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2019 DIGILAW 808 (GAU)

Purushottam Lall Basudeo v. State of Assam

2019-06-28

UJJAL BHUYAN

body2019
JUDGMENT : Ujjal Bhuyan, J. 1. Heard Mr. D. Das and Mr. B.D. Das, learned Sr. Counsel assisted by Ms. R. Deka and Mr. H. Nath, learned counsel for the petitioners. Also heard Mr. D. Saikia, learned Sr. Addl. Advocate General Assam assisted by Mr. B. Gogoi, learned Standing Counsel, Finance Department and Ms. M. Bhattacharjee, learned Government Advocate, Assam. Mr. S. Chamaria, learned counsel has appeared for Assam Government Marketing Corporation Ltd. 2. Though WP(C) Nos. 2610, 2270, 2611, 4493, 6467, 6475, 6478, 6778, 6780, 6781, 6800, 7492, 7512 and 7518 of 2017 were heard together, for the sake of convenience the cases are divided into two groups and the group comprising WP(C) Nos. 2610, 2611, 6467, 6475, 6478 and 6800 of 2017 are taken up together and disposed of by this common judgment and order. 3. Matter relates to claim of the petitioners for release of their respective bill amounts against supply of various quantities of polar blankets under the Chief Minister's Special Programme for the year 2015-16. 4. For better appreciation, individual facts of each case may be briefly highlighted. WP(C) No. 2610/2017. 5. Petitioner in this case is a partnership firm by the name of Pumshottam Lal Basudev. Respondent No. 3 i.e. Director of Hand-loom and Textiles, Assam had issued notice inviting tender (NIT) dated 30.10.2015 inviting technical and price bids through e-tendering for supply of polar blankets under the Chief Minister's Special Programme for the year 2015-16 from registered manufacturers or authorized dealers. NIT indicated specification of polar blankets and schedule of the tender. It was mentioned that rates should be quoted group-wise covering the districts as under:- Group Districts A Tinsukia, Dibrugarh, Sivasagar and Golaghat B Jorhat, Nagaon and Morigaon. C Dhemaji, Lakhimpur, Sonitpur, Darrang and Udalguri. D Kamrup, Kamrup (M), Nalbari, Barpeta and Baksa. E Bongaigaon, Dhubri, Goalpara and Chirang. F Cachar, Hailakandi, Karimganj, Dima Hasao and Karbi Anglong. 6. Petitioner responded to the above NIT and submitted tender. 7. A meeting of the tender committee for evaluation of tender papers (technical bids) was held on 26.11.2015. It was found that a total of 15 tenderers including petitioner had submitted soft copies as well as hard copies. Three tenderers did not submit hard copies of tender documents along with samples. Thereafter, tender committee short listed 12 tenderers who according to the tender committee had submitted samples as per required specifications. It was found that a total of 15 tenderers including petitioner had submitted soft copies as well as hard copies. Three tenderers did not submit hard copies of tender documents along with samples. Thereafter, tender committee short listed 12 tenderers who according to the tender committee had submitted samples as per required specifications. This included the petitioner. On verification of bid documents, samples and examination of report of the technical committee, tender committee found the tenders of the 12 short listed tenderers to be technically valid and the other 6 tenderers were accordingly disqualified. 7.1. The short-listed 12 tenderers whose tenders were found to be technically valid are as under:- 1. Assam Government Marketing Corporation Ltd. (AGMC). 2. BSM Agency, Guwahati 5. 3. NE Enterprise, Nagaland. 4. Rameshwar Textile Mills Ltd., Sural 5. Youngman Woollen Mills Pvt. Ltd., Punjab. 6. Dhanraj Mahendra Kumar, Dhubri. 7. Mafatlal Industries Ltd., Mumbai. 8. M/s. Sanna Enterprise, Nagaland. 9. Pumshottam Lal Basudev, Dhubri. 10. Eastern Agro Marketing Agencies, Guwahati. 11. Rosana Udyog Ltd., Kolkata. 12. M/s. NCS Enterprises, Dimapur, Nagaland. 7.2. The 6 tenderers who were disqualified by the tender committee are as under:- 1. M/s. BSPL India Pvt. Ltd. 2. Mangal Corporation. 3. M/s. Sapna Enterprises. 4. Techno crafts Associates. 5. National Cooperative Consumers Federation of India Ltd. 6. M/s. AAA Spinners. 8. Tender committee in its meeting held on 27.11.2015 for finalization of price bids noted that for groups A, B, C and F, Youngman Woollen Mills Pvt. Ltd., Punjab quoted the lowest rate i.e Rs. 333.00 per piece of blanket and Rs. 324.00 for groups E and D which was the lowest rate. Tender committee accepted the lowest rates for the different groups and decided to get the rates approved by the Govt. of Assam. 9. It is not known whether the rates were approved or not. However, respondent No. 3 i.e. Director of Handloom and Textiles, Assam wrote to the petitioner and ten others vide letter dated 22.12.2015 informing them that tender committee had approved Rs. 333.00 per piece of blanket in respect of groups A, B, C and F and Rs. 324.00 per piece of blanket in respect of groups D and E as the lowest rates. Petitioner was requested to inform respondent No. 2 whether it was willing to supply the said item (polar blankets) at the lowest rates as per specification. 10. 333.00 per piece of blanket in respect of groups A, B, C and F and Rs. 324.00 per piece of blanket in respect of groups D and E as the lowest rates. Petitioner was requested to inform respondent No. 2 whether it was willing to supply the said item (polar blankets) at the lowest rates as per specification. 10. Petitioner by its letter dated 29.12.2015 informed respondent No. 3 that it was ready to supply polar blankets at the approved L1 rate for the respective groups. 11. Thereafter, respondent No. 3 issued supply order dated 18.01.2016 to the petitioner to supply 1,30,149 pieces of polar blanket @ Rs. 333.00 for group C. It was also mentioned that petitioner should submit bills duly certified and signed by departmental authorities. 12. Deed of agreement was entered into between petitioner and respondent No. 3 for such supply. 13. It is stated that petitioner made the necessary supply where after bills were submitted totalling Rs. 4,33,39,617.00 which was inclusive of VAT. 14. However, no payment was made. Petitioner submitted representation dated 22.03.2017 but to no effect. 15. Hence the writ petition. 16. Director of Handloom and Textiles, Assam, respondent No. 3 has filed affidavit. Stand taken in the affidavit is that bills submitted by the petitioner for supply of polar blankets were forwarded to the Government on 09.03.2016. It is stated that ceiling proposal for release of funds for an amount of Rs. 49,99,93,274.00 was submitted to the Government but fund has not been received. 