1. The action of the Thane Municipal Corporation in giving the cleaning, fishing and boating contract to respondent No.6 without giving any public advertisement or without inviting tenders is challenged by the petitioner by way of this petition under Article 226 of the Constitution of India.
2. The petitioner is a Cooperative Society registered under the provisions of the Maharashtra Cooperative Societies Act, 1960 and Rules framed thereunder. Initially the petitioner was given the contract of boating in Masunda lake situate in the heart of the Thane city. When the lease given to the present petitioner was about to expire and during the existence of the aforesaid lease, the Municipal Corporation of Thane executed a lease agreement of fishing , cleaning and boating with respondent No.6. The said lease agreement is executed for a period of 25 years . By way of this petition, the petitioner has prayed that the lease agreement dated 19th September, 2001 may be declared as illegal and unconstitutional and it may be held that the same is contrary to the Resolution No. 201 dated 19th July, 2001 passed by the Corporation. It is also prayed that appropriate writ and directions may be issued directing the Corporation to invite tenders which may be published in the newspaper in connection with cleaning, boating and fishing at Masunda Lake at Thane.
3. Masunda Lake is located in the heart of Thane City wherein cleaning, fishing and boating activities are going on. It is the case of the petitioner that prior to the present disputed lease agreement which has been executed in favour of respondent No.6 by the Corporation, the petitioner was given the lease and the said lease was in existence upto 22nd October, 2001. The grievance of the petitioner is that even though the lease agreement was subsisting, the Corporation executed fresh lease agreement in favour of respondent No.6 and that too without inviting any tender or without issuing any advertisement. Even though as per the policy of the State Government, such contract is required to be given only to the Cooperative Societies, yet the same has been given to respondent No.6 which is a proprietory concern. It is the submission of the petitioners that the said action of the Corporation is arbitrary and illegal and the Corporation has acted against its own financial interest in the matter of granting lease in favour of respondent No.6. It is the case of the petitioner that initially General Body of the Corporation passed a resolution bearing No. 201 dated 19th July, 2001 and by virtue of condition Nos. 1 to 6, Respondent No. 6 was permitted to execute separate agreement with the petitioner in connection with boating in the said lake. According to the petitioner, the said lease executed by the Corporation with respondent No.6 is contrary to the aforesaid resolution of the Corporation. It is further submitted that the Deputy Municipal Commissioner, who is the signatory to the lease agreement had no power to sign such agreement as it is only the Commissioner who is empowered to do the same. It is submitted that in order to favour one of the employees of the Corporation viz. Dinanath Kashinath Thanekar that the lease agreement is given to respondent no.6. The proprietor of respondent No.6 is the mother of the aforesaid employee of the Corporation. It is submitted that since the Corporation is dealing with the public property, it was not open to the Corporation to lease the property for such a long period without inviting public advertisement or inviting tenders. It is further submitted that at the time when the petitioner was given the lease agreement, the yearly amount was Rs. 4,27,000/. As against that, in the present lease agreement, respondent No.6 has been given the lease agreement for breeding, fishing and boating only at the rate of Rs. 2 lacs per year. It is submitted that the Corporation has, therefore, acted against the interest of the Corporation and such a decision is against the public authority. It is submitted by Mr. Thorat, learned counsel for the petitioner, that after the Resolution of the Corporation, respondent No. 6 filed a suit being Civil Suit No. 386 of 2001 against the Corporation for a declaration that the lease agreement executed between respondent No.6 and the Corporation is subsisting, binding and valid. In the said suit, the petitioner filed an application under Order 1 Rule 10 of the Civil Procedure Code to join the petitioner as party defendant No.2 which ultimately came to be rejected on 21st December,2001. Status quo order was passed in the said suit with the result that the petitioner could not move this Court even for interim relief. In order to substantiate his say, Mr. Thorat has relied upon the order passed by this Court at the time of admission of this Writ Petition. While admitting the said writ petition, the Division Bench has passed the following order. " Heard.
2. Rule.
3. Mr. Malvankar, learned Asstt. Government Pleader waives service for respondent Nos. 1 and 2. Mr. R.S. Apte waives service for respondent Nos. 3, 4 and 5. Humdast granted for unrepresented Respondent No.6.
4. Mr. Pate, learned counsel for respondent Nos. 3 to 5 submitted that Respondent No. 6 Precision Fisheries has filed a suit for specific performance of contract against present Respondent Nos. 3 to 5 and in that suit the order of status quo has been directed to be maintained against Respondent Nos. 3 to 5. In view thereof presently no interim relief deserves to be granted. Liberty to parties to apply for interim relief as and when the order of status quo passed by civil court is modified, varied, discharged or vacated.
5. After service of rule on Respondent no.6 liberty to Petitioners to apply for early hearing of writ petition."
4. The learned counsel for the petitioner submitted that the action of the Corporation in giving the lease to respondent No.6 without tender is against the public policy and appropriate directions may be given asking the Corporation to invite fresh tenders by quashing the present lease agreement entered into by the Corporation with respondent No.6. Mr. Thorat has also submitted that executing lease agreement for a period of 25 years amounts to creating monopoly in favour of respondent No.6. According to him, normally such lease contract should not be given for more than three years so that the Corporation may not be subjected to any financial loss. It is submitted that by the aforesaid action, respondent No.6 has benefited substantially and would enrich itself for such a long period of 25 years. In order to substantiate his say that the Corporation could not have given the lease to respondent No.6 without inviting tenders, he has relied upon certain judgments which we will refer in the latter part of this judgment.
