Andhra HC (Pre-Telangana)
W.P.No.10586 Of 2012 vs The A.P.State Road Transport ... on 7 September, 2012
Author: C.V. Nagarjuna Reddy
Bench: C.V. Nagarjuna Reddy
HON'BLE SRI JUSTICE C.V. NAGARJUNA REDDY
W.P.Nos.10586 of 2012 and Batch
7-09-2012
W.P.No.10586 of 2012
N.S. Sriramrao
The A.P.State Road Transport Corporation, Represented by its Managing Director,
Musheerabad, Hyderabad and others
W.P.No.11297 of 2012
N. Naveen Kumar and another .. Petitioners
Regional Manager,A.P. State Road Transport Corporation, Ranga Reddy Region,
MGBS, Hyderabad and others.. Respondents
W.P.No.10586/2012 :
Counsel for petitioner : Sri C.B. Rammohan Reddy
Counsel for respondent Nos.1 to 3 : Sri C. Sunil Kumar Reddy
Counsel for respondent No.4 : Sri C.V. Mohan Reddy, Senior Counsel for Sri C.
Sumon
W.P.No.11297/2012:
Counsel for petitioners : Sri C. Ramachandra Raju
Counsel for respondent Nos.1 & 2 : Sri C. Sunil Kumar Reddy
Counsel for respondent No.3 : Sri C.V. Mohan Reddy, Senior Counselfor Sri C.
Sumon
?CASES REFERRED:
1.2000) 2 SCC 617
2.1975) 1 SCC 421
3.(359 U.S. 535: Law Ed. (Second Series) 1012
4.(1979) 3 SCC 489
5.(1994) 6 SCC 651
COMMON JUDGMENT:
As the issues raised in both these Writ Petitions are inter-related, they are heard and being disposed of together.
The Andhra Pradesh State Road Transport Corporation (for short "the Corporation") issued a notification which was published in the newspapers on different dates. This notification has invited sealed tenders for running stalls/shops/canteens/vacant spaces/scooter/cycle stands etc. It is mentioned in the tender notice that the persons who are interested to run business in the notified fields may pay fees and obtain tender forms from any of the units in Ranga Reddy Region from 29-2-2012 to 14-3-2012. The last date for filing of the tenders in the tender box placed on the second floor of the Mahatma Gandhi Bus Station (MGBS), Gowliguda, Hyderabad, was fixed as 15-3-2012 by 2.00 P.M. and the tenders were scheduled to be opened at 3.00 P.M. on the same day.
The petitioner and respondent No.4 in W.P.No.10586/2012 and others filed their tenders for running Fast Food Center at stall No.63 of MGBS. Petitioner No.1 and respondent No.3 in W.P.No.11297/2012 and another person filed their tenders for running Departmental Stores at the Jubilee Bus Station (JBS), Secunderabad. Petitioner No.2, respondent No.4 in W.P.No.11297/2012 and two others filed their tenders for running Scooter Parking at the JBS.
The tenders in both the cases were opened on 15-3-2012 at 3.00 P.M. With respect to stall No.63 at the MGBS (Fast Food Center in dispute in W.P.No.10586/2012), respondent No.4 emerged as the highest bidder having offered Rs.1,26,999/- per month and the petitioner who is an existing licensee offered a sum of Rs.56,115/- per month. Three persons by names S. Purnachander, Kishorelal Yadav and S. Raju, have offered Rs.1,18,786.39, Rs.1,06,000/- and Rs.80,500/- per month, respectively, which fall below the amount offered by respondent No.4 and above the bid amount offered by the petitioner. With regard to the Departmental Stores at the JBS, respondent No.3 in W.P.No.11297/2012 offered Rs.4,23,999/- and petitioner No.1 offered Rs.2,78,199/-. One T. Puneeth offered Rs.4,04,200/-, which is less than the bid amount offered by respondent No.3 and more than that offered by petitioner No.1. In respect of the Scooter Parking at the JBS, respondent No.4 offered Rs.3,55,000/- and petitioner No.2 offered Rs.2,11,000/-. One A. Varada Reddy offered Rs.3,11,999/- which is above the offer of petitioner No.2 and below the offer of respondent No.3. Another person by name V. Nagaraj offered Rs.1,50,000/-.
