Himachal Pradesh High Court
Sarita Devi vs Secretary on 16 August, 2017
Bench: Sanjay Karol, Ajay Mohan Goel
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No.1673 of 2017 Reserved on : August 4, 2017 .
Date of Decision : August 16, 2017
Sarita Devi ...Appellant.
Versus
Secretary, Excise and Taxation
Department & others ...Respondents.
Coram:
The Hon'ble Mr. Justice Sanjay Karol, Acting Chief Justice. The Hon'ble Mr. Justice Ajay Mohan Goel, Judge. Whether approved for reporting? Yes.
r 1For the Petitioner : Mr. B.C. Negi, Senior Advocate, with Mr. Neeraj Sharma and Mr. Raj Negi, Advocates.
For the Respondents : Mr. Shrawan Dogra, Advocate General, with Mr. Anup Rattan and Mr. Romesh Verma, Additional Advocates General, for respondents No.1 to 4.
Mr. Mohan Jain, Senior Advocate, with Mr. Vikram Jain and Mr. Ajay Vaidya, Advocates, for respondent No.5.
Sanjay Karol, Acting Chief Justice In this petition, we are concerned with the rights of the State and the action of its functionaries in allocating Retail Excise Vends (Liquor), Licence in Form L-2 & L-14, falling within the revenue District Una, Himachal Pradesh - (a) Whether the impugned action of Whether reporters of the local papers may be allowed to see the judgment?
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the Commissioner is in consonance with the Announcements of the Excise allotments pertaining to .
the year 2017-18; (b) the acts of the respondent -
authorities meet the principle of reasonableness, non-
arbitrariness; hence, not violative of Article 14 of the Constitution of India; (c) whether this Court is justified in taking on record bid of the petitioner, higher than that of the private respondent, are the questions, which arise for consideration.r
2. Petitioner Smt. Sarita Devi has assailed the acceptance of the bid of M/s Rana Enterprises (private respondent No.5 - referred to as private respondent), for the allotment of liquor vends in the Revenue District of Una, on the ground that the bid of `46.51 crores, so accepted by Commissioner (Excise and Taxation), Himachal Pradesh (respondent No.2), subsequent to the petitioner having enhanced her bid to `46.50 crores, was arbitrary, discriminatory and further an act of colourable exercise of power, as no opportunity was afforded to her to participate in the process of negotiation alongwith the private respondent. Collusively respondents No.2 (hereinafter referred to as the Commissioner) and ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...3...
respondent No.3 (hereinafter referred to as the Deputy Commissioner) entered into unilateral negotiations with .
the said respondent, calling him to place higher bid, which act of his is per se illegal.
3. In the response filed by the Commissioner, it is averred that the respondent-authority completed the auction process strictly in accordance with the Himachal Pradesh Excise Act, 2011 and the Rules made thereunder as well as Announcements of Excise Allotments by Auction-cum-Tender for the year 2017-18 and that it accepted the final bid which was so offered by the private respondent for an amount of `46.51 crores;
respondent-authorities shall implement the orders of this Court in case auction proceedings are conducted in the Court and more revenue is generated for the State;
pursuant to the Public Notice so issued by the authority, when negotiations took place on 17.07.2017, private respondent offered the highest bid of `45.99 crores, whereas bid offered by the petitioner was only for a sum of `45.11 crores; on the directions of the Commissioner, private respondent was called by the Deputy Commissioner and the amount was increased to a sum of ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...4...
`46.51 crores; offer of the petitioner of `46.50 crores sent in writing was not considered as auction/negotiation .
process stood completed by the Committee and that the bid of private respondent had already attained finality.
4. Private respondent in his reply has taken a stand that there was neither any breach nor any illegality in the allotment of tender. Settled position cannot be allowed to be unsettled, especially when petitioner is not an aggrieved person as she failed to offer an amount higher than so quoted by private respondent. Further, an investment to the tune of `4 crores (Appx.) has been made for procurement of liquor.
5. It is clarified that record from the authorities was called for and examined. From the pleadings of the parties as also from the said record, following undisputed facts emerge.
6. The Excise and Taxation Department of Himachal Pradesh, for allotment of liquor vends of revenue District, Una, for the year 2017-18, issued announcements, with reserve price fixed at `90.05 crores.
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7. Consequently liquor vends of Revenue District, Una, were put to auction in the month of April, .
2017. One Shri Surender Rana, a relative of the petitioner, had given the highest bid, however, since it did not match the reserved price, during the exercise so conducted on 8.4.2017 and 18.4.2017, when the offers of `60 crores (Appx.) & 62 crores (Appx.) (respectively of the bids) were not increased during the negotiations, the process was cancelled, with the State undertaking the exercise of running the vends through its instrumentality, namely, Himachal Pradesh Beverages Ltd. Record of the Department reveals that since the said entity was not in a position to deposit pro-rata amount of excise, a decision was taken to conduct the auction afresh.
8. Hence, Notice Inviting Tender from the general public, for re-allotment of the vends, was issued on 10.7.2017 (Annexure P-2). In terms of the said notice, on 14.7.2017 at 3 pm, the tender was opened. Only two persons offered their bids. Petitioner-Sarita Devi quoted an amount of `42.77 crores, whereas private respondent, quoted an amount of `41 Crores. The said bids were not accepted. Why so, no plausible reason is forthcoming.
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9. Resultantly, another notice dated 14.7.2017 (Annexure P-3) was issued for grant of licence by holding .
negotiations, which reads as under:-
"PUBLIC NOTICE GOVERNMENT OF HIMACHAL RPADESH EXCISE & TAXTION DEPARTMENT NOTICE INVITING APPLICATIONS FOR HOLDING NEGOTIATIONS FOR REMAINING LICENSES OF RETAIL SALE OF COUNTRY LIQUOR (L-14/L-14A) & FOREIGN LIQUOR (L-2) FOR THE REMAINING PERIOD OF THE YEAR 2017-18 ENDING ON 31.03.2018 OF UNA AND CHAMBA DISTRICTS H.P. It is notified for the information of all concerned that applications for holding negotiation are hereby invited for the allotment of following un-allotted/clubbed/de- clubbed liquor units/vends for the remaining period of the year 2017-18 ending on 31.03.2018 of Una and Chamba Districts H.P. The negotiation shall be held in the office of the Dy. Excise & Taxation Commissioner, (North Zone) Himachal Pradesh, Palampur on 17-07- 2017 from 12:30 P.M. onwards.
Terms & Conditions:
1. The applications shall be received in the office of the undersigned at 11:30 A.M.
2. The successful allottee will have to deposit application and license fee at the spot.
3. The Selection Committee shall be competent to take appropriate decision on the spot regarding allotment in order to secure the Government revenue.