5. Mr. Apte, learned senior counsel, appearing for respondent Nos. 3 to 6, at the outset submitted that the challenge to the contract granted to Respondent No.6 cannot be entertained at the instance of the petitioner who, as can be seen from the averments made in the petition, is agitated by the fact that respondent No.6 has not entered into a contract with it for the purpose of boating. The learned Senior Counsel drew our attention to the prayers made in the petition wherein the petitioner has claimed that respondent No.6 should be directed to enter into a contract with the petitioner. Mr. Apte further submits that it is a composite contract given to respondent No.6 which includes fishing, boating and cleaning the Masunda lake. Mr. Apte submits that the Corporation was facing a problem regarding cleaning the said lake which requires special mechanism and after considering the report of Envirokraft, a Division of Wockhardt Life Sciences Limited, and after having satisfied that respondent No.6 is having proper machinery and infrastructure for the purpose of cleaning the lake that ultimately the aforesaid contract was given by executing a lease in favour of respondent No.6 for the purpose of cleaning and fishing in the lake as well as the boating contract. It is submitted by Mr. Apte that in the past it was found that the petitioner, at the time when the petitioner was having the boating contract, used to run the boats by using kerosene which had an adverse impact as far as fishing in the lake was concerned and resulted into environmental degradation of the lake. Ultimately after considering the expert report, the Corporation gave the said contract to respondent No.6 which is a composite contract which includes the cleaning of the lake also. It is submitted by Mr. Apte that since initial expenditure was required to be incurred by respondent No.6 in this behalf and with a view to see that the cleaning activity may take some time that the lease agreement has been given to respondent No.6 for 25 years. It is submitted that the petitioner had asked for extension of the lease agreement but with a view to solve the immediate problem of cleaning the lake that the Corporation ultimately, after passing Resolution No. 201 in the general body of the Corporation executed the lease agreement in favour of respondent No.6. It is further submitted by Mr. Apte that in the resolution passed by the Corporation i.e. Resolution No. 201, an option was given to respondent No.6 to give boating contract to the petitioner and in view of that it was not necessary to mention the said aspect in the said lease agreement executed between the Corporation and Respondent No.6 and it is for Respondent No.6 whether to take the services of the petitioner as per the Resolution of the Corporation. It is submitted by Mr. Apte that no doubt it is true that an ideal way to give contract is to invite tenders or by way of auction but since in the present case specialised method is required for cleaning the lake and since respondent No.6 was having the infrastructure and machinery in this behalf and after considering the report of Envirokrat that ultimately it was decided to give contract to respondent No.6. It is submitted that initially the contract for fishing in Masunda lake was in the name of Ganesh Macchimar Society but now a composite contract for boating and fishing has been given which includes the cleaning of the lake also. Mr. Apte further submitted that the lease agreement preceded the resolution of the Corporation and unless the resolution of the Corporation is challenged by the petitioner, the petitioner cannot challenge the lease agreement which is based on the resolution passed by the Corporation. It is submitted by Mr. Apte that since Resolution No. 201 by which it was decided to give lease to respondent No.6 has not been challenged, the lease agreement cannot be challenged by the petitioner. Mr. Apte has relied upon clauses 1 to 6 of the Resolution passed by the Corporation to substantiate his say that an option was given to respondent No.6 to avail the services of the petitioner regarding boating contract. It is submitted that in a given case, the contract can be given without inviting tenders, if there are compelling circumstances exist. It is submitted by Mr. Apte that since Respondent No.6 was having modern technology, it was decided to give contract to respondent No.6 for the purpose of cleaning, boating and fishing activities in the Masunda lake. Mr. Apte further submitted that the Government Resolution cannot be straightway made applicable to the Corporation in connection with giving preference to Cooperative Societies. He further submitted that in any case since the contract was not only for boating but it was also a composite contract which includes cleaning of the lake that no preference could have been given to the Cooperative Societies as respondent No.6 was having the infrastructure modern machinery in connection with cleaning the lake. It is submitted by Mr. Apte that it is permissible for the Corporation to give lease straightway for 25 years and there is no prohibition in this behalf in the Act. Mr. Apte further submitted that the action of the Corporation in granting lease to respondent No.6 is reasonable as it is a composite contract in connection with fishing, boating, cleaning as well as electrification of the surrounding area. He submits that the allegation regarding mala fide is absolutely baseless and that it is not possible that Dinanath Kashinath Thanekar, who is a Junior Clerk of the Corporation, may influence to such an extent that ultimately Corporation decides to give contract to respondent No.6 wherein the proprietor is the mother of the said employee. It is submitted that when the Resolution is not challenged, and that the lease agreement executed is as per the Resolution, then naturally the second prayer asking the Corporation to invite tenders and to hold auction is also not maintainable. It is submitted that respondent No.6 has initially invested Rs. 47 lakhs for carrying out the aforesaid work and considering the facts and circumstances of the case, this Court may not interfere with the decision of the Corporation in the matter of awarding contract to respondent No.6 in its extraordinary jurisdiction under Article 226 of the Constitution of India.
6. Ms. Godse, learned counsel appearing for respondent no.6, has supported the argument of Mr. Apte. It is submitted by her that respondent No. 6 was possesses the machinery in terms of the report of Envirokraft for the purpose of cleaning of the lake and such work could not have been done by the petitioner or any other Cooperative Societies. It is submitted by her that if in the lease agreement a condition was incorporated that subcontract is to be given to the petitioner for boating, petitioner naturally would not have challenged the decision of the Corporation in awarding contract to respondent No.6 without tender and now the petitioner is making a grievance about not inviting tenders because respondent No.6 has not given subcontract to the petitioner regarding boating activities. It is submitted by her that the petitioner is not interested in fishing and cleaning the lake but only interested in boating contract. Since it is a composite contract, the petitioner cannot make any grievance especially when the petitioner is not interested in cleaning the lake in question. She submitted that since the contract entailed investment of substantial amount, the Corporation in its wisdom decided to grant the said contract for a period of 25 years. Learned counsel for respondent No.6 drew our attention to a statement annexed to the affidavit in reply disclosing the extent of the investment made by Respondent No.6. The learned counsel has relied upon certain judgments to buttress her submissions which we will refer to later on.
