Gauhati High Court
Jamal Ahmed vs The State Of Assam And 6 Ors on 2 November, 2015
1
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM; NAGALAND; MIZORAM &
ARUNACHAL PRADESH)
(1) In WP(C) 4360/2014
Sri Nitya Gopal Das,
S/o- Late Noresh Ch. Das,
R/o- Village- Tarapur,
PS-Katigorah, PO- Kalain- 788815,
District- Cachar, Assam.
....PETITIONER
-versus-
1. The State of Assam
represented by the Commissioner & Secretary
to the Government of Assam, Forest Department,
Dispur, Guwahati-06.
2. The Principal Chief Conservator of Forest
& Head of Forest, Rehabari, Guwahati-08.
3. The Additional Principal Chief Conservator of Forest (T),
Lower Assam Zone.
4. The Conservator of Forest,
Southern Assam Zone, Silchar.
5. The Divisional Forest Officer,
Karimganj Division, Karimganj.
6. M/s D & J Suppliers,
represented by its proprietor,
Md. A.L. Rahman,
R/o- Katigorah, Village-Kalain,
PO- Kalain-788815,
District- Cachar, Assam.
7. Sri Rajib Das,
S/o- Late Ranjit Das,
R/o- Ukil Pattay, Karimganj,
PO- Karimganj- 788710
Dist- Karimganj, Assam.
...RESPONDENTS
2
(2) In WP(C) 4358/2014
Jamal Ahmed,
S/o- Md. Akram Ali,
R/o- Village- Dhumkar,
PS-Katigorah, PO- Kalain- 788815,
District- Cachar, Assam.
....PETITIONER
-versus-
1. The State of Assam
represented by the Commissioner & Secretary
to the Government of Assam, Forest Department,
Dispur, Guwahati-06.
2. The Principal Chief Conservator of Forest
& Head of Forest, Rehabari, Guwahati-08.
3. The Additional Principal Chief Conservator of Forest (T), Lower Assam Zone.
4. The Conservator of Forest, Southern Assam Zone, Silchar.
5. The Divisional Forest Officer, Karimganj Division, Karimganj.
6. M/s Trio Stoney Mart, Represented by its proprietor, Md. A.L. Rahman, R/o- Katigorah, Village-Kalain, PO- Kalain-788815, District- Cachar, Assam.
7. Sri Rajib Das, S/o- Late Ranjit Das, R/o- Ukil Pattay, Karimganj, PO- Karimganj- 788710 Dist- Karimganj, Assam.
...RESPONDENTS
3
BEFORE
HON'BLE MR. JUSTICE MANOJIT BHUYAN
Advocates for petitioner - Mr. Sheeladitya
Mr. S Borthakur,
Mr. G Bokalial,
Advocates for Respondent Nos.1 to 5- Mr. RK Bora
Advocates for Respondent No.6 - Mr. KN Choudhury,
Senior Advocate
Mr. SU Ahmed,
Mr. N Alam,
Advocates for Respondent No.7 - Mr. P Upadhyay,
Ms. T Bora,
Mr. A Upadhyay
Date of hearing - 22.9.2015
Date of delivery of judgment -
JUDGMENT AND ORDER (CAV)
Heard Mr. S Borthakur, learned counsel representing the petitioner. Also heard Mr. RK Bora, learned counsel representing State Respondent Nos.1 to 5, Mr. KN Choudhury, learned Senior counsel representing Respondent No.6, assisted by Mr. SU Ahmed, Advocate. None appeared for Respondent No.7. The array of counsels/senior counsel is common in both the writ petitions i.e. WP(C) 4360/2014 and WP(C) 4358/2014. The primary issues for adjudication being similar, both the writ petitions are taken up together for disposal by a common order.
2. The cases arise from the Sale Notice dated 5.9.2013, issued under the hand of the Divisional Forest Officer, Karimganj Division, Karimganj (hereinafter referred to as the 'DFO') under Rule 32(1) and 33(1) of the Assam Minor Mineral Concession Rules, 2013 (hereinafter referred to as 4 'AMMC Rules, 2013') whereby bids were invited for grant of mining contract for collection of Boulder/Stone/Gravel/Sand Gravel. Amongst the Mining Units put up for tender sale, it also included the Kalain Minor Mineral Unit No.1 (Stone) - the subject matter in WP(C) 4360/2014, and the Kalain Minor Mineral Unit No.2 (Stone) - the subject matter in WP(C) 4358/2014.
