Shivendra Singh vs State of M.P. and Others

P.K. Jaiswal, J.

Challenge in this writ petition is the order dated 27.8.2009 (Annexure P-19) passed by Respondent No. 2, whereby right to sell the fishes for the remaining period of contract is given to the Respondent No. 4. In the writ petition, the Petitioner is seeking following reliefs:

(i) A writ in the appropriate nature may kindly be issued to quash order dated 27.8.2009, contained in Annexure P-19, issued by Respondent No. 2;

(ii) That a writ in the nature of mandamus may also be issued directing the Respondents No. 2 and 3 to permit the Petitioner to execute the contract in terms of Annexure P-1 as he is doing since the date of execution of the said agreement uptill now;

(iii) Any other relief flowing from the facts and circumstances of the case may please be awarded along with the costs of the proceedings to meet the larger interest of justice.

The factual position in a nutshell is as follows:

The Respondent No. 2 had invited tenders for fisheries rights from Ban Sagar Dam for the period of 5 years commencing from 2006-07 to 2010-11. The Petitioner being the highest bidder, his bid was accepted and agreement to this effect was entered between the Petitioner and Respondent No. 2 vide Annexure P-1 on 24.1.2007.

By the said agreement, the Petitioner was entrusted with the rights to sell the fishes of the Ban Sagar Dam for a period of five years with effect from 24.1.2007 to 15.6.2011. As per Clause (1) of the agreement, at the time of submission of tender, the Petitioner had submitted a bank, draft of Rs. 6.00 lacs and thereafter when the contract was awarded to him, on 24.1.2007 he submitted a demand draft of Rs. 6.60 lacs. As perterms and conditions of the agreement, the Petitioner was to deposit Rs. 25.20 lacs for the year 2006-07, Rs. 56.28 lacs for the year 2007-08, Rs. 61.32 lacs for the year 2008-09, Rs. 68.04 lacs for the year 2009-2010 and Rs. 74.76 lacs for the year 2010-11. As per Clause (3) of the agreement, the Petitioner was required to deposit the security deposit, 25% of the annual value of the contract.

On 21.2.2007 the Petitioner entered into an agreement with Respondent No. 4 and formed a joint venture-cum -partnership with him that they would do the business in the name and style of M/s. Ma Kali Enterprises. They also executed a partnership deed on 21.2.2007 (Annexure P-2). As per Clause (2) the partnership shall commence on the 27th day of January 2007 and shall continue for a period of the terms and conditions of the contract dated 24.1.2007. As per Clause (3) the capital of the firm shall be contributed by both the partners in an equal proportion and if during the continuation of contract any further capital is needed by the firm, both the partners shall contribute on such terms and conditions and in such shares as they may mutually agree upon. As per Clause (7) every partner and his authorized representative shall have the right of access to the books of account maintained by the firm as also the right of either inspecting them or copying the whole or any portion of such books of account. As per Clause (10) every partner shall have a right to take part in the conduct of the business. As per Clause (11) every partner shall be entitled to 50% of the profits of the firm and shall also bear the loss, if any, in the same proportion Clause 16 deals with the dispute and differences, if arises, between the partners. This clause provides a mode for settlement of disputes between the partners of firm, through arbitration which reads as under:

Any dispute or difference of opinion that may arise between the partners or their legal representatives or heirs with regard to this partnership agreement or to any other matter relating to the firm shall be referred to two arbitrators by common agreement of the partners. Where the arbitrators are themselves divided in opinion, the matter may further be referred to any umpire chosen by the said arbitrator. The decision of the arbitrator or umpire shall be final and binding on all the partners.

After executing a partnership deed, the Petitioner submitted an application before the Respondent No. 2 on 12.3.2007 (Annexure R-l) seeking permission to permit him to execute the contract along with Respondent No. 4 Abhay Kumar Shaw with whom the Petitioner executed a joint venture/partnership deed on 21.2.2007, in the name and style of M/s. Ma Kali Enterprises and said change be incorporated in the contract agreement. The Respondent No. 2 had accorded permission for the said change in the contract with the condition that all terms and conditions as stipulated in the contract agreement (Annexure P-1) shall be applicable to them. The Respondent No. 2 had further clarified that no further change in the structure of the firm shall, however, be permitted and passed an order on 5.4.2007 (Annexure R-2).

