* THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION NO. 17187 OF 2008 % 30.12.2008 # P. Mohan Rao, S/o late P.C. Ramachandra Rao, aged 56 years, Occ: Coach, R/o 1-1805, Jayaramarao Street, Srikalahasti, Chittoor District. ….. Petitioner Vs. $ Govt. of Andhra Pradesh, rep. by its Principal Secretary (Endowments) Secretariat, Hyderabad and others. ….Respondents. ! Counsel for the Petitioner: Sri K.V. Bhanu Prasad. ^ Counsel for Respondents 1 and 2: GP for Endowments. Counsel for respondent No.3: Sri VTM Prasad, S.C., Counsel for respondent No.4: Sri N. Subba Rao < Gist: >Head Note ? Citations: 1. (1986) 3 SCC 391 2. AIR 1991 SC 1260 3. AIR 1996 SC 11 4. AIR 1980 SC 1992 5. AIR 2000 SC 80 6. (1981) 1 SCC 568 7. 1987(1) SCC 227 8. (2003) 7 SCC 546 9. (2004) 11 SCC 1 10.(1979) 3 SCC 489 11.(1975) 1 SCC 70 12.(1985) 3 SCC 267 13.(2001) 10 SCC 305 14.(1988) 1 SCC 166 15.AIR 1981 SC 1 16.(1993) 1 SCC 445 17.(1993) 2 SCC 279 18.(1994) 1 SCC 595 19.(1995)4 SCC 595 20.(1996) 5 SCC 510 21.(1975) 3 SCC 432 22.(2002)3 SCC 496 23.(2007) 8 SCC 75 24.(1996) 9 SCC 338 25.AIR 1954 SC 592 HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO.17187 of 2008 ORDER: More often than not detriment to what belongs to “many”, collectively, does not cause pangs to “any”, for no one is personally hurt directly. That is why public officials, and public- minded citizens, entrusted with the care of “public property” have to show exemplary vigilance. What is true of “public property” is equally true of property belonging to religious or charitable institutions or endowments. (Chenchu Rami Reddy v. Govt. of A.P.[1]) The petitioner, a former Chairman of the Trust Board of the 3rd respondent temple, has filed this writ petition seeking to have the order in G.O.Rt.No.2552 dated 01-12-2007, issued by the 1st respondent, permitting the 2nd respondent to purchase audio and video CDs from the 4th respondent for a period of two years without calling for tenders, set aside as arbitrary, illegal and without jurisdiction The 4th respondent, claiming to have developed Audio Compact Discs (CDs) and Video Compact Discs (VCDs), explaining the history of Srikalahasti Temple, approached the 3rd respondent who, in turn, sent proposals on 16-08-2004 and 03-09- 2004 requesting the 2nd respondent to accord permission to purchase the audio CDs and video CDs developed by the 4th respondent for distribution to those pilgrims who perform Rahu Ketu and Sarpa Dosha Nivarana Pujas. The 2nd respondent accorded permission on 09-09-2004. Thereafter, vide proceedings dated 15.10.2004, the 2nd respondent informed the 3rd respondent that the method followed for supply of red and black clothes, required for performing Rahu Kethu Puja, should also be followed for supply of these CDs. Aggrieved thereby, the 4th respondent filed W.P.No.19418 of 2004 and, pending disposal of the writ petition, the proceedings of the 2nd respondent dated 15-10-2004 were stayed by this Court on 19-10-2004. The trust board members of the third respondent temple submitted their representation dated 11.01.2007 to the 2nd respondent. The Executive Officer of the Temple, in his letter dated on 15-05-2008, brought to the 2nd respondent’s notice the difficulty in implementing the orders of the Government, and the expenditure which the temple had to incur in this regard. He requested the Government to re-examine the issue. Petitioner would allege malice against several persons. It is, however, not necessary for this Court to examine this plea of malice as persons, against whom malice is alleged, have not been arrayed as respondents eo-nominee in the writ petition. (State of Bihar vs. P.P. Sharma[2]). According to the petitioner, the permission accorded for purchase of these CDs was in violation of the rules framed under the Act, that, as crores of rupees of public money was involved, the authorities were bound to call for tenders and that the 1st respondent could not pass orders ignoring the procedure of calling for tenders. In the counter affidavit filed by the 1st respondent it is stated that, after detailed examination of the proposal of the 2nd respondent, and to avoid further complications, permission was accorded to the 3rd respondent to purchase these CDs relating to “Sri Kalahastheeswara Mahathyam” from the 4th respondent, (which was a Government of India undertaking), for distribution free of cost to those pilgrims who performed Rahu Ketu and Sarpa Dosha Nivarana Pujas. The rates, at which the audio and video CDs were to be supplied for a period of upto 2 years, are furnished in a tabular form and it is stated that these rates were fixed as per resolution No.31/200 of the Trust Board and