4. The recommendations of the Selection Committee shall be subject to confirmation by the Excise & Taxation Commissioner, Himachal Pradesh, as per the law applicable.
5. For detailed Terms & Conditions relating to the allotment/re-allotment please refer to the Announcements of Excise Allotments/Tender for the year 2017-18 which are available on the official website of the H.P. Excise &n Taxation Department i.e. www.hptax.gov.in.
Sd/-
Collector-cum-
Dy.Excise & Taxation Commissioner, (North Zone) H.P. Palampur"
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10. Pursuant to the said notice, again only two parties offered their bids. Petitioner's offer was for a sum .
of `45.11 crores, whereas private respondent's bid was for a sum of `45.99 crores. As such Commissioner recommended that bid of private respondent be accepted. Significantly, such recommendation of the Selection Committee never came to be confirmed by the Commissioner on 17.7.2017 itself.
11. rSo far so good. The game begins thereafter.
12. After the process of negotiations was over, but prior to the acceptance of the bid, on 17.7.2017 itself, at 4 pm, petitioner revised her bid by offering a sum of `46.50 crores. This was so done vide Email (Annexure P-
4). Though receipt of Email stands admitted, but neither the Selection Committee nor the Commissioner acknowledged, much less responded to the same. It was totally ignored in the decision making process.
13. To the contrary, the following day, i.e. on 18.7.2017, Commissioner asked the Deputy Commissioner to further negotiate, but only, with the private respondent.
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14. At this juncture, we may clarify that vide letter dated 17.7.2017, so received in the office of the .
Commissioner on 18.7.2017, petitioner not only reiterated her enhanced offer so made the previous day, but also requested that s he be called for further negotiations by affording opportunity to make bid for issuance of liquor vends. Now even this letter came to be ignored by the Commissioner/Deputy Commissioner.
15. However, pursuant to the "directions" of the Commissioner, the Deputy Commissioner asked the private respondent to enhance the bid, which was so done from a sum of Rs.45.99 crores to `46.51 crores.
Enhancement was only for a sum of Rs.52 lakh and only for a sum of `1,00,000/-, as compared to the enhanced bid offered by the petitioner.
16. The aforesaid facts, to some extent, though in a distorted manner, stand admitted by the State, as is evident from the affidavit dated 31.7.2017 filed by Shri D.C. Negi, Excise & Taxation Commissioner, relevant portions whereof (without being read out of context), are reproduced hereinbelow:-
"... ... ...In this regard, it is submitted that the respondent no.5 has been allotted the vends of District ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...9...
Una in Tender/Negotiation process on dated 17.7.2017 by Tender/Negotiation Committee constituted by respondent no.3 and the same was confirmed by the respondent no.2 on 18.7.2017 for total negotiated auction amount of Rs.46.51 crore for period w.e.f.
.
18.7.2017 to 31.3.2018."
"... ... ...3 to 5. That in reply to these paras it is submitted that the reserved price for the liquor vends of Una district for the year 2017-18 was fixed at Rs.90.05 crore. Since no bidder quoted bid amount exceeding the reserve price during the negotiation process held on 9.4.2017, the respondent authorities did not accept the offered bids and the vends were run by the Himachal Pradesh Beverages Ltd. w.e.f. 13.4.2017. It is pertinent to submit that during the negotiation process held on 9.4.2017, one Mr. Surinder Rana had quoted the highest bid of Rs.63,00,00,227 whereas respondent no.5 quoted Rs.62,75,79,999 during the third round of the negotiation. ..."
"7.to9. That in reply to these paras it is submitted that during negotiation process on 17.7.2017, the respondent no.5 offered the highest bid amount of Rs.45.99 crore and the petitioner offered bid amount of Rs.45.11 crore only. The highest bidder i.e. respondent no.5 was asked by respondent no.3 on the directions of respondent no.2. to further increase the offered bid amount and the respondent no.5 increased the offered amount to Rs.46.51 crore. The respondent no.2 accepted the bid offered by respondent no.5. amounting to Rs.46.51 crore. However the offer of Rs.46.50 crore made by the petitioner through e-mail as well as representation was not considered as the auction/negotiation process was completed by the committee and bid of the respondent no.5 had attained finality."
"... ... ...The respondent no.5, the highest bidder made a increased offer of Rs. 46.51 crore which is higher than the offer of Rs. 46.50 crore made by the petitioner through email after completion of the negotiation process. ... ... ..."
(Emphasis supplied)
17. Significantly no document was placed on the record by the Commissioner alongwith affidavit, reproduced supra.
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18. From the aforesaid averments, at least one thing is clear. Contrary to what the Commissioner .
deposed and wanted the Court to believe, the process of negotiations did not conclude on 17.7.2017 itself. He suppressed that on 18.7.2017 itself, he had asked his subordinate to negotiate only with the private respondent or that such negotiations concluded only the following day, i.e. 18.7.2017. He has taken mutually contradictory and destructive stance. His affidavit does not narrate correct and complete events which led to the acceptance of the bid.
19. If the Commissioner himself was of the view that the process of negotiations stood completed by the Committee, then how is it that the following day, he asked his subordinate to enter into fresh negotiation, and that too only with the private respondent. Noticeably the bid came to be enhanced, by a meager amount, only after: (a) the process of negotiation stood closed; and (b) an offer of higher amount had been made by the petitioner.
20. In our considered view, stand taken by the Commissioner that negotiation stood concluded on ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...11...
17.7.2017 itself, is factually incorrect. He has tried to mislead the Court, for had we not seen the record, it .
wouldn't have been known that the private respondent revised his offer only on 18.7.2017. In case negotiations stood concluded on 17.7.2017 itself, then it was neither open for the petitioner to have enhanced the offer nor was it open for the Commissioner to have asked his subordinate to negotiate, which was for getting an enhanced offer, from the private respondent and that too to the petitioner's exclusion. Perhaps at that point in time, the only option open was to issue a fresh notice, as was so done with the issuance of the notice dated 15.7.2017 (Annexure P-3) or else invite all the parties, who had initially participated in the process of negotiation, for further negotiations.
21. At this stage, we deem it appropriate to discuss the legal position, with regard to the rights and obligations of the State, duties of its functionaries and the rights of the bidders. Also, the powers of a Writ Court to interfere with, in an auction, which is arbitrary, capricious, whimsical, malafide and illegal.
History of Alcoholism and the Paradox in Right of the State to deal in the Trade of Liquor.
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22. History, social and legislative, dealing with the issue of alcoholism, best stands traced by Hon'ble the .
Supreme Court of India in P.N. Kaushal & others vs. Union of India & others, (1978) 3 SCC 558. The Court viewed the impact of alcohol on temperance on a given society.
