Gujarat High Court
Patel Scrap Traders vs State Of Gujarat on 25 June, 2004
Equivalent citations: AIR2005GUJ13, AIR 2005 GUJARAT 13
JUDGMENT K.M. Mehta, J.
1. Patel Scrap Traders, (a proprietorship concern), having its office at Balapir-ni-Dargha, Tal.Kadi, Dist.Meshana, petitioner has filed this petition under Articles 226 and 227 of the Constitution of India with a prayer that this Court may please to issue a writ in the nature of mandamus or any other suitable writ, order or direction quashing and setting aside the decision dated 7th November, 2003, and consequent sale agreement dated 15th March, 2004, entered into by and between the respondents.
2. It may be noted that this petition was filed on 12th April, 2004, the Court issued notice, however the court did not grant interim relief in this matter because in earlier matter in Special Civil Application No. 3453 of 2004 which I have already disposed of the said matter by separate order and the interim relief was also granted and all the matters were heard together and therefore this Court did not grant interim relief in this matter.
3. The facts giving rise to this petition are as under:-
3.1 GROFED is a co-operative society registered under the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to as "the Act"). Junagadh Regional Telibia Utpadak Sahkari Sangh Ltd. inter-alia engaged in the activity of procuring oilseeds and producing therefrom oil and cake in its plant situate at Junagadh. The said society was wound up by the order dated 18th July, 2000. The Liquidator, Junagadh Regional Oil Seeds Growers Cooperative Union Ltd. respondent No. 3 came to be appointed as Liquidator under the provisions of Section 108(1) of the Act.
3.2 The society in liquidation is owned and possessed of land ad-measuring 29 Acres with compound wall. An oil processing unit complete with storage tanks, boilers, sub-station, HPS Plant etc. The technology applied is still utilised by other manufacturers in the business within the country and beyond. The said society is one of the biggest oil processing complex in entire Asia.
3.3 The Government has prepared a valuation report dated 15th August, 2001, of plant and machinery in question as if the same was to be sold as a whole on "as-is-where-is-basis" for resuming the manufacturing activities and the same came to the tune of Rs. 671.64 lakhs ( Rupees Six Hundred Seventy One Lakhs and Sixty Four Thousand). A categorical suggestion was also made in the aforesaid Valuation Report to the effect that if the buildings are not dismantled, the cost of individual items would fetch much lower value than what is mentioned in the report as the said individual items cannot be shifted anywhere. It was, therefore, stated that it is desirable that the entire complex together with the building is sold on as is where is basis and if no purchaser is available, then only individual items after dismantling the same can be sold wherein lower value than indicated in the report would be fetched. In the said process, it was also suggested that the valuation of the building would be reduced in the range of 25% to 40%. It was further suggested that if the sale as suggested is not carried out within one year from the date of the report, then depreciation at the rate of 5% per annum would be considered extra.
3.4 The Liquidator - Junagadh Regional Oil Seeds Growers Cooperative Union Ltd. respondent No. 3 issued an advertisement on 24th February, 2003, in various newspapers inviting offers for the sale of machinery, building and shed valuing at Rs. 671.64 lakhs ( Rupees Six Hundred Seventy One Lakhs and Sixty Four Thousand) to be sold as a plant along with building and shed on "as-is-where-is-basis".
3.5 It may be noted that the respondent No. 3 has carried out new valuation report of the property in question on 14th April, 2003, as if the same was to be sold as 'scrap' and not as a whole on "as-is-where-is-basis", and as per its valuation report, the same came to the tune of Rs. 525 lakhs (Rupees Five Hundred Twenty Five Lakhs).
3.6 In response to the aforesaid advertisement, the respondent No. 3 received 25 tenders on 22nd April, 2003, from various parties including only one from outside the State of Gujarat. The said tenders came to be opened in the presence of all the parties as well as the District Level Sale Committee wherein the highest bid was only in the order of an amount of Rs. 457/- lakhs (Rupees Four Hundred Fifty Seven lakhs) of Ajay Enterprises. The necessary minutes of the said tenders were also drawn.
3.7 Thereafter all the parties were called for further negotiations on 16th May, 2003, and 26th May, 2003. In the said meeting the aforesaid amount of Rs. 457 lakhs came to be raised to Rs. 505 lakhs.
3.8 In view of the above, the State Level Committee rejected the aforesaid offer since it was less as compared to the amount of the valuation to the tune of Rs. 671.64 lakhs (Rupees Six Hundred Seventy One Lakhs & Sixty Four Thousand) as per the first report suggesting the total property to be sold on as-is-where-is-basis as well as compared to further valuation to the tune of Rs. 525 lakhs wherein the plant, machinery, etc. were recommended to be sold as scrap.
3.9 In view of the above, the respondent No. 3 gave further advertisement on 8th July, 2003, in two leading Gujarati dailies of Gujarat viz., "Gujarat Samachar" and "Sandesh" in their all editions inviting fresh tenders.
3.10 Pursuant to the aforesaid another advertisement only 10 parties responded to the aforesaid advertisement and all the tenders came to be opened in the presence of the parties where the highest amount offered as found was Rs. 522/- lakhs (Rupees Five Hundred Twenty Two Lakhs). It is pertinent to note that on all the occasions referred to above when the tenders were invited, none of the petitioners had ever made any offer. All the offers were placed before the State Level Committee somewhere on 13.8.2003, 29.8.2003 and 11.9.2003 where the parties were asked to raise their offers and accordingly the offers were in the order of Rs. 569.11 lakhs, Rs. 568 lakhs, Rs. 564 lakhs, Rs. 564 lakhs and Rs. 568.11 lakhs. A further meeting of the State Level Committee came to be convened on 18th September, 2003, wherein it was resolved to take a final decision after taking physical verification of the site in question.
3.11 Thereafter scheduled visit was carried out on 7th November, 2003, and it was resolved to accept the highest offer of Rs. 569.11 lakhs (Rupees Five Hundred Sixty Nine Lakhs and Eleven Thousand) of respondent No. 4 herein and accordingly minutes of the meeting were also reduced in writing.
3.12 The Joint Registrar (Marketing), Co-operatives, Gandhinagar, addressed a letter to respondent No. 3 on 16.12.2003 not to proceed further for executing the aforesaid final decision which was so done at the instruction of the Registrar, Co-operatives purpotedly for finding out about the financial standing of the respondent No. 4.
3.13 The Joint Registrar vide his letter dated 9th March, 2004, informed the respondent No. 3 that earlier decision to wait in the matter has been cancelled and needful may be done pursuant to the final decision taken by the State Committee on 7th November, 2003, accepting the tender of Jain Ispat Ltd. - respondent No. 4 herein.
3.14 The respondent No. 3 addressed a letter dated 10th March, 2004, to respondent No. 4 in connection with the confirmation of the sales contract for entire processing complex (without land) as per schedule no. 2 of the tender document where the final offer of Rs. 5,69,11,111.00 was accepted which has been produced at page 145 and the respondent No. 4 has also thereafter addressed a letter dated 10.3.2004 to the liquidator accepting the same which is produced on page 146 of the paper book.
3.15 The Memorandum of Agreement has been executed on 15th March, 2004, between Shri Ajit Lalvani, sole proprietor of M/s. Jain Ispat on one part and Shri Dhimant Radia partner of M/s. Friends Corporation of the other part. The said Memorandum of Agreement has been executed and same has been produced at page 161 of the paper book.
3.16 As per one of the conditions of the said agreement, 25% of the price amount was required to be deposited on the same day of registration of the sale and accordingly Rs. 1.42 crores was deposited and the possession of the plant, machinery and shed was handed over by respondent No. 3 to respondent No. 4 i.e. Jain Ispat.
3.17 Being aggrieved and dissatisfied with the aforesaid action, as indicated above, first a Special Civil Application No. 3453 of 2004 was filed in which this Court granted interim relief. However, in view of the subsequent development, the said matter has been disposed of separately. Subsequently, another Special Civil Application No. 3918 of 2004 was also filed which I have also disposed of by separate orders. For the convenience, I am disposing this matter separately.
4. It may be noted that pursuant to the aforesaid agreement, the liquidator also accepted the payment made by respondent No. 5 of Rs. 1,42,28,000/- ( Rupees One Crore Fourty Two Lakhs and Twenty Eight Thousand only ) and thereafter handed over the possession of the property in question to the respondent No. 4 in view of the terms of the agreement of sale. On the same day, an agreement was executed between the said M/s. Friends Corporation and the respondent No. 4 for sale of the property in question. It may be noted that both the agreements one with the liquidator and another with the third party have been executed on the same day which shows that the property has been transferred by respondent No. 3 to respondent No. 4 and again it was transferred by respondent No. 4 to respondent No. 5.
4.1 As indicated above, this Court passed the order on 18th March, 2004, restraining the respondents from transferring, alienating the property in question.
5. Mr. Mitul Shelat, learned advocate with Mr. Shaktisinh Gohil, learned advocate appeared for the petitioner submitted that agreement entered into by respondent No. 3 with respondent No. 4 on 15th March, 2004, and again the agreement between respondent No. 4 to respondent No. 5 which is also executed on the same day may be quashed and set aside on various grounds.
5.1 The learned advocate for the petitioner submitted that in this case the respondent No. 3 has accepted the offer of respondent No. 4 at Rs. 5.69 crores. He submitted that the acceptance of offer of respondent No. 4 by respondent No. 3 is bad on following grounds.