3. The petitioner, the Respondent No.6 and the Respondent No.7 in WP(C) 4360/2014 had offered Rs.4,05,00,000/-, Rs.6,28,00,000/- and Rs.4,53,04,000/- respectively covering a total period of 7 years. The individual standings as per comparative bids were that Respondent No.6 became the highest bidder, followed by Respondent No.7 and then the petitioner in respect of Unit No.1.
4. The petitioner, the Respondent No.6 and the Respondent No.7 in WP(C) 4358/2014 had offered Rs.3,10,00,000/-, Rs.7,86,00,000/- and Rs.5,17,30,000/- respectively. Accordingly, the Respondent No.6 became the highest bidder, followed by Respondent No.7 and then the petitioner in respect of Unit No.2.
5. After evaluation of respective bids, recommendation was made by the DFO for issuing Letter of Intent in favour of Respondent No.6 in both the writ petitions. The matter having reached the office of the Principal Chief Conservator of Forest and Head of Forest force, Assam (hereinafter referred to as 'PCCF & HoFF'), a decision was made for putting both the Mahals to re- sale on grounds that many documents furnished by the tenderer were not in his favour and also that the financial capability of the highest tenderer was negligible as compared to the amount offered.
6. The decision of the PCCF was communicated to the DFO vide letter dated 8.1.2014, whereupon a Re-sale Notice was notified on 22.1.2014. The Respondent No.6 in both WP(C) 4358/2014 and WP(C) 4360/2014 preferred appeals under Rule 68(2) of the AMMC Rules, 2013 before the Government in the Environment and Forest Department, being aggrieved of the decision of putting the Mahals to re-sale. During the pendency of the appeal, the Respondent No.7, who is common in both the cases, had also preferred two 5 writ petitions i.e. WP(C) 756/2014 and WP(C) 780/2014 before this Court assailing the Re-Sale Notice. The said cases, however, stood disposed of by orders of like date i.e. 12.3.2014 when it was brought to notice that M/s D&J Suppliers and M/s Trio Stoney Mart (Respondent No.6 in the instant cases and impleaded as Respondent No.7 in WP(C) 780/2014 and WP(C) 756/2014 respectively) had already preferred statutory appeals before the appellate authority. Accordingly, both the writ petitions were closed granting liberty to the Respondent No.7 i.e. Rajib Das to participate in the appeal proceedings by getting himself impleaded. This Court had also observed that the appellate authority would dispose of the appeals as expeditiously as possible.
7. The appeals were heard and allowed. By the order of the appellate authority dated 21.7.2014 i.e. the Secretary to the Government of Assam in the Environment and Forest Department, a direction was made to the PCCF to issue Letter of Intent in favour of M/s D & J Suppliers [Respondent No.6 in WP(C) 4360/2014] in respect of Unit-1 and by order dated 23.7.2014 a similar direction was made for issuing Letter of Intent in favour of M/s Trio Stoney Mart [Respondent No.6 in WP(C) 4358/2014] in respect of Unit-2. The said two orders dated 21.7.2014 and 23.7.2014 are assailed separately in the instant cases.
8. The common grounds for allowing the appeals vide orders dated 21.7.2014 and 23.7.2014 were essentially:
(i) As against the annual contract amount standing at Rs.89,71,428.60, determined by the competent authority under Rule 18(2) of AMMC Rules, 2013 as the annual outright price payable by the successful bidder in a year in 4 equal installments, the Respondent No.6 is able to pay without any dispute,
(ii) From the Financial Soundness Certificate and connected papers of financial status of the Respondent No.6, it clearly reveals that he is capable of making payment of the contract value in equal installments and his financial capability in no way can be doubted, 6
(iii) The offer of the Respondent No.6 having been duly accepted by the DFO as well as by the Conservator of Forest and the Additional PCCF as per provisions under Section 7 of the Indian Contract Act, 1872, as such the same becomes a contract enforceable in law. The PCCF was without any right to discard the contract by notifying a re-
sale of the Mahals.
