THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE R. KANTHA RAO W.P.No. 6020 of 2010 Date:30.06.2010 Between: K. Rameshreddy …Petitioner Vs. The Government of A.P., rep., by its Principal Secretary, Panchayat Raj Department, Secretariat Building, , Hyderabad and others. …Respondents THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE R. KANTHA RAO W.P. No. 6020 of 2010 Oral order: (Per: THE HON’BLE SRI JUSTICE GODA RAGHURAM) Heard Sri P. Veera Reddy, the learned counsel for the petitioner; the learned Special Government Pleader for respondent Nos.1 to 4; and Sri S. Niranjan Reddy, learned counsel for 5th respondent. 2. The entrustment of all works relating to relief and rehabilitation centres at different villages, under the Galeru Nagari Srujala Sravanthi Project (GNSS) Phase-I in Kadapa District in favour of the 5th respondent, on nomination basis, without inviting tenders from eligible contractors, is assailed in this writ petition filed in the Public Interest by a resident of P. Ananthapuram village, Kondapuram Mandal, Kadapa District. 3. The petitioner states: (a) That the State granted approval in G.O.Ms.No.53, Irrigation and CAD Department dated 10-06- 2004 for Galeru Nagari Srujala Sravanthi Phase- I Works and approved the formation of Gandikota Reservoir across the Penna River with a gross storage capacity of 16.487 TMC of water. (b) The project is designed to irrigate an ayacut of 36,000 acres in Kadapa District. (c) The State Government allocated Rs. 196.54 crores under GO.Ms.No. 39, Irrigation & CAD Department dated 10-03-2008 towards the estimated cost of Relief and Rehabilitation Facilities (for short ‘R & R’). (d) Originally the reservoir was proposed with FRL+209 Meters which was subsequently revised on 14- 02-2007 to +212 Meters resulting enhanced storage capacity of 26.85 TMC. As a consequence of the rising the FLR of the Dam, there would be increased submergence on account of alteration in the contour levels that fall within submergence. (e) Under the R & R scheme, centers at six (6) places are proposed to be constructed including at P. Ananthapuram village covering Gandluru, Obannapeta and Sitarampuram villages. (f) Part of the R & R scheme also involves allotment of house plots for the families affected by submergence including provision of civic amenities like roads, water supply, electrification, drains etc.,. (g) The construction of the main dam across the Penna River, excavation of GNSS main canal and construction of other complementary civil works from KM 0.00 to KM 24.330 apart from construction of head regulatory (balance work), was entrusted to the 5th respondent under the EPC turn key system for Rs. 325.70 crores. (h) The State by the orders in G.O.Rt.No. 1830 Transport, R & B Department dated 20-12-2008 sanctioned Rs.121 crores for formation of a road from Managapatnam to K. Sugumanchipalli village and entrusted this work to the 5th respondent, on nomination basis. Such entrustment was challenged by the petitioner herein and two others in W.P.No.1338 of 2009. W.P. No. 1338 of 2009 was allowed by this Court by the judgment dated 05-03-2010 whereunder the entrustment of this work to the 5th respondent herein, on nomination basis was quashed. (i) Continuing the patronage to the 5th respondent, the State Government through its agencies, the other respondents herein and in particular the 3rd respondent, entrusted various components of R & R works to the 5th respondent (as spelt out in paragraph-5 of the affidavit filed in support of the writ petition). (j) Entrustment of the works to the 5th respondent on nomination basis is subversive of the rule of law and violates the provisions of Article 14 of the Constitution which enjoin equal access to eligible candidates to execute public works or partake in the largesse of the State. 4. By an interim order dated 13-04-2010 this Court after admitting the writ petition, directed the respondent Nos. 1 to 4 not to make any payments for any works executed by the 5th respondent relating to execution of R. & R Centers under GNSS Phase-I in Kadapa District. 5. The 1st and 5th respondents have filed counter affidavits. The 1st respondent on its behalf and on behalf of respondent Nos. 2 to 4 as well. To the extent relevant and material, the 1st respondent’s counter asserts: (i) The State had taken up the GNSS project to provide irrigation facilities for an ayacut of 36,000 acres in Kadapa District. (ii) The dam as originally conceived involved submergence of 14 villages involving displacement of 6242 families which are required to be shifted to R & R centers on priority basis. Unless the displaced or potentially to be displaced families are shifted, the object of the main project would be frustrated and therefore construction of R & R centers in Gandluru, Obannapeta and Sitarampuram villages is a priority. The execution of R & R project involves provision of minimum basic facilities