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Judgment
Gavai B.R., J.—Rule. Rule made returnable forthwith and heard finally, by consent. The petitioner had initially approached this Court for a direction in the nature of a writ of mandamus, directing the respondents to withdraw the Public Tender Notice, published in Daily Sakal, Aurangabad dated 27th May, 2011, for the property bearing CTS No. 9233, admeasuring 685.75 sq. mtr. and 963.80 sq. mtr., situated at Jinsi Market Yard, Aurangabad, owned and possessed by the respondent No. 5 society, which is under liquidation.
This Court, vide order dated 17th June, 2011, had issued notice before admission. The matter was thereafter listed before this Court (i.e. the Bench consisting of Hon''ble Shri Justice D.B. Bhosale and Hon''ble Shri Justice S.B. Deshmukh) on 15th July, 2011. It appears from record that when the matter was heard on 15th July, 2011, a statement was made on behalf of respondent No. 6 M/ s. Abbas Transport Company that their offer of Rs. 73 lakhs and some odd amount had been accepted and they had deposited part of the amount with respondent No. 5. On that day, learned Senior Counsel appearing for the petitioner sought leave to add M/s Abbas Transport i.e. present respondent No. 6 as party-respondent. A statement was also made on behalf of the petitioner that the petitioner shall deposit an amount of Rs. 75 lakhs in this Court before the next date to show their bona fides. Said statement on behalf of the petitioner was accepted. In view of said statement on behalf of the petitioner, the respondent No. 5 was directed not to confirm the sale till the next date. It is not in dispute that accordingly, the petitioner has deposited an amount of Rs. 75 lakhs in this Court.
After the change of roster, the matter was listed before this Bench. When the matter came up before this Court on 20th October, 2011, noticing that the learned Senior Counsel appearing for the petitioner had made a statement that valuation of the property in question was not less than Rs. 1,11,00,000/-, we had asked learned Senior Counsel for the petitioner as to whether the petitioner was willing to file an undertaking to that effect. On 20th October, 2011, Shri Dixit, learned Senior Counsel, on behalf of the petitioner, made a categorical statement that the petitioner was willing to give an offer of Rs. 1,11,00,000/-. On the said date, we had asked Shri Mandlik, learned Senior Counsel, appearing for respondent No. 6, as to whether the respondent No. 6 is willing to give a better offer than the petitioner. Shri Mandlik informed us that the main partner of respondent No. 6 Company, namely, Mr. Fayyaz Khan was undergoing a major operation and as such, he could not make the offer on the said date and sought an adjournment. Since, we had substantially heard the matter on various dates and as the matter was being adjourned only because Shri Mandlik, learned Senior Counsel for the respondent No. 6, could not make the statement on the ground of the partner of his client being ill and since the assignment was likely to change immediately, the matter was directed to be treated as part-heard, at the request of the Counsel for the parties. Accordingly, the matter was directed to be listed after Diwali Vacations i.e. on 9th November, 2011.
On 9th November, 2011, when the matter was listed before the Bench, presided over by Hon Tale Shri Justice Naresh H. Patil, noticing that this Bench had, on earlier date, directed the matter to be treated as part-heard, the Court directed the Registry to place the matter before this Bench. Accordingly, on 14th November, 2011, the matter was listed before us. We found that in the interest of justice, it would be appropriate that both the parties are permitted to give their bids before this Court. We had, therefore, taken offers from both the parties in the open Court and both the petitioner as well as respondent No. 6 had progressively increased their offers and had finally agreed to give an offer of Rs. 1 Crore 50 Lakhs. A statement was also made by Shri Dixit, learned Senior Counsel, that since the petitioner is a society, the petitioner was also willing to give a better offer, however, subject to approval by the Managing Committee of the petitioner and therefore sought an adjournment.
We found that any further delay may not be in the interest of the respondent No. 5 and had, therefore, dictated an order on 14th November, 2011, thereby dismissing the petition subject to the respondent No. 6 giving an undertaking that he shall pay an amount of Rs. 1 Crore 50 Lakhs, which undertaking was given on behalf of respondent No. 6.
