Nitin Nagorao Mohod & Others vs Amravati Municipal Corporation & … on 7 October, 1998

ORDER

S.B. Mhase, J.

1. These two petitions have been filed by the citizens residing within the local limits of the Municipal Corporation of Amravati, under Article 226 of the Constitution of India challenging the Act of awarding the contract in favour of the respondent M/s. Ideal Road Builders for the collection of octroi for the year 1998-99 and to direct the respondent No. 1 Municipal Corporation, Amravati to recall the tender.

2. Initially the petitions were filed at the stage when the contract was not executed in favour of the respondent M/s. Ideal Road Builders, but after

inviting the tenders as per the notice dated 16th May, 1998, the negotiations were going on in between the Commissioner of the respondent Municipal Corporation and M/s. Ideal Road Builders. However, on presentation of these petitions, the notice before admission was issued on 8th June, 1998, which was made returnable in the next week. Meanwhile, the respondent Municipal Corporation had filed its submissions on 18th June, 1998. Thereafter, the additional submissions were filed sometime after 24th June, 1998, wherein, it was contended that the offer given by the respondent M/s. Ideal Road Builders has been accepted by the Standing Committee in a meeting dated 24th June, 1998 and the contract of collection of octroi from 3rd July, 1998 to 3rd July, 1999 for Rs. 17,37,00,000/- has been given to M/s. Ideal Road Builders. In view of this, the necessary amendments were incorporated by the petitioners in the petitions including the amendment to the prayer clauses stated above. The interim orders passed by this Court were challenged by the respondent Municipal Corporation in Special Leave Petition (Civil) No. 11436-37/1998. In view of the orders passed by the Apex Court, the further interim orders were passed by this Court.

3. Thus the main controversy involved in the present petition is in respect of the tender issued by the respondent No. 1 Municipal Corporation for appointing an Agent for collection of octroi for the year 1998-99 and the contract entered by the Municipal Corporation with M/s. Ideal Road Builders.

4. The petitioner in Writ Petition No. 1623 of 1998 is a public spirited person and a social worker associated with various social and religious organisations. The petitioners in Writ Petition No. 1702 of 1998 are also public spirited persons, like that Editor of Pratidin Akhbar, businessman or the President and Vice-president of different Trusts and the social workers including the Medical Practitioner and the Architect, residing within the area of City of Amravati and thus they claim that they are entitled to receive civic and municipal facilities and services from the respondent Municipal Corporation, which the respondent Municipal Corporation can discharge better way on the basis of the income of the said Municipal Corporation and the octroi being one of the important sources of income of the Municipal Corporation, they are naturally interested in proper and appropriate recovery of the octroi by the respondent Municipal Corporation and thereby are entitled to in the public interest to challenge the act of the respondent Municipal Corporation while giving the work of collection of octroi on contract basis to the Agent, viz. M/s. Ideal Road Builders.

5. The petitioners have submitted that the tender notice was issued in various newspapers inviting tenders for the collection of octroi for the year 1998-99 on 16th May, 1998, 17th May, 1998, 19th May, 1998, 19th May, 1998 and 20th May, 1998. The last date for submission of tender was 26th May, 1998 and on the same day, the tenders were opened. It is further submitted by the petitioners that only one tender was received, which was submitted by the respondent M/s. Ideal Road Builders for Rs. 16,65,00,000/-. The petitioners submit that the anticipated amount of collection of octroi for the period of one year was Rs. 22,74,58,137/- and the earnest money, which was required to be deposited in the manner prescribed in the tender notice, was Rs. 1,13,73,000/- and the amount of security deposit was Rs. 3,65,00,000/-. According to the petitioners, the tender notice contained a condition that any

offer lower than Rs. 22,74,58,137/-, which is anticipated amount of collection of octroi for the period of one year, may not be considered and it may be rejected. This condition thereby excluded the tenderers from the area of consideration by the respondent Municipal Corporation, who desire to fill it a tender lower than the estimated/anticipated amount of collection of octroi. However, the respondent M/s. Ideal Road Builders, who alone filled in the tender, has quoted the less amount than the estimated or anticipated amount of octroi and, therefore, the said tender should have been rejected. The petitioners have further submitted that even if the tender of the respondent M/s. Ideal Road Builders is to be considered, the opportunity should have been given by the respondent-Municipal Corporation to those persons, who desire to fill in the tender below the anticipated amount of octroi by extending an opportunity to them by advertising this fact. The relaxation of the condition in favour of the respondent No. 1 alone has denied equal opportunity to the equally or similarly situated persons and thus by negotiating with the respondent M/ s. Ideal Road Builders and giving tender to than, the Municipal Corporation has sacrificed the public interest. The petitioners have further given the figures of the anticipated octroi from the year 1993-94 to 1997-98 and have tried to demonstrate that except the initial year of 1993-94, in all the rest of the years, the tender has been awarded to the respondent M/s. Ideal Road Builders at an offer, which was less than the anticipated amount of collection of octroi. The petitioners have further pointed out that not only the tender was given to the respondent M/s. Ideal Road Builders systematically below the estimated amount of octroi, but had also excluded the other bidders from the offer and thus the petitioners state that the public interest has been systematically sacrificed by the respondent Municipal Corporation in favour of M/s. Ideal Road Builders. The petitioners have further submitted that the Government Resolutions dated 28th February, 1994 and 3rd March, 1995 have not been followed by the respondent-Municipal Corporation while fixing the upset price and in accepting the tender below the anticipated amount of octroi. Thus the petitioners claim that the principles of equality enshrined in Article 14 of the Constitution of India have been violated so also the procedure prescribed by the Government Resolutions dated 28th February, 1994 and 3rd March, 1995 in giving the tenders, which has ultimately caused the loss to the Municipal Corporation and, therefore, these petitions.

6. The respondents have submitted that the petitioners have no locus to file the petitions and that the petitions are not motivated by public interest. The respondents have further submitted that none of the petitioners has filled in the tender and has pointed out the class of persons, who could have filled in the tender. The respondents have further submitted that as the petitions are not motivated by public interest, they are liable to be dismissed. The respondent-Municipal Corporation has further submitted that the said Corporation had, for the first time, experimented the system of collection of octroi by appointing an Agent by issuing the tender notice in the year 1993-94 and thereby introduced the privatisation of collection of octroi. The said system was appreciated by the Government of Maharashtra and, therefore, after carrying out the necessary amendments in the Maharashtra Municipalities Act of 1965 by introduction of section 143-A, the system was introduced in the Municipalities covered under the said Act of 1965 by issuing various notifications under the said Act. The respondent Corporation has further submitted, on the basis of the data supplied from 1993-94 till 1997-98, that the collection of octroi and the tender amount have been increased from year to year and has further tried to demonstrate that neither the public interest was sacrificed, nor any loss has been caused to the Corporation. The respondent Corporation has further contended that even though the Government Resolutions issued on 28th February, 1994 and 3rd March, 1995 under the Maharashtra Municipalities Act, 1965 are not applicable to the respondent Corporation, the respondent Corporation has followed those Government Resolutions in letter and spirit by taking recourse to them. The respondent Corporation has further submitted that when the respondent Corporation realised that only one tender has been received for Rs. 16,63,00,000/- it was thought necessary to negotiate with M/s. Ideal Road Builders and thus the negotiations were carried out. Those negotiations were placed before the Standing Committee, as required under section 73 of the Bombay Municipal Corporation Act, and the Standing Committee, after having considered the factors viz. the shifting of the godowns by the businessmen outside the city of Amravati to evade the tax and the exemptions/concessions given to the Industrial Units, has ultimately accepted the negotiated offer of the respondent M/s. Ideal Road Builders at Rs. 17,37,00,000/-and has granted approval under the said section 73. The learned Counsel for the respondent Municipal Corporation has submitted that thus the act of the respondent Municipal Corporation is a transparent one and it is the executive fiat of the respondent Corporation. The learned Counsel has further submitted that there is a presumption that the executive action is reasonable and in the public interest. The learned Counsel has further submitted that the power of judicial review of an executive and/or administrative Action is limited to the scrutiny as to whether there is compliance with statutory provisions; whether the decision has been taken in bad faith and whether the decision has been taken after taking into consideration the relevants and cogent material or whether the decision has been taken by taking into consideration irrational or irrelevant material. Relying upon these principles derived from the various decisions of the Apex Court, the learned Counsel for the respondent Municipal Corporation submitted that the decision taken by the respondent Municipal Corporation is not open for interference by this Court by any judicial review. The learned Counsel has further submitted that the attempt made by the petitioners to interpret the terms of the contract that there was absolutely ban for filling in tender below the estimated or anticipated amount of octroi, is misconceived. The learned Counsel for the respondent Municipal Corporation has further submitted that the word “may” has been used in the said clause and, therefore, it was open for the intended tenderers to quote the amount of the octroi below the estimated or anticipated amount of octroi in the tender. The learned Counsel submitted that, that was not an essential term of the contract and, therefore, it cannot be said that as a result of the said term, the persons, who desired to quote below the anticipated amount of octroi in the tender, were precluded from taking part in the tender. The learned Counsel for the respondent Municipal Corporation, therefore, submits that the petitions are misconceived and they be rejected accordingly.