(iv) Rejection of the tender of the Respondent No.6 having regard to his Financial Soundness Certificate and putting the Mahal to re-sale is not tenable, inasmuch as, in respect of settlements made for Bardanga area, Naukhanda and Bandarkhowa, the same PCCF had issued Letters of Intent to tenderers who had not furnished Financial Soundness Certificate along with their tenders and granting liberty to submit additional documents in support of their financial soundness.
(v) Revenue generation to the State Fund is essentially to be considered. The Respondent No.6 had not only offered a higher amount but his tender was also found valid in all respects in conformity to the mandatory requirements under the AMMC Rules, 2013. Denial of settlement of the Mahal to Respondent No.6 is prima facie illegal and not sustainable in law.
9. The broad grounds of challenge made to the orders of the Secretary to the Government of Assam in the Environment and Forest Department, as urged by Mr. S Borthakur, learned counsel representing the petitioner in both the cases, can be noticed as under :
(a) In terms of Rule 3 read with Rule 2(e) of the AMMC Rules, 2013, the competent authority empowered to grant mining lease in respect of minor minerals for uses other than in industry as specified in Schedule "Y" is the PCCF & HoFF. As such, the reference made to the Indian Contract Act and to the nature of the contract being binding since the offer of Respondent No.6 had been accepted by the DFO, is utterly fallacious;7
(b) The Financial Soundness Certificates, as enclosed at pages 34 and 35 of the counter-affidavits of the Respondent No.6, discloses that the said documents pertain to the individual partners and not of the tendering firms i.e. M/s D&J Suppliers and M/s Trio Stoney Mart.
Situated thus, the properties indicated in the Certificates are not the properties of the firm in view of Section 14 of the Indian Partnership Act, 1932, in that, the property of an individual partner can be the property of the firm only if the same had been originally brought into the stock of the firm by way of a contract between the parties. As appearing from the Deed of Partnership enclosed to the counter- affidavit of Respondent No.6, it nowhere discloses any such contract between the partners of the Respondent No.6. The Apex Court in the case of Arm Group Enterprises Ltd. vs. W aldorf Restaurant and others , reported in (2003) 6 SCC 423 had ruled that in the absence of any agreement to the contrary, property exclusively belonging to a person, on his entering into partnership with others, does not become a property of the partnership.
(c) Clause 12(d) of the Sale Notice, which also stipulates the requirement of Income Tax Returns for the last 3 (three) years, besides the Financial Soundness Certificate, was violated by the Respondent No.6 as it did not submit the Income Tax Returns even for a single year. Perhaps, the inability being that the Respondent No.6 firm had come into existence only on 5.8.2013, a month prior to the issuance of the Sale Notice.
(d) In view of the absence of essential documents relating to the Financial Soundness Certificate and Income Tax Returns of the Respondent No.6 firm, no infirmity can be attributed to the findings and decision of the PCCF & HoFF, as indicated in the letter dated 8.1.2014, addressed to the DFO, Karimganj Division, for putting the Mahals to re-sale. Also, the appeals were allowed without considering the vital aspects as to the absence of the Certificates and Income Tax 8 Returns. Only a bald statement had been made expressing satisfaction of the financial capability of the Respondent No.6.
