Jharkhand High Court
M/S R.S. Traders vs The State Of Jharkhand Through The ... on 5 December, 2022
Author: Rajesh Shankar
Bench: Rajesh Shankar
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 810 of 2020
M/s R.S. Traders, represented by its Proprietor namely, Rajiv Ranjan
Singh, Deoghar ... ... Petitioner
Versus
1. The State of Jharkhand through the Secretary, Department of
Urban Development and Housing, Ranchi
2. Joint Secretary, Department of Urban Development and Housing,
Ranchi
3. Deoghar Municipal Corporation, through its Chief Executive Officer,
Deoghar Municipal Corporation, Deoghar
4. M/s Swati Industries, through its Director, Ranchi ... Respondents
CORAM: HON'BLE MR. JUSTICE RAJESH SHANKAR
-----
For the Petitioner : Mr. Indrajit Sinha, Advocate For the Respondent Nos.1 & 2 : Mr. Shray Mishra, AC to AG For the Respondent No. 3 : Mr. Vijay Shanker Jha, Advocate
-----
Order No. 11 Dated: 05.12.2022 The writ petition was initially filed for quashing letter no. 624 dated 14.02.2020 issued by the respondent no. 2 - Joint Secretary, Department of Urban Development and Housing, Ranchi to the Municipal Commissioner, Deoghar Municipal Corporation.
2. During pendency of the writ petition, a supplementary affidavit was filed on behalf of the petitioner on 23.11.2021 confining the prayer made in the writ petition to the extent of quashing letter no. 642 dated 24.02.2020 (Annexure-4 to the writ petition) issued by the Assistant Municipal Corporation, Deoghar Municipal Corporation, Deoghar, whereby the agreement dated 03.07.2018 executed between the petitioner and the respondent no. 3 has been cancelled on the direction of the respondent no. 2 issued vide letter no. 624 dated 14.02.2020.
3. Learned counsel for the petitioner submits that a tender was invited by the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar for making settlement with respect to collection of hoarding tax/advertisement tax from persons desirous of publicity and advertisement of their brand by fixing posters, boards, hoardings and other advertisement mediums etc. within the jurisdiction of Deoghar Municipal Corporation. The petitioner participated in the said 2 tender and was declared successful. Thereafter, an agreement was executed between the petitioner and the respondent no. 3 on 19.05.2018 for a period of one year commencing from 12.04.2018 and expiring on 31.03.2019. The petitioner erected several hoardings for advertisement, however, due to widening of roads, many hoardings were removed and the petitioner suffered huge loss. The Deoghar Municipal Corporation after approval of the Board, executed a fresh agreement on 03.07.2018, the period of which was from 12.04.2018 to 31.03.2023. Pursuant to the said agreement, the Deoghar Municipal Corporation instructed the petitioner to install unipole hoardings and accordingly, the petitioner started erection of such hoardings getting orders from desirous persons so as to collect hoarding tax on behalf of the respondent no. 3. The petitioner vide letter dated 26.11.2018, informed the respondent no. 3 that it had commenced the first phase of establishing unipoles and thereafter on the direction of the respondent no. 3, the petitioner deposited a total sum of Rs. 4,65,000/- in the account of Deoghar Municipal Corporation. The Department of Urban Development and Housing through its Joint Secretary vide letter no. 624 dated 14.02.2020 addressed to the Municipal Commissioner, Deoghar Municipal Corporation inter-alia directed to cancel the agreement executed in favour of the petitioner and to issue a fresh tender. Pursuant to the said letter, the Assistant Municipal Commissioner, Deoghar Municipal Corporation, Deoghar cancelled the settlement of the petitioner vide letter no. 642 dated 24.02.2020.
4. It is also submitted that the State Government cannot interfere with working of the municipal corporation which is governed under the provisions of the Jharkhand Municipal Act, 2011 and, therefore, issuance of letter dated 14.02.2020 is without jurisdiction. It is well settled that the State even in the matter of contract has to act fairly and reasonably and any action which violates Article 14 of the Constitution of India is liable to be struck down. It is further submitted that no notice was ever served upon the petitioner by the respondents and the said act of cancellation of the agreement without issuing prior notice to the petitioner and providing an 3 opportunity of hearing to it is wholly unfair and arbitrary. After cancellation of the agreement of the petitioner, a fresh tender was floated under the signature of the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar inviting bids for the financial year 2020-21, whereupon the petitioner served legal notice to the Chief Executive Officer, Deoghar Municipal Corporation, Deoghar on 27.03.2020 and requested to keep the said NIT in abeyance till the petitioner avails a legal remedy, however, the respondent no. 3 vide order as contained in letter no. 950 dated 01.04.2020, allotted the work to the respondent no. 4 - M/s Swati Industries, Namkum, Ranchi.
