-1- W.P.Nos. 958 of 2002 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 958 OF 2002 along with Civil Application No. 1541 of 2010 Sonalaxmi Machhimar Sahakari Soc. Ltd., ) registered in 1971, under the provisions of Maharashtra ) Co-op. Societies Act, 1960, having office at 18, Chendani ) Koliwada, Thane (E), Thane-400 403 ).Petitioners vs. 1. The State of Maharashtra, ) Fishery Department of State Government, ) Mantralaya, Mumbai. ) 2. The District Collector, Dist. Thane ) 3. Municipal Corporation of Thane ) 4. The Commissioner of Municipal Corporation of Thane ) 5. Dy. Municipal Commissioner (Immovable Property) ) The office address of Respondent Nos. 3, 4 and 5 at ) Mahapalika Bhavan, Dr. Almeda Road, Thane. ) 6. The Precision Fisheries, through its Proprietor ) Smt. Laxmibai Kashinath Thanekar ) having office at Masunda Lake, Shivaji Path, ) Thane. ).Respondents Mr. S.P. Thorat for the petitioner. Mr. A.B. Vagyani, Assistant Government Pleader, for respondent Nos. 1 and 2. Mr. R.S. Apte, Senior Advocate, instructed by Mr. Mandar Limaye, for respondent Nos. 3 to 5. Smt. Gauri Godse for respondent No. 6. CORAM: P.B. MAJMUDAR & R.M. SAVANT, JJ. Judgment reserved on : 18 th August, 2010 Judgment pronounced on : 8 th September, 2010 -2- W.P.Nos. 958 of 2002 JUDGMENT: (Per P.B. Majmudar, J.) The action of the Thane Municipal Corporation in giving the cleaning, fishing and boating contract to respondent No.6 without giving any public advertisement or without inviting tenders is challenged by the petitioner by way of this petition under Article 226 of the Constitution of India. 2. The petitioner is a Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and Rules framed thereunder. Initially the petitioner was given the contract of boating in Masunda lake situate in the heart of the Thane city. When the lease given to the present petitioner was about to expire and during the existence of the aforesaid lease, the Municipal Corporation of Thane executed a lease agreement of fishing , cleaning and boating with respondent No.6. The said lease agreement is executed for a period of 25 years . By way of this petition, the petitioner has prayed that the lease agreement dated 19th September, 2001 may be declared as illegal and unconstitutional and it may be held that the same is contrary to the Resolution No. 201 dated 19th July, 2001 passed by the Corporation. It is also prayed that appropriate writ and directions may be issued directing the Corporation to invite tenders which may be published in the newspaper in connection with cleaning, boating and fishing at Masunda Lake at Thane. -3- W.P.Nos. 958 of 2002 3. Masunda Lake is located in the heart of Thane City wherein cleaning, fishing and boating activities are going on. It is the case of the petitioner that prior to the present disputed lease agreement which has been executed in favour of respondent No.6 by the Corporation, the petitioner was given the lease and the said lease was in existence upto 22nd October, 2001. The grievance of the petitioner is that even though the lease agreement was subsisting, the Corporation executed fresh lease agreement in favour of respondent No.6 and that too without inviting any tender or without issuing any advertisement. Even though as per the policy of the State Government, such contract is required to be given only to the Co-operative Societies, yet the same has been given to respondent No.6 which is a proprietory concern. It is the submission of the petitioners that the said action of the Corporation is arbitrary and illegal and the Corporation has acted against its own financial interest in the matter of granting lease in favour of respondent No.6. It is the case of the petitioner that initially General Body of the Corporation passed a resolution bearing No. 201 dated 19th July, 2001 and by virtue of condition Nos. 1 to 6, Respondent No. 6 was permitted to execute separate agreement with the petitioner in connection with boating in the said lake. According to the petitioner, the said lease executed by the Corporation with respondent No.6 is contrary to the aforesaid resolution of the Corporation. It is further submitted that the Deputy Municipal Commissioner, who is the signatory to the lease agreement had no power to sign such agreement as it is only the Commissioner -4- W.P.Nos. 958 of 2002 who is empowered to do the same. It is submitted that in order to favour one of the employees of the Corporation viz. Dinanath Kashinath Thanekar that the lease agreement is given to respondent no.6. The proprietor of respondent No.6 is the mother of the aforesaid employee of the Corporation. It is submitted that since the Corporation is dealing with the public property, it was not open to the