Om Parkash and anr. Vs. Rajbiri and ors. - Court Judgment

Excerpt:
- administrative law - government contract: [vijender jain, c.j., rajive bhalla & sury kant, jj] government contract rejection of highest bid challenge as to held, state has no dominus status to dictate unilateral terms and conditions when it enters into contract. its actions must be reasonable, fair and just in consonance with rule of law. as a necessary corollary thereto, state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. the state is free to enter into a contract just like any other individual and the contract shall not change its legal character merely because other party to contract is state. though no citizen possesses a legal right to compel state to enter into a contract, yet latter can neither pick and choose any person arbitrarily for entering into such agreement nor can it discriminate between persons similarly circumstanced. similarly, where breach of contract at hands of state violates fundamental rights of a citizen or its refusal to enter into a contract is contrary to statutory provisions or public duty, judicial review of such state action is inevitable. likewise, if state enters into a contract in consonance with article 299 rights of the parties shall be determined by terms of such contract irrespective of fact that one of the parties to it is a state or a statutory authority. for these precise reasons the equitable doctrine of promissory estoppel has been made applicable against the government, as against any other private individual, even in cases where no valid contract in terms of article 299 was entered into between the parties. hence, if government makes a representation or a promise and an individual alters his position by acting upon such promise, the government may be required to make good that promise and shall not be allowed to fall back upon the formal defect in the contract, though subject to well known limitations like larger public interest. the state, thus, has no dominus status to dictate unilateral terms and conditions when it enters into contract and its actions must be reasonable, fair and just and in consonance with rule of law. as a necessary corollary thereto state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. -- consumer protection act, 1986 [c.a. no. 68/1986]. articles 14 & 300a: government contract noon-acceptance of highest bid held, it does not result in taking away right to property of highest bidder highest bid, per se, unless it is accepted by competent authority, and consequential sale certificate is issued, does not grant the highest bidder right to property of type which is protected under article 300a right to property is limited to confer highest bidder the right to challenge action of appropriate authority in refusing to accept highest or other bids. [air 1984 p&h 282 (fb) explained] articles 14 & 226: government contract rejection of highest bid held, highest bidder has locus standi to maintain writ petition and assail action of state government or its authorities by contending that his bid has been turned down for arbitrary, illegal or perverse reasons however in such matters, heavy onus would like on petitioner bidder to establish his allegations as state action shall always be presumed to be in accordance with lawamarjeet chaudhary, j.1. the motor accident claims tribunal, sonepat on a claim petition filed by the claimants under section 166 of the motor vehicles act, had fastened the liability to pay compensation of rs. 96,000/-alongwith interest at the rate of 12% per annum on the owner and driver of offending truck no. hrs-889, on account of death of krishan pal in a road accident on 16.3.1990. the insurance company was absolved of its liability to pay compensation on the ground that there was no privity of contract between jawahar singh son of ganesh dass and the insurance company.2. aggrieved against the award, the owner and driver of the truck had filed the present appeal for setting aside the award of the tribunal to the extent that the liability to pay compensation has been fastened on them.3. there is no dispute regarding the factum of accident in any manner and the compensation awarded by the tribunal.4. learned counsel for the appellants contends that the offending truck was duly insured with the insurance company and the premium was duly paid by the owner and as such the liability should have been fastened on the insurance company but the tribunal has wrongly fastened the liability on the appellants.5. on the other hand, learned counsel for the respondent contends that the liability to pay compensation has been rightly fastened on the appellants.6. i have heard learned counsel for the parties and perused the paper book.7. the accident took place on 16.3.1990 and at the time of accident one jawahar singh son of ganesh dass was registered owner of truck bearing no. hrs-889. the owner of the truck, ganesh dass died on 12.7.1989 i.e. prior to the accident. ganesh dass left behind his widow and large number of family members. in the insurance policy, exh. r-l issued by respondent-insurance company on 31.10.1989 for a period of one year i.e. upto 30.10.1990, ganesh dass son of davinder has been shown registered owner of truck no. hrs-889 and the policy was being renewed by ganesh dass from time to time.8. in this case, the insurance company continued to renew the policy in the name of registered owner and had been issuing the cover note. i am not inclined to accept the argument of learned counsel for the insurance company that the owner of the truck had died and the premium was being paid on his behalf by somebody else and as such, the insurance company is not liable to pay compensation. the insurance companies should not accept the premium with closed eyes. a duty is cast, upon the insurance company to verify whether the owner of the vehicle is alive or not and also to verify the credentials of the person offering premium.9. in this case, the offending truck was duly insured with the insurance company and the insurance company had received the premium. as such, the mere fact that the owner of the vehicle had died cannot absolve the insurance company from its liability to pay compensation for the person that it is the vehicle which is being insured and not the owner of the vehicle.10. for the fore-going reasons, the finding of the tribunal on issue no. 8-a is reversed and it is held that the liability to pay compensation would be that of the insurance company.11. appeal is allowed to the extent indicated above.