Madras High Court
G.Babu vs A.Sankar on 10 December, 2007
Author: S.Palanivelu
Bench: F.M.Ibrahim Kalifulla, S.Palanivelu
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 10/12/2007 CORAM THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA AND THE HONOURABLE MR.JUSTICE S.PALANIVELU WRIT APPEAL (MD) No.467 OF 2007 WRIT APPEAL (MD) Nos.572 OF 2007 G.Babu ... Appellant in both appeals vs 1.A.Sankar 2.The Assistant Director, Inland Fisheries, Vaigai Anai, Theni, Theni District. ... Respondents in W.A.No.467/2007 1.T.Madhavan 2.The Assistant Director, Inland Fisheries, Vaigai Anai, Theni, Theni District ... Respondents in W.A.No.572/2007 !For appellant ... Mr.G.R.Swaminathan For respondent 1 in W.A.No.467/2007 ... Mr.Hema Karthikeyan For respondent 1 in W.A.No.572/2007 ... Mr.R.Suriyanarayanan For respondent 2 in both appeals ... Mr.R.Janakiramulu, Spl.Govt.Pleader. Appeals under Clause 15 of the Letters Patent. :JUDGMENT
S.PALANIVELU,J.
These appeals are filed against the common order, dated 30.08.2007, made in W.P.(MD) Nos.6736 and 3562 of 2007, whereby the contract of lease of fishery rights awarded to the appellant by the second respondent was set aside by a learned single Judge.
2. In Bodi-Ammapatti Village of Bodinayakkanur Taluk of Theni District, a tank, known as Meenakshi Amman Periyakanmoi is situated, sprawling to an extent of 86.12 Hectares in Survey No.220. It is learnt, that throughout the year, water would be available in the said tank. It comes under the direct control of the Assistant Director of Inland Fisheries, Vaigai Dam, in Theni District, the superior authority being the Director of Fisheries in Chennai. Fishery rights were used to be leased out periodically as per G.O.Ms.No.33, Animal Husbandry and Fisheries, dated 27.02.1995.
3. By virtue of the powers conferred, the Assistant Director of Fisheries, in short, the Assistant Director, invited sealed tenders through a notification, dated 14.03.2007, fixing the upset price at Rs.2,34,000/-. As per the said notification, it was proposed to lease out the right to catch fishes in the tank for the period from April,2007 to June,2010.
4. In order to unearth the truth, this Court directed the learned Special Government Pleader to produce the relevant files before this Court and, accordingly, they are produced. A perusal of the said files reveals some important points to be considered in these appeals.
5. It is significant to note the viability and capacity of the tank. It is necessary to bear those particulars in mind, to reach an appropriate conclusion. The particulars for fixing the upset price at Rs.2,34,000/- are available in a note prepared by the Assistant Director, in which it is mentioned that considering 40 percentage of the surviving fishes after culture and fixing the average weight of a fish at 900 grams and also calculating the value of fish at Rs.30/- per k.g., the proposed total income on sale of fishes would be Rs.11,70,450/-, if 39,015 kgs. of fishes were developed. The upset price for auction was 20% of the gross value of the fishes, which would come to Rs.2,34,000/-. On 08.02.2007, the Assistant Director ascertained the said value. Sealed tenders were called for, which were to be opened on 30.03.2007 and, accordingly, on 30.03.2007, in the meeting hall of the Collector's Office at Theni, the auction was held at 03.30.p.m.
6. It was the version of the Assistant Director in his counter affidavit, that out of 41 tenderers, the highest bidder Tamilarasan offered Rs.19,02,518/- and the second highest bidder Sekar quoted Rs.15,06,700/-. Since both of them expressed their inability to pay the quoted bid amount, their Earnest Money Deposit of Rs.5,000/- each was confiscated to the State and nobody else among the remaining 39 tenderers came forward to bid the auction and, hence, the auction was cancelled on that date.
7. But, the writ petitioners would contend that though other participants came forward to bid the auction, the Assistant Director closed the auction and cancelled it arbitrarily.
8. In this connection, it is to be noted that the Assistant Director is competent to cancel the auction, however, the discretion must be exercised judiciously.
9. A careful scrutiny of the relevant register, captioned as "Tender Opening Register", would show that there were as many as 41 persons, who submitted their tenders and the tender amounts were ranging from Rs.2,34,050/- to Rs.19,02,518/-. It is seen that most of the tenderers had offered attractive amounts. At the end of the list, the Assistant Director has written that the auction was knocked down in favour of Tamilarasan, who offered highest bid of Rs.19,02,518/- and, afterwards, he has also written that the auction was cancelled on the same day, i.e., 30.03.2007.
