Andhra Pradesh High Court - Amravati
K B Sarla vs The State Of Andhra Pradesh on 19 January, 2021
HON'BLE SRI JUSTICE D.V.S.S.SOMAYAJULU
W.P.No.18698 of 2020
ORDER :
This writ petition is filed questioning the legality and validity of the public auction to shop Nos.1,2, 7 and 9 dated 07.10.2020 on the ground that it is contrary to the provisions of the A.P. Municipalities (Regulation of Receipts and Expenditure) Rules, 1968 as also opposed to G.O.Ms.No.56 dated 05.02.2011.
This Court has heard Sri Sudhakar Rao Ambati, learned counsel for the petitioners and Sri N.Ranga Reddy, learned standing counsel for the second respondent, who is the main answering respondent.
The petitioners before this Court are the tenderers in a public auction conducted by the second respondent for shops 1,2, 7 and
9. They are questioning the legality of the second auction notice as well as the letter by which the earlier auction proceedings have been cancelled.
Learned counsel for the petitioners relying upon the provisions of G.O.Ms.No.56 and the amendment thereto on 05.02.2011 and argues that the action of the second respondent is not supported by the said G.O. According to him, the action of the State should be traced to a power conferred by the statute or by the rules. He points out that the G.O. in question does not give the power to the second respondent to cancel an auction that has been conducted successfully. He argues that once the auction has been conducted successfully, the second respondent is bound to comply 2 with all the terms and conditions and cannot cancel the auction. He points out that the first auction was held on 15.07.2020 for lease of the shops for a period of 25 years. The petitioners were the successful tenderers. Learned counsel relies upon the endorsement issued by the second respondent stating that the petitioners are the successful bidders.
He draws the attention of the Court to the payments made. Thereafter, by undated of September 2020, the said auction was cancelled and they were informed that re-auction was being conducted. The notice for the re-auction was issued fixing the date of the auction as 13.10.2020. The essential contention of the learned counsel for the petitioners is that G.O. does not give a power to re-auction and the second respondent does not have the power or authority to cancel the duly held auction.
In reply to this, learned standing counsel argued that the auction that was held on 15.07.2020 was not finalized and according to him, the auction can only be confirmed after placing the letter before the Committee. He also points out that the price that was the quoted in the first auction did not reach the price range assumed by the respondents. Therefore, it was decided to re- auction of the shops. Learned standing counsel relies upon the note which is below the tender notification which gives a right to the Commissioner of the second respondent to either postpone the auction or to cancel the same. Learned standing counsel submits that this right is an absolute right giving the Commissioner of the second respondent the right to cancel any tender or to postpone the same. He points out that the same is reiterated in the second 3 notice also. He submits that the contention of the second respondent that the correct auction price has not been realised is confirmed by the re-auction, wherein the petitioners themselves have paid much higher than the original bid on 15.07.2020. He points out that by relying upon the tabular column mentioned in para 5 of his counter affidavit that the sum total of three bids of all the four petitioners was Rs.27,200/- in the first bid. The same rose to Rs.36,100/- in the second bid. He points out that all the four petitioners participated in the second auction and three out of four quoted higher prices. Therefore, on fact, he argues that the respondent Corporation has cancelled the earlier tender on 15.07.2020 for valid reasons which are borne out by record. He also submits that by participating in the second auction, the petitioners are debarred/stopped from claiming any rights in the present writ petition. He points out that the writ petition was affirmed on 05.10.2020 and thereafter the petitioners participated in the auction on 13.10.2020. Therefore, it is his contention that the petitioners are estopped from claiming a relief and that the reasons mentioned by the respondent are borne out by record.
This Court after hearing both the learned counsel notices that there is a clause in the tender notification, which clearly says that the commissioner has every right to cancel the auction or to postpone the same without assigning any reasons. Similar clauses were interpreted by the highest Courts of land. It was held in Food Corporation of India vs. Kamdhenu Cattle Feed Industries that even if the clause says that the tender can be cancelled without assigning any reasons, there should be clear and cogent 4 reasons for canceling the tender. The following passage from the case is very apt and is being reproduced hereunder:
"10. 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 prince 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."
If the action of the 2 nd respondent is examined against the backdrop of this settled case law, it is apparent that in the re- auction, these very same shops were procured a better and higher price. When an instrumentality of the State auctions its shops, it expects to get the best price possible. When it seeks to procure 5 material or acquire anything, it aims to get the same for the lowest price. The very purpose of public auction is to ensure that the State maximizes its revenue. Therefore, when the property is being sold or leased, the action of the second respondent is to secure the best possible price. As can be seen from the counter affidavit, in the first bid the first petitioner quoted Rs.9,000/- and in the second bid, she quoted Rs.11,600/-. The second petitioner quoted Rs.9,200/- and Rs.12,500/- while the fourth petitioner quoted Rs.9,000/- and Rs.12,000/- respectively. There is a clear rise in the quotations. Therefore, this Court holds that there are valid reasons which are visible from the record for the re-auction being conducted. This is precisely the reason which is mentioned in the notices issued to the petitioner. The re-auction was to avoid the revenue loss. As far as the first tender is concerned, it is clearly mentioned that the agreement will only be given after the approval of the resolution by the special officer. Therefore, in the case on hand, it appears that the same was rejected for valid and cogent reasons.
This Court also has to hold that the conduct of the petitioners by participating in the second auction disentitles them from questioning the same.
Lastly, it is also held that G.O.Ms.No.56 relied upon by the learned counsel for the petitioners merely provides the procedure for conducting of an auction etc., and it need not expressly provide a power to cancel a tender notice. The law of the land itself empowers the tender department-the 2 respondent to cancel nd a tender for valid reasons.
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In the case on hand, the revenue loss which could have occurred after the first tender is clearly established.
Therefore, for all these reasons, this Court holds that the petitioners are not made out a case for interference. Even in the interlocutory order passed in this case on 22.10.2020, this Court has reiterated that the bid of the petitioners has not been accepted and that it did not fructify into a concluded contract, the reasons assigned for the re-tender and the right of the respondent to seek the higher price was also mentioned in the interim order. Nothing to the contrary was submitted or established.
For all the above reasons, this Court holds that the petitioner has not made out a case for interference. Hence, the writ petition is dismissed. No order as to costs.
As a sequel, the miscellaneous petitions if any shall stand dismissed.
________________________ D.V.S.S.SOMAYAJULU,J Date : 19.01.2021 KLP