Gujarat High Court
Sarvodaya Charitable Trust vs State Of Gujarat on 24 December, 2021
Author: Biren Vaishnav
Bench: Biren Vaishnav
C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 22149 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV Sd/-
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1 Whether Reporters of Local Papers may be allowed No to see the judgment ?
2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy No of the judgment ?
4 Whether this case involves a substantial question No of law as to the interpretation of the Constitution of India or any order made thereunder ? ========================================================== SARVODAYA CHARITABLE TRUST Versus STATE OF GUJARAT & 4 other(s) ========================================================== Appearance:
MR DIPEN DESAI(2481) for the Petitioner(s) No. 1 MR MEET THAKKAR, AGP (1) for the Respondent(s) No. 1 MR DEEP D VYAS(3869) for the Respondent(s) No. 4 MR HRIDAY BUCH(2372) for the Respondent(s) No. 5 MR MEHUL H RATHOD(701) for the Respondent(s) No. 3 NOTICE SERVED BY DS(5) for the Respondent(s) No. 2 ========================================================== CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV Date : 24/12/2021 CAV ORDER
1. By way of this petition, under Article 226 of the Constitution of India, the petitioner - Sarvodaya Charitable Trust has prayed for quashing and setting Page 1 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 aside the order dated 15.11.2017 passed by respondent No.1 - Joint Secretary (Appeals), Urban Development and Urban Housing Department.
2. The facts in brief are as under:
2.1. It is the case of the petitioner that the petitioner is a Public Trust. The Palanpur Municipality constructed various pay and use toilets in the year 2008-09 and maintenance of 11 pay and use toilets was given to respondent No.5 - Maa Samajik Seva Sansthan.
2.2. A work order was also issued by the Palanpur Municipality. The case of the petitioner is that since it was found that the respondent No.5 was not maintaining the toilets and various complaints were received, notices were issued to the respondent No.5 on 26.8.2016, 25.10.2016 and 30.11.2016 for proper maintenance of pay and use toilets.
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C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 2.3. The notice further stated that the work order of respondent No.5 - Sansthan will be cancelled if no maintenance is carried out. 2.4. Since the respondent No.5, according to the petitioner, did not take steps for improvement of the maintenance of the toilets, the Palanpur Municipality in its meeting dated 7.3.2017 resolved to cancel the work order of the respondent No.5 for maintenance of the 11 toilets and decided to give work order to the petitioner. Despite this resolution, the petitioner was not handed over possession of the toilets. However, a work order in favour of the petitioner was issued on 7.4.2017 and a contract was entered into by a letter dated 7.4.2017 between the petitioner and the Municipality. The Municipality on 10.4.2017 issued a notice to the respondent No.5 to handover the possession of the 11 toilets to the Municipality.
3. Aggrieved by the Resolution dated 7.3.2017 passed by the Municipality, the respondent No.5 Page 3 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 approached the Collector, Banaskantha challenging the resolution of awarding the contract to the petitioner. By an order dated 26.4.2017, the resolution of the Municipality by an interim order was stayed.
4. After the final hearing based on the report of the Collector on 26.6.2017, the Collector by a final order dated 11.10.2017 dismissed the appeal preferred by the respondent No.5 and approved the resolution of the Municipality dated 7.3.2017 awarding the contract to the petitioner.
5. Being aggrieved by the order of the Collector, the respondent No.5 approached the Deputy Secretary (Appeals) by filing a revision application and by the impugned order dated 15.11.2017, the revision application was allowed and the work order dated 7.4.2017 issued in favour of the petitioner and the result awarding such contract dated 7.3.2017 in favour of the petitioner was set aside. Page 4 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021
6. Mr. Dipen Desai, learned counsel for the petitioner made the following submissions:
* The State Government has not considered the resolution dated 7.3.2017 was required to be passed because the respondent No.5 had remained completely negligent in managing and cleaning the toilets. Notices were issued where it was specifically stated that the possession of the toilets would be taken over by the Municipality and given to any other agency.
(a) The notices were issued in line with Clause 22 and 24 of the contract.
(b) It cannot be said that the notices of the termination of contract was in violation of principles of natural justice.
(c) Reliance placed on Clause 25 by respondent No.5 was misconceived. Clause 25 will have application only when after commencement of the Page 5 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 contract work, the Municipality had decided not to carry out the whole of the said work.
* Mr. Desai drew the attention of this Court to Clause 15, 16 and 17 of the contract to submit that the ownership of the blocks shall vest with the Municipality and only maintenance and operation was to be done by respondent No.5.
* The State Government committed serious error in considering subsequent development for considering the legality of the Resolution dated 7.3.2017. What was produced by the petitioner in the rejoinder is not only recent photographs but it is evident that the toilets were in-fact not maintained properly. The State Government committed an error in holding that the contract was terminated without notice and, therefore, the resolution was set aside. He would submit that Section 67 of the Municipalities Act would have no application.
