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Judgment
This Reference u/s 7 of the Karnataka High Court Act 1961 has been received in these circumstances. A learned Single Judge following Sri
Krishna Fisherman Cooperative Society Limited -Vs- State of Karnataka, represented by its Secretary, Department of Animal Husbandry and
Fisheries [ ILR 2009 KAR 189] had on 01.09.2010 issued a mandamus to the effect that fishing rights in the State shall be by tender/public
auction with reference to the Government Order dated 26.02.2006 and not by private negotiations. Writ Appeal No. 3829/2010 preferred by the
State of Karnataka, was admitted on 02.12.2010. In the interregnum, Writ Appeal No. 2/2011 came to be filed by Shri Mahatma Gandhi Kere
Balakedarara Sangha (R) also assailing the very same order of the learned Single Judge dated 01.09.2010; and it was allowed to prosecute the
Appeal despite its non impleadment in the writ proceedings. In terms of its Order dated 26.07.2011, the Division Bench had specifically noticed
the contention raised by Learned Counsel for the Sangha that the Karnataka Inland Fisheries (Conservation, Development and Regulation) Act,
1960 [hereinafter referred to as ''the Fisheries Act''] would be relevant and therefore, ought to have been considered by the Division Bench which
had decided Sri Krishna Fisherman. Both Appeals were being heard together. Before the referring Division Bench it had also been argued by the
Learned Counsel for the Appellants that the Karnataka Transparency in Public Procurement Act, 1999 [Transparency Act'' for brevity] ordinarily
could not have any impact on grants made by the State Government which, nevertheless, should answer every transparency test. Thus, the
questions that arise for consideration of the Full Bench are:
i) Whether Sri, Krishna Fisherman Cooperative Society Limited -Vs- The State of Karnataka, correctly enunciated the law.
ii) Whether the Karnataka Transparency in Public Procurement Act, 1999 governs the grants of fishing rights made by the State.
The relevant provisions of the Transparency Act are reproduced for facility of reference:
Procurement other than by Tender Prohibited - On and from the date of commencement of this Act, no Procurement Entity shall procure goods
or services except by inviting Tenders for supply.
The said Section 5 places an embargo on (a) every procurement entity, (b) from procuring, (c) goods or services, (d) without inviting tenders for
supply. As defined in clause (d) of Section 2 of the Transparency Act, procurement entity means ""any Government Department, a State
Government Undertaking, Local Authority or Board, Body or Corporation established by or under any law and owned or controlled by the
Government, and any other body or authority owned or controlled by the Government and as may be specified by it"". As defined in Section 2 (e),
''public procurement'' or ''procurement'' means (i) purchase of goods, (ii) obtaining of services or (iii) undertaking of construction works by the
procurement entities. The definition clause of the Transparency Act in Section 2 (b) defines the ''goods'' as ""machinery, motor vehicles, equipment,
furniture, articles of stationary, textiles raw materials, drugs, scientific instruments, chemicals food grains, oil and oilseeds or other commodity
required for consumption, use or distribution by a procurement entity in discharge of its public duties"". Section 2 (f) defines ''services'' as ""the
action of serving, attending upon, helping or benefiting a procurement entity in the course of discharging its public duties and includes construction
works"". Section 2 (h) defines Tender"" as a formal offer made for supply of goods or services in response to an invitation for tender published in a
Tender Bulletin.
It is in the backdrop of the above statutory provisions that it is contended by Learned Counsel for the Appellants that the disposal of fishing
rights in any lake, tank or water bodies does not tantamount to the procurement of any ''goods'' or ''services'' or the ''undertaking of construction
services'' and therefore, the formalities contained in the Transparency Act are not attracted; ergo they do not have to be mandatorily and
meticulously followed by the Government while granting fishing rights. We may also notice that Section 3 of the Transparency Act prescribes that
this provisions of the Act shall not apply to procurement of ''goods'' or ''services'' which are inconsistent with the procedure specified in respect of
the Projects funded by the International Financial Agencies or Projects covered under International Agreements.
The Animal Husbandry and Fisheries Secretariat of the Government of Karnataka has gazetted its policy/scheme in respect of disposal of fishing
rights in the tanks, lake, rivers, river basin and other water resources in the Gazette dated 16.02.2006, its relevant features read thus:
GOVERNMENT ORDER No.
PaSaMi/ 167/MiEE/2005,
(AHF/167/SFM/2005)
BANGALORE DATE 28TH JANUARY 2006
On the basis of the explanation in the preamble, the Orders issued earlier with regard to rules for transfer of fishery rights in the tanks, lake, rivers,
river basin etc., and other water resources within the purview of Fishery Department/Forest Department/Village Panchayats/ Water Development
Plan/Lake Development authority/other authorities under the Government is cancelled and orders are passed, issuing the comprehensive inland
fishery rules are issued with immediate effect and until further orders.
