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Judgment
Sivasubramanian, J.—This writ petition has been filed by the petitioner for issue of a writ of mandamus directing the respondents 1 and 2 to
accept the highest tender of the petitioner and to give the right to purchase the bagasse from the 2nd respondent Sugar Mill for the Sugarcane for
the year 1987-88.
The material averments found in the petitioner''s affidavit are as follows:
The first respondent published an advertisement in Daily Thanthi, Tamil newspaper dated 24.12.1987, calling for sealed tenders on or before
4.1.1988 from intending purchasers of bagasse from the sugar-mills in the State of Tamil Nadu. In accordance with'' the said publication, the
petitioner submitted his sealed tender quoting his price in accordance with the procedures and rules for the purchase of bagasse. The total quantity
of bagasse anticipated to be available for sale in the 2nd respondent Sugar Mills was 5,000 tonnes. The following persons submitted the tenders
for the purchase of baled and loose bagasse from the 2nd respondent Sugar Mills at the prices indicated against each:
Baled Loose
(Price per M/T.)
Rs. Rs.
Amaravathi Sri Venkatteswara Paper Mills 150/- Nil.
Pondicherry Paper Mills Limited-Southern 180/- 140/-
Agrifurance Industries Limited, Madras 150/- ...
Sekhar Agencies (3rd respondent herein) 161/- 125/-
A.V. Lakshminarayanan (Petitioner herein) 191/- 150.50
R. Ramamurthy 190/- 112.50
Manavalan 189/- 136.45
Hindusthan Paper Ltd. 200/- ...
These sealed tenders were opened on 4.1.1988 in the presence of the Special Officer of the 1st respondent and the tenderers. According to the
petitioner, he is the person who has quoted the highest price for loose bagasse. It is stated that baled bagasse were not available in the 2nd
respondent mills and that only loose bagasse was available at that time. Therefore, according to him his rate ought to have been accepted and
bagasse ought to have been supplied to him for the year 1987-88. The petitioner claims he has got past experience in lifting bagasse from Sugar
mills and as a matter of fact, he has lifted considerable quantities of bagasse from the second respondent sugar mills during the previous year. While
so, the first respondent has given the right to purchase the bagasse at the rate of Rs. 110 per metric tonne to the 3rd respondent, even though his
tender was only Rs. 125 as against the tender of the petitioner for Rs. 150.50 per metric tonne. There was no negotiation after the opening of the
tenders. That being so, the acceptance of the tenders of the third respondent either for the price he has quoted or for any other price can be done
only by private negotiation and they cannot do it behind the back of all the other tenderers and without giving an opportunity to others to negotiate
the price with the respondents 1 and 2. The third respondent cannot be given special treatment after calling for sealed tenders. The petitioner being
the tenderer for the highest price ought to have been given an opportunity to raise price by private negotiation. The first respondent being a public
authority cannot discriminate the tenderers, who had offered more price with better experience and efficient in favour of persons who have offered
lesser price and who could not be compared with the petitioner in efficiency in the matter of payment.