Thereafter on 5.4.2007 a supplementary agreement was executed by the Respondent No. 2 with the Petitioner and his partner i.e. Respondent No. 4 vide Annexure R-3

As per terms of the contract (Annexure P-1), an amount of Rs. 56,07,000/- was required to be deposited as Bank Guarantee towards security. A joint Bank Guarantee was furnished by the Petitioner along with Respondent No 4 to the extent of Rs. 35 lacs to the Federation. The rest of the Bank Guarantee of Rs. 21 lacs was to be submitted by the end of December, 2008. The Petitioner was also called upon by the Respondent No. 2 Federation that it the Bank Guarantee of Rs. 56,07,000/- is not furnished afresh, the agreement would be cancelled. He was also called upon to furnish the Bank Guarantee of remaining amount within the stipulated period. It is also submitted that the Respondent No. 4, partner of the Petitioner, stopped taking any interest in the matter. The Petitioner on 20.6.2008 and 22.8.2008 wrote a letter asking him to submit the Bank Guarantee of Rs. 56,07,000/- failing which the partnership would be terminated. Thereafter the Petitioner sent a fax message on (Annexure P-6) reiterating the same grievances and requested the Respondent No. 4 to furnish the bank guarantee of Rs. 21.07 lacs. It is also pointed out that if the bank guarantee is not furnished within the stipulated period, the contract would be cancelled and the Petitioner will have to incur huge loss. The Petitioner also wrote a letter to the Respondent No. 2 Federation pointing out the above facts and also requested the said authority to issue necessary instructions so that he may submit the said Bank Guarantee and continue with the contract. On 5.1.2009, he received a letter (Annexur P-7) from the Respondent No. 2 Federation wherein it has been pointed out that the Petitioner and his partner had furnished a Bank Guarantee of Rs. 45.00 lacs in their individual name whereas they have to furnish the bank guarante of Rs. 56.07 lacs in the name of firm and directed them to furnish a fresh Bank Guarantee of Rs. 56.07 lacs in the name of M/s. Ma Kali Enterprises and if the same is not furnished within a period of 15 days, the action will be taken against the Petitioner and Respondent No. 4. On receiving this letter, a legal notice was issued by the Petitioner to the Respondent No. 4 and pointed out that if the Bank Guarantee is not furnished, the agreement dated 24.1.2007 would be candled and the Bank Guarantee of Rs. 45,00,000/- already furnished would be forfeited. It is also pointed out by the Petitioner that in spite of notice dated 5.1.2009 necessary Bank Guarantee towards security deposit amounting to Rs. 56,07,000/- has not been furnished due to inaction on your part and in that event the agreement may be cancelled by the Federation and, therefore, the Petitioner has no option but to cancel the partnership deed with immediate effect as period of six months has expired from notice dated 20.6.,2008 and 22.8.2008.

On 28.1.2009 Respondent No. 2 Federation wrote a letter to M/s. Kali Enterprises stating therein that despite the repeated demands the bank guarantee is not being furnished. It is also stated that the Respondent No. 2 Federation is not concerned with the inter se dispute between the Petitioner and Respondent No. 4 i.e. partners of Petitioner firm M/s. Ma Kali Enterprises and contended that the Federation is concerned with the fisheries right which was awarded to them and wants that the work be done strictly as per terms and conditions of the contract. The security deposit in the shape of bank guarantee has not been furnished within a period of 30 days and thus they have violated the terms and conditions of the contract and granted a last opportunity to furnish the bank guarantee so that the contract may not be terminated, else the security deposit held by the Respondent No. 2 Federation would be forfeited and agreement would be terminated.

