ORDER
D. Murugesan, J.
1. The second petitioner, who was the highest bidder in the tender-cum-public auction conducted during February 1996, has questioned the order passed by the third respondent, the Joint Registrar, PMT District Central Cooperative Bank Limited, Sivaganga dated 5.6.96.
2. The factual matrix of the case is as follows. The erstwhile “Ramanathapuram District Central Cooperative Bank Limited” was functioning with head quarters at Madurai upto 1.9.93. On the trifurcation of the District into three separate revenue districts, the said bank was also trifurcated into three banks viz., (1) Ramanathapuram District Central Cooperative Bank Limited with head quarters at Ramanathapuram, (2) Pasumpon Muthuramalinga Thevar District Central Cooperative Bank Limited with head quarters at Sivaganga and (3) Kamarajar District Central Cooperative Bank Limited with head quarters at Virudhunagar. On and from 2.9.93, all the three banks started functioning in the respective head quarters. Hence, the head office building of the erstwhile composite bank situate at Madurai became vacant and proposals were initiated to sell the building with vacant land. All the three banks by resolution No. 28 dated 18.9.93 jointly resolved to sell the building and vacant land in question.
3. In terms of Rule 78(3) of the Tamil Nadu Cooperative Societies Rules, 1988 (hereinafter referred to as the “Rules”), “The Ramanathapuram District Central Cooperative Bank Limited” applied for permission to the Registrar on 9.3.94. There is no dispute that prior to the above requisition, there was a resolution of the Special Officer of the said bank resolving to sell the building and vacant land in public auction. The said requisition was considered and the Government accorded their permission on 3.5.94 followed by the permission accorded by the Registrar on 17.5.94 under Rule 78(3) of the Rules. In view of the above, the joint committee of the banks was constituted by the Registrar which resolved to conduct tender-cum-public auction. Though an offer was made for Rs. 1,53,00,000/- by one Sharravvanan, the first petitioner, the Government in G.O.Ms. No. 287, Cooperation, Food and Consumer Protection Department dated 20.12.94 granted permission for the sale subject to the rate of bid amount at Rs. 1,77,12,000/-. In view of the said Government Order, the bid amount was raised and permission for sale was granted on 27.1.95. The highest bid of Rs. 1,77,12,200/- was offered by the first petitioner. The tender proceedings were challenged before this Court and pending the writ petitions, stay of tender proceedings was ordered. Challenging the order of stay, the first petitioner herein filed appeal in W.A. No. 939 of 1995. A Division Bench of this Court heard the writ appeal along with the writ petitions and by judgment dated 21.11.95, issued certain directions, which will be referred to in the later portion of this order. Pursuant to the directions, tender-cum-public auction was conducted. In the public auction, one M. Janakiraman offered Rs. 3,75,00,000/-. Since he withdrew his offer, the second petitioner who was the next highest bidder offered a sum of Rs. 3,75,00,000/-. The offer was placed before the general body of the three District Central Cooperative Banks Limited and the same was accepted. The matter was again placed before the Registrar of Cooperative Societies, the second respondent who, according to the petitioners, approved the same in terms of Rule 78(3) of the Rules. It appears that the second respondent forwarded the entire papers to the Government for confirmation of sale. The Government decided not to dispose of the building and vacant land. By the impugned order dated 5.6.96, the decision of the Government namely, “for the present there was no necessity to dispose of the vacant site and building of the composite Ramanathapuram District Central Cooperative Bank Limited situated at Madurai and decided to close the case without accepting the tender.” was communicated to the first petitioner by the third respondent. Though this order was initially questioned by the first petitioner alone, as it was presumably pointed out that the first petitioner was not the actual bidder and therefore could not maintain the writ petition, the second petitioner came on record by the orders of this Court dated 29.7.97 in W.M.P. No. 17315 of 1997.
4.(1) Mr. A.L. Somayaji, learned Senior Counsel appearing for the petitioners would contend that the entire issue as to the sale was decided by the Division Bench of this Court while giving directions to the respondents to conduct public auction, of course, subject to certain conditions by judgment dated 21.11.95. The first respondent-State Government was also a party to the said judgment and therefore the directions of the Division Bench are binding on the first respondent as well. In the said judgment, the Division Bench had only directed the property to be sold in tender-cum-public auction subject to the minimum upset price of Rs. 1,77,12,000/-. The Division Bench had further directed that on receipt of the highest bid, the matter should be placed before the general body of the three District Central Cooperative Banks Limited and to the Registrar of Cooperative Societies, Tamil Nadu. Once approval is accorded by both the general body and the Registrar, the respondents shall have no other option except to execute the sale deed. In the absence of any further directions for placing the matter before the Government, the second respondent erred in referring the matter to the Government again. For the reason, the impugned order of the third respondent communicating the decision of the State Government is unsustainable. He would submit that the impugned order in effect amounts to nullifying the directions of this Court. In support of the said submission, the learned Senior Counsel would rely upon the Division Bench judgment of this Court in “R.SRINIVASAN v. STATE OF TAMIL NADU REP. BY SECRETARY, HOME DEPARTMENT, FORT ST.GEORGE, CHENNAI-9 AND ANOTHER (2003 (4) CTC 12) “. The learned Senior Counsel would submit that in any case, having taken action pursuant to the directions of the Division Bench of this Court and having approved the sale by the general body and accepted the bid by the Registrar of Cooperative Societies, question of further referring the matter to the Government does not arise and the third respondent ought to have executed the sale deed in terms of the directions of the Division Bench. He would also submit that in the matters of tender the action of the State shall not be arbitrary. Having accepted the proposals for sale, the respondents cannot now refuse to execute the sale deed. To support the said submission, the learned Senior Counsel would rely upon the judgment of the Apex Court in “MONARCH INFRASTRUCTURE PRIVATE LIMITED v. COMMISSIONER, ULHASNAGAR MUNICIPAL CORPORATION AND OTHERS “.
4.(2) The learned Senior Counsel would also contend that in any case, G.O.Ms. No. 325, Cooperation, Food and Consumer Protection Department dated 15.4.93 imposes a prior approval of the Government before the cooperative institutions call for tenders for works, equipments, etc., and it does not apply to the sale of the assets of the cooperative societies. Even assuming that the said Government Order is applicable, the Government should be presumed to have given such approval when it accorded its permission on 3.5.94 for sale of the building and vacant land in question.