7. We have heard the learned counsel appearing for the parties at length and have also gone through the documentary evidence forming part of the petition as well as various judgments cited at the Bar by both the sides.
8. As per the record, the petitioner was initially granted lease for the purpose of boating activities in the Masunda Lake. The aforesaid lease period was in existence upto 22102001. By its letter dated 25th June, 2001, the petitioner had asked for extension of lease for a period of ten years. This was followed by another letter dated 16th July, 2001 wherein also the request contained in the said letter dated 25th June, 2001 was reiterated. In the meanwhile, the Corporation passed a Resolution on 19th July, 2001, by which it was decided to execute lease agreement with respondent No.6 for a period of 25 years in connection with the contract of cleaning, care and supervision, fishing and boating in Masunda lake. The petitioner was informed accordingly by the Corporation vide its letter dated 9th October, 2001 that the period of lease of Masunda lake in favour of the petitioner cannot be extended. The aforesaid decision was taken subject to various terms and conditions. The Respondent No.6 was asked to incur initial expenditure regarding water purification. Respondent no. 6 was also asked to see that the surrounding area is kept clean. The Respondent no.6 was required to pay Rs. 2 lakhs per annum to the Corporation and afterwards for every three years increase at the rate of 15 per cent was to be paid. Respondent No.6 was also required to carry out colouring at the identified spots of the lake and for other similar works at the lake area. Some portion of the area was required to be earmarked for icecream parlor or for selling food packets. 50 per cent of the total profit received from this business was to be paid to the Municipal Corporation. The lease was granted for a period of 25 years. Respondent No.6 was also required to carry out breeding, fishing and boating. Only paddle boat, roving boat and CNG boat working on gas are supposed to be used for boating. There is also a mention about special condition No. 3 that the petitioner is ready to use CNG and LPG gas engine boats to avoid pollution in the lake. It is also provided that on the same terms and conditions which contract is given to respondent No.6, respondent No.6 can enter into subcontract of boating with the petitioner. Accordingly the lease agreement was entered into between the Corporation and respondent No.6 for a period of 25 years for the aforesaid work of boating, cleaning, fishing etc. at the Masunda Lake.
9. So far as the contention of the petitioner that the lease agreement is contrary to the Resolution of the Corporation is concerned, in our view, Resolution No. 201 provides for giving contract to respondent No.6 for boating, cleaning and fishing activities at the Masunda Lake. On a perusal of the said resolution it is clear that an option was given to respondent No.6 to give sub contract regarding boating activities to the petitioner in view of the fact that the petitioner had shown willingness to continue the boating activities by using CNG and LPG Gas engine boats. In the lease agreement also it is provided that respondent no.6 can give subcontract to the petitioner for boating. Giving of such subcontract to the petitioner is at the option of respondent No.6. In view of the above, it cannot be said that the lease agreement is in any way contrary to the resolution. We also do not find any substance in the argument of the learned counsel for the petitioner that the lease agreement is executed by the Deputy Commissioner and not the Commissioner. Commissioner would include Deputy Commissioner as per the provisions of the Bombay Provincial Municipal Corporations Act, 1949 (hereinafter referred to as "the Act").
10. As pointed out by Mr. Thorat, normally preference is required to be given to the registered Cooperative Societies. However, so far as the Government Resolution is concerned, it is in connection with the Government contracts and the same ipso facto cannot be made applicable to the Municipal Corporations. Since, in the instant case it was a composite contract for various activities and according to the learned counsel for the Corporation, with a view to see that if the private sector is able to carry out the work effectively that it was not necessary to give preference only to cooperative societies. The learned counsel for the petitioner is not in a position to point out that the said Government Resolution is also applicable to Municipal Corporations.
11. The real question which requires consideration in this petition is as to whether the contract could have been given to respondent No.6 for a period of 25 years without inviting tenders or public advertisement. It is required to be noted that the petitioner has challenged the action of the Corporation in awarding the contract without inviting tenders and has ultimately challenged the lease agreement entered into between the Corporation and respondent no.6. Considering the above, we are not in a position to accept the contention of Mr. Apte, learned counsel for the Corporation, that unless the Resolution is challenged, the lease agreement cannot be challenged by the petitioner. When the petitioner has challenged the decision of the Corporation in giving lease for 25 years without inviting tender or public advertisement, even if the resolution in this behalf is not challenged, the ultimate decision of executing the lease deed can be challenged by the petitioner. We do not find merit in the submission of the learned Senior Counsel for the RespondentCorporation and the learned counsel for Respondent No.6 that the petition at the behest of the said petitioner should not be entertained as the petitioner has filed the above petition only because the Respondent No. 6 has refused to enter into a contract for boating with the petitioner. May be the petitioner has claimed certain reliefs for itself in the above petition, that would not disentitle it from challenging the award of contract to the respondent No.6 for a period of 25 years without inviting tenders. This Court sitting in writ jurisdiction would be failing in its duty if the said challenge is not considered, on the ground that the petitioner in the above petition is claiming certain reliefs for itself. More especially in view of the fact that the issues of distribution of State largesse and loss to public exchequer are brought before it. It is true that in prayer clause (a) of the petition, the petitioner has prayed that the record and proceedings in respect of the passing of the resolution may be called for and after perusing the same, it may be declared that the lease agreement dated 19th September, 2001 in favour of respondent No.6 is illegal and unconstitutional. The main issue therefore is as to whether the aforesaid contract given to respondent No.6 can be said to be illegal, arbitrary and hence violative of Article 14 on the ground that the same is given for a long period of 25 years and that too without inviting tenders by public advertisement. We are also required to see as to whether the action of the Corporation is mala fide as the proprietor of respondent No.6 is the mother of an employee of the Corporation.