7. The first objection raised by the learned Counsel for the respondents is about the focus standi of the petitioners. As has been stated earlier, these petitioners are the citizens residing within the area of Amravati Municipal Corporation. They are the office bearers of the registered Trusts and Organisations and some of them are businessmen so also the Architect, Medical Practitioner, Engineer and Lawyer and they have filed the present petitions in the public interest claiming that as a result of the inadequate or improper recovery of octroi, which is one of the main source of income of the Corporation, the civil amenities, which they are entitled to, being within the area of the Municipal Corporation, will be affected and, therefore, they are interested in protecting the income of the Corporation. Thus the contention of the petitioners is that the public interest cannot be sacrificed by the respondent Municipal Corporation.

8 The learned Counsel for the respondent Municipal Corporation has relied on the case of S.P. Gupta and others v. Union of India and others, and submitted that though a member of a public who complains of a public injury, could initiate an action by way of public interest litigation, but there are two exceptions to it. Firstly, when the Court is moved for judicial redressal not acting bona fide, but with an oblique motive, the Court cannot allow itself to be activised at the instance of an individual and must reject his application at the threshold, and secondly, when by an act or omission or State of Public Authority, if the persons or specific class or group of persons, who are primarily injured as a result of such act or omission, do not wish to claim any relief and accept such act or omission willingly and without protest, the member of the public, who complains of a secondary public injury cannot maintain the action, for the effect of entertaining the action at the instance of such member would be to foist a relief on the person or specific class or group of persons primarily injured, which they do not want.

9. The learned Counsel for the tenderer has also relied upon the same case and made the similar submissions. Factually, it is submitted that the petitioners are the businessmen and some of them are the members of the business organisation. The respondent relied upon the letter dated 3rd June, 1998, which is at Annexure 3 to its submissions. It is a letter by the Chamber of Amravati Mahanagar Merchants and Industries, Amravati. The respondent pointed out from the said letter-head that some of the petitioners are the office-bearers of the said Merchants’ Association and, therefore, they are the persons naturally interested in avoidance of the octroi. They have, since beginning, opposed to the system of privatisation of the octroi and, therefore, the interest of these persons is adverse to the Corporation so far as the octroi is concerned. The respondent Municipal Corporation further pointed out relying on Annexure 3 to its submissions, that the Municipal Corporation has realised that many businessmen have shifted their godowns outside the area of the Municipal Corporation so as to avoid the payment of octroi and, therefore, the Municipal Corporation has resolved on 23rd April, 1993 that the octroi boundary of the Municipal Corporation shall be extended and accordingly, the proposal be made to the Government. Thus the respondent Municipal Corporation pointed out that these persons are interested in stopping the system of privatisation of the octroi. They submitted that the system

of privatisation of octroi was introduced by the Municipal Corporation and on the basis of the experiment carried out at Amravati, the Government of Maharashtra extended the said system to the rest of the Municipalities in the State having found that the system has worked in favour of the Municipal Bodies by increasing the recovery of octroi. Therefore, they submitted that as a result of the recovery of octroi by privatisation system, these persons (petitioners) are massively affected and, therefore, it cannot be said that they are the persons having any public interest in contesting the present petitions and, therefore, it is submitted that the claim of the petitioners is not bona fide and they (petitioners) are actuated by their individual interest.

10. These submissions cannot be accepted, because when the different systems are introduced, the opposition from various corners and especially from those persons, who are connected with the said scheme or system, are likely to point out certain drawbacks in the said scheme or system. That itself cannot be said to be their intention to avoid the tax, because whenever the goods are brought within the area of Corporation, the octroi is required to be paid at the octroi post, and, therefore, for the tax-payer, it makes no difference unless the tax-payer gets benefit of avoiding tax as a result of collusion with the staff or the employees of the Corporation are negligent. However, the Municipal Corporation, which may suffer loss as a result of the employees being not diligent and/or colluding with some of businessmen, can avoid such loss by introducing of system of privatisation, because, in that circumstances, the private Agent’s individual interest is affected as a result of non-payment or avoidance of octroi and, therefore, at the most, he will be very cautious in recovering the said octroi. In the absence of any material to point out that these petitioners have avoided the tax/octroi either in colluding with the employees and/or in any other manner by importing the goods within the area of Corporation, the claim of the respondents that the petitioners are actuated by individual interest, cannot be accepted. Apart from that, even though some of the petitioners may be businessmen, but there are some of the petitioners, who are members of the Trusts and Professionals like Medical Practitioner, Architect, etc. and they cannot be said to have any interest in avoidance of the octroi. The net result is, therefore, that the contention that the petitions are not bona fide, cannot be accepted and the said ground is liable to be rejected.

11. The second objection is that the petitioners are not directly affected. The learned Counsel for the respondent-Corporation submitted that the petitioners have made a grievance that the public was not made known that the tenderers, who may give offer below the estimated or anticipated amount of octroi, will be also allowed to be participated in the tender. Had the said fact been known to the public, those persons, who desired to file the tender below the estimated or anticipated octroi, could have filed tender quoting below the said amount, as has been done by the respondent M/s. Ideal Road Builders. Thus, on the basis of this grievance, it is submitted that none of the petitioners were desirous of filing such a tender below the estimated amount of octroi and, therefore, they are not directly affected. It is further being submitted that as a result of these public interest petitions, the claim of class of a person, who could have filed their tender below the estimated amount of octroi for the year 1998-99, is being represented and putforth by these petitioners in the name of public interest. It is submitted that none of those persons from the said class has made a grievance at any point of time and none of them is before this Court. Not only that, but the petitioners have not pointed out any such person, who is affected in the real sense. However, even assuming that such persons are there, as such persons are not desirous of making their claim to their right, the petitioners are not entitled to putforth their grievance.