The Respondent No. 4 served a legal notice to the Petitioner vide Annexure P-10 dated 17.3.2009 and stated that there is a gross violation of the partnership agreement as the Petitioner is not allowing the constituted attorney of Respondent No. 4 to participate in the business nor he is permitting him to inspect the accounts book as per terms and conditions of the partnership deed and further stated that in such circumstances there is a dispute and difference between the Petitioner and the Respondent No. 4 in running the partnership business and invoked Clause 16 of the partnership deed (Annexure P-2) and suggested the name of two arbitrators and requested the Petitioner to accord his consent for the appointment of proposed arbitrators. The Petitioner immediately submitted his reply through registered AD on 18.4.2009 and intimated that both the proposed arbitrators are close friends of Respondent No. 4 and had a discussion with regard to the dispute with the Petitioner and, therefore, he refused to accept the name of the above two proposed arbitrators and requested to suggest two new names failing which he will appoint two arbitrators to get the dispute decided in terms of Clause (16) of the partnership deed.

The Respondent No. 2 Federation who had earlier entered into an agreement with the Petitioner for production of fishing in the reservoir of Bank Sagar Dam district Shahdol and later on at the request of Petitioner permitted the change and constitution of partnership firm in the name and style of M/s. Ma Kali Enterprises, vide order dated 5.4.2007 and on the basis of the affidavit furnished by the Petitioner and Respondent No. 4 jointly, passed an order and executed an agreement to the effect that the contract of fishing rights shall be deemed to be executed between M/s. Ma Kali Enterprises and Respondent No. 2 and modified the earlier contract and amended the agreement by holding that the agreement was deemed to have been executed by the Petitioner and Respondent No. 4. It vide letter dated 1 3.7.2009 directed both the partners to appear before the Managing Director of the Federation on 21.7 2009 for settlement of their inter se dispute. On 21.7.2009 in absence of Respondent No. 4 the matter was adjourned to 3.8.2009 and thereafter for 1 7.8.2009. The Respondent No. 4 was not willing to remain present on 1 7.8.2009 and permuted his attorney to attend the meeting and on that day no meeting was held because the Petitioner was not willing to sit with the attorney of Respondent No. 4.

Prior to 17.8.2009 the Petitioner was called upon by the Federation vide letter No. 235 dated 1.8.2009 to deposit the lease amount for the period 2009 2010, difference of security amount, the amount of arrears of seed and the rent of boats, etc. etc. amounting to Rs. 27.77,010/-. On 11.8.2009 the Petitioner alone deposited the said amount and sought permission to start the work so that the fishing operations may be done through the societies and wrote a letter to this effect which is evident from Annexure P-15 and P-16.

As per the agreement, the fishing is to be done through fishermen of the registered cooperative societies and for that tripartite agreement was executed by the Petitioner with the registered fishing society i.e. Mngnayani Fishermen Cooperative Society through its President and also by the Regional Manager of the Federation on 13.8.2009 (Annexue P-17) for a period commencing from 16.8.2009 to 15.6.2010. As per terms and conditions of the said agreement the Petitioner has to pay the necessary charges to the Fishermen Cooperative Society @ R.17/- per kg. after completion of necessary formalities as required under the terms of agreement dated 24.1.2007 (Annexure P-1), the work order was issued to the Petitioner on 16.8.2009 vide Annexure P-18. After the receipt of work order, the Petitioner started the work as per terms and conditions of the contract.

The Petitioner after depositing the amount of Rs. 27,77,010/- had entered into an agreement with the registered Fishing Society. The said agreement was tripartite signed by the Petitioner, President of Mngnayani Fishermen Cooperative Society and Regional Manager of the Respondent No. 2 Federation. The aforesaid action has not been challenged by the Respondent No. 4 by taking appropriate proceedings and the same has attained a finality. Thereafter all of a sudden, without any notice to the Petitioner, the Respondent No. 2 issued an order dated 27.8.2009 by which he look a decision that the right to sell the fishes of (he remaining period is given to Respondent No. 4. It is this action which is impugned in the writ petition.