It is the pleaded case of the petitioners, and there is no dispute with respect thereto, that the tender form contains a specific condition that the same is not transferable; that the person who purchased the tender form shall only participate in the tender and that if the names of the purchaser of the tender form and the participant differ, the tender will be treated as invalid and rejected apart from forfeiting the Earnest Money Deposit (EMD). It is also not in dispute that the tenders filed by respondent No.4 in W.P.No.10586/2012 and respondent Nos.3 and 4 in W.P.No.11297/2012 were not purchased in their names. However, it is the pleaded case of respondent No.4 in W.P.No.10586/2012 that a person by name S. Ranga Rao, who is an employee of her husband, was sent to the MGBS for purchasing the tender form and that while selling the tender form instead of showing her name, the name of the said S. Ranga Rao was shown in the Register by the employee of the Corporation as the purchaser of the tender form. In W.P.No.11297/2012, respondent No.3 has stated that she has obtained the tender form through one M. Prabhakar, an employee of her cousin who is running a stall in the MGBS and that instead of selling the tender form in her name, the same was issued in the name of the said person. Even though, notice was served by the petitioners with the permission of the Court on the wife of respondent No.4, the latter has not entered appearance and contested the case.
The petitioners in both these Writ Petitions submitted that on coming to know that the contesting respondents in both these cases have not purchased the tender forms in their names, they made representations to respondent No.1 i.e., the Regional Manager, Ranga Reddy Region, MGBS, Hyderabad, pointing out that in the face of the unequivocal tender condition that the tenders purchased in the names of third parties are invalid and liable to be rejected, the tenders of the contesting respondents are liable to be rejected. They have also offered to negotiate further with regard to the prices offered by them for upward revision. However, the Corporation in its counter-affidavits pleaded that even before receipt of the representations from the petitioners, the tenders were finalized in favour of the contesting respondents and that the Tender Committee has subsequently considered the representations of the petitioners and rejected the same by resolving that in future the tender condition referred to above should be strictly adhered to. It is also pleaded in the counter-affidavits that the highest offers of the contesting respondents were accepted, allotment orders were issued and the deeds of licence were executed in their favour. In both these Writ Petitions, the petitioners have assailed the action of the Corporation in accepting the tenders of the contesting respondents and awarding the contracts in their favour.
I have heard Sri C.B. Rammohan Reddy, learned counsel for the petitioner in W.P.No.10586/2012, Sri C. Ramachandra Raju, learned counsel for the petitioners in W.P.No.11297/2012, Sri C. Sunil Kumar Reddy, learned Standing Counsel for the Corporation in both the cases and Sri C.V. Mohan Reddy, learned Senior Counsel for respondent No.4 in W.P.No.10586/2012 and respondent No.3 in W.P.No.11297/2012.
The main submission of the learned counsel for the petitioners in both the Writ Petitions is that as the tender condition prohibits in unequivocal terms the transfer of the tender forms and mandates that in case of variation between the names of the purchaser of the tender forms and the tenderer, such tender shall be invalid, the Corporation had no option other than invalidating the tenders of respondent No.4 in W.P.No.10586/2012 and respondent Nos.3 and 4 in W.P.No.11297/2012. Their further submission is that as the other tenderers who offered higher rates than that offered by the petitioners have taken back their EMDs., and as they were not interested in pursuing their tenders, the Corporation is bound to negotiate with the petitioners. In support of this submission, the learned counsel placed reliance on Circular No.14/2012-OPD(C), dated 3-4-2012 (for short "Circular No.14") issued by the Vice Chairman & Managing Director of the Corporation.
Opposing the above submissions, Sri C. Sunil Kumar Reddy, the learned Standing Counsel for the Corporation and Sri C.V. Mohan Reddy, learned Senior Counsel, appearing for respondent Nos.4 and 3, respectively in these Writ Petitions, submitted that even though the tender condition prohibits transfer of the tender forms, the Corporation has not been following this condition for the last 20 years and that as the petitioners have not imputed motives to the Corporation for deviating from the said tender condition, its action is not liable for interference. The learned Senior Counsel further submitted that in both the cases in respect of all the three tenders, even if the tenders of the contesting respondents are rejected, there was no possibility of the acceptance of the petitioners' offers as there are three higher offers in respect of the Fast Food Center at the MGBS, one offer each with regard to the Departmental Store and Scooter Stand at the JBS than the petitioners' offers. The learned Senior Counsel placed reliance on the Judgment of the Supreme Court in AIR India Limited Vs. Cochin International Airport Limited1 in support of his submission that unless the action of the Corporation is found to be mala fide, unreasonable or arbitrary, the Court would not interfere with its action even if it has deviated from the tender condition, in public interest.
I have carefully considered the respective submissions of the learned counsel for the parties and perused the record.
The tender condition prohibiting transfer of tender forms is as under:
"Tender form is not transferable (i.e., the person who purchases the tender form shall only participate in the tenders). If the tender form is transferred i.e., the names of the purchaser of the tender forms and the participant differ, the tender has to be treated as invalid and rejected apart from the EMD forfeited."