However, after the order was dictated, we found that certain issues which were raised in the petition were not considered by us while dictating the order. In that view of the matter, the interest of justice demanded that the matter be posted for rehearing for considering all the issues and as such, the matter was directed to be posted for rehearing on 18th November, 2011. On the said date, Shri Dixit, learned Senior Counsel appearing for the petitioner, made a statement that the petitioner was willing to submit a resolution of the petitioner society before this Court within a period of one week from that day to the effect that the petitioner was willing to give minimum offer of Rs. 1 Crore 51 Lakhs. We, therefore, found that when the petitioner and the respondent No. 6 had increased their respective offer from Rs. 73 Lakhs to Rs. 1 Crore 51 Lakhs, if the wide publicity was given, there was a possibility of fetching a much higher price. We are of the considered view that in such sort of litigation, what was paramount was the public interest which demands that a property belonging to a Public Body should fetch the best possible price. We found that this could be done by directing the fresh auction process to be undertaken and putting a condition on the party who has sought interference of this Court that he will bid a minimum price of Rs. 1 Crore 51 Lakhs. We had noticed that the petitioner has already deposited an amount of Rs. 75 Lakhs in this Court. We were, therefore, of the prima facie view that the interest of the respondent No. 5 was squarely safeguarded. However, we were of the view that before any such course was adopted, it was necessary to give complete and full-fledged hearing to the respondent No. 6, who was to ultimately lose his rights in the event, such an order was passed. Accordingly, we had directed the matter to be posted for hearing today i.e. 29th November, 2011, specifically at 2.30 P.M.-, with the consent of the learned Counsel for the parties.
7 We have extensively heard Shri V.J. Dixit, learned Senior Counsel appearing for the petitioner, Shri P.V. Mandlik, learned Senior Counsel appearing for the respondent No. 6, Shri Deelip Bankar Patil, learned Counsel for the respondent No. 5 and the learned A.G.P. appearing for the respondent Nos. 1 to 4.
8 Shri Dixit, learned Senior Counsel appearing for the petitioner, submits that in view of section 105 of the Maharashtra Cooperative Societies Act, 1960 (hereinafter referred to as "the MCS Act", for brevity), the petitioner had a preferential right. It is submitted that since the petitioner had already communicated to the respondent Nos. 4 and 5 regarding their preferential rights and requested for transfer of the assets of the respondent No. 5 to them, as the petitioner society was a society registered with the similar objects as those of the respondent No. 5, it had approached this Court immediately after the tender notice was published. He further submits that in view of the provisions of section 110 of the MCS Act, the respondent - Registrar is duty-bound to invest the surplus funds available with it after liquidation of respondent No. 5 as the petitioner is a society registered with similar objects with those of the respondent No. 5. The learned Senior Counsel relies on various judgements of the Apex Court which refer to permissibility of interference by this Court in its jurisdiction under Article 226 of the Constitution of India in such matters.
per contra, Shri Mandlik, learned Senior Counsel appearing on behalf of the respondent No. 6, submit that the petitioner has no locus at all to ased the tender form and having not participated in the tender process is estopped from approaching this Court. It is submitted that the petitioner, who has taken godown on rent from respondent No. 5, has not even paid the rent and has not submitted audited balance-sheet for last three years. It is further submitted that there is no violation of any fundamental right of the petitioner and hence, the petition under Article 226 of the Constitution would not be at all maintainable. Shri Mandlik relies on following judgements of the Apex Court;
(i) Directorate of Education and Others Vs. Educomp Datamatics Ltd. and Others, .
(ii) B.S.N. Joshi and Sons Ltd. Vs. Nair Coal Services Ltd. and Others, .
(iii) Nizam Sugar Factory Vs. Collector of Central Excise, A.P., .
(iv) Tata Cellular Vs. Union of India, .
(v) Sterling Computers Limited and Others Vs. M and N Publications Limited and Others, .