The paradox in the State indulging in the trade of liquor stands reiterated in the following terms:
"42. ... ... Further, Article 47 charges the State with promotion of prohibition as a fundamental policy and it is indefensible for Government to enforce prohibitionist restraints on others and itself practice the opposite and betray the constitutional mandate. It suggests dubious dealing by State power. Such hollow homage to Article 47 and the Father of the nation gives diminishing credibility mileage in a democratic polity." ...
23. By culling out the principles of law laid down by the Apex Court in its several decisions, moreso, in earlier Constitution Bench (Five Judges) in Har Shankar and others v. The Dy. Excise ad Taxation Commr. and others, (1975) 1 SCC 737, the Constitution Bench (Five Judges) in Khodey Distilleries Ltd. & others vs. State of Karnataka & others, (1995) 1 SCC 574 summarized the law relevant for the issue as under:
"(a) The rights protected by Article 19 (1) are not absolute but qualified. The qualifications are stated in clauses (2) to (6) of Article 19. The fundamental rights guaranteed in Article 19 (l) (a) to (g) are, therefore, to be read along with the said qualifications. Even the rights guaranteed under the Constitutions of the other ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...13...
civilized countries are not absolute but are read subject to the implied limitations on them. Those implied limitations are made explicit by clauses (2) to (6) of Article 19 of our Constitution.
.
(b) The right to practise any profession or to carry on any occupation, trade or business does not extend to practising a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilised societies. It does not entitle citizens to carry on trade or business in activities which are immoral and criminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the general public, i. e. , res extra commercium, (outside commerce). There cannot be business in crime.
... ...
(d) Article 47 of the Constitution considers intoxicating drinks and drugs as injurious to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health. It, therefore, ordains the State to bring about prohibition of the consumption of intoxicating drinks which obviously include liquor, except for medicinal purposes. Article 47 is one of the directive principles which is fundamental in the governance of the country. The State has, therefore, the power to completely prohibit the manufacture, sale, possession, distribution and consumption of potable liquor as a beverage, both because it is inherently a dangerous article of consumption and also because of the directive principle contained in Article 47, except when it is used and consumed for medicinal purposes.
(e) For the same reason, the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor as a beverage and also sell the licences to the citizens for the said purpose by charging fees. This can be done under Article 19 (6) or even otherwise.
... ...
(g) When the State permits trade or business in the potable liquor with or without limitation, the citizen has the right to carry on trade or business subject to the limitations, if any, and the State cannot make discrimination between the citizens who are qualified to carry on the trade or business.
(h) The State can adopt any mode of selling the licences for trade or business with a view to maximise ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...14...
its revenue so long as the method adopted is not discriminatory.
... ..."
Drunken Driving
.
24. Most recently the Apex Court reiterated that law of preventing drunken driving requires proper enforcement [State of Tamil Nadu represented by its Secretary Home, Prohibition and Excise Department & others. Vs. K. Balu and another, (2017) 2 SCC 281].
State's Right to Contract in the trade of liquor and Fairness in dealing with the same
25. In Ramana Dayaram Shetty vs. International Airport Authority of India & others, (1979) 3 SCC 489, the Apex Court held that it is a well settled principle of administrative law that an executive authority must rigorously be held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. The Government, in a welfare State is the regulator and dispenser of special services and provider of a large number of benefits, including licences, but they all share one characteristic. The Court further held that "The State need not enter into any contract with anyone, but if it does so, it must do so fairly without ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...15...
discrimination and without unfair procedure. This proposition would hold good in all cases of dealing by the .
Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, in granting largesse or licences, it cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant.
26. It is a settled principle of law that if the Government departs from standards, which are structured by rational, relevant and nondiscriminatory factors, unless it is shown that the departure is not arbitrary, in fact based on some valid principle, which in itself was not irrational, unreasonable or discriminatory, the action is liable to be struck down.
27. The Apex Court in Raunaq International Ltd.
vs. I.V.R. Construction Ltd. & others, (1999) 1 SCC 492 observed as under:
"9 The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations.::: Downloaded on - 16/08/2017 23:56:28 :::HCHP
...16...
These would be: (1) The price at which the other side is willing to do the work; (2) Whether the goods or services offered are of the requisite specifications; (3) Whether the person tendering has the ability to deliver the goods or services as per specifications. When large .
works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important; (4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality; (5) past experience of the tenderer, and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services. Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.
10. What are these elements of public interest? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work - thus involving larger outlays of public money and delaying the availability of services, facilities or goods.
e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation."
28. In Food Corporation of India vs. M/s Kamdhenu Cattle Feed Industries (1993) 1 SCC 71, the Court observed as under:
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"7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Art, 14 of the Constitution of which non- arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority .
possesses powers only to use them for public good.
This imposes the duty to act fairly and to adopt a procedure which is 'fair play in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review."
29. In State of M.P. & others vs. Nandlal Jailwal & others, (1986) 4 SCC 566, it is held that when State decides to grant right of privilege, it cannot escape the rigors of Article 14 of the Constitution. It cannot act arbitrarily and on its own will. It must comply with equality clause while granting exclusive grant of privilege for selling liquor. Further grant of sale of liquor would essentially be a matter of economic policy.
Power to Accept or Reject
30. In State of Orissa & others vs. Harinarayan Jaiswal & others, (1972) 2 SCC 36, the Court reiterated ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...18...
that the power to accept or reject the highest bid is that of the State. Such power cannot be considered as to be .
arbitrary and if the power is exercised for collateral purposes, the exercise of power would be struck down.
31. A Constitution Bench (Five Judges) in Trilochan Mishra etc. vs. State of Orissa and others, 1971 (3) SCC 153 has held as under:
"14. With regard to the grievance that in some cases the bids of persons making the highest tenders were not accepted, the facts are that persons who had made lower bids were asked to raise their bids to the highest offered before the same were accepted. Thus there was no loss to Government and merely because the Government preferred one tenderer to another no complaint can be entertained. Government certainly has a right to enter into a contract with a person well known to it and specially one who has faithfully performed his contracts in the past in preference to an undesirable or unsuitable or untried person. Moreover, Government is not bound to accept the highest tender but may accept a lower one in case it thinks that the person offering the lower tender is on an overall consideration to be preferred to the higher tenderer."
Right to Negotiate
32. Right of the State to resort to private negotiations instead of public auction justified on account of compulsive situation stands acknowledged by Hon'ble the Supreme Court in Haji T.M.Hassan Rawther vs. Kerala Financial Corporation, (1988) 1 SCC 166.
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Rights of Bidder
33. What are rights of a bidder stands reiterated .
by the Apex Court in Meerut Development Authority vs. Association of Management Studies & another, (2009) 6 SCC 171 in the following terms:
"27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the Authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations.