12. The learned Counsel for the respondent Municipal Corporation relied upon the observations of the Apex Court in the matter of S.P. Gupta, cited supra and especially on the observations made in paragraph 24, wherein the Apex Court has observed that before we part with this general discussion in regard to locus standi, there is one point we would like to emphasis and it is that cases may arise where there is undoubtedly public injury by the act or omission of the State or a public authority but such act or omission also causes a specific legal injury to an individual or to a specific class or group of individuals. In such cases, a member of the public having sufficient interest can certainly maintain an action challenging the legality of such act or omission, but if the person or specific class or group of persons who are primarily injured as a result of such act or omission, do not wish to claim any relief and accept such act or omission willingly and without protest, the member of the public who complains of a secondary public injury cannot maintain the action, for the effect of entertaining the action at the instance of such member of the public would be to foist a relief on the person or specific class or group of persons primarily injured, which they do not want.”

13. Thus coming to the facts of the present case, the basic purpose of these petitions is to see that the Municipal Corporation’s income by way of octroi, as has been estimated or anticipated, declared in the tender, is secured or enhanced. The petitioners are not interested in the private Agent to whom the tender will be given, but their interest lies in protecting the income of the Municipal Corporation, because if the income of the Municipal Corporation is protected, the Municipal Corporation will be in a sound position to provide the citizens the civil amenities and discharge the functions of the Corporation towards the citizens as provided and required under the Act, and Law. The petitioners feel that had it been known to public that tender below the estimated amount of octroi will be considered, there would have been more tenders like that of M/s. Ideal Road Builders. The petitioners further claim that at the time of negotiations there would have been competition between these tenderers so as to get the said tender and thereby the respondent-Corporation could have ultimately earned octroi which is competitively highest or equal to or more than anticipated amount of octroi. The cases are known where even though the initial offer is less than the estimated amount, the offer ultimately tendered in the negotiations, is equal to the estimated amount, or higher than the estimated amount. The claim of the petitioners is that as a result of certain clauses of the tender, such persons are excluded from the competition and thereby the competitive offer at the time of negotiations could not take place, which has causes loss to the respondent-Corporation and that aspect of the matter is of the public interest. In the present matter, as rest of the persons have been excluded as a result of certain clauses of the tender, the only persons with whom the Corporation has to negotiate is M/s. Ideal Road Builders and this situation has been brought about by the

Corporation as a result of incorporation of certain clauses, which will be discussed in the later part of the judgment, and, therefore, the claim of the petitioners is not for the redressal of right or claim of any other tenderer, but their interest lies in increasing the income of the Corporation and when they have noticed that such public interest of the Corporation is being sacrificed by the Corporation by publishing improper tender, they cannot be the by standers to the whole episode and allow the Corporation to sacrifice the said public interest. On the contrary, they being the citizens, they have every right to observe the performance of their representatives and the officers of the Corporation and to see that the public interest is not sacrificed by these office bearers of the Corporation and, therefore, the submission made by the respondents that even though the action by them is maintainable, however, as the persons, who are primarily affected, are not coming forward, the action by secondary affected persons cannot be considered, is not accepted. On the contrary, as a result of sacrifice of the public interest by the Civil Body like the respondent Municipal Corporation, they are the persons directly affected along with the other citizens residing within the area of the said Corporation and, therefore, we are not in agreement with the learned Counsel for the respondent-Corporation. In support of this, we rely on the observations of the Apex Court in the matter of S.P. Gupta, cited supra, that we would, therefore, hold that any member of the public having sufficient interest can maintain an action for judicial redress for public injury arising from breach of public duty or from violation of some provision of the Constitution or the law and seek enforcement of such public duty and observance of such constitutional or legal provision. This is absolutely essential for maintaining the rule of law, furthering the cause of justice and accelerating the pace of realisation of the constitutional objective “Law”, as pointed out by Justice Krishna Iyer in Fertilizer Corporation Kamgar Union v. Union of India, A.I.R. 1981 S.C. 344 “is a social auditor and this audit function can be put into action when some one with real public interest ignites the jurisdiction. …..” In the result, we find that the present case is not covered by any of the exceptions, which have been pointed out by the learned Counsel for the respondent-Municipal Corporation as stated earlier, and we hold that the petitions are maintainable by the present petitioners and we reject the objection raised by the learned Counsel for the respondent-Municipal Corporation & M/s. Ideal Road Builders on account of the focus standi and maintainability of the present public interest litigating by the petitioners.

14. Both the learned Counsel for the respondents raised a contention on the basis of the matters of Tata Cellular v. Union of India, “and Delhi Science Forum v. Union of India, and submitted that the scope of the judicial review of the correctness of the administrative action is limited to (i) whether there is a compliance with the statutory provisions, (ii) whether the decision has been taken in bad faith and (iii) whether the decision has been taken after taking into consideration the cogent material or whether the decision has been taken by taking into consideration the irrational or irrelevant material. The learned Counsel relied upon paragraph 94 of the Tata Cellular’s case, cited supra, wherein the principles deduced by the Apex Court, after scrutinizing various cases, are as follows :

(i) The modern trend points to judicial restraint in administrative action.

(ii) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made.

(iii) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(iv) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(v) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(vi) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

15. The learned Counsel further relied upon the portion from paragraph 10 of the judgment in the case of Delhi Science Forum v. Union of India, , which is as follows :

“Many administrative decisions including decisions relating to awarding of contracts are vested in a statutory authority or a body constituted under an administrative order. Any decision taken by such authority or a body can be questioned primarily on the grounds : (i) decision has been taken in bad faith; (ii) decision is based on irrational or irrelevant considerations; (iii) decision has been taken without following the prescribed procedure which is imperative in nature. While exercising the power of judicial review even in respect of contracts entered on behalf of the Government or authority, which can be held to be State within meaning of Article 12 of the Constitution Courts have to address while examining the grievance of any petitioner as to whether the decision has been vitiated on one ground or the other. It is well settled that the onus to demonstrate that such decision has been vitiated because of adopting a procedure not sanctioned by law, or because of bad faith or taking into consideration factors which are irrelevant, is on the person who questions the validity thereof. This onus is not discharged only by raising a doubt in the mind of the Court, but by satisfying the Court that the authority or the body which had been vested with the power to take decision has adopted a

procedure which does not satisfy the test of Article 14 of the Constitution or which is against the provisions of the statute in question or has acted with oblique motive or has failed in its function to examine each claim on its own merit on relevant considerations. Under the changed scenarios and circumstances prevailing in the society, courts are not following the rule of judicial self-restraint.

But at the same time all decisions which are to be taken by an authority vested with such power cannot be tested and examined by the Court The situation is all the more difficult so far the commercial contracts are concerned. …”

Relying on this, the learned Counsel submitted that the grounds for challenge, so far as the decision taken by the respondent-Corporation, shall be (a) whether the decision has been taken in bad faith; (b) whether the decision is based on irrational or irrelevant considerations; or (c) whether the decision has been taken without following the prescribed procedure which is imperative in nature. The learned Counsel submitted that the petitioners have not made out the grounds, as desired by the Apex Court, for challenging the decision taken by the respondent-Corporation. The learned Counsel pointed out that there are no allegations of bad faith and further submitted that the respondent-Corporation has complied which the statutory provisions. He submitted that so far as the present contract is concerned, the following provisions of the Bombay Provincial Municipal Corporations Act, 1949 are relevant.