(e) The impugned orders passed in the appeals are non-est in law. In terms of Rule 68(2) of the AMMC Rules, 2013, an appeal against an order passed by the Director/PCCF & HoFF lies before the Government in the Environment and Forest Department in respect of minerals under Schedule-"Y", as in the instant case. The conduct of business of the Government of a State, as provided for in Article 166 of the Constitution of India, must be expressed to be taken in the name of the Governor. Further, the definition of "State Government" as given in Section 3(60) of the General Clauses Act, 1897 clearly postulates that in respect of anything done or to be done after the commencement of the Constitution (Seventh Amendment) Act, 1956, shall mean, in a State, the Governor, and in a Union Territory, the Central Government. As such, from a conjoint reading of Article 166 and section 3(60) of the General Clauses Act, 1897, it leaves no room for doubt that an order to be termed as an order of the Government has to be expressed in the name of the Governor. Support can also be had from the provisions under Rule 11 and 12 of the Assam Rules of Executive Business, 1968 (as amended), which has been framed by the State of Assam in exercise of powers conferred by Article 166(3) of the Constitution of India. The Apex Court in the case of M R F Lim ited v. M anohar Parrikar and ors, reported in (2010) 11 SCC 374 have unambiguously held that the provisions under Article 166(3) are mandatory in nature. The case of MRF Limited was distinct from the earlier Constitution Bench judgments, including the case in Dattatreya M oreshw ar Pangarkar v. The State of Bom bay, reported in AIR 1952 SC 181, as the said judgments were rendered only in the context of Article 166(1) and (2) without any reference to Article 166(3) of the Constitution. The settled position of law that the Rules of Executive Business framed under Article 166(3) of the Constitution is mandatory, finds reiteration in the case of Delhi International Airport Ltd. v. International Lease Finance 9 Corporation , decided by the Apex Court in Civil Appeal No.2932 of 2015. Although in the case of Dattatreya M oreshw ar Pangarkar (supra), it was held that an omission to comply with Article 166 would not render the executive action a nullity if confirmed by the appropriate Government, however, in the present case, the State government is yet to validate the impugned order, yet to declare the same to be its order and yet to cure the irregularity. As such, the orders under challenge dated 21.7.2014 and 23.7.2014, not being valid orders of the Government, are unsustainable in law.
(f) In the facts and circumstances, the re-sale of the Kalain Minor Mineral Unit No.1 and 2 is warranted by setting aside the orders under challenge.
10. Mr. RK Bora, learned State counsel representing Respondent Nos.1 to 5 in both the writ petitions submits that in terms of Rule 2(e) of the AMMC Rules, 2013, the competent authority in respect of minor minerals listed in Schedule 'Y' is the Principal Chief Conservator of Forest and Head of Forest Force, Assam (PCCF & HoFF). As per the said provision, the 'competent authority' is empowered to exercise such powers and to carry out such functions as prescribed under the said Rules. Mr. Bora also refers to Rule 37 of the Rules to say that no bid shall be regarded as 'successful' unless accepted by the officer competent to accept the bid/tender in accordance with the provisions of the Delegation of Financial Powers Rules, 1999 of the State. According to Mr. Bora, the provisions under Rule 37(1) have to be read with the prescription under Rule 2(e) of the Rules. With regard to the appeal provisions under the Rules, it is contended that Rule 68(2), as applicable in the instant case, recognizes the Government in the Environment and Forest Department as the appellate authority. This power of appeal of the Government cannot be delegated, as statutorily provided for in Rule 66 of the Rules. Lastly, Mr. Bora contends that the requirement under Clause 12(d) of the Sale Notice is that the Financial Soundness Certificate has to be obtained from the concerned Deputy Commissioner/Sub-Divisional Officer ascertaining the financial capability. However, the Certificates, even in the case of 10 individual partners, are not those of the Deputy Commissioner/Sub-Divisional Officer concerned, but of the Circle Officer concerned. This according to Mr. Bora is in blatant violation of the requirement under Clause 12(d), not to speak of the absence of any Financial Soundness Certificates in favour of the respondent firms.
11. Mr. KN Choudhury, learned Senior counsel representing Respondent No.6 in both the writ petitions opens by saying that the observations and findings made against it in the Re-Sale Order dated 8.1.2014 are vague, cryptic and incongruous. The Respondent No.6 had duly submitted Financial Soundness Certificates issued by the Circle Officer concerned and countersigned by Sub-Divisional Officer and/or the Additional Deputy Commissioner, as the case may be. The said Certificates, according to Mr. Choudhury, are in due compliance of the requirement under Clause 12(d) of the Sale Notice. As regards the observation of the PCCF & HoFF in the Re- Sale order dated 8.1.2014 to the effect that the financial capability of the Respondent No.6 is negligible compared to the bid, it is contended that the same was not looked into in its correct perspective. Mr. Choudhury submits that the tenure of the Mahal being for 7 (seven) years, all that the Respondent No.6 has to satisfy is with regard to its financial resources to be able to operate the Mahal for the first year only, looking at it from the commercial standpoint. As a corollary, just because the Respondent No.6 had quoted Rs.7.86 crores covering a period of 7 (seven) years that it must necessarily have financial resources commensurate with the bid value of 7 (seven) years, is not a prudent commercial expectation. Further, the Income Tax Returns submitted by the partners of the Respondent No.6 for the last 3 (three) years is sufficient indication of the financial soundness of the partners of the Respondent No.6 firm. Reference is also made to the provisions under Rule 3, Part-III of the AMMC Rules, 2013, which pertains to the mode of payment of contract money and surface rent. It is contended that the said provision makes it clear that the contractor need not have the total contractual/bid value in his hands at one go.