In view of the fact that once the Petitioner was permitted to carry out the contract w.e.f. 16.8.2009 vide Annexure P-18 which was never challenged by the Respondent No. 4, there was no question of awarding the contract for remaining period to Respondent No. 4. The said order has been challenged on the ground that the Federation is not concerned with the inter se dispute between the Petitioner and Respondent No. 4 and was not having any right to take a decision to award contract for the remaining period in favour of Respondent No. 4 when there was no breach of any terms and conditions of the contract. It is also contended that the Petitioner furnished the bank guarantee of Rs. 21 lacs after cancelling the partnership deed with Respondent No. 4 and thereafter deposited a huge amount of Rs. 27,77,010/- and the learned authority accepted these changes and permitted the Petitioner to carry out the contract for the remaining period and issued an order to this effect on 16.8.2009 and therafter all of a sudden at the instance of Minister, Respondent No. 2 Federation had taken a decision to award the contract for the remaining period in favour of Respondent No. 4 which is arbitrary. The said action of Respondent No. 4 which is at the behest of the Minister is arbitrary, unjust and per se illegal because the Petitioner is neither a defaulter nor has committed any breach of the terms and conditions of the contract and the powers exercised by Respondent No. 2 is apparently in violation of Article 14 of the Constitution of India.

The Respondents No. 2 and 3 filed their return and made the following admissions in para 3, 6, 8 and 11 of the return which reads thus:

It is admitted fact that the Petitioner was successful bidder in respect of NIT issued by the answering Respondents for the purpose of sale of fish from Ban Sagar Dam for the period from 2006-07 to 2010-2011. At that stage the Petitioner himself volunteered to execute the contract as sole contractor, hence the answering Respondent had duly executed the contract agreement (Annexure P-1) with the Petitioner alone. It was only after having successfully obtained the contract that the Petitioner found himself to be unable to deposit the requisite of security. Bank Guarantee, regular instalments against the cost of fish and also amounts to be deposited by the Contractor under different heads like fish seed stocking etc. Hence, the Petitioner himself had submitted an application before the Managing Director of the answering Respondent on 12.3.2007 seeking permission to execute the contract with one Abhay Kumar Shaw, Anr. partner having share capital of 50%. The name of the partnership firm was disclosed by the Petitioner himself as M/s. Ma Kali Enterprises having its registered office at 34, Lake Road, Kolkata and Branch Office at Village Kuan, Tahsil Beohari, District Shahdol. Copy of the letter of request dated 12.3.2007 sent by the Petitioner to the answering Respondents is being annexed herewith as Annexure R-1.

That, at the time of agreement the Petitioner had deposited Rs. 6.30 lacs as annual Security Deposit and also an amount of Rs. 6.30 lacs as against the first instalment of first year of the contract. Thereafter, before 15.3.2007, the second instalment of Rs. 6.30 lacs was again deposited by the Petitioner. After coming into existence of the partnership firm, the amount has invariably been deposited in the name of the firm which had stepped into the shoes of the contractor after the permission/Annexure P-2. Thus, it does not lie in the mouth of the Petitioner that he continued to deposit the amount in his personal capacity even after the partnership firm came into existence at the Petitioner''s instance itself. Thus, every amount deposited after the constitution of the partnership firm, has been adjusted against the same account i.e. contract in respect of Ban Sagar Dam for the period from 2007 to 2 011. Even otherwise, the writ jurisdiction of this Hon''ble Court cannot be invoked for holding a roving inquiry as regards disputed facts relatable to the present dispute between the partners inter se.