5.2 The learned advocate for the petitioner submitted that the decision of the committee accepting the offer of respondent No. 4 is absolutely irrational. In support of the aforesaid contention, the learned advocate for the petitioner submitted following grounds:
5.2(A) (1) Non Consideration of relevant factors:
5.2(B) The learned advocate for the petitioner submitted that before the confirmation of the sale the committee had received a higher offer of Rs. 5.78 crores from Akash Associates, Baroda, however no attempt was made to obtain the said offer or on the said basis obtain a higher offer from the respondent No. 4. Without checking the bonafide or otherwise of the said bidder the offer was shrugged off by stating that it was a paper offer. The offer clearly indicated that the property could fetch a higher price despite which the same was ignored and not considered.
5.2(C) (2) Adequacy of Price:
The learned advocate for the petitioner submitted that no attempt appears to have been made by the committee to verify the adequacy of price. Time without number the court has held that the paramount duty of the authority entrusted with sale of property is to ensure the most remunerative price is obtained by liquidation.
5.2(D) (3) Valuation Report:
The learned advocate for the petitioner submitted that in order to assess the fair market value of any property, it is essential to obtain the valuation report thereof which reflects that valuation as on date of the proposed sale. In the instant case, no attempts were made to obtain the valuation report either in November 2003 or in March 2004 when the decision for confirmation of sale was taken by the authority.
5.3 Thus, it is submitted that while confirming the sale, the sale committee ought to have called for a revised valuation report. There was no report available with the committee indicating the market value of the property on the date of the recommendation by the committee or on the basis of the decision to enter into an agreement of sale. The adequacy of sale price can only be ensured when the authority is aware of the market value of the property in question. The decision, therefore, suffers from non-application of mind and non-consideration to relevant factors. While confirming the sale, the sale committee could not have ignored the offer of a bidder which was higher than the highest bid. Failure is to ignore the available higher bid and to explore the possibility of a much higher bid.
5.4 The learned advocate for the petitioner further submitted that the decision of the committee is bad in law because the committee has arrived at a decision while considering the irrelevant factors.
(a) The learned advocate for the petitioner submitted that the committee has applied incorrect principles of valuation. He submitted that in order to justify the lower offset price it was held that if the plant is to be sold after one year of its valuation the value must be reduced by respect of the subject property the valuation must be reduced by 40% annually in respect of buildings and 25% annually in respect of plant & machinery. In view of such premises, the valuation was reduced from 6.71 crores to 5.25 crores. Learned advocate submitted that this is completely inconsistent with the actual applicable principles. Since the property was to be sold as scrap the application of the above deductions could not arise. Further the observation of a recession in the market was also inaccurate since it overlooked the actual trend in the scrap market which indicated otherwise.
5.5 The learned advocate further submitted that the committee has taken into consideration outdated and unscientific valuation report. He submitted that the authority has based its decision regarding adequacy of price on the valuation report dated April, 2003. The report relied upon by the committee was outdated and had no nexus with the market position on the date of the execution of the agreement. In the entire report there is not a single reference to the market value or last sale price of equivalent property. Valuation report are systematic and scientific and reveal the actual value of a property sought to be sold on the basis of its intrinsic value. A bare comparison of the report on record with any valuation report obtained in any sale procedure either under the Companies Act, Co-operative Societies Act or Civil Procedure Code would clearly expose the ineptness and inaccuracy in the said report. The report was completely unreliable for the purpose of confirmation of sale both on the basis of its being outdated and it being completely unscientific.
5.6 The learned advocate for the petitioner further submitted that the committee while accepting the offer of respondent No. 4 committed severe illegality in this behalf and therefore the decision of the committee is bad in law. In support of the aforesaid contention, the learned advocate submitted that initial withdrawal of decision to confirm sale on 16.12.2003 and subsequent unreasoned withdrawal of the said decision on 10.3.2004, it is submitted that it is a matter of record that the committee has recommended sale in favour of the respondent No. 4 in November 2003, however the Government in its wisdom had decided not to implement the said decision vide its letter dated 16.12.2003. The petitioner had specifically alleged that the decision regarding not to implement recommendation of sale was on account of awareness regarding possibility of a higher price. The explanation rendered is that it was to obtain approval. Having decided not to implement the decision dated 7.11.2003 the action of the Official respondent in withdrawing its decision on 10.3.2004 without a whisper regarding any approval (as is urged), regarding the current market value, clearly indicates that the same was in order to favour the respondent No. 4 at the interest of the public exchequer. The said allegation is fortified by the further conduct of the respondents which can be categorised as showing undue haste and indulgence in favour of the respondent No. 4. The aforesaid action is clearly indicative of colourable exercise of power which would render the decision illegal.
5.7 The learned advocate for the petitioner further submitted that the respondent No. 3 has shown undue haste and indulgence in favour of respondents. In support of the aforesaid submission, the learned advocate for the petitioner submitted that handing over possession of premises contrary to agrement of sale - without receipt of 50% of sale price from person who was a stranger to the contract under the agreement of sale which is produced at page 87 of the paper book. The delivery of the goods was to commence only after receipt of 50% of the sale price over and above the EMD from the bidder. In the instant case, upon receipt of 25% of the sale price, that too, from a stranger to the agreement of sale, the authority has sought to hand over the possession of the property for the purpose of possession of the property and not the goods to the respondent No. 5. The respondent No. 5 was not privy to the agreement of sale and could not be entrusted with the possession of the premises yet he was given possession of the entire premises. Even otherwise, unless 50% of the sale price was paid, the question of handing over possession/delivery could not arise. Despite the clear provisions under the agreement, the liquidator has handed over possession of the premises to the respondent No. 5 which is patently illegal in fact and in law. Any document purporting confer title on the respondent No. 4 dehors the agreement of sale is not significance and is completely irrelevant. Further it amount to modification of the terms of the agreement determined by the sale committee and is therefore ex-facie without jurisdiction and illegal.
5.8 The learned advocate for the petitioner further submitted that the statement that the property in goods was transferred from the liquidator to the respondent No. 4 on 15.3.2004 and on the same day was transferred from respondent No. 4 to respondent No. 5 is ex-facie errorneous and illegal. It is trite law that without payment of price, delivery of goods in accordance with the terms of the sale agreement the question of transfer of title does not arise. Further the goods in question are amenable to Gujarat Sales Tax Act, 1969. If the property in goods has actually passed as is sought to be asserted then the respondent No. 4 must have paid sales tax on the said sale amount. This is admittedly not done. Under the circumstances, there was no sale and, therefore, it was incorrect to state that the property in goods has been passed. Further any agreement contrary to the provisions or in breach of the provisions of the sales tax act would be illegal being in breach of a provision of law and being contrary to public policy. Despite this in order to show favour to the respondents No. 4 and 5 the liquidator has directly handed over possession to respondent No. 5 so as to avoid payment of sales tax. This conduct clearly reflects that the respondents authorities have acted malafide in order to favour the private respondents, which clearly indicates the colourable exercise of power, the favouritism in favour of the said respondent. The malafides are discernable from the conduct of the official respondent and it is sufficiently established from the surrounding factors which preceded and culminated into the agreement of sale and the handing over of the possession. In such circumstances, it cannot be urged that malafides must be proved only by direct evidence.
5.9 The learned advocate for the petitioner therefore submitted that the impugned decision of the State Government to accept the offer of respondent No. 4 is against the public interest. For challenging the said action, he has made following submissions:
(1) The learned advocate submitted that considering the outstanding dues of the society in liquidation, the public interest lies in accepting an offer which is the highest and more remunerative.
(2) The learned advocate further submitted that the court must consider the sanctity of private interest and general public interest, public interest must prevail. He submitted that when the Court is at cross roads between public interest and private interest, private interest must give way to public interest. What is most sacrosanct is the interest of the society which lies in getting the best price and not in protecting the private interest of a business man who has already attempted to sell the property without payment of price, payment of tax, etc. 5.10 In view of the aforesaid circumstances, the learned advocate for the petitioner submitted that the decision of the committee to accept the offer of respondent No. 4 is illegal, irrational and bad in law and the committee has ignored the relevant material and has taken into consideration irrelevant and unreliable factors in this behalf. The learned advocate for the petitioner has made following submissions:
(a) The decision making process suffers from material and procedural irregularity.
(b) The procedure suffers from an abuse of power by the authority concerned and therefore is malafide and in bad faith.
(c) The decision is unreasonable and in the facts is one which is so outrageous as to be in total defiance of logic and prescribed norms and standards.
5.11 In view of the above defects in the decision making process, the same suffers from arbitrariness, procedural impropriety, material irregularity, irrationality, unreasonableness, unfairness, illegality and does not satisfy the test of Wednesbury reasonableness, is against public interest and is, therefore, amenable to judicial review.
5.12 The learned advocate for the petitioner has cited following decisions where the court has interfered with the decisions confirming sale in favour of the highest bidder.
5.13 The learned advocate has relied upon the judgment of the Hon'ble Supreme Court in the case of Divya Manufacturing Company (P.) Ltd., Tirupati Woollen Mills Shramik Sangharsha Samity and another Vs. Union Bank of India and others reported in (2000) 6 SCC 69 particularly para 16 on page 79 the Court has observed as under:
5.13A "para.16. Further, there is a specific Condition 11 in the terms and conditions of sale as quoted above which empowers the Court to set aside the sale even though it is confirmed for the interests of creditors, contributories and all concerned and/or public interest. In this view of the matter, it cannot be said that the Court became functus officio after the sale was confirmed. As stated above, neither the possession of the property nor the sale deed was executed in favour of the appellant. The offer of Rs. 1.30 crores is totally inadequate in comparison to the offer of Rs. 2 crores and in case where such higher price is offered, it would be in the interest of the Company and its creditors to set aside the sale. This may cause some inconvenience or loss to the highest bidder but that cannot be helped in view of the fact that such sales are conducted in court precincts and not by a business house well versed in the market forces and prices. Confirmation of the sale by a court at a grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the court may prevent, to some extent, undervidding at the time of auction through court. In the present case, the Court has reviewed its exercise of judicial discretion within the shortest time."