16. The learned Counsel for the respondent-Corporation pointed out section 73 of the said Act, which is in respect of the power of the Commissioner to execute contracts on behalf of Corporation. He pointed out the provisions of section 73(c), which is as follows :

“Section 73. With respect to the making of contracts under or for any purpose of this Act, including contracts relating to the acquisition and disposal of immovable property or any interest therein, the following provisions shall have effect, namely :—

(a) …..

(b) …..

(c) no contract which will involve an expenditure exceeding three lakh rupees or such higher amount as the Corporation may, with the approval of the Provincial Government, from time to time prescribe, shall be made by the Commissioner unless the same is previously approved by the Standing Committees.”

The learned Counsel further relied on section 470 of Chapter XXX of the said Act, which is as follows :

“Section 470. Whenever it is provided by or under this Act that
notice shall be given by advertisement in the local newspapers,
or that a notification or any information shall be published in
the local newspapers, such notice, notification or information
shall be inserted, if practicable, in at least two newspapers in
such language or languages as the Corporation may from time
to time specify in this behalf published or circulating in the city.”

The learned Counsel further relied upon Rule 2 of Chapter V of the Schedule,
which is as follows :

“Rule 2. (1) Except as is hereinafter otherwise provided, the Commissioner or any officer authorised by him in this behalf shall, at least seven days before entering into any contract for the execution of any work or the supply of any materials or goods which will involve an expenditure exceeding three thousand rupees or such higher amount as the Corporation may, with the approval of the Provincial Government from time to time prescribe, give notice by advertisement in the local newspapers, inviting tenders for such contract.

(2) The Commissioner shall not be bound to accept any tender which may be made in pursuance of such notice, but may accept, subject to the provision of Clause (c) of section 73, any of the tenders so made which appears to him, upon a view of all the circumstances, to be the most advantageous :

Provided that the Standing Committee may authorise the Commissioner, for reasons which shall be recorded in its proceedings, to enter into a contract without inviting tenders as herein provided or without accepting any tender which he may receive after having invited them.”

The learned Counsel then relied on Chapter VIII of the Schedule pertaining to the taxation rules and more specifically, Rule 35, which is as follows :

“Rule 35. Octroi and tolls may be collected under the orders of the Commissioner by municipal officers and servants appointed in this behalf or, if the Commissioner thinks fit, may, with the approval of the Standing Committee, be framed by him for any period not exceeding one year at a time or be collected by or under the orders of any person whom the Commissioner, with the approval of the Standing Committee, appoints to be his agent for this purpose.”

17. Relying on these provisions, the learned Counsel for the respondent-Corporation pointed out that even though section 470 qua the Rules require a publication in the local newspapers, the Corporation published the tender notice by giving the publicity throughout the nation by publishing the said notice in sixteen newspapers, which are not only circulated in the area of Amravati Municipal Corporation, but are equally circulated throughout the Maharashtra and the country. The learned Counsel further submitted that the rules require seven days’ notice and accordingly, it has been published in the daily newspapers on 16th, 17th, 18th and 19th May, 1998. In fact the Corporation has sent the advertisement for publication to all these newspapers on one and the same day, but the newspapers, as per the availability of the space, have published it. In spite of that, except one newspaper, viz. The Maharashtra Times, in respect of the fifteen newspapers, it has been published giving seven days’ time to the tenderers and, therefore, the learned Counsel submitted that so far as the procedure is concerned, it has not been violated. He further submitted that the Commissioner, after getting the approval from the Standing Committee, is empowered to enter into the contract as per the provision of section 73 of the said Act. In the present matter, the Standing Committee, in the meeting dated 24th June, 1998, has accepted

the negotiated offer of the respondent-tenderor and on the basis of the said resolution, the Commissioner has entered into the contract and thus it cannot be said that the respondent-Corporation has not complied with the provisions of the said section 73. The learned Counsel further submitted that various factors were considered by the Standing Committee in the meeting dated 24th June, 1998, like recession in the market, Amravati district was declared as wet drought district, various godowns were shifted outside the municipal limit of Amravati Municipal Corporation, thereby leading to reduction in collection of octroi, after privatisation, there has been substantial increase in the income from collection of octroi, want of manpower with the Corporation to collect the octroi/tax and as there was no necessary manpower, the octroi was collected through agent for last several years, ban on fresh recruitment for collection of octroi, possibility of not taking part in the retendering process, etc. and, therefore, the respondent-Corporation has resolved to accept the negotiated offer of the respondent-tenderer.

18. The learned Counsel for the respondent-Corporation then relied on the case of G.B. Mahajan v. Jalgaon Municipal Council, , and submitted that the Standing Committee members, who are elected to the Standing Committee of the Corporation by the Corporators, who are in turn elected by the citizens at large, have taken the decision unanimously to award the contract. He submitted that though popular support could not validate an ultra vires action, it would become relevant to the question whether a certain action was reasonable or not and that the circumstance that the resolutions had been passed unanimously would lend credence to the propriety and wisdom of measure. Thus the learned Counsel submitted that as there is no challenge to the non-compliance with the statutory provisions and/or bad faith and that the irrelevant material being considered or the action of the Corporation suffers from unfairness, the petitioners’ claim for quashing the contract cannot be accepted.

19. What is pertinent to be noted is that in the present matter, the submission of the learned Counsel that the petitions are not based on bad faith or the statutory provisions have not been violated and the popularly elected Standing Committee has taken a decision and, therefore, the action on the part of the respondent-Corporation cannot be said to be arbitrary one, cannot be accepted. No doubt, the provisions like sections 73 or 470 or the rules in respect of the publication of the tender, have been complied with. However, the question of bad faith and other aspects of the petitions is required to be scrutinised.

20. Before we proceed to consider as to how the contract is vitiated, it is necessary to observe that the proposition of the learned Counsel for the respondent-Corporation, which he has tried to raise on the basis of paragraph 10 of the case of Delhi Science Forum v. Union of India, , that the decision of Administrative Authority can be challenged only on the basis of bad faith based on irrational or irrelevant considerations and/or that the statutory provisions have not been followed, is not correct. What the Apex Court has stated that there could be the grounds of challenge in respect of the administrative decision, but what is important is that the said paragraph discusses the principles of equality, its application to the assessment of the Government contracts. The discussion starts with this observations,
“Even in the absence of rules the power to grant licence on such conditions and for such considerations can be exercised by the Central Government but then such power should be exercised on well settled principles and norms which can satisfy the test of Article 14 of the Constitution.” The Apex Court has further observed. “The onus is not discharged only by raising a doubt in the mind of the Court, but by satisfying the Court that the authority or the body which had been vested with the power to take decision has adopted a procedure which does not satisfy the test of Article 14 of the Constitution or which is against the provisions of the statute in question or has acted with oblique motive or has failed in the function to examine each claim on its own merit on relevant considerations.