7. Mr. Meet K. Thakkar, learned AGP for the Page 6 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 respondent would support the order dated 15.11.2017 of the revisional authority. He would submit that reading the order of the authority, it was evident that the Deputy Secretary (Appeals) had held that the contract awarded to the respondent No.5 was cancelled without affording any opportunity to the respondent No.5. He would further submit that the authority had rightly, taking into consideration the provisions of Section 67(1) of the Gujarat Municipalities Act held that the Municipality could not have entered into a contract with the petitioner without public advertisement and inviting a fresh tender. He would submit that reading the MOU entered into between the petitioner and the Municipality, particularly condition No.17, it was evident that money for implementation and operation that was to be paid to the petitioner was to be borne from the grants that the Municipality received and, therefore, payment of such Government grants was without any proper procedure and without giving a tender and work Page 7 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 order in accordance with the contracts of the Government.
* Mr. Thakkar would further submit based on the report of the Collector dated 23.6.2017, which was produced in the impugned order of 11.10.2017 that it was clearly found that there were certain short- comings in the maintenance of toilets but the short- comings were not serious enough such as not having fan in the toilet or display in red card for which the respondent No.5 cannot be held to be responsible. The authority further observed that since the gutter connection of the toilets had been disconnected over a period of time and it was not operational, it cannot be said the respondent No.5 was at fault. * Reading the order, Mr. Thakkar would submit that what was observed was that from 2017, the respondent No.5 had not been granted any funds for renovation and maintenance and now on the basis of a report, it was found that the toilets were operational. On the basis of the photographs Page 8 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 produced before the authority, the authority found that the photograph which was produced of December, 2016 and March, 2017, over a gap of 3 months showed the same position and the fact of the photographs' actual display of condition was doubtful. The authority therefore was right in observing that the resolution of 7.3.2017 passed by the Municipality awarding the contract to the petitioner without putting it to the General Board was contrary to law and, therefore, the resolution was rightly set aside and the contract and the work order in favour of the petitioner was cancelled.
8. Mr. Hriday Buch, learned counsel appears for respondent No.5. He submits as under:
* He supports the order of the State Government dated 15.11.2017. He would submit that the State Government rightly quashed the order passed by the Collector, District Banaskantha. He would submit that the State Government rightly quashed the order of the Collector.
Page 9 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 * Mr. Buch would submit that the issue is in two parts, namely; (I) Cancellation of agreement executed with the respondent No.2 & (II) the issue would be to allot 11 toilet blocks to the petitioner. * Relying on the conditions of the agreements Mr. Buch would submit that the agreement was for the construction, operation and maintenance of pay and use toilet complex. There was no complaint for a period of eight years. The communications dated 25.10.2016 and 30.10.2016 were ill-designed. These communications would not be set to give reasonable opportunity of hearing as per Clauses 22 and 25 of the agreement.
* The Executive Committee passed a Resolution dated 7.3.2017 for cancellation of the agreement without notice.
* With regard to the issue of 11 toilet blocks to the petitioner, he would submit that the Executive Page 10 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 Committee cannot independently execute the contract without the permission of the State Government as is clearly stipulated in Section 65(2) of the Act. No such resolution was passed. * The State Government rightly relied on several photographs and that the decision taken in the manner so taken shows the malafide intention of the Municipality to favour the petitioner. * Affidavit-in-reply has been filed on behalf of respondent No.5 to which Mr. Buch would draw the attention of the Court. Reading of the affidavit would indicate the submission of respondent No.5 briefly as under:
a) That the resolution dated 7.3.2015 is passed in gross violation of principles of natural justice without following the mandatory procedure under Section 67 of the Act.
b) The dates would indicate that the whole Page 11 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 process was carried out with a malafide intention.
c) On 5.7.2017, for the first time, the petitioner made an application.
d) On 7.3.2017, the Executive Committee passed a resolution of cancellation of the agreement in favour of respondent No.5.
e) On 6.4.2017, the Chief Executive Officer executed the agreement in favour of the petitioner.
f) On 7.4.2017 immediately, the order was passed in favour of the petitioner.
g) Though the respondent No.5 was maintaining the toilets since the year 2008, within a short span, the contract was awarded to the petitioner.
h) Reading the affidavit, Mr. Buch would further submit that it was a construction contract that was given to the petitioner executed in the year 2008 Page 12 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 under the Mahatma Gandhi Swachh Mission for a period of 30 years.
I) He would further submit that the notices clearly were in line of stating that the contract was terminated as there was a breach. The agreement entered into between the petitioner and the Municipality particularly by reading Clause 22 made it compulsory for the Municipality to issue a notice before terminating the contract which was not done.
Clause 28 of the agreement provided for an administrative clause and, therefore, it was not open for anybody to approach the Collector.
9. Further affidavit has also been filed by the respondent No.5 pointing out that the allegation made against the respondent No.5 are base-less. Photographs have been placed on record to suggest that the condition of the pay and use toilets is clean and maintenance is done appropriately.
10. Having considered the submissions made by the Page 13 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 learned advocates for the respective parties, it will be in the fitness of things to refer to the agreement entered into between the respondent No.5 and the Palanpur Municipality. Since the issue revolves around Clauses 22 and 23 of the MoU, the same are reproduced hereunder:
"22. It is hereby agreed that any neglect on the part of the second party to clean maintain and repair regularly the said complexes shall entitle the First party to terminated (sic.) this agreement after giving reasonable opportunity to the second party by a show cause notice to make necessary amends as per terms and conditions of this agreement to the satisfaction of the First Party.
