IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 1 Mohd. Zakir Saudagar Age 48 years, Occ. Business R/o. Plot No.40, Lane No.8, Near Motiwala Highschool, Aurangabad Times Colony, Kat Kat Gate, Aurangabad. .. PETITIONER. VERSUS 1] The State of Maharashtra (through Department of Urban Development Mantralaya, Mumbai 400 032) 2] Municipal Corporation, Aurangabad Through its Commissioner. 3] The Commissioner, Municipal Corporation, Aurangabad. 4] The Standing Committee, Municipal Corporation, Aurangabad, through its Chairman. 5] The City Engineer, Municipal Corporation Aurangabad. IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 2 6] Abhishek Advertisers Through its Proprietor Subhash Madhavrao Patil Shelke, Age 44 years, Occ. Business, R/o. 1, Disha Vaibhav, Aurangpura, Aurangabad. 7] M/s. Setu Media Specialists, Through its Proprietor, Subhash Madhavrao Patil Shelke, Age 44 years, Occ. Business, R/o. 1 , Disha Vaibhav, Aurangpura, Aurangabad. 8] Akola Passenger & Goods Transport Coop Society Limited, Akola, through its President, Arun Devrao Mhaisne. .. RESPONDENTS. Mr. D.P. Palodkar,Advocate for petitioner. Mr. V.D. Rakh, AGP for respondent No.1. Mr. A.M. Karad, Advocate for respondent Nos. 2 to 5 Mr. A.S. Shelke, Advocate for respondent Nos. 6 & 7. CORAM :- B.R. GAVAI & M.T. JOSHI, JJ. DATE :- 15th SEPTEMBER, 2011. IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 3 ORAL JUDGMENT [ PER B.R. GAVAI, J.] :- 1] Heard. Rule. Rule made returnable forthwith. Heard finally by consent of parties. 2] Since no orders, prejudicial to the interest of respondent No.8 are being passed and since respondent No.8 is duly served with the notice for admission, we do not find it necessary to issue fresh notice on Rule, to respondent No.8. 3] Facts, in brief, giving rise to the present petition are as under :- . The respondent No.3, which is a Municipal Corporation, on account of the decision of the Maharashtra State Road Transport Corporation ( for short, MSRTC), thereby deciding to discontinue the local bus service within the area of Aurangabad Municipal Corporation, decided to operate the said local bus transport scheme, ( hereinafter referred to as, “the Transport Scheme”) on, “Built-Operatate-Transfer”, hereinafter referred to as, “BOT basis”). For the said purpose, tenders were invited by the Municipal Corporation, The respondent No.8 was found successful in the said tender process and accordingly, an IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 4 agreement was entered into between the Corporation and respondent No.8 on 31/10/2005, for running the said Transport Scheme on BOT basis. . According to the said agreement, respondent No.8 was to purchase 100 buses. As per Clause 15 of the said agreement, the period of agreement was for 10 years. As per clause 18, after the completion of the period of 10 years, all the buses, bus stops, work shops, etc. were to be transferred in favour of the Corporation, without the respondent No.8 being entitled to any possession thereof. Clause 16 of the said agreement is relevant for the purpose of this petition. The truly translated version of the said clause reads thus :- “The work of construction of designed sheds at the Bus Stops in the city will have to be made by the Society, as directed by the party No.1 and the Corporation will give permission to erect small shops adjacent to the bus stops, the size of which will be determined by the Corporation. The Society shall receive the rent therefrom. The Society will be entitled to receive the entire income towards advertisements at the bus stops. However, the society will be required to pay Advertisement Tax to IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 5 the Corporation. The Society shall be entitled to transfer all the advertising rights on the bus stops, passenger tickets and on the bodies of buses etc. to any other agency. The responsibility of upkeep and maintainance of bus stops will be of the society. The small shops will be allotted for Tea Stall, STD PCO, Book Stall, other stalls etc. One side of the bus will, however, be reserved for the Corporation. The society will not be entitled to Income thereof. Bill Boards can be kept at the Bus stops as designed by the Corporation. 50% space of such boards will be reserved for information of buses while rest 50% space can be made available for advertisement.” . It can be seen that as per the said clause, respondent No.8 was entitled to get entire income of advertisement, on the bus stops. However, the Corporation was entitled to the Advertisement Tax. Respondent No.8 was also entitled to give the advertisement rights to any other agency on the bus stops and bodies of the buses. However, the advertising rights on one side were reserved for the Corporation. In pursuance to the rights, which, respondent No.8 accrued in view of the terms and conditions of the aforesaid agreement, IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 6 the respondent No.8 entered into an agreement on 25th March, 2006, with one Setu Media Specialists ( Respondent