21. All these tests, the Court is supposed to satisfy, have been connected by the conjunction “or” and, therefore, non-satisfaction of one of such tests is sufficient to vitiate action. The learned Counsel for the respondent-Corporation has tried to point out that the provisions have been complied with and, therefore, the action cannot be said to be a wrong one so as to quash the contract. What is important is that the test of Article 14 of the Constitution has not been satisfied in the present matter. The main challenge of the petitioners is based on Article 14 of the Constitution, which will be considered in the paragraphs to follow, and, therefore, simply pointing out the provisions in respect of the execution of contract would not be sufficient. One more aspect requires to be pointed out is that in view of the tender, which has been issued by the respondent-Corporation, the respondent-Corporation has received only one tender of the respondent-tenderer, which is below the estimated or anticipated octroi for the year 1998-99 and thereafter the negotiations have taken place. While the negotiations were going on, the news flashed in the newspaper dated 3rd June, 1998, making certain grievance in respect of the said procedure. Thereafter on 5th June, 1998, Writ Petition No. 1623 of 1998 was filed. So also on 12th June, 1998, Writ Petition No. 1702 of 1998 was filed. In earlier writ petition, the notice before admission was issued on 8th June, 1998 and after service, the respondent-Corporation appeared and filed submissions. In latter writ petition, it appears that the submissions were filed and both these writ petitions were simultaneously before the Court. What is important is that no interim relief was granted. However, the respondents were in full knowledge of the fact that their action of alloting the tender is under challenge and that they have filed these submissions in view of the notice before admission and thus when the matter was sub judice before this Court, the prudence on their part required that the Standing Committee should not have taken decision of allotment of tender in favour of the respondent-tenderer, because the anticipated amount of octroi was Rs. 22,74,59,137/- as against that, the negotiated offer was being accepted by the Standing Committee at Rs. 17,37,00,000/-, which, on the face of the record, was much below the anticipated amount of octroi and when the petitions contained a grievance that the tender is being offered by the Corporation at a rate below the estimated amount of octroi, in a meeting dated 24th June, 1998, when the subject was not on agenda, it was introduced at the eleventh-hour and the Resolution No. 66 was passed, upon which the learned Counsel for the respondent-Corporation relies very heavily to point out the popular prudent decision of the Standing Committee. In fact, the subject, in

which the offer of the respondent-tenderer was of Rs. 17 Crores and odd as against the anticipated amount of octroi of Rs. 22 Crores and odd, was to be considered, should not have been introduced at the eleventh-hour, but should have been listed as a regular subject so that it can be inferred that it was a regular activity of a decision-making process by the Corporation. The manner is which the subject was introduced and thereafter the tender amount was accepted, much below the estimated amount of octroi, is a fact adverse to the respondent-Corporation and which speaks volumes about that. Ho explanation is coming forward as to why the subject was not introduced as a regular subject when the meeting of the Standing Committee was scheduled. It is to be noted that at a particular point of time when the petitions were presented, there was no concluded contract in favour of the respondent-tenderer, but the Corporation was to take decision as to whether the tender is to be accepted or not to be accepted and the Court was called upon by the petitioners that as a result of certain relaxation in the conditions of the tender and/or the representations made in the tender, which has been subsequently relaxed by the respondent-Corporation, there is a discrimination involved in the decision-making process of the acceptance of the tender and thus matter was sub-justice. If the respondent-Corporation had any urgency, it could have brought it to the notice of the Court and thereafter could have proceeded. But that would have given opportunity to the petitioners to press for stay. Equally, act of taking the said subject on agenda would have made the petitioners after to press for stay. Thus no interest could have been created in favour of the respondent tenderer/M/s. Ideal Road Builders. However, to create a contractual interest in favour of the respondent-tenderer and to give support to act of acceptance of low offer than the estimated one, the subject was introduced resolved by the Corporation. It is thus two-fold attempt; (i) to create interest in favour of the respondent-tenderer and (ii) to see that the petitioners fail or frustrate. That reflects upon the conduct of the respondents and speaks writ large about the bad faith of the respondent-Corporation.

22. Till 1992-93, the respondent-Corporation was collecting the octroi through its own machinery. In the year 1992-93, for the first time, the privatisation of the collection of the octroi was introduced on the basis of the provisions in the Act and Rules, which permit appointment of agents for the collection of octroi. The respondent-Corporation pointed out that hi the year 1993-94 the estimated published amount of octroi was Rs. 12 Crores and the contract was given to the respondent-tenderer for the amount of Rs. 12,51,00,000/-. In the year 1994-95, the estimated published amount of octroi was Rs. 13 Crores and the contract was given for the amount of Rs. 12,33,00,000/- to the respondent-tenderer. In the year 1995-96, the published amount was Rs. 14,17,00,000/-. however, the contract was given to the respondent-tenderer for the amount of Rs. 12,64,50,000/-. In the year 1996-97, the published amount was Rs. 17,04,17.500/-. However, the contract was given to the respondent-tenderer for the amount of Rs. 16,16,00,000 / – and in the year 1997-98, the amount published was Rs. 19,59,80,125/-, as against that the tender was given for the amount of Rs. 16,37,30,000/-. Thus it is argued that except the first year of 1993-94, the tender was accepted below the published estimated amount of octroi and that it is not for the first time the tender is being given to the respondent-tenderer below the

estimated amount. It is further tried to be submitted that the privatisation was permissible to the respondent-Corporation in view of the provision of Rule 35 of Chapter VIII of the Schedule of the Bombay Provincial Municipal Corporations Act, 1949. However, for the first time, it was introduced by the respondent-Corporation, the State Government, in order to enable the Municipal Councils/ Corporations in the State to introduce such system for collection of octroi, has introduced section 143-A in the Maharashtra Municipalities Act, 1965 and issued certain guidelines for the same. The grievance made by the petitioners is that those guidelines have not been followed by the respondent-Corporation. The stand taken by the respondent-Corporation is that those guidelines are not binding on the respondent-Corporation. However, the respondent-Corporation has followed those guidelines in letter and spirit taking recourse to them and, therefore, the submission was tried to be made that the published estimated amount of octroi in all these years was more than the estimated amount, which can be arrived at on the basis of the Government Resolution, which is pointed out by the respondent-Corporation as follows:

Sr. No.

Financial Year

Estimated amount as per Govt. Resolution

Estimated Published Amount

Contract Amount

1.

1993-94

10,23,00,923

12,00,00,000

12,51,00,000

2.

1994-95

11,76,46,061

13,00,00,000

12,33,00,000

3.

1995-96

12,94,10,667

14,17,00,000

12,64,50,000

4.

1996-97

14,23,51,733

17,04,17,500

16,16,00,000

5.

1997-98

15,65,86,906

19,59,80,125

16,17,30,000

6.

1998-99

17,22,45,596

22,74,58,137

17,37,00,000

Thus, it is argued that the respondent-Corporation has acted in public interest and has always put up or published the estimated amount higher than the estimated amount of octroi, which could have been on the basis of the Government Resolution. It was further tried to be impressed that at all times the contract has been offered and accepted at the amount which is higher than the estimated amount as per the Government Resolution and, therefore, it is submitted that the grievance of the petitioners that the Government Resolution has not been followed, is of no merit. It is pertinent to note that as per the Government Resolution, the amount to be fixed up for second and subsequent years is to be calculated by making an increase of 10% over the first year’s amount. The Government has considered and decided that increase in the second and subsequent years should not be less than 10% every year over the preceding year, e.g. if the amount of first year is Rs. 100/ -, then it should not be less than Rs. 110/- in the second year and not less than Rs. 120/- in the third year. The Municipal Corporations are, however, free to fix any amount higher but not lesser than the amount to be calculated as above in their entire discretion looking to the local condition and experience. Proposal for acceptance of any offer for the amount of less than 10% increase shall be referred to the Government with details for orders. The orders of the Government shall be final. Those guidelines of the Government require that every year, there should be 10% increase in the estimated amount of octroi and the higher amount can be published looking to the focal condition and experience.