12. In the affidavit in reply filed on behalf of the Corporation it is averred in paragraph 3 that the Corporation received letter from the Environment Department, Govt. of Maharashtra, that the Makhmali lake was taken under National Lake Conservation and Restoration programme and hence the Corporation should submit the feasibility report to the Ministry of Environment and Forest,Delhi, through the State of Maharashtra. Since there was no scope for development at Makhmali, the Corporation requested the State of Maharashtra that the Corporation has identified 15 lakes located in the Corporation area and these lakes have good potential recreation, hence the State should provide funds for the development of all lakes as "Thane Lake System" as Government has sanctioned proposal of Udaipur as Udaipur Lake System. This proposal was approved by the Government of Maharashtra in principal. It is averred in the affidavit that the Corporation floated tenders in 1997 for making feasibility report for all the 15 lakes and the work was allotted to one of the consultants. In the meanwhile, M/s. Wockhardt Ltd. approached the Corporation stating that they are possessed with modern technology known as Biotechnology and that they want to try this technology in India, as till that date it was not tried for lake cleaning in India. It is averred in the affidavit that the aforesaid technology was expensive but the technology was very good. It is averred that the boating contractor is running motor boats on kerosene oil resulting into oil pollution in the lake water which was affecting the fish and fish used to have ugly oil smell. It was, therefore, recommended that there should be ban imposed on using liquid fuel for motor boats. Feasibility was studied that motor boats should run on gaseous fuel like LPG. When these aspects were pointed out to the petitioner, it was not ready to switch over to new fuel and ultimately shown their disinclination from entering into the contract. It is averred in the affidavit that respondent No.6 submitted a proposal stating that they are ready to maintain the Masunda Lake, clean the same without insisting for the cost from the Corporation, if the lease is granted by the Corporation to them, permitting fishing in the lake also. As per the averment, the proposal was prima facie found beneficial to the Corporation. Since respondent no.6 was having expertise, the resolution was passed by the General Body which was followed by the lease agreement. In paragraph 16 of the affidavit in reply, it is averred that the petitioners have earned huge profit in the last 30 years by way of contract for fishing from the Corporation and, therefore, they cannot make any grievance in this behalf.
13. In the affidavit in reply filed by the proprietress of respondent No.6, it is stated that earlier the contract for fishing in the lake was in the name of Ganesh Macchimar Society for a number of years and her husband was the Chairman of the said Society. The said contract was granted by auction for every three years. She has stated that the contract for fishing and boating in the lake was with the said Society from the year 1968 upto 1997. In 1997 after the death of her husband the contract for fishing was given to her son Hemant Thanekar. She has stated that there were separate contracts for boating and fishing in the lake.
14. At this stage reference is required to be made to the relevant statutory provisions. Section 74 of the Act which provides for execution of the contract reads as under:
74. Mode of executing contracts.
(1) The mode of executing contracts under this Act shall be as prescribed by rules.
(2) No contract which is not made in accordance with the provisions of this Act, and the rules shall be binding on the Corporation."
15. Reference is also required to be made to the provisions of Section 79 of the Act and the same reads thus:
"79. Provisions governing the disposal of municipal property. With respect to the disposal of property belonging to the Corporation, other than property vesting in the exclusively for the purposes of the Transport Undertaking the following provisions shall have effect, namely:
(a) the Commissioner may, in his direction, disposal of by sale, letting out on hire or otherwise, any movable property belonging to the Corporation not exceeding in value in each instance five hundred rupees or such higher amount as the Corporation may, with the approval of the State Government, from time to time determine, or grant a lease of any immovable property belonging to the Corporation including any right of fishing or of gathering and taking fruit, and the like, for any period not exceeding twelve months at a time. Provided that, the Commissioner shall report to the Standing Committee every lease of immovable property within fifteen days of the grant thereof unless it is a contract for a monthly tenancy or the annual rent thereof at a rack rent does not exceed three thousand rupees:
(b) with the sanction of the Standing Committee the Commissioner may dispose of by sale, letting out on hire or otherwise any movable property belonging to the Corporation, of which the value does not exceed five thousand rupees; and may with the like sanction grant a lease of any immovable property belonging to the Corporation, including any such right as aforesaid, for any period exceeding one year or sell or grant a lease in perpetuity of any immovable belonging to the Corporation the value of premium whereof does not exceed fifty thousand rupees or the annual rental whereof does not exceed three thousand rupees;
(c) with the sanction of the Corporation, the Commissioner may lease, sell, let out on hire or otherwise convey any property, movable or immovable belonging to the Corporation"........
16. Mr. Apte submitted that by virtue of Section 79 (c) of the Act, Commissioner is empowered to lease, sell, let out on hire or otherwise convey any property, movable or immovable, belonging to the Corporation. He submits that in the present contract the Corporation is not required to spend anything. In fact, the Corporation is getting its work done through respondent No.6 for which Corporation is not required to give any tender. Such tenders are required to be given only when the Corporation is required to spend money. The learned counsel for respondent No.6 submits that there is nothing in the Act which prohibits giving a long term contract even for 25 years.
17. So far as the contract in question is concerned, it is required to be noted that prior to giving such contract it is pointed out to the Court that all throughout such boating or fishing contract used to be given by way of auction and this is the first time that the lease has been given without holding any auction or without inviting tenders. It is required to be noted that unless there are compelling circumstances, the public body is required to give contract by way of advertisement or by way of inviting tenders. It is not the case of the Corporation that it is only respondent No.6 in the entire State or in the country who is capable of performing such a contract. Respondent No.6 had not even undertaken any such work in the past and this is the first such assignment which it has been granted by the Corporation and that too without inviting any tenders. We agree with the submission of Mr. Thorat that the work of cleaning lake is not such a work which nobody can perform. In our view, the decision of the Corporation to give contract of such a long term of 25 years at a stretch would amount to creating monopoly in favour of one party for a long period. Learned counsel for the Corporation has also fairly accepted that normally awarding the contract by way of inviting tender is a rule and to give such work without tender is an exception. We do not find any exceptional circumstances existing in the present case to deviate from the general rule of inviting tenders. As pointed out earlier, initially the contract was given at the rate of Rs. 4,27,000/ and now the Corporation has given contract at Rs. 2 lakhs with 15 per cent increase for every three years.
