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2019 DIGILAW 161 (ALL)

UDAI PAL SINGH v. STATE OF U. P.

2019-01-22

P.K.S.BAGHEL, PANKAJ BHATIA

body2019
JUDGMENT & ORDER : PANKAJ BHATIA, J. 1. Heard Sri Yogendra Singh Bohra, learned counsel for the petitioner, Sri Pramod Kumar Singh, learned counsel for the respondents and learned standing counsel for the State. 2. The present petition has been filed challenging the order dated 20.9.2018 passed by the respondent no.3 with the approval of respondent no.2. 3. The facts of the case, in brief, are that the respondent no.3 published a auction notice on 12.9.2017 for public auction of number of items which included the collection of fee for the transport of minor minerals namely; Sand, Morang and Gitti etc. The said auction notice which is filed as Annexure-3 to the writ petition called for bids for auction of various items from the general public. The said auction notice was published in a widely circulated daily newspaper Amar Ujala dated 14.9.2017. It has been stated that in terms of the said public notice, a public auction was held by the Auction Committee under the Chairmanship of Uppar Mukhya Adhikari on 22.1.2018 and the petitioner was the highest bidder at Rs.12.50 lacs. It has been further stated that the public auction held on 22.1.2018 in pursuance to the auction notice dated 12.9.2017 was approved by the respondent no.2 vide its order dated 11.4.2018 and in pursuance to the said confirmation, the petitioner deposited the amounts were to be deposited in the following manner. 4. Rs. 4.50 lacs on 22.1.2018 and Rs. 4.00 lac each which were to be deposited by 30.12.2019 and 30.12.2020 are yet to be deposited. 5. The petitioner also submitted the stamp papers of Rs.50,500/- for the execution of the agreement. It is further stated that an agreement was duly executed on 20.4.2018 and the same has been filed as Annexure-6 to the present petition. It has been stated that the auction was conducted under the Uttar Pradesh Kshettra Panchayats and Zila Panchayats Act, 1961, (hereinafter referred to as 'the Act'). 6. Section 117 of the Act confers the power to enter into contracts which may be necessary or expedient for any purpose of this Act. Section 117 of the Act herein quoted below : "117. 6. Section 117 of the Act confers the power to enter into contracts which may be necessary or expedient for any purpose of this Act. Section 117 of the Act herein quoted below : "117. Contracts by Zila Panchayat and Kshettra Panchayat- (1) Subject to the provisions of this Act, a Zila Panchayat or a Kshettra Panchayat shall have power to enter into contracts which may be necessary or expedient for any purpose of this Act." 7. Section 239 of the said Act empowers the Zila Panchayats to make bye-laws with regard to subject matter described Section 239 (2) of the Act. Section 240 (2) of the Act further empowers the Zila Panchayats to make Bye-laws which are to be published in the gazette. It has been stated that in exercise of powers conferred under Section 239 (2) of the Act and with the approval of the competent authority under Section 240 (2) of the Act, the Zila Panchayat, Bulandshahar framed by-laws for levying fee on the vehicles carrying minor minerals. The said bye-laws were duly published on 6.10.2012 and the said bye-laws quantified the levy of fee on the vehicles carrying the minor minerals. It has been stated that the auction was only with regard to the collection of the said fee duly quantified vide bye-laws dated 26.9.2012. 8. It has been stated that on 20.9.2018, the respondent no.3 with the approval of respondent no.2 passed an order cancelling the auction acceptance dated 22.1.2018 on the ground that the said auction was held in violation of Government Orders Nos. 623/33-2-2018-114G/2008 TC dated 15.2.2018, 642/33-2-17-37G/17 dated 10.4.2017 and 475/33-2-2017 dated 24.3.2017. 9. The perusal of the said order also indicate that the order was passed on the ground that the auction was held without following the guidelines enumerated in the said Government Orders. 10. The counsel for the petitioner argued that the order dated 29.9.2018 is wholly erroneous and illegal and has been further passed without giving any notice to the petitioner prior to the passing of the order dated 20.9.2018, thus, the same is arbitrary and illegal and deserves to be set aside. 11. The petitioner has drawn our attention to the Government Orders as referred in the impugned order which are the basis for passing of the cancellation order. 