Bombay High Court
Nagpur. Through Its President vs The State Of Maharashtra on 16 January, 2013
Bench: B. P. Dharmadhikari, Prasanna B. Varale
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION No. 6372/2012.
Arunodaya Magaswargiya Mazdoor
Kamgar Sahakari Sanstha Ltd.,
Walni, Tahsil Saoner, District
Nagpur. Through its President. ....PETITIONER
VERSUS
1. The State of Maharashtra,
through the Secretary,
Revenue and Forests Department,
Mantralaya, Mumbai - 400 -032.
2. The Divisional Commissioner,
Nagpur Division,
Civil Lines, Nagpur.
3. The Collector, Nagpur District,
Civil Lines, Nagpur.
4. E-Procurement Technologies Ltd.,
B-704, Wallstreet, Opposite
Orient Club Near Gujarat College,
Ahmedabad - 380 066.
Gujarat State (India). ....RESPONDENTS
.
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Mr. M.V. Samarth, Advocate for Petitioner.
Mr. N.W. Sambre, Govt. Pleader for Respondent Nos. 1 to 3.
Mr. Anjan De, Advocate for Respondent No.4.
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CORAM : B.P. DHARMADHIKARI
AND P.B. VARALE, JJ.
DATED : JANUARY 15 & 16, 2013.
ORAL JUDGMENT.
Heard learned Counsel for the parties. By their consent, Writ Petition is taken up for hearing at the stage of admission by issuing Rule, making it returnable forthwith.
2. By this petition filed under Article 226 of the Constitution of India, the petitioner-Labour Co-operative Society, registered under Maharashtra Co-operative Societies Act, 1960, has challenged the auction of Sand Ghats at Sr. No.53 and Sr. No.56 of Tahsil Saoner, District Nagpur.
3. Though in prayer Ghat at Sr. No.49 at Bawangaon and the Ghat at Sr. No.57 Waki-B of Tahsil Saoner are mentioned, during arguments, the petitioner has pressed for relief only in relation to Ghat at Sr. No.53 i.e. ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 3 Karaj Ghat-A and Ghat at Sr. No.56 i.e. Waki-A.
4. The facts are not much in dispute. The respondent nos.1 to 3 had held e-auction of various Sand Ghats and as per their policy decision dated 25/10/2010, all Sand Ghats need to be auctioned on a single day.
Accordingly, sand ghats were divided into suitable lots and advertisement was issued which notified 22/12/2012 as the date on which four lots were to be e-auctioned. Karaj Ghat-A is included in Lot No.4 while Waki-A is included in Lot No.1. The petitioner participated in those auctions. The time schedule for Lot No.1 was 1'O clock in after noon till 2:00 p.m. with three automatic extensions to enable the competing bidder to increase his bid if a higher bid was received before 10 minutes of the scheduled time of closure i.e. 2:00 p.m. Lot No.4 has been auctioned in the evening between 7:00 p.m. to 8:00 p.m. with three similar automatic extensions of 10 minutes each. The petitioner has in this background urged that when purpose of e-
auction was to enable the State Government to procure highest price, the introduction of time limit in the process is arbitrary as it militates with said object. It is the contention that an auction must be permitted to come to its logical end by enabling all competitors to bid till they wish and till the highest bid comes on record. Thus, introduction of closure time of 2:30 for Lot No.1 or then 8:30 for Lot No.4 after three extensions is questioned as ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 4 unsustainable and arbitrary.
5. It is further contended that the petitioner was participating in e-
auction, by using four computers and I.P. Address of three computers was known to respondent nos.1 to 3 as also respondent no.4 technical expert company, which provided necessary soft-ware and services for conducting that auction. At the crucial juncture, the link to petitioner's three disclosed computers got disconnected and thereby the petitioner was prohibited from participating in E-auction. Attention is invited to terms and conditions of e-
auction process to show that the respondents were/are aware of the computers which the petitioner is using and, therefore, could have easily disabled the link to those three computers. Learned Counsel for the petitioner has submitted that the fourth computer, whose I.P. Address was not disclosed, and therefore, was not within the knowledge of respondents, got connected and, therefore, the petitioner could participate in auction in the evening in relation to Karaj Ghat-A.