as per the rates specified by the Executive Officer of the Temple. The 1st respondent would admit that the 4th respondent had earlier been given an order for supply of coconuts, for the year 01.04.2004 to 31.03.2005, on his being found to be the highest bidder. According to the first respondent it was felt that, in the tender system, good quality audio and video CDs could not be obtained, that a work order was placed on the 4th respondent after lengthy correspondence from the year 2004 till 2008 and that the concept developed by the 4th respondent was innovative for which tenders could not be called for. According to the 1st respondent, after examining the entire issue, orders were issued in G.O.Rt.No.2552 dated 01.12.2007 entrusting the work to the 4th respondent which was a government of India undertaking. The 1st respondent would contend that public auction, through the tender process, could not be held for supply of audio and video CDs, as it required a high degree of specialization, that the concept was conceived by the 4th respondent, that preparation of audio and video CDs was a specialized work by itself and could not be taken up under the tender system as good quality CDs could not be procured from the lowest private firms, that this issue was placed before the board of trustees which, after viewing the VCDs, had resolved to accept the proposal for their preparation by the 4th respondent and to purchase the required number of compact discs from them at reduced rates, that the trust board had approved the master copy script of the audio and video CDs and the then Executive Officer had informed the same to the 4th respondent vide proceedings dated 25-09-2006. According to the 1st respondent, the rules were not transgressed or violated and that the work was entrusted to a government concern only in the interest of the institution. The 1st respondent would state that the rates quoted by the 4th respondent were reasonable when compared to the price for such products in the market, that the product was of good quality, that, pursuant to G.O.Rt.No.2552 dated 01-12-2007, the temple had entered into an agreement with the 4th respondent and had placed an indent and that the 4th respondent had supplied the monthly stock to the temple on 23-08-2008. It is stated that the net income towards Rahu-Kethu Pujas in the temple exceeded Rs.13.69 crores and that no loss was caused to the institution. In his counter affidavit, the second respondent would state that the branch manager of the 4th respondent, vide letter dated 22-06-2004, had proposed to provide audio CDs to the Devasthanam for Rs.29-50ps and VCDs for Rs.65/- titled “Sri Kalahasteeswara Mahathyam” containing information regarding the importance of both the temple, and the Rahu-Ketu Dosha Pujas, in three languages (Telugu, Tamil and Kannada) with the right to sell after two years being vested in the devasthanam, that the then Regional Joint Commissioner and Executive Officer of the Temple had submitted his report dated 16-08-2004 stating that the practice of giving audio and video CDs was in vogue in the Sri Durga Malleswara Swamy Devasthanam, Vijayawada, and that they had requested for permission to be accorded for distribution of audio and video CDs free of cost to such of those pilgrims who performed these pujas, that, after the writ petition was filed by the 4th respondent in the year 2004, orders were issued on 18-01-2005 to the Executive Officer to take action as per the earlier orders dated 09-09-2004, that, after negotiations, the rates for the audio and video CDs were reduced, that the proposal was placed before the trust board on 19-04-2006, that the trust board, vide resolution dated 19-04-2006, had approved the rates, script and concept and had resolved to purchase the audio and video CDs for a period of two years. The 2nd respondent would state that the Executive Officer of the Temple had reported that till date no stock of audio and video CDs were taken delivery from the 4th respondent, that G.O.Rt.No.2552 dated 01-12-2007 was communicated to the 3rd respondent on 28-12-2007, that the 4th respondent had, vide letter dated 01-02-2008, requested the Commissioner, Endowments to issue direction to the Executive Officer to implement the G.O, that thereupon the Executive Officer was requested, vide letter dated 25.2.2008, to take action as per the orders of the Government, that the Executive Officer of the Temple, vide proceedings dated 29.08.2008, had reported that, during the year 2007-08, a net income of Rs.8.21 crores had been earned and that the expenditure required to be incurred for the years was approximately Rs.1.21 crores and not Rs.5.00 