5.14 The learned advocate for the petitioner has relied upon another judgment of the Hon'ble Supreme Court in the case of Wellworth Vanijya Pvt.Ltd. Vs. Chowdhury Udyog Pvt.Ltd. reported in AIR 2003 SC 1627 particularly para 4 on page 1628 the court has observed as under:
"para.4 As noted above, the Company was wound up as far back as on 28.2.1986 and the creditors of the company have not been able to receive anything only because of the fact that the assets of the Company could not be sold. The value of the assets of the Company has come down from Rs. 7.5 crores to Rs. 4.25 crores which is the best offer received as on today; whereas the offer made by the first respondent is only Rs. 3 crores and he is not willing to enhance it. In the above fact-situation, without going into the legality of the questions involved, bearing in mind solely the interests of the creditors, we thing the offer made by the appellant of Rs. 4.25 crores should be accepted. Therefore, allowing this appeal and setting aside the impugned judgment, we direct the Company Court to accept the offer of Rs. 4.25 crores made by the appellant and on the appellant depositing the balance amount, necessary documents may be executed in its favour."
5.15 The learned advocate for the petitioner has also relied upon another judgment of Hon'ble Supreme Court in the case of Allahabad Bank etc. Vs. Bengal Paper Mills Co. Ltd. and others reported in AIR 1999 SC 1715 particularly para 24 on page 1721 the Court has observed like this:
"para. 24 We think that the Division bench lost sight of what is stated above. It could not have realistically expected the ordinary unsecured creditors of the said company to have filed appeals on the ground of inadequacy of the sale price. It could not have turned a blind eye to the many defects that it itself noted in the order of sale merely because the banks had moved the appeals after five months; nor was there any justification for taking into consideration the expenditure that had been incurred by the second respondent subsequent to its possession of the assets and properties. In the first place, the Division Bench should have noted that the learned single Judge had with unseemly haste ordered possession thereof to be handed over to the second respondent on the very next day. In the second place, the appeals had been filed within the period of limitation. Expenditure incurred during this period could not render the appeals, in effect, infructuous. The same would apply to expenditure incurred subsequent to the filing of the appeals and until the time that they were heard. The second respondent knew that the appeals were pending and that they could end in the order of sale being set aside. Such expenditure as it incurred with this knowledge was at its risk. In the third place, and most important, the interests of the creditors of the company, particularly the unsecured creditors, overweighed such equities, if any, as might have been considered to be in favour of the second respondent. It was, in our view, the obligation of the Division Bench to have struck down the order of sale, having regard to what it found wrong with it."
5.15(A) Thereafter the court has observed that the question was whether the Division Bench was justified in not setting aside the sale on the ground that the purchaser had been allowed to take possession after the sale and he had employed persons and placed orders without objection from the banks and interference would create inequities in favour of the said purchaser. The Apex Court set aside the sale in favour of the said purchaser despite possession having been transferred in his favour and directed fresh auctions holding that "the interests of the creditors of the said company are paramount, as is the obligation of the Court to them".
5.16 The learned advocate has further relied upon the judgment of the Hon'ble Supreme Court in the case of Motors & Investments Ltd. vs. New Bank of India and others reported in (1997) 11 SCC 271 wherein also the Hon'ble Apex Court set aside the sale confirmed in favour of the highest bidder and directed fresh auction when a higher price was offered in appeal before the High Court. Though the Court was concerned with sale of property in public auction under CPC and not under Companies Act, it applied the same principles for setting aside the impugned sale. The sale confirmed in 1982 was set aside in 1997 considering the offers made and the market value available on that date.
5.17 The learned advocate for the petitioner has also relied upon another judgment of Hon'ble Supreme Court in the case of The Industrial Credit and Investment Corporation of India Ltd. and others Vs. The Official Liquidator, H.C. Calcutta and another reported in AIR 1994 SC 167.
5.18 The learned advocate further relied upon the Division Bench judgment of this Court in the case of O.J. Appeal No. 49 of 2003 in Misc. Civil Application No. 167 of 2003 in the matter of Abhishek Shops & Warehouse Co-op. Soc. Ltd. Vs. Monali Textile where the Division Bench of this Court (Coram: N.G.Nandi & D.P. Buch, JJ.) by order dated 24.12.2003 recalled the sale confirmed in favour of the highest bidder at the instance of a person who had not participate in the bid. The difference in bid was of Rs. 45 lakhs and offer was made subsequent to the confirmation of sale by on who had not participated therein. The Division Bench while upholding the order held that "the fact that within less that 10 days the respondent No. 1 gave a higher offer is suggestive of the property capable of fetching a higher price". It was further observed that the valuation of the property at the time of confirmation ( 11.9.2003) would be higher that the amount stated in the report of an anterior dated (January 1998). The Court held that difference of 45 lakhs is substantial.
5.19 Similarly, learned advocate has also relied upon the decision of this Court in Special Civil Application No. 1413 of 2004 in the case of Mahavir Ghantakaran Enterprise Vs. State of Gujarat decided on 27.2.2004 by this Court (Coram: K.M. Mehta, J.).
5.20 The learned advocate further submitted that, over and above the aforesaid principle, inadequate publicity of the proposed sale of the goods as scrap, before confirming the sale of the property in question, the Sale Committee should have ensured adequate publicity. A decision was taken by the authority to invite offers for the sale of the property as scrap. The notice inviting offer was inadequately published. The proposed sale of the property as scrap was advertised only in two local newspapers. It was not advertised in any English daily newspaper in the State or in the country, any newspaper catering to the business community such as Economic Times, any newspaper having circulation outside the State of Gujarat, any local or regional newspaper having wide circulation in the various regions of the State. In all such sales advertisement is always published in a variety of newspapers to ensure maximum participation. The advertisement was therefore, inadequate and insufficient. Adequate publicity is a sine qua non for enabling any authority to fetch the highest price of the assets sought to be sold, which in turns ensures participation of all persons interested in purchasing the property and to secure the best price is a procedural lapse in the decision making process. In such circumstances, confirmation of sale suffers from material irregularity, procedural irregularity and must be set aside.
5.21 In support of the same, the learned advocate for the petitioner has relied upon the judgment of the Hon'ble Apex Court in the case of Navalkha and Sons Vs. Sri Ramanya Das and others reported in AIR 1970 SC 2037. In para 7 the Court held that the Division Bench has come to the conclusion that publicity was not as wide as originally proposed by the Commissioners in their affidavit. The publication was made in four dailies namely The Hindu, Indian Express, Hindustan Times and The Statesman. There was no publication in the Times of India. Further out of the four newspapers in which publication was made only in two there were two insertions and in the remaining two there was only one insertion. It was further observed that since there was want of publicity and there was lack of opportunity to the public to take part in the auction the acceptance of the highest bid by the learned Judge was not a sound exercise of discretion. It is contended on behalf of the appellant that confirmation was discretionary with the court and the Division Bench ought not to have interfered with the discretion exercised by the Company Judge. It is true that the discretion exercised by the Judge ought not to be interfered with unless the Judge has gone wrong on principle. As already pointed out the learned Company Judge having decided to put the property to auction went wrong in not holding the auction as a public auction after due publicity and this has resulted in prejudice to the company and the creditors in that the auction did not fetch adequate price.
5.22 The learned advocate has also relied upon another judgment of the Hon'ble Supreme Court in the case of Allahabad Bank Vs. Bengal Paper Mills Co. Ltd. reported in AIR 1999 SC 1715. In the said case it was stated that the sale was advertised once only in three newspapers, two of which at least were local newspapers. For a sale of the magnitude of that with which we are concerned, this was surely inadequate publicity. Inadequate publicity necessarily suggests the possibility that a better price could have been obtained.
5.23 The learned advocate has also relied upon another decision in the case of Committee of Management Pachaiyappa's Trust Vs. Official Trustee of Madras reported in (1994) 1 SCC 475, while dealing with the trust property where lease was granted by the High Court on the basis of an application without holding public auction, it was observed:
"This cannot be possible on the basis of the terms offered by the applicant approaching the court. Whether the said terms are just and reasonable, and in the interest of the trust can be determined by making a comparative assessment of competing offers and, therefore, it is necessary that the person interested in taking the lease must have an opportunity to make an offer. Public auction is the means for enabling such persons to make their offers. In the matter of exercise of its supervisory jurisdiction under Section 25 of the Act, the High Court has to be guided by the same consideration which governs the administration of trust property by the Official Trustee, namely, "to make the trust get the maximum advantage of a transaction." Since public auction after adequate publicity ensures participation of those who are interested and anxious to compete, it normally secures the best price. This procedure of public auction should be adopted when the lease is to be granted under an order passed by the High Court in exercise of the jurisdiction."
5.24 The learned advocate for the petitioner has also relied upon another judgment of the Hon'ble Supreme Court in the case of Chairman and Managing Director, SIPCOT, Madras and others Vs. Contromix Pvt. Ltd. by its Director (Finance) Seetharaman, Madras and another reported in AIR 1995 SC 1632. The Hon'ble Apex Court has observed like this:
"Non determination of a Reserve Price and Non Advertisement thereof: It is an admitted fact that no reserve price was fixed and even if fixed was not advertised at all. Reserve price is fixed on the basis of the market value of the object to be sold. The alleged reserve price is also not suggestive or indicative of the market price considering the fact that the same is based on the valuation report dated 14.4.2003 and the sale is sought to be confirmed in the first instance in November 2003 and actually agreement is entered into in March 2004. No determination of reserve price and non publication thereof is fatal to the entire sale procedure."
