IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC FRIDAY, THE 4TH JANUARY 2008 / 14TH POUSHA 1929 WP(C).No. 1982 of 2007(J) ------------------------------- PETITIONER: --------------- DR.T.P. SUNILKUMAR, S/O SRI.T.K. PURUSHOTHAMAN, AGED 43, GURUPRIYA, CHANGAMPUZHA NAGAR P.O.K, SOUTH KALAMASSERY, KOCHI-33. BY ADV. SRI.GEORGE THOMAS (MEVADA) RESPONDENTS: ----------------- 1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY, HOUSING (A) DEPARTMENT GOVERNMENT SECRETARIAT, TRIVANDRUM. 2. THE KERALA STATE HOUSING BOARD REPRESENTED BY IS SECRETARY, TRIVANDRUM. 3. THE REGIONAL ENGINEER, THE KERALA STATE HOUSING BOARD, PANAMPILLY NAGAR, KOCHI-36. *ADDL.R4. VIJI PONNAL, PONNAL VILAS, C.M.S.ROAD, KOTTAYAM *(IMPLEADED AS ADDL.R4 AS PER ORDER DTD.1/8/07 IN IA 10270/07) BY ADV. POOVAPPALLY M.RAMACHANDRAN NAIR,SC.KSHB SRI.A.JAYASANKAR, SC KSHB, TVM SRI.T.C.SURESH MENON SRI.K.P.JOSE PIOUS THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 5/11/2007, THE COURT ON 04/01/2008 DELIVERED THE FOLLOWING: WPC NO.1982/07 APPENDIX PETITIONER'S EXHIBITS EXT.P1: TRUE COPY OF TENDER NOTICE DT.27.5.05. EXT.P2: TRUE COPY OF RELEVANT PORTION OF NOTICE OF TENDER PUBLISHED IN MALAYALA MANORAMA DATED 5.6.05. EXT.P3: TRUE COPY OF QUOTATION NOTIFICATION DT.6.6.05. EXT.P4: TRUE COPY OF the EXTRACT OF the MINUTES OF THE MEETING OF 2ND RESPONDENT DT.23.6.05. EXT.P5: TRUE COPY OF LETTER DT.8.7.05 TO 1ST RESPONDENT BY THE 2ND RESPONDENT. EXT.P6: TRUE COPY OF LETTER DT.6.1.06 OF THE 3RD RESPONDENT TO THE PETITIONER. EXT.P7: TRUE COPY OF JUDGMENT DT.23.11.06 IN WPC NO.27758/06. EXT.P8: TRUE COPY OF JUDGMENT IN WA NO.2273 OF 2006 DT.2.1.2007. EXT.P9: TRUE COPY OF GOVT.ORDER DATED 16.11.2006. EXT.P10: TRUE PHOTOCOPY OF THE PAPER PUBLICATION DT.14.7.07. EXT.P11: TRUE PHOTOCOPY OF THE COMMUNICATION DT.4.6.07 ISSUED BY THE 3RD RESPONDENT. EXT.P12: TRUE PHOTOCOPY OF THE PROCEEDINGS DT.20.7.07. EXT.P13: TRUE PHOTOCOPY OF THE LETTER DATED 28.7.07. RESPONDENTS EXHIBITS EXT.R2(a): TRUE PHOTOCOPY OF AUCTION PROCEEDINGS HELD ON 20.7.07. EXT.R2(b): TRUE PHOTOCOPY OF TEMPORARY CONFIRMATION DT.20.7.07. EXT.R2(c): TRUE PHOTOCOPY OF CONFIRMATIONORDER NO. HBO. NO. 506/07 E (Sc) 10264/07. //TRUE COPY// P.A. TO JUDGE ANTONY DOMINIC, J. =============== W.P.(C) NO. 1982 OF 2007 J ===================== Dated this the 4TH day of January, 2008 J U D G M E N T The second respondent had published Ext.P1 notice inviting tender for the disposal of 25 cents of land and a three storied building situated in Changampuzha Nagar, South Kalamassery. Responding to Ext.P1 tender notice, petitioner submitted tender along with an Earnest Money Deposit of Rs.1,00,000/- offering Rs.1,01,00,013/-. The tender was opened on 15/6/05 and as compared to the offer made by the only other tenderer, the petitioner's offer was the highest. In the Board meeting held on 23/6/05, as is seen from Ext.P4 minutes of the meeting, the Board resolved to accept the bid and 3rd respondent was authorised to take necessary action in that behalf. Thereafter, the 2nd respondent by Ext.P5 letter sought the permission of the 1st respondent for confirming their decision to accept the petitioner's tender. 2. Although few months had elapsed, as his bid was not confirmed, the petitioner submitted representations and eventually filed WP(C) No.27758/06 before this court. When that WPC 1982/07 :2 : writ petition came up for consideration, the standing counsel for the Board made available Government Order dated 16/11/06 cancelling the tender. Thereupon the learned Single Judge heard the writ petition and disposed of the case by Ext.P7 judgment directing that the Earnest Money Deposit made by the petitioner be returned with 12% interest. Ext.P7 judgment was challenged by the petitioner in WA 2273/06. That appeal was considered by the Division Bench and was disposed of by Ext.P8 setting aside the judgment of the learned Single Judge and dismissing the writ petition as infructuous with liberty to the petitioner to challenge the Government order dated 16/11/06 relied on by the Board. Thereafter, producing the Government order dated 16/11/06 as Ext.P9, this writ petition was filed by the petitioner on 16/1/2007 praying for quashing Ext.P9 and to direct the respondents 2 and 3 to execute the sale deed in favour of the petitioner in pursuance to Ext.P4 resolution. 