4.(3) The learned Senior Counsel would further submit that by virtue of Section 15 of the Tamil Nadu Cooperative Societies Act, 1983 (hereinafter referred to as the “Act”), the General body is the competent authority to decide in the matter of sale of properties belonging to the bank and not the Government. He would further submit that as per Rule 78(3), the authority competent to take decision to sell the property of the bank is the general body and the Registrar of Cooperative Societies is the authority to approve such decision. There is no role for the Government in the matter and that too, to take a decision not to sell the property belonging to the bank. The only power of the Government to issue general directions to the Registrar to make enquiry or appropriate proceedings under the Act in the public interest could be traced to Section 182 and the said section does not empower the Government to take a decision not to sell the property.
5.(1) Mr. R. Muthukumaraswamy, learned Additional Advocate General for the respondents 1 and 2, on the other hand, would submit that in the auction held on 20.1.96, one M. Janakiraman was the highest bidder with an offer of Rs. 3,75,00,000/-. Since he withdrew his offer, the second petitioner approached the third respondent voluntarily with an offer of Rs. 3,75,00,000/-. When the second petitioner was not the highest bidder, she cannot maintain the writ petition. He would also argue that the writ petition originally was not filed by the second petitioner, but only by the first petitioner who did not participate in the public auction. In the circumstances, the writ petition is not maintainable at the instance of both the petitioners.
5.(2) The learned Additional Advocate General would further submit that in terms of Sections 153 and 182, the Government is competent to issue directions to the cooperative bank, more particularly, even the decision of the Government not to sell the property of the bank. In terms of G.O.Ms. No. 325 dated 15.4.93, the approval of the Government before sale of the property belonging to the bank and the consequential confirmation is necessary. However, he would fairly submit that G.O.Ms. No. 325 dated 15.4.93 was not brought to the notice of the Division Bench at the time of hearing. The decision of the Government was taken on the basis of the Government Order and in exercise of powers under the provisions of Sections 153 and 182 of the Act. Hence the impugned order passed on the basis of the Government decision cannot be questioned.
5.(3) The learned Additional Advocate General would further submit that insofar as the power of the general body and the Registrar under Rule 78(3), prior sanction of the general body and the Registrar is absolutely necessary before the property of the bank is disposed of. The said power includes the power of the Government, as has been held in the very same Division Bench judgment relied upon by the petitioners. The learned Additional Advocate General submitted that in any event when the Government has taken a decision not to sell the property, question of challenge to the said decision does not arise, as it is not the case of the petitioners that the Government has chosen to pick a person of their choice to dispose the property. In support of the said submission, the learned Additional Advocate General would rely upon the judgment of the Apex Court in “RAMANA DAYARAM SHETTY v. THE INTERNATIONAL AIRPORT AUTHORITY OF INDIA AND OTHERS “. He would also submit that nobody could compel the Government to sell the property through public auction.
5.(4) Finally, the learned Additional Advocate General would submit that though the matter was placed before the general body and approval was accorded the bid was not accepted by the Registrar and no permission was granted more particularly, no decision of the Registrar as to his acceptance was communicated to the petitioners. In the absence of such communication, it must be construed that there was no acceptance or for that matter there was no confirmation of the offer made by the second petitioner. For the said reason, request for direction to communicate the acceptance is certainly not entertainable. To support the said submission, the learned Additional Advocate General would rely upon the judgments of the Apex Court in “TATA CELLULAR v. UNION OF INDIA ” and in “FOOD CORPORATION OF INDIA v. M/S KAMDHENU CATTLE FEED INDUSTRIES “.
6. Mr. P. Srinivas, learned counsel for the third respondent would also support the submission of the learned Additional Advocate General by contending that the offer of the second petitioner was not accepted and the decision as to the acceptance/confirmation was not communicated to the second petitioner. In the absence of such communication, no right is accrued on the second petitioner and in any case on the first petitioner who is only a power agent of the second petitioner seeking a direction to sell the property.
7. In reply to the above submissions, Mr. A.L. Somayaji, learned Senior Counsel would submit that the powers of the Government as traced by the learned Additional Advocate General to Section 182 is only general in nature as to the administration of the society/bank and is not applicable to a decision taken by the Government not to sell the property. The learned Senior Counsel would further submit that the offer of the second petitioner was accepted by the second respondent, Registrar of Cooperative Societies as could be seen from the reply dated 3.5.96 to the lawyer’s notice issued on behalf of the second petitioner on 22.4.96, wherein the second respondent has specifically stated that “the Registrar has passed final orders on 26.2.96”. The said communication should be construed as one of acceptance of the offer and in that event, the second petitioner has every right to seek for a direction to the third respondent to sell the property.
8. In view of the above submissions, the following points arise for consideration:-
(1)Whether the writ petition filed at the instance of the petitioners is maintainable?
(2)Whether the Government is competent to decide not to sell the building and vacant land after the directions of the Division Bench of this Court in W.A.Nos.939 of 1995 etc. dated 21.11.95 in directing the public auction to be conducted and the matter to be placed before the general body and the Registrar for their approval?
(3)Whether it is open to the Government to trace its power to take a decision not to sell the building and vacant land in terms of G.O.Ms. No. 325 dated 15.4.93, when the same was not argued before the Division Bench and after inviting an order?
(4)Whether Rule 78(3) contemplates a prior approval of the general body, the Registrar of Cooperative Societies and the Government even in case of sale of properties belonging to the bank?
(5)Whether the bid of the second petitioner was in fact accepted/confirmed by the third respondent to seek a direction to sell the property?
(6)Whether the action of the respondents in not accepting the highest bid of the second petitioner would amount to arbitrary action?
(7)Whether this Court could compel the respondents to accept the offer of the second petitioner?