(vi) Assistant Commercial Taxes Officer Vs. Kansai Nerolac Paints Ltd., .
(vii) K.D. Sharma Vs. Steel Authority of India Ltd. and Others, .
(viii) Forward Construction Co. and Others Vs. Prabhat Mandal (Regd.), Andheri and Others, .
in support of his proposition that scope of judicial review by this Court under Article 226 of the Constitution is very limited and this Court would not be permitted to interfere unless it is found that in the decision-making process there is illegality, irrationality, arbitrariness or mala fides. Shri Mandlik submits that in the present case, none of these factors are available and for no reason, the respondent No. 6 who was the only bidder, is being penalized, by taking away the rights those were crystallized in favour of the respondent No. 6.
For considering the rival submissions, we will have to consider the provisions of section 105 and section 110 of the MCS Act. Section 105 deals with the powers of the Liquidator. No doubt that Clause (c-i) of the said section, which deals with one of the modes by which the property of the society, which is under liquidation, can be sold, permits a transfer by sale of assets valued at market price to a society registered with similar objects or to Government undertaking which carries on the same business as of the society under liquidation. However, the said provision does not mandate that a preferential right has to be given to a society registered with the similar objects. In that view of the matter, we are not inclined to accept the contention raised on behalf of the petitioner that the property in question ought to have been first offered to them for sale before inviting the tenders. However, we find that the said provision would be relevant while considering the locus of the petitioner which is strongly agitated by the learned Counsel appearing for the respondent No. 6.
The perusal of the documents placed on record alongwith the petition, would reveal that there is continuous correspondence between the petitioner on one hand and the respondent Nos. 4 and 5 on the other hand, regarding the transfer of the property in question to the petitioner society. It can also be seen that the said proposal was also being considered by the respondent Nos. 4 and 5 inasmuch as certain information was sought by the respondent No. 4 for considering the proposal of the petitioner. It is thus clear that it is not as if that the petitioner''s request for transfer of the assets of the respondent No. 5 was not at all under consideration of the official assignee of respondent No. 5 society. It is further pertinent to be noted that the petitioner had approached this Court seeking a relief in that regard immediately after noticing that the tender notice was issued and this Court had issued notice before admission, before the tender process was finalized. In that view of the matter, the contention of the learned Senior Counsel appearing for respondent No. 6 that the petitioner has no locus to file the present petition, cannot be accepted.
Insofar as the next contention raised on behalf of the respondent No. 6 that there is no violation of fundamental rights to permit the petitioner to approach this Court is concerned, we are unable to accept the said contention. The limitation on a citizen to invoke the extraordinary remedy in case of violation of fundamental rights is only when an aggrieved party seeks redressal of his grievance under Article 32 of the Constitution by directly approaching the Apex Court. By now, it is settled position that such a restriction is not applicable when a party approaches the High Court for redressal of its grievance under Article 226 of the Constitution. The very (sic) ding of Article 226 would reveal that a (sic) y can approach this Court under Article 226 of the Constitution not only for redressal of its grievance regarding violation of fundamental rights, but also for violation of other rights and also for other purposes. In that view of the matter, we are not inclined to accept the contention in that regard.
Insofar as the reliance placed by the learned Senior Counsel on behalf of the petitioner, on the decisions of the Apex Court, in respect of the powers of judicial review by this Court while reviewing an administrative action is concerned, no doubt that the learned Senior Counsel is right in relying on the aforesaid judgements. We do not wish to refer to all those judgements inasmuch as the ratio laid down has to be applied to the facts of each of the case. The legal position pertaining to permissibility of interference by this Court by taking recourse to powers of judicial review under Article 226 of the Constitution is very well crystallized in the judgement of the Apex Court in the case of Tata Cellular Vs. Union of India, . The Apex Court in para. No.77 of the said judgement, has observed thus :
The duty of the Court is to confine itself to the question of legality, Its concern should be :
Whether a decision-making authority exceeded its powers?
committed an error of law,
committed a breach of the rules of natural justice,
reached a decision which no reasonable tribunal would have reached or,
abused its powers.
