IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THURSDAY, THE TWENTY FOURTH DAY OF JULY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MRS JUSTICE T.MEENA KUMARI and THE HON'BLE MR JUSTICE RAMESH RANGANATHAN WRIT APPEAL NO : 830 of 2002 (Writ Appeal under Clause 15 of the Letters Patent against the Order dated 11/03/2002 in WP NO : 26578 OF 2002 on the file of the High Court.) Between: Mekala Yadaiah S/o.Mallaiah R/o.H.No.6-3- 126/33,Gandhinagar Near S.T.Hostel,Nalgonda ..... APPELLANT AND 1 Andhra Pradesh State Warehousing Corporation rep.by its Managing Director Warehousing Sadan,2nd Floor,Behind Gandhi Bhavan Nampally Hyderabad 2 The Regional Manager Andhra Pradesh State Warehousing Corporation Musheerabad Hyderabad 3 The Warehouse Manager Andhra Pradesh State Warehousing Corporation Nalgonda 4 V.Koti Reddy S/o.Ranga Reddy R/o.Tirupathi Mandal Nalgonda District .....RESPONDENT(S) Counsel for the Appellant: MR.A.ANANTHA REDDY Counsel for the Respondents: SMT.V.MEENAKSHI The Court made the following : THE HON’BLE MRS. JUSTICE T. MEENA KUMARI AND THE HON’BLE MR. JUSTICE RAMESH RANGANATHAN W.A.NO. 830 OF 2002 JUDGMENT: (Per Smt. Justice T. Meena Kumari) This writ appeal is ﬁled against order dated 11.3.2002 passed by a learned single Judge of this Court in WP No. 26578 of 2001. The writ petition was ﬁled challenging the action of the respondents in entrusting the work of handling and transport in respect of godowns situated at Anishetty Duppalapally village, near Nalgonda and consequently sought a direction to the respondents to issue tender notiﬁcation for awarding the contract of handling and transport work. The writ petition was dismissed by the learned single Judge. Against this order, the present writ appeal is preferred. According to the writ petitioner, he was awarded the contract of handling and transport work of food grains, fertilizers, receipts and dispatches etc. by the 1st respondent on 23.6.2001 for a period of two years for two godowns after he became the successful bidder in an auction. The case of the petitioner is that the 1st respondent had taken four godowns from private person/institution on lease basis for a period of seven years situated at Anisetty Duppalapalli village, near Nalgonda town where the petitioner was awarded the contract. The petitioner gave representations to the respondents on 21.8.2001 to entrust the handling and transport work in these four godowns in his favour on the same terms and conditions of the contract which was given to him for two godowns. The writ petitioner submits that the 1st respondent entrusted the work of handling and transport in the newly constructed godowns at Anishetty Duppalapally village to the respondent No.4 without issuing any tender notiﬁcation and without giving any reply to the representations given by the writ petitioner. Hence he challenged the allotment of handling and transport work made in favour of other party as illegal and arbitrary. The 1st respondent ﬁled a counter in which it is stated that to overcome the shortage of storage space in the State for the procurement and maintenance, storage, preservation of food grains, the respondents along with Food Corporation of India Marketing Department of the Government and NABARD have evolved a scheme in the month of February, 2001. Under this scheme, there will be an oﬀered guarantee of 7 years occupancy for 15 lakhs tones of capacity. The investor had to construct the godown strictly in accordance with the FCI speciﬁcations and oﬀer it on rent for a period of seven years. There were some incentives oﬀered by FCI, Marketting Department and NABARD. In view of the huge investments running into crores of rupees from private parties, it was decided to award the contract of handling and transport work to private investors under a mutual agreement to create better package for the investor and to have good hold on the properties constructed by them. The normal handling and transport contract is in no way identical to the new scheme. The scheme was notiﬁed on 17.3.2001 inviting oﬀers from private parties for construction of godowns with a capacity of 15 lakh metric tonnes under 7 years guarantee scheme for storage of food grains in several places including Nalongda. The 4th respondent was awarded the contract of constructing godowns at Nalgonda center by nomination. As per the agreement, six godowns were constructed for a total capacity of 30,000 metric tonnes. It is stated that the new godowns constructed under the new scheme are distinct and separate and they are in no way related to the godowns entrusted to the writ petitioner. As per the new scheme, the 4th respondent was awarded the contract