6. As against the aforesaid submissions, one Shri S.S. Vavadia, respondent No. 3 - liquidator has filed affidavit on 30th April, 2004. The respondent No. 3 has also filed written submission. The learned Additional Advocate General Shri Kamal B.Trivedi has appeared for respondent No. 3 and made following submissions.
6.1 (1). Re: Locus Standi of the petitioner:
Learned Additional Advocate General submitted that the question of locus-standi, it is well-settled principle of law that if the right is lost, remedy is lost. The petitioner having missed the chance of participating in the tendering process and the whole process having finalized in favour of the respondent No. 4, the petitioner now cannot, under the pretext of the decision of the authority suffering from the vice of arbitrariness, favoritism and procedural illegality, make all sorts of grievances which are not sustainable in the eye of law. The petitioner has no locus standi much less any right to challenge the decision making process in the matter since the petitioners were never parties to the said process and in absence of there being any participation on part of the petitioners in the tender process the petitioners have no locus standi to make any grievance as regards the decision of the authorities of awarding contract in favour of the respondent No. 4. The petitioner being a total stranger to the entire tendering process which ultimately culminated into execution of a sale deed and thus having reached the finality, now cannot and should not be permitted to raise any grievance as regards the tendering process. The petitioner having chosen not to participate in the tendering process, it is too late in a day for the petitioner to challenge the same under some ipse dixit. The petitioner having acquiesced in the matter, the petitioner may not be permitted to agitate against the concluded contract over again.
6.1(A) The learned counsel has relied upon the decision of the Hon'ble Supreme Court in the case of R.K. Jain Vs. Union of India, reported in (1993) 4 SCC 119-relevant para 74, wherein it was observed as under:
"Shri Harish Chander, admittedly was the Senior Vice-President at the relevant time. The contention of Shri Thakur of the need to evaluate the comparative merits of Mr. Harish Chander and Mr. Kalyansundaram a senior most member for appointment as president would not be gone into in a public interest litigation. Only in a proceedings initiated by an aggrieved person it may be open to the considered. This writ petition is also not a writ of quo warranto. In service jurisprudence it is settled law that it is for the aggrieved person i.e. non-appointee to assail the legality of the offending action. Third party has no locus standi to canvass the legality or correctness of the action. Only public law declaration would be made at the behest of the petitioner, a public-spirited person."
6.1(B) The learned counsel has also relied upon another decision in the case of Nand Kishore Sharaf Vs. State of Rajasthan, reported in AIR 1965 SC 1992-relevant pages 595-596, wherein it was observed as under:
"The next question is whether the appellant can complain of this by way of a writ. In our opinion, he could have done so in an ordinary case. The appellant is interested in those contracts and has a right under the laws of the State of 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 the fact remains that he made 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 setting a matter of this moment behind the backs of those interested and anxious to complete is unjustified."
6.2 (2). Re: Decision making process"
6.2(A) Learned Addl.Advocate General has submitted that it is a well-settled principle of law that the decision making process in the matter of award of contract can be challenged only on the Wednesbury principle of unreasonableness i.e. unless the decision is so unreasonable that no prudent man would have arrived at such a decision coupled with arbitrariness, favoritism for use of power for collateral purposes. The sequence of events referred to above makes it abundantly clear that the respondent No. 3 had got entire pros and cons of the matter examined while remaining totally impartial, unbiased, practical and pragmatic during the entire decision making process. The very fact of cancelling the first tendering process initiated pursuant to advertisement dated 24.02.2003 suggests that respondent No. 3 as well as the State Level Committee were very much alive to the realities of the situation and that is how, whole tendering process was initiated afresh by issuing a fresh advertisement dated 08.07.2003. In that view of the matter, the petitioner driven by market forces and market considerations is not justified to find fault with any of the aspects concerning the entire decision making process in the instant matter based upon such market forces. It was a matter of sheer coincidence that there was a sudden spurt in the market price of the steel scrap in question at the time when petitioner filed the petition in the month of April 2004, which was never there at the time of issuance of the first advertisement dated 24.02.2003 or even at the time of issuance of second advertisement dated 08.07.2003 inviting fresh tenders. In a matter like this, there must be a freedom of "play in the matter of joints" in favour of the executive i.e. respondent No. 3.
6.2(B) The learned counsel has also relied upon another decision in the case of Tata Cellular Vs. Union of India, reported in (1994) 6 SCC 651, wherein at page 679/680, the Hon'ble Supreme Court while referring to a passage in the speech of Lord Diplock, quoted the following observations from the case of Council of Civil Service Unions Vs. Minister for Civil Service.
"By "irrationality" I mean what can now be succinctly referred to as "Wednesbury unreasonableness". (Associated Provincial Picture Houses Ltd. Vs. Wednesbury Corpn.) It applies to a decision which is so outrageous in its defiance to logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at."
6.2(C) The learned Addl.Advocate General has also relied upon another decision in the case of Sterling Computers Ltd., reported in (1993) 1 SCC 445 relevant para 12, wherein it was observed as under:
"....................in contracts having commercial element, some discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognized by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into a contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bonafide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts whole judging the constitutional validity of executive decisions must grant certain measure of freedom of "pay in the joints" to the executive."
6.3 (3). Re: Vice of delay and latches"
6.3(A) Learned Addl.Advocate General submitted that the petitioner does not have any right to make a fishy and rowing inquiry into the matter at a belated stage when not only the whole tendering process is over but the sale deed is already executed and pressed in service by giving the possession of property in question to the successful party. When, entire decision making process has been legal, proper and fair, there is no scope for any such inquiry under the above-referred circumstances. Thus, by preferring a belated petition, petitioner wants to catch a missed train and that therefore, the petitioner should not be permitted to have any say in the matter.
6.4 (4). Re: Valuation:
6.4(A) The learned Addl.Advocate General submitted that the petitioner has tried to make a feeble attempt to make a show that upset price of Rs. 671.64 lakhs (Rupees Six Hundred Seventy One Lakhs & Sixty Four Thousand) was unilaterally reduced to Rs. 525 lakhs (Rupees Five Hundred Twenty Five Lakhs) by applying unscientific and unrealistic method of valuation. In fact, it should have been appreciated that initially it was decided to sell the property in question as a plant alongwith building and shed on as it where is basis and it was from that point of view that the valuation was arrived at Rs. 671.64 lakhs as if the purchaser would purchase the entire plant alongwith building and Shed for doing the needful. However, when no proper response was received pursuant to first advertisement dated 24.02.2003, new valuation was arrived at as per the valuation report dated 14.04.2003 (see page 153 in the record of SCA No. 3453/04) of the aforesaid property to be sold as scrap. The said report is self-eloquent and a mere perusal thereof makes it clear that the method of valuation arrived at after the first unsuccessful attempt referred to above wherein the highest offer received was in the order of Rs. 457 lakhs, was totally scientific and realistic. Without prejudice to what is mentioned hereinabove, it is submitted that this Hon'ble Court may not be inclined to consider whether the aforesaid valuation was correct or not.
6.4(B) The learned Addl.Advocate General has relied upon the decision of the Hon'ble Supreme Court in the case of Balco Employees Union Vs. Union of India, reported in (2002) 2 SCC 333 - relevant paras 65, 66 and 95, wherein the Hon'ble Supreme Court while dealing with the challenge against disinvestments of Balco, commenced with the recommendation of by the Disinvestment Committee, held that the power of judicial review cannot be exercised by the courts to consider whether the reserve price which was fixed by the Evaluation Committee for the assets was correct or not."
6.4(C) The learned Addl.Advocate General has also relied upon another decision of the Hon'ble Supreme Court in the case of Air India Ltd. Vs. Cochin International Airport Ltd., reported in (2000) 2 SCC 671-relevant paras 3, 5, 7 and 11, wherein though evaluation committee appointed by Cochin international Airport Ltd. for the award of contract for ground handling services at the new airport had suggested the name of M/s. Cambatta Aviation Ltd. amongst several tenderers, its recommendation was not binding on the Board of Directors which after having considered relevant aspects of the matter held negotiations with Air India to improve its offer and ultimately awarded the contract to Air India and that the same was wrongly interfered with by the High Court. While so observing, the Hon'ble Supreme Court in para 7 of the judgment held that as under:
"Even when some defect is found in a decision-making process, the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out a legal point."
6.4(D) The learned Addl.Advocate General has also relied upon another decision in the case of Sameer Engineering Works Vs. District Collector, reported in (2003) 3 GLH 535 this Hon'ble Court had an occasion to observe when no bidder came forward for the purchase of the mortgage property of the defaulter in view of the higher upset price, there is nothing wrong to reduce the upset price on the basis of Jantri value and the sale effected on the basis thereof cannot be challenged on the ground of inadequacy of price, more particularly when no irregularity or fraud was proved.