11. The petitioner has drawn our attention to the Government Orders as referred in the impugned order which are the basis for passing of the cancellation order. A perusal of the Government Order dated 24.3.2017 reveals that it has been brought to the knowledge that the Zila Panchayats are not following transparency and adequate publication and which is affecting image of the State and, thus, the Zila Panchayats should not call for any tender till further orders. The Government Order dated 10.4.2017 states that with regard to the tenders for construction work. The tenders should be done through E-tendering. Relevant paragraphs of the said Government Order are as under:- **iapk;rh jkt vuqHkkx & 2 y[kuÅ % fnukad % 10 vizSy 2017 fo"k; %& ftyk iapk;rks es fufonk;s lkekU; Vs.Mj iz.kkyh ds LFkku ij bZ & Vs.Mfjax O;oLFkk ykxw fd;k tkukA egksn;] mi;qZDr fo"k; ds laca/k es eq>s ;g dgus dk funsZ'k gqvk gS fd orZeku es iapk;rh jkt foHkkx ds vUrxZr ftyk iapk;rks es fufonk;sa lkekU; Vs.Mj iz.kkyh ls izkIr dh tkrh gSA iapk;rh jkt foHkkx ds vUrxZr ftyk iapk;rks }kjk djk;s tkus okys fuek.kZ dk;kZs gsrq vkeaf=r Vs.Mjks dks vlekftd rRoksa] vijkf/k;ks }kjk vius izHkko dk bLrseky dj izkIr dj fy;k tkrk gSA** 12. The Government Order dated 15.2.2018 relates to the directions that no collection of fee should be done from the vehicles carrying minor minerals by putting a barrier on the highway and the important roads as the same result in the obstruction of the said roads and in fact the barriers should be placed only at the place of mining. The relevant paragraphs of the said Government Order are as under:- **3- mDr ds laca/k es ;g Li"V fd;k tkrk gS fd ftyk iapk;rks }kjk dsoy mnxe LFky ls gh fcuk cSfj;j yxk;s [kfut ifjogu 'kqYd@rgcktkjh dh olwyh dh tk,xhA bl gsrq jk"Vªh; jktekxZ] jk"Vªh; ekxZ] eq[; ftyk ekxZ] vU; ftyk ekxZ vFkok fdlh Hkh izdkj ds ekxZ ij cSfj;j yxkdj vFkok fdlh Hkh izdkj dk O;o/kku mRiUu dj bu ekxksZ ij olwyh ugh dh tk,xhA** 13. Sri Yogendra Singh Bohra, learned counsel for the petitioner in continuation to the arguments, has argued that auction was held with regard to several items vide auction notice dated 12.9.2017, however, the cancellation order has been passed only in respect of the tender given to the petitioner and no other cancellation order has been passed with regard to the other items which were included in the same tender. It has also been argued that none of the Government Orders which are the basis for passing of the impugned order are applicable to the petitioner's auction. 14. At last, the counsel for the petitioner submits that the impugned order is arbitrary, illegal and the petitioner having spent a substantial amount is against the principles of promissory estopples. The order suffers from manifest arbitrariness and is thus violative of Articles 14 as well as 19(1)(g) of the Constitution of India. 15. In respect of the submissions made by the counsel for the petitioner, the petitioner has relied upon the Judgments of the Supreme Court in the case of Popcorn Entertainment Vs. City Industrial Development Corporation, 2007 LAWS(SC) 249, ABL International Ltd. Vs. Export Credit Guarantee Corporation of India Limited, (2003) LawSuit(SC) 1286 and Mohinder Singh Gill Vs. Chief Election Commission, New Delhi, (1977) LawSuit(SC) 339. 16. The counsel for the respondents on the other hand, has tried to impress the Court by stating that the order impugned is justified as the three Government Orders referred to in the impugned order were not followed. He further submits that there is no error of law in passing the impugned order and, thus, the writ petition is devoid of merits and is liable to be dismissed. 17. When confronted with the argument of the petitioner that the auction held in pursuance to the auction notice dated 12.9.2017 has been quashed only in respect of the auction confirmed in favour of the petitioner. 17. When confronted with the argument of the petitioner that the auction held in pursuance to the auction notice dated 12.9.2017 has been quashed only in respect of the auction confirmed in favour of the petitioner. The standing counsel relies on the averment made in para-17 of the counter affidavit, which is as under :- "That the contents of paragraph no.2 of the supplementary affidavit is not admitted hence denied and in reply as to the supplementary affidavit Annexure no.1 Sartaj have deposited the entire auction amount and as to the Annexures no.2 and 3 it is relating to the licence of disposal of dead body animals under the Zila Panchayat and Nyay Panchayat of Bulandshahar which is not applicable in the present case of the petitioner." 