with the package of preservation, maintenance of handling and transport work at a discount of 5% on the existing rates at Nalgonda in view of the involvement of an investment of Rs.4 crores and 60 lakhs of rupees. Hence the writ petitioner has no right to get the handling and transport work at the newly constructed godowns. The allotment of handling and transport contract to the investor on a discount of 5% on the prevailing rates in the newly constructed godowns was done as per the new policy decision taken by the Government of Andhra Pradesh under the new scheme of 7 years guarantee by the method of nomination instead of tender notification. The main contention of the learned counsel for the appellant taken before this Court is that the respondents had awarded the contract of handling and transport on nomination basis and without inviting tenders and there was arbitrariness in awarding the contract. It is also submitted that the petitioner made several representations to the respondents for awarding the contract to the petitioner, but they were neither accepted nor rejected and there was no justiﬁcation in awarding the contract to a private party. We have gone through the order impugned and found that the contentions of the learned counsel for the appellant which were taken here also were considered by the learned single Judge. The learned single Judge in his order observed that it is accepted position that one of the prime economic polices breezing across the country is to minimize the involvement of State or its Undertakings in the matter of investments and for better utilization of the limited resources, it was decided to disinvestments in non-productivity sectors due to paucity of funds. The ﬁrst respondent evolved a scheme in consultation with FCI and State Government for making available suﬃcient number of godowns for undertaking such procurement. Accordingly, it took a policy decision to rope in private investors/partnership concern for construction of godowns, which is a non- productivity center by entrusting the same to the private sectors. The learned single Judge also observed that the submission made by the respondents that State Warehousing Corporation was not in a position to provide requisite storage facilities as per the needs of FCI and there was over all ﬁnancial crunch in constructing 15 lakhs Metric Tonnes capacity godowns through out the state and making available them to FCI and as such they awarded the contract of handling and transport work as an incentive to the private party who constructed and oﬀered godowns for storage of food grains cannot be faulted with. The learned single Judge also dealt with other contentions of the writ petitioner. It was also observed by the learned single Judge that it is well settled proposition of law that in the absence of any mala ﬁdes attributed to the Government agencies in awarding a particular work by negotiation resulting in corresponding loss to the Corporation or award of contract was due to extraneous consideration, non- ﬂoating of tenders or not holding public action would not in all cases be deemed to be the result of the exercise of the executive power in an arbitrary manner. Making an exception to the general rule of awarding largees by public auction or by tenders could be justiﬁed if a challenge is made. The learned single Judge also observed that the ﬁrst respondent discharged the onus to justify its action in awarding the contract to the 4th respondent which do not suﬀer from vices of Article 14 of the Constitution. Even before us there is no material placed attributing malaﬁdes to the Government agencies in awarding the contract or that the respondents awarded the contract to the 4th respondent arbitrarily and for extraneous consideration. In the absence of such material, it cannot be said that the contract was illegal and arbitrarily awarded in favour of the 4th respondent. The scheme under which the contract was awarded was also not under challenge and in fact, the contract was awarded on nomination basis as a part of the scheme. Tenders were called for and the 4th respondent was awarded the contract of constructing the godowns and in terms of the scheme only, the contract of maintaining the godowns was also awarded on nomination basis to him. Therefore, it cannot be said that the contract was awarded arbitrarily. For these reasons, we do not ﬁnd any ground to interfere with the order of the learned single Judge. The writ appeal is accordingly dismissed. No order as to costs. ___________________ T. MEENA KUMARI, J _________________________ RAMESH RANGANATHAN, J Dt. 24.7.2008 KR ........REGISTRAR To 1. 2.2 CD copies Form-NIC-OGS/WA { }