6.5 (5). Re: Inadequate Publicity:
6.5(A) Learned Addl.Advocate General has submitted that in catena of judgements of the Hon'ble Supreme Court as well as various High Courts it is held that it is not an invariable rule of law that before disposing of public property, issuance of advertisement is sine qua non. Nevertheless, in the present case sufficient publicity was made for obtaining competitive prices. The first advertisement was issued on 24.02.2003 in various newspapers all throughout the country, viz. Gujarat Samachar (Gujarat Edition as well as Bombay Edition), Times of India, (Ahmedabad Edition), Saurashtra Samachar (Bhavnagar Edition), Saurashtra Bhumi (Junagadh Edition), Dainik Bhaskar (Rajasthan, Uttar Pradesh, Madhya Pradesh Editions), Deccan Herald (Bangalore Edition) and Deccan Cronical (Hyderabad Edition), inviting tenders for the same of the property in question by incurring a huge expense of about Rs. 4.50 lakhs. At that time, only 25 duly filled in tenders were received out of which only one party was from outside the State and the highest bid was in the order of an amount of Rs. 457 lakhs of one M/s. Ajay Enterprise as against the fixed upset rate/valuation of Rs. 671.64 lakhs where the property in question was to be sold on as-is-where-is basis. It is under these circumstances that the State Level Committee decided to go for fresh tendering process after detailed deliberation and that is how, a further advertisement inviting tenders came to be published in two leading dailies of the State Viz. 'Sandesh' and 'Gujarat Samachar' on 08.07.2003 and 16.07.2003 respectively. It is pertinent to note that though there was spurt in the market price of the scrap during the second round, it was in response to the said later advertisement that the highest offer received was of an order of Rs. 522 lakhs as against the upset price fixed which was to the tune of Rs. 525 lakhs in respect of plant, machinery and building to be sold as scrap. It is further pertinent to note that all the offers received were placed before the State Level Committee where the parties were asked to raise their offers and accordingly the offers raised were in the order of Rs. 564 lakhs Rs. 568 lakhs and Rs. 569.11 lakhs. In view of this, it does not lie in the mouth of the petitioner to allege that the notice inviting offer was not sufficiently published so as to attract competitive offer. In fact, hard reality referred to hereinabove belies all the averments and allegations of the petitioner in this behalf. As aforesaid, when the first advertisement was issued on 24.02.2003 in various dailies, there was only one party outside the State which had submitted its offer but unfortunately same was not of competitive rates as compared to the offers received from the parties within the State. In view of this, similar mode of publishing advertisement in the second round was not preferred, which could have invited a huge expenses and that is how, this time, the stress was within the State, which ultimately invited more competitive rates as compared to earlier occasion.
6.6. (6) Re: Non-consideration of the offer of M/s. Akash Associates:
There is a marked distinction between the sale of the property through tendering process, where interested parties agree to bind themselves with the terms and conditions of the tender documents and thereafter to make their offer and when the same is accepted, it becomes a concluded contract, on one hand and the sale of the property by way of auction through the Court where the property is in the custody of the court, where parties make their offer without undergoing through the tendering process. In that view of the matter, one cannot, strictly legally speaking, compare the aforesaid two modes of disposal of the public property and that therefore, the parties who willingly chose to remain outside the tendering process by not accepting the binding terms and conditions of the tender documents and by not making their offers, cannot and should not be allowed to come in picture at any stage of the tendering process and that too to the disadvantage and detriment of the interest of those parties who accepted the binding terms and conditions of the tender documents and made their offers accordingly by depositing EMD amount at the outset and also passed through the stage of negotiations for raising their respective offers wherein ultimately the highest bidder is chosen in whose favour it is decided to finalize and execute the contract. It is under this circumstances that the so-called offer of one M/s. Akash Associates who did not bother to take the tender documents and file the same after having duly filled in with deposit of EMD amount and accordingly did not effectively participate in the tender inquiry. A mere writing of a piece of letter with quotation of an amount of Rs. 578 lakhs and that too at the fag end of the whole tender inquiry cannot, by any stretch of imagination, be considered to be a valid offer without there being any attempt to establish authenticity and/or credibility. Such an attempt was in fact a device to stall the tendering process under one pretext or other and so is the position with the petitioner herein who are merely intending to take advantage of spurt in the market price of steel scrap and in the event of the said market price being lowered down tomorrow, these very parties will undoubtedly back out. However, without prejudice to the said submission, it is respectfully submitted that the petitioner does not have any locus standi to make any hue and cry in the matter at this belated stage when the rights of the successful bidder have already been crystallized and pressed in service. If such a move of the petitioner is countenanced, the same will nullify the sanctity and the finality in the whole tendering process and will give premium to such strangers to frustrate the concluded tender inquiry to the disadvantage of many other genuine parties who had effectively participated in the tendering process right from the very beginning. In fact, nothing had restrained the petitioner to make its offer in response to the notice inviting tenders at the material point of time.
6.7 (7) Re: alleged indecisiveness in the decision-making process and alleged indecent haste in handing over the possession:
6.7(A) The learned Addl.Advocate General has submitted that various allegations and averments of the petitioners in support of their aforesaid propositions are totally baseless, misconceived and sheer figments of their imagination. It was never contemplated to abandon the decision which was taken on 07.11.2003. It was only with a view to taking administrative clearance that vide a letter dated 16.12.2003, Liquidator was informed not to proceed further in the matter of the acceptance of the highest offer of Rs. 569.11 lakhs (Rupees Five Hundred Sixty Nine Lakhs & Eleven Thousand) which ultimately came to be given a green signal vide letter dated 09.03.2004. The time gap between the aforesaid two dates should not be allowed to used for taking undue advantage so as to defeat and frustrate the crystallized right of the successful bidder and to steal the march over the same by effecting backdoor entry. Erratic rise and fall in the market price of the steel scrap on frequent basis cannot set at naught the well arranged tendering process of a long duration. Such erratic fluctuation in market price can never allow any tendering process to reach finality and that therefore, what is to be seen is the principle and sanctity involved in the tendering process rather than entertaining such abrupt and belated offers motivated by oblique and market considerations. Thus, while acting as a prudent businessman, the State is required to act on principle with responsibility and accountability towards various bidders who participated in the tender inquiry, unlike an individual businessman whose sole intention is to make a profit by hook or by crook.
6.8 (8) Re: Allegation of malafides:
6.8(A) The learned Addl.Advocate General has submitted that the allegation of malice in fact and in law, as advanced by the petitioner has no substance, inasmuch as neither of the two can be assumed or readily inferred in the absence of any direct and strong evidence against a particular party.
6.8(B) He has relied upon the decision in the case of State of Maharashtra Vs. Dr.Budhikota Subbarao, reported in (1993) 3 SCC 71 - relevant para 7 at page 78 wherein it was observed as under:
"Mala fides violating the proceedings may be legal or factual Former arises as a matter of law where a public functionary acts deliberately in defiance of law without any malicious intention or improper motive whereas the latter is actuated by extraneous considerations. But neither can be assumed or readily inferred. It requires strong evidence and unimpeachable proof."
7. On behalf of respondents No. 4 and 5, Mr. S.N. Shelat, learned Advocate General appeared on behalf of respondent No. 5 and Mr. M.C. Bhatt, learned advocate appeared on behalf of respondent No. 4. They both have supported the submissions of learned Addl.Advocate General. Over and above they have made following submissions:
7.1 Jurisdiction under Article 226 of the Constitution of India:
7.1(A) Learned Advocate General has submitted that undisputedly the sale is conducted in exercise of statutory powers by administrative authority. The sale is not directly under the control of either civil court or this Hon'ble Court. The basic principles on which any administrative action can be interfered with are only the principles on the basis of which, a decision of the administrative authority in the matter of disposal of property can be interfered with. It is consistent trend of judicial decisions that all administrative action can only be examined by process of judicial review on the limited grounds. Normally, the Court would be inclined to interfere only in the following circumstances:
(a) If the administrative action is taken in breach of any expressed provisions of law;
(b) If the administrative action is mala fide;
(c) If the administrative action is taken for collateral purpose;
(d) If the authority has taken into consideration the circumstances not relevant to the issue;
(e) If the authority has not taken into consideration the circumstances relevant to the issue;
(f) If the decision is discriminatory;
(g) If the decision is arbitrary.
7.1(B) He further submitted that no case is made out regarding decision being vitiated on any of the above grounds. The decision is just, fair, equitable and reasonable.
7.2 Publicity:
7.2(A) The learned Advocate General submitted that the petitioner has made a grievance that on second occasion, there is inadequate publicity in inviting the tenders. Inadequacy of publicity is contended on the ground that publicity is not in the newspapers published from the places other than State of Gujarat. It is humbly submitted that the petitioner is based in Gujarat. The petitioner has not made any grievance in the petition that the petitioner has suffered on account of inadequate publicity. The petitioner has not contended that the petitioner did not come to know about invitation of tender on account of inadequate publicity. It is pertinent to note that on the first occasion, the advertisement was published at the national level, but on that occasion also, the petitioner did not even choose to purchase the tender and participate in the tender. On the second occasion also, it is not the grievance of the petitioner that the petitioner could not read Gujarati Newspaper and is ignorant of Gujarati language and on that count it has suffered.
7.2(B) The extent of publicity required to be made for invitation of the offers is within discretion of the administrative authority and there are no hard and fast rules for making publicity in a particular way or at a particular level. The authority has justified its action regarding inviting tenders through publicity in Gujarat's newspapers only on second occasion and the decision is absolutely rational and it is a commercial decision. It also reflects the proper application of mind by the authority. It is not in dispute that on first occasion, the authority had to incur expenditure of Rs. 4.50 lakhs for publishing advertisement. It is a matter of record that all tenderers were from Gujarat except one on first occasion and, therefore, considering the huge expenditure involved and considering the fact that response to the advertisement was practically from Gujarat alone, the authority had come to absolutely rational decision to publish the advertisement in Gujarati Newspapers. The fact remains that there was substantial response and a number of tenders were purchased and a number of parties have participated on second occasion also and there is substantial entry in the bid process. Therefore, no complaint can be made regarding inadequate publicity.
7.3 Valuation Report:
7.3(A) The learned advocate submitted that the petitioner has raised the following two contentions in respect of Valuation Report:
(a) Report is unscientific and
(b) Report is outdated.