In the year 2009, the Corporation has issued Circular No.40/2009 dated 18-12- 2009 whereunder it has inter alia dealt with a situation where the tenders are signed by persons other than those who purchased the tender forms. Under this Circular, the Corporation has issued the following directions:
As regards to (sic) transferability of the tenders, no specific guidelines have been issued so far. However, to have clarity on the matter, VC & MD ordered for strict implementation of the following instructions:
1. To incorporate a specific clause in the ensuing tender schedules that the tender form is not transferable i.e., the person who purchases the tender form shall only participate in the tenders.
2. If the tender form is transferred, i.e., the names of the purchaser of the tender form and the participant differ, the tender has to be treated as invalid and rejected apart from E.M.D. forfeited.
It is obviously in the light of this Circular that the above reproduced tender condition was incorporated in the tenders in question. While the purpose of prohibition of transfer of tender forms is not explained by the Corporation, the same is not germane for discussion in these cases for, the Corporation has consciously incorporated this clause in the tender conditions. The said clause is couched in such an unequivocal terms that it leaves no room for ambiguity. The only reason which is putforth by the Corporation for not adhering to the tender condition in its counter-affidavits is that as the tender forms were sold in different Units, proper track of the sales with reference to the names of the persons who purchased the tenders and those who filed the tenders, was not kept, as a result of which the tenders of the persons other than those in whose names they were sold, were not rejected.
In my opinion, this hardly constitutes any justification for not following the specific tender condition. In Sukhdev Vs. Bhagatram2, Mathew., J, narrated with approval, the opinion of Frankfurter.,J in Viteralli v. Saton3, in the following passage:
"An executive agency must be rigorously held to the standards by which it professes its action to be judged .... Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed ... This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword."
The same passage was again quoted with approval by Bhagwati.,J (as his Lordship then was) in Ramana Dayaram Shetty Vs. International Airport Authority4 wherein His Lordship observed :
"...It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain if invalidation of an act in violation of them..."
In Tata Cellular v. Union of India5 and various subsequent Judgments, reference to which is not being made to avoid multiplication of Judgments, reiterated this opinion.
Post Ramana Dayaram Shetty (4-supra), the Constitutional Courts recognized "some play in joints" on the part of the executive in awarding the contracts. The ultimate test to be applied by the Courts while undertaking judicial review is whether the decision making process is vitiated by malafides, arbitrariness or illegalities. Even the Judgment in AIR India Limited (1-supra), on which heavy reliance is placed by Sri C.V. Mohan Reddy, reiterated these principles in paragraph-7 by observing:
"...It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned...." (Emphasis added) It is undoubtedly true that the contesting respondents in these cases have offered far higher prices than the petitioners did. While weighing public interest by the Courts, this factor alone will not constitute the sole basis. Public interest comprises different facets. Adherence by the State and its instrumentalities to the professed norms is also a facet of public interest, for if they are allowed to deviate from the specific tender conditions, that would seriously affect transparency and give rise to arbitrariness and discrimination. Such actions, if condoned, would erode public faith in the actions of the State and its agencies and if permitted, are likely to encourage them to indulge in such deviations in future even without there being any bona fide reasons. Therefore, in my opinion, the overwhelming public interest requires that the Corporation should be made to act within its bounds by strictly adhering to the tender conditions.
The submission of the learned Senior Counsel that there is no possibility of the petitioners being awarded with the licences even if the contesting respondents' tenders are rejected as they are not the next lowest tenderers, is without any merit. The petitioners specifically pleaded that the persons who offered the higher amounts than that offered by them are no longer in the field and that therefore in the event the offers of the contesting respondents are rejected, there is a possibility of consideration of the petitioners' offers by the Corporation. In my opinion, the submission of the learned Senior Counsel falls in the realm of hypothesis. Indubitably, the petitioners, who participated in the tender process and were unsuccessful are the affected parties due to award of contracts in favour of the contesting respondents by the Corporation. Therefore, they are entitled to challenge the action of the Corporation in awarding the contracts in favour of the contesting respondents and in denying award of contract to them. When once the law is set in motion, this Court, in exercise of its power of judicial review needs to consider whether the decision making process undertaken by the Corporation is vitiated by malafides, arbitrariness or illegalities, procedural or otherwise. If the Corporation fails to satisfy this Court that its decision making process in considering the tenders is fair and proper, this Court is bound to interfere irrespective of whether the petitioners have the reasonable prospects of getting the licences or not.