like, roads, water, electricity, drains etc., These works were therefore entrusted to the 5th respondent, on nomination basis, at the estimated cost. (iii) Initially the R & R works were notified and tenders were called for the several distinct components and the generic R & R works viz., laying of roads, drains, electrification, construction of community halls and other infrastructure facilities by the tender notice No.SE/2008- 09 to 9 SE/2008-09 on 07-06-2008 in Telugu and English dailies having local circulation. As there was no response to the first tender notice, another notification was issued and published in the dailies having local circulation on 12-07-2008. There was no response to the second tender notification either. (iv) As there was no response to the tender notifications issued on successive occasions, the District Collector, Kadapa requested the answering respondent to take necessary action. (v) A similar situation (no response to tender notifications) occurred in Karimnagar District and the District Collector there requested the answering respondent to take necessary steps for early completion of R & R centers. Thereupon the Government issued G.O.Ms.No. 671 dated 05-09-2008 permitting the District Collectors to entrust civil works in R & R colonies, on nomination basis, to the EPC Contractors executing the main project, provided the main contractors are willing to execute the R & R works. (vi) In the light of the aforementioned experience and with a view to avoid escalation of prices and interminable delays in execution of the R & R works and the urgency involved, the civil works relating to execution of R & R centres was entrusted to the 5th respondent at the estimated cost, but on nomination basis. (vii) Most of the works at R & R centers have been completed and final bills are also released; some works are however at final stages. (viii) The completion of R & R works is an emergent necessity, in order to rehabilitate families displaced by the project. 6. A status report on the several works entrusted to the 5th respondent on nomination basis (impugned herein) including the expenditure incurred reveals the on going or concluded works, and the bills paid therefor. This report was furnished by the learned Special Government pleader on 16.06.2010. This report reveals that 10 of the works were completed in entirety and final bill have also been paid. In respect of two of the works, 75% of the component work is completed and proportionate bills were paid. In respect of another work 50% of the work has been completed and the bill has not yet been paid to the 5th respondent. 7. During the course of hearing of the writ petition, Sri Veera Reddy, the learned counsel for the petitioner had submitted that payment was made for the work relating to the construction of a community hall at Obulapuram, R&R Centre in R.S. Kondapuram mandal of Kadapa District even though there was no construction of any community hall at Obulapuram. In view of the oral assertion by the learned counsel for the petitioner this Court called upon the respondents to file a response on this specific allegation. The Executive Engineer representing the 4th respondent filed an affidavit dated 16.06.2010 stating that the State had initially sanctioned 5 R & R Centres including at Obulapuram and thereafter one more at R.S.Kondapurm; the sanction included construction of a community hall in all the 5 (five) R & R centres in the first instance, apart from other infrastructure facilities, such as, roads, drainages, water supply, electricity etc. Insofar as the R.S.Kondapuram R & R Centre, there was no proposal for construction of a community hall, but other infrastructural facilities were programmed. The land identified for construction of the R&R Centre, Obulapuram was in fact located in Gandluru Village of R.S.Kondapuram Mandal. Further this R & R Centre was named as Obulapuram R&R Centre as it is proximate to Obulapuram though, the lands are in Gandluru Village of R.S.Kondapuram, while obulapuram village comes under Muddanuru Mandal. However, the community hall of Obulapuram R&R Centre was constructed in Survey No.169 of Obannapeta Village, R.S.kondapuram Mandal and not in the lands in Gandluru Village as originally proposed. The reason for the relocation is that the current location (where the R&R Center was eventually executed) is proximate to the road, railway station and mandal headquarters. The Obulapuram R&R Centre was originally proposed to be located in Gandluru Village in R.S.Kondapuram Mandal, but was actually constructed in Survey No.169 of Obannapeta Village also in R.S.Kondapuram but is called the Obulapuram R&R Centre. According to this counter, the Obulapuram R&R Centre was in fact constructed but the misapprehension of the petitioner is due to the name of the R & R centre as Obulapuram while the location is in Obannapeta village. 