts and circumstances, there will be, however, no order as to costs. Appeal allowed.