That, the Petitioner in his entire petition has not disclosed the fact that during the subsistence of the contract and also the partnership deed, supplementary agreement so ente rd into between the Petitioner and the Respondent No. 4 which has been received by the answering Respondent on 29.6.2009. The said supplementary agreement invariably stipulates that the Petitioner and the Respondent No. 4 since are partners to the extent of 50%, the execution of the contract in hand shall be shared by the two in equal proportion, meaning thereby the contract awarded for a term of period of five years, has to be invariably split into two parts, first half to be executed by the Petitioner herein, Ist partner, and the later part of two and half years to be executed by the second partner i.e. Respondent No. 4. It is on the basis of the said supplementary agreement signed by both the partners that the Respondent No. 4 had approached the Managing Director of the M.P. Matsya Mahasangh (who had referred the matter to the Minister of Fisheries who is ex-officio Chairman of M.P. Matsya Mahasangh) along with opinion received from the Legal Advisor as also the Chartered Accountant. The Chairman of the Federation after due scrutiny of the supplementary agreement detailed supra, has referred the matter back to the Managing Director for decision as per the supplementary agreement. Hence, the Managing Director, after holding the meetings on 21.7.2009,3.8.2009 and 17.8.2009 had proposed three options so as to resolve the issue:

(i) As per the demand of Shri Shaw, Partner of Ma Kali Enterprises and according to the agreement, the work for the rest of the period may be given to him.

(ii) the aforesaid agreement may be terminated.

(iii) to continue the work as prevalent at present.

That, the decision aforesaid has been taken by the answering Respondent in the larger interest of the fishermen whose only source of livelihood is the work of fishing which shall conic to standstill in case of any dispute between the partners of the firm executing the contract of sale of fish. Thus, the Petitioner who himself has initiated to constitute the partnership firm even after entering into a contract agreement with Mahasangh, cannot now blame Mahasangh for having decided the matter in the interest of partnership firm which has in fact stepped into the shoes of the contractor for sale of fish from Bansagar Dam.

As per the averments made in the aforesaid paras, it is not in dispute that the amount of bank guarantee submitted by the Respondent No. 4 was duty returned to him and thereafter the Petitioner deposited the lease amount and furnished the bank guarantee as security deposit and deposited the other necessary charges and also executed the tripartite agreement with the Mrignayani Fishermen Cooperative Society. In the return Respondents No. 2 and 3 very specifically admitted that the Petitioner has not committed any breach of the terms and conditions of the contract nor they issued any notice to the Petitioner and under the terms and conditions there is no provision to award the contract for the remaining period in favour of Respondent No. 4. It is also not in dispute that at the behest of the Minister, the Respondent No. 2 awarded the contract for the remaining period in favour of Respondent No. 4. Minutes of the meeting held on 17 8.2009 at Bhopal for settling the dispute between the partners of M/s. Ma Kali Enterprises is relevant which reads thus:

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Issue orders. Sd/- 26.8.2009"

The Respondent No. 4 filed a separate return inter alia denying the averments made in the petition and made the following submissions in paras 5, 12, 20 and 21 which read thus:

The answering Respondent submits that the Petitioner was initially awarded contract for collection and sale of fish from Ban Sagar Water Reservoir for a period of 5 years commencing from 24.1.2007 to 15.6.2007. An agreement to the said effect was executed between the Petitioner and Respondent No. 2 on 24.1.2007, copy whereof is already on record as Annexure P-1.

The answering Respondent thus respectfully submits that he has already made considerable investment in execution of the contract. Inspite of fact that the answering Respondent had provided all the financial assistance required for due implementation of the contract, the Petitioner declined to share the profit with the answering Respondent. In fact, the Petitioner started carrying out the contract individually in his own name. The Petitioner has executed contract single handedly for last 2-1/2 years. During this period, the Petitioner has not paid single penny to the answring Respondent, though the answering Respondent had invested considerable amount in the same.

The answering Respondent submits that impugned order has been passed by the Respondent No. 2 as the Petitioner has already reaped benefit of the contract individually for a period of almost 2-1/2 years i.e. since 24.1.2007. The Petitioner has not paid single penny out of his own pocket in connection with the said contract. On the contrary the answering Respondent invested considerable amount but has not been paid single paisa out of sale proceeds. It is in the aforesaid scenario and in order to do complete justice between the parties that answering Respondent has been permitted to carry out the contract for the remaining period.

The order passed by the Respondent No. 2 is fair, reasonable and equitable. Such an order calls for no interference of this Hon''ble Court in exercise of extraordinary writ jurisdiction.