Para 1: All the water resources under the Government in the whole of the State is divided and classified as under:
a) The First Farmers Development Agencies within the administrative control of the Fisheries Department have been executing the centrally
sponsored schemes of Government of India and under the said program, since there is necessity to provide training to the rural fishermen in fishing
and to lease the smallest water bodies for cultivation of fishing, in which district the fishing culture development organizations are functioning, water
bodies up to the extent of 10 hectares identified in such districts, shall be subject to the concerned fishing culture development organizations. (The
list of Lakes to the extent of 10 Hectares of water bodies subjected to the concerned fishing culture development organizations shall be notified in
separate Government Order).
b) Excluding the water bodies at Para (a), all the Government water bodies with an extent of 40 Hectares of region, shall be subjected to the
concerned Village Panchayat limits.
c) Government Water bodies with more than 40 hectares region shall be subjected to the control of Department of Fisheries.
d) Even though the control of Government water bodies be subjected to any department/ authority/ Government undertaking organization, the
matter of distribution of fishery rights shall vest with the Department of Fisheries.
Order of priority:
Para 2:- The fishery rights in all the water bodies within the purview of Fisheries Department/Jala Samvardhana Yojana Sanga (JSYS) shall be
limited only to the following societies/associations/persons and shall be leased on preference.
1) Societies/Associations registered under the Water Development Planning Organization. (This first preference provided to the
Societies/Associations registered under the Jala Samvardhana Yojana Sanga (JSYS) are applicable only to the Government water resources
above 40 Hectares region developed by the Jala Samvardhana Yojana Sanga (JSYS) under World Bank aid subject to following conditions)
a) Local fishermen of the village within the limits of the Lake, shall be compulsorily registered as members to the Tank User Groups (TUG).
b) The Co-operative Societies of local fishermen with the limits of the pond, shall be compulsorily enrolled as members to the Tank User Groups
formed by the Jala Samvardhana Yojana Sanga (JSYS);
c) The fishing development in the said tanks shall be carried on only through the local fishermen members only;
d) 70% out of the net profit from fishing in the said tanks, shall be issued to the local fishermen/Fisheries Co-operative Society;
e) In the case where already the fishery rights lease in the water bodies within the purview of the Jala Samvardhana Yojana Sanga (JSYS) are
granted, the same lessee shall be continued until the expiry of the said lease period.
f) Apart from this, for the development of fishing in the said tanks and with regard to the fishing culture, the rules in this order and the rules issued
by the Government from time to time shall be compulsory followed.
2) Karnataka Co-operative Fisheries Federation Board (Limited), Mysore (This organization is provided first preference in distribution of the
fishery rights by the Fisheries Department, apart from this, the following societies/associates/persons shall be provided preference as 2nd and soon
on, respectively),
3) The Fishing Co-operative Societies having membership of the Karnataka Co-operative Fisheries Federation Board (Ltd.) Mysore (If the
fishermen co-operative society falling within this preference contest for a single tank, the Fishermen Co-operative Society within the limits of the
village where the pond is situated shall be preferred. The next preference shall be given to the Fishermen co-operative Societies having its
operation limited to Hobli level, Taluk level and District level respectively. The society proposed to obtain fishing culture rights, shall have obtained
no objection certificate from the Board).
4) Registered Fishermen co-operative societies (If the fishermen co-operative society falling within this preference contest for a single tank, the
Fishermen co-operative Society within the limits of the village where the tank is situated shall be preferred. The next preference shall be given to
the Fishermen co-operative Societies having its operation limited to Hobli level, Taluk level and District level respectively.
5) Unemployed Graduates holding degree in the subject of fisheries:
a) With an intention to provide fresh fish nutritious food to the general public of the State, to carry out inland fishing in a scientific method,
unemployed Graduates in fisheries subject may obtain one water resource within the limits of their district for a maximum of 5 years on lease for
fishery rights subject to the terms and conditions of this order. Since the preference given to the unemployed Graduates in fisheries is at the 4th
place, if they are unable to obtain lease of fisheries rights in any one of the water bodies within the limits of their district, they may obtain the lease
for fishery rights in the water bodies available in the neighbouring districts subject to the above conditions.
b) The unemployed fishing Graduates intending to obtain fishery rights should be born in Karnataka or he must have resided in the Karnataka for
not less than 10 years;
c) During the period of lease of fish cultivation rights, if the fishing Graduates gain employment, the lease of such lessee shall continue the lease up
to the end of the fish yield year. In case, if the unemployed Graduate continues the lease even after expiry of the lease period, the fishery rights in
the water bodies obtained by them on lease shall be renewed with the approval of the competent authority.