crores as alleged. It is stated that the script for the audio and video CDs had been developed by Sri Bharavi, a renowned Cine Writer, and directed by the renowned Cine Director Sri K. Raghavendra Rao, that the Commissioner, and other officers of the department, had seen the audio and video CDs exhibited by the 4th respondent and were satisfied with the script, picturization and other connected subjects, that entrustment of the work to the 4th respondent, a government concern, was only in the interest of the institution, that the cost of the products supplied by the 4th respondent was reasonable when compared to the market and were of good quality and standard. In his counter affidavit, the 3rd respondent would state that the temple had entered into an agreement with the 4th respondent on 6.8.2008, that an indent was placed for supply of stock and that the 4th respondent had supplied the stock on 23.8.2008. It is stated that these audio and video CDs would help in increasing the number of poojas through word of mouth publicity, that the temple could get additional income from the master copy rights by selling it to various satellite channels which in turn would help it get free publicity regarding the importance of Rahu-Kethu pooja. In its counter affidavit, the 4th respondent would submit that the writ petition was not bona-fide and was only filed with a view to harass them, that the petitioner had no locus-standi to question the government order, that they were a central government organization, that they intended to introduce an innovative concept on Sri Kalahasteeswara Swamy Varu by picturizing a short film, that video CDs and audio CDs in the name of “Sri Kalahastheeswara Mahathyam” were prepared in three languages, with the help of renowned script and lyric writers, cine artists and technicians of the Telugu film industry, on par with cine standards, that the short film was directed by the legendary devotional Director Sri K.Raghavendra Rao, that this innovative concept was proposed and developed by the 4th respondent which would enable the temple administration to boost propagation of the temple history, the story of Bhaktha Kannappa and formation of ‘Sri Kalahastheewara” from ‘Sree’ ‘Kala’’ and ‘Hasthi’, the history of ‘Rahu’ and ‘Kethu’, the importance of ‘Rahu Kethu Sarpa Dosha Nivarana Pooja’, to create awareness regarding the Rahu Kethu pooja and for wide publicity of the temple. They state that the cost of screening and production, of both audio and video CDs, and short film, had to be borne by the 4th respondent, that the quotation for each item, included the cost of production of the master copy as well as the cost of making copies, that the reputation and creative work of technicians and the other artists involved in concept based works may have some impact on the pricing of the copies, despite which the 4th respondent had offered reasonable rates with the intention of rendering devotional service, that these CDs were meant exclusively for temple use, that, on each and every occasion, the temple administration had kept a close watch on the making of the short film and had suggested corrections, that the 4th respondent had adhered to the instructions given for improving the quality of the short film, that, in this process, the 4th respondent had spent more money for arranging several shooting locations, that, after completion of picturization, the 2nd and the 3rd respondents, and other officers of the Department, had seen the short film exhibited by the 4th respondent and were satisfied with the picturization and audio songs, that the 4th respondent had spent huge amounts for making the short film and audio songs, that they had spent Rs.1.00 Crore without calculating interest for the past 4 years, that the respondent had also entered into an agreement with the 3rd respondent on 6.8.2008, had supplied the stock to the temple as early as on 13.8.2008 and 23.8.2008 and that the respondent could not recover a single paise till date in view of the interim orders of this Court. Sri K.V.Bhanuprasad, Learned Counsel for the Petitioner, would submit that Rule 44 of the Rules made under the 1966 Act required tenders to be called for, that the 4th respondent was neither an expert nor did making of a short film call for such expertise as to justify dispensing with the tender process, that respondents 1 to 3 could not confer largesse on the 4th respondent without adhering to the tender process, that, since the 2nd respondent had admitted in its counter affidavit that a sum of Rs.1.2 Crores would be the expenditure to be incurred for procurement of these audio and video CDs, a transparent and fair procedure