Corporation to lease the property for such a long period without inviting public advertisement or inviting tenders. It is further submitted that at the time when the petitioner was given the lease agreement, the yearly amount was Rs. 4,27,000/-. As against that, in the present lease agreement, respondent No.6 has been given the lease agreement for breeding, fishing and boating only at the rate of Rs. 2 lacs per year. It is submitted that the Corporation has, therefore, acted against the interest of the Corporation and such a decision is against the public authority. It is submitted by Mr. Thorat, learned counsel for the petitioner, that after the Resolution of the Corporation, respondent No. 6 filed a suit being Civil Suit No. 386 of 2001 against the Corporation for a declaration that the lease agreement executed between respondent No.6 and the Corporation is subsisting, binding and valid. In the said suit, the petitioner filed an application under Order 1 Rule 10 of the Civil Procedure Code to join the petitioner as party defendant No.2 which ultimately came to be rejected on 21st December,2001. Status quo order was passed in the said suit with the result that the petitioner could not move this Court even for interim relief. In order to substantiate his say, Mr. Thorat has relied upon the order passed by this Court -5- W.P.Nos. 958 of 2002 at the time of admission of this Writ Petition. While admitting the said writ petition, the Division Bench has passed the following order. “ Heard. 2. Rule. 3. Mr. Malvankar, learned Asstt. Government Pleader waives service for respondent Nos. 1 and 2. Mr. R.S. Apte waives service for respondent Nos. 3, 4 and 5. Humdast granted for unrepresented Respondent No.6. 4. Mr. Pate, learned counsel for respondent Nos. 3 to 5 submitted that Respondent No. 6 Precision Fisheries has filed a suit for specific performance of contract against present Respondent Nos. 3 to 5 and in that suit the order of status quo has been directed to be maintained against Respondent Nos. 3 to 5. In view thereof presently no interim relief deserves to be granted. Liberty to parties to apply for interim relief as and when the order of status quo passed by civil court is modified, varied, discharged or vacated. 5. After service of rule on Respondent no.6 liberty to Petitioners to apply for early hearing of writ petition.” 4. The learned counsel for the petitioner submitted that the action of the Corporation in giving the lease to respondent No.6 without tender is against the public policy and appropriate directions may be given asking the Corporation to invite fresh tenders by quashing the present lease agreement entered into by the Corporation with respondent No.6. Mr. Thorat has also submitted that executing lease agreement for a period of 25 years amounts to creating monopoly in favour of respondent No.6. According to him, normally such lease contract should not be given for more than three years so that the -6- W.P.Nos. 958 of 2002 Corporation may not be subjected to any financial loss. It is submitted that by the aforesaid action, respondent No.6 has benefited substantially and would enrich itself for such a long period of 25 years. In order to substantiate his say that the Corporation could not have given the lease to respondent No.6 without inviting tenders, he has relied upon certain judgments which we will refer in the latter part of this judgment. 5. Mr. Apte, learned senior counsel, appearing for respondent Nos. 3 to 6, at the outset submitted that the challenge to the contract granted to Respondent No.6 cannot be entertained at the instance of the petitioner who, as can be seen from the averments made in the petition, is agitated by the fact that respondent No.6 has not entered into a contract with it for the purpose of boating. The learned Senior Counsel drew our attention to the prayers made in the petition wherein the petitioner has claimed that respondent No.6 should be directed to enter into a contract with the petitioner. Mr. Apte further submits that it is a composite contract given to respondent No.6 which includes fishing, boating and cleaning the Masunda lake. Mr. Apte submits that the Corporation was facing a problem regarding cleaning the said lake which requires special mechanism and after considering the report of Envirokraft, a Division of Wockhardt Life Sciences Limited, and after having satisfied that respondent No.6 is having proper machinery and infrastructure for the purpose of cleaning the lake that ultimately the aforesaid contract was given by executing a lease in -7- W.P.Nos. 958 of 2002 favour of respondent No.6 for the purpose of cleaning and fishing in the lake as well as the boating contract. It is submitted by Mr. Apte