28. It is so well-settled in law and needs no restatement at our hands that disposal of the public property by the State or its instrumentalities partakes the character of a trust. The methods to be adopted for disposal of public property must be fair and transparent providing an opportunity to all the interested persons to participate in the process.
29. The Authority has the right not to accept the highest bid and even to prefer a tender other than the highest bidder, if there exist good and sufficient reasons, such as, the highest bid not representing the market price but there cannot be any doubt that the Authority's action in accepting or refusing the bid must be free from arbitrariness or favoritism."
34. It is a settled principle of law that with the submission of the highest bid, no right is conferred upon the bidder. [Uttar Pradesh Avas evam Vikas Parishad & others vs. Om Prakash Sharma, (2013) 5 SCC 182].
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35. In Tata Cellular vs. Union of India, (1994) 6 SCC 651 the Court observed as under:
.
"70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness of favoritism. However, it must be clearly stated that there are inherent limitation in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."
36. In Haji T.M.Hassan Rawther (supra), the Apex Court clarified that the State owned or public owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest when it is considered necessary to dispose of a property is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...21...
rational and should not be suggestive of discrimination.
Appearance of public justice is as important as doing .
justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism.
37. Petitioner alleges the impugned action to be illegal inter alia on the ground of collusion that of the authorities with the private respondent. We find such allegation somewhat emanating from the record.
Definitely conduct of the Commissioner is partisan.
38. In the month of April, 2017 itself, Commissioner did not accept the offer of Surender Rana, a relative of the petitioner. It is evident from the reply reproduced supra that his offer was for an amount of `63,00,00,227/-, whereas at that time private respondent had just quoted an amount of `62,75,79,999/-, yet the bid was not accepted. Further, even on 14.7.2017, bid of the petitioner was for a sum of `42.77 crores, whereas bid of private respondent was much lower being `41 crores. Even then the bid was not accepted. Why so? is not evidently clear. But then, we do not go into this aspect. Fact of the matter being that even during the claimed time, i.e. in the process of negotiation, so held ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...22...
pursuant to notice dated 14th July, 2017 bid of private respondent was in no manner lucrative or exceedingly .
higher than what was so quoted by the present petitioner. Offer of the petitioner, post negotiation, but before finalization, enhancing the bid amount, came to be received by the Commissioner the very same day.
One notices that final amount at which the bid came to be accepted was only enhanced by `1,00,000/-. Is it a co-incidence that the amount came to be enhanced by this much amount or is it that offer of the petitioner came to be disclosed to the private respondent and the amount enhanced rather conveniently, only to ensure that counter offer of the petitioner is lower than that of the private respondent at the amount on which the bid was finally accepted.
39. At this juncture, we take note of the communication dated 17.07.2017 of the Deputy Commissioner, addressed to the Commissioner, indicating that in the first two rounds of negotiations the amount of bid offered by the petitioner was much higher than that of the private respondent.
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40. We deem it appropriate to reproduce three communications exchanged inter se respondent No.2 and .
respondent No.3. They read as under:-
Letter dated 17.7.2017 "No.EXN-NZ/-Excise-2421 Office of the Deputy Excise & Taxation Commissioner (North zone), Palampur, District Kangra (H.P.) To The Excise & Taxation Commissioner Himachal Pradesh, Shimla-9 Dated Palampur 17th July, 2017 Subject: Result of Excise negotiations in respect of Una District held on 17-07-2017.
Sir, I have the honour to submit that the negotiations for the allotment of Excise vends of Una District for the remaining period of the year 2017-18, was held today i.e. 17-07-2017 in the office of the undersigned. First of all, offers were invited for individual Excise Units of the District for which only one bidder intended to submit offers for two Units namely Amb and Gagret. Therefore, offers were invited for the whole Una District in which the following two bidders participated:-
1. Smt. Sarita Devi w/w Sh Ranjeet Singh, V.P.O. Hath Sultanu, Tehsil Bangana, District Una (through her Power of Attorney Sh. Rangeel Singh.
2. M/s Rana Enterprises, Vill. Umbewal, P.O. Nikku Nangal, Tehsil Nangal, District Ropar, Punjab (through its Power of Attorney Sh.
Rajiv Rana.
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The offers were invited in three successive rounds. The result of the offer received is as under:-
Name of the First offer Second offer Third offer bidder .
Smt.Sarita Rs.42,79,27,227/- Rs.43,27,27,227/- Rs.45,11,27,227/-
Devi M/s Rana Rs.41,50,00,000/- Rs.42,50,000/- Rs.45,99,99,999/- Enterprises The whole District at the time of negotiations at Shimla for the year 2017-18 was offered at Rs.63,00,00,227/-.00 (highest offered bid) on 09.05.2017 but the same was not finalized in the name of the highest bidder and consequently allotted to HPBL for Rs. 90.05 Crore and after the process of re-
auction the reserve price fixed on pro rate basis for the remaining period of the year 2017-18 was determined at Rs.64,47,28,074 and the highest bid offered today I for Rs.45,99,99,999.00 thereby lesser by Rs.18,47,28,075.00 and the unpaid license fee by the HPBL till 30.06.2017 is Rs.19,01,59,592. The total amount of unpaid license fee and loss of revenue on account of re-auction comes to Rs.37,48,87,667.00. Besides this the amount of license fee due with effect from 01.07.2017 to 16.07.2017 comes to Rs.3.95 Crores whereas the amount of license fee deposited by HPBL for these 16 days is not available.
Therefore, the offer received from M/s Rana Enterprises amounting to Rs.45,99,99,999/- being the highest, is recommended for approval.
Yours faithfully, Sd/-
Deputy Excise & Taxation Commissioner, (North Zone), Palampur, District Kangra (H.P)"
(Emphasis supplied) ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...25...
Letter dated 18.7.2017 "No.7-703/2016-EXN-20843 Excise & Taxation Department Himachal Pradesh.
.
From The Excise & Taxation Commissioner Himachal Pradesh, Shimla-9 To The Dy.Excise & Taxation Commissioner, (North Zone) Palampur, Himachal Pradesh.
Dated Shimla-9, the 18 July, 2017 Subject: Result of Excise Negotiations in respect of Una and Chamba Districts held on 17.07.2017.
Sir, Kindly refer to your letters no EXN-NZ-Excise-
2421 dated 17th July, 2017 and even no. 2425 on dated 17th July, 2017 on the subject cited above.
I am directed to say that, on perusal of result of excise negotiations in respect of Una and Chamba district held on 17.07.2017, submitted by you, it has been decided to further negotiate with the highest bidder for increasing the respective offer.
In view of above, you are therefore requested to further negotiate with respective highest bidder(s) in said negotiation process for increase of respective bids for revenue Districts of Una and Chamba in the interest of Govt. revenue and submit the final negotiated offers from the highest bidder for approval to this office.