1112. Responding to the challenge that the Respondent No.6 being a partnership firm, it does not have financial soundness in the absence of any documents evidencing properties exclusively belonging to the firm and that the properties of the individual partners cannot be construed as the properties of the firm, Mr. Choudhury submits that the said contention has no legs to stand in view of the law laid down by the Apex Court in the case of New Horizons Lim ited and another v. Union of India and others , reported in (1995) 1 SCC 478 as well as in the case of M aster M arine Services (P) Ltd. vs. M etcalfe & Hodgkinson Pvt. Ltd , reported in (2005) 6 SCC 138.
13. In so far as the challenge to the appellate order being non-est as it had not been expressed to have been taken in the name of the Governor as required under Article 166(1) of the Constitution, Mr. Choudhury submits that the scope and ambit of Article 166(1) has been amply interpreted by a Constitution Bench of the Apex Court. In the said case of R . Chitralekha vs. State of M ysore , reported in AIR 1964 SC 1823 , the provision of Article 166 has been held to be directory and not mandatory in character. The submission, therefore, is that it is no more res-integra that non-compliance of Article 166(1) of the Constitution would not go to vitiate the order itself.
14. Mr. KN Choudhury also refers to the contentions of the petitioner in respect of infraction of Rule 34(1) of the AMMC Rules, 2013 and of the Secretary to the Govt. of Assam, Environment and Forest Department of usurping the powers of the PCCF & HoFF in directing settlement of the Mahals in favour of the Respondent No.6. At this stage it may be clarified that during the course of hearing of the case, the petitioner did not specifically urge such grounds of challenge, save and except what had been alluded to above.
15. Lastly, it is contended that the case of the petitioner is shorn of any merits and he has failed to establish any arbitrariness in the decision-making process. Further, the petitioner is not entitled to equity as he has not suffered any prejudice or legal injury. Also, he is no longer in the fray, he having withdrawn his earnest money.
1216. The submissions of the parties concerned are broadly the issues involved in both the writ petitions. The orders under challenge, save and except the dates of the orders and name of the Respondent No.6, are on the same premises. As such, both the writ petitions are being decided by this common order.
17. Rule 3 read with Rule 2 (e) of the AMMC Rules, 2013 leaves no room for doubt that, having regard to the facts of the instant cases, the PCCF & HoFF is the competent authority to grant a mining lease or a mining contract or permit or any other concession or licence or transit pass etc. or to take other actions under the Rules. Accordingly, the PCCF & HoFF was within his domain to consider and reverse the recommendation made by the DFO for granting settlement in favour of M/s D & J Suppliers and M/s Trio Stoney Mart respectively and for putting both the Mahals to re-sale. Under Rule 68(2) of the AMMC Rules, 2013, an appeal against the order of the PCCF & HoFF lies before the Government in the Department of Environment and Forest in respect of minerals under Schedule 'Y', as in the instant case. As an appellate authority the State Government is conferred with the powers to reach its own decision, reverse the order of the PCCF & HoFF and issue directions to the PCCF & HoFF to act accordingly. To this limited extent the appellate orders, if discharged by the State Government, with directions to the PCCF & HoFF to issue Letter of Intent to the Respondent No.6 in both the cases cannot be faulted. In other words, the State Government in exercise of its statutory power, functions and duties under Rule 68(2) can direct the competent authority i.e. the PCCF & HoFF to proceed accordingly.