10. Also, the file submitted by the learned Special Government Pleader contains two letters written by the Assistant Director, one addressed to the Deputy Director of Fisheries (Region-Madurai), dated 14.03.2007, and the other to the Director of Fisheries, Chennai, dated 02.04.2007. In the letter dated 14.03.2007, the Assistant Director of Fisheries sought for sanction, to call for tenders, and, in the other letter dated 02.04.2007, he mentioned about the conduct of the auction, in which he stated that though Tamilarasan and Sekar offered higher bids, they expressed their inability. He also added that the further process of auction was dropped, since none, remaining in the list, numbering 39, had come forward to offer any bid. Writ petitioner Madhavan was also one among them, who offered Rs.4,05,000/-.
11. When the two highest bidders had skipped the bid, it is preposterous to say that nobody else was willing to stick to his offer. As adverted to supra, the lowest offer was Rs.2,34,050/-, quoted by one Muthu Manikumar, which was just Rs.50/- higher than the upset price. One cannot imagine that even a single person did not come forward to bid in the auction. Hence, it appears that cancellation of the auction by the Assistant Director is bristled with suspicion. After the said auction was cancelled, a fresh notification came to be issued by the Assistant Director on 02.04.2007, calling for tenders, fixing 17.04.2007 as the date of auction, for which wide publicity was also given. It is stated, that for the said notification, only five tenders were received, inclusive of one G.Babu, the appellant herein. The re-auction was held in the Office of the Assistant Director in Vaigai Dam, which is somewhat far away from the Collector's Office, Theni, where the previous auction was held.
12. It is the outcry of the respondent-individuals/writ petitioners that nobody was allowed to come to the venue of the auction and the appellant arranged his men to threaten the persons, who came forward to offer the bid, and that he also formed a cartel to get the auction confirmed in his favour, by eliminating the other bidders. The respondents also contend that Vaigai Dam is a secluded place and the reason for conducting the auction at the said place was only for favouring the appellant, when the Collectorate is more accessible to the public, which allegations are controverted to by the appellant.
13. The Assistant Director, in his counter affidavit, has justified the change of venue to Vaigai Dam, stating that it cannot be believed that the respondents were prevented from coming to the place of auction, since sufficient police protection was provided and that the auction was held in the Office of the Assistant Director itself in Vaigai Dam, which is not at all a wrong place.
14. In the second auction, dated 17.04.2007, the appellant quoted Rs.3,11,000/- and other four persons offered amounts ranging from Rs.2,50,000/- to 3,00,000/-. Since the appellant was the highest bidder, auction was knocked down in his favour.
15. Worthwhile it is to state that the writ petitioner Sankar was not a participant in the first tender process and, similarly, for the second auction, the other writ petitioner Madhavan was not in the list. Further, the appellant had quoted Rs.15,00,000/- in the auction, dated 30.03.2007, who would have been the third highest bidder, but, it is not known why his bid was not considered. It is also noteworthy to mention that he might have been present at the time of first auction. It is nowhere stated by him that he was not present on 30.03.2007, while the auction took place. The fourth highest bidder had offered Rs.14,00,000/- and the fifth highest offer in the list was for Rs.13,01,400/-. This circumstance also creates suspicion.
16. In W.P.No.3562 of 2007, the petitioner Madhavan prayed for interim injunction, restraining the Assistant Director from conducting any auction, and this Court, on 17.04.2007, passed an order, stating, "Mr.D.Sasi Kumar, learned Government Advocate undertakes to instruct the respondent not to confirm the auction bid till 20.04.2007." But, the auction was confirmed in favour of the appellant on 19.04.2007 itself. It is represented that the copy of the order was not served upon the Assistant Director at once, who received the same only on 23.04.2007 and, prior to that, the auction was confirmed.
17. In pursuance of the confirmation of the auction on 19.04.2007, the appellant proceeded to develop the pond by nursing fingerlings, getting them from private hatcheries. He also engaged 12 watchmen, for whom he is paying Rs.3,000/- per month. The cost of the fish food would cost Rs.60,000/-. He has pressed into service three parisals in the kanmoi, which are worth Rs.25,000/-. Because of his heavy spending and investment, there is a good growth of the fish, for which he has pursed out a sum of Rs.7,00,000/-, which includes initial remittance, as per his contention.
18. It is the categorical stand of the appellant in his affidavit that presently the fishes worth Rs.10,00,000/- are available in the tank. In the additional affidavit, he affirmed that fishes would be ripe for harvest either in April or May,2008. He further stated that he has not formed any syndicate or cartel during the process of second auction and that both the writ petitioners are ayakatdars of the said kanmoi while he is an outsider and, hence, they ganged up themselves against him.