18. He states that as the other items related to disposal of dead body of the animals and as such is not applicable in case of the petitioner. No other argument has been raised either by the petitioner or by the respondents. 19. The submissions made by the petitioner and the respondents clearly reveal that the auction was made in pursuance to the statutory powers conferred by virtue of Section 117 and bye-laws framed under the U.P. Kshettra Panchayat and the Zila Panchayat Adhiniyam, 1961 and, thus, have a statutory flavour. It is well settled that the State authorities are bound to act fairly and reasonably even while exercising their administrative power and this Court under Article 226 of the Constitution of India is duly empowered to interfere in the event of the administrative order following short of the requirements enumerated and enshrined under Article 14 of the Constitution of India. 20. The Hon'ble Supreme Court in the Case of Food Corporation of India Vs. Kamdhenu Cattle Feed Industries Ltd., (1993) 1 SCC 71 in Paragraph No. 7 has held as under :- "7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This impose the duty to act fairly and to adopt a procedure which is 'fairplay in action'. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This impose the duty to act fairly and to adopt a procedure which is 'fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non- arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely lo be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but providers for control of its exercise by judicial review." 21. The Hon'ble Supreme Court placing reliance on decision in the case of Shri Lekha Vidyarthi, in the case of ABL International Limited (supra) has held that the Courts can interfere in exercise of its power under Article 226 of the Constitution of India in the event of the order being arbitrary. The relevant part is reproduced below :- "52. On the basis of the above conclusion of ours, the question still remains why should we grant the reliefs sought for by the appellant in a writ petition when a suitable efficacious alternate remedy is available by way of a suit. The answer to this question in our opinion, lies squarely in the decision of this Court in the case of ShriLekha Vidyarthi (supra) wherein this court held : "The requirement of Article 14 should extend even in the sphere of contractual matters for regulating the conduct of the State activity. The answer to this question in our opinion, lies squarely in the decision of this Court in the case of ShriLekha Vidyarthi (supra) wherein this court held : "The requirement of Article 14 should extend even in the sphere of contractual matters for regulating the conduct of the State activity. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, the State cannot thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more. The personality of the State, requiring regulation of its conduct in all spheres by requirement of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirement of Article 14 and contractual obligations are alien concepts, which cannot co-exist. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. Therefore, total exclusion of Article 14 - non-arbitrariness which is basic to rule of law - from State actions in contractual field is not justified. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals. x x x Unlike the private parties the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The impact of every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions. x x x " 53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs.16 lacs. On facts we have found that the terms of the policy does not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court or this Court from granting the relief sought for by the petitioner." 22. It is well settled that arbitrariness being opposed to reasonableness, is an an antithesis to law, although arbitrariness can never be defined in strict jacket formula, however, an action which is irrational or perverse can always be termed as an arbitrary decision and, thus, is violative of the mandate of Article 14 of the Constitution of India. 