of inviting bids through the tender process ought to have been adopted, that, admittedly, the 4th respondent had no expertise in this regard since it had itself admitted that it had engaged the services of directors and musicians from the telugu film industry and that picking the 4th respondent, for conferment of largesse, was in flagrant violation of Article 14 of Constitution of India. Learned counsel would contend that the 3rd respondent could have stipulated stringent conditions, both technical and financial, while inviting tenders to ensure that the audio and video CDs supplied to them were of the required standard and quality and at the most competitive price. Learned Counsel would state that there was no rationale in dispensing with the tender process in procurement of these audio and video CDs, that there was no prescribed policy for giving preference to central government undertakings ignoring the claims of others and that it was not as if the 4th respondent, a central government undertaking, was making these films and preparing these CDs on its own as the bye-laws of the 4th respondent showed that it was not involved in this business and that they had engaged the services of private technicians, and others conversant in this trade, for making the film and in preparing the audio and video CDs. Learned Government Pleader for Endowments would contend that it was not as if the 4th respondent was hand-picked for conferment of largesse, that the documents placed before this Court would disclose that detailed negotiations had taken place over a long span of 4 years, that the 4th respondent was asked to reduce the price at which the audio and video CDs were to be supplied and that the decision of the state government, to entrust the work to the 4th respondent – a Central Government undertaking, was neither unreasonable nor arbitrary. Sri V.T.M.Prasad, Learned Standing Counsel appearing on behalf of the 3rd respondent, would submit that the petitioner was not a competing tenderer, that it was not as if the petitioner had offered to supply these audio and video CDs at rates lower than the rate offered by the 4th respondent, that there was no offer on the petitioner’s part to provide these CDs at lower rates, that the petitioner had not placed any material before this Court to show that the rates quoted by the 4th respondent were low and that the petitioner was, therefore, disentitled to the relief sought for. He would contend that specialized areas, such as making of films and preparation of audio and video CDs, were not amenable to the tender process. Learned counsel would place reliance on Tata Cellular v. Union of India[3]. According to Sri N.Subba Reddy, learned Senior Counsel appearing on behalf of the 4th respondent, the questions which arise for consideration is whether the government had the power to issue the impugned order, and whether the order was unreasonable or irrational. He would contend that the government had the right, in the interest of the temple, and in larger public interest, to pass necessary orders allotting this work to another government organization, that the test to ascertain whether, or not, the action of the government was fair and reasonable, was the wednesbury test of reasonableness and, since the government had considered the matter from different angles, examined the reports of the executive officer and that of the trust board, this Court should refrain from interfering in the matter. He would contend that, since the work was given to another government undertaking, it could not be said that the action of the respondents was arbitrary. Learned Senior Counsel would place reliance on Kasturi Lal Lakshmi Reddy v. State of J & K[4] and Center for Public Interest Litigation v. Union of India[5] in this regard. He would further contend that, even if the action of the respondents, in entrusting the work to the 4th respondent without adhering to the tender process, is found to suffer from some infirmity, this Court would not interfere merely because it was lawful to do so, more so, as an agreement had been entered into, and the CDs had been received by the 3rd respondent temple. Learned Senior Counsel would state that W.P.No.19418 of 2004, filed earlier by the 4th respondent, was closed on 31.1.2008 in view of the orders passed by the Government in G.O.Rt.No.2552 dated 1.12.2007. On the question of locus-standi, it must be noted that the petitioner is a former chairman of the Trust Board of the 3rd respondent temple. He has invoked this Court’s jurisdiction questioning the action of respondents 1 to 3 in awarding the work, relating to supply of audio and video CDs to the 3rd