17. In his affidavit, Commissioner and Secretary to the Govt. of Assam, Handloom, Textiles and Sericulture Department has admitted that respondent No. 3 had submitted ceiling proposal for release of fund amounting to Rs. 49,99,93,274.00 for making payment against supply of polar blankets. The proposal was sent to the Finance Department on 14.03.2016. Against the proposal ceiling for an amount of Rs. 520.50 lakhs only was received from the Finance Department on 30.03.2016 which was issued to respondent No. 3 on 31.03.2016 being the drawing and disbursing officer. Thereafter respondent No. 3 submitted proposal for renewal of sanction for releasing the bill amounts. Proposal was sent to the Finance Department for concurrence on 27.02.2017 but no concurrence has been received. 18. An affidavit has been filed on behalf of respondent No. 2 i.e. Commissioner and Secretary to the Govt. of Assam, Finance Department through the Under Secretary. Thereafter respondent No. 3 submitted proposal for renewal of sanction for releasing the bill amounts. Proposal was sent to the Finance Department for concurrence on 27.02.2017 but no concurrence has been received. 18. An affidavit has been filed on behalf of respondent No. 2 i.e. Commissioner and Secretary to the Govt. of Assam, Finance Department through the Under Secretary. It is stated that on going through the record of the administrative department, it appeared that there were prima facie violation of CVC guidelines in the whole supply process of polar blankets under the Chief Minister's Special Programme, 2015-16. It is stated L1 bidder had supplied the materials based on partial allotment of the quantity. Supply orders were split up by reducing the quantity from the L1 bidder where after it was distributed to the other bidders at the L1 rate. Stand taken is that the same is in violation of terms and conditions of tender and relevant guidelines for procurement issued by the CVC. Matter was considered at the level of Chief Secretary, Hon'ble Finance Minister and Hon'ble Chief Minister. Handloom, Textiles and Sericulture Department was asked to inform the Finance Department as to the proposed administrative action against officials involved in the illegalities. Handloom, Textiles and Sericulture Department has submitted draft statement of allegations along with draft charges, list of witnesses and documents against the then Director of Handloom and Textiles, Assam Sri P.K. Talukdar and by the endorsement dated 30.11.2017, Finance Department informed the Handloom, Textiles and Sericulture Department that in the light of views expressed by the Judicial Department, Handloom, Textiles and Sericulture Department may proceed in the matter in consultation with the Personnel Department. It is further stated that Finance Department had concurred to payment of Rs. 12,14,91,438.00 to L1 bidder Youngman Woollen Mills Pvt. Ltd. for supply of polar blankets. WP(C) No. 2611/2017 19. Petitioner in this case is BSN Agency, a proprietorship concern and is represented by its constituted attorney, Sri Bikas Jalan. It is stated that petitioner had participated in the tender for supply of polar blankets. 20. In this case, respondent No. 3 issued supply order dated 18.01.2016 for supply of 2,31,288 pieces of polar blankets to the petitioner for distribution to the beneficiaries of group E under Chief Minister's Special Programme for the year 2015-16. 21. It is stated that petitioner had participated in the tender for supply of polar blankets. 20. In this case, respondent No. 3 issued supply order dated 18.01.2016 for supply of 2,31,288 pieces of polar blankets to the petitioner for distribution to the beneficiaries of group E under Chief Minister's Special Programme for the year 2015-16. 21. It is stated that pursuant to such supply order petitioner executed an agreement dated 18.01.2016 with respondent No. 3 where after polar blankets were supplied. Petitioner submitted bill for an amount of Rs. 7,49,37,312.00 on 29.02.2016. But no payment was made. 22. Despite submission of representation, the bill amount was not released. 23. Aggrieved, the writ petition has been filed for release of bill amount of Rs. 7,49,37,312.00 with interest. 24. Identical affidavits have been filed by respondent Nos. 1 and 3. However, respondent No. 2 in his affidavit has stated that Finance Department would examine admissibility of the claim. WP(C) No. 6467/2017 25. M/s. Mero Traders, a proprietorship firm, is the petitioner. It is stated that supply order was issued to Assam Government Marketing Corporation Ltd. (AGMC) on 18.01.2016 for supply of 4,26,565 pieces of polar blankets to the beneficiaries under groups A, C and F. 26. AGMC is a Government of Assam Undertaking. Pursuant to supply order dated 18.01.2016 it issued order dated 18.01.2016 to the petitioner as the handling agent for supply of 1,18,696 pieces of polar blankets under group F. Petitioner entered into an agreement with AGMC on 18.01.2016 itself. Thereafter, petitioner supplied 1,18,696 pieces of polar blankets to the beneficiaries where after bill dated 29.02.2016 for an amount of Rs. 3,95,25,768.00 was raised and submitted. 27. It is stated that despite submission of bill payment has not been made. 28. Aggrieved, the writ petition has been filed seeking a direction to the respondents for release of bill amount of Rs. 3,95,25,768 to the petitioner. 29. In its affidavit, respondent No. 6 AGMC has admitted that supply order dated 18.01.2016 was issued by AGMC in favour of the petitioner. Bill raised by the petitioner was forwarded to the Handloom and Textiles Department with the request for release of fund at the earliest. Because of non-release of required fund by the Handloom and Textiles Department, petitioner could not be paid the bill amount. Bill raised by the petitioner was forwarded to the Handloom and Textiles Department with the request for release of fund at the earliest. Because of non-release of required fund by the Handloom and Textiles Department, petitioner could not be paid the bill amount. It is stated that it was mentioned in the supply order itself that payment would be made only after receipt of fund from the Directorate of Handloom and Textiles, Assam. 