7.3(B) He submitted that there is no substance in both the above contentions. The petitioner has made grievance that ultimately, the property was sold at a price lesser than the price stated in the valuation report. Therefore, the authority did produce valuation report at Annexure-H, Page 153 with affidavit-in-reply filed in Special Civil Application No. 3453 of 2004. This report is produced with a view to meet the contention that the property is not ultimately sold below the estimated price. After production of this report, new contention is raised that report is not scientific. But, the petitioner has ignored the fact that all the details regarding valuation are as per Annexure-I as indicated at Page 154. It is submitted that valuation report is prepared by experts and the authority is justified in relying upon the valuation report made by the experts. There is absolutely no allegation of mala fide against the experts who have made the report and even considering the offers made on the first occasion and on second occasion, it cannot be inferred that valuation report is unscientific or does not reflect correct market value.
7.3(C) As far as time gap is concerned, it is submitted that valuation report produced on Page 153 is dated 14.4.2003 and after following the procedure evolved by the authority, ultimately the authority has confirmed the sale on 7.11.2003 through the State Level Sale Committee. It is humbly submitted that no where it is contemplated that valuation report should be called from time to time during the process of sale either by tender or by auction. No such procedure is known to the statutory laws. The valuation report or upset price report is also updated from time to time either under CPC or under the Sale by Company Court or under the sale by Insolvency Court. If the valuation report would be required to be called from time to time, ultimate decision of sale can never be taken and it would become an endless process.
7.4 Offer of M/s. Akash Associates: Submissions of Mr. S.N. Shelat, Learned Advocate General on behalf of respondent No. 5.
7.4(A) The learned Advocate General has submitted that the petitioner has contended that the authority has committed an error in not accepting the offer or in not making further inquiry in respect of offer made by Akash Associates. This contention is without any substance.
7.4(B) It is pertinent to note that Akash Associates had neither purchased tender on first occasion nor on the second occasion. Akash Associates did not participate in process of first tendering process or second tendering process. Since Akash Associates did not participate in the tendering process, it had not paid EMD of Rs. 20 lakhs. It is pertinent to note that Akash Associates has not made any representation on administrative side or made any offer to the authority, but Akash Associates only issued a legal notice through the advocate and tried to challenge the action of the liquidator. It is pertinent to note that normally, businessman does not straightway resort to legal notice before entering into arena. This would amply demonstrate that it was not a genuine or bona fide approach, but the legal notice was issued with an ulterior motive to stall the process of tenders. It is pertinent to note that at the stage of completion of tendering process, the alleged offer of Akash Associates was allegedly higher by less than 2%. This negligible difference in the offer would never justify cancellation of the entire process. The question of considering offer of Akash Associates does not arise because taking into consideration of offer of Akash Associates would result into breach of the expressed procedure evolved by the authority to dispose of the property by tender process. In the tender process, offer of an alien or a stranger can never be taken into consideration. Thus, the contention of the petitioner is to the effect that authority ought to have committed illegality and the authority ought to have committed breach of all the norms, rules and regulations. It is pertinent to note that Akash Associates, after service of legal notice, has not taken any further action in the matter. This would also suggest that so-called offer was not genuine and Akash Associates was not interested in purchasing the property, but it was acting for ulterior motive. Thus, the authority was fully justified in discarding bogus, speculative and mischievous offer of Akash Associates.
7.4(C) He further submitted that the present petitioner has absolutely no justification to make any grievance in respect of offer Akash Associates having been rejected by the authority.
7.5 Sale:
7.5(A) The respondent Nos. 4 and 5 and the liquidator have contended that sale is complete and property in the goods is transferred from the liquidator to the fourth respondent. It is further contended by fourth respondent and fifth respondent that fourth respondent has transferred the property in goods to fifth respondent for a consideration. It is contended by the respondent that in view of the fact that documents of sale are executed and possession of the goods is handed over, the petition is either not maintainable or extraordinary writ jurisdiction should not be exercised more particularly when the property has changed hands twice.
7.5(B) It has been further submitted that the contention of the petitioner that it is only at a stage of agreement to sell and the sale is not concluded. The petitioner has relied upon one condition, i.e. Condition No. 4.6 of deed of agreement at Page 149 (SCA No. 4630 of 2004). Condition 4.6 in terms provides that:
"Delivery of goods will commence after completion of 50% amount over and above to EMD".
7.5(C) He submitted that this term is sought to be read in isolation without context and without taking into consideration of all other terms and conditions of deed of agreement produced at Page 147, and further contract produced at Page 153.
Term No. 4.1 provides that bidder has to deposit 25% within 30 days from the date of issue of the deed of agreement.
Term No. 4.2 provides that 25% of the amount of contract value to be submitted in the form of bank guarantee within 30 days thereafter.
7.5(D) It is pertinent to note that 25% payment was made on 15.3.2004 by a demand draft, and on payment of 25% further, contract was signed between the parties, which is produced at Annexure- I E at Page 153. The respondent rely upon the terms Nos. 11, 12, 13, 15 and concluding portion of the contract.
Condition No. 11 provides that possession of the goods is handed over and mill premises is required to be locked by fourth respondent.
Condition No. 12 provides that possession of the goods is handed over and the fourth respondent has to make suitable arrangement for the safety and security of the property.
Condition No. 13 provides that in the eventuality of any damage to the property by theft, fire, cyclone, template, dacoity, etc. it will be risk of fourth respondent.
Condition No. 15 provides that the goods is insured by the liquidator upto 31st March, 2004, and the respondent No. 4 is expected to insure the goods with effect from 1.4.2004.
A concluding part of paragraph of the agreement says that property is transferred and exclusive possession is handed over.
7.5(E) Learned Advocate General has submitted that in view of express provisions made in Sale of Goods Act, the only test of sale is whether the property in goods is passed from seller to buyer. The delivery can be postponed and possession can be postponed. Both can be postponed, but if the identifiable movable property is sold and if the property in goods has past, the sale is completed. In view of the above referred to conditions/terms of both the contracts, there is no doubt that with effect from 15.3.2004 the property in goods has past to fourth respondent and in turn, it has been transferred to fifth respondent. At present also, the property is lying in the mill premises at the risk of the fifth respondent because as per the contract between the respondent No. 4 and the liquidator, the respondent No. 4 is bound to pay agreed price irrespective of fact that the property would continue to be existed or would be destroyed. In the same way, the respondent No. 5 is bound to comply with the contract made with respondent No. 4, irrespective of existence or condition of property.
7.6 The learned Advocate General has submitted that the passing of the property from seller to buyer depends upon the intention of the seller and buyer. In the instant case, in view of the aforesaid two written contracts, at least there is no scope of any doubt that the property in goods has not past from the liquidator to fourth respondent and fourth respondent to fifth respondent.
7.7 The learned Advocate General submitted that in the instant case, seller and buyer both agreed and it is a common ground that the property in question has past from seller to buyer. The petitioner is a third party and otherwise not legally justified in making a grievance. Though the contracting parties contend that sale is concluded, possession is given, third party raises a contention that property has not past or possessions is not handed over. There is no legal justification for grievance, and this question cannot be examined by this Hon'ble Court at the instance of the petitioner who is an alien to the transaction of sale.
7.8 The learned Advocate General has relied upon the decision of the Apex Court in the case reported at AIR 1966 SC p.543 regarding the contention that transaction is of a completed sale. In the case before the Apex Court, subject matter of sale was forest timber. The contract was entered into by officer of lower level and it was subject to approval of the higher authority. Before the approval was accorded, the property was destroyed. The Apex Court held that the property in goods has past to the buyer because possession was given and the sale was completed, and it was identifiable goods. It was a case of sale by the authority and, therefore, the authority squarely governs the disputed sale in this petition.
7.9 General:
7.9(A) The learned Advocate General has submitted that in sum and substance, the petitioner contends that the authority is legally bound to consider the offer made by any person at any time though such person would not have participated in the tender process. The ultimate contention is that the authority should not follow the norms, rules, regulations and process evolved for processing tenders and the authority must commit breach of terms and conditions of the tender document with immunity and judgments are being cited wherein the Company Court has set aside the sale. As far as disposal of the Company Court is concerned, the sale is governed by the rules and the Company Court Rules authorise the Court either to confirm the sale or set aside the sale. The powers are vested in the highest court of the State and, therefore, no citizen can question the propriety or exercise of powers. The disputed sale is under Section 110 of the Gujarat Cooperative Societies Act, and the liquidator is not conferred with powers to set aside the sale. What is required to seen is whether a just, fair and reasonable procedure is followed and whether such evolved process is complied with or not. It would be against public interest to hold that administrative authority should not adhere to Rules, Regulations, Terms & Conditions of the Tender and permit any non-tenderer, at any stage, to make offer and direct the authority to consider the said offer at any stage. This would lead to conferring of powers arbitrarily to the administrative authorities and there is no assurance and guarantee that such powers may not be misused. On the contrary, equity demands that this Court would be inclined to hold that all statutory authorities should act according to the norms, rules, regulations and terms and conditions of the tender. This would ensure the performance of duty in proper perspective and public interest can be achieved.
7.10 Factual Defence:
7.10(A) The authority has relied upon affidavit of Mr. S.S. Vavadiya filed in Special Civil Application No. 4630 of 2004. The contention is regarding locus standi of the petitioner regarding delay and laches in preferring the petition; regarding valuation report, regarding publicity of tender notice; regarding non consideration of offer of Akash Associates etc. This affidavit justifies the actions taken by the authority and in view of this affidavit, the contentions raised by the petitioner are required to be rejected.
7.10(B) The authority has also relied upon another affidavit filed in Special Civil Application No. 3453 of 2004. Mr. S.S. Vavadiya has sworn the affidavit. This affidavit is on Page 98 of Special Civil Application No. 3453 of 2004. These respondents also rely upon this affidavit filed by the authority.