The learned Senior Counsel submitted that in the realistic sense, there is no transfer of the tender forms and that in both the cases relating to the Fast Food Centre at the MGBS and the Departmental Stores at the JBS, the tenderers have deputed their agents for purchase of the tender forms and that the personnel of the Corporation who sold the tender forms have mistakenly shown the names of those agents instead of that of the tenderers. This plea is liable to be rejected for more than one reason. Except the ipsi dixit of the contesting respondents, no proof is adduced by them in support of this plea. The affidavits of those persons who purchased the tender forms on behalf of the contesting respondents have not been filed. In the reply affidavits, the petitioners have specifically denied this plea of the contesting respondents and put them to strict proof. In its counter-affidavits, the Corporation has not averred that it has examined this aspect and was satisfied that no transfer of the tender forms was involved and that the tender forms were purchased by the agents of the contesting respondents on behalf of the latter. Therefore, this plea putforth by the contesting respondents is without any basis. On a holistic consideration of the facts of the cases with reference to the tender conditions, I have no hesitation to hold that the decision making process undertaken by the Corporation is vitiated by serious procedural illegality as it has completely overlooked the mandatory tender condition prohibiting transfer of the tender forms. Even though it is submitted by the learned counsel for the respondents that interference by this Court would cause loss to the Corporation, I do not find any substance in the said contention. This aspect will be dealt with later while considering the submissions of the learned counsel for the petitioners regarding their entitlement for acceptance of their tenders.
Coming to the submissions of the learned counsel for the petitioners that as a consequence of disqualification of the tenders of the contesting respondents and the next highest bidders having left the field, the Corporation is bound to invite the petitioners for negotiations in terms of Circular No.14 dated 3-4-2012, I have given my earnest consideration to the same. A reading of this Circular would disclose that the same was issued as the following instances have come to the notice of the Corporation:
(i) The successful bidders are backing out intentionally from taking up the contract giving scope for extension of the existing contract for a further period i.e., upto finalization of next tenders; and
(ii) representations from the successful bidders of the open spaces of various Bus stations seeking more time for erection of temporary structures and commencement of business.
Keeping in view the above noted exigencies, the Corporation issued guidelines under which it has envisaged that whenever the highest bidder backs out from taking up the contract, the second highest bidder shall be called for negotiations and shall be requested to match his offer to that of the highest bidder; that if the second highest bidder expresses inability to match his offer to that of the highest bidder, the tender committee shall negotiate for reasonable enhancement over his initial offer and the contract may be allotted subject to the condition that the offer is at least 25% more than the existing licence fee being realized from that particular stall; that while accepting such offer, the tender committee shall satisfy itself that there is no scope for getting better offer than the offer of the second highest bidder; and that in case the second highest bidder also backs out, the third highest bidder shall be given an opportunity. Clause (e) of this Circular is relevant which is reproduced hereunder:
"As per the existing guidelines, the 1st highest tenderer will be treated as (having) backed out when he fails to pay the security deposit and one month advance licence fee within 15 days from the date of allotment letter. Therefore, the process of ensuring the 1st highest bidder backed (sic: backing) out from taking up the contract, issue of cancellation of allotment, forfeiture of EMD amount shall be completed within 30 days from the date of allotment letter."
On a careful consideration of the above mentioned Circular, I am of the considered view that the same applies in cases of existence of either of the two eventualities i.e., either the successful bidders intentionally backing out of their offers; or in cases of the successful bidders of the open spaces seeking more time for erection of temporary structures and commencing business. The instant cases do not fall under either of these two categories for attracting this Circular. The contesting respondents who are the successful bidders are very much interested and willing to run their respective businesses. But due to this Court's intervention on account of the improper procedure followed by the Corporation, a situation has arisen where they are being disabled from being awarded the licences. Ordinarily, the highest bidder backs out when he feels that the offer made by him is not remunerative. In such a situation, it is reasonable for the Corporation to presume that by calling for fresh tenders, it may not be able to get equal to or better offers than the highest offer. Therefore, Circular No.14 has provided for negotiations with the next highest bidders in the order of priority. But the present situation is fundamentally different from the one envisaged in Circular No.14. It would quite well be that if fresh tenders are called, there is a likelihood of the Corporation receiving better offers than the highest offers made by the contesting respondents. The petitioners have therefore no right for being invited for negotiations, on the present set of facts. On an over-all consideration of the facts and circumstances of the cases, I am of the firm opinion that public interest as well as the Corporation's interests would be better served if fresh tenders are invited by the Corporation.