6. To demonstrate how prescribing time limit and thereby artificially bringing to an end the auction process has prejudice the petitioner, attention has been invited to flow chart of offers received in relation to Kharaj Ghat-A. It is pointed out that the petitioner was participating and was regularly ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 5 increasing his bids as per the bids of rivals. One M/s. Nagpur Sand Trading Private Limited increased its bid to Rs.2,31,00,000/- at 20:29:59 hours i.e. just a one second prior to the expiry of prescribed time of 20.30 hours i.e. 8.30 PM. After said increased offer was registered and displayed on screen, the petitioner could not have done anything within one second and thus the petitioner has been denied opportunity to increase the bid further within stipulated time. Still the petitioner forthwith communicated its increased bid of Rs.2,35,00,000/- but that has not been registered as it was after 8:30 p.m. The petitioner has relied upon a computer printout at Annexure-K taken out on the very same day i.e. 22/12/2012 at 20:36 hours to show that it had in fact hiked its offer above M/s. Nagpur Sand Trading Pvt. Ltd.
Attention is invited to mention of Rs.2,35,00,000/- as rate stipulated by the petitioner.
7. Mr. Samarth, learned Counsel, submits that thus this has resulted in serious prejudice not only to the petitioner, which is a registered co-
operative society of backward class labours, but it has also caused loss of revenue to the respondent-State Government.
8. He has also invited attention to flow chart of Sand Ghat Bawangaon-A to show how the higher offer of one Mahesh Madhukar ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 6 Burade worth Rs.51,55,786/- registered at 20:29:43 p.m. has been ignored and offer of one M/s. Rakesh Sharma of Rs.46,75,666/- submitted at 20:29:51 hours has been accepted. He fairly points out that though the petitioner is not seeking any relief in relation to that Ghat from this Court, the instance shows arbitrariness in the process of e-auction.
9. According to learned Counsel, thus by imposing time limit and thereby artificially bringing an end to the process of auction and by highhandedness/mala fides the entire process itself has been vitiated.
Learned Counsel, therefore, prays for direction to respondent no.3-Collector to accept the bids of petitioner-society on the ground that he could not participate in auction process for almost 55 minutes i.e. from 7:30 p.m. to 8:26 p.m. on 22/12/2012. Further prayers are to restrain the said respondent from issuing any work order to other participants, to direct them to hold an enquiry against respondent no.4, who has provided technical services and there is also prayer to direct respondent no.2-Divisional Commissioner to conduct an enquiry into online system of e-auction process and to submit a report to this Court. By amendment, prayer "AA" has been added and relief has been sought of quashing and setting aside entire process of e-auction as it was held in violation of Government Resolution dated 25/10/2008.
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10. He has further contended that as per Circular dated 05/10/1981, the State Government has given preference in such allotments to the Labour Co-operative Society like the petitioner. He also relies upon Rule 38 of Maharashtra Minor Mineral Extraction (Vidarbha Region) Rules, 1966 for said purpose. He submits that the procedure followed by respondent nos.1 to 3 has denied that privilege to the present petitioner. According to him, to that extent the procedure is unsustainable.
11. Learned Government Pleader for respondent nos.1 to 3 has raised a preliminary objection by placing reliance upon the judgment of Division Bench of this Court reported in 2006(1) Bombay Cases Reporter 428- (Sharad Keshao Ghonge .vrs. State of Maharashtra and others).
According to him, the petitioner has participated in auction process with open eyes and has taken a chance of emerging as successful bidder. This position as highest bidder is sought to be canvassed even before this Court.