7.11 Learned Advocate General Mr. Suresh N.Shelat who has appeared for one of the respondent has supported the contention of the State urged by Mr. Kamal Trivedi, learned Addl.Advocate General. Over and above he has also made earlier submissions which I have noted in para 7.9, 7.10(A) and 7.10(B). In support of the aforesaid submission he has relied upon the following authorities. He has relied upon the judgment of the Hon'ble Apex Court in the case of Tata Cellular Vs. Union of India reported in AIR 1996 SC 11 particularly paras 84, 93, 94, 96 and 113 which reads as under:
7.11A "para.93 The duty of the Court is to confine itself to the question of legality. Its concern should be:
1. whether a decision-making authority exceeded its powers?
2. committed an error of law.
3. committed a breach of the rules of natural justice.
4. reached a decision which no reasonable Tribunal would have reached or.
5. abused its powers.
7.11B para.94 Therefore, it is not for the Court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
7.11C "para.96 What is this charming principle of Wednesbury unreasonableness? Is it a magical formula? In R. v. Askew, (1768) 4 Burr 2186, Lord Mansfield considered the question whether mandamus should be granted against the College of Physicians. He expressed the relevant principles in two eloquent sentences. They gained greater value two centuries later:
"It is true, that the judgment and discretion of determining upon this skill, ability, learning and sufficiency to exercise and practice this profession is trusted to the College of Physicians; and this Court will not take if from then, nor interrupt them in the due and proper exercise of it. But their conduct in the exercise of this trust thus committed to them ought to be fair, candid and unprejudiced; not arbitrary, capricious, or biased, much less, warped by resentment, or personal dislike."
7.11D "para.113 The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitative by experts.
(5) The Government must have freedom of contract. In other words, a fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
7.11E Thereafter the learned Advocate General has relied upon the judgment of Hon'ble Apex Court in the case of Chairman and M.D., B.P.L. Ltd. Vs. S.P. Gururaja and others reported in AIR 2003 SC 4536 where the Hon'ble Supreme Court has held in paragraphs 31 and 33 as under:
"para.31 In the facts and circumstances, we do not find that the Board and the State had committed any illegality which could have been as subject matter of judicial review. The High Court in our opinion committed a manifest error insofar as it failed to take into consideration that the delay in this case had defeated equity. The allotment was made in the year 1995. The writ application was filed after one year. By that time the Company had not only took possession of the land but also made sufficient investment. Delay of this nature shall have been considered by the High Court to be of vital importance."
7.11F "para.33 Undue haste also is a matter which by itself would not have been a ground for exercise of power of judicial review unless it is held to be mala fide. What is necessary in such matters is not the time taken for allotment but the manner in which the action had been taken. The Court, it is trite, is not concerned with the merit of the decision but the decision making process. In absence of any finding that any legal malice was committed, the impugned allotment of land could not have been interfered with. What was only necessary to be seen was as to whether there had been a fair play in action."
7.11G The learned Advocate General has relied upon the judgment of Hon'ble Apex Court in the case of Radhy Shyam Vs. Shyam Behari Singh reported in 1971 SC 2337 particularly para 8 which reads as under:
"para.8 Rule 90 of O.XXI of the Code, as amended by the Allahabad High Court, inter alia, provides that no sale shall be set aside on the ground of irregularity or even fraud unless upon the facts proved the Court is satisfied that the applicant has sustained injury by reason of such irregularity or fraud. Mere proof of a material irregularity such as the one under Rule 69 and inadequacy of price realised in such a sale, in other words injury, is, therefore, not sufficient. What has to be established is that there was not only inadequacy was caused by reason of the material irregularity or fraud. A connection has thus to be established between the inadequacy of the price and the material irregularity."
7.11H The learned Advocate General has relied upon the judgment of Hon'ble Apex Court in the case of M/s. Kayjay Industries (P.) Ltd. Vs. M/s. Asnew Drums (P). Ltd. and others reported in AIR 1974 SC 1331 where the Hon'ble Supreme Court has held that for quashing and setting aside the auction, the court has held that there must be material irregularity in the conduct of the sale and did it cause substantial injury to the debtor (see para 8 on page 1334).
8. On behalf of respondent No. 4, Mr. M.C. Bhatt, learned Senior Counsel appeared. He has relied upon the provisions of Sec.4 of the Sale of Goods and Partnership Acts which provides contract of sale. The said section further provides that a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. A contract of sale may be absolute or conditional.
8.1 Sec.19 of the Act provides property passes when intended to pass. Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.
8.2 The learned counsel has also relied upon the terms and conditions entered into between the liquidator on one hand and respondent no. 3 to respondent No. 4 and respondent No. 4 to respondent No. 5. Some of the conditions which I have already set out earlier. Over and above he has relied upon the said provisions and submitted that the property of the goods is already transferred by respondent No. 4 to respondent No. 5 and sale was also completed and, therefore, in this eventuality this Court may not set aside the sale in this behalf.
8.3 The learned counsel has relied upon the judgment of Hon'ble Apex court in the case of Sri Ram Maurya Vs. Kailash Nath and others reported in AIR 2000 SC 3402 where the court has held that when the objections under Order 21 Rule 90 CPC for setting aside the auction sale on the ground that there was material irregularity and fraud in conducting the auction sale, and if there is absence of pleading that due to said irregularity objectors were put to substantial injury, the auction cannot be set aside.
8.4 The learned counsel has relied upon the Division Bench judgment of this Court in the case of Elecon Engineering Co. Ltd. Vs. Gujarat Mineral Development Corporation Ltd. reported in 2003(2) GLR 956.
8.5 The learned counsel has relied upon another Division Bench judgment of this Court in the case of Prabhudasbhai Bhikabhai Patel Vs. State of Gujarat and others reported in 1981 GLR p.570 where the court has held that giving of tender is an administrative decision and jurisdiction in the matter of this nature this Court will not sit in an appeal to award or not to award the contract for the decision taken by the State Government.
8.6 The learned counsel has also relied upon another judgment of this Court in the case of Sameer Engineering Works Vs. District Collector and others reported in 2003(3) GLH 535 where the court has held that the sale challenged on the ground of inadequacy of price, no irregularity or fraud proved, then auction sale upheld and court has further held that if there is any objection then it has to be filed within reasonable time.
8.7 The learned counsel has also relied upon another judgment of this Court in the case of Sr.Regional Manager, FCI and another Vs. Sunil Agencies, Kutch reported in 2003(2) GLR 1020 where the court has held that court cannot interfere in matters relating to terms of invitation of tenders, after relying upon the judgment of Hon'ble Supreme Court in Tata Cellular vs. Union of India (supra) and West Bengal State Electricity Board Vs. Patel Engineering Co. Ltd. reported in 2001(2) SCC 451.
8.8 The learned counsel has also relied upon another judgment of Hon'ble Apex Court in the case of Duncans Industries Ltd. Vs. State of U.P. and others reported in (2000) 1 SCC 633 where the Hon'ble Apex Court held that in the case of immovable property, transfer of title in, by deed of conveyance, whether, on facts, involved transfer of title in plant and machinery embedded in the earth, the court held that it should be ascertained from the intention of the parties from the material on record including the agreement of sale. It was also held that question of valuation is a question of fact and hence where the valuation is based on relevant material, the court would not interfere with the same.
8.9 The learned counsel for the respondent has relied upon another judgment of the Hon'ble Supreme Court in the case of Ram and Shyam Company Vs. State of Haryana and others reported in AIR 1985 SC 1147 where the court held that a unilateral offer, secretly made, not correlated to any reserved price made by B after making false statement in the letter was accepted without giving any opportunity to A either to raise the bid or to point out the falsity of the allegations made by B in the letter as also the inadequacy of his bid. In view of this peculiar facts and circumstances of the case, A suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fairplay in action. In view of the same the ratio of the said judgment will not be applicable to the facts of present case.
8.10 Learned counsel for the respondent has submitted that as regards M/s. Navalkha's case (supra), in that case the Hon'ble Supreme Court has held that once the Court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received. In that case the auction was not a public auction because it was not open to the general public but was confined to two named persons. In this case it is a public auction and therefore the petitioner has not been able to show that the price arrived is not adequate or is there any fraud in that behalf and therefore that judgment of the Supreme Court is not applicable to the case of the petitioner in this behalf.
9. I have considered the contention raised by the petitioner. I have also considered the submissions made by Mr. Kamal B.Trivedi, learned Addl. Advocate General on behalf of the State. I have also considered the submissions made by learned Advocate General Mr. S.N. Shelat who is appearing one of the respondent as well as Mr. M.C. Bhatt, learned senior counsel who is appearing one of the respondent. I have also considered the judgments of the Hon'ble Apex Court in Divya Manufacturing Company (P.) Ltd. (supra), Wellworth Vanijya Pvt. Ltd. (supra), Allahabad Bank (supra), Motors & Investments Ltd. (supra), the Division Bench judgment of this Court in the case of Abhishek Shops & Warehouse Co-op. Soc. Ltd. (supra) and also judgment of this Court in the case of Mahavir Ghantakaran Enterprise (supra). I have also considered the judgments of Hon'ble Apex Court in the case of Committee of Management Pachaiyappa's Trust (supra), Chairman and Managing Director, SIPCOT, Madras and others (supra). I have also considered the judgments of Hon'ble Supreme Court in the case of Tata Cellular (supra), Chairman & M.D., BPL's case (supra), Radhy Shyam (supra), M/s. Kayjay Industries (supra), Sri Ram Maurya (supra), Duncans Industries Ltd. (supra), Ram & Shyam's case (supra). I have also considered the division bench judgments of this Court in the case of Elecon Engineering Co. Ltd. (supra) and Prabhudas Bhikabhai Patel (supra). I have also considered the judgments of this Court in the case of Sameer Engineering (supra) and Sr.Regional Manager, FCI (supra) and other materials in this behalf.