that in the past it was found that the petitioner, at the time when the petitioner was having the boating contract, used to run the boats by using kerosene which had an adverse impact as far as fishing in the lake was concerned and resulted into environmental degradation of the lake. Ultimately after considering the expert report, the Corporation gave the said contract to respondent No.6 which is a composite contract which includes the cleaning of the lake also. It is submitted by Mr. Apte that since initial expenditure was required to be incurred by respondent No.6 in this behalf and with a view to see that the cleaning activity may take some time that the lease agreement has been given to respondent No.6 for 25 years. It is submitted that the petitioner had asked for extension of the lease agreement but with a view to solve the immediate problem of cleaning the lake that the Corporation ultimately, after passing Resolution No. 201 in the general body of the Corporation executed the lease agreement in favour of respondent No.6. It is further submitted by Mr. Apte that in the resolution passed by the Corporation i.e. Resolution No. 201, an option was given to respondent No.6 to give boating contract to the petitioner and in view of that it was not necessary to mention the said aspect in the said lease agreement executed between the Corporation and Respondent No.6 and it is for Respondent No.6 whether to take the services of the petitioner as per the Resolution of the Corporation. It is submitted by Mr. Apte that no doubt it is -8- W.P.Nos. 958 of 2002 true that an ideal way to give contract is to invite tenders or by way of auction but since in the present case specialised method is required for cleaning the lake and since respondent No.6 was having the infrastructure and machinery in this behalf and after considering the report of Envirokrat that ultimately it was decided to give contract to respondent No.6. It is submitted that initially the contract for fishing in Masunda lake was in the name of Ganesh Macchimar Society but now a composite contract for boating and fishing has been given which includes the cleaning of the lake also. Mr. Apte further submitted that the lease agreement preceded the resolution of the Corporation and unless the resolution of the Corporation is challenged by the petitioner, the petitioner cannot challenge the lease agreement which is based on the resolution passed by the Corporation. It is submitted by Mr. Apte that since Resolution No. 201 by which it was decided to give lease to respondent No.6 has not been challenged, the lease agreement cannot be challenged by the petitioner. Mr. Apte has relied upon clauses 1 to 6 of the Resolution passed by the Corporation to substantiate his say that an option was given to respondent No.6 to avail the services of the petitioner regarding boating contract. It is submitted that in a given case, the contract can be given without inviting tenders, if there are compelling circumstances exist. It is submitted by Mr. Apte that since Respondent No.6 was having modern technology, it was decided to give contract to respondent No.6 for the purpose of cleaning, boating and fishing activities in the Masunda lake. Mr. Apte further submitted that the Government -9- W.P.Nos. 958 of 2002 Resolution cannot be straightway made applicable to the Corporation in connection with giving preference to Co-operative Societies. He further submitted that in any case since the contract was not only for boating but it was also a composite contract which includes cleaning of the lake that no preference could have been given to the Co-operative Societies as respondent No.6 was having the infrastructure modern machinery in connection with cleaning the lake. It is submitted by Mr. Apte that it is permissible for the Corporation to give lease straightway for 25 years and there is no prohibition in this behalf in the Act. Mr. Apte further submitted that the action of the Corporation in granting lease to respondent No.6 is reasonable as it is a composite contract in connection with fishing, boating, cleaning as well as electrification of the surrounding area. He submits that the allegation regarding mala fide is absolutely baseless and that it is not possible that Dinanath Kashinath Thanekar, who is a Junior Clerk of the Corporation, may influence to such an extent that ultimately Corporation decides to give contract to respondent No.6 wherein the proprietor is the mother of the said employee. It is submitted that when the Resolution is not challenged, and that the lease agreement executed is as per the Resolution, then naturally the second prayer asking the Corporation to invite tenders and to hold auction is also not maintainable. It is submitted that respondent No.6 has initially invested Rs. 47 lakhs for carrying out the aforesaid work and considering the facts and circumstances of the case, this Court may not interfere with the decision of the Corporation in the matter -10- W.P.Nos. 958 of 2002 of awarding contract to respondent No.6 in its extraordinary jurisdiction under Article 226 of the Constitution of India. 