A counter affidavit was filed by the first respondent raising the following contentions:
The fact that such tenders were called for is not disputed. According to them, when the tender was opened on 4.1.1986 none of the tenderers
came up to the expectation of the standard price in respect of loose bagasse at the rate of Rs. 160 per metric tonne. Therefore, no tender was
accepted and in fact all the tenders have been rejected. In the tender, M/s. Hindusthan Papers Limited, a Government of India undertaking has
quoted the highest rate of Rs. 200 per metric tonne for purchase of baled bagasse from the 2nd respondent Sugar Mills. After opening the tender
they indicated that the officials of M/s. Hindusthan Paper Mills Private Limited have quoted the highest rate and asked them to lift baled bagasse at
Rs. 200 per metric tonne and loose bagasse at the rate of Rs. 160 per metric tonne. As the bagasse had to be transported immediately and the
mills had no facilities for baling, the mills expressed their inability to supply baled bagasse. It was stated on behalf of the mills that large quantities of
bagasses accumulated affecting the working of the mills considerably. In the meanwhile, the Tamil Nadu Agro Industries Corporation, a
Government of India undertaking requested the first respondent to allot loose bagasse from the second respondent mills for their own use. As no
one quoted the expected rate of Rs. 160 per metric tonne for the purchase of loose bagasse, the first respondent rejected all the tenders and
decided to allot available bagasse to the said Corporation. Accordingly, 1,000 tonnes of bagasse was supplied to them at the rate of Rs. 160 per
metric tonne, which was subsequently reduced to Rs. 157 per metric tonne. The third respondent, M/s. Sekhar Agencies, whose tender also was
not accepted, were supplied with 2,000 tonnes of bagasse at the rate of Rs. 157 per metric tonne, as the sugar mill had no adequate place to store
the bagasse. Apart from that the first respondent permitted the second respondent to dispose of bagasses by open offers at the rate of Rs. 157 per
metric tonne. The performance of the petitioner and their associates was not satisfactory during the previous year. For instance the first respondent
allotted 1,000 tonnes of loose bagasse of Thirupathur Co-op. Sugar Mills and asked the party to remit a sum of Rs. 5,000 as deposit. But, he did
not remit the amount and he did not lift a single bagasse. When the party kept silent for all the days and which he came up with a proposal for
extension of time, his request was negatived considering his past experience. Apart from that he was acting as an agent for R. Ramesh to whom the
allotment of bagasse was made. But, the party has failed to allot the bagasse as agreed by them. The petitioner is responsible for the said
transaction. The Special Officer, Sugar Federation has rejected the offer of the petitioner by virtue of his powers conferred in Clause 12 of the
terms and conditions of the tenders and allotted 1,000 tonnes to the said Corporation at the highest rate. There is no violation of any rule or
regulation.
Mr. G. Masilamani, learned Counsel appearing for the petitioner reiterated the contentions raised in the affidavit above referred to. He submitted
that the allegation in the counter affidavit that 1,000 tonnes of bagasse was agreed to be supplied to the petitioner during the previous year is not
correct, but it was only 100 metric tonne, as 500 metric tonne of bagasse was allotted. According to him, after having rejected all the tenders, the
first respondent ought to have given an opportunity to the petitioner and other tenderers to raise their offers by private negotiation and there is
absolutely no justification for them to accept the rates offered by the Corporation or any other private party. No intimation was given to the
petitioner stating that his tender was rejected. In so far as the last year''s transaction is concerned, he submitted that the petitioner had nothing to do
with the same. He had signed the document as an agent. He further submitted that the very same Ramesh has been given supply of bagasse by
another Sugar Mill on the same day, when the tenders were considered. Therefore, the learned Counsel for the petitioner submitted that there is no
basis for dis-qualifying the petitioner in any manner. Moreover, there was no indication anywhere as to the price expected by the first respondent.
A detailed reply-affidavit has been filed on behalf of the petitioner raising these contentions. In support of his contentions, the learned Counsel for
the petitioner relied on ''a decision in Ram and Shyam Company Vs. State of Haryana and Others, , and Harminder Singh Arora Vs. Union of
India (UOI) and Others, . After careful consideration of the contentions raised on behalf of both the parties, I find the above procedure adopted
by the first respondent in the matter of disposal of bagasse from the second respondent Sugar Mills is far from satisfactory. By this time, the Courts
have laid down certain clear principles as to the method by which public property or any largess should be disposed of. The owner of a private
property is entitled to deal with his property in any manner, he likes. But, the same principles cannot be applied in the matter of disposal of a public
property. A public property has to be dealt with or disposed of for public purpose and in public interest. The Supreme Court has held that disposal
of public property partakes the character of a trust in that in its disposal there should be nothing panicky and that it must be done at the best price
so that larger revenue coming into the coffers of the State administration would serve the public interest. Exception to this principle has been made
to the effect that a socialist property may be disposed at a price lower that the market price or even for a token price to achieve some defined
constitutionally recognised public purpose. One such being to achieve the goals set out in Part IV of the Constitution of India. But where disposal is
for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy. A
Welfare State as the owner of the public property has no such freedom while disposing of the public property, A welfare state exists for the largest
good of the largest number more so when it proclaims to be a socialist state and all the attempts must be to obtain the best available price while
disposing of its property because the greater the revenue, the welfare activities will get a fill up and shot in. Some principles were expressed in most
clear terms by the Supreme Court in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, , wherein Bhagwati, J.
speaking for the Court observed as follows:
It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into
contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrary at its sweet will and, like a private
individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant.