9. Point No. 1: The first petitioner and 15 others were the highest bidders when the property was sought to be sold initially in the year 1992. Since the tender proceedings were challenged before this Court, the highest bid was not accepted. After the directions of the Division Bench of this Court in W.A.Nos.939 of 1995 etc. dated 21.11.95, the Committee which was constituted to dispose of the building with vacant land in question conducted the sale by tender-cum-public auction. Though two tenders were received, one from Tmt. Sasikala Ramasamy, the second petitioner and 17 others for Rs. 2,16,00,000/- and another from Thiru K. Gunasekaran and 5 others for Rs. 2,10,00,000/-, the same were not accepted, as in the open auction held on 20.1.96, one Thiru M. Janakiraman of Chennai quoted the highest bid of Rs. 3,75,00,000/-. However, the said Janakiraman withdrew his bid offer in his letter dated 24.1.96. Consequent to the said withdrawal, the second petitioner and 17 others offered their willingness to purchase the property for Rs. 3,75,00,000/-. This offer was accepted by the Committee in its meeting held on 5.2.96. The Committee also resolved and recommended the offer to the general body of the three District Central Cooperative Banks Limited. The general body of the three District Central Cooperative Banks Limited in their meeting held on 14.2.96, 15.2.96 and 16.2.96 resolved to sell the property to Tmt. Sasikala Ramasamy and 17 others for Rs. 3,75,00,000/- The decision of the three District Central Cooperative Banks Limited was communicated to the Registrar, the second respondent in letter dated 17.2.96 for approval. Based upon the above communication, the Registrar of Cooperative Societies after examining the proposals under the provisions of Rule 78(3) of the Rules recommended the sale of the property and requested the orders of the Government for confirmation. The first petitioner was authorized by Tmt. Sasikala Ramasamy and 17 others for further action to be taken in the matter of sale. This is evident from the very impugned communication of the third respondent dated 5.6.96 addressed to the first petitioner in the capacity of authorized person for Tmt. Sasikala Ramasamy and 17 others. Even in the impugned communication itself, the third respondent had requested the first petitioner to inform the decision of the Government to the second petitioner and 17 others on the ground that he was authorised by them to participate in the tender-cum- public auction. Moreover, by order of this Court dated 29.7.97 in W.M.P. No. 17315 of 1997, Tmt. Sasikala was also impleaded as one of the petitioner. In the circumstances, the first petitioner namely Tmt. S. Sharravvanan is entitled to maintain the writ petition in the capacity of power agent of Tmt. Sasikala Ramasamy and 17 others who were the highest bidders in the tender-cum-public auction held on 20.1.96. Equally, the second petitioner being the highest bidder though with 17 others, is also a person aggrieved and as such, she is also entitled to maintain the writ petition. For the above reasons, I hold that the writ petition at the instance of both the petitioners is maintainable and point No. 1 is answered accordingly.
10. Point Nos.2 and 3: After the decision of the general body and the three District Central Cooperative Banks Limited to sell the building and vacant land in question in public auction, a Committee was formed by the second respondent, the Registrar of Cooperative Societies to conduct the sale. Two tenders were received and the highest bid was offered by S. Sharravvanan and 15 others. This tender process was challenged before this Court and this Court had granted stay of confirmation of tender. The interim order was taken on appeal and the Division Bench in W.A. Nos. 939 of 1995 etc. along with connected writ petitions dismissed the writ appeals with certain directions. The relevant portion of the directions reads as under:-
“For all the reasons, we have no hesitation in quashing the impugned proceedings and issuing consequential directions as to the manner in which respondents 1 to 3 must proceed in the matter further. The fact that the matter has to be started afresh will not in any manner prejudice the respondents. The price for which it is proposed to be sold is what has been notionally fixed to be the value and nothing more and in our view could not be said to be the actual and open market value. The cost of land in Madurai city which is also a Municipal Corporation and that too in the particular area is concerned, being the heart of the town would be very high and keeping in view with the prevailing open market rate in such cities and to was the matter is considered the rate fixed for the land does not appear to be a competitive rate at all. We are stating this only to highlight the position that, if at all, the Institution concerned is only likely to gain and lose nothing by re-doing the matter afresh. The fact that the petitioners are not themselves offering higher bid or assuring to secure such higher bid does not matter at all, in the above circumstance. Consequently, the impugned proceedings are liable to be and are hereby set aside. The respondents 1 to 3 are directed to proceed in the matter afresh and in the manner directed as follows:-
(i) To conduct a public auction on a date to be specified and notified after due and sufficient publication of the proposed auction with particulars relating to the property to be sold and the upset price which shall be the value fixed viz., Rs. 1,77,12,000/-.
(ii) Simultaneously, publish a notification inviting sealed tenders also to be opened at the time of and immediately after the public auction only, and accept as hereinafter provided the beat of the two offers made at the time of public auction and receive in the form of sealed tenders, if considered to represent real market value of the property in question.
(iii) The auction shall commence at the time, date and place specified in the notice of auction. No bid or tender below the upset price shall be entertained or considered. Immediately after the close of the bidding the sale officer shall record the maximum bid amount and thereafter the tenders if any, received shall be taken and opened by the Sales Officer. If the tender is found to be in order, it shall be taken as part of the sale records and the amount offered in the tender also shall be considered. If the amount quoted in the highest tender is higher than the maximum bid amount recorded in open auction, the sale officer shall continue the auction allowing the participation of only the highest bidder and the tenderers who have quoted the above of the highest bid. If there are no tenders or after continuing the auction between the highest bidder and the highest tenderer, the sale officer shall then provisionally accept the highest of the bid subject to the approval of the General Body of the three District Central Banks and the Registrar of Cooperative Societies, Tamil Nadu State. On such approval only, the acceptance of the offer and bid made and provisionally accepted shall become final and operative and binding between parties.
(iv) Immediately after conclusion of the auction as above, the authority shall cause the same to be placed before the General Body of the three District Central Banks, through their Special Officers/Managing Directors/Secretaries concerned within four weeks and there upon place the same, with the approval, if any, accorded to the Registrar who shall pass orders either way within four weeks from the date of receipt of the relevant papers by him.
(v) If the approval has been accorded as above, thereafter, the sale can be effected, as required in law. The writ petitions are allowed on the above terms consequent the writ appeals shall stand dismissed.”