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, Wednesday unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. Vs. Secretary of State for the Home Department, ex Brind 28, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the Court should, "consider whether something has gone wrong of a nature and degree which requires its intervention.
However, the question that we will have to put to ourself, is as to whether while exercising the powers of judicial review under Article 226 of the Constitution of India, can we keep ourself aloof from the public interest that demands the best price to be fetched/secured while a Public Body is disposing of its property.
No doubt that the petitioner had not initially submitted its bid. However, we have already observed hereinabove that the petitioner had very much approached this Court immediately after the tender notice was issued and this Court had also taken cognizance of the petition before the tenders were finalized. Not only that, on the very next date, the petitioner had established his bona fides by way of showing the readiness to deposit an amount of Rs. 75 Lakhs and also deposited the same in this Court As stated already by us hereinabove that on 20th October, 2011 itself, the petitioner had given an undertaking that it was willing to give an offer of Rs. 1 Crore 11 Lakhs. It could well be seen that within a short span of time, the bid had increased from Rs. 73 Lakhs and odd amount to Rs. 1 Crore 11 Lakhs. We may further note that on 14th November, 2011, when this Court had asked the learned Counsel for the petitioner to give their bids, within a short span of 15 to 20 minutes in the presence of lawyers present in this Court, both the petitioner and the respondent No. 6 had increased their bids from Rs. 1 Crore 11 Lakhs to Rs. 1 Crore 50 Lakhs. When we kept the matter for rehearing, on 18th November, 2011, the petitioner expressed its willingness to file an undertaking that in the case the tenders are invited afresh, it (petitioner) will submit a bid of minimum amount of Rs. 1 Crore 51 Lakhs, if not more. The petitioner had, however, sought time to file a resolution of the petitioner society, on record. Accordingly, a resolution alongwith the undertaking of the Chairman of the petitioner society is already placed on record. If the petitioner gives its bid of minimum amount of Rs. 1 Crore 51 Lakhs in the event the bids are invited afresh, it can be seen that on account of judicial intervention, the respondent No. 5 which was getting an amount of Rs. 73 Lakhs and odd, will be now getting the offer of Rs. 1 Crore 51 Lakhs, if not more. While sitting as a Constitutional Court, should we not be alive to take into consideration the public interest of a Public Body getting an amount more than twice, the one which was offered initially by the respondent No. 6. We are at pains to state that if we fail to do so, we will be failing in our duties as the Constitutional Court. By now, it is settled position of law that the power under Article 226 of the Constitution is a power coupled with duty to do justice. In any event, the course which we are adopting now is not unknown to the legal precedence.
As way back as in 1985, the Apex Court in the case of Ram and Shyam Company Vs. State of Haryana and Others, , had permitted the parties to offer their bids in the open Court. It will be relevant to refer to what was observed by Their Lordships of the Apex Court after considering the offers which were given in the Court. In para 6 of the judgement in the said case, the Apex Court observed thus :
Shock and surprise was visible on the face of each one in the Court. Shock was induced by the fact that public property was squandered away for a song by persons in power who hold the position of trust. Surprise was that how judicial intervention can serve larger public interest. One would require multi-layered blind-fold to reject the appeal of the appellant on any tenuous ground so that the respondent may enjoy and aggrandize his unjust enrichment. On this point, we say no more.
(emphasis supplied)
The aforesaid observations are aptly applicable to the facts of the present case.