No. 7 herein), which is claimed to be a sister concern of the respondent No.6. The recital No.B is relevant for the purpose of the present petition, which reads thus :- “The Assignor who has been entrusted all the work of and connected to the city bus service, for certain reasons, proposes to assign the job contained in clause 16 of the said agreement pertaining to construction of bus sheds; constructing small shops besides them; putting up display boards and advertisements on the bus stops, passenger tickets and on the body of the buses etc. subject to all the rights and benefits and obligations under the said agreement; to the Assignee and to which the Assignee has agreed.” Clause No.1 of the terms and conditions of the said agreement would also be relevant :- “The period of this agreement is 6 years and the same is extendable for a further period with the consent of both the parties, on the terms and IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 7 conditions to be agreed thereon. It is also hereby agreed that, on expiry of the period of this agreement, priority shall be given to the assignee for extension“. . It can thus be seen that respondent No.8 had agreed to give the work as per the said BOT contract, in so far as constructions of bus stops, small shops besides them and advertising rights of the said bus stops, to respondent No.7. It is further to be noted that as per clause (1) of the terms and conditions, the said agreement was to continue only for a period of 6 years and the same was extendable for a further period, by consent of both the parties. Thus, the right of the said Setu Media Specialists I.e. Respondent No.7 after a period of 6 years, was only for a preference. The agreement was executed on 25.3.2006. It is not in dispute that in pursuance to the said agreement, respondent No.7 has constructed 48 bus stops at various places. It is the contention of the respondent No.6/7 that they have incurred an expenditure amounting to Rs.48 Lakhs on the construction of the said bus shades/stops, apart from the expenditure incurred by them for maintenance of the said bus stops. IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 8 However, subsequently, it appears that the respondent No.8 was not in a position to continue with the said project and as such, the Corporation was required to cancel the work allotted in favour of respondent No.8. A resolution passed in the general body of the corporation dated 16th October, 2007 would be relevant for the purpose of this petition. A truly translated version of the said resolution, reads thus :- “As has been mentioned in the proposal and and as per the discussions held in the house, since the city bus service has stopped, no objection is given to the Maharashtra State Road Transport Corporation, for running/providing city bus service. So also, permission is granted to the administration of the Corporation and administration of the MSRTC, to take a decision after holding joint discussions to finalize the terms and conditions of the agreement, at administrative level. Similarly, while starting the new city bus service, the MSRTC should sympathetically consider absorption of those employees who were actually working in the A.M.T. Similarly, permission is granted to the Corporation and the Bank administration, for holding joint auction of buses for repayment of the loan taken for the purchase of IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 9 buses. For recovering the royalty and advertisement tax, the Corporation is authorized to seize the material at the bus stops, parking spaces of bus stops, AMT office and for recovering RTO Tax, the Regional Transport Department is authorized to take independent action against the Directors of the Society so also permission is accorded to the administration to issue them such letter. Similarly, approval is granted to conduct a high level enquiry in the matter under the Chairmanship of the Commissioner of the Corporation, by appointing a Chartered Accountant and a Retired Judge, at the hands of a committee consisting of Chief Accountant, Chief Auditor, Deputy Commissioner (M), Head of Technical Section, Legal Advisor and Deputy Engineer (Mechanical) and five members of the Corporation and to take a decision by convening a Special Meeting of the Corporation. Legal action be taken” . It is also not in dispute that acting on the said resolution of the General Body of the Corporation, the contract awarded in favour of respondent No.8 stood terminated vide letter addressed by the Corporation to respondent No.8, dated 19th October, 2010. IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 10 It can thus clearly be seen that vide the said resolution, it has been specifically resolved that for recovering the royalty and the Advertisement Tax, the corporation shall seize the bus stops, the articles lying in the parking slots, articles lying in the office of respondent No.8 etc. It has been further decided that in so far as recovery of RTO tax is concerned, the Regional Transport Officer was