It is the contention of Mr. A.L. Somayaji, learned Senior Counsel that in terms of the above directions of the Division Bench, the respondents have no other option but to proceed with the sale strictly in conformity with the directions of this Court. As per the directions, after the Committee constituted for the sale of the building and vacant land, is entitled to invite sealed tenders for public auction and accept the highest offer in the tender as well as public auction. Thereafter, the matter should be placed before the general body of the three District Central Cooperative Banks Limited and the Registrar of Cooperative Societies for their approval. This procedure is in terms of Rule 78(3) of the Rules. Factually, the highest offer of Tmt. Sasikala Ramasamy and 17 others was accepted by the Committee. The general body of the three District Central Cooperative Banks Limited and the Registrar of Cooperative Societies have also approved. Once this procedure is completed, there is no other option for the third respondent except to execute the sale deed. In terms of the Division Bench judgment, there is no question of further reference to the first respondent-State Government for confirmation of the sale. Therefore, the learned Senior Counsel would submit that placing reliance on G.O.Ms. No. 325 dated 15.4.93 would be outside the scope of the directions of this Court and in any case, the respondents cannot nullify the directions of this Court. In this regard, it must be noted that G.O.Ms. No. 325, Cooperation, Food and Consumer Protection Department dated 15.4.93 was much prior to the judgment of the Division Bench dated 21.11.95. The first respondent namely, the Secretary to Government, Cooperation, Food and Consumer Protection Department was also a party to the proceedings before the Division Bench. Reference to the said Government Order was not drawn to the notice of the Division Bench. The first respondent allowed the Division Bench to proceed with the matter without reference to G.O.Ms. No. 325 dated 15.4.93. Considering the nature of the powers that could be exercised by the authorities under the provisions of the Act and the Rules, the Division Bench directed the sale to be concluded on the approval of the general body and the Registrar of Cooperative Societies as required under Rule 78(3) of the Rules. Having accepted such an order, it would not be now open to the first respondent to come forward with a new case that even after the completion of the formalities as directed by the Division Bench, the matter must again be considered for confirmation of sale by the first respondent. Applying the Government Order without referring the same before the Division Bench and after inviting an order, would be nullifying the order of the Division Bench, which course cannot be approved. In this regard, the judgment of the Division Bench of this Court in R. Srinivasan’s case (supra) can be usefully referred to. That was a case the Government brought in Tamil Nadu Motor Vehicles (Special Provisions) Act, 1992 (Act 41 of 1992) to validate all permits issued, renewal/variations granted between 4.6.76 and 30.6.90 in view of the judgment of the Apex Court in “PANDIYAN ROADWAYS CORPORATION LTD., v. M.A.EGAPPAN ” holding that no person other than those mentioned in Annexure II to the draft scheme can operate the stage carriage service on the entire notified route or any part thereof apart from the State Transport Undertaking. By the said judgment, persons who were operating on the scheme route were deprived of their permits and therefore the Government brought out Act 41 of 1992. The said Act was implemented and operators were also allowed to operate by the orders of quasi judicial authorities. By a subsequent Act known as Tamil Nadu Motor Vehicles (Special Provisions) (Cancellation of Variation of Conditions of Permit) Act, 1996 (Act 19 of 1996), the variations granted pursuant to Act 41 of 1992 were sought to be cancelled. While considering the validity of Act 19 of 1996 with reference to the variations granted by the orders of the quasi judicial authorities following Act 41 of 1992, this Court had observed as follows:-
“It is not in dispute that all the petitioners were granted variations by the Transport Authorities exercising quasi judicial function more particularly, on the strength of sub-section (2) of Section 6 of Act 41 of 1992. Such orders as to grant of variations cannot be annulled or cancelled by the impugned legislation, as it would amount to encroachment of quasi judicial functions of the authorities and consequently would take away the right conferred on any orders by such Tribunal or quasi judicial functionaries retrospectively. In this context, it would be useful to refer to the judgment of the Apex Court in “M/S RAMAN AND RAMAN LTD., v. THE STATE OF MADRAS AND OTHERS “, wherein the Apex Court has held that the rights conferred on the operators cannot be taken away retrospectively except by making a law specifying retrospective effect and within permissible limits.”
11. In the given case, the tender-cum-public auction was held only pursuant to the directions of this Court. The Court further directed the procedures to be followed upto the conclusion of the sale. In view of the directions of the Division Bench of this Court in W.A.Nos.939 of 1995 etc., dated 21.11.95 more particularly, in paragraph 30 which has been extracted in the earlier portion of this order, there is no scope for the third respondent, the Joint Registrar of Cooperative Societies or the second respondent, the Registrar of Cooperative Societies for that matter to require a further confirmation from the State Government namely, the first respondent.
12. There is yet another aspect as to the exercise of power by the Government for confirmation of sale by virtue of G.O.Ms. No. 325 dated 15.4.93. For better understanding of the power of the Government, the very Government Order itself can be quoted as follows:-
ABSTRACT
Cooperative Institutions – Approval of tenders and contracts – guidelines issued.
——
Read: G.O.Ms. No. 836, Finance (BPE) dated 6.11.91.
ORDER:
In the Government Order read above, Government, among other things, ordered that Public Sector Undertakings should obtain prior approval of the Government in respect of all tenders for works, equipments, etc., and all purchases whether by open tender or by limited tender enquiries etc., where the value of the contract exceeds Rs. 1 crore.
2. The question on whether the above orders head to be made applicable to cooperative institutions has been examined carefully and the Government have decided to extend the above orders to Cooperative Institutions also so long as the Cooperative Institutions are managed by the Special Officers instead of elected Boards of Management.
3. The Government accordingly direct that prior approval of the Government should be obtained by Cooperative Institutions in respect of all tenders for works, equipments etc., and all purchases whether by open tender or by limited tender enquiries etc., where the value of the contract exceeds Rs. 1 crore.
4. The proposal should be sent to Government in the administrative department with the recommendation of the Head of the Department much in advance to the date of expiry of validity of tenders.
5. This order shall take effect from the date of issue of this order.
Office of the Registrar of
Cooperative Societies
Madras-10
Endt.Rc. No. 171241/93 CM-2 dated 24.9.1993
Purattasi, Srimugha
Thiruvalluvar Aandu 2024
A copy of the G.O.Ms. No. 325, Cooperation, Food and Consumer Protection Department dated 15.4.93 is communicated to all the Regional Joint Registrars for information and necessary action. They are also requested to communicate the G.O. to the societies under their administrative control.