30. Respondent No. 5 i.e., Director of Handloom and Textiles, Assam in his affidavit has stated that supply order was issued to AGMC for supply of 4,26,565 pieces of polar blankets under Chief Minister's Special Programme for the year 2015-16 vide supply order dated 18.01.2016 pursuant to e-tender notice dated 30.10.2015. It is stated that on completion of the e-tendering process, Director of Handloom and Textiles, Assam had issued supply orders to six numbers of bidders including AGMC at the rate approved by the tender committee for supply of polar blankets considering the limitation of time. Petitioner received supply order from AGMC. AGMC submitted bills for supply of polar blankets against supply orders to the Directorate of Handloom and Textiles. However, no sanction of fund was received from the Government. Referring to the supply order it is stated that it was mentioned therein that payment would be made subject to receipt of fund from the Government. In so far claim of the petitioner is concerned, petitioner received the supply order from the AGMC. Therefore, it is a matter between the petitioner and AGMC. 31. Respondent No. 3, i.e. Commissioner and Secretary to the Govt. of Assam in the Finance Department has filed an identical affidavit as the one filed in WP(C) No. 2610/2017. Additionally, it is stated that supply orders were issued to parties who were not L1. That apart, supply orders were also issued to parties who had not even participated in the tender process. However, Finance Department concurred vide endorsement dated 31.7.2017 for payment to L1 bidder i.e. M/s. Youngman Woollen Mills Pvt. Ltd. for an amount of Rs. 12,14,91,438.00. No proposal for sanction against bill of petitioner is pending with the Finance Department. WP(C) No. 6475/2017 32. In this case petitioner is M/s. Eastern Agro Marketing Agencies, a proprietorship firm. Petitioner had supplied polar blankets for group C in terms of supply order dated 18.01.2016. 12,14,91,438.00. No proposal for sanction against bill of petitioner is pending with the Finance Department. WP(C) No. 6475/2017 32. In this case petitioner is M/s. Eastern Agro Marketing Agencies, a proprietorship firm. Petitioner had supplied polar blankets for group C in terms of supply order dated 18.01.2016. Total quantity to be supplied was 71,044 pieces @ Rs. 333.00 per piece. 33. Petitioner signed agreement with the Handloom and Textiles Department on 18.01.2016 and thereafter supplied the blankets. 34. After supplying the blankets, petitioner submitted bill dated 29.02.2016 for supply of 71,044 pieces of polar blankets amounting to Rs. 2,36,57,439.00. However, the bill amount was not released to the petitioner. Representations submitted by the petitioner on 01.06.2016 and 01.09.2016 did not yield any result. 35. For release of the aforesaid amount present writ petition has been filed. 36. Identical affidavits have been filed by respondent No. 5, i.e. Director of Handloom and Textiles, Assam. 37. In his affidavit, respondent No. 2, i.e. Commissioner and Secretary to the Govt. of Assam, Handloom, Textiles and Sericulture Department has taken the stand that the said Department had accorded administrative approval for an amount of Rs. 1,25,00,000.00 vide letter dated 19.10.2015, of which Rs. 50 crores were earmarked for procurement of polar blankets and Rs. 75,00,00,000.00 were earmarked for procurement of yarn. 37.1. It is stated that in response to e-tender notice dated 30.10.2015 for supply of polar blankets under Chief Minister's Special Programme for the year 2015-16, 18 numbers of bidders had participated out of which 12 are found technically qualified. On further scrutiny of the bids of technically qualified bidders, tender committee in its meeting held on 27.11.2015 had accepted the lowest rate of Rs. 333.00 per piece of polar blanket in respect of groups A, B, C and F and Rs. 324.00 per piece of polar blanket for groups D and E. It is stated that the above rates were quoted by M/s. Youngman Woollen Mills Pvt. Ltd. Director of Handloom and Textiles, Assam had moved the Government for sanction of Rs. 49,99,99,588.00 to which Government had accorded sanction on 2.1.2016 as per concurrence of Finance (EC-II) Department. 37.2. 324.00 per piece of polar blanket for groups D and E. It is stated that the above rates were quoted by M/s. Youngman Woollen Mills Pvt. Ltd. Director of Handloom and Textiles, Assam had moved the Government for sanction of Rs. 49,99,99,588.00 to which Government had accorded sanction on 2.1.2016 as per concurrence of Finance (EC-II) Department. 37.2. However, it is stated that it is not known under what circumstances Director of Handloom and Textiles, Assam had issued supply order to the lowest tenderer, i.e. M/s. Youngman Woollen Mills Pvt. Ltd. to supply only in two groups i.e. groups B and D. For the other groups supply orders were issued to five other technically qualified bidders at the approved lowest rate irrespective of their participation in those particulars groups in the bidding process. In this connection, Govt. of Assam in the Handloom, Textiles and Sericulture Department had sought for clarification from the Director of Handloom and Textiles on 14.03.2016. Particularly it was asked whether consent of L1 bidder was obtained before allotting works to bidders quoting L4, L5, L6 etc.; why orders were placed with firms which did not even participate in the bidding process for the groups concerned; whether such action taken conformed to CVC guidelines etc. Director was also requested to furnish a copy of the tender submitted by AGMC. 37.3. Director informed that the above course of action was adopted following direction of the departmental Minister for expeditious implementation of the package but no approval from the Government was taken. It is stated by respondent No. 2 as under:- "In this regard, it may be stated that- 1. For Group-A, supply order was issued to AGMC Ltd., which was L-5 in the bidding process, instead of giving supply order to L-1 bidder. 2. For Group-A, a portion of the supply order was also given to M/s. Dhanraj Mahendra, who did not participate in the bidding process. 3. For Group-C, supply orders were issued to M/s. Purushottam Basudeo and AGMC Ltd., who were L-6 and L-8 bidders respectively, instead of issuing the supply order to L-1 bidder. 4. For Group-C, a portion of supply order was also given to M/s. Eastern Agro Marketing Agency, who did not even participate in the bidding process. 5. 3. For Group-C, supply orders were issued to M/s. Purushottam Basudeo and AGMC Ltd., who were L-6 and L-8 bidders respectively, instead of issuing the supply order to L-1 bidder. 4. For Group-C, a portion of supply order was also given to M/s. Eastern Agro Marketing Agency, who did not even participate in the bidding process. 5. For Group-E, supply order was given to M/s. BSM Agency, who was the L-4 bidder, instead of giving the supply order to the L-1 bidder. 6. For Group-F, supply order was given to AGMC Ltd., who was L-6 bidder, instead of issuing the supply order to the L-1 bidder." 