6) Under the provisions of the Karnataka Irrigation Act, the Minor irrigation users co-operative Societies/Lake Development associations/Tank
users associations/Lake bounders association/Lake Management associations/Wild life/life Culture protection associations registered under other
schemes of the Minor Irrigation Department (If the fishermen cooperative society falling within this preference contest for a single Lake, the same
shall be granted on lease through auction among those contesting societies/associations).
The aforementioned Associations/Societies intending to obtain the Lease of fish cultivation rights, shall have declared fishing as their chief objective
in their by-laws.
In the interest of safeguarding scheduled caste/scheduled tribes and the plans of the Government, the Government has authority to make changes to
the aforesaid preferences in accordance with the situation therein.
If there is competition among the societies/associations/persons having same preference in obtaining the fishery rights in a water body, the lease
shall be subjected to those competitors and shall be distributed through auction.
In Sri Krishna Fisherman the challenge was to a lease of fishing rights in respect of Tippagondanahalli tank on certain terms in favour of a sole
applicant. The principal stand of the Government was that it had chosen not to invite tenders or applications for grant of lease as there were no
rival claimants. The learned Government Advocate had conceded that no exemption, as envisaged in Section 4 (g) of the Transparency Act had
been promulgated in respect of that transaction. In recording this ""fair concession"", it had already been assumed by all concerned, including the
Court, that the Transparency Act governed that transaction. There can be no gainsaying that even if the Transparency Act was not attracted, the
spirit and impregnating the provisions of the Transparency Act would nonetheless pervade all Government transactions, and that concept would
have to be conformed to. The Division Bench in Sri Krishna Fisherman relied on the observations in Nagar Nigam, Meerut -Vs- Faheem Meat
Exports Pvt. Ltd, (2006) 13 SCC 382, but in doing so, we respectfully state, the Division Bench fell into error in assuming/accepting without due
consideration, that it was mandatory to adhere to the provisions of the Transparency Act. Indubitably, had it been contended by the learned
Government Advocate that the said statute did not apply to the subject transaction therein, our learned Brothers would have considered that
aspect of the conundrum more carefully. Keeping in mind the exposition of the law enunciated in Faheem Meat Exports, the result may have been
the same i.e., that the State must be fair and open in all its dealing and must honour the equality mandate articulated in Article 14 of our
Constitution. However, the other conclusion reached by our learned Brothers, namely, that it was indefensible for the State Government to contend
that its procedure was faultless merely because there were no other rival claimants is certainly debatable. The adherence to a public auction after
due publicity would normally ensure the presence of eligible interested parties. Before we move further, we think it appropriate to reproduce the
following passage from Faheem Meat Exports as it succinctly encapsulates the law which governs the grant of State contracts:
In this case, however, we are concerned with a different question. It is now a well-settled principle of law that having regard to the provisions
of Article 14 of the Constitution of India, a State within the meaning of Article 12 thereof cannot distribute its largesse at its own sweet will, vide
Ramana Dayaram Shetty v. International Airport Authority of India. The court can ensure that the statutory functions are not carried out at the
whims and caprices of the officers of the Government/local body in an arbitrary manner. But the court cannot itself takeover these functions.
The law is well settled that contracts by the State, its corporations, instrumentalities and agencies must be normally granted through public
auction/public tender by inviting tenders from eligible persons and the notification of the public auction or inviting tenders should be advertised in
well-known dailies having wide circulation in the locality with all relevant details such as date, time and place of auction, subject-matter of auction,
technical specifications, estimated cost, earnest money deposit, etc. The award of government contracts through public auction/public tender is to
ensure transparency in the public procurement, to maximize economy and efficiency in government procurement, to promote healthy competition
among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by
the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural
calamities and emergencies declared by the Government; where the procurement is possible from a single source only; where the supplier or
contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists; where the auction was held on
several dates but there were no bidders or the bids offered were too low, etc. this normal rule may be departed from and such contracts may be
awarded through ""private negotiations"". (See Ram and Shyam Co. Vs. State of Haryana).
It must be kept in perspective that although their Lordships were of the persuasion that the State Government should keep public hygiene and
sanitation in perspective and therefore move towards the creation of a modern abattoirs, the Court did not set aside the order impugned before it,
as it fell within the province ""policy"". The Court merely directed the State ""to have a fresh look at the matter"", thereby recognizing the position that
''policy'' was the preserve of the State. In the present context, unless we detect Constitutional or statutory transgressions the manner and method
by which the State of Karnataka ordains the grant or disposal of fishing rights ought not to be interfered by us; unless perversity is palpable.
