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2020 DIGILAW 804 (KER)

Kottackal Timbers, Rep. by its Managing Partner, Rajan Mathew v. State of Kerala Rep. by Additional Chief Secretary

2020-09-28

N.NAGARESH

body2020
JUDGMENT : N. NAGARESH, J. 1. W.P. (C) Nos. 11854/2020, 12389/2020 and 18884/2020 are filed by Forest Contractors holding A Class licence, aggrieved by the refusal on the part of the respondents to renew their respective licences. W.P. (C) No. 13399/2020 has been filed by the petitioner seeking to command the 3rd respondent-Divisional Forest Officer to finalise the bid in respect of Ext.P2 tender notice in favour of a participating A Class Contractor under the Forest Department having a valid licence and who has satisfied all the conditions stipulated in Ext.P2 tender notice. 2. The petitioners are holding A Class contract licences issued by the Forest Department. They have been renewing the licence from time to time. The grievance of the petitioners in three of the writ petitions is that for the year 2020-2021, the respondents have introduced a new condition for renewal of A Class licences. The condition is that A Class registered contractors who are not found participated in any of the tenders notified by the Department for timber extraction during last financial year, are not eligible to get renewal of A Class registration. Due to the said arbitrary condition imposed by the respondents, the petitioners are denied renewal of their A Class licence and have been excluded from participating in tenders floated by the Forest Department. 3. The petitioners submit that they are holding A Class licence for undertaking civil works of the Forest Department as also A Class licence for undertaking timber works. They have been participating in tenders, executing works and receiving remunerations for the civil works and timber works of the Forest Department. However, during the last year, they have not participated in any of the timber operations though they have been executing civil works for the Forest Department. 4. Refusal to renew their licence offends their right under Article 19 of the Constitution of India. The decision of the respondents to exclude those Contractors who have not responded to auction notifications relating to timber operations in the last year, is arbitrary and unreasonable and has no nexus with the objects sought to be achieved. The petitioners have not undertaken timber operations on behalf of the Forest Department, does not mean that they have not taken up any timber works. Nor does it mean that the petitioners are not experienced in or incapable of carrying out timber operations. 5. The petitioners have not undertaken timber operations on behalf of the Forest Department, does not mean that they have not taken up any timber works. Nor does it mean that the petitioners are not experienced in or incapable of carrying out timber operations. 5. Learned Special Government Pleader opposed the writ petitions and submitted that the decision of the authorities not to renew A Class licences of such Contractors is reasonable and within the powers of the respondents. It was brought to the notice of the office of the Principal Chief Conservator of Forests that a good number of people registered as A Class Contractor in Forest Department for taking up timber extraction work and renewing themselves before the authority in every succeeding year but only a few of them are actually participating in the auction notified by the Department. A large number of A Class registered Contractors remained on paper for name sake purpose. Therefore, it was decided that such Contractors should not be permitted to continue as registered Contractors and should be discouraged in the best interest of Government. 6. Learned Special Government Pleader further urged that the petitioners have no fundamental right to get A Class registration. They have no vested right to get Government Contracts either. The respondents are competent to prescribe such conditions in the public interest for grant or renewal of registration of A Class Contractors. 7. Per contra, the counsel for the petitioners argued that the award of contracts are governed by Rules framed by the Government. Rule 6 of the Rules for Registration of Contractors for Working Down Timber Firewood from Timber Depots (Supply Coupe Contracts) reads as follows:- “The registering authority can renew the registration or refuse to do so at his discretion following the procedure for registration as laid down in paragraph 4. He may refuse renewal for the following reasons: (i) Not being satisfied of the financial stability of the applicant. (ii) Failure to execute satisfactorily previous contracts. (iii) Poor quality of works executed. (iv) Or any other reason which in the opinion of the registering authority makes the applicant unsuitable for such registration.” The learned counsel for the petitioners argued that the Sub-Rule (iv) of Rule 6 should be read ejusdem generis and the respondents cannot pick or choose any reason to deny renewal of registration. 8. (iii) Poor quality of works executed. (iv) Or any other reason which in the opinion of the registering authority makes the applicant unsuitable for such registration.” The learned counsel for the petitioners argued that the Sub-Rule (iv) of Rule 6 should be read ejusdem generis and the respondents cannot pick or choose any reason to deny renewal of registration. 