Jagat Roller Flour Mills Through Jagat Mohan Aggarwal Vs. Punjab State Civil Supplies Corporation Ltd. and anr. - 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 law - as the appellant failed to lift the wheat, security amount of rs. ultimately, the court below found that the appellant has miserably failed to bring his case within the ambit of grounds mentioned in section 34 of the act. thus, in view of clause 11 of the agreement, the appellant was liable not only with regard to forfeiture of security without notice in case of non-lifting of stock within the stipulated period but also to make good the loss, if any, suffered by the corporation.rakesh kumar jain, j.1. this appeal arises out of an order dated 14.9.2007 passed by learned district judge, gurdaspur, dismissing the application filed by the appellant under section 34 of the arbitration & conciliation act, 1996 (for short, 'the act') for setting aside the award dated 26.11.2002, passed by respondent no. 2.2. brief facts culled out from the available record are that in response to the advertisement offering purchase of wheat for the crop year 1995-96, the appellant agreed to lift 196 metric tons of wheat @ rs. 571/- per quintal lying at kotkapura centre in district faridkot. in lieu of this acceptance, the appellant deposited rs. 56,000/- as security with respondent no. 1. the appellant was required to lift the stock of wheat by 5.9.1998 without late delivery charges and up to 20.9.1998 with late delivery charges. as the appellant failed to lift the wheat, security amount of rs. 78,341.20 was forfeited in terms of the agreement and the wheat was put to retender on 2.2.1999 at the risk and cost of the appellant. the said wheat was purchased by m/s bhagwant rai garg & company-15, new grain market, barnala @ rs. 492/- per quintal which caused a loss of rs. 79/- per quintal to the corporation. as a result of which the appellant was directed to pay rs. 1,46,782/-. this led to a dispute between the parties and as per clause 14 of the tender, it was referred to the arbitrator by the managing director, punsup, chandigarh. representative of the appellant appeared before the arbitrator (respondent no. 2) on 24.7.2002 and thereafter, did not appear despite notice.3. after recording the ex-parte evidence, the arbitrator (respondent no. 2) passed an award holding the respondent entitled to rs. 1,46,782/- from the appellant on account of loss due to re-tender of the wheat at lower rate. the respondent was also held entitled to recover interest @ 21% per annum from 20.9.1998 till the date of award and thereafter, the appellant was held liable to pay interest @ 18 per annum till realization besides costs of the arbitration proceedings quantified at rs. 10,000/-.4. award of respondent no. 2 was challenged by the appellant before the civil court at gurdaspur, by filing an application under section 34 of the act. the contention raised by the learned counsel for the appellant was noticed by the court below and it was observed that the award has been challenged on the ground that there was no valid arbitration agreement between the parties nor any agreement was ever communicated to the appellant. it was found in clause 14 of the terms and conditions of tender ex.r-5 that in case any dispute arises out of this contract, the matter shall be referred to the managing director, punsup, chandigarh, who may himself arbitrate or appoint any body to arbitrate in the matter. the place of arbitration will be at chandigarh. it was also found that tender was signed by ravi mittal, representative of the appellant. therefore, in the presence of an arbitration clause in the agreement, the contention of the appellant that there was no arbitration clause, was found meritless.5. the second contention raised by the learned counsel for the appellant was also noticed and discussed by the learned court below that same matter was pending before the civil court at pathankot where the corporation had already appeared. learned counsel has referred to section 8(1) of the act and argued that the arbitrator has also been appointed when the appellant filed a civil suit in the court of addl. civil judge (senior division), pathankot, which was later on dismissed as withdrawn. ultimately, the court below found that the appellant has miserably failed to bring his case within the ambit of grounds mentioned in section 34 of the act. in the present appeal, the only argument raised by the learned counsel for the appellant is in respect of clause 11 of the agreement, which is reproduced below:in case of non-lifting of stocks by the party within stipulated period, punsup will get automatic right to forfeit the emd and security without any notice to the purchaser' besides taking legal measures including resorting risk sale of the left over stocks to recover the losses if any suffered by corporation.it is contended that after forfeiture of the security, the loss suffered due to resort to risk sale could not have been recovered.6. i have heard learned counsel for the parties and have perused the record with their assistance.7. there is no dispute that the appellant did not lift the wheat in terms of the agreement and the same had to be sold by the corporation to some other buyer after suffering loss of rs. 79/- per quintal. thus, in view of clause 11 of the agreement, the appellant was liable not only with regard to forfeiture of security without notice in case of non-lifting of stock within the stipulated period but also to make good the loss, if any, suffered by the corporation.8. thus, in view of the above discussion, i do not find any error in the order of the court below and as such, the present appeal is found to be without any merit and the same is hereby dismissed.no costs.