authorized to take action against the contractor and respondent No.8 and a letter was to be addressed to the RTO by the Administrator to the said effect. . It is further to be noted that in the meeting held on 22/10/2010, which was attended by the Estate Officer, Legal Advisor, Project Contractor, the Deputy Engineer Mechanical, Ward Officer of the Corporation and Deputy Commissioner (CIDCO), it was decided that for recovering the amount recoverable by the Corporation , action should be taken against respondent Nos. 8 and 6. . Surprisingly, thereafter, the Standing Committee of the Corporation, which is the respondent No.4 herein, and which, is not in existence today, resolved to give the rights of advertisement on the bus stops to the respondent No.6. IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 11 . The Standing committee, after negotiations with respondent No.6, resolved to give the rights of advertisement for 10 years to respondent No.6, towards display of advertisements at bus stops for an amount of Rs.8 Lakhs per year. It was further agreed that, in the event, respondent No.6 was to add any number of bus stops, he would be required to pay Rs.25.000/- per annum to the respondent corporation, per additional bus stop. . In pursuance to this decision of the Standing Committee dated 21.2.2011, the respondent No.5 has entered into an agreement with respondent No.6 for giving the advertisement rights for a period of 2 years. The said agreement is executed on 1/3/2011. Being aggrieved by this action on the part of the respondent Nos. 4 and 5, the petitioner has approached this court. 4] It is the basis contention of the petitioner that in view of the provisions of Section 73 of the Bombay Provincial Municipal Corporation Act, ( hereinafter referred to as, “ the BPMC Act”) read with Chapter V of Schedule D, the Corporation could not have given the rights of advertisement without inviting tenders. It is also the contention of the petitioner that had the advertisement being published inviting tenders, the Corporation would have earned much more amount than the one which has IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 12 been agreed to be paid by respondent No.6. 5] The petitioner has himself stated that he is willing to pay an amount of Rs.12 lakhs per annum towards the said rights. To test the bonafies of the petitioner, we had asked the learned counsel for the petitioner as to whether the petitioner is willing to deposit an amount of Rs. 12 Lakhs in this court. The petitioner had readily agreed to deposit the amount of Rs. 12 lakhs. However, in view of the subsequent developments, we did not find it necessary to issue such direction, inasmuch as, the petitioner has amply established his bonafides. 6] Shri Karad and Shri Shelke, learned counsel appearing on behalf of the Corporation and respondent No.6, respectively, submitted that taking into consideration the fact that the respondent No.6 had constructed the bus stops, the Standing committee of the Corporation found it just and proper to award the contract in favour of respondent No.6, without requiring the Commissioner to invite tenders. It is submitted by the learned counsel that though as a general rule, the Commissioner can award contract only after tenders are invited, the proviso to sub- clause (2) of Rule 2 of Chapter V of Schedule D, permits the Commissioner to enter into agreement, without inviting tenders. It is submitted that in the present case, the Standing Committee IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 13 found it appropriate to permit the Commissioner to award the contract without inviting tenders, taking into consideration the peculiar facts and circumstances of the case. 7] By now it is a settled principle of law that whenever a public body wants to enter into an agreement, the best mode to do so is by inviting tenders or by auction. It has been consistently held by the Apex Court right from the decision in the case of “Ramandnd Dayaram Shetti Vs. Air India Authority”, reported in AIR 1979 SC 1628, that while distributing the public largesses, the State is enjoined to do so, either by inviting tenders or by conducting public auction. A non transparent manner in award of public largesses is always capable of raising a suspicion that it is not done in public interest but has been done with ulterior motive. . It would also be relevant to note the provision of Rule 2 of Chapter V of Schedule D of the BPMC Act, which reads thus :- . “2. (1) Except as is hereinafter otherwise provided, the Commissioner or any officer authorized by him in this behalf shall, at least seven days before entering into any contract for the execution of any work or the supply of any materials or goods which will involve an IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 14 expenditure exceeding three thousand rupees or such higher amount as the Corporation may, with the approval of the State Government, from time to time prescribe, give notice by advertisement in the local newspapers, inviting tenders for such