Yours faithfully, Sd/-
Jt. Excise & Taxation Commissioner (D) Himachal Pradesh.
(Emphasis supplied) ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...26...
Letter dated 18.7.2017 "No.EXN-NZ-Excise-2467 Office of the Deputy Excise & Taxation Commissioner .
(North zone), Palampur, District Kangra (H.P.) Dated Palampur 18th July, 2017 To The Excise & Taxation Commissioner Himachal Pradesh, Shimla-9 Subject: Result of Excise negotiations in respect of Una District held on 17-07-2017.
Sir,
r to
Kindly refer to your office letter No. 7- 703/2016-EXN-20843 dated 18.07.2017 and in continuation to this office letter No.EXN-NZ-Excise- 2421 dated 17th July, 2017 of the retail vends/units of the Una district M/s Rana Enterprises offered highest bid for the whole district amounting to `45,99,99,999/-.
Now the said bidder vide e-mail dated 18-07-2017 has increased the bid price to `46,51,00,000/- (copy enclosed).
It is, therefore, recommended that increased bid price offered by the said highest bidder amounting to `46,51,00,000/- may please be approved for the remaining period of the year 2017-18.
Sd/-
Dy. Excise & Taxation Commissioner, North Zone, Palampur."
(Emphasis supplied)
41. Now a reading of the aforesaid communications reveals that the process of negotiation was directed to be with and in fact was so done only with ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...27...
private respondent. Why so? is not evident from the record. It is not that petitioner's offer was not there, or .
she was otherwise ineligible or unsuitable. Commissioner does not assign any reason, save and except that negotiations stood completed on 17.7.2017 itself. If it was so, then how could he direct for holding further negotiations and that too only with one party.
42. It is in this backdrop, we find the Commissionerr to have deposed, rather incorrectly, bordering falsehood. Communication addressed by the private respondent, enhancing his bid, is reproduced, in toto, as under:-
"To The Excise and Taxation Commissioner, Himachal Pradesh, Shimla.
Sir, With due respect I wish to state that we had given bid of Rs.45,99,99,999.00 during negotiation of District Una. Now we are revising our bid to Rs.46,51,00,000/- for District Una for 2017-18.
Thanking you Yours faithfully Sd/-
Rajeev Rana
Dated: 18/07/2017 For Rana
Enterprises"
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...28...
43. We have doubts as to whether further
negotiations ever took place with the Deputy
.
Commissioner, for the above letter came to be addressed not to him but to the Commissioner. Why is it that the Commissioner never informed the Deputy Commissioner about the petitioner's subsequent offer? If the Deputy Commissioner was aware of the same then why is it that he did not exercise his authority in protecting the interests of the Revenue by also inviting the petitioner for negotiation, for after all, the duty to negotiate was only his and thereafter bid was to be confirmed by the Commissioner. We may only observe that Office of the Commissioner is situate at Shimla, whereas, that of the Deputy Commissioner is at a distant place i.e. Palampur.
It is nobody's case that such revised bid came to be communicated to the Commissioner either by Email or Fax or that private respondent was in touch with the Commissioner and negotiating with him or that Deputy Commissioner had disclosed to the private respondent about the directions so issued by the Commissioner.
44. Further, it is a matter of record that liquor vends came to be allotted in favour of private ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...29...
respondent, vide communication dated 18.7.2017 and the vends handed over on 19.7.2017, with a deposit of a .
sum of `3,90,14,000/-, in terms of Condition No.2.25 and 2.26 of the Excise Announcement. It is also a matter of record that pursuant to the said allotment, permit for transportation of liquor was issued on 22.7.2017.
45. While contending that petition ought to be dismissed purely on the ground of suppression and concealment of such facts, Mr. Mohan Jain, learned Senior Advocate, has further added to the facts, that petitioner being in the related trade and a business competitor, was fully aware that out of 92 retail outlets, 60 of them had become fully functional, with 250 persons gainfully employed. Also, investments to the tune of `10 crores were made.
46. The contention qua suppression and concealment is misconceived, and not borne out from the record. Except for bald statement so made at the bar, not an averment, there is nothing on record to establish -
(a) opening of 60 liquor vends, (b) engagement of 250 persons, and (c) investment of `10 crores. The only investment made, as is evident from the Annexures to ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...30...
the affidavit, so filed by the private respondent, is of a sum of `3.90 crores (approximately) and that too for .
procurement of quota of liquor, which is imperishable.
47. Be that as it may, it is a matter of record that with the allotment in favour of private respondent, petition came to be drafted and filed in the Registry of this Court on 21.7.2017, and 22nd and 23rd being holidays, matter was taken up on 24.7.2017, when following interim order was passed:
r "Mr. B.C. Negi, learned Senior Advocate, under instructions, states that the petitioner is ready to enhance the bid amount from `46.50 crores to `49.51 crores. Mr. Negi further points out that the offer of private respondent No.5, as accepted by the Selection Committee, is contrary to the interest of the revenue as also the process of negotiation so adopted by the Selection Committee, as stipulated in terms of the notice inviting applications (Annexure P-3).
Notice. Mr. J.K. Verma, learned Deputy Advocate General, appears and waives notice on behalf respondents No.1 to 4. Dasti notice be issued to respondent No.5, returnable for 28th July, 2017. Steps for service, complete in all respects, be positively taken during the course of the day. In the event of steps being taken, Registry to hand over dasti notice to the learned counsel for the petitioners by 25th July, 2017.
List on 28th July, 2017. In the meanwhile, we stay the allotment so made in favour of M/s Rana Enterprises-respondent No.5 pertaining to liquor vends in District Una, H.P. Copy dasti."
(Emphasis supplied) ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...31...
48. Petitioner stands by the offer and agrees to immediately deposit 20% - 5% in excess of the Policy - of .
the bid amount.
49. At this juncture, we may observe that on two different dates, suggestion of the Court in matching the offer of the petitioner did not find favour with the private respondent. To the contrary, it was argued that it was not within the domain of the Court to either call upon the parties to bid or call upon the private respondent to meet the bid so made by the petitioner.
50. As far as jurisdiction of this Court under Article 226 of the Constitution of India is concerned, we are not oblivious of the fact that this Court is not to substitute its decision with that of the authorities concerned, in the matter of acceptance of bids, but in case decision of the authorities is not fair, legal and/or transparent, then obviously this Court is duty bound to interfere with the same, in exercise of its extra ordinary jurisdiction, which confers upon this Court wide powers to interfere where the order smacks of perversity or illegality as a result of arbitrary exercise of power.