/By order/
For Registrar
A perusal of the said Government Order, more particularly paragraph 3, it is seen that prior approval of the Government should be obtained by a cooperative institution in respect of all tenders for works, equipments etc., and all purchases whereby by open tender or by limited tender enquiries where the value of the contract exceeds Rs. 1 crore. In terms of the said Government Order prior approval of the Government is necessary. In this regard, it must be noted that after the general body of three District Central Cooperative Banks Limited resolved to sell the building and land in question on 18.9.93, individual cooperative bank sought permission of the Registrar, the second respondent, who in turn in his letter dated 11.3.94 sought the approval of the Government. This approval was asked only with reference to “the prior approval of the Government” as required under G.O.Ms. No. 325 dated 15.4.93. The Government also granted approval in its letter dated 3.5.94. In paragraph 2 of the counter affidavit filed by the first respondent it is stated that the Government Letter (D) No. 380, Cooperation, Food and Consumer Protection Department dated 3.5.94 considered that the vacant site and building of the erstwhile Ramanathapuram District Central Cooperative Bank Limited be sold in public auction so as to fetch the maximum price after observing usual formalities. This letter dated 3.5.94, in my view, is prior approval as required under the Government Order. After the sale proceedings, but before the confirmation, the Government again issued further order in G.O.Ms. No. 287, Cooperation, Food and Consumer Protection Department dated 20.12.94 directing the Committee constituted for the sale of the property to negotiate with the highest bidder for further bid amount of Rs. 1,77,12,200/-. When the said amount was also accepted by the highest bidder in their letter dated 27.1.95, proceedings were initiated in writ petitions questioning the very tender proceedings. That is how the highest bid offered by Mr. Sharravvanan and 15 others was not confirmed. Thereafter, the Division Bench had directed the sale to be completed in the manner contained in paragraph 30 of the judgment. In the circumstances, the application of the Government Order, even for confirmation of sale should be considered. It is admitted case that the approval for sale through public auction was accorded by the Government on 3.5.94 which is in accordance with the requirement of G.O.Ms. No. 325 dated 15.4.93. When the confirmation was also sought from the Government after the tender proceedings were completed, all that the Government had directed the Committee to negotiate with the highest bidder for further amount of Rs. 1,77,12,200/-. By these two Government Orders it must be construed that the Government had accorded prior approval for the sale as required under the Government Order. Hence, question of further reference to the Government for confirmation does not arise more particularly, in view of the directions of the Division Bench of this Court, in and by which, this Court did not direct either the third respondent or the second respondent to refer the matter to the Government again for confirmation. Hence, I am of the view that after the directions of the Division Bench in W.A.Nos.939 of 1995 etc., dated 21.11.95, the second respondent is neither obligated nor mandated to place the matter for confirmation to the first respondent. Accordingly, point nos.2 and 3 are answered.
13. Point No. 4: Rule 78(3) of the Rules reads as under:-
“No society shall dispose of any immovable property (other than a property purchased at a sale held in execution of a decree by the society or by the financing banks to which the society is affiliated for recovery of any sum due to the society) acquired by the society without the prior sanction of the general body and the Registrar:
Provided that a housing society or a society the object of which is to purchase and sell immovable property, may dispose of such immovable property without the sanction of the general body and the Registrar.”
It was argued by the learned Senior Counsel for the petitioners that the said rule requires prior sanction of the general body and the Registrar only in case of sale of property for recovery of dues due to the bank. However, the learned Additional Advocate General brought to my notice that there was a printing mistake in the book by bracketing the words only upto “affiliated”, but actually the bracket should be closed only after the words “due to the society”. If that mistake is corrected, the rule requires the prior sanction of the general body and the Registrar in the matter of sale of property of the bank. He also drew my attention to paragraph 26 of the Division Bench judgment which reads as follows:-
“The entire transaction has been processed by the authorities in the context of Rule 78(3) of the Rules. Though during the course of arguments a reading of the rules was said to throw doubts about the applicability of the sale rule to the situation in question, we find that such doubts were sought to be raised only on the basis of an inappropriate bracket used at a particular place in the rule. On a careful reading of the entire rule 78 and the role of sub-rule (30 of rule 78 of the rules is meant to take care of sale of properties in situations like the one under our consideration. The bracket, particularly the ending bracket in the sub-rule appears to be a clear mistake and, in our view, that does not in any manner affect the applicability of the same to the case on hand. AS noticed earlier, all the authorities have proceeded on such basis only and that, therefore, there could no real or genuine controversy over its applicability to the case on hand. Submissions have also been made about the stage at which the prior sanction of the General Body and the Registrar requires to be obtained. The provision of Rule 78(3) of the Rules provides for prior sanction of the General Body and the Registrar. Whatever may be the justification or otherwise to contend that even to sell or not, a decision has to be taken in the manner contemplated therein, there can be serious controversy or dispute over the position that the prior sanction contemplated of the General Body and the Registrar should be at any time before accepting the bid when the bargain becomes struck and finalized fructifying into a completed sale though it may have to be effected by executing a registered sale deed. Merely because the registration of a sale deed is inevitable and necessary, the approval contemplated by the General Body cannot be relegated to the stage subsequent to acceptance and immediately prior to the execution of the sale deed. In our view, having regard to the object, purpose and aim of the safeguard envisaged under sub-rule (3) of Rule 78 of the Rules, it has to be necessarily construed to make the rule effective and purposeful as also meaningful and held that the prior sanction of the General Body and the Registrar must be obtained before finally accepting the bid or offer of intending or prospective purchaser and not later to the said stage. In this case, there was no observance of the rule in that manner and this also vitiates the impugned proceedings.”
For the said reasons, it must be held that in terms of Rule 78(3) of the Rules, the sanction of the general body and the Registrar is required in respect of the sale of the property of the bank. Accordingly, point No. 4 is answered.