8. The learned counsel for the petitioners submitted that the impugned orders would show that the Chief Conservator of Forests, who is the registering authority, has based his decision on the reason of not responding to any auction notifications in the previous year, for denial of renewal. The registering authority, who is bound to exercise his discretion while considering the application for registration or renewal, was dictated by the Principal Chief Conservator of Forests. In effect, the registering authorities have abdicated their licensing powers. 9. The learned counsel for the petitioners further argued that the order issued by the Principal Chief Conservator of Forests has been given effect to retrospectively, which also cannot stand the scrutiny of law. Declining renewal of licence on that ground would not in any manner advance the interest of Government. It will at the most facilitate a caucus of limited number of forest contractors, who alone will participate in tenders, and thereby ultimately cause financial loss to the public exchequer. The impugned orders are therefore liable to be set aside and the registering authority should be directed to renew the A Class licence held by the petitioners. 10. I have heard Advocate M.C. John, Advocate K.B. Gangesh and Advocate Manu Ramachandran appearing for the petitioners as also Advocate Sandesh Raja, the Special Government Pleader (Forests) appearing for the State of Kerala. 11. The rules for Registration of Contractors for Working Down Timber Firewood from Timber Depots (Supply Coupe Contracts) are part of Kerala Forest Code, Volume I and II. Rules 6 to 8 are relevant in the matter of registration of contractors and renewal of such registration. The Rules read as follows:- “6. (a) The registration issued is valid only for one financial year. Registration Cards are to be renewed every year. Applications for renewal are to be submitted before 1st January in every year in Form IV together with Bank Guarantee/Solvency Certificate. Application may, however, be received up to 31st January after realizing a fine of Rs. 5/- on such late applications. (a) The registration issued is valid only for one financial year. Registration Cards are to be renewed every year. Applications for renewal are to be submitted before 1st January in every year in Form IV together with Bank Guarantee/Solvency Certificate. Application may, however, be received up to 31st January after realizing a fine of Rs. 5/- on such late applications. (b) A non refundable fee of Rs.10/- or such amount as prescribed from time to time by the Government is payable for renewal. Such renewal fee should be remitted after receiving intimation for the same in Form V. The registering authority can renew the registration or refuse to do so at his discretion following the procedure for registration as laid down in Para 4. He may refuse renewal for the following for the following reasons: (i) Not being satisfied of the financial stability of the applicant. (ii) Failure to execute satisfactorily precious contract. (iii) Poor quality of works executed. (iv) Or any other reason which in the opinion of the registering authority makes the applicant unsuitable for such registration. 7. A contractor who fails to get his registration renewed for any year can apply afresh next year for registration only as a new contractor. 8. The registering authority shall before 1st March, issue the renewal Card Form VI or the fact of having refused the request for renewal.” The rules would indicate that the registering authority may refuse renewal of registration for reasons stated as (i) to (iv) in Rule 6. The 4th reason namely “or any other reason which in the opinion of the registering authority makes the applicant unsuitable for such registration” need not be confined to reasons of the nature indicated in Clauses (i) to (iii). The contention of Advocate Manu Ramachandran is that Clauses (i) to (iii) are directly related to the nature and quality of the work of the contractors and therefore, the reason indicated in Clause (iv) also need to be a reason related to the nature and quality of the work, cannot be accepted. Firstly, the rules of registration of contractors are not statutory rules but are part of the Kerala Forest Code which is only a compilation of administrative/executive instructions. Provisions contained in Kerala Forest Code cannot be interpreted in the manner statutory rules are interpreted. The registering authority can refuse renewal of registration on any reason in public interest. 12. Firstly, the rules of registration of contractors are not statutory rules but are part of the Kerala Forest Code which is only a compilation of administrative/executive instructions. Provisions contained in Kerala Forest Code cannot be interpreted in the manner statutory rules are interpreted. The registering authority can refuse renewal of registration on any reason in public interest. 