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51. Merely because the formula proposed by the Court was better and should have been preferred, cannot .
be a reason for the Court to substitute its view in a writ jurisdiction. Also the Court cannot direct the Commissioner to accept the bid. [Excise Commissioner, U.P., Allahabad & others vs. Prem Jeet Singh Gujral & others, (1984) 1 SCC 270]
52. The Court in State of Punjab vs. Yoginder Sharma Onkar Rai & Co. & others, (1996) 6 SCC 173 laid down two principles: (a) Loss to the exchequer may be a factor which may be taken into account in genuine cases but finality of action must also be recognized to be in the interests of the exchequer. (b) A writ court can interfere with an order passed by the Commissioner only if it is found to be perverse that is to say if it found its conclusions such as not reasonable arrived at on the record.
53. The Court can ensure that the statutory functions are not carried out of the whims and caprices of the functionaries of the State in an arbitrary manner.
True it is that the Court itself cannot take over these functions but then before parting with the grant, eligible ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...33...
persons should be afforded equal opportunity to bid in the auction, ensuring absolute transparency. [Nagar .
Nigam, Meerut vs. Al Faheem Meat Exports (P) Ltd. & others, (2006) 13 SCC 382]
54. Error apparent on the face of record in the action of the Commissioner, in exercise of grant of liquor licence would be a reason sufficient enough for the court to interfere in the writ jurisdiction. [Bishnu Ram Borah & another vs. Parag Saikia & others, AIR 1984 SC 898] Arbitrariness
55. A Constitution Bench (Five Judges) in K.N.Guruswamy vs. The State of Mysore and others, AIR 1954 SC 592 had an occasion to deal with a case where the appellant was the highest bidder. Before his bid could be confirmed his rival, who had not participated in the auction gave a bid of an amount higher than that of the appellant. The Commissioner cancelled the process of auctioning and directed his subordinate to take action, who accepted the bid of the rival candidate and allotted the work. The Supreme Court disapproved such action by making the following observations:
"20. The next question is whether the appellant can complain of this by way of a writ. In our opinion, he ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...34...
could have done so in an ordinary case. The appellant is interested in these contracts and has a right under the laws of the State to receive the same treatment and be given the same chance as anybody else. Here we have Thimmappa, who was present at the auction .
and who did not bid-not that it would make any difference if, he had, for that fact remains that he made no attempt to outbid the appellant. If he had done so it is evident that the appellant would have raised his own bid.
The procedure of tender was not open here because there was no notification and the furtive method adopted of settling a matter of this moment behind the backs of those interested and anxious to complete is unjustified. Apart from all else, that in itself would in this case have resulted in a loss to the State because, as we have said, the mere fact that the appellant has pursued this writ with such vigour shows that he would have bid higher. But deeper considerations are also at stake, namely the elimination of favoritism and nepotism and corruption:
not that we suggest that that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the legislature in its wisdom has endeavoured to avoid. All that is part and parcel of the policy of the legislature. None of it can be ignored.
We would therefore in the ordinary course have given the appellant the writ he seeks. But, owing to the time which this matter has taken to reach us (a consequence for which the appellant is in no way to blame, for he has done all he could to have an early hearing), there is barely a fortnight of the contract left to go. We were told that the excise year for this contract (1953-54) expires early in June. A writ would therefore be ineffective and as it is not our practice to issue meaningless writs we must dismiss this appeal and leave the appellant content with an enunciation of the law. But as he has in reality won his case and is prevented from reaping the full fruits of his victory because of circumstances for which he is not responsible, we direct that the first respondent, the State of Mysore, and the fourth respondent, Thimmappa pay the appellant his costs hear and in the High Court." ...
Disposal of Public Property partakes character of trust
56. The Government has a right not to accept the highest bid and even to prefer a tenderer other than the ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...35...
highest bidder, if there exists good and sufficient reasons. In Ram & Shyam Company vs. State of Haryana .
& others, (1985) 3 SCC 267 the Apex Court illustrated such reasons, inter alia, to be the highest bid not to represent the market price or need to give concession to the weaker section of the society, enabling to outbid the highest bidder. However, the Court clarified that disposal of public property partakes character of trust and disposal thereof r must be by such a method as would grant an opportunity to public at large to participate in it, the State reserving to itself the right to dispose it off, as best sub-serve the public will. The Court itself undertook the exercise of calling the parties to improvise their offers and what came as a "shock and surprise" as recorded in para-6 of the report, the parties tried to outbid each other by raising their bids multiple times. It is in this backdrop the Court observed that "public property has to be dealt with for public purpose and in public interest". Disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and it must be done at the best price so that larger revenue coming into the coffers of ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...36...
the State administration, serves public purpose i.e. welfare measures stand sub-served. The Court observed .
that:
12. ... "or further the public property has to be dealt with for public purpose and in public interest" ...
... "On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficent activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy". ... ...
57. In the very same report, relying upon M/s Kasturi Lal Lakshmi Reddy vs. State of Jammu & Kashmir & another, (1980) 4 SCC 1, the Court reiterated that where any governmental action fails to satisfy the test of reasonableness and public interest and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government, therefore, ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...37...
cannot, for example, give a contract or sell or lease out its property for a consideration less than the highest that .
can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. The Court held that acceptance of an offer secretly made and sought to be substantiated on the allegations would certainly amount to arbitrary action in the matter of distribution of State largesse.
58. Significantly, said decision stands followed in Manoj I Naik & Associates vs. Official Liquidator, (2015) 3 SCC 112; Rakesh Kumar Goel & others vs. Uttar Pradesh State Industrial Development Corporation Limited & others, (2010) 8 SCC 263; Meerut Development Authority (supra); Nagar Nigam, Meerut vs. Al Faheem Mid Exports (P) Ltd. & others, (2006) 13 SCC 382; Ramchandra Murarilal Bhattad & others vs. State of Mahrashtra & others, (2007) 2 SCC 588; Tata Cellular (supra); and Haji T. M. Hassan Rawther (supra).
59. Though there are no specific allegations of malafide in the writ petition, but the manner in which the respondent-authority has dealt with the entire matter, indicates that acceptance of bid of the private ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...38...
respondent is nothing but an act of colourable exercise of power. The action is per se illegal, arbitrary, irrational, .
illogical and unreasonable.
60. Repetitive though it may sound, but we must say.
61. Negotiations, which took place on 17.7.2017, were not accepted by the Commissioner. On the said date itself, through E-mail, petitioner had expressed her intention, enhancing the amount of bid to `46.50 crores.