18. But who is the 'Government' so authorized to exercise statutory powers under Rule 68(2). This is the moot question. Can it be said that the order passed by the Secretary to the Govt. of Assam, Environment and Forest Department is an order in discharge of the mandate of Rule 68(2). Whether the order passed by the Secretary can be deemed to be the order passed by the 'Government' in terms of Rule 68(2) ? The term "State Government" is defined in Section 3(60) of the General Clauses Act, 1897 and, more particularly at Clause (c) thereof, to mean that as respects anything done or 13 to be done after the commencement of the Constitution (Seventh Amendment) Act, 1956 in a State, the Governor, and in a Union Territory, the Central Government. Article 166(1) of the Constitution, in the conduct of government business, lays down that all executive action of the Government of a State shall be expressed to be taken in the name of the Governor. In addition, the Assam Rules of Executive Business, 1968 (as amended), framed under Article 166(3) of the Constitution, more particularly at Rule 11 and 12, lays down as follows:
"11. All orders or instrum ents m ade or executed by or on behalf of the Governm ent of Assam shall be ex pressed to be m ade or ex ecuted in the nam e of the Governor of Assam .
12. Every order or instrum ent of the Governm ent of the State shall be Expressed to be m ade in the nam e of the Governor and shall be signed either by a Secretary, an Additional Secretary, a Special Secretary, a Joint Secretary, an Under Secretary or such other Officer as m ay be specially em pow ered in that behalf such signature shall be deem ed to be the proper authentication of such or instrum ent."
19. Having noticed the aforesaid provisions of law, the orders of the Secretary to the Govt. of Assam, dated 21.7.2014 and 23.7.2014, in purported exercise of powers under Rule 68(2) of the AMMC Rules, 2013 cannot be held as orders passed by the Government. The said orders do not indicate that it had been made or executed in the name of the Governor.
20. The inevitable issue that now falls for consideration is whether the orders passed by the Secretary to the Government of Assam are void ab initio in view of non-compliance with the requirements of Article 166(1) and that of the provisions under the Assam Rules of Executive Business, 1968 (as amended). The answer is not far to seek. In the case of Dattatreya 14 M oreshw ar Pangarkar (supra) , followed and relied upon in R. Chitralekha (supra), the respective Constitution Bench of the Apex Court have held that strict compliance with the requirements of Article 166 operates to the extent of giving immunity to the order, in that, it is immune from a challenge on ground that it is not an order made by the Governor. Vice versa, the immunity cannot be claimed by the State if the requirements under Article 166 had not been complied with. However, the caveat is that an omission to comply would not vitiate the order or render the executive action a nullity. Therefore, all that the procedure established by law requires is that the appropriate Government should confirm or validate the order. If an order is not in form, that is, shorn of compliance of the requirements of Article 166, it is always open to the State Government to prove by other means that such an order had been validly made. Although it is no more res- integra, in view of the aforesaid Constitution Bench decisions, that the provisions of Article 166 of the Constitution are not mandatory in character, however, in case of non-compliance it needs to be established as a question of fact that the order was issued in fact by the State Government or the Governor.
21. There is no gain-saying that the orders of the Secretary to the Government of Assam, Environment and Forest Department, were rendered without compliance of the requirements under Article 166 of the Constitution. Although the said orders did not stand vitiated initially due to non-compliance of Article 166, the fact remains that there are no records to indicate that same had been confirmed, cured or validated by any orders of the State Government or the Governor. In view thereof, the orders dated 21.7.2014 and 23.7.2014 of the Secretary to the Government of Assam, Environment and Forest Department, are not orders validly passed under Rule 68(2) of the AMMC Rules, 2013. On this count alone the orders under challenge warrants interference.
22. Notwithstanding the findings above, recourse is also made to Clause 12(d) of the Sale Notice. It reads as:
"12. The tender papers m ust be accom panied w ith the follow ing docum ents.15
(a)... ... ... ... ... .
(b)... ... ... ... ... ..
(c)... ... ... ... ..
(d) A Financial Soundness Certificate from
the concerning Deputy Com m issioner/ Sub-
Divisional Officer ascertaining the financial
capability to operate the m ining lease/ contract and the incom e tax return for the last 3 (three) years is also to be subm itted.
(e) ......................... "
The magnitude of the works in question, where the Earnest Money itself is fixed at Rs.17 lakhs each and the volume of stones to be extracted running to thousands of cubic metres, it is sufficient evidence that a tenderer must be financially capable to execute the works and such financial soundness has to be demonstrated in the manner provided in Clause 12(d).