6. Ms. Godse, learned counsel appearing for respondent no.6, has supported the argument of Mr. Apte. It is submitted by her that respondent No. 6 was possesses the machinery in terms of the report of Envirokraft for the purpose of cleaning of the lake and such work could not have been done by the petitioner or any other Co-operative Societies. It is submitted by her that if in the lease agreement a condition was incorporated that sub-contract is to be given to the petitioner for boating, petitioner naturally would not have challenged the decision of the Corporation in awarding contract to respondent No.6 without tender and now the petitioner is making a grievance about not inviting tenders because respondent No.6 has not given sub-contract to the petitioner regarding boating activities. It is submitted by her that the petitioner is not interested in fishing and cleaning the lake but only interested in boating contract. Since it is a composite contract, the petitioner cannot make any grievance especially when the petitioner is not interested in cleaning the lake in question. She submitted that since the contract entailed investment of substantial amount, the Corporation in its wisdom decided to grant the said contract for a period of 25 years. Learned counsel for respondent No.6 drew our attention to a statement annexed to the affidavit in reply disclosing the extent of the investment made by Respondent No.6. The learned counsel has -11- W.P.Nos. 958 of 2002 relied upon certain judgments to buttress her submissions which we will refer to later on. 7. We have heard the learned counsel appearing for the parties at length and have also gone through the documentary evidence forming part of the petition as well as various judgments cited at the Bar by both the sides. 8. As per the record, the petitioner was initially granted lease for the purpose of boating activities in the Masunda Lake. The aforesaid lease period was in existence upto 22-10-2001. By its letter dated 25th June, 2001, the petitioner had asked for extension of lease for a period of ten years. This was followed by another letter dated 16th July, 2001 wherein also the request contained in the said letter dated 25th June, 2001 was reiterated. In the meanwhile, the Corporation passed a Resolution on 19th July, 2001, by which it was decided to execute lease agreement with respondent No.6 for a period of 25 years in connection with the contract of cleaning, care and supervision, fishing and boating in Masunda lake. The petitioner was informed accordingly by the Corporation vide its letter dated 9th October, 2001 that the period of lease of Masunda lake in favour of the petitioner cannot be extended. The aforesaid decision was taken subject to various terms and conditions. The Respondent No.6 was asked to incur initial expenditure regarding water purification. Respondent no. 6 was also asked to see that the surrounding area is kept clean. -12- W.P.Nos. 958 of 2002 The Respondent no.6 was required to pay Rs. 2 lakhs per annum to the Corporation and afterwards for every three years increase at the rate of 15 per cent was to be paid. Respondent No.6 was also required to carry out colouring at the identified spots of the lake and for other similar works at the lake area. Some portion of the area was required to be earmarked for ice-cream parlor or for selling food packets. 50 per cent of the total profit received from this business was to be paid to the Municipal Corporation. The lease was granted for a period of 25 years. Respondent No.6 was also required to carry out breeding, fishing and boating. Only paddle boat, roving boat and CNG boat working on gas are supposed to be used for boating. There is also a mention about special condition No. 3 that the petitioner is ready to use CNG and LPG gas engine boats to avoid pollution in the lake. It is also provided that on the same terms and conditions which contract is given to respondent No.6, respondent No.6 can enter into sub-contract of boating with the petitioner. Accordingly the lease agreement was entered into between the Corporation and respondent No.6 for a period of 25 years for the aforesaid work of boating, cleaning, fishing etc. at the Masunda Lake. 9. So far as the contention of the petitioner that the lease agreement is contrary to the Resolution of the Corporation is