23. The learned Counsel for the respondent-Corporation submitted, on the basis of the above figures, that the amount more than the estimated amount as per the Government Resolution has been published as estimated amount of octroi by the Corporation in all those years and the tender has been accepted at an amount which is higher than the amount calculated as per the Government guidelines for minimum offer and, therefore, according to the learned Counsel, that even though those Government Resolutions are not binding on the respondent-Corporation, they have been followed in letter and spirit and that no loss has been caused to the Corporation. It is pertinent to note that the respondent-Corporation has been established in the year 1982-83 and is one of the most prosperous Corporations in the Vidarbha region. As a result of the establishment of the Corporation, many business activities have been increased. For the first year, the estimated amount was calculated when there were no guidelines on the basis of the earlier years’ recovery figures. However, thereafter, as per the respondent-Corporation’s contention, the estimated amount was published, which was more than the estimated amount, which could be arrived at as per the Government guidelines. If the contention of the respondent-Corporation is accepted that they followed the guidelines in letter and spirit, then it appears that looking to the local condition and experience, they have published the higher amount of the estimated amount of octroi required by the Government Resolution. What is pertinent to be noted is that except the year 1993-94, in all subsequent years the estimated published figures of octroi are higher than the estimated amount as per the Government guidelines, that is to the extent of 3 to 4 Crores. What are the local conditions and experience of the Corporation for increasing such amount, have not been placed on record. However, the fact remains that the experience of the Corporation and the local conditions were of such nature that the anticipated amount of octroi every year is higher than by Rs. 3 to 4 crores and, therefore, that was published. However, what is pertinent to be noted is that every time the contract amount was accepted below the published amount and even though it is little higher than the estimated amount as per the Government Resolutions, it was exorbitantly less than the estimated published amount of octroi. This has to be considered in the light of further circumstance that in the year 1993-94, there were seven tenderers. The respondent-tenderer was the second bighest. However, the highest tenderer did not accept the tender and ultimately, the tender was given to the respondent- tender. In the year 1994-95, there were four tenderers. However, the respondent-tenderer was the second highest tenderer. The first highest tenderer, viz. Sycho Construction, who has quoted above the published estimated amount, was unable to accept the contract and, therefore, the contract was given to the respondent-tenderer, whose offer was below the published estimated amount of octroi. In the year 1995-96, there were only three tenderers. All were below the published estimated amount of octroi. But the respondent-tenderer being the highest, was chosen and the contract was given to him. In the year 1996-97, there were five tenderers. All were below the published estimated amount of octroi. But in negotiations, the tender was given to the respondent-tenderer. In the year 1997-98, the respondent-tenderer was the sole person filling in the tender and the tender was given to him. In the year 1998-99, which is the year in question, the respondent-tenderer is the sole tenderer in the field.

24. These facts point out that the respondent-tenderer is a successful tenderer in all these years and since the year 1994-95, he is quoting the amount below the estimated published amount and those tenders, either at a quoted offer and/or negotiated offer, have been accepted by the respondent-Corporation. It further appears that the competition is reduced and ultimately since last year, the respondent-tenderer is the only tenderor. What is pertinent to be noted is that even though the Government guidelines permit the quoting of higher estimated amount of octroi, on the basis of the local conditions and the experience, the respondent-Corporation has not placed on record those local conditions and the experience. Had the same been placed on record, it would have been possible for this Court to know whether the published estimated amount of octroi has proximity or nexus with the local conditions and the experience of the respondent-Corporation. In the absence of such material being placed on record, the only inference follows that the amounts were published arbitrarily because since 1994-95 onwards at no point of time, the contract was offered to the amount which is estimated published amount of octroi or higher to it, but all the while experience shows that it has been accepted below the said published estimated amount of octroi. This is to be considered in the light of the competition being reduced and all the while the tender going in favour of the respondent tenderer. What is important is that if the respondent tenderer is the highest competitive tenderer, then nobody can make a grudge about him. But the respondent-tenderer is day-by-day quoting below the published estimated amount of octroi and looking to the fact that he is the only offerer, the respondent-Corporation is required to negotiate with him and award the tender to him. This situation has arisen because the published tender amount is all the while higher by Rs. 3 to 4 Crores than the estimated amount calculated as per the guidelines of the Government. If this quoting of the higher amount had no reference to the local conditions and the experience, then, in that circumstances, such hike or quoting of the higher amount than the estimated amount calculated as per the guidelines of the Government, is an arbitrary act and secondly it affects the tender, because the persons, who desire to participate in the tender also, have their calculations and thereafter they entered into the fray of competition by filling in the tender and, therefore, if the estimated amount is exorbitant by Rs. 3 to 4 Crores, as is evident in the present case, which has no nexus with the present conditions and the experience of the respondent-Corporation, them, in that circumstances, the persons, who desire to participate in the tender would naturally avoid to take part in the tender. Thereby the question arises whether the excess amount has been published or higher amount has been published in order to exclude or avoid the competition between the tenderers or in any way to get the higher income to the Corporation. Therefore, it was necessary for the respondent-Corporation as to how the higher amount was calculated and had a nexus with the local conditions and the experience of the Corporation. Otherwise, it results into arbitrariness in quoting the estimated amount, which results into exclusion of citizens from taking part in the tender and then the persons like the respondent-tenderer, who quotes below the estimated amount, remained in the fray with whom the Corporation negotiates and offers the tender below the estimated published amount of octroi. The same is

the result in the present matter and, therefore, the act of publishing the tender by quoting the higher estimated amount of octroi than which could have been published on the basis of the Government guidelines without nexus with the local conditions and the experience of the Corporation, is an arbitrary one and can be said to be of bad faith so as to accommodate the respondent-tenderer by excluding the relative competition between the tenderers and, therefore the contention of the respondent-Corporation that the Government Resolutions have been followed in letter and spirit, is without any merit.

25. One more aspect requires to be considered is that the respondent-Corporation contends that those Government Resolutions are not applicable to the respondent-Corporation. However, they have been followed by taking re-course to them. This simply means that even though the Government has not made them applicable to the respondent-Corporation, the respondent-Corporation decided to follow them and, therefore, they have followed them. What is pertinent to note is that the tender conditions make it clear in clause 1(f) that the act and the rules shall include the Bombay Provincial Municipal Corporations Act, 1949 and rules framed thereunder from time to time, the Maharashtra Municipalities (Octroi) Rules, 1963 Bye-laws and the Resolutions passed by the then Municipal Council. Amravati and Municipal Corporation. Amravati from time to time for the imposition, assessment, levying, collection and recovery of octroi. Thus the marked portion will show that if it is decided by the Corporation to follow a particular procedure, the same will be an Act and Rules for the purpose of tender. It is their contention that they have decided to take recourse to these Government guidelines and have followed them in letter and spirit and, therefore, as a result of their contention those Government guidelines were and are applicable to the present tender. By their own admission, those Government Resolutions are applicable to the present tender and the contention raised that they are not applicable, is without any merit. This requires to be mentioned for the purpose that as per the Government Resolutions, the purpose that as per the Government Resolutions, the proposal of acceptance of any offer for the amount of less than 10% increase shall be referred to the Government for orders. When it was found that the offer in the present matter coming below 10% of the published estimated amount (i.e. while the published amount is Rs. 22,74,53,137/- – Rs. 2,27,45,813/- = Rs. 20,47,123,24/- it was, as a result of these Government Resolutions, necessary for the respondent-Corporation to approach the Government apart from the resolution passed by the Standing Committee, which has been relied on by the respondent-Corporation. The previous year’s actual recovery of octroi is Rs. 16,17,30,000/- and if it is increased by 10% it comes to Rs. 17,79,03,000/- in accordance with the Government Resolution and therefore, the tender accepted at an amount of Rs. 17,37,00,000/ -, being less than 10% the permission of the Government was necessary. However, the contract has been offered in the absence of such approval from the Government and, therefore, the act of acceptance of the tender cannot be said to be a proper one in the present matter. As the definition of the “Act and Rules” given in the tender incorporates the resolutions of the respondent-Corporation, one of such resolutions is taking recourse to the Government Resolutions, issued under section 143-A of the Maharashtra Municipalities Act of 1965. Therefore, the act of acceptance of tender is improper.