As per the averments made in the return, the contention of Respondent No. 4 was that he had provided all the financial assistance required for due implementation of the contract but the Petitioner declined to share the profit with the answering Respondent and, therefore, the dispute arose between the parties. It is also contended that the Petitioner has executed the contract single handedly for a period of last 2-1/2 years and he had not paid a single penny to the answering Respondent and it is he who was controlling the entire business and was acting contrary to the terms and contract of the partnership deed and the Respondent No. 2 in order to resolve the dispute in a fair and amicable manner asked both the partners of M/s. Ma Kali Enterprises to appear before him and thereafter considering the fact that it is Respondent No. 4 who had made huge investment in executing the contract and, therefore, with a view to settle the matter equitably passed an order on 27.8.2009 permitting him to execute the contract for the remaining period. The said order is fair, reasonable and executable and that the contract in question is a private contract and it is not a statutory contract and no interference is warranted. By the said action if the Petitioner has suffered any loss that can be compensated by filing a suit for damages.

It is also submitted that Clause (16) of the partnership deed dated 21.2.2007 (Annexure P-2), itself provided inter alia for settlement of a inter se dispute between the Petitioner and Respondent No. 4 by reference to arbitrators, there is no reason as to why the Petitioner has not followed and adopted that remedy and invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution.

We have heard the arguments of learned Counsel for the parties, at length and perused the record.

In the present case, the Petitioner is only challenging the impugned action dated 27.8.2009 (Annexure P-19) of Respondent No. 2 by which Respondent No. 2 who is instrumentality of the State in an arbitrary manner at the behest of the Minister terminated the contract and diverted it in favour of Respondent No. 4 for the remaining period of 2-1/2 years.

The scope of interference injudicial review of award of contract is limited only to cases where the decision is vitiated either by arbitrariness/irrationality or either by mala fide/favouritism.

Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound".

The apex Court in case of ABL International Ltd. and Another Vs. Export Credit Guarantee Corporation of India Ltd. and Others, , laid down the law relating to enforcement of contractual obligations of a State or its instrumentality and the power of the High Court to intervene under Article 226, if the State acts in an arbitrary manner even in a matter of contract. The Federation has to discharge its functions or different duties reasonably, fairly and impartially. The apex Court has held in the following paras as under:

...if a State acts in an arbitrary manner even in a matter of contract, an aggrieved party can approach the Court by way of writ under Article 226 of the Constitution and the Court depending on facts of the said case is empowered to grant the relief.

...once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly, and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the Appellants the first Respondent as an instrumentality of the State has acted in contravention of the above said requirement of Article 14, then we have no hesitation in holding that a writ Court can issue suitable directions to set right the arbitrary actions of the first Respondent.

From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution.

In the case of Puravankara Projects Ltd. Vs. Hotel Venus International and Others, , it was observed by the apex Court in para 32 and 33 as follows:

In Assistant Excise Commissioner v. Issac Peter, this Court highlighted that the concept of administrative law and fairness should not be mixed up with fair or unfair terms of the contract. It was staled in no uncertain terms that duty to act fairly which is sought to be imported into a contract to modify and/or alter its terms and/or to create an obligation upon the State Government which is not there in the contract is not covered by any doctrine of fairness or reasonableness. The duty to act fairly and reasonably is a doctrine developed in administrative law field to ensure the rule of law and to prevent failure of justice when the action is administrative in nature.

Just as the principles of natural justice ensure fair decision where function is quasi-judicial, the doctrine of fairness is evolved to ensure fair action when the function is administrative. But the said principle cannot be invoked to amend, alter or vary the expressed terms of the contract between the parties.

According to the Petitioner and as per the extract of the meeting it is clear that the Petitioner has not committed any breach of the terms and conditions of the contract. The Respondent No. 2 at the behest of the Minister modified the terms of the contract and awarded the contract for the remaining period to Respondent No. 4 which is not there in the contract, the said action is not covered by any doctrine of fairness or reasonableness.

