Gujarat High Court
Karimkhan Mattumiya Behlim vs State Of Gujarat & 2 on 4 April, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, Z.K.Saiyed
C/SCA/1542/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 1542 of 2016
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KARIMKHAN MATTUMIYA BEHLIM....Petitioner(s)
Versus
STATE OF GUJARAT & 2....Respondent(s)
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Appearance:
MR MIG MANSURI, ADVOCATE for the Petitioner(s) No. 1
MS JIRGA JHAVERI, AGP for the Respondent(s) No. 1 - 3
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE Z.K.SAIYED
Date : 04/04/2016
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The petitioner has prayed for a direction to the respondent authorities to refund a sum of Rs.32,25,722.76 ps. for purchase of scrap by the petitioner through auction process on the ground that the quantity of scrap upon ultimate weightment came to be much lesser than what was advertised by the respondents.
2. Brief facts are as under :
3. The petitioner is an individual and is a proprietor of one Gujarat Scrap Traders. The proprietary concern is engaged in the business of dealing in the scarp, since some time. Respondent No.1 is State Government. Respondent No.2 is Executive Engineer of Irrigation, Machhudam, Division No.4.
Page 1 of 10HC-NIC Page 1 of 10 Created On Thu Apr 07 01:22:07 IST 2016 C/SCA/1542/2016 ORDER Respondent No.3 is Executive Engineer, Salinity Control Division, Porbandar. There were certain iron scrap items, under the Salinity Control Division of Porbandar, which were required to be disposed of through auction. A public advertisement was therefore issued on 30.12.2014 calling upon interested contractors to quote their rates for purchase of various scrap items. These items were divided into different lots. We are concerned with Lot No.1, which pertains to "46 Nos. of vertical gate & 16 Nos. of godbole gate, platform etc. scrap." The quantity of such scrap was mentioned at 269 MT. The scrap was lying at Meghal dam site. The petitioner applied for Lot No.1 and quoted Rs.76.25 lacs as his offer exclusive of VAT and Rs.81.96 lacs with VAT. The petitioner's offer was the highest. The authorities accepted such offer and awarded work contract on 2.2.2015 and required the petitioner to deposit sum of Rs.69,90,625/, over and above what the petitioner had already deposited at the time of filling the tender. The petitioner deposited such sum and started lifting the goods on 17.2.2015 which work was completed on 26.3.2015. This was so certified by the local authority in the letter dated 31.3.2015 written to the Executive Engineer -
Page 2 of 10HC-NIC Page 2 of 10 Created On Thu Apr 07 01:22:07 IST 2016 C/SCA/1542/2016 ORDER respondent No.2. On 4.4.2015, the petitioner wrote to the respondent No.2 and pointed out that against 269 MT of scrap advertised actually only 153.295 MT of scrap was found upon clearance. The respondent should therefore refund the amount for the shortage of the quantity. The petitioner followed up this letter by a detailed representation dated 29.5.2015 and pointed out to the authorities that against promised quantity of 269 MT of scrap the petitioner has received 123.18 MT short. He had represented to the authority for refund of the excess payment under letter dated 4.4.2015. He was orally conveyed that his request is under consideration. However, so far no such refund has been made. He pointed out that there is a total shortfall of nearly 42% of the quantity by weight. This shortfall is not negligible in the range of 2 to 5%. The excess payment may therefore be refunded.
4. The authorities did not accept the request and on 30.4.2015 took a decision to reject the same on the ground that in the tender conditions there is no provision for refund of the money for less quantity. At that stage the petitioner filed this petition.
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5. Learned counsel for the petitioner submitted that the estimate of 269 MT of iron scrap was totally wrong. The ultimate quantity found was short by nearly 42%. The petitioner had placed offer on the basis of estimated quantity. The case would not fall under acceptance of 'as is where is basis', clause contained in clause (7) of the tender conditions. He pointed out that there is no dispute about the actual quantity of the iron scarp being lifted by the petitioner nor is there any dispute that the advertised quantity of 269 MT was based on mere estimation.
6. On the other hand, learned AGP Ms.Jirga Jhaveri opposed the petition contending that clauses (7.1) and (7.2) of the tender conditions provided that no objection regarding the condition or weight of the tendered items would be entertained. The petitioner had filled up the tender with full consciousness. The claim for refund is therefore not justified.
7. Few facts are not in dispute. The respondents invited tenders for sale of various scrap items. Lot No.1 pertained to iron gates and other items of which the Page 4 of 10 HC-NIC Page 4 of 10 Created On Thu Apr 07 01:22:07 IST 2016 C/SCA/1542/2016 ORDER quantity specified was 269 MT. The petitioner applied for such tender and was awarded contract. Upon removal of the goods it was found that actual quantity of scrap turned out to be only 153.295 MT. This shortfall was close to 42% of the advertised quantity.