respondent temple, to the 4th respondent through private negotiations without adhering to the tender process. While the petitioner may not be a competing tenderer, it is well to remember that Law is a social auditor and this audit function can be put into action only when someone, with public interest in mind, ignites the jurisdiction of the Court. If public property is dissipated, it would require a strong argument to convince the court that representative segments of the public would have no right to complain of the infraction of public duties and obligations. (Fertilizer Corpn. Kamgar Union v. Union of India[6]). In an appropriate case, although the petitioner might have moved the court in his private interest, and for redressal of personal grievances, the Court in furtherance of the public interest may consider it necessary to enquire into the state of affairs of the subject matter of litigation in the interest of justice. (Shivajirao Nilangekar Patil v. Dr Mahesh Madhav Gosavi[7]; Guruvayoor Devaswom Managing Committee v. C.K. Rajan[8]; Indian Banks' Assn. v. Devkala Consultancy Service[9]) That the Government, and the 3rd respondent – temple, should not pick and choose persons, with whom they intend to enter into contracts, is not in dispute. The Government, is not, and should not be, as free as an individual in selecting the recipients of its largesse. It cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal. (Ramana Dayaram Shetty v. International Airport Authority of India[10]). It cannot, without adequate reason, exclude any person from dealing with it or take away largesse arbitrarily. The activities of the Government have a public element and, therefore, there should be fairness and equality and absence of arbitrariness and discrimination in such transactions. The State need not enter into a contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. (Erusian Equipment and Chemicals Ltd. v . State of West Bengal[11]). Where the Government is dealing with the public, whether by way of entering into contracts or issuing licences or granting other forms of largesse, it cannot act at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse, including award of contracts, licences, etc. must be confined and structured by rational, relevant and non-discriminatory standards or norms and, if the Government departs from such standard or norm in any particular case, the action of the Government would be liable to be struck down, unless it can be shown that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory. (Ramana Dayaram Shetty10). The Government cannot act in a manner which would benefit a party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government, therefore, cannot give a contract for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. It is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the court would have to decide whether the action of the Government is reasonable and in public interest. (Kasturi Lal Lakshmi Reddy4). Where the object is augmentation of revenue and nothing else, the State is under an obligation to secure the best market price. (Ram & Shyam Co. v. State of Haryana[12]). In such matters there should not be any suspicion of a lack of principle. (V. Purushotham Rao v. Union of India[13]). The rule that property should be purchased/sold through public auction or by inviting tenders not only secures the best price but also ensures fairness in the activities of the State and public authorities. Their actions should be legitimate and above board. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favouritism or nepotism. Ordinarily, these factors would be absent if the matter is brought to public auction. There may be situations necessitating a departure from the rule, but then such instances must be justified by compulsion and not by compromise. It must be justified by compelling reasons and not just by convenience. (Haji T.M. Hassan Rawther v. Kerala Financial Corpn.[14]). Public auction with open participation, and a reserve price, guarantees public interest being fully subserved. (State of U.P. v. Shiv Charan Sharma[15]). The object of holding the auction is generally to raise the highest revenue. (Ramana Dayaram Shetty10). The methodology which can be adopted for receiving maximum consideration in a normal and fair competition would be by public auction which is fair and transparent. Public auction not only ensures a fair price and maximum return it also militates against any allegation of favouritism on the part of the Government authorities. Courts have accepted public auction as a transparent means. (Shiv Charan Sharma15, Ram & Shyam Co12, Sterling Computers Ltd. v.