18. It is also required to be noted that so far as boating contract is concerned, even Corporation in its Resolution also permitted respondent No.6 to give such contract to the petitioner. It is not in dispute that respondent No.6 was in fact not having any experience in the past and this seems to be the first assignment which the respondent No.6 has undertaken. It is not the case of the petitioner that except respondent No.6 nobody possesses the wherewithal which may be required for cleaning the lake. If any tender was invited, perhaps Corporation could have received better rates from such a tenderer who might be possessing the machinery required and would have offered even much better offer than by respondent No.6. When a contract is given by a public authority it should not be done in a hide and seek manner. It is surprising that other eligible persons may not be aware that Corporation is in need of availing services for cleaning the lake and giving boating or fishing contracts for such a long period. There is nothing on record to show that except respondent No. 6 nobody was eligible for undertaking such work. In our view, unless some special facts exist, normally contract could have been given for three or five years which is not the case here. Considering the aforesaid aspect, we are of the opinion that the act of the Corporation in executing the lease agreement in favour of respondent No.6 for 25 years is arbitrary, illegal and de hors the public interest. Even if it is presumed that the petitioner had not shown inclination to do the work of fishing or cleaning the lake, then also there may be other eligible persons who might be willing to do so. According to the learned counsel for the petitioner, if fresh tenders are invited, the petitioner is still willing to take part in such tender process for doing the aforesaid work of boating, fishing and cleaning as undertaken by respondent No.6.
19. In so far as the submission of the learned counsel for Respondent no.6 and the learned Senior Counsel for the Corporation that in view of the fact that large investment was required to be made by Respondent No.6 in so far as cleaning the lake is concerned and therefore the contract was given for a sufficient long duration. The said submission does not impress us. The Respondent No.6 has tried to support its contention by figures of expenses till date by annexing a statement showing that it has expended a sum of Rs. 67 lakhs till date. Firstly the said statement is not supported by any documents under the Incometax Act or that of a Chartered Accountant that the amounts mentioned therein have been so spent over during the relevant period. Secondly the petitioner has produced a document under the Right to Information Act that the Corporation has spent an amount of Rs. 3 crores for the beautification of the said lake. Therefore the theory that sufficient investment is made by the Respondent No. 6 is questionable. Apart from that, it is also required to be noted that the respondent No.6 has earned income for the last about 10 years.
20. Considering the aforesaid aspect, we are unable to accept the submission of Mrs. Godse that since there is no prohibition in the Act by which Corporation is permitted to give contract for a long term and that in a given case the Corporation can even give the contract without inviting tenders or by way of auction . This is not such a case in which such decision could have been taken especially when respondent No.6 does not possess any past experience and simply because it has tried to project itself as possessing such technology, it cannot be said that there may not be other competitors in the field who might not be possessing such a technology or even better equipments. It is also required to be noted that even the Corporation itself had taken decision that the said boating contract can be given to the petitioner for which a resolution was passed. The petitioner has also shown its willingness to perform the said contract with the help of boat using CNG or any such material which may not create any pollution in the lake.
21. Mr. Thorat, learned counsel appearing for the petitioner, relied upon the decision of the Supreme Court in the case of Ramana Dayaram Shetty vs. The International Airport Authority of India and others1 wherein the Supreme Court has held in paragraph 21 that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is nondiscriminatory. It has also been held that equality of opportunity should apply to matters of public contracts. The State has the right to trade and the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The State cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and nondiscrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and nondiscriminatory ground. 1 AIR 1979 SC 1628
22. Mr. Thorat has also relied upon the decision of the Division Bench of this Court in the case of Bhupal Anna Vibhute vs. Collector of Kolhapur and others1. After considering the various judgments of the Supreme Court, the Division Bench has observed in paragraph 35 thus:
"35. The above referred judgments of the Supreme Court make it abundantly clear that when the State has to dispose of its property, the normal rule is that it should be disposed of by public auction. That would bring in the highest revenue. Exception could be made if some directive principle contained in Part IV of the Constitution is sought to be achieved. Here it is not the case of the Respondents that they have in granting this land to Respondent No.3 been guided by the provisions of achieving any of the directive principles. Here Respondent No. 3 is not an educated unemployed person as the undisputed facts show that he and his family members have another motor repairing garage nearby this land. The further affidavit shows that he has some other property as well. The only ground which has been advanced in the affidavits in reply to justify the grant of this land to Respondent No.3 is that he is a promising young man having very good knowledge of motor mechanism. Now this fact was within the knowledge of the State Government even before the first order ( AnnexureA to the petition) was passed. It was no secret that Respondent No.3 wanted this land for setting up a Motor Mechanical Servicing Centre. He had another motor servicing centre about half a kilometer from this land. Of course he runs that along his family members and even then when the first order ( AnnexureA to the petition) was passed, the Government went by the well accepted standards and decided to reject the request of Respondent No.3 as also of Choradia and to sell this land by public auction after fixing the upset price after getting the current market value of the land determined from the Assistant Director of Town Planning. But soon after this decision was taken, the Minister for Industries and Energy, who had nothing to do with this, pleaded the case of Respondent No.3 and requested the Revenue Minister for stay of the order (AnnexureA to the petition) and recommended that this land be granted to respondent No.3. The Revenue Minister readily agreed even in face of the fact that the Secretary had pointed out that the proper course was to sell the land by public auction. The matter, under the rules of business was required to be taken to the Council of Ministers. There again the Secretary succinctly pointed out the desirability of disposing this land by public auction and drew the attention of the powers those be that auctioning the land would fetch much higher revenue than even the market price and that giving the land to Respondent No.3 in the manner it was proposed to be done would cause loss to the revenue, and yet the Council of Ministers granted the land to Respondent No.3, as per AnnexureB to the petition. These facts leave no room for doubt, in our mind, for saying the State Government had acted quite contrary to its obligation to protect the public interest. The Ministers were not dealing with their personal property, which they could have given away for song to whom they like. They were dealing with the public property. The authorities referred to hereinabove clearly point out that in such a case public auction of a property is the best method to be followed by the State or State authorities unless of course some directive principle of the State policy is sought to be achieved. Here that is not the case. Here Mr. Avade, the Minister for Industries and Energy took up the case of Respondent No.3 quite unjustifiably and that is the reason why the State Government changed its earlier decision which was just and proper decision, namely to sell this land by public auction. Neither in the affidavit nor in the file we find any material justifying any departure from the decision contained in AnnexureA of the petition dated 30th September, 1983 wherein the request of Respondent No.3 as also of Choradia to grant this land to them was rejected and the land was decided to be disposed of by public auction."