3. The 2nd respondent filed a counter affidavit, in which it is stated that in response to Ext.P1, two bids were received of which the petitioner's was the higher one. It is stated that the matter was placed before the Board Meeting held on 23/6/05 and the Board approved the quotation. Thereafter, the Board by WPC 1982/07 :3 : Ext.P5 sought the permission of the 1st respondent. According to the 2nd respondent, such permission was necessary in terms of the procedure followed by the Board, as the cost of the Commercial Complex, as on 30/6/05 was Rs.132.67 lakhs and the highest bid received was for a much lower amount. It is also stated that it was imperative on their part to have obtained prior approval of the 1st respondent for any disinvestment. According to the respondent, it was on account of the aforesaid requirements that the Board had not issued any confirmation accepting the offer made by the petitioner. 4. Answering the contention that the bid was concluded in favour of the petitioner, it is stated that the auction sale was not concluded in the name of the highest bidder and that no part of the sale consideration was remitted by the petitioner to complete the auction procedure. It is stated that the Board had also reserved its right to accept or reject any or all the quotations without assigning any reasons. 5. In paragraph 9 of the counter affidavit it is also stated that as per the recent assessment , the cost of land with building was above Rs.1,58,95,000/- and that the Board had reviewed the decision taken on 26.06.2005 and decided to re-auction the WPC 1982/07 :4 : building in its meeting held on 22.11.2006. 6. The petitioner filed IA No.10268 of 2007 stating that the Board had caused the publication of notification dated 14.07.2007 proposing to auction the property again and that the additional 4th respondent had bid the property on 20.07.2007 for Rs.4.10 crores. Alleging that the notification (Ext.P10) and the auction held are illegal, petitioner sought stay of confirmation of the auction sale in favour of the additional 4th respondent. Along with this IA petitioner also filed IA No.10269 of 2007 seeking to amend the writ petition incorporating a challenge to Ext.P10 notification referred to above and also IA No.10270 for impleading the successful bidder in the re-auction as additional 4th respondent. 7. Counter affidavits have been filed by the Board and in the counter filed in IA No. 10268 of 2007, it is stated that notification dated 14.07.2007 was published in leading dailies and that vide publicity was also given through electronic media regarding the re-auction of the property in question. It is also stated that in response to the notification, 6 persons/ firms had submitted tenders and 5 of them participated in the auction and that Sri.Viji P. Isaac was the highest bidder with an offer of WPC 1982/07 :5 : Rs.4.10 crores. Ext.R2(a) is the auction proceedings of 20.07.2007. The Board has also produced Ext.R2(b), the temporary confirmation letter issued to the successful bidder and Ext.R2(c), sanction for confirmation of the auction. 8. By order dated 01.08.2007, the additional 4th respondent was impleaded and the writ petition was also allowed to be amended as prayed for in IA No.10269 of 2007. Considering the prayer for confirmation of the auction sale in favour of the additional 4th respondent, this court directed in IA No.10268 of 2007 that the 4th respondent shall not alienate the property purchased by him in the auction held. Subsequently, the petitioner filed IA No.13936 of 2007 praying for amending the writ petition seeking to quash Ext.P11dated 04.06.2007 returning the Earnest Money Deposit made by the petitioner and also Ext.P12 dated 20.07.2007 temporarily confirming the auction in favour of the additional 4th respondent. However, no orders have been passed on IA No. 13936 of 2007. Petitioner has also filed a reply affidavit dated 05.11.2007, in reply to the counter affidavit filed by the Board. 