5. Learned counsel for the petitioner further submits that during Covid-19 pandemic, all the tenders floated by the Deoghar Municipal Corporation were cancelled except the present one which suggests intention of the respondent-Corporation to favour the respondent no. 4. The petitioner is still ready and willing to perform its part of contract in view of agreement dated 03.07.2018 which clearly mentions that the balance consideration amount of Rs. 15,22,900/- would be paid by the petitioner in two equal installments within the agreement period i.e., from 12.04.2018 to 31.03.2023. The term of the agreement was extended from one year to five years at the sole discretion of the respondent no. 3 in pursuance of which the petitioner deposited a total sum of Rs.9,30,000/- by way of two account payee cheques in favour of Deoghar Municipal Corporation.
6. On the contrary, learned counsel for the respondents submits that the petitioner failed to comply para 6 of the first agreement dated 19.05.2018, whereby it was required to deposit Rs.25,35,000/- in the month of September, 2018 which was not deposited. Thereafter, the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar issued letter no. 3660 dated 24.12.2018 to the petitioner demanding payment of the said amount, failing which the tender was to be cancelled in addition to recovery of the due amount by initiating legal proceeding against it. In response to the said letter, the petitioner vide letter dated 15.01.2019 requested the said authority to provide some more time to pay the 4 remaining amount. The Municipal Commissioner, Deoghar Municipal Corporation, Deoghar again issued demand notice to the petitioner vide letter no. 1586 dated 17.06.2019 for depositing the due amount of Rs.15,22,900/-. After receiving the said letter, the petitioner, vide letter dated 20.06.2019 replied the respondent no. 3 that since the period of the agreement was for five years i.e., from 12.04.2018 to 31.03.2023, it would pay the remaining amount in two equal installments within the said agreement period. The Municipal Commissioner, Deoghar Municipal Corporation, Deoghar again issued demand notice on 24.01.2020, however, the petitioner failed to pay the said amount. The Municipal Commissioner, Deoghar Municipal Corporation, Deoghar after obtaining legal opinion issued letter no. 145 dated 10.01.2020 to the Principal Secretary, Department of Urban Development and Housing, Government of Jharkhand seeking necessary instructions in this regard. Pursuant to the said letter, the Joint Secretary of the said Department vide letter no. 624 dated 14.02.2020 communicated the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar regarding instruction given by the Principal Secretary, Department of Urban Development and Housing, Government of Jharkhand to call explanation from the former Municipal Commissioner, Deoghar Municipal Commissioner, Deoghar for violating regulation 6(3)(ii) of Jharkhand Local Bodies Advertisement Regulation, 2017 (hereinafter referred to as "Regulation, 2017"). The Municipal Commissioner was also instructed to cancel the previous tender and to invite new tender so as to select a new agency. Thereafter, the Assistant Municipal Commissioner, Deoghar Municipal Corporation, Deoghar issued letter no. 641 dated 24.02.2020 to Sanjay Kumar Singh, former Municipal Commissioner, Deoghar Municipal Corporation, Deoghar, whereby he was communicated about the instruction given by the respondent no. 2 vide letter dated 14.02.2020 to seek explanation regarding violation of regulation 6(3)(ii) of Regulation, 2017. Pursuant to the instruction communicated by the respondent no. 2 to the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar vide aforesaid letter, the settlement of the petitioner was cancelled vide 5 letter no. 642 dated 24.02.2020 which was communicated to it and a copy of the said letter was also circulated to the respondent no. 2. Thereafter, in compliance of the said instruction of the Department, the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar invited fresh tender to make settlement for financial year 2020-21 which was finally settled in favour of the respondent no. 4 - M/s Swati Industries pursuant to which an agreement was also executed on 01.08.2020 between the parties for a period of one year i.e., 01.04.2020 to 31.03.2021.
7. Heard learned counsel for the parties and perused the materials available on record. The petitioner is aggrieved with letter dated 24.02.2020, whereby the tender awarded to the petitioner for the said work was cancelled and subsequently, the same was awarded to the respondent no. 4 by inviting fresh tender.
8. The thrust of argument of learned counsel for the petitioner is that the impugned letter of cancellation of the agreement suffers from violation of the principles of natural justice since no opportunity of hearing was granted to the petitioner before issuing the letter. It has further been contended that pursuant to the agreement dated 03.07.2018, the petitioner had made huge investment and it will suffer irreparable loss and injuries by such premature cancellation of agreement.
9. Learned counsel for the petitioner puts reliance on a judgment rendered by the Hon'ble Supreme Court in the case of "UMC Technologies Private Limited Vs. Food Corporation of India & Anr." reported in (2021) 2 SCC 551, wherein it has been held as under:
13. At the outset, it must be noted that it is the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose right or interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling 6 beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Custodian General, Evacuee Property [Nasir Ahmad v. Custodian General, Evacuee Property, (1980) 3 SCC 1] has held that it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard.