9.1 I have also considered the detailed affidavit filed by the State as well as other respondents and also considered the judgment of this Court which gives a discretionary jurisdiction to this Court under Articles 226 and 227 of the Constitution of India. As I am considering this matter under Articles 226 & 227 of the Constitution of India, this Court has a very limited jurisdiction. As far as contract is concerned, the Court has to see whether is there any procedural irregularity is there or not. The judgment of Tata Cellular's case (supra) which has been heavily relied upon by the learned advocate for the respondents succinctly set out the principle laid down particularly para 84, 85, 86 as well as para 93, 94 and 113 in this behalf. From this judgment and other judgments of Air India's case (supra) the only jurisdiction of this Court is as to whether the respondents have properly carried out procedural requirement or not.
9.2 In my view the contention of the petitioner that there is an inadequate publicity of tender has no substance. The respondents have tried to demonstrate that earlier the advertisement is given in more than 8 to 10 Newspapers on 24th February, 2003, including the newspaper out of State and they had received 25 tenders from various parties including only one from outside the State and thereafter fresh advertisement is published in two leading newspapers namely "Gujarat Samachar" and "Sandesh" on 8.7.2003 and therefore the contention of the petitioner that there is an inadequate publicity has no substance in this behalf.
9.3 It may be noted that in view of this advertisement, 10 parties responded and all the said tenders came to be opened in the presence of the parties and all the offers were placed before the State Level Committee where the parties were asked to raise their offers and ultimately maximum adequate price realised by the State Level Committee. It may also be noted that on all the occasions referred to above when the tenders were invited, none of the petitioners had ever made any offer. The petitioner has not been able to show any alleged malafide or fraud by the State Level Committee. A detailed affidavit has been filed and written submissions also filed in this behalf which shows that there is a clear transparency arrived at by the State Level Committee for fetching higher price and, therefore, in my view the Committee has properly conducted the auction proceedings in this behalf.
9.4 It may be noted that the meeting has taken place on 13.8.2003, 29.8.2003, 11.9.2003 & 18.9.2003 and price was negotiated. It may be noted that the sale agreement has also been executed between respondent No. 3 and respondent No. 4 on 15.3.2004. I have also considered the terms and conditions between the respondent No. 3 and respondent No. 4 and also the provisions of Sale of Goods Act. In view of this provisions, it appears that the sale has been completed on 15.3.2004 and present petition was filed only on 12.4.2004 that is almost one month after executing the contract particularly petitioner has not participated in the auction proceedings. In view of the same, the petitioner has failed to show that the price which has been arrived at is inadequate price or there is malafide or alleged fraud of the committee and in view of the same this Court has very limited jurisdiction and therefore the contention of the petitioner cannot be accepted.
9.5 I have considered the recent judgment of the Hon'ble Apex Court in the case of Indian Railway Construction Co. Ltd. vs. Ajay Kumar reported in AIR 2003 SC 1843. The Hon'ble Apex Court laid down the principle for judicial review of administrative action particularly paras 13, 15, 18, 20 and 23.
9.6 In view of the aforesaid principle also, I have considered the submissions made by learned Addl. Advocate General as well as respondents and also perused the meeting of the State Level Committee. There is no error in exercising powers of State Level Committee in accepting the tender of respondent No. 4. The State Level Committee has considered all relevant materials and highest price which was available at the relevant time has been accepted in this behalf. The tender was also given due publicity. In my view, there is no illegality, irrationality and there is no procedural impropriety also in this behalf. The decision of the State Level Committee is within the four corners of the law and there is bonafide exercise the powers by the State Level Committee and the decision of the State Level Committee which has been taken into consideration the commercial aspect also in this behalf. The decision of the State Level Committee is not so outrageous as to be in total defiance of logic or moral standards which this Court can interfere in this behalf. There is no malafide, bad faith or malice or fraud has been alleged by the petitioner against the State Level Committee, and in absence of such this Court has very limited jurisdiction in judging the decision of the State Level Committee and that ground also this Court is declined to interfere with the decision of the State Level Committee in this behalf.
9.6A The Essential Requisites of Sale:
"Lord Denning, MR, in CBB Draper & Son Ltd. v. Edward Tuner & Son Ltd, said:
The word 'sale' properly connotes the transfer of the absolute or general property in a thing for a price in money; see Benjamin on Sale of Goods, quoted on Kirkness v John Hudson & Co.
The Supreme Court has held that according to the law, both of England and of India, in order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, which of course presupposed capacity to contract, that it must be supported by money consideration, that as a result of transaction, the property must actually pass in the goods. Unless all these elements were present there would be no sale."
{See: Pollock & Mulla on Sale of Goods Act, Sixth Edition, page 57} 9.6B "The essential object of the contract of sale is the exchange of property for a money price. There must be a transfer of property, or an agreement to transfer it, from one party, the seller, to the other, the buyer, in consideration of a money payment or a promise thereof by the buyer. Both under common law and the statute law relating to sale of goods in England and in India, to constitute a transaction of sale there should be an agreement, express or implied relating to goods to be completed by passing of title in those goods. It is the essence of the concept that both the agreement and the sale should relate to the same subject matter. Transfer of property in goods for a price is the linchpin of the definition." {See: Pollock & Mulla on Sale of Goods Act, Sixth Edition, page 58}.
9.6C Intention of parties:
" When it appears that the goods - the subject of the contract - are specific or ascertained, so that it is possible for the property to pass to the buyer, it becomes necessary to determine whether it has actually passed; as Lord Blackburn wrote many years ago:
This is properly speaking a question depending upon the construction of the agreement, for the law professes to carry into effect the intention of the parties as appearing from the agreement, and to transfer the property when such is the intention of the agreement, and not before. In this, as in other cases, the parties are apt to express their intention obscurely, very often because the circumstances rendering the point of importance were not present to their minds, so that they really had no intention to express. The consequence is that, without absolutely losing sight of the fundamental point to be ascertained, the courts have adopted certain rules of construction which in their nature are more or less technical."
"The governing principle which should determine as to the passing of the property in the goods must be to find out what is the intention of the parties. It is open to the parties to agree that the property shall pass ipso facto immediately the goods become ascertained or even that it shall pass at some time after the delivery is effected."
{See: Pollock & Mulla on Sale of Goods Act, Sixth Edition, page 176 & 177}.
9.6D What is tender:
"Under the law of contract the term tender is used in two senses: Firstly, it means a 'tender of performance' or 'offer of performance' of a contract. A valid offer of performance or 'tender' is considered to be equivalent to the performance of the contract. Secondly, a 'tender' means a quotation or an 'offer', just like an auction bid. When such a tender or offer is accepted by the acceptance of the tender by the party who had invited the tenders, the process of offer and acceptance between the parties becomes complete and the same results in a contract between the two parties."
"The sale by auction is complete when the auctioneer announces its completion by the fall of hammer or in other customary manner. In case of tenders, the contract becomes complete when a tender is accepted."
{See: Law of Contract & Specific Relief by Jaswant Singh, Madras Law Journal, Edition 2001 page 169 and 174.
10. I have considered the Sale of Goods Act particularly sec.4 and sec.19 and the quotation from Mulla. I have also considered what is meant by tender and what the tender become complete as far as tender is concerned. Once we consider this position, it becomes clear that an offer made by one person to another, on its acceptance by the other, becomes an agreement under the law of contract; none of the parties can resile therefrom. Sec.37 of the Indian Contract Act states that "the parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law." In view of these provisions, a binding contract between the parties entered into and none of them can resile therefrom at any time thereafter. In view of this legal position, once the parties have entered into the contract between respondents No. 3 and respondent No. 4 and thereafter respondent No. 4 to respondent No. 5 which has been happened on 15th March, 2004, and the petitioners have filed this petition almost after one month, it will not be possible for this Court to give any relief to the petitioners in this behalf. The possession of the property is also handed over to respondent No. 4 and then to respondent No. 5.
11. It may be noted that in this case the petitioner has not participated in the tender proceedings earlier. He has come at the last minute particularly where the auction proceedings was already completed and possession was also handed over to respondent No. 4 and subsequently to respondent No. 5. In view of the same on the ground of gross delay and laches the contention of the petitioner is liable to be rejected.
11A. As regards Akash Associates, he has not particiapted in earlier tender process, he has not paid earnest money. So the State Government was right in not considering his case.
12. It may be noted that the State has ably demonstrate that there is a clear transparency and State has complied with all the requirements, and in view of Tata Cellular's case (supra) and other cases, this Court has very limited jurisdiction and therefore in my view the contention of the petitioner cannot be accepted. The State has also filed valuation report which also shows that the price arrived at by the auction committee is an adequate price and a fair price looking to the facts and circumstances of the case. In my view once the contract is completed and sale has taken place and property of the goods is already transferred by respondent No. 4 to respondent No. 5, in view of the same therefore this Court is not inclined to interfere with the same in this behalf because it will cause great prejudice to respondents No. 4 and 5. In view of the same, the petition is rejected. Rule is discharged with no order as to costs.
13. This Court beholden to the learned advocate Mr. Mitul Shelat for the petitioner, Mr. S.N. Shelat, learned Advocate General for the respondent No. 4, Mr. Kamal B.Trivedi, learned Additional Advocate General for the respondents No. 1 to 3 and Mr. M.C. Bhatt, learned Senior Counsel for the respondent No. 5 who have rendered valuable assistance in resolving this complicated question of law and fact in this behalf.