Having participated in that process, the petitioner cannot now permitted to turn around and raise such challenges. He has invited attention to procedure as prescribed to urge that the petitioner was aware of entire procedure including the hours within which the auction of each lot was to be completed. The petitioner never objected to imposition of time limit at any ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 8 point prior to his failure. It is submitted that earlier experience of State Government in the matter where conduct of auctions used to be spread over number of days was imperfect as it gave rise to forming of cartels and resulted in very low offers or then even backing out of contractors.
Therefore, a most transparent procedure as possible has been evolved and in that process the participants are not aware of the other bidder as . their identity remains secret. With the result, they are free to offer best price without any hesitation or threat and those offers can also be revised. The e-
auction was earlier preceded by e-tenders and the highest amount offered in e-tenders was taken as offset price for commencement of e-auction. He further points out that in order to follow the time limit and avoid frivolous offers or increases, a rule of increasing the earlier offer in a particular multiple was prescribed. He submits that for offers below Rs.1,00,00,000/-, the first two digits were treated as multiples and accordingly for Bawangaon Ghat-A the multiple worked out at Rs.21,000/-. The offer submitted by Mahesh Burade were not in multiple of Rs.21,000/- and, therefore, could not be accepted. In case of Karaj Ghat-A, as the initial offer was of Rs.1,00,000/- , a multiple of Rs.1,00,000/- was accepted. This procedure was well known to all bidders and the petitioner had acquiesced in it. He further submits that as per the procedure, if an offer was revised before 10 ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 9 minutes of normal closure time, i.e. 2:00 p.m. or 7:00 p.m., the system automatically generated an extension of 10 minutes and all other participants were, therefore, free to increase their offers further within said 10 minutes. The system contemplated three such extensions and after three extensions i.e. at 2:30 p.m. or 8:30 p.m., the e-auction came to an end. He thus submits that through process of e-tender and thereafter e-auction, the petitioner and all other bidders were given equal opportunity and everybody was aware of the auction coming to an end at a particular time. According to him, therefore, grievance of artificially putting an end to that process is unwarranted and unsustainable.
12. He has also pointed out that all bids were received from bidders who had digital signatures and, therefore, it was not possible for the respondents or any of their employees including respondent no.4 to identify the bidders or then to block service to any particular computer. Without prejudice, he submits that the petitioner had submitted his highest offer at 20:28:02 hours on 22/12/2012 and, therefore, he was in fray before the closure of auction. He has accordingly urged that in this situation there is no need to consider the issue of mala fides. He has, therefore, prayed for dismissal of petition.
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13. To substantiate his contention, he has also relied upon the judgment of the Hon'ble Apex Court in the case of Michigan Rubber (India) Limited vs. State of Karnataka and others, reported at (2012) 8 SCC 216 and Global Energy Ltd. and another vs. M/s. Adani Exports Ltd. and others, reported at AIR 2005 SC 2653 to submit that when tender conditions permit equal opportunity to all and are not arbitrary, the Court of law should not interfere. Formulations of the terms and conditions is privilege of the State and if the same are fair and reasonable, the petitioner can not question it. He has relied upon the judgment of Hon'ble Apex Court, in the case of Ashoka Smokeless Coal India (P) Ltd and others vs. Union of India and others, reported at (2007) 2 SCC 640 to point out how the mechanism of e-auction has been appreciated by the Hon'ble Apex Court.
14. Mr. Anjan De, learned Counsel for respondent no.4 has submitted that role of respondent no.4 is very limited. He has explained the procedure of e-auction to demonstrate that all willing bidders like petitioner are required to register themselves and then only they are in position to participate. He submits that name of person bidding is not visible on computer screen and, therefore, his identity cannot be established before the auction comes to an end. This position continues till the time auction or bidding continues and the data in encrypted form only remains available to ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 11 the viewer. All bidders, therefore, can see revised highest offers and can tender or revise their offer further. After the scheduled time is over, the data is decrypted automatically and, hence, further participation by any bidder thereafter is ruled out. He further submits that the documents at Annexure-
K at Page 86 with the petition filed by the present petitioner is a printout from the computer used by the petitioner and it is not a printout from any of the computers of the respondents. He points out that the said printout has been taken out at 20:36 hours i.e. after schedule time and in software used by the respondents, there was no scope for enabling the figure of Rs.2,35,00,000/- which has been offered after 8:30 p.m. to be entered. He has attempted to substantiate this by pointing out that in flow chart of offers available with the respondents, the petitioner is shown at Sr. No.2 as his last offer was only Rs.2,10,00,000/-.