26. It is pertinent to note that in the present petitions, the main challenge by the petitioners is based on Article 14 of the Constitution of India. According to the petitioners, the public interest has been sacrificed by the respondent-Corporation by giving tender to the respondent-tenderer below the estimated amount of octroi every year and that there is a systematic effort to reduce the competition so as to award the contract in favour of the respondent-tenderer. The petitioners have taken recourse to those figures (which are quoted in this judgment) for the purpose of showing that how the tender has been given to the respondent -tenderer every year below the estimated amount of octroi. The petitioners contend that the discrimination in the present matter arises an a result of certain conditions of the tender. Those conditions, upon which the petitioner rely, are as follows:-

(1) Tenders will be opened on 26th May, 1998.

(2) Tender amount is Rs. 22,74,58,137/-,

(3) Earnest Money is Rs. 1,13,73,000/-,

(4) Amount of Security Deposit is Rs. 3,65,00,000/-.

(5) Any offer lower than Rs. 22,74,58,137/-, which is the anticipated amount of the collection of octroi for the period of one year, may not be considered and may be rejected,

(6) Right to accept or reject any or all offers without assigning any
reasons is reserved by the Corporation.

Reference is also made to Clause (6) of the terms and conditions of the tender, which is as follows:-

(6) Acceptance of offer:

Offer may not be accepted, if the following conditions are not fulfilled by the offerer while giving his offer:-

(i) The offerer shall furnish the Call Deposit of Rs. 1,13,73,000/- as
the earnest money along with the offer.

(ii) The offerer shall furnish a letter from any Nationalised or Scheduled or Co-operative Bank to the effect that it is willing to furnish Bank Guarantee of Rs. 3,65,00,000/- if the tender is accepted.

(iii) …       …        …

(iv) …        …        …

(V) …        …        …

(vi) If the offer of the ‘contract amount’ is less than Rs. 22,74,53,
137/-.

(vii) …        …        …

(viii) …        …        …

On the basis of these terms published while making the tender and the terms of the tender documents, it is submitted by the learned Counsel for the petitioners that it was represented to the public at large and especially those who are desirous of participating in the tender that the offer below the estimated amount of octroi may not be considered and rejected and, therefore, the public at large and especially those who are desirous of filling in the tender were made to believe that it is not worthwhile to fill in the tender below the estimated amount of octroi because the said tender may not be considered and may be rejected. According to the learned Counsel, therefore

it was not expected to present any tender below the estimated amount of octroi. The learned Counsel submitted that it is the only respondent-tenderer/ M/s. Ideal Road Builders, who has filled in the tender below the estimated amount of octroi. The learned Counsel submitted that the tender submitted by the respondent tenderer was for Rs. 16,65,00,000/-for the year 1998-99. He submitted that this was approximately Rs. 4 Crores or more, less than the estimated amount of the octroi and, therefore, in view of the conditions published in the tender and the tender documents referred to above, the learned Counsel for the petitioner submits that the tender of the respondent-tenderer should have been rejected by the respondent -Corporation and instead of rejecting the tender of the respondent -tenderer, the respondent-Corporation negotiated with the respondent-tenderer and, who in turn, increased the amount from Rs. 16,65,00,000/- to Rs. 17,37,00,000/-. The grievance is that had it been known that the tenders making offers below the estimated amount of octroi will be considered and accepted, then may others, who were desirous to participate in the tender, would have participated in the tender and at the time of negotiations, as have been held with the respondent-tenderer, there would have been a competition between the tenderers, so that the respondent -Corporation could have allotted the tender to a person giving a maximum offer of octroi collection. The learned Counsel submitted that having represented the public at large that the tender below the estimated price may not be accepted and rejected and thereafter instead of rejecting the tender, which is below the estimated amount, the attempt to negotiate with the sole respondent-tenderer, amounts to relaxation of condition, published in the tender referred to above, in favour of the respondent -tenderer and thereby excluded an opportunity to take part in the tender to the persons who are similarly situated and were desirous of participating in the tender, but for the condition referred to above. The learned Counsel relied upon the case of Ramana Shetty v. The International Airport Authority of India, , and submitted that there is a discrimination committed by the respondent -Corporation and, therefore, the contract awarded to the respondent-tenderer should be set aside.

27. The learned Counsel appearing for the respondent -Corporation submitted that the interpretation of Clause (6) made by the petitioners’ Counsel that the tender below or more than the estimated amount of octroi may not be considered and may be rejected with a force of the word “shall”, is incorrect. The learned Counsel submitted that the word “may” used in the said term does not prohibit the person from quoting or filing the tender below the estimated amount of octroi. The learned Counsel submitted that by reading the said term coupled with the term “that all rights to accept or reject the tender have been reserved with the respondent Corporation”, it is reasonably possible that even the tender below the estimated amount of octroi may be considered and accepted. He further pointed out that on earlier occasions also, the tenders were published with this condition, which is incorporated in the present tender. However, the offers below the estimated amount were received by the respondent-Corporation and, therefore, it cannot be said that those terms and conditions represented to the public at large that in case the tender below the estimated amount of octroi is filled, it is not being considered. The learned Counsel submitted that in administrative actions, the Executive should have freedom of “play in joints” and relied on the cases of Sterling Computers v. M & N Publications Limited and Ors., and Delhi Science Forum v. Union of India, reported in 1994(5) S.C.C. 651. He further submitted, relying on the case of Food Corporation of India v. Kamdhenu, , that the Apex Court desired that if the Authority decides to negotiate, it shall negotiate with all bidders and shall not choose any one of them so as to violate Article 14 of the Constitution of India. The learned Counsel submitted that in the present matter, as there is only one bidder, the respondent-Corporation has negotiated with him. He further submitted, relying on Ramana Shetty’s case, cited supra that the relief in that case was denied to the petitioner on the ground that the petitioner was not really interested and, therefore, submitted that there is no force in the contentions raised by the learned Counsel for the petitioners.

28. So far as the respondent -tenderer is concerned, he submitted that the said estimated amount of octroi does not lay down a norm or eligibility condition like that of Ramana Shetty’s case and, therefore, it being not an essential eligibility condition, it was capable of being waived in a non-discriminatory equal manner and, therefore, the decision taken by the respondent-Corporation cannot be said to be violative of any principles of law.

29 Therefore, the question arises is that what should be the interpretation of the terms and conditions of the tender and what is the effect of a condition that the tender below the estimated amount of octroi may not be considered and may be rejected and what is the effect of condition No. 6 wherein it has been made clear that the offer may not be accepted if the following conditions are not fulfilled and one of such conditions being that the offer of the ‘contract’ amount is less than Rs. 22,74,58,137/- is not fulfilled. In Ramana Shetty’s case cited supra it has been observed as to how the document should be” interpreted, which is as follows:

“It is a well settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document “and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use. To reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The Court must, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce to silence any part of the document and make it altogether inapplicable.”