14. Point No. 5: Coming to the next point as to whether the bid of the second petitioner Tmt. Sasikala Ramasamy and 17 others was accepted under Rule 78(3) of the Rules. It must be noted that after the directions of this Court, the Committee constituted for conduct of sale invited tenders and also conducted public auction on 20.1.96. In the public auction, one Thiru. M. Janakiraman offered a sum of Rs. 3,75,00,000/- which was the highest, as the two tenders received from Tmt. Sasikala Ramasamy and 17 others and Thiru. V. Gunasekaran were far less than the said amount. In view of the fact that even the said Janakiraman withdrew his bid, the matter was placed before the Committee which in its meeting held on 2.2.96 accepted the withdrawal and also resolved to invite the other two bidders for negotiations on 5.2.96, as the Committee felt that the fresh bid might not fetch that much bid amount. Since K. Gunasekaran and 5 others were not willing for higher offer and Tmt. Sasikala Ramasamy and 17 others were willing to purchase the property for Rs. 3,75,00,000/-, the Committee accepted the same in its meeting held on 5.2.96 and also resolved to recommend the said offer to the general body of all the three District Central Cooperative Banks Limited as well to the Registrar. The general body of Ramanathapuram District Central Cooperative Bank Limited, Pasumpon Muthuramalinga Thevar District Central Cooperative Bank Limited and Kamarajar District Central Cooperative Bank Limited in their meetings held on 15.2.96, 14.2.96 and 16.2.96 respectively resolved to sell the property to Tmt. Sasikala Ramasamy and 17 others for Rs. 3,75,00,000/-. Upto this stage, there is no dispute as to the compliance of the directions of this Court.
15. Coming to the question of approval by the Registrar which is also one of the requirements as directed by a Division Bench of this Court in terms of Rule 78(3) of the Rules, after the resolution of the general body of the three cooperative banks, the convenor of the Committee (Managing Director, Pasumpon Muthuramalinga Thevar District Central Cooperative Bank Limited) in his letter dated 17.2.96 requested the Registrar to accord approval for disposal of the vacant site and building. As the approval of the Registrar was not communicated, the second petitioner caused a lawyer’s notice dated 22.4.96 to be issued to both the Commissioner and Secretary to Government, Cooperation, Food and Consumer Protection Department and the Registrar of Cooperative Societies. By that notice the second petitioner called upon the second respondent to comply with the directions of the Division Bench of this Court to sell the property, failing which contempt proceedings will be initiated. In response to this notice, the second respondent in his letter dated 3.5.96 informed the Advocate of the second petitioner that the matter has since been placed before the Government and the Registrar has already passed orders, question of contempt does not arise on his part. Mr. A.L. Somayaji, learned Senior Counsel submitted that this letter of the second respondent must be treated as the approval of the second respondent accorded under Rule 78(3) of the Rules. When once the approval is granted as directed by this Court and that too in terms of Rule 78(3) of the Rules, the petitioners are entitled to the execution of the sale deed pursuant to their offer. Per contra, it is the contention of Mr. R. Muthukumaraswamy, learned Additional Advocate General that at no point of time the second respondent had approved the recommendations of the Committee that was constituted to sell the property as well as the resolution of the general body. He specifically drew my attention to paragraph 6 of the counter affidavit filed by the first respondent wherein it is stated that “the Registrar of Cooperative Societies examined the proposal under the provisions of Rule 78(3) of the Tamil Nadu Cooperative Societies Rules, 1988 and recommended the sale of the property at Rs. 3.75 crores to Tmt. Sasikala Ramasamy and 17 others and requested orders of Government for confirmation, since the Government have to approve all the contracts and tender the value of which is above Rs. 1 crore (G.O.Ms. No. 325 dated 15.4.93).” He would also rely upon paragraphs 10 and 11 of the counter wherein it is stated that “no orders have been passed by the second respondent in terms of Rule 78(3), nor it has been communicated to the petitioners. It is submitted that it is incorrect to suggest that the bid of M/s Sasikala Ramasamy and 17 others has to be accepted and such a contention is misconceived. It is submitted that there has been no confirmation or final word of approval or any letter agreeing or confirming the bid amount and as such there is no concluded contract between Sasikala Ramasamy and 17 others and the third respondent at any point of time. The entire matter is at the stage of proposal and no contract has been concluded for the sale and purchase of the Ramanathapuram District Central Cooperative Bank building at Madurai as sought to be suggested by the petitioner.” His contention is that there was no concluded contract and till such time the acceptance of the offer is communicated to the petitioners and the confirmation is ordered, no right is accrued on the petitioners. In the circumstances, the respondents could not be compelled to sell the property.
16. Law is well settled that this Court in the matter of contract would not dwell on the disputed question of facts and direct the sale of the property. Acceptance of an offer is a question of fact. Whether the reply of the second respondent to the lawyer’s notice would constitute an acceptance of the offer is also a question to be decided on facts. This Court in exercise of power under Article 226 will not dwell on disputed questions of fact, thereby direct the acceptance of offer or for that matter to confirm the sale. In a matter of contract, unless the offer is accepted and the sale is confirmed and the decision as to the confirmation is communicated to the offerer, the contract is not concluded. Keeping the above in mind, it must be now seen as to whether the offer of the petitioners was accepted and the confirmation was made so as to contend that the contract is concluded, whereby the petitioners are entitled to the execution of sale deed. As against the specific stand of the respondents that the offer was not accepted by the Registrar in terms of Rule 78(3) as the Government is yet to confirm the sale, it is the specific stand of the petitioners that by letter dated 3.5.96, the Registrar of Cooperative Societies has communicated the petitioners of the approval. As already held, question of confirmation of sale by the Government does not arise as the Government in exercise of the powers under G.O.Ms. No. 325, Cooperation, Food and Consumer Protection Department dated 15.4.93 has already accorded prior approval for sale of the property and hence question of further confirmation is not contemplated under the said Government Order, more particularly, in view of the specific directions of the Division Bench. Mr. R. Muthukumaraswamy, learned Additional Advocate General would rely upon the power of the Government even to confirm the sale under Sections 153 and 182 of the Act. Section 153 relates to the revisionary power of the Government over the orders of the Registrar. By that provision, the Government may of their own motion or on application, call for and examine the record of the Registrar, in respect of any proceedings under this Act or the rules or the bye-laws as to the regularity of such proceedings, or the correctness, legality or propriety of any decision passed or order made therein. Section 182 relates to the general power of Government to give directions in the public interest. I am not inclined to go into the power vested in the Government under Sections 153 and 182 as relied upon by the learned Additional Advocate General for the simple reason that the sale of the property in question is governed by the directions of this Court in the writ appeals. As already observed, as per the directions of this Court there is no role of the Government in confirmation of the sale as neither the application of G.O.Ms. No. 325 dated 15.4.93 nor the power of the Government under Sections 153 and 182 were pleaded before the Division Bench contending that even after the approval of the general body and the Registrar under Rule 78(3) of the Rules, the matter should be placed before the Government for confirmation.