The Respondent No. 4 was aware that there is no such terms and conditions of the contract by which the remaining period of the contract can be awarded to him. On the basis of the meeting dated 17.8.2009 three proposals were made by the Respondent No. 2 Managing Director of the Federation which reads as under:

(i) As per the demand of Respondent No. 4 partner of M/s. Ma Kali Enterprises, the work for the rest of the period may be given to him.

(ii) The aforesaid contract may be terminated.

(iii) To continue the work as prevalent at present.

With the above three options the matter was referred to the Minister who is Chairman of the M.F. Matsya Mahasangh (Sahakari) Maryadit who on 26.8.2009 directed that as per demand of Respondent No. 4 the work for rest of the period be given to him.

In Association of Registration Plates Vs. Union of India (UOI) and Others, , the apex Court held:

...Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest.

In the present case, as per Minutes of the meeting which is reproduced herein before in para 17, the Respondent No. 2 authority directed the Petitioner to return the amount of Rs. 21.00 lacs which was invested by the Respondent No. 4. This direction has been made with the consent of representative of Respondent No. 4. It is also found that a sum of Rs. 11,25,600/- towards instalment of the contract amount was deposited by the Petitioner on 17.12.2007. As per record of the Federation, it is also found that the Petitioner deposited a sum of Rs. 6.00 lacs towards the amount of seed, on 15.2.2008 and 5.11.2008. The Federation also found that the Respondent No. 4 jointly furnished the bank guarantee of Rs. 35.00 lacs out of which Respondent No. 4 received his share and thereafter the hank guarantee of Rs. 20.07 lacs was furnished by the Petitioner alone. This amount has not been shared by the Respondent No. 4. Thereafter the Petitioner deposited a sum of Rs. 27,77,010/- by demand draft No. 306191-95 dated 11.8.2009 as stated in Annexure P-16. This fact has not been disputed by any of the Respondents. Thus, as per the settlement, the Petitioner returned all the amount to the Respondent No. 4 and on 26.8.2009 when the contract for the remaining period was awarded to Respondent No. 4, no amount was deposited by the Respondent No. 4. In view of above, the Respondents No. 2 and 3 committed an error in awarding the contract in favour of Respondent No. 4 whereas in terms of the settlement he received all his money which was invested by him, the process of issuing the order dated 26.8.2009 for diverting the contract for the remaining period in favour of Respondent No. 4 by the authorities is mala fide and intended to favour the Respondent No. 4. The decision of Respondents No. 2 and 3 to award the contract for the remaining period to Respondent No. 4 is so arbitrary and irrational that no responsible authority acting reasonably and in accordance with relevant law could have reached to such decision. The tender conditions gave no such option to the authority to award the contract for remaining 2-1/2 years in favour of Respondent No. 4. In such circumstances, the limited question is whether the process adopted by Respondents No. 2 and 3 in awarding the contract in favour of Respondent No. 4 is mala fide or intended to favour Respondent No. 4. In this case, even before the Respondents No. 2 and 3 when they called for reconciliation to the Petitioner and Respondent No. 4 there was no issue regarding terminating the contract or granting the contract for the remaining period in favour of Respondent No. 4. The issue was how to settle the inter se dispute between the Petitioner and Respondent No. 4 who have framed a joint venture in the name and style of M/s. Ma Kali Enterprises to carry out the fishing contract for a period of five years. During the meeting the authorities directed the Petitioner to return all the amount which has been invested by the Respondent No. 4 to him. The Petitioner in compliance to the same, returned all the amount which has been invested by Respondent No. 4 and when this fact was not in dispute, there was no occasion to pass the impugned order dated 27.8.2009. Thus the Respondent No. 2 Federation acted unreasonably and arbitrarily in arriving at the decision, the said authority did not send show cause notice to the Petitioner before the order dated 27.8.2009 nor there was any dispute before the authority that the Petitioner who was having full control of the contract, has committed any breach of the terms and conditions of the contract or failed to pay the contract amount.