Again in the case of M/s. Rajshila Vs. State of Uttar Pradesh and others, , the Apex Court has followed the same practice. However, while directing the re-tendering, the Apex Court had ensured the interest of the Body who had invited the tenders by directing the appellant before the Apex Court to deposit a sum of Rs. 25 Lakhs by a crossed Demand Draft. The Apex Court had also observed that in the fresh auction, the minimum bid would be of Rs. 86 Lakhs which was the bid that was being offered by the appellant before the Apex Court. No doubt that in the case of State of Punjab Vs. Yoginder Sharma Onkar Rai and Co. and Others, , the Apex Court had deprecated the judgement of the High Court wherein the High Court had set aside the auction and directed the re-auction to be done. However, that was done by the Apex Court noticing that while doing so, the High Court had not ensured to safeguard the interest of the tenderer the State Government. It has been specifically observed by the Apex Court in the said case as under:
The Division Bench was, in the circumstances, in error in reaching the conclusion that the auction was not fairly and properly held with the result that the State exchequer had been subjected to a huge loss. In any event, loss to the exchequer is a factor which may be taken in to account in genuine cases, as it was in the case of M/s. Rajshila cited by learned Counsel for the first respondent At the same time, the finality of auctions must also be recognised to be in the interests of the exchequer. If auctions are set aside and reauctions ordered in less than satisfactory material, the loss of the exchequer would be far greater.
This brings us to the form of the order that the Division Bench passed. We have quoted it above in extenso. It quashes the auction. It directs reauction for the balance of the term. It directs that for Group No. 108 the first bid "shall be deemed to be Rs. 4.21 crores" as offered by the first respondent, and for Group No. 111 the first bid "shall be deemed to be Rs. 3.50 crores" as offered by it. The order then directs that in case the first respondent opts not to participate in the fresh auction and no other bidder offers a bid of the amount equivalent to the earlier successful bid, "this petition shall be to have been dismissed.
It is a very difficult order to appreciate. If at the fresh auction the first respondent does not bid and no other bidder offers a bid equivalent to the earlier successful bid and the writ petition is to stand dismissed, what is the State Government''s authority for holding the fresh auction? Whether or not the first respondent bids or somebody else bids an amount equivalent to the earlier successful bid can be known only after the fresh auction is held. If at that stage the petition is to stand dismissed, there is no authority for holding the fresh auction. Secondly, if at the fresh auction the first respondent does not bid and no other bidder offers a bid equivalent to the earlier successful bid, it must mean that the earlier successful bidder is no longer interested; but, by reason of the dismissal of the writ petition, he remains bound by his earlier bid. This not a workable or well thought out order.
In cases where there is real need to set aside an auction, he who challenges it must be required to prove his bona fides before the auction is set aside by depositing a substantial portion of what he says he will bid. It is only if the deposit is made that the auction should be set aside and a re-auction ordered.
(emphasis supplied)
As a matter of fact, the Apex Court in the said judgement has approved the course adopted by it in the case of M/s Rajshila Vs. State of U.P. and others (supra) and has held that the loss to the exchequer is a factor which may be taken into account in genuine cases, as it was in the case of Rajshila. The Apex Court held that the order of the Division Bench was very difficult to appreciate. If the fresh auction was done and the respondent who had succeeded before the High Court does not bid and no other bidder offers a bid equivalent to the earlier successful bid and the writ petition is to stand dismissed, there would have been a great loss to the public exchequer. It can further be seen that the Apex Court itself in the said case has observed that, when an auction is set aside and the reauction ordered, the party approaching the Court should be required to prove its bona fides by depositing a substantial portion of what he says he will bid.
In the present case, the course that we are adopting totally safeguards the interest of the respondent No. 5. Not only that, such a course ensures that the respondent No. 5 would get a minimum amount of Rs. 1 Crore 51 Lakhs for the property which the respondent No. 6 was to get at an amount of Rs. 73 Lakhs. In that view of the matter, in our considered view, the course that we are adopting safeguards the public interest for getting the best price for the property of a Public Body. As such, we do not find it necessary to go into the other questions raised by the petitioner. In any case, the respondent No. 5, in its affidavit, has clearly stated that after the funds are received, it will follow the provisions of section 110 of the MCS Act in accordance with the spirit of the said section. In that view of the matter, we do not find it necessary to go into that aspect of the matter.
Considering the totality of the circumstances and in view of the facts narrated by us hereinabove, we find that the impugned award of tender in favour of respondent No. 6 is not in the public interest. We are, therefore, inclined to allow the petition and pass the following order in the interest of justice.