23. The First party shall have the right to inspect the said complexes during construction operation and maintenance period and may issue such order and directions as may be considered necessary in confirm with this agreement to the Second party. The Second party shall ensure that such orders are complied with."
11. Reading the agreement clause would indicate that if there is any neglect or lapse on the part of the 2 nd party to clean and maintain the complex, the Municipality can terminate the agreement after giving reasonable opportunity to show cause. Page 14 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021
12. It is in this context that the notices dated 26.8.2016, 25.10.2016 and 30.11.2016 being to be read. When these notices are read, it is evident that it was communicated to the respondent No.5 - agency that in the event they fail to properly manage, repair and renovate the toilets, the same would be allotted to some other agency. The notice dated 30.11.2011 intimated the respondent No.5 that they may properly carry out operation and maintenance of the toilet otherwise the work will be allotted to some other agency. Essentially, therefore, what these notices warn was that since the respondent No.5 was not operating and maintaining the toilets, it may be handed over for maintenance to some other agency.
13. In the background of these notices, the Executive Committee issued the notice dated 7.3.2017. The body of the Resolution indicates that the Executive Committee came to a conclusion that the respondent Page 15 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 No.5 had committed breach of the contract and, therefore, the same for maintenance and operation was decided to be handed over to the petitioner - Sarvodaya Charitable Trust. Evidently, therefore, the Executive Committee of the Municipality terminated the contract of the respondent No.5 without an appropriate reasonable opportunity as envisaged under Clause 22, the agreement entered into by the Municipality with the respondent No.5. The fact that the Committee observed that the respondent No.5 committed breach of contract was a clear opinion of the direction of termination of the contract, contrary to Clause 22.
14. While reading the order of the State Government which is impugned in this petition, the State Government has undertaken an excessive exercise and given 8 reasons, which in the opinion of the Court are just and proper, not to exercise jurisdiction of this Court vested in Article 226 of the Constitution of India.
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15. For the purposes of the benefit of this judgment, these reasons are as under:
* The State Government observed that the Executive Committee had passed the resolution No.72 on 7.3.2017 without giving an opportunity to the respondent No.5. It was in violation of principles of natural justice. This observation is amply justified in light of the communication of 2016 when read in context of Clause 22 of the agreement. * According to the directions of the Municipality while awarding a contract of such a nature, it is important for the local authority to invite tenders which it has not done. In fact, this observation of the authority under the State is justified from the manner in which the contract was awarded to the petitioner. The following dates would indicate so.
a) 7.3.2017 - Resolution of the Executive Page 17 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 Committee was passed.
b) 4.4.2017 - the Municipality prepared caveat and filed it before the Civil Court on 6.4.2017.
c) 6.4.2017 - the agreement was executed with the petitioner by the Chief Officer.
d) After the agreement was executed on 7.4.2017, the order was passed in favour of the petitioner.
e) Without any show cause notice, on 10.4.2017, the order was passed terminating the contract and directing the respondent No.5 to handover the possession of the toilet blocks to the petitioner.
f) The State Government found that when the MoU between the Municipality and the petitioner is read, Clause 17 thereof indicated that the petitioner would be released grants in its favour whenever they were made available by the State Government. Page 18 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022
C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 Thus, as rightly observed by the State Government in the impugned order parting with funds in favour of private institutions without any audit is contrary to the Rules and Regulations with regard to expenditure from public exchequer.
* The contention of Mr. Dipen Desai that subsequent proceedings especially the interim report of the Deputy Collector dated 23.6.2017 could not have been taken into consideration is also misconceived. The State Government in analyzing the report extensively found that the irregularities or short-falls in the maintenance of such toilets was not so grave or serious which would warrant termination of the contract. In fact, it was found that at some point of time, the Municipality had disconnected gutter connections and it was as a result of this and due to non-payment of regular grants that the respondent No.5 - Trust could not maintain and operate toilets effectively. Page 19 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022 C/SCA/22149/2017 CAV ORDER DATED: 24/12/2021 * The State Government also was not wrong in not applying the genuineness of the photographs produced showing the date of 3.12.2016 and 8.3.2017 which in fact were found to be doubtful. * Clause 28 of the agreement entered into between the respondent No.5 and the Palanpur Municipality clearly indicated that in the event, the Municipality found that there was some short- comings in the contract, it could have invoked arbitration proceedings rather than terminating the contract in violation of Clause 22 thereof.
16. For the foregoing reasons, in the opinion of this Court, there is no reason to interfere with the order passed by the State Government dated 15.11.2017.
17. In view of above, the petition deserves to be dismissed and accordingly it is dismissed. Rule is discharged. No order as to costs.
Sd/-
(BIREN VAISHNAV, J) VATSAL S. KOTECHA Page 20 of 20 Downloaded on : Wed Jan 12 14:34:58 IST 2022