17. Keeping the above in mind, it must be now considered as to whether the Registrar has accorded approval under Rule 78(3) of the Rules. The reply of the second respondent which has been much relied upon by the petitioners reads as under:-
Rc. No. 42335/93/CII dated 3.5.96
To
Thiru G. Baskaran, B.Sc., B.L.,
Advocate
Goronel Manor
No. 9, Dr. Rangachari Rioad
Mylapore,
Madras 600 004
Sir,
Sub: Disposal of vacant site and building of the Composite Ramanathapuram District Central Cooperative Bank situated at Madurai.
Ref: Your notice dated 22.4.96.
—–
With reference to the above notice, I would like to say that I am the Registrar of Cooperative Societies. In accordance with the direction of the Hon’ble High Court in Writ Appeals No. 939 of 1995 batch that immediately after conclusion of the auction, the authority shall cause the same to be placed before the General Body of the three District Central Cooperative Banks, through their Special Officers etc., concerned, and within 4 weeks thereupon, place the same, with the approval, if any, accorded to the Registrar who shall pass orders either way within 4 weeks from the date of receipt of the relevant papers.
The relevant papers were received by the Registrar of Cooperative Societies on 19.2.96 and in obedience to the direction of the Hon’ble High Court, the Registrar of Cooperative Societies has passed his final orders on 26.2.96. However, this matter does not relate to the permission under rule 78(3) of the Tamil Nadu Cooperative Societies Rules, 1988, but relates mainly to the confirmation of the sale. As per the Government’s Order G.O.Ms. No. 325, Cooperation, Food and Consumer Protection Department dated 15.4.93, all tenders and purchases the value of which exceeds Rs. 1 crore should be sent to the Government for approval. Since the sale is attracted by the G.O.Ms. No. 325 dated 15.4.93, the confirmation of the sale has to be given only by the Government. Besides the Hon’ble High Court in the above Writ Appeal, hence directed the respondents 1 to 3 to proceed in the matter afresh in the manner directed by the Hon’ble High Court and since the Government is the respondent No. 1, it is necessary on the part of the Registrar of Cooperative Societies to remit the matter to the Government for their orders.
I would also like to say that Rule 78(3) relates to the permission for the disposal of any immovable property by the Society. In this case, the Government have already given permission to the Societies in May’94 to dispose of the above property in Public Auction and pursuance to this, the Registrar of Cooperative Societies in his proceedings Rc. No. 216947/93/CBPI dated 17.5.94 had already issued a permission under Rule 78(3) permitting the Bank to dispose of the vacant site and building. The process of sale has been conducted in accordance with the direction of the Hon’ble High Court.
The issue to be decided in this case is only the confirmation of the sale. As mentioned above, as per the G.O., the Government is the competent Authority to confirm any tender above Rs. 1 crore. Hence the matter has been referred to the Government as it is outside the competence of the Registrar of Cooperative Societies.
The Hon’ble High Court had directed the Registrar to pass orders within 4 weeks. The Registrar has already passed orders as directed by the High Court within 4 weeks and there is no further action due from the Registrar. The Registrar of Cooperative Societies have complied with the orders of the Hon’ble Court in all respects.
The only issue remaining is the confirmation of the sale by the Government which is the competent authority.
I hope the above reply would clarify the matter.
Yours faithfully,
Sd/-
(JOR SINGH SYIEM)
In paragraph 2 of the said letter, the Registrar has in fact informed the counsel for the second petitioner that “in obedience to the directions of this Court the Registrar has passed final orders on 26.2.96”. The circumstances of this letter is more relevant to find out as to whether the sale was approved by the Registrar. This reply was sent to a notice issued by the second petitioner, purportedly a notice to initiate contempt proceedings for disobedience of the orders of the Division Bench. In that context only the second respondent has replied that he has passed final orders on 26.2.96. The final order which has been made by the second respondent is only in forwarding the matter to the Government for its confirmation. It is one thing to say that it is not necessary for the Registrar to forward the matter to the Government for confirmation, but another thing to say whether, by that communication the Registrar has approved the sale in terms of Rule 78(3). Law requires that in the matter of contract there must be a specific approval and such approval must be communicated to the highest offerer by way of confirmation. From a reading of the said letter, it is very clear that though the offer was placed before the Registrar, he has passed orders only to place the matter before the Government for confirmation. Hence, it must be held that there was no confirmation of the offer made by the petitioners. Except this letter, my attention was not drawn by the learned Senior Counsel for the petitioners as to any other communication either from the third respondent, the Joint Registrar or from the second respondent, the Registrar in accepting the offer and communicating the same by way of confirmation. This view is fortified by the fact that the petitioners themselves have approached this Court for a consequential relief in the form of a direction to the respondents to communicate the acceptance of the offer. Even assuming that the Registrar has passed final orders on 26.2.96 as to the acceptance, the said decision was not communicated to the petitioners and hence no right is said to have been accrued on the petitioners. In the absence of communication, no order can be considered as a valid order in the eye of law as they reflect only the decision of the authority in the records. Such decision could be varied by the same authority for best reasons till such time it is communicated. In this context, the following judgments of the Apex Court throws much light on settled law. In “STATE OF PUNJAB v. SODHI SUKHDEV SINGH “, the Apex Court held as follows:-
“Mr. Gopal Singh attempted to argue that before the final order was passed the Council of Ministers had decided to accept the respondent’s representation and to reinstate him, and that, according to him, the respondent seeks to prove by calling the two original orders. We are unable to understand this argument. Even if the Council of Ministers had provisionally decided to reinstate the respondent that would not prevent the Council from reconsidering the matter and coming to a contrary conclusion later on, until a final decision is reached by them and is communicated to the Rajpramukh in the form of advice and acted upon by him by issuing an order in that behalf to the respondent.”