The power of discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences etc., must be
confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm
in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the
departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.
The object of holding auction by Government or other public authorities is generally to raise the highest revenue. They are entitled to reject the
highest claim if they think that the price offered was inadequate. But in all fairness, after rejecting the offer, it is obligatory upon the Government to
act fairly and at any rate it cannot act arbitrarily, as pointed out by the Supreme Court In the above said cases. The same view was followed in
Kasturi Lal Lakshmi Reddy, Represented by its Partner Shri Kasturi Lal, Jammu and Others Vs. State of Jammu and Kashmir and Another, .
Coming to the facts of the present case, I find that once the authorities decided to dispose of all stocks of bagasse by calling for tenders, they
are bound to follow the principles referred to above. After inviting tenders, it is not open to them to reject all of them, without giving any
information to the tenderers and proceed to dispose of the goods by private negotiation secretly and behind the back of the tenderers. First of all
there is no indication anywhere in the notification about the prices accepted by the respondents 1 and 2. It was open to them to fix an upset price
and call for tenders on that basis. But, for reasons best known to them, they have not done so. However, it is open to them to reject all the tenders
if they come to the conclusion that the prices offered by the tenderers are not satisfactory. But, in such a case, they are bound to call for fresh
tenders or invite all the tenderers and others and negotiate for an higher price. It is also not necessary for the authorities to accept the highest tender
alone and it is always open to them to reject such highest offer on certain specific grounds, for example, the financial position of a party, past
unsatisfactory performance, incapacity to handle a particular contract, etc If any tender is rejected, certainly the authorities are bound to inform the
tenderers that their tenders have been rejected for certain reasons. In this case, we find that no communication has been sent to the tenderers
stating that their tenders have been rejected and no reasons have also been given till the petitioner came to this Court as to why the highest price
offered by him was not accepted. This is certainly not a procedure expected from a public authority like the first respondent, who is entrusted with
the task of dealing with public property.
It has been categorically held by the Courts that whenever the public authorities proceed to dispose of the properties by private negotiation after
rejecting the tenders, opportunity must be given to the tenderers to raise their offers provided they are not disqualified otherwise. According to the
petitioner, if he had been consulted, he would have certainly offered more price than the price for which the bagasse has been disposed of in favour
of third parties. In such a situation what is to be done has been clearly indicated by the Supreme Court in the above said decision. Ram and Shyam
Company Vs. State of Haryana and Others, , in the following terms:
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. A suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of
fairplay in action. When he gave the highest bid, he could not have been expected to raise his own bid in the absence of a competitor. Acceptance
of an offer secretly made and sought to be substantiated on the allegations without the verification of their truth, which was not undertaken, would
certainly amount to arbitrary action in the matter of distribution of State largesse which is impermissible.
The learned Counsel for the first respondent submitted that whatever might be the merits in the contentions of the petitioner, this writ petition has
become infructuous since the bagasse which was the subject-matter of the tender has already been disposed of and, therefore, no relief could be
granted to the petitioner. I am unable to accept the contention since the mills are producing bagasses continuously and we do not know the nature
of stock out of which the other persons were supplied. Anyhow, it is not a matter about which we are concerned in this writ petition. If once the
procedure adopted by the first respondent is held to be invalid, naturally the consequences must follow. If the bagasse is not available, it is a matter
for the parties to work out their rights on the basis of the declaration made in this writ petition.
In the result, this writ petition is allowed declaring that the tender submitted by the petitioner for the highest price ought to have been accepted in
the absence of private negotiation between the tenderers and others and directing the respondents 1 and 2 to accept the highest tender of the
petitioner and effect supply of bagasses in pursuance of the said tender, provided stock is available and giving liberty to the petitioner to work out
his remedies in so far as the quantity of bagasse which is not supplied to him. No costs.