8. Having regard to the fact that 10 of the 13 works awarded to the 5th respondent on nomination basis, have been completed in entirety and the final bills also paid; for two other works 70% of the work completed and proportionate bills paid and in respect of the other work 50% work is concluded though payment has not been made (by the date of the interim order passed by this Court in this case), we are not inclined to interdict further process. The works pertain to relief and rehabilitation in respect of a Dam which has already been built and impounding of water therein will certainly result in submergence. 9. However, it requires to be recorded and in no ambiguous terms that the conceptual justification pleaded by the State for resorting to entrustment of these works to the 5th respondent on nomination basis, is to an order in G.O.Ms.No.671, dated 05.09.2008. The inadequate response in Karimnagar District is no justification in law for a State wide policy of award of contracts by nomination. 10. A constitutional government with a controlled charter under our constitutional architecture, founded on rule of law principles is required to structure its executive conduct in accordance with established doctrines of public law and to ensure that the largesse of public contracts is not channelised to pre-identified beneficiaries through a non-transparent process. Public contracts involve expenditure from the public exchequer. Government is a trust and the executive is a public fiduciary. In the public sphere the discretion of a public authority must be exercised professionally, neutrally and by a methodology and process that optimizes public and economic interests of the State. Governance like democracy is a complex process and resort to shortcuts subverts the logevity of democratic governance and saps the vitality of the State. 11. In respect of the Gandikota Reservoir also involving award of a contract on a nomination basis, a learned Division Bench of this Court by the judgment dated 05.03.2010 in W.P.No.1338 of 2009 has recorded adverse comments on the conduct of the State in entrusting works on nomination basis to the 5th respondent, impleaded as the 4th respondent in that writ petition. The observations in that judgment apply equally to the conduct of the State in this case as well. 12. Before award of contract by the Executive on a nomination basis, an exceptional case must be made out and clear reasons recorded and it is impermissible for the State to issue a General Executive directive as in G.O.Ms.No.671, that civil works in relief and rehabilitation colonies should be awarded on nomination basis to the EPC contracts executing the main project provided that the main contractors are ready to execute the R&R works. Such a policy decision is inconceivable in a rule of law governance. 13. Irrigation projects (Dams) involving impounding of water and consequent displacement warranting creation of R&R facilities is an event known in advance to the State instrumentalities, including the magnitude and intensity. The moment, the main project is designed and even before an appropriation or financial sanction is made for the project, the contour levels to which submergence occurs would be known to any technical agency worth its name, employed by the State for design and approval of the work. Therefore, the scale, magnitude and dimension of submergence and consequent rehabilitation involved is known simultaneously with the design of the project. There is therefore ample time for the State to follow the well established principles regarding award of contracts by the public authorities, viz. a transparent process affording equitable and fair opportunity to all to participate with a complimentary benefit to the public exchequer viz. a competitive bid for the execution of R&R works. The State should not eschew settled principles and resort to award R&R works on nomination basis on the contrived expediency. 14. We record these observations in the context of a repetitive practice by the State in resorting to award of contracts on nomination basis willy-nilly under the guise of conformity with an earlier executive policy spelt out in G.O.Ms.No.671, dated 05.09.2008, which itself has no rational basis. 15. In view of the facts and circumstances peculiar to this case however, we are not inclined to interfere with contracts already entered into between the 5th respondent and the State and in respect of which a substantial component and variety of works have been completed and bills paid and only a small proportion of the work remains to be executed and payments made. 16. The writ petition is disposed of with the above observations. No order as to costs. The interim order dated 13.04.2010 in W.P.M.P.No.7752 of 2010 stands dissolved. ____________________ GODA RAGHURAM,J ____________________ R. KANTHA RAO,J Date:30.06.2010 Kvrm/ccm/pvks HON’BLE SRI JUSTICE GODA RAGHURAM AND HON’BLE SRI JUSTICE R.KANTHA RAO W.P.No. 6020 of 2010 Date:30.06.2010