19. The appellant projects two main grounds against the writ petitioner, Madhavan. One is, he voluntarily received the EMD furnished by him in respect of the tender held on 30.03.2007 and, nextly, he has not challenged the cancellation of the auction and, therefore, the prayer for a writ of mandamus is not legally sustainable. It is his further contention that the re-auction was held on 17.04.2007, but the other writ petition filed by Sankar for declaration of auction as void was filed on 09.08.2007 and such a delay would amount to laches.
20. After the filing of writ petition by Madhavan, the other writ petitioner Sankar filed an affidavit on 12.08.2007, affirming that he was ready and willing to offer a sum of Rs.10,00,000/- as the lease amount for the period from 2007 to 2010 and, as a single payment, he has taken a demand draft and, hence, the fishery rights may be awarded to him, which, in our view, would not fulfil the requirements of the auction notification.
21. We have bestowed our thoughtful consideration to the rival submissions of Mr.G.R.Swaminathan, learned counsel for the appellant; Mr.Hema Karthikeyan and Mr.R.Suriyanarayanan, learned counsel for the writ petitioners and Mr.R.Janakiramulu, learned Special Government Pleader.
22. Learned counsel for the appellant would argue in vehemence that the appellant is a bona fide participant in the subsequent auction, which was not at all vitiated on any ground and the auction was confirmed even before the order of the Court was received by the Assistant Director and as he has sown and fed fish in the pond, by equity also, he is to be allowed to appropriate the fruits of his efforts and his entitlement to harvest has to be recognised by the Court.
23. Per contra, learned counsel for the writ petitioners would submit that by hook or crook the appellant managed to grab the auction in his favour and, by no stretch of imagination, it could be stated that the first auction was lawfully cancelled and, therefore, the second auction is non est.
24. Learned counsel for the appellant would draw attention of this Court to a decision of the Supreme Court in The Bihar Eastern Gangetic Fishermen Co- operative Society Ltd. v. Sipahi Singh and others, 1977 (4) Supreme Court Cases 145, wherein it was held that a lease of fishery is an immovable property, as defined by Section 2 (6) of The Registration Act. He further states, that in view of the above said observation, Sections 51 and 108 of The Transfer of Property Act would be applicable.
25. Section 51 of The Transfer of Property Act,1882, reads as follows:
"51.Improvements made by bona fide holders under defective titles.- When the transferee of immovable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell interest in the property to the transferee at the then market value thereof, irrespective of the value of such improvement.
The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at the time of the eviction. When, under the circumstances aforesaid, the transferee has planted or sown on the property crops which are growing when he is evicted therefrom, he is entitled to such crops and to free ingress and egress to gather and carry them."
26. Section 108 of the said Act denotes the rights and liabilities of lessor and lessee.
27. On the strength of the above said provisions, learned counsel for the appellant would contend that since the lease of fishery right is an immovable property, the said provisions have to be scrupulously followed by the parties concerned to the lease and, hence, the appellant is entitled to get the value of the improvement. As for the capacity of the appellant by which he is holding the fishery right, he has derived it from the auction notification and the conditions provided therein.
28. In the decision of the Apex Court aforementioned, it is stated that if lease of any immovable property, as defined by Section 2 (6) of The Indian Registration Act, is for any term exceeding one year or reserves a yearly rent, it has also to be registered, as required by Section 17 (1) (d) of the Indian Registration Act,1908, and Section 107 of The Transfer of Property Act. But, the facts of the present case are distinguishable and they could not be brought under the purview of the said provisions.
29. As adverted to supra, as the stipulations in the auction notification would govern the rights of the highest bidder, he has to abide by the same.
30. The above said discussion would lead to the following conclusions :
(1) Though Tamilarasan and Sekar, who offered higher bid amounts, did not come forward to get the auction in their favour, the action of the Assistant Director to cancel the auction, without verifying the willingness of the remaining 39 tenders, is not justifiable.
(2) Appellant was No.1 in the bidders list of the first auction, after Tamilarasan and Sekar. He had quoted Rs.15,00,000/-. It was the third highest bid. It is not explained, whether his willingness was ascertained.
(3) It is unbelievable that none of the 39 tenderers had made their offers, as quoted. Further, no sane person could accept that a person, who quoted Rs.2,34,050/-, was not ready to bid the auction.
(4) When hefty amounts were quoted in the first auction, it is not known why the second auction list contained meagre quotations, with the highest offer at Rs.3,11,000/- by the appellant. Moreover, this Court is at a loss to understand, when the appellant himself had quoted Rs.15,00,000/- in the first auction, what motivated him to stoop down and quote at Rs.3,11,000/- in the second auction.