37.4. Explanation was sought for from the Director on 18.05.2016 as to why supply orders were issued to non-bidders and other bidders instead of L1 bidder. It is stated that such supply orders to parties other than L1 was in violation of GVC norms. Administrative steps are being taken against the then Director of Handloom and Textiles. 37.5. It is stated that orders for supply of blankets in groups A, C, E and F to parties other than Youngman Woollen Mills Pvt. Ltd. which was the L1 bidder in the tender process was in violation of CVC norms. 37.6. It is further stated that on recommendation of the Finance Department, Personnel (A) Department, Govt. of Assam has initiated steps for taking necessary action in the matter against the then Director of Handloom and Textiles, Assam. 38. Respondent No. 3, i.e. Commissioner and Secretary to the Govt. of Assam, Finance (EC-II) Department in his affidavit has stated that for implementation of Chief Minister's Special Programme, 2015-16 for distribution of blankets and yarn, Finance Department had accorded concurrence for administrative approval of Rs. 125 crores vide endorsement dated 17.10.2015. Handloom, Textiles and Sericulture Department was asked to follow e-procurement procedure, CVC guidelines, provisions of other statutory enactments, office memorandum and guidelines in this regard. Financial sanction of Rs. 49,99,99,588 was accorded with the concurrence of Finance Department vide endorsement dated 18.12.2015. Thereafter, Finance Department received proposal for sanction of Rs. 3859.72 lakhs for partially clearing the bills for supply of blankets in Chief Minister's Special Programme, 2015-16. 38.1. It is stated that from the file records of the administrative department there appear to be prima-facie violation of the CVC guidelines in the whole supply process of blankets. Thereafter, Finance Department received proposal for sanction of Rs. 3859.72 lakhs for partially clearing the bills for supply of blankets in Chief Minister's Special Programme, 2015-16. 38.1. It is stated that from the file records of the administrative department there appear to be prima-facie violation of the CVC guidelines in the whole supply process of blankets. Supply orders were issued to parties who were not L1 bidders in the respective groups; not only that, supply orders were issued even to parties who had not participated in the bid. 38.2. It is also stated that this matter was considered at the level of Chief Secretary, Hon'ble Finance Minister and Hon'ble Chief Minister where after Finance Department was asked to separate the bills related to L1 bidder and to submit proposal for sanction. 38.3. It is further stated that providing of supply orders to other bidders by reducing the quantity from L1 bidder was in complete violation of the terms and conditions of tender. Handloom, Textiles and Sericulture Department was asked on 21.03.2017 to inform the Finance Department as to what action was proposed against such irregularities/illegalities. 38.4. Handloom, Textiles and Sericulture Department submitted proposal of draft charges against Sri P.K. Talukdar, ACS, the then Director of Handloom and Textiles. 38.5. Finance Department concurred to payment of Rs. 12,14,91,438 on 31.07.2017 to L1 bidder, i.e. Youngman Woollen Mills Pvt. Ltd. This was in compliance of this Court's order in Contempt Case (C) No. 112/2017 (Youngman Woollen Mills Pvt. Ltd. Vs V.K. Pipersenia). 38.6. Presently no proposal for concurrence to sanction against bill of petitioner from Handloom, Textiles and Sericulture Department is pending in the Finance Department WP(C) No. 6478/2017 39. In this case petitioner is M/s. Eastern Agro Marketing Agencies which is a proprietorship firm having its establishment at Srimanta Market, AT Road, Guwahati. 40. It is stated that AGMC had participated in the tender in respect of three groups i.e. groups A, C and F for supply of polar blankets under the Chief Minister's Special Programme, 2015-16 pursuant to e-tender notice dated 30.10.2015. 41. Following evaluation of tenders, AGMC was issued supply order for supply of polar blankets on 18.01.2016 for distribution to beneficiaries in respect of groups A, C and F within 10.02.2016. 41. Following evaluation of tenders, AGMC was issued supply order for supply of polar blankets on 18.01.2016 for distribution to beneficiaries in respect of groups A, C and F within 10.02.2016. Total quantity to be supplied was 4,26,565 pieces of polar blankets; 1,42,089 pieces under group A; 47,462 pieces under group-C; and 2,37,014 pieces under group F. The rate prescribed was that of L1 i.e. Rs. 333.00 per piece. 42. An agreement was also entered into between the parties on 18.01.2016. 43. AGMC in turn issued supply order dated 21.01.2016 to the petitioner as handling agent for supply of 85,031 pieces of polar blankets under group-A. In this connection an agreement was entered into between the petitioner and AGMC on 21.01.2016 itself. 44. It is stated that pursuant to the agreement dated 21.01.2016 petitioner started procuring the required quantity of polar blankets and thereafter made the supply which were duly received by the different agencies. 45. After supplying the materials petitioner raised bill of Rs. 2,83,15,068 on 29.02.2016. 46. Grievance of the petitioner is that the said bill amount has not been released. Representations submitted on 01.06.2016 and 01.09.2016 have failed to yield any result. 47. It is stated that in the meanwhile the L1 bidder Youngman Woollen Mills Pvt. Ltd. was also not paid the bill amount. It had approached this Court by filing WP(C) No. 2918/2016 and this Court by order dated 29.09.2016 directed the Handloom, Textiles and Sericulture Department to do the needful. Then also payment was not made. It was only after a contempt case was filed being Contempt Case (C) No. 112/2017 that dues of L1 bidder were released. 48. Aggrieved, present writ petition has been filed for a direction to the respondents to release payment of Rs. 2,83,15,068.00 to the petitioner. 49. An identical affidavit has been filed by respondent No. 3, i.e. Commissioner and Secretary, Finance (EC-II) Department. 50. In his affidavit, Director of Handloom and Textiles, Assam has stated that on completion of the e-tendering process the Directorate had issued supply orders to six numbers of bidders including AGMC for supply of 4,26,565 pieces of polar blankets. It is admitted that petitioner M/s. Eastern Agro Marketing Agencies received supply order from AGMC. It is stated that as the petitioner had received supply order from AGMC, it is a matter between AGMC and the petitioner. 51. It is admitted that petitioner M/s. Eastern Agro Marketing Agencies received supply order from AGMC. It is stated that as the petitioner had received supply order from AGMC, it is a matter between AGMC and the petitioner. 