concerned, in our view, Resolution No. 201 provides for giving contract to respondent No.6 for boating, cleaning and fishing activities at the Masunda Lake. On a perusal of the said -13- W.P.Nos. 958 of 2002 resolution it is clear that an option was given to respondent No.6 to give sub- contract regarding boating activities to the petitioner in view of the fact that the petitioner had shown willingness to continue the boating activities by using CNG and LPG Gas engine boats. In the lease agreement also it is provided that respondent no.6 can give sub-contract to the petitioner for boating. Giving of such sub-contract to the petitioner is at the option of respondent No.6. In view of the above, it cannot be said that the lease agreement is in any way contrary to the resolution. We also do not find any substance in the argument of the learned counsel for the petitioner that the lease agreement is executed by the Deputy Commissioner and not the Commissioner. Commissioner would include Deputy Commissioner as per the provisions of the Bombay Provincial Municipal Corporations Act, 1949 (hereinafter referred to as “the Act”). 10. As pointed out by Mr. Thorat, normally preference is required to be given to the registered Co-operative Societies. However, so far as the Government Resolution is concerned, it is in connection with the Government contracts and the same ipso facto cannot be made applicable to the Municipal Corporations. Since, in the instant case it was a composite contract for various activities and according to the learned counsel for the Corporation, with a view to see that if the private sector is able to carry out the work effectively that it was not necessary to give preference only to co-operative societies. The learned counsel for the petitioner is not in a position to point out that the said -14- W.P.Nos. 958 of 2002 Government Resolution is also applicable to Municipal Corporations. 11. The real question which requires consideration in this petition is as to whether the contract could have been given to respondent No.6 for a period of 25 years without inviting tenders or public advertisement. It is required to be noted that the petitioner has challenged the action of the Corporation in awarding the contract without inviting tenders and has ultimately challenged the lease agreement entered into between the Corporation and respondent no.6. Considering the above, we are not in a position to accept the contention of Mr. Apte, learned counsel for the Corporation, that unless the Resolution is challenged, the lease agreement cannot be challenged by the petitioner. When the petitioner has challenged the decision of the Corporation in giving lease for 25 years without inviting tender or public advertisement, even if the resolution in this behalf is not challenged, the ultimate decision of executing the lease deed can be challenged by the petitioner. We do not find merit in the submission of the learned Senior Counsel for the Respondent-Corporation and the learned counsel for Respondent No.6 that the petition at the behest of the said petitioner should not be entertained as the petitioner has filed the above petition only because the Respondent No. 6 has refused to enter into a contract for boating with the petitioner. May be the petitioner has claimed certain reliefs for itself in the above petition, that would not disentitle it from challenging the award of contract to the respondent No.6 for a period of 25 years without inviting -15- W.P.Nos. 958 of 2002 tenders. This Court sitting in writ jurisdiction would be failing in its duty if the said challenge is not considered, on the ground that the petitioner in the above petition is claiming certain reliefs for itself. More especially in view of the fact that the issues of distribution of State largesse and loss to public exchequer are brought before it. It is true that in prayer clause (a) of the petition, the petitioner has prayed that the record and proceedings in respect of the passing of the resolution may be called for and after perusing the same, it may be declared that the lease agreement dated 19th September, 2001 in favour of respondent No.6 is illegal and unconstitutional. The main issue therefore is as to whether the aforesaid contract given to respondent No.6 can be said to be illegal, arbitrary and hence violative of Article 14 on the ground that the same is given for a long period of 25 years and that too without inviting tenders by public advertisement. We are also required to see as to whether the action of the Corporation is mala fide as the proprietor of respondent No.6 is the mother of an employee of the Corporation. 12. In the affidavit in reply filed on behalf of the Corporation it is averred in