This was followed by confirmation so received in the office of the Commissioner on 18.7.2017, vide which, while reiterating her enhanced offer of `46.50 crores, petitioner requested that she be called for further negotiations. However, rather than doing so, Commissioner called upon the Deputy Commissioner to negotiate the matter only with the private respondent, seeking enhancement of the amount of bid. This led to the enhancement of the bid by the private respondent to `46.51 crores i.e. by just a sum of `1,00,000/- ,more than the amount which was offered by the petitioner and the said enhanced amount was accepted/confirmed by the Commissioner, without either intimating or calling upon ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...39...
the petitioner to participate in the negotiations. We fail to understand as to why petitioner was not associated in .
the negotiations, because intent of negotiations is also to generate more revenue to the State. We have already observed that earlier also even when bid of private respondent was not the highest, auction proceedings were not taken to their logical conclusion. From this also, it can be inferred that act of the authority in accepting the bid of the private respondent in the mode and manner, enumerated above, is nothing but an act of colourable exercise of power.
62. We may add, Announcements of Excise allotment for the year 2017-18 are salutary and have to be religiously followed by the respondents-authority in the matter of allotment of liquor vends. As is evident from the correspondence, decision to have the vends auctioned was only to generate maximum revenue, else vends could have been continued to be operational by an instrumentality of the State.
63. Allotment of the vends is required to be confirmed by the Commissioner, Excise and Taxation, Himachal Pradesh, in terms of clause 1.3 of the Liquor ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...40...
Policy. Being custodian of public property and trust, he could not have allowed the private respondent to benefit, .
by compromising the interests of the State.
64. In the present case, from the facts and circumstances enumerated above, we find that rather than adhering to the clauses of Announcements of Excise allotment for the year 2017-18, issued by the Excise and Taxation Department, the authorities acted in an arbitrary manner, while accepting the bid of private respondent. Right to decide coupled with duty to do so in the manner, which is just, fair and reasonable.
65. Acceptance of such a bid cannot be said to be a result of a process of negotiations, which is just, fair, reasonable or in the interest of Revenue. When on 17.7.2017 itself, petitioner had enhanced her bid to `46.50 crores, then why the authorities rather than having the matter re-negotiated between the private bidders, unilaterally called upon the private respondent to enhance his bid. This act of the authorities, in our considered view, is wholly arbitrary and not in consonance with the spirit of announcements of excise ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...41...
allotment for the year 2017-18. Definitely, it was not to protect the interest of the Revenue.
.
66. It is not the case of any one of the respondents herein that petitioner was otherwise ineligible or unsuitable to have participated either in the process of auction or negotiations. She is not a person of bad character or suspected to have indulged in the activity of pooling or any other activity prejudicial to the interest of r Revenue/Government. Twice she had participated. She was not barred from making the bid. In fact positively interested to go ahead with the bidding process.
67. The Constitution Bench in Khodey Distilleries Ltd.
(supra), held the purpose of selling licences for trade in alcohol was also to maximize revenue. It cautioned that while distributing the State largesse, method adopted should not be discriminatory. This mandate of Constitution Bench stands reiterated subsequently in several decisions referred to in paras 22 to 29 (supra). Yes, the right to negotiate and select the bidder as has been so held by the Apex Court in Haji T.M.Hassan Rawther (supra) and Meerut Development Authority (supra) is that of the State and that ipso facto fact does not confer any right on the bidder of confirmation of his ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...42...
bid but then as has been held in Tata Cellular (supra), action of the authorities finalizing the process can subject to judicial .
review. To us, the instant case appears to be identical to the one with which the Apex Court was seized in Ram & Shyam Company (supra). We are reminded of the observations made by the Constitution Bench of Apex Court in K.N.Guruswamy (supra) to the effect that negotiation, which is secretive cannot meet the test of reasonableness or non-
arbitrariness. Presumably, it is expected of the functionaries of the State to be aware of this position of law. Their acts must not smack of illegality or arbitrariness. Hence such actions are subject to judicial scrutiny.
68. During the course of hearing learned Advocate General, expressed concern of the State in protecting the interests of revenue. Both the learned counsel appearing for the petitioner and for the private respondent clarified that they were willing to abide by the terms of Excise Policy, inasmuch as requisite quota of liquor so stipulated in Clause 2.17 shall be lifted.
69. The period in issue, for which the offers came to be made by the parties, was from 18.7.2017 upto 31.3.2018. Private parties have clarified that in the event of liquor vend allotted/continued to be allowed to be ::: Downloaded on - 16/08/2017 23:56:28 :::HCHP ...43...
operated, in terms of the allotment, time spent in the Court shall be taken to be period of contract, not .
adversely affecting the interests of Revenue. In effect, parties are ready and willing to accept the contract, even without opening the vends, for such time this Court was seized of the matter.
70. Thus, on all counts, we find interests of the State stands adequately protected. In fact, State stands to benefit with the increase of the offer by the present petitioner to the tune of `3.1 crores. Also, petitioner has agreed to deposit 20% of the bid amount. This is also in public interest.
71. We have already recorded about the conduct of the Commissioner, which, to our mind is definitely not reflective of interests of the State or the Revenue. We are of the considered view suppression of fact amounts to abuse of process of law. Suppression is of relevant and material fact having bearing on the outcome of the decision of the petition.
Also had the Commissioner disclosed the factum of petitioner's counter-offer to his subordinate, perhaps the decision would have been different. In such circumstances, ordinarily we would have issued notice of contempt, for not disclosing complete facts in his affidavit, but refrain from ::: Downloaded on - 16/08/2017 23:56:29 :::HCHP ...44...
doing so. However, we find it not prudent to have the present Commissioner associated any longer with the process of .
allotment of the vends in question. As such, we direct the Chief Secretary, Government of Himachal Pradesh to either himself or through the Principal Secretary (Finance) or any other Officer but not below the rank of Principal Secretary, so nominated in accordance with law and Announcements of the Excise Allotments, take further decisions with respect to the allotment of the vends in question.
72. In Eureka Forbes Limited vs. Allahabad Bank and others, (2010) 6 SCC 193, the Apex Court observed:
78. The concept of public accountability and performance is applicable to the present case as well. These are instrumentalities of the State and thus all administrative norms and principles of fair performance are applicable to them with equal force as they are to the Government department, if not with a greater rigor. The well established precepts of public trust and public accountability are fully applicable to the functions which emerge from the public servants or even the persons holding public office. In State of Bihar v. Subhash Singh, (1997) 4 SCC 430, this Court, in exercise of the powers of judicial review stated that, the doctrine of full faith and credit applies to the acts done by officers in the hierarchy of the State. They have to faithfully discharge their duties to elongate public purpose ::: Downloaded on - 16/08/2017 23:56:29 :::HCHP ...45...