51. AGMC (respondent No. 6) in its affidavit has admitted about supply order dated 21.01.2016 issued by AGMC in favour of petitioner. AGMC has also admitted that petitioner had successfully executed the supply order and thereafter raised bill. Consolidating all the bills, AGMC submitted proposal for an amount of Rs. 20,79,33,072.00 to the Government. It is stated that because of non-release of fund by the Handloom, Textiles and Sericulture Department, AGMC could not release the bill amount to the petitioner. It is further stated that payment would be made as and when funds are received. WP(C) No. 6800/2017 52. In this case Dhanraj Mahendra Kumar, a proprietorship firm, is the petitioner. In the tender process, petitioner was short-listed as L3. Respondent No. 3 vide letter dated 22.12.2015 sought for the consent of the petitioner as to whether it could supply the polar blankets at L1 rate. Petitioner by letter dated 24.12.2015 consented to such offer whereafter respondent No. 3 issued supply order to the petitioner on 18.01.2016. Petitioner was directed to supply 1,18,507 pieces of polar blankets @ Rs. 333.00 per piece for group A. An agreement was entered into between petitioner and respondent No. 3 on 18.01.2016 itself where after petitioner made the supplies. 53. On completion of supply petitioner raised bill dated 29.02.2016 for an amount of Rs. 3,94,62,831.00. 54. Grievance of the petitioner is that the said bill amount has not been paid despite representing in this regard. 55. Hence the writ petition seeking a direction to the respondents for release of the bill amount. 56. Similar affidavit has been filed by the Finance Department taking identical stand as in other cases. 57. Director of Handloom and Textiles, Assam has filed affidavit admitting that petitioner was issued supply order for supply of 1,18,507 pieces of polar blankets at L1 rate. He has also admitted that petitioner had supplied the materials as per supply order where after it had submitted the bills. Submissions 58. Learned counsel for the petitioners have argued that petitioners had executed the supply orders issued either by the Director of Handloom and Textiles or by the Managing Director of AGMC, both Government instrumentalities. He has also admitted that petitioner had supplied the materials as per supply order where after it had submitted the bills. Submissions 58. Learned counsel for the petitioners have argued that petitioners had executed the supply orders issued either by the Director of Handloom and Textiles or by the Managing Director of AGMC, both Government instrumentalities. Respondents have admitted that petitioners had made the requisite supplies as per supply orders backed by agreements. There is also no complaint regarding deficiency in supply, either of quality or of quantity. Supply orders were issued to the petitioners at L1 rate. Therefore, there was no pecuniary loss to the Government. In such circumstances, withholding of payment to the petitioners is not justified. Reference has been made to Section 70 of the Indian Contract Act, 1872. As such necessary directions may be issued to the respondents for payment of the due amounts to the petitioners. 59. Mr. D. Saikia, learned Sr. Addl. Advocate General, Assam submitted that he appears on behalf of Finance Department, Govt. of Assam as well as Handloom, Textiles and Sericulture Department, Govt. of Assam i.e. respondent Nos. 1 and 2. However, he would not appear on behalf of Director of Handloom and Textiles, Assam. At the outset, he submits that grievance raised by the petitioners are contractual in nature. Therefore, remedy of the petitioners is by way of a civil suit. Writ petitions would not be maintainable. On merit he submits that M/s. Youngman Woollen Mills Pvt. Ltd. was the L1 bidder. Government had no difficulty in releasing payment to L1. But what has happened is that entire supplies were not given to L1. Director had adopted pick and choose method and randomly selected bidders who were not L1 and awarded orders of supply to such bidders though at L1 rate. To make matters worse, supply orders were given to AGMC who was in fact L5. What AGMC did thereafter was clearly in defiance of law. AGMC allotted supply orders to parties from out of its share. These parties were not bidders in the tender process. How these parties were given supply orders by AGMC without following any procedure is beyond comprehension. Thus supply orders were issued randomly to parties who were not L1. One of the parties who got the supply order i.e. AGMC handed down the supply orders to parties of its choice without following any procedure. How these parties were given supply orders by AGMC without following any procedure is beyond comprehension. Thus supply orders were issued randomly to parties who were not L1. One of the parties who got the supply order i.e. AGMC handed down the supply orders to parties of its choice without following any procedure. There was thus clear violation of tendering norms which has been viewed very seriously by the Government Though steps have been initiated against the Director of Handloom and Textiles, Government is of the view that there could be other and bigger forces which forced the Director to adopt such illegal methods. It is for such reason that Government has taken the view that payment should not be released to the petitioners. 59.1. Referring to the agreements entered into between the parties, Mr. Saikia submits that Director of Handloom and Textiles, Assam had executed the agreements on behalf of Government of Assam which he is not authorized to do. On the basis of such agreements, Government cannot be saddled with huge quantum of payments to the petitioners. In any view, Government cannot be compelled to make payments on the strength of supply orders and agreements of AGMC in which Government was not a party. 60. Ms. M. Bhattacharjee, learned Government Advocate, Assam appearing for the Director of Handloom and Textiles, Assam supports the tender process and submits that Director had acted as desired by the higher authority. Further, the tender committee had ensured that while the supply was executed expeditiously by distributing the work amongst a number of tenderers but at the same time it was also ensured that no loss was caused to the state exchequer as all the supplies were made at L1 rate. Reduction of quantity and distribution amongst other tenderers was not objected to by the L1 tenderer. 