contract. (2) The Commissioner shall not be bound to accept any tender which may be made in pursuance of such notice, but may accept, subject to the provisions of clause (C) of section 73, any of the tenders so made which appears to him, upon a view of all the circumstances, to be the most advantageous: Provided that the Standing Committee may authorize the Commissioner, for reasons which shall be recorded in its proceedings, to enter into a contract without inviting tenders as herein provided or without accepting any tender which he may receive after having invited them. 8] Perusal of the aforesaid provision would clearly show that the Commissioner is required to give an advertisement in the local newspaper inviting tenders for awarding contracts. Though the proviso to sub clause (2) of Rule 2 of Chapter V of Schedule D IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 15 permits the Standing committee to authorize the Commissioner, for reasons to be recorded in writing, in doing away with the public advertisement, the same has to be by way of an exception. 9] It is thus clear that as a rule, before awarding contract the Commissioner is required to give an advertisement inviting tenders, only in exceptional circumstances and that too for the reasons to be recorded in writing, the Standing Committee may authorize the Commissioner to do away with inviting tenders. Perusal of the proceedings of the Standing Committee would reveal that the Standing Committee has not recorded any reasons as to why it has found it expedient and in the interest of the Corporation, to do away with issuing an advertisement for inviting tenders and enter into contract directly. 10] Perusal of Section 453, would reveal that the rules in the schedule are to be given the same effect as if they are part of the main statute. It can thus clearly be seen that the rules in Schedule D will have the same effect as they are part of the main enactment I.e. BPMC Act. It is a settled principle of law that when law requires a thing to be done in a particular manner, it has to be done in that manner alone or not at all. IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 16 11] It is further to be noted that the General Body of the Corporation, had resolved to seize all the bus stops, material lying in the parking slots, material lying in the A.M.T. office, so as to recover the dues from respondent No.8. In the light of these specific decision of the General Body, we find that the decision of the Standing Committee to award contract directly in favour of respondent No.6, was not in the public interest. 12] The Apex Court, in the case of “Tata Cellular Vs Union of India” reported in (1994) 6 SCC 651 , has laid down the parameters while exercising the powers of judicial review in respect of contractual matters. The Apex Court in para. 77 observed thus : The duty of the court is to confine itself to the question of legality, its concern should be : 1. Whether the decision making authority exceeded its powers ? 2. Committed an error of law, 3. committed a breach of the rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers. Therefore, it is not for the court to determine whether a IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 17 particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under :- (i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. vs. Secretary of State for the Home Department, Ex Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, “consider whether something has gone wrong of a nature and degree which requires its intervention.” 13] We are of the considered view that the Standing Committee, which is the decision making authority, has IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.3557 OF 2011 Office Notes, Office Memoranda of Coram appearances, Court's Orders Court's or Judge's orders or directions and Registrar's orders. 18 committed an error of law and has taken a decision, which a prudent and reasonable man would not taken in the facts of the case and therefore, we find that this is a fit case, wherein, this court should invoke its extraordinary powers under Article 226 of the Constitution of India, to seek judicial review of the order of the Standing Committee. 14] Apart from that, the Division Bench of this court, in the matter of “Sonlaxmi Macchimar Society Vs. State of Maharashtra and others” reported in 2010(6) Mh.L.J. 264, while interpreting the provisions of the BPMC Act, has held that action of awarding contracts by a public body without issuing advertisement and without inviting tenders is not sustainable. 15] There is another angle to the matter. The Apex Court in the matter of “ Piloo Dhunjishaw Sidhwa Vs. Municipal Corporation of City of Poona,” reported in 1970(1) SCC 213, has held that unless the contract is executed in accordance with the provisions of Section 73 r/w. Chapter V of Schedule D of the BPMC Act, the same is not binding on the Corporation. Perusal of the agreement would reveal that it has been executed by respondent No.5 – the City Engineer in favour of respondent