15. Mr. Samarth in his reply-argument has relied upon the judgment reported at Ashoka Smokeless Coal India (P) Ltd and others vs. Union of India and others, (supra), on which the Government Pleader has placed reliance, particularly paragraph nos.162 and 163 thereof. He submits that the Hon'ble Apex Court has not accepted e-auction process as best method in the said judgment.
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JANUARY 16, 2013.
16 The affidavit filed by respondent no.3 deals with the process of e-
auction. Respondent no.3 has pointed out that the system was tamper
proof, having ISO 27001 compliance. It is further stated that had the
computer hacking as alleged, would have been possible, the entire bid process and auction could have been affected. Every bidder was provided unique codes for the purpose of participation, which was secret within the scope of an individual registration. Thus, the bidders quoting remained un- disclosed till the entire e-auction process was over, and as such, the names or address of the bidders could not have been traced before the end of process. These precautions were taken to avoid formation of ring amongst the bidders. The system was devised to show automatically a unique code with name of individual bidder only after completion of bidding. Affidavit of respondent no.4 has disclosed multiple advantages of e-auction, as also it benefits to sellers. In paragraph no.5 various steps to be completed by an individual, including online registration, its validation, obtaining of digital signature certificate, etc., are explained. It is further pointed out that the bidder was to agree to the terms and conditions mentioned in the tender document before participating in online auction, and without such acceptance petitioner could not have participated in the process. The ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 13 computer screen revealed name of Ghat, start price, increment price i.e. multiple, which can be used in the process of hiking the bid, highest price prevailing at the moment and participant's own ranking as per the amount offered by the bidders. The screen also disclosed remaining time of auction, end time of auction with number of extension available or number of extension already used. The officials i.e. respondent nos. 1 to 3 can and could only view the auction event on real time basis, without details of any bidder. They thus view the information displayed against each ghat, which reveals number of bidders participating in the auction, respective ranks and bid post on the name of the bidder, the start price, increment price, remaining time of auction, end time of auction, number of extensions available, number of extension already availed. Respondent no.4 has also pointed out that after end of the auction, the system got decoded to identify the bidders and provide various reports like highest bid report, log-in history with IP address and bid history.
17. A public notice issued well in advance by the office of the Collector, disclosed the date and time of each e-auction, the office of the Collector also published an explanation in relation to this time table which pointed out slot of one hour each available for each lot and also mentioned three extensions of 10 minutes each.
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18 All these facts and details which are available on record are not in
dispute. The allegations of petitioner on malafides and about computer
hacking are in paragraph no.13 of the writ petition. He has complained of computer screen going blank between 7.30 p.m. to 8.20 p.m. During this time the auction of slot Karaj ghat-A was only on. Thus these allegations do not relate to participation of petitioner earlier or after said time in e-auction or in relation to auction of Waki-A sand ghat. The flowchart of bidding process of Karaj ghat-A sand ghat filed before this Court by the respondent no.3 is not in dispute. That flow chart shows various offers by petitioner.
The flow chart opens with first offer and next offer which is by petitioner only comes at 19.05.24. The same is at Sr.No.2 in the said flow chart. At Sr.No.3, again very same amount appears to have been recorded against the name of the petitioner at 19.06.04 hours; At Sr.No.4 offer of petitioner of Rs.1,19,00,000/- is recorded at 19.06.50 hours. Thereafter, again at Sr.No.11 offer of petitioner at Rs. 1,75,00,000/- appears at Sr.No. 20.20.48 hours. His next offer appears at Sr.No.13 and it is of Rs.1,90,00,000/- and has been recorded at 20.22.56 hours. His last offer is at Sr.No.15.