10. Learned counsel for the petitioner puts further reliance on a judgment rendered by the Hon'ble Supreme Court in the case of "State of U.P Vs. Sudhir Kumar Singh & Ors." reported in 2020 SCC OnLine SC 847, wherein it is held as under:
23. It may be added that every case in which a citizen/person knocks at the doors of the writ court for breach of his or its fundamental rights is a matter which contains a "public law element", as opposed to a case which is concerned only with breach of contract and damages flowing therefrom. Whenever a plea of breach of natural justice is made against the State, the said plea, if found sustainable, sounds in constitutional law as arbitrary State action, which attracts the provisions of Article 14 of the Constitution of India - see Nawabkhan Abbaskhan v. State of Gujarat (1974) 2 SCC 121 at paragraph 7. The present case is, therefore, a case which involves a "public law element" in that the petitioner (Respondent No. 1 before us) who knocked at the doors of the writ court alleged breach of the audi alteram partem rule, as the entire proceedings leading to cancellation of the tender, together with the cancellation itself, were done on an ex parte appraisal of the facts behind his back.
11. On perusal of record, it appears that first agreement was executed between the petitioner and the Chief Executive Officer, Deoghar Municipal Corporation on 19.05.2018 which was for a period of one year i.e., from 12.04.2018 to 31.03.2019 and in terms with the said agreement, the petitioner deposited security money as well as 50% of the bid amount and further agreed to deposit rest 50% of the bid amount in two equal installments i.e., 25% in last week of June, 2018 and remaining 25% in the last week of September, 2018. The contention of the respondents is that the petitioner failed to pay the remaining 50% of the bid amount within the stipulated time and the said factual plea has not been controverted by the petitioner, rather 7 the claim of the petitioner is that during pendency of the first agreement, another agreement was executed on 03.07.2018 for the same work fixing the period of agreement for five years i.e., from 12.04.2018 to 31.03.2023. Thus, the remaining bid amount was to be paid within the said extended period.
12. Initially, the said contract was awarded to the petitioner by way of public auction which was for a period of one year, however, subsequently the period of contract was extended for five years without following due process of law. It is well settled principle of law that in the matter of grant of state largesse, resort should be had to public auction by way of inviting tenders. The State or its instrumentality must ensure that it receives adequate revenue for the allotted resource. The purpose of public auction in granting state largesse is to provide equal opportunity to public at large to participate and get any contract by which the State also gets benefitted. If indoor extension of any contract is permitted, the very purpose of public auction will get frustrated. The specific contention of the respondents is that the decision of extending the said contract was in violation of the regulation 6(3)(ii) of Regulation, 2017 which provides that for hoarding or similar structures used or adapted to be used for display of advertisement (outdoor media devices on commercial advertising structures) coming under Type C and D, as illustrated in Annexure-5 of the said Regulation, the maximum period of approval relating to agreement of a contract will be one year. Due to the said irregularity, a show cause notice was issued to the then Municipal Commissioner. The petitioner has, however, failed to controvert the said aspect. Thus, the second agreement dated 03.07.2018 was certainly contrary to the provisions of the Regulation, 2017.
13. In view of the aforesaid discussion, I am of the opinion that the petitioner has not come to this Court with clean hands. The petitioner itself has violated the terms and conditions of the first agreement dated 19.05.2018 and is claiming arbitrariness on the part of the respondents which is not permissible in the eyes of law. Since it is an admitted position that the petitioner has violated the terms 8 and conditions of the first agreement, the compliance of the principles of natural justice will not make any difference. Moreover, several letters were written to the petitioner for depositing the due amount in terms with the agreement dated 19.05.2018, however, it failed to deposit the same, it rather tried to take shelter of the second agreement dated 03.07.2018 which itself was not executed in accordance with law. So far the contention of the petitioner that the State Government has no power to interfere with the administrative decision of the municipal corporation, I do not find any substance in the said contention since the Joint Secretary, Department of Urban Development and Housing, Government of Jharkhand issued letter dated 14.02.2020 pursuant to the letter issued by the Municipal Commissioner, Deoghar Municipal Corporation, Deoghar, whereby necessary instructions were sought from the Principal Secretary, Department of Urban Development and Housing, Government of Jharkhand. Another argument of learned counsel for the petitioner is that the petitioner has made huge investment pursuant to the agreement dated 03.07.2018 and due to cancellation of the said agreement, it has suffered irreparable loss and injuries. I am of the view that for such claim, the petitioner has the recourse of private law remedy and as such, no direction can be issued under extraordinary writ jurisdiction.
14. The writ petition is accordingly dismissed. The petitioner is, however, at liberty to claim damages against the respondent no. 3 before the competent court of law, if so advised.
(Rajesh Shankar, J.) Manish/AFR