79. Inaction, arbitrary action or irresponsible action would normally result in dual hardship. Firstly, it .
jeopardizes the interest of the Bank and public funds are wasted and secondly, it even affects the borrower's interest adversely provided such person was acting bonafide. Both these adverse consequences can easily be avoided by the authorities concerned by timely and coordinated action. The authorities are required to have a more practical and pragmatic approach to provide solution to such matters. The concept of public accountability and performance of functions takes in its ambit proper and timely action in accordance with law. Public duty and public obligation both are essentials of good administration whether by the State instrumentalities and/or by the financial institutions.
80. In Centre for Public Interest Litigation & Anr. v. Union of India & Anr., (2005) 8 SCC 202, this Court declared the dictum that State actions causing loss are actionable under public law and this is as a result of innovation to a new tool with the court, which are the protectors of civil liberty of the citizens and would ensure protection against devastating results of State action. The principles of public accountability and transparency in State action even in the case of appointment, which essentially must not lack bonafides were enforced by the Court. All these principles enunciated by the Court over a passage of time clearly mandate that public officers are answerable both for their ::: Downloaded on - 16/08/2017 23:56:29 :::HCHP ...46...
inaction and irresponsible actions. What ought to have been done, if not done, responsibility should be fixed on the erring officers then alone the real .
public purpose of an answerable administration would be satisfied.
81. The doctrine of full faith and credit applies to the acts done by the officers and presumptive evidence of regularity of official acts done or performed, is apposite in faithful discharge of duties to elongate public purpose and to be in accordance with the procedure prescribed. It is known fact that, in transactions of the Government business, none would own personal responsibility and decisions are leisurely taken at various levels [refer : State of Andhra Pradesh v. Food Corporation of India, (2004) 13 SCC 53.]
82. Principle of public accountability is applicable to such officers/officials with all its vigour. Greater the power to decide, higher is the responsibility to be just and fair. The dimensions of administrative law permit judicial intervention in decisions, though of administrative nature, but are ex facie discriminatory. The adverse impact of lack of probity in discharge of public duties can result in varied defects not only in the decision making process but in the decision as well. Every public officer is accountable for its decision and actions to the public in the larger interest and to the State administration in its governance."
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Judgments cited by the private respondent
73. While contending that the petitioner .
committed an act of fraud by concealing relevant material information which led to the passing of interim order, Sh. Mohan Jai, learned Senior Counsel, has invited our attention to paragraphs 34 to 41 of the decision rendered in K. D. Sharma vs. Steel Authority of India Limited & others, (2008) 12 SCC 481.
74. The jurisdiction of the court to interfere in the nature of the contract with which we are dealing is now well settled. So also that the petitioner must come out with clean breast and if the Court found the facts to be otherwise, the claim howsoever tenable can be rejected purely on such ground. But then, these are not the facts here, as we have already discussed.
75. For similar reasons, we find the decision rendered in Dalip Singh vs. State of Uttar Pradesh & others, (2010) 2 SCC 114, not to be applicable.
76. Reliance on the decision rendered by the apex Court in Valji Khimji & Company vs. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & others, (2008) ::: Downloaded on - 16/08/2017 23:56:29 :::HCHP ...48...
9 SCC 299 is also of no consequence. Reliance is laid on para-31 of the report which reads as under:
.
"28. If it is held that every confirmed sale can be set aside the result would be that no auction-sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount." ... ...
Submission that no confirmation of the bid in an auction can be set aside is untenable in law. In this regard reliance on para 28 of the report is misconceived. It is not ratio decidendi that under no circumstance sale can be set aside. On the contrary, in para-27 of the said report the Court held it to be otherwise.
77. Reliance in S. Soundararajan & others vs. Khaka Mohamed Ismail Saheb of Messrs. Roshan & Co.
AIR 1940 Madras 42 is also of no consequence and is totally misplaced.
78. Reliance in Bishnu Ram Borah & another vs. Parag Saikia & others, AIR 1984 SC 898 is not applicable to the given facts and circumstances.
79. In Excise Commissioner of U.P. & others vs. Manminder Singh & others, (1983) 4 SCC 318, Court only stated that the Commissioner is not bound to re-auction every time he receives a better offer and the Court will not interfere if he refuses to entertain better offers after ::: Downloaded on - 16/08/2017 23:56:29 :::HCHP ...49...
the auction is held. On the other hand, if he receives substantially better offers and so, in the interest of the .
revenue, he orders re-auction, then too the Court should not interfere. The said observations were made in a case where the action of the Commissioner was not found to be violative of Article 14 of the Constitution of India.
80. Decision rendered in Prem Jeet Singh Gujral (supra) already dealt with.
81. Reliance is placed on the observations made by the Apex Court in paras-14 & 15 of decision rendered in Harinarayan Jaiswal (supra) wherein it is held that the State can grant licence by adopting any of the methods prescribed in the statute. Significantly in para-13 of the report itself, Court clarified that exercise of such power for collateral purpose is liable to be struck down by the Courts.
82. Under these circumstances, we hold (a) the action of Excise and Taxation Commissioner (respondent No.2) in allotting liquor vends of District Una, in favour of M/s Rana Enterprises (private respondent No.5) to be illegal and as such quash the allotment letter; (b) notwithstanding the fact that private respondent had ::: Downloaded on - 16/08/2017 23:56:29 :::HCHP ...50...
refused to enter into any exercise of negotiation before this Court, we direct the Chief Secretary, Government of .
Himachal Pradesh/Officer nominated to immediately hold fresh negotiations with the private parties, by taking the amount of `49.51 crores, as quoted by the petitioner, to be the minimum reserve price; (c) the process of negotiation shall positively be completed within next 24 hours and accordingly we direct the petitioner and the private respondent to make themselves available in the office of the Chief Secretary on 17.8.2017 at 10 a.m.; (d) we direct that, in any event, petitioner is bound by such offer; (e) if for whatever reason, petitioner fails to participate in the said process, she shall be liable to pay a sum of `3,90,14,000/-, the amount equivalent to the sum deposited by the private respondent on 19.7.2017, which shall be recovered as arrears of land revenue and also in future she shall be debarred from participating in the auction of liquor vends. Also, in that eventuality, it shall be open for the private respondent to claim damages, if any, from the petitioner, in accordance with law; (f) if the private respondent fails to participate, it shall be open for the Chief Secretary/ nominated Officer to accept the bid ::: Downloaded on - 16/08/2017 23:56:29 :::HCHP ...51...
of the petitioner, which decision, we clarify shall be taken by him in exercise of his statutory power; (g) in the event .
of the State cancelling the process, petitioner shall be deemed to be discharged of all commitments and liabilities; (h) the Chief Secretary/nominated Officer shall take a decision with regard to the quota of liquor already received by the private respondent.
In view of the above, writ petition stands disposed of, so also pending application(s), if any.
Copy dasti.
( Sanjay Karol ),
Acting Chief Justice
( Ajay Mohan Goel ),
August 16, 2017(sd) Judge.
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