Finally, one aspect which is subsidiary to the main issue, remains to be considered. The petitioners are continuing to operate their respective stalls even after expiry of their licences. After reserving the cases for Judgment, the same were reopened for hearing the learned counsel for the parties on the petitioners' entitlement to continue their businesses after expiry of their licence periods. Sri C. Ramachandra Raju, learned counsel for the petitioners in W.P.No.11297/2012, placed before this Court, Circular No.03/2008-OPD (C), dated 5-2-2008 wherein certain instructions were issued. The following are the relevant clauses for the present purpose:
1. The Regional Managers shall accord approval to the existing licensees of Canteens, Stalls, Space/Office accommodation, Cycle/Scooter stands etc., to continue the business (after expiry of the licence period of six years or four years as the case may be), if they are willing, till such time the tenders are finalized and fresh allotment is made on the same terms and conditions of the original allotment/agreement.
2. The Regional Managers shall direct the Dy. CTM concerned to enter into a supplementary agreement with the existing licensees whose licence period is extended temporarily, on a non-Judicial stamp paper of Rs.100/- purchased at the cost of the licensee, incorporating the following conditions to avoid legal complications that may arise in ----
(a) ---
(b) The licensee shall vacate the premises as and when demanded by the licensor (Corporation).
(c) The Corporation is at liberty to demand for immediate possession of the premises and the licensee is not entitled for any notice.
(d) The other terms and conditions of the original agreement shall remain in force including security deposit till such time the temporary extension of licence period comes to an end.
In W.P.No.11297/2012, respondent No.1 has issued proceedings No.P4/122(67)/2008- RR dated 4-11-2011 whereunder he has agreed to extend the contract of petitioner No.1 in respect of Departmental Stores at the J.B.S. till finalization of the new allotment subject to payment of the licence fee of Rs.2,36,403/- per month along with charges etc., from time to time. It is made clear therein that the said extension is only till finalization of the new allotments. The learned counsel for the petitioners submitted that both of his clients have been asked to pay certain percentage of the licence fee over and above the existing licence fee and that they have accordingly been paying the enhanced licence fees. In case of the petitioner in W.P.No.10586/2012, the Regional Tender Committee issued proceedings dated 26-6-2012 whereunder it has decided to allow him to continue to run the business of Fast Food Center in Stall No.63 at the M.G.B.S. on a monthly licence fee of Rs.47,017/- with effect from 16-4-2012. A letter to this effect was addressed by the Regional Manager of the Corporation. Indeed, the petitioner in this Writ Petition has submitted before this Court, which was placed on record, that he is prepared to pay higher licence fee than that was offered by the highest tenderer.
The Circular dated 5-2-2008 obviously does not envisage a situation where new allotments are delayed on account of the Court litigation. In such an event, pendency of litigation should not become a providence for the previous licensees. This Court is of the opinion that the Corporation needs to review its policy on continuing the previous licensees to carry on the businesses wherever finalization of tenders is delayed by contingencies such as the Court litigation. However, for the present, as the Corporation has committed itself to continue the petitioners in terms of the above mentioned Circular, this Court is not inclined to set at naught the arrangement between the parties. In order to secure public interest, this Court is of the opinion that an equitable arrangement needs to be made till finalization of the tenders, which will be indicated infra.
In the analysis as above, the Writ Petitions are disposed of in the following terms:
(a) The action of the Corporation in accepting the tenders of the contesting respondents i.e., respondent No.4 in W.P.No.10586/2012 and respondent Nos.3 and 4 in W.P.No.11297/2012, is contrary to the mandatory tender condition relating to non-transferability of the tender forms and hence the said action is declared as invalid;
(b) the Corporation shall forthwith call for fresh tenders and finalize the same within a period of one month from the date of receipt of this Judgment, strictly in terms of the tender conditions/regulations/circulars/executive instructions holding the field;
(c) the petitioners shall be allowed to continue their businesses in their respective stalls on the same terms and conditions on which they were permitted by the Corporation beyond their licence periods upto 30-9-2012. The petitioners' continuance from 1-10-2012, till finalization of fresh tenders shall be subject to their paying the highest offers made by the contesting respondents in each of these Writ Petitions in relation to the respective stalls in their occupation; and
(d) if the petitioners do not intend to continue their businesses from 1-10-2012 in the respective stalls in their occupation by paying the highest rates offered by the contesting respondents, they shall vacate the stalls on 30-9-2012, failing which the Corporation shall be entitled to recover possession of the stalls and the licence amounts as directed above.
As a sequel, WVMP Nos.1581 & 1647 of 2012 and WVMP Nos.1563 & 1653 of 2012, filed in the respective Writ Petitions are disposed of as infructuous. ________________________ Justice C.V. Nagarjuna Reddy Date : 7-9-2012