Learned Counsel for the Respondent No. 4 submitted that the authorities in exercise of equitable jurisdiction and also on the facts that all the money was invested by Respondent No. 4 took a decision to award the contract for the remaining period to the Respondent No. 4 because if the contract was terminated then it is the Respondents No. 2 who would suffer loss, therefore, in the interest of justice out of the three proposals the Respondent No. 2 had taken a decision to award the contract in favour of Respondent No. 4 which is just and proper and no interference in the said decision is warranted. It is also submitted that the Respondent No. 2 has not acted arbitrarily or with a mala fide intention in awarding the contract in favour of Respondent No. 4. He lastly submitted that the validity of the decision of Respondents No. 2 and 3 cannot be tested in the writ proceedings nor it can be held that the authority acted arbitrarily in passing the impugned order dated 27.8.2009 and this Court was not sitting in appeal over the decision of Respondent No. 2.

The Respondents No. 2 and 3 who have admitted the facts that it is the Petitioner who was carrying out the fishing contract and he had returned all the amount invested by Respondent No. 4 and after due permission granted by the authorities on 13.8.2009 executed a tripartite agreement with President of Mrignayani Fishermen Cooperative Society and Regional Manager of the Federation and thereafter he was duly permitted to carry out the contract by order dated 16.8.2009 and the Respondent No. 4 had proceeded on incorrect basis of facts, in violation to the principles of natural justice and when there was no breach of any terms and conditions of the contract, then decision dated 26.8.2009 was open to judicial review. In the case at hand the Minister had acted in excess of his power, unfairly and on basis of incorrect facts and without any reason erred in diverting the contract in favour of Respondent No. 4 when admittedly at the time of passing of the said order he was not carrying out any fisheries rights and he had received all the amounts invested by him and Respondent No. 2 had granted permission to carry out the contract in favour of Petitioner vide order dated 16.8.2009 (Annexure P-18), the said action dated 26.8.2009 is patently illegal and was made by the authorities with a mala fide intention to favour the Respondent No. 4.

In the case of Mahabir Auto Stores and others Vs. Indian Oil Corporation and others, , it has been held by the apex Court that the decision of the State/public authority under Article 298 of the Constitution, is an administrative decision and can be impeached on the ground that the decision is arbitrary or violative of Article 14 of the Constitution of India on any of the grounds available in public law field. In the instant case, having considered the facts and circumstances of the case and the nature of the contentions and the dealings between the parties and in view of the present state of law, we are of the opinion that the impugned decision of the Respondent No. 2 dated 27.8.2009 to award contract for the remaining period in favour of Respondent No. 4 is not a fair action and had been taken with a mala fide intention to award the contract to the Respondent No. 4. The said decision is not based on fair play and equity. The Respondent No. 2 has an obligation in law to act fairly, justly and reasonably which is a requirement of Article 14 of the Constitution. We may state here, so far as the inter se dispute between the Petitioner and Respondent No. 4 is concerned, the observations made by us herein before in various paras, the same were made in order to narrate the facts. We are not expressing any opinion on the merits of the dispute and the parties shall be free to agitate the same in appropriate forum. As stated herein before, we are only concerned in this case with the order dated 26/27.8.2009 passed by the Minister, awarding the contract to Respondent No. 4, which action was arbitrary, unreasonable and unfair in the facts and circumstances of the case and as such we quash the same.

Thus, on appraisal of the relevant material in the light of the submission before us, we are not satisfied with the argument of learned Counsel for the Respondents No. 2, 3 and 4 that in exercise of equitable jurisdiction the contract was awarded to the Respondent No. 4 by impugned order dated 27.8.2009.

For the above mentioned reasons, the impugned order dated 27.8.2009 (Annexure P-19) is hereby quashed.

We direct accordingly to Respondents No. 2 and 3 to permit the Petitioner to execute the contract in terms of Annexure P-1 and in case if it is found that the Petitioner has committed breach of any terms and conditions of the contract, the authority is at liberty to take action in accordance with the terms and conditions of the contract.

In the result, the writ petition is allowed and disposed of with the aforesaid directions. In the facts and circumstances of the case, there will be no order as to costs.