Referring to Mr. Choudhury's argument that from the commercial perspective and in view of the provisions of Rule 3, Part-III of the AMMC Rules, 2013 it would not be a prudent proposition that the Respondent No.6 must necessarily have financial resources commensurate to the bid value and that it need not have the total contractual value in hand at a time, the said argument is inherently flawed being tangentially distinct/different from the issue in hand and that of the requirement under Clause 12(d). Reiterating the first requirement, the tenderer along with the tender papers is required to submit Financial Soundness Certificate demonstrating its financial capability to operate the mining lease/contract. The said Certificates in favour of the tenderer has to from the concerned Deputy Commissioner/Sub-Divisional Officer. The Respondent No.6, in both the cases, are partnership firms governed under the Indian Partnership Act, 1932. The Certificates submitted by the Respondent No.6 are that of the individual partners and not of the tendering firm. Also, the said Certificates have been issued by the Circle Officer concerned, although counter-signed by the Sub-Divisional Officer/Additional District Magistrate concerned. The moot question is whether the Certificates in favour of the individual partners in a case where the tenderer is a duly constituted partnership firm can be deemed to have 16 satisfied the requirement of Clause 12(d) or for that matter even in respect of the Income Tax Returns, which are not of the tendering firm but of the individual partners.
23. Section 14 of the Indian Partnership Act, 1932 gains significance as an answer to the question. It reads as :
"14 . The property of the firm . - Subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of business of the firm, and includes also the goodwill of the business.
Unless the contrary intention appears, property and rights and interests in property acquired with money belonging to the firm are deemed to have been acquired for the firm."
The aforesaid provision under Section 14 was considered by the Apex Court in the case of Arm Group Enterprises Ltd. (supra) holding that in the absence of an agreement to the contrary, property which belongs to a person does not become the property of the partnership on his entering into the said partnership merely because it is used for the business of the partnership. It was reiterated that such property will become property of the partnership only if there is an agreement - express or implied - that the property was, under the agreement of the partnership, to be treated as the property of the partnership.
24. A perusal of the Partnership Agreements in question does not disclose any covenants to the effect that the property of individual partners would be treated as the property of the partnership. No Financial Soundness Certificates had been submitted in favour of the tendering firm. All that had been submitted, belonged to individual partners. The said flaw also extended to the Income Tax Returns. Having regard to the provisions under Section 14 17 of the Indian Partnership Act, 1932 and that of legal proposition laid down in Arm Group Enterprises Ltd. (supra) , there is no hesitation in holding that the Financial Soundness Certificates and the Income Tax Returns submitted by the Respondent No.6 firms along with its tender papers were not in compliance of the essential requirements under Clause 12(d) of the Sale Notice. This aspect of the matter was not at all considered in the orders under challenge, which is also otherwise held in the foregoing paragraphs to be not valid orders in the teeth of Rule 68(2) of the AMMC Rules, 2013.
25. In view of the primary findings above as to the legality and validity of the orders under challenge, no further consideration is made on the issue as to whether the Financial Soundness Certificates issued by the Circle Officers concerned and not by the concerned Deputy Commissioner/Sub-Divisional Officer satisfied the manner as to the authority competent to issue such Certificates required under Clause 12(d).
26. Not to be left out are the contentions of Mr. KN Choudhury that although the tenderer is a firm, the experience/financial soundness of one of the partners of the firm can well be taken into consideration. Further, that only when the tender specifies that experience/financial soundness should be in the name of the firm, then such a requirement can be insisted upon. To buttress his argument, reliance was placed in the case of New Horizons Ltd. (supra) and M aster M arine Services (P) Ltd. (supra). In the former case the Apex Court visualized a situation where a person having past experience has entered into a partnership and the tender has been submitted in the name of the partnership firm which may not have any past experience in its own name. In that context it was clarified that the same would not mean that the earlier experience of one of the partners of the firm cannot be taken into consideration. In the latter case, one of the issues was with regard to a requirement related to the Financial Bid which envisaged "a copy of licence to act as surveyor/loss assessor under the Insurance Act, 1938". The Apex Court noted that the tender document did not say that in case where a Company has made a bid the licence must be in the name of the Company itself or that a licence personally in the name of the Chairman or a Director of 18 a Company would not be treated as a valid compliance with the requirement of the tender. Mr. KN Choudhury seeks to draw analogy from the decisions above to say that the financial capability of individual partners of the tendering partnership firm cannot stand to be ignored and the Certificates in the name of the partners is valid compliance of the requirement under Clause 12(d) of the Sale Notice.