These observations have been made by the Apex Court while interpreting the consequence of a term “registered IInd Class hoteliers”, being one of the eligibility conditions of the tender, which amounted to relaxation in favour of the contractor in that case and thereby the contract being termed as violative of Article 14 of the Constitution of India. Here in the present matter, the whole debate, which has been raised by both the Counsel is as to whether the

words “may not be considered and may be rejected” in case the offer quoted is lower than the estimated amount of octroi and , therefore, whether this word “shall” or “must” or “may” shall be interpreted as “permissive”. The respondents are inclined to say that the word “may” is “permissive” and, therefore, there was no bar for filing the tender below the estimated amount of octroi. As against that, the petitioners are contending that it was one of the important conditions of the contract, which if not fulfilled, shall result into rejection of the contract and remove it from the consideration zone, further informing that it may be rejected.

30. Keeping in view the test, which has been quoted above, as laid down by the Apex Court, it further requires to be observed that it is necessary for the courts to know in such public contract as to how an ordinary man will react to the terms and conditions of the tender. There should not be a mechanical, technical, expertise interpretation of the words, but how the words in common parlance by common man may be interpreted because it is a public tender calling upon offers by public at large. It is further necessary to be mentioned that what had happened on earlier occasion, when the same terms and conditions were published, is of no relevance, when we are considering the present tender and interpreting the words, which are incorporated in the terms and conditions of the tender. We are of the opinion that the tender runs in corers. The earnest money, which is required to be deposited with the tender is Rs. 1,13,73,000/- and the bank guarantee to be offered is for Rs. 3,65,00,000/-. Thus, while filing the tender, the person, who is desirous of filing the tender, assesses a fair reasonable opportunity of his tender, being accepted and therefore from that approach or view in the mind, he complies with the conditions of the tender and quotes the offer. Therefore, from the tender conditions, which are published, if he realises that his tender may not be accepted and may be rejected, then, in that circumstances, he may not come forward with an investment of earnest money of Rs. 1,13,73,000/- and with a bank guarantee of Rs. 3,65,00,000/- and one of the factors, which dissuade him from taking part in the tender, is that the tender specifically states that the offer lower than the estimated or anticipated amount of collection of octroi may not be considered and rejected, Thus he is put to understand that the offer below the anticipated amount of the octroi cannot materialise in acceptance of the said tender and thereby all those persons, who are desirous to quote below the estimated amount of the octroi, may not take part in the tender. On the contrary, they are made to understand that their offers may not be considered and may be rejected. To interpret these words, as suggested by the learned Counsel for the respondent -Corporation, as “permissive” to mean that the offer lower than the anticipated amount of collection of octroi may be considered and may be accepted, is a complete violation of the language quoted in the tender and, therefore, the simple, reasonable and fair meaning of the said term is that the offers, which are below the estimated or anticipated amount of octroi are not going to be considered and are going to be rejected and thereby it becomes one of the essential conditions of the tender requiring the tenderer to quote the offer that of the anticipated amount of collection of octroi or more than the anticipated amount and, therefore, it cannot be inferred from the said terms and conditions that the tender below the estimated amount of

octroi was possible. The reliance placed by the learned Counsel for the petitioners on the Ramana Shetty’s case, cited supra is hereby accepted. It is made clear that as a result of the negotiations being held with the respondent tenderer only, who had filed the tender below the estimated amount, have resulted in exclusion of number of others, who could have participated in the tender, had they been made known that the tenders below the estimated amount would be also considered and accepted and, therefore, we hold that as a result of the action of the respondent-Corporation to negotiate with the respondent -tenderer, when his tender is below the estimated amount, has resulted in waiving one of the important essential conditions of tender. In the result, the other person, who are similarly situated and who could have participated in the tender, have been denied an equal opportunity to participate in the said tender and , therefore, the acceptance of the tender of the respondent-tenderer is violative of the equality clause of the Constitution of India as also the rules of the Administrative Law. The argument raised on the basis of the cases of Sterling Computers Ltd. v. M. & N. Publications Ltd., and G. J. Fernandez v. State of Karnataka, reported in 1990(2) S.C.C. 490, cannot be accepted, because those cases are not applicable to the facts and circumstances of this case as the question of non-observance of certain non-essential conditions of tender has been considered by the Apex Court. The present case is squarely covered by case of Ramana Shetty, referred to above, and thereby the tender violates Article 14 of the Constitution.

31. The last limb of argument is in respect of the re-tendering. The learned Counsel for the respondent-Corporation relied on the case of State of Punjab v. Yoginder Sharma Onkar Rai, , wherein it has been observed that “if at the fresh auction the first respondent does not bid and no other bidder offers a bid equivalent to the earlier successful bid and the writ petition is to stand dismissed, what is the State Government’s authority for holding the fresh auction 7 Whether or not the first respondent bids or somebody else bids and an amount equivalent to the earlier successful bid can be known only after the fresh auction is held. If at that stage the petition is to stand dismissed, there is no authority for holding the fresh auction. Secondly, if at the fresh auction the first respondent does not bid and no other bidder offers a bid equivalent to the earlier successful bid, it must mean that the earlier successful bidder is no longer interested, but, by reason of the dismissal of the writ petition, he remains bound by his earlier bid. This is not a workable or Well-thought out order.” On the basis of this, it is submitted that if the re-tendering is directed, there is no guarantee that the respondent-Corporation would receive the offer higher than the one, it has received from the respondent-tenderer. The possibility of no one responding to the notice, also cannot be ruled out. In any event, the respondent-tenderer would not be bound by the offer, which he has made. It is further submitted that if the auction is set aside and new auction is directed, the one, who challenges the earlier auction, should be made to deposit the substantial amount of offer. Unless the answering respondent is secured that it will get a higher offer or at least an offer which has already been received, the re-tendering would not subserve any public interest and on the contrary would cause injury to the public interest.

32. These submissions made by the learned Counsel for the respondent-Corporation cannot be accepted. What is intended in the transparency in the contract given by the State or instrumentality of the State: When the auction is found to be violative of Article of the Constitution denying the equal opportunity to equally or similarly situated persons, the question whether the present tenderer takes part in the fresh auction or the tender, is not a factor to be considered. It is the respondent-Corporation, which published the tender with certain conditions and thereafter relaxed in favour of the respondent -tenderer, which has resulted in sacrifice of public interest and affecting the rights of similarly situated persons, who could have otherwise participated in the tender and the respondent-Corporation could have negotiated with more tenderers so as to get the highest amount of octroi collection and, therefore, for the wrongs, which have been committed by the respondent-Corporation, the petitioners cannot be asked to deposit any amount and much more that for the possibility that the respondent-tenderer may not take part in the fresh tender. The violation of provisions of Constitution cannot be allowed to be perpetuated. The case State of Punjab v. Yoginder Sharma Onkar Rai, which has been cited by the learned Counsel for the respondent -Corporation, was different on facts, because it was a public auction. The same is not a case with the present matter. It was a public tender. Therefore, the facts of that case cannot be equated with the present case. What we feel that the present respondents are responsible for the whole mess and, therefore, the submissions made in response to the re-tendering, etc. cannot be accepted.

33. In view of the foregoing discussion, both these writ petitions stand allowed. The contract given to the respondent-tenderer by the respondent-Corporation for collections of octroi for the year 1998-99, is hereby quashed and set aside. The respondent-Corporation is hereby directed to re-advertise the tender and allot the contract of collection of octroi amount to the highest tenderer and if necessary by negotiating with them. Till the re-advertisement and finalisation of the new contract, the present system of collection of octroi amount, which is directed by way of interim arrangement, shall remain in force. Rule in both these writ petitions is made absolute in above terms. In the facts and circumstances of the case, the parties shall bear their own costs.

34. Petition allowed.