Petitioner then quoted Rs. 2,10,00,000/ and it is registered at 20.28.20 hours i.e. just prior to one minute and 58 seconds of the scheduled last time of 8.30 p.m. Only entry thereafter is of Nagpur sand Trading Private ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 15 Limited which is of Rs. 2,31,00,000/- and it has been entered at 20.29.59 hours i.e. one second prior to the finishing of the e-auction process. The flow chart therefore, shows participation by the petitioner even after his alleged de-linking. He has not made any grievance that because the screen went blank for a particular period during the process, he has suffered any specific prejudice. In this situation, we find that as the petitioner was in a position to and has participated in the auction, the allegations of malafides need not be further dealt with.
19 Perusal of the judgment of Division Bench of this Court reported at Sharad Keshao Ghonge .vrs. State of Maharashtra and others, (supra), shows that in paragraph no.12 the Division Bench has considered the pleadings and formulated the issues. Issue no.1 framed therein is, whether the said petitioner who submitted his tender without challenging the term in the tender requiring possession of Dealer Possession Licence, on rejection of his tender form, can seek the extra ordinary remedy under Articles 226 and 227 of the Constitution of India ? The issue has been answered in paragraph no.13. The Division Bench there has found that the petitioner never chose to challenge that condition and participated in the tender process; he participated with open eyes and only after his bid was rejected, he chose to invoke the extra ordinary jurisdiction. The Division Bench, ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 16 therefore, found that he could not have been allowed to approach the High Court in such facts.
20 In paragraph no.23 of the judgment in case of Michigan Rubber (India) Limited .vrs. State of Karnataka and others, (supra), the Hon'ble Supreme Court has after considering the various judgments, summarized the principles emerging from those precedents. It has found that the basic requirement of Article 14 is, fairness in action by the State and non-
arbitrariness in essence and substance, is heartbeat of fair play. The action of State Government is held amenable to judicial review only to the extent that the State must act validly for discernible reason and not whimsically for ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities. The Hon'ble Supreme Court has further observed that fixation of a value is entirely within the purview of the executive and the Courts hardly have any role to play in the process. Similarly in the matter of formulating the conditions of tender document and awarding a contract, greater latitude has been conceded to the State Authorities and the Hon'ble Supreme Court has observed that unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by Court is not warranted. In paragraph no.24, the Hon'ble Supreme Court has pointed out ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 17 questions which should be posed by an authority exercising powers of judicial review. Those observations are :
"24. ...
(i) Whether the process adopted or decision made by the authority is malafide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached "?
and
(ii) Whether the public interest is affected ?"
In Global Energy Ltd and another .vrs. M/s. Adani
Exports Ltd.and others., (supra), in paragraph no.10, the Hon'ble Supreme Court has held that the terms of invitation of tender are not open to judicial scrutiny and the Courts cannot whittle down the same as they are in the realm of contract, unless the same are wholly arbitrary, discriminatory or actuated by malice.
21 Here as already noted above, the petitioner was aware of the terms and conditions of the e-tender and/or e-auction. He did not lodge any ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 18 protest at any point of time. The respondent nos. 1 to 3 have also arranged for a training for such aspirants for whom process was new. Time slot during which each lot was to be auctioned, was advertised well before and petitioner was also aware that after expiry of the minimum period of one hour, if occasion arises, then only there can be three extensions of 10 minutes each. The system generated those extensions automatically and after third extension of 10 minutes, there could not have been any further extension and participation. Thus, the petitioner was aware of the maximum time spent for which each auction was to last and that he could have participated for 1 ½ hours. He never protested against it, but willingly participated and acquiesced in the same.