31. In our considered opinion, the above said grounds would vitiate the second auction, dated 17.04.2007. Though we do not recognise the validity of the second auction, yet, we are cautious of the consequences of declaring it void. Under the premise of confirmation of auction on 19.04.2007, the appellant has taken many efforts and spent a considerable amount in improving the pond with fish culture and protecting it. It is stated by him that the worth of fishes in the tank is Rs.10,00,000/-. Under a wrongful auction, the Government has incurred a loss, which could be ascertained at Rs.12,00,000/-, as per the assessment of the Assistant Director, as mentioned in paragraph 5 above, being the probable value of the fishes growing in the tank. Had the first auction been confirmed for Rs.15,00,000/- as quoted by the appellant, he would have parted with the said amount. Neither in his counter affidavit in the writ petitions nor in his affidavit before this Court filed along with stay petition, he has averred that he did not participate in the first auction, so also in his additional affidavit, dated 12.11.2007. His signature is very much available in the Tender Opening Register, for the action, dated 30.03.2007. In our considered opinion, since the second auction is tainted with irregularities, it must go and the appellant is liable to compensate the Government to the tune of Rs.12,00,000/-, which would not be a loss to him. In equity also, he has to pay the said sum, since the amounts quoted by him in first and second auctions are diametrically incompatible.
32. While dealing with the tender process, the Apex Court, in Raunaq International Ltd. v. I.V.R.Construction Ltd., AIR 1999 SUPREME COURT 393, has laid down the dictums as regards public interest involved. The operative portion of the judgment goes thus :
"11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the Court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by Court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the Court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the Court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the Court should not intervene under Article 226 in disputes between two rival contenders."
The Apex Court also observed therein that where there is an allegation of mala fides or an allegation that the contract has been entered into for collateral purposes, and the Court is satisfied on the material before it, that the allegation needs further examination, the Court would be entitled to entertain the petition, but, even here, the Court must weigh the consequences in balance before granting interim orders.
33. Following the principles laid down by the Supreme Court, when the facts of the case are considered, it comes to light that the element of public interest is at stake on the conduct of the second auction. If the second auction, dated 17.04.2007, is allowed to stand, the Government would incur loss of several lakhs of rupees and, in order to keep a check, this Court has to impose certain conditions on the appellant, to harvest fishes in the tank, which, we feel, will be justified.
34. Whenever an allegation of malpractice in a tender process is brought before a Court by the persons, who participated in the auction, the Court is duty bound to unearth the bona fides of the persons, who advance their contentions, and, in that process, the Court has also to find out the gravity of public interest involved in the matter and render real justice to the parties concerned. When a dispute between private individuals is before the Court, which is connected to the Government tender, the Court ought to be more conscious so as to safeguard the public exchequer. Even though the project in question was commissioned and executed by a party to the litigation, the Court is not fettered to mould the relief and grant it to the party or any person entitled to it. In that context, the prevailing cost of the product involved in the tender shall also be taken into account by the Court with the material available before it. While doing so, the relative hardship among the private parties may also be considered and the Court shall weigh the efforts made by the parties to the said project and make good of them for the benefit of the party, who is eligible to it. The similar projects are bound to be commercial transactions and it may be decided that the party, who has expended for the purpose of contract, should get returns profitably. The Court, on getting satisfied itself with grant of relief on public interest, shall overpower private interest. It may even prefer rational decisions at times, by imposing stringent conditions, to be complied with by a party to the litigation, so as to make the ends of justice to meet.
35. In view of our aforesaid observations, we dispose of these Writ Appeals, in the following terms :
(i) The auction, dated 17.04.2007, is hereby set aside ;
(iii) The appellant is directed to deposit the sum of Rs.12,00,000/- with the Assistant Director of Fisheries, Vaigai Dam, in three equal monthly instalments, the first of which shall commence from January,2008, and it shall be paid on or before 10th .
(iii) The appellant shall harvest the fishes by May,2008, as he has spent considerable amount on developing them.
(iv) After the harvest by the appellant is over in its entirety, the Assistant Director of Fisheries shall issue a fresh notification for auction of fishery rights and conduct the auction in accordance with law.
(v) The auction is directed to be held in the District Collector's Office at Theni.
(vi) The Assistant Director shall ensure that all the tenderers or their representatives, who quote offers for auction, are present at the time of auction and, if anybody is absent, letter of his inability to participate in the auction is received. He shall also make sure that adequate security arrangements are made at the venue of auction and, if necessary, he may seek the help of police.
Consequently, the connected M.P.(MD) Nos.1 and 3 of 2007 are closed.
dixit To The Assistant Director, Inland Fisheries, Vaigai Anai, Theni, Theni District.