61. Learned counsel for AGMC Shri S. Chamaria submits that AGMC was one of the tenderers and was awarded supply order at L1 rate. Memorandum of Association of AGMC permits execution of supply works through sub-contracts. Therefore, AGMC got the supply works executed through the petitioners who are registered with the AGMC as handling agents. Petitioners while executing the supplies stepped into the shoes of AGMC. As such, no illegality was committed. Discussions and analysis 62. Submissions made by learned counsel for the parties have been considered. 63. Therefore, AGMC got the supply works executed through the petitioners who are registered with the AGMC as handling agents. Petitioners while executing the supplies stepped into the shoes of AGMC. As such, no illegality was committed. Discussions and analysis 62. Submissions made by learned counsel for the parties have been considered. 63. What has emerged from the deliberations is that Director of Handloom and Textiles, Assam had issued NIT dated 30.10.2015 inviting technical and price bids through e-tendering for supply of polar blankets under Chief Minister's Special Programme for the year 2015-16 from registered manufacturers or authorized dealers. Thus, only registered manufacturers or authorized dealers were eligible to submit tender. The districts where polar blankets were to be supplied were divided into six groups described in paragraph 5 above. Evaluation of technical bids was held on 26.11.2015. On such evaluation tender committee found that a total of 15 tenderers had submitted tender. Tender committee found bids of 12 to be technically valid. Accordingly, the remaining six tenderers were disqualified. The technically valid tenderers are mentioned in paragraph 7.1 above whereas the six disqualified tenderers are mentioned in paragraph 7.2 above. 64. Price bids were finalized on the next date i.e. 27.11.2015. It was found that for all the groups Youngman Woollen Mills Pvt. Ltd., Punjab had quoted the lowest rate i.e. it was L1 for all the groups. For groups A, B, C and F it quoted Rs. 333.00 per piece of blanket and for groups E and D, it quoted Rs. 324.00. 65. Tender committee accepted the lowest rate for the different groups and decided to get the rates approved by the Government of Assam. 66. Till this point of time, there appeared to be no complication in the tender process. However, the question remains whether a tenderer like the AGMC fulfilled the eligibility criteria of being a registered manufacturer or authorized dealer of polar blankets. 67. Moreover, it is not quite discernible from the pleadings as to whether Government of Assam in the Handloom, Textiles and Sericulture Department had approved the two L1 rates. But it has come on record that Director of Handloom and Textiles had written to 11 parties i.e. those bidders other than L1 whose technical bids were found to be valid informing them that tender committee had approved the rate of Rs. But it has come on record that Director of Handloom and Textiles had written to 11 parties i.e. those bidders other than L1 whose technical bids were found to be valid informing them that tender committee had approved the rate of Rs. 333.00 per piece of blanket in respect of groups A, B, C and F and Rs. 324.00 per piece of blanket in respect of groups D and E as L1 rate. The 11 bidders were requested to inform the Director as to whether they were willing to supply the said item (polar blankets) at L1 rate as per specification. 68. It appears that Purushottam Lal Basudev, BSM Agencies, AGMC, M/s. Eastern Agro Marketing Agencies and Dhanraj Mahendra Kumar had accepted the offer. It is however not very clear from the pleadings as to whether the other bidders had accepted the offer or not because apparently they are not before the Court. It seems that either they had not accepted the offer or even if they had accepted the offer no supply order was issued to them because no payment due for supply is outstanding against them; nor had they lodged any such claim. These bidders i.e., Purushottam Lal Basudev, BSM Agencies, AGMC, M/s. Eastern Agro Marketing Agencies and Dhanraj Mahendra Kumar were not L1 bidders. Their bids were much higher than L1 in respect of different groups as has been pointed out by Commissioner and Secretary to the Govt. of Assam, Handloom, Textiles and Sericulture Department in WP(C) No. 6475/2017 (paragraph 37.3). Nonetheless, they were given supply orders but of course at L1 rate after signing of contract agreements with the Director of Handloom and Textiles, Assam. 69. AGMC on its part adopted a strange procedure. What it did is that it in turn issued supply order to one party M/s. Mero Traders [WP(C) No. 6467/2017] for supply of 4,26,565 pieces of polar blankets under groups A, C and F. M/s. Mero Traders has now complained that AGMC had not settled its supply bills. Why and how M/s. Mero Traders was given a supply order by AGMC is not discernible from the pleadings and other materials on record. Whether AGMC had issued a short tender notice for awarding the supply order or whether supply order was issued to an accredited concern has not been disclosed either by the petitioner or by AGMC. Why and how M/s. Mero Traders was given a supply order by AGMC is not discernible from the pleadings and other materials on record. Whether AGMC had issued a short tender notice for awarding the supply order or whether supply order was issued to an accredited concern has not been disclosed either by the petitioner or by AGMC. If M/s. Mero Traders is an accredited concern, than naturally question will arise as to whether AGMC had followed seriality or some rational criteria while awarding the supply order to M/s. Mero Traders. This is however not discernible as neither petitioner nor AGMC have thrown much light in this regard. But one thing is very certain and that is M/s. Mero Traders was not a tenderer pursuant to NIT dated 30.10.2015. But the fundamental question remains: that is, whether AGMC fulfilled the eligibility criteria of the NIT as pointed out in paragraph 66 of the judgment. 70. While M/s. Eastern Agro Marketing Agencies, one of the tenderers, was issued supply order by the Director of Handloom and Textiles in WP(C) No. 6475/2017, in WP (C) No. 6478/2017 original supply order was issued by the Director of Handloom and Textiles to AGMC. But thereafter AGMC issued supply order to M/s. Eastern Agro Marketing Agencies. Here also question will arise as to why AGMC had outsourced the supply order to M/s. Eastern Agro Marketing Agencies when it itself was a tenderer. Neither M/s. Eastern Agro Marketing Agencies nor AGMC have disclosed how and what procedure was followed while permitting M/s. Eastern Agro Marketing Agencies to make the supply though original supply order was issued in the name of AGMC. In both the cases i.e., in the case of M/s. Mero Traders and in the case of M/s. Eastern Agro Marketing Agencies, it was the AGMC which had signed the contract agreement with the supplier and not by the Director. 