27. The analogy introduced is too far-fetched. The cases of New Horizons Ltd. and M aster M arine Services (P) Ltd. do not come to the aid of the respondent no.6. 'Experience' and 'financial soundness' are not inter-changeable terms. One is outright distinct from the other. 'Experience' is in the realm of a credential of a party, whereas 'financial soundness' is a hard fact directly proportionate to the financial capability of a party to be able to execute the work. Financial resources of a partner, if not brought into the stock of the partnership firm, are not the tangible property of the said firm. One can wonder as to the adverse consequences that may befall if the partner decides to back out in the midst of execution of the contract for very many reasons. Participation in a tender process by a legal entity i.e. a partnership firm must itself demonstrate its financial capability. Else, the very provisions under Section 14 of the Indian Partnership Act, 1932 and that of the law laid down in Arm Group Enterprises (supra) would be left without any meaningful content. The analogy of 'past experience' to be extended to 'financial soundness' and that the financial capability of the individual partners is essentially to be considered, is an extreme proposition and cannot be accepted at its face value.
28. In so far as the case of M aster M arine Services (P) Ltd. (supra) is concerned, the facts of the case are wholly distinct. In the said case a licence to act as surveyor/loss assessor in the name of the Chairman or a Director was treated to be a valid compliance with the requirement of the tender, in the absence of any stipulation in the tender document that it has to be in the name of the Company itself. While rendering the judgment, the Apex Court took note of the facts that the Tender Evaluation Committee (TEC) had considered this question together with the fact that there were only two 19 bidders and that it would not be desirable to make the tender lapse into a single-bidder tender. As appearing from the judgment, the TEC had made further evaluation and after noting that Master Marine Services (P) Ltd. is known to be an established surveyor doing works at various terminals of the Container Corporation of India (CONCOR) and further that the Chairman of the Company had the licence, made a recommendation that both the bidders may be qualified for their technical capabilities. What is of utmost significance that goes to the root of the distinction from the present cases is that in the Instructions power was conferred upon CONCOR to relax the tender conditions at any stage, if considered necessary, for the purpose of finalizing the contract in overall interest of CONCOR and the trade. On such premises the order of CONCOR awarding the contract to Master Marine Services (P) Ltd., which had been set aside by the High Court, was restored by allowing the appeal. Having regard to the aforesaid facts in the Apex Court judgment, the facts obtaining in the present cases are entirely different. Each case is an authority for what it actually decides. In the cases in hand, the Sale Notice read as a whole leaves no room for doubt that proof of financial soundness is a requirement that has to discharged by the tenderers. Respondent No.6, in both the cases, are the tendering firms. There is no stipulation in the Sale Notice that a Certificate of financial soundness/capability of a partner of the tendering firm would be sufficient compliance of Clause 12(d). Also, the requirement is an essential condition of the contract, not hedged by any relaxation clause/criteria, unlike the Instructions of CONCOR. As such, the case referred to by Mr. Choudhury is without any application in the facts and circumstances of the instant cases.
29. In the backdrop of the discussions and findings above, the orders dated 21.7.2014 and 23.7.2014 issued by the Secretary to the Government of Assam, Environment and Forest Department, cannot stand the scrutiny of law and warrants interference. Accordingly, the said orders dated 21.7.2014 and 23.7.2014 and all consequential orders thereon are set aside with direction to the Principal Chief Conservator of Forest and Head of Forest Force (PCCF & HoFF) to take such steps for putting the Kalain Minor Mineral Unit No.1 and the Kalain Minor Mineral Unit No.2 to re-sale. The PCCF & HoFF shall ensure 20 that the exercise for issuing a fresh Re-Sale Notice in respect of the aforesaid Units together with completing the process and awarding the contract to suitable bidder is completed within an outer limit period of 8 (eight) weeks from the date of receipt of a copy of this order. The petitioner is permitted to furnish a copy of this order before the PCCF & HoFF for his doing the needful in terms of the directions above.
30. Resultantly, both the writ petitions i.e. W.P.(C) 4360/2014 and W.P.(C) 4358/2014 stands allowed. The parties are left to bear their own costs.
JUDGE gunajit