Following the above view, the Apex Court in “BACHHITTAR SINGH v. STATE OF PUNJAB AND ANOTHER ” has observed as follows:-
“The business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. The Constitution, therefore, requires and so did the Rules of Business framed by the Rajpramukh of Pepsu provide, that the action must be taken by the authority concerned in the name of the Rajpramukh. It is not till this formality is observed that the action can be regarded as that of the State or here, by the Rajpramukh. We may further observe that, constitutionally speaking, the Minister is no more than an adviser and that the head of the State, the Governor or Rajpramukh, is to act with the aid and advice of his Council of Ministers. Therefore, until such advice is accepted by the Governor whatever the Minister or the Council of Ministers may say in regard to a particular matter does not become the action of the State until the advice of the Council of Ministers is accepted or deemed to be accepted by the Head of the State. Indeed, it is possible that after expressing one opinion about a particular matter at a particular stage a Minister or the Council of Ministers may express quite a different opinion, one which may be completely opposed to the earlier opinion. Which of them can be regarded as the ‘order’ of the State Government? Therefore, to make the opinion amount to a decision of the Government it must be communicated to the person concerned.”
In yet another judgment in “THE ASSISTANT TRANSPORT COMMISSIONER, LUCKNOW AND OTHERS v. NAND SINGH ” the Apex Court has held as follows:-
“In our opinion, the judgment of the High Court is right and cannot be interfered with by this Court. Apart from the reasons given by this Court in the earlier judgment to the effect that the order must be made known either directly or constructively to the party affected by the order in order to enable him to prefer an appeal if he so likes, we may give one more reason in our judgment and that is this: It is plain that mere writing an order in the file kept in the office of the Taxation Officer is no order in the eye of law in the sense of affecting the rights of the parties for whom the order is meant. The order must be communicated either directly or constructively in the sense of making it known, which may make it possible for the authority to say that the party affected must be deemed to have known the order. In a given case, the date of putting the order in communication under certain circumstances may be taken to be the date of the communication of the order or the date of the order but ordinarily and generally speaking, the order would be effective against the person affected by it only when it comes to his knowledge either directly or constructively, otherwise not.”
The same view was also reiterated in a subsequent judgment in “TAGIN LITIN v. STATE OF ARUNACHAL PRADESH AND OTHERS ” wherein the Apex Court held thus:-
“It is settled law that, in order to be effective, an order passed by the State or its functionaries must be communicated to the person who would be affected by that order and until the order is so communicated the said order is only provisional in character and it would be open to the concerned authority to reconsider the matter and alter or rescind the order.”
Similarly, the Apex Court in “STATE OF WEST BENGAL v. M.R.MONDAL AND ANOTHER “, has observed as follows:-
“An order passed but retained in file without being communicated to the plaintiff can have no force or authority whatsoever and the same has no valid existence in the eye of the law or claim to have come into operation and effect. No reliance can be placed on the same to even assert a claim based on its contents.”
In the absence of such confirmation and non-communication of the acceptance of the offer, though the sale was conducted in terms of the directions of the Division Bench and no confirmation is actually required from the State Government, it must be concluded that no right is conferred on the petitioners to seek for a direction to the respondents 2 and 3 to execute the sale deed. Accordingly, point No. 5 is answered.
18. Point Nos.6 and 7: The power of judicial review in the contractual matters cannot be denied more particularly, to prevent the arbitrariness or favouritism. Though it is settled law that the right to refuse the tender is always available to the Government, nevertheless, the principles laid down under Article 14 of the Constitution of India have to be kept in mind while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government or cooperative bank for that matter tries to get the best person or best quotation. The right to choose cannot be considered to be an arbitrary power. The judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide the matters whether contractual or issues of social policy.
19. While a similar question came up for consideration before the Apex Court in Food Corporation of India case (supra), the Apex Court has held as follows:-
“From the above, it is clear that even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet the power to reject all the tenders cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action. The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete. Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund. Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price. The inadequacy may be for several reasons known in the commercial field. Inadequacy of the price quoted in the highest tender would be a question of fact in each case. Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest. A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement. This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise of power for public good.”
From the above it is seen that if the action of the State or the Central Cooperative Bank is arbitrary, the power of judicial review is no longer alien to judge the same. The facts of the case as elaborately discussed would show that the second petitioner had participated in the tender-cum-public auction and was the highest bidder whose offer was approved by the Committee and further by the general body of the three cooperative banks. Thereafter, the matter was placed before the Registrar for his approval in terms of Rule 78(3) of the Rules. Instead of considering the approval as contemplated under the rule, the Registrar merely forwarded the matter to the Government for confirmation. Such action was nothing but arbitrary and amounted to failure to exercise statutory duty thrust upon him under the Rules. By the impugned order, the third respondent has also merely communicated the decision of the Government not to dispose of the property. In that view of the matter, I find that no decision was taken by the second respondent-Registrar on the recommendation of the Committee and the general body of the cooperative bank in either accepting or rejecting the tender.
20. The further argument of the learned Additional Advocate General is that the petitioners cannot compel the Government to dispose of the property. As per the law laid down by the Apex Court in Tata Cellular case (supra) and Food Corporation of India case (supra), the highest bidder can have no right to compel the State or for that matter the third respondent bank to dispose of the property. However, when the action of the respondents is found to be arbitrary, the petitioners are entitled to question such action. Accordingly, point nos.6 and 7 are answered.
21. In view of the foregoing discussions, I hold that the impugned order of the third respondent dated 5.6.96 based on the decision of the Government not to sell the building and vacant land in question is arbitrary, illegal, unsustainable and consequently is liable to be set aside. Accordingly, the same is set aside. However, the consequential relief of direction to the respondents to communicate the acceptance of the tender cannot be ordered as it is the right vested in the second respondent either to grant sanction or to refuse the same. Hence, the second respondent is directed to consider the recommendations of the Committee and the approval of the general body of the bank for sale of the building and vacant land in question in the light of the observations made in this order, more particularly, with reference to Rule 78(3) of the Rules, pass appropriate orders and communicate the same to the second petitioner on or before 21.11.2003.
22. The writ petition is disposed of with the above directions. No costs. Consequently, W.M.P. No. 26367 of 2000 is closed.