71. Thus the role of AGMC is not really above board; rather it is highly questionable. Its eligibility is itself under a cloud. Besides, it had sub-awarded supply orders to parties without disclosing what procedure it had followed while doing so. AGMC is a Government of Assam undertaking. In other words, it is a state instrumentality. It is not open to a state instrumentality to act like a private citizen. It has to act within the para-meters of law by following some norms and procedure. AGMC is a Government of Assam undertaking. In other words, it is a state instrumentality. It is not open to a state instrumentality to act like a private citizen. It has to act within the para-meters of law by following some norms and procedure. No such norms and procedure are discernible while issuing supply orders by AGMC to M/s. Mero Traders and M/s. Eastern Agro Marketing Agencies. 72. Certainly, issuance of multiple supply orders following the tender process pursuant to NIT dated 30.10.2015 has raised a lot of questions. At the same time it is also true that Finance Department as well as Handloom, Textiles and Sericulture Department, Govt. of Assam have not raised any objection regarding deficiency in the supplies, whether be it of quantity or of quality. Therefore, this is also an aspect which needs to be considered. Can the suppliers who had made the supplies be penalised for wrong doing of the authorities? If wrong doing has taken place, and certainly it appears it has taken place, can only the Director of Handloom and Textiles be singled out and made the scapegoat? Or could there be other persons who had compelled the Director to adopt such a procedure? And what about the role of AGMC? As discussed above, conduct of AGMC is not above board. 73. Article 299 of the Constitution of India deals with Government contracts. Clause (1) says that all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorize. However, clause (2) makes it clear that neither the President nor the Governor shall be personally liable in respect of such contract or assurance. 74. Thus what emerges from the above is that Government contracts must be expressed in the name of the President or the Governor. Such contract shall be executed by the competent person and in the prescribed manner. The use of the expression "shall" in clause (I) of Article 299 is indicative of its mandatory character. 74. Thus what emerges from the above is that Government contracts must be expressed in the name of the President or the Governor. Such contract shall be executed by the competent person and in the prescribed manner. The use of the expression "shall" in clause (I) of Article 299 is indicative of its mandatory character. If the requirements of clause (I) of Article 299 are not satisfied, then the Government is not bound by the contract. 75. In State of Punjab Vs. Om Prakash Baldev Krishan, AIR 1988 SC 2149 , Supreme Court held that a contract entered into by the State must satisfy three conditions:- (1) it must be expressed to be made by the Governor; (2) it must be executed; (3) the execution should be by such persons and in such manner as the Governor might direct or authorize; These three conditions are required to be fulfilled. Examining the provisions of Section 175 (3) of the Government of India Act, 1935 and the corresponding provisions of Article 299 (I) of the Constitution, it was held that these provisions have not been enacted for the sake of mere form but they have been enacted for safeguarding the Government against unauthorized contracts. These provisions were embodied earlier in Section 175(3) of the Government of India Act, 1935 and now in Article 299(1) of the Constitution of India on the ground of public policy-on the ground of protection of general public. These conditions cannot be waived or dispensed with. State should not be saddled with liability for unauthorized contracts; the contracts must show on their faces that these were made by the Governor and executed on his behalf in the manner prescribed. 75.1. Rule 12 of the Assam Rules of Executive Business, 1968 says that every order or instrument of the Government of the State shall be expressed to be made in the name of the Governor and shall be signed either by a Secretary, an Additional Secretary, a Special Secretary, a Joint Secretary, a Deputy Secretary, an Under Secretary or such other officer as may be specially empowered in that behalf and such signature shall be deemed to be the proper authentication of such order or instrument Carefully read, this provision mentions three requirements. Firstly, every order or instrument of the Government of Assam shall be expressed in the name of the Governor. Firstly, every order or instrument of the Government of Assam shall be expressed in the name of the Governor. Second requirement is that it must be signed by any of the officers mentioned therein. Thirdly, it can also be signed any other officer but he/she has to be specially empowered in that behalf. When the above conditions are fulfilled, such signature shall be deemed to be the proper authentication of such order or instrument. 76. Reverting back to the present cases, it is seen that contract agreements were signed by the Director of Handloom and Textiles, Assam on behalf of the Government of Assam. There is no recital in the contract agreements or any averment in the affidavits filed by the Director of Handloom and Textiles, Assam that he was authorized by the Governor of Assam to enter into and execute such contract agreements. In the absence of such authorization, such contract agreements would be invalid and cannot be binding on the Government. Evidently those are in complete violation of Article 299 (1) of the Constitution of India as well as Rule 12 of the Assam Rules of Executive Business, 1968. In so far contract agreements entered into by AGMC with the suppliers are concerned, it is entirely a matter between the two and no claim can be made against the Government on the basis of such contract agreements. There was no privity of contract between the State or even the Director and the petitioners. Therefore, State cannot be saddled with the liability to pay the amounts claimed by the petitioners. 