1) 1997 (2) Mh. L.J. 651
23. Learned Counsel for the petitioner in support of his contention has placed heavy reliance on the decision of a Division Bench of this Court in the case of Vijay Krishna Kumbhar vs. Collector, Pune and others1 has considered the provisions of Section 79 (c) of the Act. In the aforesaid case, which was a Public 1 2004 (2) MhL.J. 636 Interest Litigation, the petitioner sought a direction ordering Pune Municipal Corporation to cancel sham and bogus lease executed by the Corporation in favour of Respondent No.6 therein by directing the Corporation to issue tenders by calling competitive bids from all interested persons for granting lease for Sports Complex. In paragraphs 23 and 27, the Division Bench observed as under:
"23. In the facts and circumstances, in our opinion, the petition deserves to be allowed. From what has been stated by the petitioner in the petition as also from the record, in our opinion, there does not seem to be any dispute that the land belongs to Government. It is also clear from the fact that it was the respondentcorporation who prayed to the Government to grant the land. The proposal was accepted by the Government and the land was given to the Corporation for the purpose of developing garden. This is further clear from the affidavit in reply filed by City Survey Officer No.1 Pune wherein it was stated that the land belongs to Government and was not transferred to respondentCorporation. It was also stated that the Corporation had no authority to allow construction on the said land. According to the State Government, construction of Sports Complex had been made on the land and hence a notice had been issued on 18th October, 2002 alleging therein that the construction could not have been made. The Corporation, hence, was asked to show cause as to under what authority such construction has been made by the Corporation.
27. It is not in dispute that before granting lease in favour of respondent no.6, neither tenders were invited, nor competitive bids called nor such rates taken into account and all the persons interested in getting such lease were not informed by the Corporation. It is the case of the respondentcorporation that it is the consistent practice of the Corporation to execute lease on the basis of valuation report prepared by City Engineer and in the instant case also, the same consistent past practice has been followed."
24. On behalf of the respondents, reliance has been placed on the decision of the Supreme Court in the case of Netai Bag and others vs. The State of West Bengal and others1. In the aforesaid case, a PIL was filed before the Calcutta High Court with a prayer to issue appropriate writ,order or direction in the nature of mandamus commanding the respondents to forbear from using or utilising the acquired lands for the purposes other than the one for which the acquisition was made. It was prayed that directions be issued to give back the lands in question to the erstwhile land owners or to sell the land by public auction only for the public purpose. After considering the case laws, the Supreme Court has held in paragraphs 16 to 19 as under:
" 16. Learned counsel for the appellant has not referred to any statutory provision mandating the State to adhere to a specified procedure in the matter of transfer of its property either by way of sale or by lease. In the absence of a statutory restriction imposed upon the State, it is to be seen whether the impugned action is against public interest or actuated by extraneous considerations or is opposed to fair play or the State is shown to have conferred undue benefits upon undeserving party.
17. It has been consistently held by this Court that in a democracy governed by the rule of law, the Executive Government or any of its officers cannot be allowed to possess arbitrary powers over the interests of the individual. Every action of the Executive Government must be in conformity with reason and should be free from arbitrariness. The Government cannot be equated with an individual in the matter of selection of the recipient for its largesse. Dealing with the limits on the exercise of Executive authority in relation to rule of administration, Mr. Justice Frankfurther in Vitarell vs.Seaton (1959) 359 US 535: 3 LO Ed 2d 1012 said:
" An executive agency must be rigorously held to the standards by which it professes its action to be judged....Accordingly, if 1 AIR 2000 SC 3313 dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed... This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword."
18. This Rule of Administrative law, was accepted as valid and applicable in India by this Court in A.S. Ahluwalia vs. The State of Punjab (1975) 3 SCR 82: (AIR 1975 SC 984 : 1975 Lab IC 613), Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi (1975) 3 SCR 619 : (AIR 1975 SC 1331: 1975 Lab IC 881) and Ramana Dayaram Shetty v. The International Airport Authority of India, AIR 1979 SC 1628.