12. The denial of renewal of registration appears to be a result of Ext.R4(a) Circular No. KFDHQ/25452/2018/F6 dated 29.02.2020 of the Principal Chief Conservator of Forests. The relevant portion of the said Circular reads as follows:- “Any ‘A’ class registered contractors who are not found participated in any of the tender notified by the Department for timber extraction during last financial year should not be renewed for further subsequent year and the ‘A’ class registration be cancelled. Taking the provision of (b)(iv) of Para 6, the registering authority using his discreatory power can refuse the renewal of ‘A’ class contractor recording the reason that contractor has not participated in any of the tender notified by the Forest Department during previous financial years for timber extraction works. All the Circle Heads in charge who are registering authorities for ‘A’ class contractors for timber extraction are directed accordingly in order to curb the menace of name sake contractor.” The direction given by the Principal Chief Conservator of Forests cannot be found fault with. As pointed out by the Special Government Pleader Advocate Sandesh Raja, no Forest Contractor can abstain from participating in forest contracts for long periods and at the same time, claim that they should be given renewal of registration. Registration or renewal of registration as Contractors is not a fundamental or statutory right. The Government can very well right-size the panel of registered Contractors for the purpose of administrative convenience. Therefore, Ext.R4(a) Circular cannot be said to be illegal. 13. The argument of Advocate M.C. John that the Circular dated 29.02.2020 is an interference with the powers of the registering authorities, cannot also be accepted. It is to be noted that the registering authorities for enrollment of Contractors in Forest Department, are not discharging any statutory function. They are registering the Contractors on the basis of executive instructions/administrative orders compiled as Kerala Forest Code. Therefore, an authority superior to the registering authorities can indeed give guidelines or instructions as to how the registering powers should be exercised. They are registering the Contractors on the basis of executive instructions/administrative orders compiled as Kerala Forest Code. Therefore, an authority superior to the registering authorities can indeed give guidelines or instructions as to how the registering powers should be exercised. The impugned orders cannot be interfered with on that score either. 14. Yet another contention of the counsel for the petitioners is that the amendment to the Rules by incorporating the new condition has been given retrospective effect. Therefore, the said amendment is liable to be set aside or at least to be declared as having prospective effect only. As regards the said contention, one should keep in mind that the petitioners as registered Contractors do not hold a vested right for renewal of their licence. As the petitioners do not have a vested right, they cannot be heard to contend that their alleged right cannot be taken away by orders having retrospective effect. Therefore, the said argument of the petitioners is also liable to be rejected. 15. However, it has to be noted that the Rules in question provides that applications for renewal of licence are to be submitted before 1st January in every year in Form-IV together with Bank Guarantee and Solvency Certificate. Such applications, as per Rules, may be received up to 31st January, after realising a fine of Rs. 5/- on such late applications. The Rules contemplate that the registering authority shall before 1st March, issue the renewal card or the fact of having refused the request for renewal. In the case of the petitioners, they all have made their applications for renewal before 1st January, 2020. The registering authority is bound to complete the process of renewal and either grant or refuse the renewal before 01.03.2020. In the case of renewal of licence of this year, the Principal Chief Conservator of Forests has issued the Circular in question, after receiving all the applications for renewal and before the registering authorities passed orders on such applications. After the last date prescribed for submission of applications, that too accompanied by Bank Guarantees and Solvency Certificates, the authorities cannot put a new condition for consideration of such applications. That would indeed be highly arbitrary offending Article 14 of the Constitution of India. In that view of the matter, refusal of renewal of registration of the petitioners based on Circular dated 29.02.2020 is illegal and unsustainable. That would indeed be highly arbitrary offending Article 14 of the Constitution of India. In that view of the matter, refusal of renewal of registration of the petitioners based on Circular dated 29.02.2020 is illegal and unsustainable. The three writ petitions are liable to be allowed on that ground. 16. In W.P. (C) No. 13399/2020, the petitioner has sought to direct the Divisional Forest Officer to consider his Ext.P3 objection. Ext.P3 objection is based on the amended rule. Application of the amended rule to those who have submitted renewal requests before 01.01.2020, is held unsustainable hereinabove. Therefore, the reliefs prayed for by the petitioner in W.P. (C) No. 13399/2020 are not liable to be granted. Advocate K.B. Gangesh appearing for the petitioner would submit that due to subsequent events also, the writ petition has become infructuous. 17. In the circumstances, the writ petitions are disposed of with the following directions:- The orders impugned in W.P. (C) Nos. 11854/2020, 12389/2020 and 18884/2020 declining renewal of registration of the petitioners, are set aside. The competent registering authorities among the respondents are directed to consider the applications for renewal of Forest Contractor A Class licence made by the petitioners in W.P. (C) Nos. 11854/2020, 12389/2020 and 18884/2020, on merits dehors the Circular dated 29.02.2020 of the Principal Chief Conservator of Forests and renew the licences of the petitioners, if they are otherwise eligible. 18. W.P. (C) No. 13399/2020 is dismissed as infructuous.