8. We may also notice that there was no upset price declared by the respondents for such auction. It appears that internally the upset price worked out by the Committee of the respondent authorities for Lot No.1 was Rs.59.19 lacs (rounded off) on a total estimated quantity of scrap of 269.09 MT. This was only an internal decision. However, when the tender notice came to be published all that was specified for Lot No.1 was 259 MT of scrap. No upset price was declared. The significance of this element may be addressed later. However, at this stage, we may notice that as per the official records against the petitioner's offer of Rs.76.25 lacs the next highest offer was Rs.30.21 lacs. In other words, the second highest offer was way below the internal assessment of the minimum price of respondents based on the quantity estimate of 269 MT and the upset price (which remained on file and was not published) of Rs.59.19 lacs.
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9. Clauses (7.1) and (7.2) of the tender conditions read as under : "7.1 The goods will be sold on "As is where is" for each lot and "No complaint basis" in so far as physical condition of the same is concerned. The Tenderer(s) will therefore deemed to have made themselves aware of the physical conditions, dimensions, size, weight, working conditions etc., by inspecting the materials before submitting their physical offer and no complaint or any claim in this regard will be entertained by NWRWS & K. DEPTT., after the submission of the e offer.
7.2 Where there are items of more one classification of any form in any lot and the Tenderer has quoted in lumpsum for the entire lot instead of quoting in units per item, then no refund of any kind shall be entertained by NWRWS & K. DEPTT., owners if the quantity whatever mentioned in the Tender turns to be less at the time of delivery. However, if the quantity turns out to be more than the tendered quantity, then the delivery of material shall be limited to tendered quantity only."
10. It is undoubtedly true that under clauses (7.1) and (7.2) of the tender conditions the tenderer was to make an offer on 'as is where is basis' by making himself aware of the physical condition, dimension, size, weight etc., of the material in question. It also provided that if there is any shortfall at the time of delivery, the respondents would Page 6 of 10 HC-NIC Page 6 of 10 Created On Thu Apr 07 01:22:07 IST 2016 C/SCA/1542/2016 ORDER not be responsible and if there is excess quantity found, only the advertised quantity would be supplied to the tenderer.
11. These conditions are to be read reasonably and in tune with the nature of the sale in question. What was put for auction was the iron scrap of old irrigation gates and other machineries. By very nature of things it would be impossible for any contractor to judge with any degree of precision its ultimate weight. Even the authorities made a major error in their estimation. Against the actual quantity of 153.295 MT of scrap their estimate came to 269 MT. This was explained by the authorities through their report, inter alia, on the ground that the machinery was heavily rusted and corroded as a result of which there was drop of weight by more than 30% in several items where the rusted portion upon lifting just fell off or had to be removed. The authorities had for the estimate of weight reduced the original weight of such machinery by 50% to come to total weight estimate of 269 MT. Thus even after applying a liberal weight reduction on account of natural factors such as rusting and corroding the authorities themselves made a serious error Page 7 of 10 HC-NIC Page 7 of 10 Created On Thu Apr 07 01:22:07 IST 2016 C/SCA/1542/2016 ORDER of judgment when the actual weight of the scrap came to lesser by 42% of advertised quantity.
12. Clauses (7.1) and (7.2) of 'as is where is basis' cannot be applied in the present case for principally two reasons. Firstly, as noted, the drop in the weight was by a huge margin of 42% which was not possible even for the authorities to estimate and judge with any degree of accuracy and secondly perhaps on account of such reason itself the authorities had not fixed the upset price of the items for sale, instead, specified the weight of the scrap.
13. The State authority while entering into private contract with general public, cannot discard the principles of fairness and reasonableness. What the petitioner had offered was a rate of certain expected quantity of scrap. Had there been a minor difference in the ultimate quantity that the petitioner might have lifted, surely clauses (7.1) and (7.2) would have prevented the petitioner from raising any dispute or claiming any refund for such shortfall. However, by very nature of things the term 'shortfall' has to be seen as a minor Page 8 of 10 HC-NIC Page 8 of 10 Created On Thu Apr 07 01:22:07 IST 2016 C/SCA/1542/2016 ORDER deviation or variation from estimated, projected or advertised quantity. It cannot take shape of nearly 50% of the quantity going missing.
14. As noted, two things are not disputed. One that the advertisement specified the weight of the Lot No.1 at 269 MT and two when it was removed the actual weight turned out to be 153.295 MT. This later figure is recorded by the authorities in their contemporaneous data which is also borne out from the letter dated 31.3.2015 written by the respondent No.3 to respondent No.2.
15. Under the circumstances, the respondents are directed to refund to the petitioner proportionate sum out of the total of Rs.81,96,000/ deposited by the petitioner with the respondents for 269 MT of scrap to the extent the same was found short. If this is done latest 30.6.2016, there shall be no liability to pay interest, failing which the respondents shall bear interest on such refund at the simple rate of 8% p.a. from the said date till actual payment.
16. Petition is disposed of. Direct service is permitted.
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