(a) The Tender awarded by the respondent No. 5 in favour of the respondent No. 6 shall stand cancelled.
(b) The respondent No. 5 shall publish an advertisement within three days from today in Daily Sakal (Marathi) and Daily Lokmat Times, Aurangabad Editions, which are undisputedly widely circulated newspapers in English and vernacular languages in this area, inviting fresh tenders. In the said advertisement, the upset price of the tender will be of Rs. 1 Crore 51 Lakhs.
(c) The respondent No. 5 shall finalize the work of allotment of tender to the successful bidder within a period of fifteen (15) days from today. Needless to state, the tender of highest bidder shall be accepted.
(d) As undertaken by the petitioner, the petitioner shall submit a minimum bid of Rs. 1 Crore 51 Lakhs. Needless to say, petitioner would be at liberty to raise its bid, if it so desires.
(e) In the event the petitioner fails to give a bid of Rs. 1 Crore 51 Lakhs, the amount of Rs. 75 Lakhs which is deposited in this Court by the petitioner, shall stand forfeited. The said amount of Rs. 75 Lakhs which is deposited in this Court shall be credited/ transferred to the account of respondent No. 5 within a period of one week from today.
(f) In the event the petitioner is a successful bidder, the petitioner would be entitled to setoff of amount of Rs. 75 Lakhs, which is deposited by the petitioner in this Court. In the event the bid of the petitioner is not highest and bid of some other participant is accepted, the amount of Rs. 75 Lakhs would be returned to the petitioner.
(g) It is further made clear that in the event the petitioner fails to give bid of Rs. 1 Crore 51 Lakhs, apart from the amount of Rs. 75 Lakhs being forfeited, the Chairman of the petitioner society, who has given an undertaking, would also be liable for an action of committing breach of undertaking given to this Court.
(h) In the event the respondent No. 6 desires to participate in the tender process, he would also be at liberty to give his bid which will not be less than an amount of Rs. 1 Crore 51 Lakhs. However, at the request of learned Senior Counsel appearing for respondent No. 6, the undertaking which was given by the respondent No. 6 that he will be giving a bid of Rs. 1 Crore 50 Lakhs, is permitted to be withdrawn.
(i) In the event the respondent No. 6 desires to submit his lad for more than Rs. 1 Crore 51 Lakhs, he would also be entitled for adjustment of the amount of Rs. 32,78,700/- which is already deposited by it with the respondent No. 5.
(j) In the event the respondent No. 6 does not intend to submit his bid, he would be entitled to withdraw the amount which is already deposited by it with the respondent No. 5 and if the respondent No. 6 requests for withdrawal of the same, the same shall be returned by the respondent No. 5 within three (3) days of making such an application.
(k) In the event the petitioner or respondent No. 6 submit their respective bids and in the event the respondent No. 5 imposes any condition of depositing certain amount alongwith the bid, the said condition shall not be applicable in case of the petitioner and the respondent No. 6 since the substantial amount of both the petitioner and the respondent No. 6 is already with the respondent No. 5.
With the above directions, the Rule is made absolute in terms thereof. At this stage, Shri Mandlik, learned Senior Counsel appearing for the respondent No. 6, requests for stay of the above order for a period of eight weeks. Shri Dixit, learned Senior Counsel appearing for the petitioner vehemently opposes the said prayer. It may be noted that we have passed the aforesaid order in the public interest of securing the best price for the property of the Public Body i.e. respondent No. 5, which price has now been increased to Rs. 1 Crore 51 Lakhs from Rs. 75 Lakhs. It is further to be noted that the respondent No. 5 society is under liquidation for a period of last thirteen years. For one or the reason reason, the liquidation proceedings could not be completed and the dues of the eligible persons could not be satisfied. In that view of the matter, we are not inclined to consider the said prayer of learned Senior Counsel appearing for the respondent No. 6 for stay of the above order, passed by us. The prayer is rejected.