77. At this stage, Section 70 of the Indian Contract Act, 1872 (Contract Act for short) may be adverted to. Section 70 says that where a person lawfully does anything for another person or delivers anything to him, not intending to do so gratuitously and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of or to restore the thing so done or delivered. Thus, on a careful reading of Section 70 what is evident is that a claim under the section is for compensation. But for payment of such compensation three conditions must be fulfilled. Firstly, the thing or act must be done lawfully. Secondly, it must not be gratuitous. Thus, on a careful reading of Section 70 what is evident is that a claim under the section is for compensation. But for payment of such compensation three conditions must be fulfilled. Firstly, the thing or act must be done lawfully. Secondly, it must not be gratuitous. Lastly, the person who is called upon to make compensation must enjoy the benefit of the act or thing on the basis of which compensation is claimed. 78. Constitution Bench judgment of the Supreme Court in State of West Bengal Vs. M/s. B.K. Mondal, AIR 1962 SC 779 is the leading decision on this provision. Supreme Court held that the above three conditions must be satisfied before Section 70 can be invoked. Elaborating the rationale behind Section 70, Supreme Court held that if the goods delivered are accepted or the work done is voluntarily enjoyed then the liability to pay compensation for the enjoyment of the said goods or the acceptance of the said work arises. Thus, where a claim for compensation is made by one person against another under Section 70, it is not on the basis of any subsisting contract between the parties, it is on the basis of the fact that something was done by the party for another and the said work so done has been voluntarily accepted by the other party. Of course Supreme Court clarified that between the person claiming compensation and the person against whom it is claimed some lawful relationship must subsist. Explaining the implication of the word "lawfully" as appearing in Section 70, Supreme Court held that after something is delivered or something is done by one person for another and that thing is accepted and enjoyed by the latter then a lawful relationship is born between the two which under Section 70 gives rise to a claim for compensation. Regarding claim made against the Government of a State under Section 70, Supreme Court held that an invalid request is in law no request at all and so conduct of the parties has to be judged on the basis that there was no subsisting contract between them at the material time. Regarding claim made against the Government of a State under Section 70, Supreme Court held that an invalid request is in law no request at all and so conduct of the parties has to be judged on the basis that there was no subsisting contract between them at the material time. Supreme Court finally concluded that Section 70 deals with cases where there is no valid contract and provides for compensation to be paid where the three requisite conditions prescribed are satisfied, thus operating in a field separate and distinct from Section 175(3) of the Government of India Act, 1935 which deals with Government contracts and how those should be made. 79. Upshot of the above discussion is that the contract agreements signed by the Director of Handloom and Textiles, Assam are not valid as the conditions under Article 299 (1) of the Constitution have not been satisfied; so also the requirement of Rule 12 of the Assam Rules of Executive Business, 1968. On the other hand, those contract agreements signed by the AGMC with the suppliers cannot be the basis of any claim by the suppliers against the Government, there being no privity of contract between the two. Therefore, Article 299 (1) would rule out any payment by the Government to the suppliers on the strength of such contract agreements. That brings Section 70 of the Contract Act into the picture. While certainly supplies were not made by the petitioners gratuitously, for a lawful relationship to be established between the petitioners and the State it is required to be ascertained as to whether the goods (polar blankets) were accepted and enjoyed by the latter. A decision has to be taken by the State in this regard. 80. While denial of payment would result in hardship to the suppliers, it will also not be just, proper, ethical as well as lawful to turn a blind eye to such illegality and apparent misuse of Governmental machinery. Conclusions and decisions 81. In such circumstances, Court is of the view that a High Powered Committee is required to be constituted to look into the above aspects and thereafter to take appropriate decisions. The High Powered Committee should comprise of the following officials:- 1. Addl. Chief Secretary to the Govt. of Assam, to be nominated by the Chief Secretary; 2. Commissioner and Secretary to the Govt. of Assam, Finance Department; 3. The High Powered Committee should comprise of the following officials:- 1. Addl. Chief Secretary to the Govt. of Assam, to be nominated by the Chief Secretary; 2. Commissioner and Secretary to the Govt. of Assam, Finance Department; 3. Commissioner and Secretary to the Govt. of Assam, Handloom, Textiles and Sericulture Department; 4. Commissioner and Secretary to the Govt. of Assam, Judicial Department; and 5. Special Director General of Police, CID, Assam. 82. The above committee shall be constituted within 15 days from the date of a receipt of a certified copy of this order and will have its first meeting within 7 days of its constitution. 83. The committee shall examine payment of dues to the petitioners for supply of polar blankets having due regard to quantity and quality of the materials supplied and having regard to the discussions made above particularly in the context of Section 70 of the Contract Act; in this regard, Committee shall take a decision whether the goods (polar blankets) were accepted and enjoyed. Further, committee shall examine violation of tendering norms and guidelines in the tender process pursuant to NIT dated 30.10.2015 and fix responsibility whereafter departmental steps may be taken. The mode and manner of issuance of supply orders by AGMC shall be looked into. Committee shall also examine as to whether there was any criminality involved in the tendering and supply process involving various persons. If such examination results in an affirmative finding, Commissioner and Secretary to the Government of Assam, Handloom, Textiles and Sericulture Department shall lodge first information before the CID Police Station where after law will take its own course. 84. Ordered accordingly. 85. The High Powered Committee as above shall complete the exercise within 4 (four) months from the date of its first sitting. 86. Writ petitions are accordingly disposed of. However, there shall be no order as to cost.