22 The flow chart referred to by us above, shows his participation till 20.28.02 hours i.e. he was participating in the auction till the end. In this situation, considering the law as laid down by the Division Bench of this Court and noted by us above, we find that the petitioner cannot be permitted to turn around and complain that imposition of such time limit was arbitrary or unwarranted.
23 The purpose of resorting to e-tender or e-auction and object behind it is not in dispute. After e-tender, the highest tendered value has ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 19 been recognized as offset price and e-auction has commenced from that stage. Thus while offering bids in e-tendering process, each bidder was given opportunity to quote maximum value as per his best judgment.
Thereafter, the process of e-auction [as named and devised], gave him second opportunity which infact is like negotiations amongst/between the registered bidders only. He was in a position to see the bids being revised, the increase in each bid and also to hike his bids in accordance with the terms and conditions of the process. He was knowing that auction process was to come to an end at 8.30 p.m. He has quoted an amount of Rs.2,10,00,000/- just prior to one minute of said closure. Highest tender price at which the auction commenced was less than Rs.1,00,000/-. The highest bid accepted by the respondent nos. 1 to 3 is/was Rs. 2,31,00,000/-.
Petitioner who had earlier quoted Rs. 1,00,000/- at 19.05.24 hours had revised his offer to Rs. 2,10,00,000/- step by step, till just one minute prior to closure. While offering that bid, he was aware that after one minute the entire process was to come to an end. Hence, even then it was open to him to offer higher bid. The grievance of present nature is being made only because one Nagpur Sand Trading Private Limited offered an amount of Rs.
2,31,00,000/-, 1 second prior to the expiry of the time limit. It is obvious that while participating in the process, the petitioner was aware of these ::: Downloaded on - 09/06/2013 19:34:15 ::: Judgment wp6372.12 20 contingencies or limitations of the process and still with open eyes he had decided to run that risk.
24 Respondent no.3 in its reply-affidavit has pointed out that out of total 57 sand ghats so put to auction, 37 received response in the process.
Offset price of 37 sand ghats was Rs.9,16,23,488/- while the District Administration actually earned Rs. 19,46,96,653/-. The revenue earnings have thus multiplied by 213% as compared to last year. In relation to ghat no.4 (Waki-B) they have disclosed that revenue earnings multiplied to the extent of 222%. The respondents wanted to avoid formation of ring amongst the contractors/tenderers, a cartel and also desired to avoid pressurizing tactics or threats by established contractors and to induce new buyers by assuring secrecy and safety till the result was out. The way adopted by them guaranteed elimination of all these lacunae and inspired confidence. The respondents have also achieved substantial increase in public revenue because of the mode devised by them. There is no challenge to the mode as devised. The facts on record show that the decision has been taken in public interest and there are no malafides in taking that decision. The process devised is not arbitrary and applies uniformly by extending equal opportunity to all participants.
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25. The entire process has been assailed only on the ground that the e-
auction should have been permitted to come to an end naturally i.e. logically by permitting each bidder to revise his bid further, after getting knowledge of higher bid offered by his competitor. Thus, contention is, till a bidder backed out of the process and only one person remained, the auction process should have been continued. The fact that process was not devised for said purpose, was within the knowledge of the petitioner. The State Government for reasons disclosed, wanted to complete the auction of all sand ghats in a single day and this could not have been possible without dividing the sand ghats into lots and without stipulating the time period for each auction. Thus a best possible decision has been taken by the State Government to augment its revenue and at the same time to keep the process transparent and open to all. We find that the decision cannot be said to be malafide, arbitrary or contrary, only because the process necessitated the time period as prescribed. As auction process has been permitted to last for 1.30 hours, the same cannot be labeled either as arbitrary or malafide or opaque. The petitioner has taken full part and after having failed in such process, he cannot be heard to make a grudge in that respect. .
26 In this situation, we find that no case is made out warranting
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interference in writ jurisdiction. Petition therefore, fails and is accordingly dismissed. Rule discharged. No cost.
JUDGE JUDGE
Rgd.
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