23. The Court on the perusal of the impugned order clearly finds that none of the Government Orders referred to in the impugned order apply to the facts of the case of the petitioner as the first Government Order dated 10.4.2017 relates to the construction works tendered by the Zila Panchayats, the Government Order dated 15.2.2018 only restricts the construction of barriers on the public road (the apprehensions expressed in the Government Order dated 15.2.2018 were duly taken care of in the agreement wherein in clause 7 of the agreement it is provided that no barriers shall be erected) and the Government Order dated 20.3.2017 is general in nature and restricts the rights of Zila Panchayats to carry out the tenders till further order. It is further borne out that the auctions are held in pursuance to the statutory powers and the powers conferred on the Zila Panchayats by virtue of Section 117 and the Government Order dated 26.9.2012 duly framed in exercise of power under Section 239(2) of the Act. The said bye-laws dated 26.9.2012 clearly conferred and authorized the Zila Panchayats to levy and collect the fee either itself or through the contractors and in the event the Zila Panchayat decides to give/outsource through a contractor, the same shall be done by the Committee constituted under the Chairmanship of Uppar Mukhya Adhikari through a public auction. The same further provides that the right to accept the tender shall be on the Adhyaksh Zila Panchayats. The relevant bye-laws no.5 is quoted herein below:- **4- 'kqYd dh olwyh fdlh Hkh n'kk es cSfj;j yxkdj ugh dh tk;sxhA 5- ftyk iapk;r }kjk 'kqYd dh dk;Zokgh Lo;a vFkok Bsds ds ek/;e ls dh tk;sxh vkSj ;fn 'kqYd olwyh Bsds ds ek/;e ls gksrh gS rks Bsdk vij eq[; vf/kdkjh dh v/;{krk es xfBr uhyke lfefr }kjk lkoZtfud uhyke ds ek/;e ls mBk;k tk;sxkA Bsdk Lohd`fr djus dk vf/kdkj v/;{k ftyk iapk;r] cqyUn'kgj dks gksxkA 6- ckyw] eksjax] fxVVh vkfn ftys ls ckgj ys tkus vFkok ftys ds ckgj ls ykus ij okguks ds 'kqYd olwyh ds fy, ftyk iapk;r] cqyUn'kgj }kjk jlhn fuxZr dh tk;sxhA bUgh jlhnks ij Bsdsnkj okguks ls 'kqYd izkIr djsxkA Bsdsnkj jlhn cfg;ks dks ftyk iapk;r] cqyUn'kgj dk;kZy; ls ml ewY; ij dz; djsxk tks ftyk iapk;r }kjk fu/kkZfjr gksxkA ckyw] eksjax] fxV~Vh ¼Qkbu lsUV dkslZ lsUV½ vkfn ys tkus okys okguks ls 'kqYd olwyh ds le; jlhn dkVus ls iwoZ ,e0 ,e0 11 nsuk vko';d gksxk vkSj ftl okgu ls ,e0 ,e0 11 izkIr ugh gksrk gS mls jlhn ugh dkVus nh tk;sxh vkSj u gh ftyk iapk;r {ks= es izos'k fnyk;k tk;sxk vkSj mldh lwpuk rRdky ftyk iapk;r ,oa ftyk iz'kklu ds [kfut foHkkx dks nsuk vko';d gksxkA** 24. It is clear that once the power to auction is conferred, the bye-laws framed in pursuance to the statutory powers, the same cannot be modified/interfered by a Government Order without amending the bye-laws and, thus, this Court holds that the Government Order referred to in the impugned order cannot over ride the bye-laws framed in pursuance to the statutory power. It is clear that once the power to auction is conferred, the bye-laws framed in pursuance to the statutory powers, the same cannot be modified/interfered by a Government Order without amending the bye-laws and, thus, this Court holds that the Government Order referred to in the impugned order cannot over ride the bye-laws framed in pursuance to the statutory power. It is further clear from the perusal of the Government Orders as discussed above, that none of the Government Orders have any applicability to the facts of the present case and, thus, reliance solely on the said Government Orders while passing the impugned order is wholly arbitrary, perverse and clearly suffers from the vice by wednesbury arbitrariness. There is one more aspect of the matter that while cancelling the contract executed in favour of the petitioner, the respondents-authorities have not cancelled the auction of the other items held through the same auction notice dated 12.9.2017, the explanation in the counter affidavit extracted above is wholly unacceptable as the Government Orders referred to in the impugned order would apply to the other items also, if the contention of the respondents are to be accepted. 25. The impugned order is further bad in law as no opportunity of hearing was given to the petitioner prior to the cancellation of the contract on 20.9.2018. Thus, the order is also bad on account of non-following the principles of natural justice. 26. In view of the above, we are of the definite view that the impugned order dated 20.9.2018 is arbitrary, perverse and deserves to be set aside and it is accordingly set aside. The petitioner would be permitted to continue and complete the period in terms of the agreement dated 20.4.2018 (Annexure-6 to the writ petition) subject to the petitioner following the conditions in the said agreement. 27. Accordingly, the writ petition is allowed in terms of the Judgment indicated above. 28. No order as to costs.