19. Though the State cannot escape its liability to show its actions to be fair, reasonable and in accordance with law, yet wherever challenge is thrown to any of such action, initial burden of showing the prima facie existence of violation of the mandate of the Constitution lies upon the person approaching the Court. We have found in this case, that the appellants have miserably failed to place on record or to point out to any alleged constitutional vice or illegality. Neither the High Court nor this Court would have ventured to make a roving inquiry particularly in a writ petition filed at the instance of the erstwhile owners of the land, whose main object appeared to get the land back by any means as, admittedly, with the passage of time and development of the area, the value of the land had appreciated manifold. It may be noticed that in the year 1961 the erstwhile owners were paid about Rs. 5.5 lakhs and the State Government assessed the market value of the property which was paid by respondent No.5 at Rs. 71,59,820/. The appellants have themselves stated that the value of the land round about the time, when it was leased to respondent no.5 was about Rs. 11 crores. There cannot be any dispute with the proposition that generally when any State land is intended to be transferred or the State largesse decided to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people. That would be a sure method of guaranteeing the compliance of mandate of Art. 14 of the Constitution. Nonfloating of tenders or not holding of public auction would not in all cases be deemed to be the result of the exercise of the executive power in an arbitrary manner. Making an exception to the general rule could be justified by the State executive, if challenged in appropriate proceedings. The Constitutional Courts cannot be expected to presume the alleged irregularities, illegalitie4s or unconstitutionality nor the Courts can substitute their opinion for the bona fide opinion of the State executive. The Courts are not concerned with the ultimate decision but only with the fairness of the decision making process."
In the aforesaid case it has also been held that the Government is entitled to make pragmatic adjustments and policy decision which may be necessary or called for under the prevalent peculiar circumstances.
25. The learned counsel for the respondent No.6 has relied upon the decision of the Supreme Court in the case of Association of Registration Plates vs. Union of India and others1 in support of her case that a long term contract can be awarded if circumstances so warrant. The aforesaid matter was in connection with work of supply of high security registration plates to motor vehicles. The relevant observations of the Supreme Court as contained in paragraphs 40, 41 and 42 may be noticed and the same reads thus:
"40. Selecting one manufacturer through a process of open competition is not creation of any monopoly, as contended, in violation of Article 19 (1) (g) of the Constitution read with clause (6) of the said Article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing stations within the premises of the RTO. He has to maintain a data of each plate which he would be getting from his main unit. It has to be crosschecked by the RTO data. There has to be a server in the RTO's office which is linked with the RTO's in each State and thereon linked to the whole nation. Maintenance of record by one and 1 AIR 2005n SC 469 supervision over its activity would be simpler for the State if there is one manufacturer instead of multimanufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multimanufacturers are involved. That would also seriously impair the high security concept in affixation of new plates on the vehicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular population and less volume of business. Multimanufacturers might concentrate only on urban areas with higher vehicular population.
41. The fifteen years contract period has also been supported by Union of India and State authorities. We find great substance in the submissions made on the data supplied as a justification for awarding contract for long period of 15 years. There would be a huge investment required towards the infrastructure by the selected manufacturer and the major return would be expected in initial period of two years although he would be bound down to render his services for future vehicles on periodically for a long period. Looking to the huge investment required and the nature of the job which is most sophisticated requiring network and infrastructure, a long term contract, if thought viable and feasible, cannot be faulted by the Court. If there are two alternatives available of giving a short term or a long term contract, it is not for the court to suggest that the short term contract should be given. On the subject of business management, expertise is available with the State authorities. The policy has been chalked out and the tender conditions have been formulated after joint deliberations of authorities of the State and the intending manufacturers. Contract providing technical expertise, financial capability and experience qualifications with a long term of 15 years would serve a dual purpose of attracting sound parties to stake their money in undertaking the job of supply and safeguard public interest by ensuring that for a long period the work of affixation of security plates would continue uninterrupted in fulfilment of the object of the scheme contained in rule 50. Our considered opinion, therefore, is that none of the impugned clauses in the tender conditions can be held to be arbitrary or discriminatory deserving its striking down as prayed for on behalf of the petitioners.
42. There is no material on record to inter any mala fide design on the part of the tendering authority to favour parties having foreign collaborations and keep out of fray indigenous manufacturers. The high security plates is a sophisticated article new for manufacturer in India. It is being introduced for the first time under the scheme contained in rule 50 of the Rules and the Act. At the time of issuance of notices of tender, technical knowhow for manufacture of plates and its further development was undoubtedly outside the country. Only a few concerns in India having collaboration with foreign parties possessed the expertise and were available in the market. The terms of the notice inviting tender were formulated after joint deliberations of Central and State authorities and the available manufacturers in the field. The terms of the tender prescribing quantum of turnover of its business and business in places with fixation of long term period of the contract are said to have been incorporated to ensure uninterrupted supply of plates to a large number of existing vehicles within a period of two years and new vehicles for a long period in the coming years. It is easy to allege but difficult to accept that terms of the Notices Inviting Tenders which were fixed after joint deliberations between State authorities and intending tenderers were so tailored as to benefit only a certain identified manufacturers having foreign collaboration. Merely because few manufacturers like the petitioners do not qualify to submit tender, being not in a position to satisfy the terms and conditions laid down, the tender conditions cannot be held to be discriminatory."
26. Reliance is also placed by the learned counsel for respondent No.6 on the judgment of the Supreme Court in the case of Lokprakashan Limited vs. Kanchanbhai Kanbhai Tadvi and others1. In the said case land was sold at a reasonable price not below the market value. The Supreme Court found that the 1 (2009) 9 SCC 43 land was sold at a rate of Rs. 1000/ per sq.mtr. And the adjoining plot was auctioned by the authority at the price of Rs. 900/ per sq.mtr. and therefore the price was found to be reasonable. In para 24 the Supreme Court has held as under:
"24. The learned counsel for the appellant further submitted that the purchase of the land has been totally in consonance with all the rules and regulations and with the approval of the authorities concerned. All procedural formalities have been strictly complied with. Even the sale deed was also executed long back in the year 1995 and this petition was filed after a gap of more than a decade with an oblique motive which is an abuse of the process of the Court."