The definition section in terms indicates that procurement is synonymous to purchase. If the State had entered into a contract to purchase fish
harvested from the Tippagondanahalli Tank, we think that the Transparency Act would be attracted and its provisions would have to be adhered
to. Facially, the Transparency Act does not apply to the sale by the State of any of its goods/properties or any services that can be rendered by it
or to the State undertaking any construction works for some other or third party, although each of the three present potential possibilities. Perhaps
such transactions should be statutorily regulated, but as of now this is not the regime. Sale by the State is antithetical to the purposes of the
Transparency Act. The State may decide to sell its properties or goods, or services at a throwaway price, or the State may contract to carry out
construction of private works at unrealistic rates. All these incidents are actually happening and are therefore the subject matter of litigations, but
not on the platform of the Transparency Act or any cognate statute.
We must now cogitate on the content of the Karnataka Inland Fisheries (Conservation, Development and Regulation) Act, 1996 (''Fisheries
Act'' for short), the avowed aim and objective of which is to provide for conservation, development and regulation of inland fisheries in the State,
An exception to the statute is envisaged in sub section (3) of Section 1 of the Fisheries Act, as are covered by the Karnataka Marine Fishing
(Regulations) Act 1986, National Parks and Sanctuaries declared under the Wildlife (Protection) Act 1972 and in any area beyond territorial
waters of India. Section 3(1) of the Act prohibits fishing except under and in accordance with the terms and conditions specified in licence granted
under sub-section (2). Section 4 prohibits fishing or fish breeding by any person who is not registered under the Act. Section 5 regulates the
licencing of fisheries rights in any water; and the grant or refusal of such rights is amenable to an appeal by virtue of subsection (3) therein. Section
6 regulates the manner of capture of fish alive or dead, killing or destruction of spawn, fry fingerlings, juveniles or breeding in any kind of fish.
Section 7 envisages the creation of fishing sanctuaries within which there is complete moratorium of fishing. All these provisions of the Fisheries Act
are indicative of the response of the Legislature to the pressing concern for conservation as well as development of fisheries in the State. If any
vacuum in the Procurement Act had it been created, it has been duly filled up and eradicated by the Fisheries Act.
Learned Counsel for the State as well as the Balakedarara Sangha have explained the extant policy which according to them is in consonance
with the primary objectives and purposes contemplated by the fisheries policy of the State and the imperative of the concerned International
Funding Agencies. Even the most sanguine will admit that humankind is guilty of overfishing, whether it be in the oceans or in rivers or lakes or
tanks and other water bodies, resulting in dangerously depleted fishing resources. Unless conservancy as well as the development of fisheries is
earnestly undertaken, fish may become extinct. These twin activities are what the International Funding Agencies expect and require of the State
Government. There is good reason for the State to involvement of Cooperative Society movement in this enterprise in the hope that there shall be
an endeavour to conserve and develop the fisheries so that eventually fish catchers may be augmented. It is therefore not possible to treat this
activity on par with the sale of other natural resource of the State, assuming that such sales by the State are within the contemplation of the
Procurement Act. Therefore, we are of the opinion that the State''s policy regarding grant of fishing rights is not perverse, and therefore do not
broke jural interference. In our analysis, the provisions of the Procurement Act are not attracted to the realm of the subject contract. The decision
in Sri. Krishna Fisherman inasmuch as, it automatically assumes the applicability of the Procurements Act, cannot be upheld. It also ignores the
Fisheries Act and falls foul of it. The factual matrix obtaining in Tulsi Ram -Vs- Mathurasagar Pan Tatha Krishi, (2003) 1 Supreme Court Cases
478 as well as Ramachandra Wahiwatdar -Vs- Narayan, (2003) 10 Supreme Court Cases 685 had in their contemplation the inter play between
customary fishing rights and rights of the owners of the concerned water bodies. Neither of the decisions are relevant for unraveling the conundrum
before us. Secondly, in granting leases of water bodies, the State has not procured or purchased any goods or services as postulated in Section- 5
of the Procurement Act. Finally, even if the leasing of lakes/tanks etc., is seen as a device to procure fish, the Transparency Act is not attracted,
since ''fish'' does not fall within the ambit of ''goods'' as defined by the said statute. It is for these manifold dialectics that we answer both the
questions in Reference in the negative.
Writ Appeal Nos.3829/2010 and 2/2011 be listed before the Division Bench for further consideration.