27. The learned counsel for respondent No.6 has also placed reliance on the decision of the Supreme Court in the case of Villianur Iyarkkai Padukappu Maiyam vs. Union of India and others1 . In the said case the Supreme Court has held as under:
" 150. Pursuant to the advertisement dated 322003, thirteen parties had responded and out of them only six parties had made presentations before the expert committee, expressing interest for the development of the Pondicherry Port through private investment. The Committee, after considering the presentations made by six firms, in its meeting held on 2882003, came to the conclusion that only two firms, namely (1) IPCOMenang, Singapore and (2) Larsen and Toubro, Chennai had necessary experience in port development and technical knowhow for the same and, therefore, shortlisted those two firms.
151. The recommendations of the expert committee were accepted by the Government of Pondicherry and a letter of intent was issued on 992003 in favour of IPCOMenang, Singapore, for feasibility studies and preparation of detailed 1 (2009) 7 SCC 561 project report for the development of the Port. However, the said firm did not submit the report despite extension of time nor deposited the required performance guarantee amount of Rs. 50 lakhs. Therefore, the second shortlisted firm i.e. M/s. Larsen and Toubro, Chennai, was issued letter of intent, but this firm also did not respond to the said letter for more than eight months. Under such circumstances, the Government of Pondicherry decided to make one more attempt to attract private investment for development of the Port and call for expression of interest for undertaking feasibility studies for development of the Port.
152. Accordingly, advertisement dated 18102004 was issued in the leading newspapers, pursuant to which, twenty seven firms had responded. However, out of twenty seven firms, only fifteen firms had given presentations before the expert committee during December, 2004 in the presence of the Minister of Ports. Thereafter, it was decided by the Committee, after having meeting with the then Lieutenant Governor of Pondicherry, that out of twentyseven firms which had responded to the advertisement, number of firms which were willing to undertake the feasibility studies should be ascertained. Accordingly such exercise was undertaken by the expert committee and the expert committee found that only eleven firms had shown the willingness to undertake feasibility studies. Seven out of those eleven firms had already made presentations before the Committee and, therefore, remaining four firms were called upon to make presentation before the Committee."
28. Learned Counsel for respondent no.6 has also made reference to the decision of the Supreme Court in the case of Sachidanand Pandey and another vs. State of West Bengal and others1. The aforesaid case was in connection with lease of property for construction of hotel. It is held in the said case that the decision of the Government was not one of those mysterious decisions taken in the shrouded secrecy of ministerial chambers. It was taken openly without any 1 (1987) 2 SCC 295 attempt at secrecy. The State Government had applied its mind to relevant considerations. In the face of the assurance of the Chief minister that facilities would be provided for the zoo, it cannot be said that the government went about the question of allotment of land to the Taj Group of Hotels determined to give the land to them and with a mind closed to everything else. It has also been held that the Government was also alive to the ecological considerations, particularly to the question of migratory birds when they took the decision to lease the land to the Taj Group of Hotels.
29. It is no doubt true that in a given case, looking to the public interest and with a view to see that an important work may not suffer, the Government may give contract, if strong circumstances exist, without inviting tenders. Though normally inviting tenders should be considered as a matter of rule and for that purpose, the people at large should be allowed to participate in the matter of government contract. The Corporation, on the basis of presence of influential persons, cannot take arbitrary decision keeping others in dark. In the present case, the proprietor of respondent No.6 is the mother of an employee of the Corporation. However, there is no material on record that because of the influence of the said employee, this work is given to respondent No.6. It is not in dispute that there is nothing on record to suggest that respondent No.6 had any experience worth the name for carrying out the nature of work in question. It is also required to be noted that the work of cleaning of the lake was to be carried out in terms of the report of Envirokraft. It is, therefore, not as if no other person would have executed the work as proposed by Envirokraft. There is nothing to show that respondent No.6 has undertaken any work similar to the one awarded to it under the present contract. We, therefore find substance in the submission of Mr. Thorat that in order to get the aforesaid contract, respondent No.6 was established, which is a proprietory concern.
30. As stated above, every action of the public authority must be informed with reason and should be free from arbitrariness. Article 14 requires that the State action must not be arbitrary but must be based on some rational and relevant principle which is nondiscriminatory, it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. Considering the facts and circumstances of the case, we are of the opinion that giving lease for such a long period of 25 years and that too without issuing any advertisement and without inviting any tenders, the Corporation has acted in an arbitrary manner. This is not such type of work which could not have waited for some time during which period tender proceedings could have been initiated by the Corporation. Considering the aforesaid aspect of the matter we are of the opinion that the lease agreement entered into between the Corporation and respondent No.6 is not sustainable and the same is, therefore, quashed and set aside. The Corporation is now directed to invite fresh tenders for giving composite contract of fishing, boating and clearing of Masunda Lake and of 2002 ultimately after considering the rival claims, if any, may take appropriate decision. Corporation may invite fresh tenders and award the same to the successful bidder within a period of four months from today. However, since respondent no.6 is continuing with the contract, at present Corporation shall allow respondent No.6 to continue with the same till the said tender process is completed. It is for the Corporation to consider as to who is a fit and proper person to undertake this work and for which if any bid is given by respondent No.6 as well as by the petitioner, their respective bids may also be considered in accordance with law. Whether preference would be given to anyone having specialised knowledge or not is also left to the discretion of the Corporation. In the light of the settled legal position, we are of the view that the action of the Corporation to execute the lease agreement in favour of respondent No.6 for a period of 25 years, without inviting tenders and without holding any auction is arbitrary and unconstitutional and the same is accordingly quashed and set aside. It is clarified that it is open to the Corporation to take appropriate action in accordance with law, in the light of the observations made above.
31. In view of what is stated above, Rule is made absolute to the aforesaid extent, leaving the parties to bear their own costs.
32. In view of the disposal of the writ petition, nothing survives in the Civil Application and the same is disposed of accordingly.
FURTHER ORDER
Date: 8th September, 2010
At the oral request on the part of the learned counsel appearing for the respondentsCorporation as well as respondent No.6, the operation of the order is stayed for a period of eight weeks from today in order to enable them to approach the Hon'ble Supreme Court of India against the present order.