9. In view of the nature of the controversy that is raised in this writ petition, the question that arises for consideration is WPC 1982/07 :6 : whether the decision of the Board in cancelling the auction in which the petitioner was the highest bidder is illegal for any reason. As already noticed petitioner made an Earnest Money Deposit of Rs.1 lakh and participated in the auction. As can be seen from Ext.P3, the Board had reserved “the right to accept or reject any or all quotations without assigning any reasons thereof”. It is also provided in Ext.P3 that “All other conditions prevailing in KSHB regarding quotations will also be applicable”. In the auction that was held subject to the aforesaid conditions, petitioner was the highest bidder who had offered Rs.1,01,00,013/-, which was resolved to be accepted in the Board Meeting held on 23.06.2005 the minutes of which is Ext.P4. Ext.P4 also shows that the 3rd respondent was authorized to take necessary action. In pursuance thereof, the 2nd respondent addressed the 1st respondent by Ext.P5, seeking sanction to the decision of the Board to confirm the auction in favour of the petitioner. It was in these circumstances that the petitioner was informed by Ext.P6 that a final decision regarding confirmation of rates can be taken only after hearing from higher authorities. It is also to be noted that although the 2nd respondent had taken a decision as reflected in Ext.P4, no WPC 1982/07 :7 : decision accepting his offer has been formally conveyed to him nor has the petitioner made deposit of any amount towards the sale consideration. 10. The Government’s decision pursuant to Ext.P5 is Ext.P9 dated 16.11.2006, wherein it is stated as follows: “The amount quoted by the higher bidder is far below the present market value as the land prices have shot up during the last two years. The latest market rate in 2005 June is not seen ascertained before auction. The publicity given is not seen sufficient as only two bidders have participated in the auction. This building being located by the side of N.H at Kalamassery should certainly fetch a much higher amount in auction. Hence the sale at the rate obtained in auction will leave to much loss to the Board. In this circumstances, re-auction after cancelling the auction appears to be the reasonable course of action”. 11. It is true that in an auction or tender, the 2nd respondent being an instrumentality of State has to act fairly and reasonably. Subject to this, when the state or its instrumentalities deal with its assets, it has to be guided by commercial considerations which require the authorities concerned to ensure that maximum returns are obtained. In this case, although it is the petitioner’s case that the 2nd respondent need not have sought or obtained sanction of the 1st respondent for confirming the auction in his favour, I am not in a position to WPC 1982/07 :8 : agree with the counsel. As already noticed, in Ext.P3 tender conditions, the Board had reserved unto themselves their right to accept or reject any or all quotations without assigning any reasons and made applicable all other conditions prevailing in the 2nd respondent regarding quotations. These conditions have been accepted by the petitioner when he submitted the bid in response to Exts.P1 to P3. The Board in its affidavit has stated that it is their usual procedure to obtain sanction of the Government and according to the Board for any disinvestment, Government approval is necessary. That apart, since the Board is dealing with public money and that too, advanced mostly by the Government itself, one cannot find any fault with the procedure adopted by the Board in addressing Ext.P5. The fact that such procedure is not specifically mentioned in Ext.P3 is immaterial. In view of this I do not find any illegality in the Board seeking approval of the 1st respondent. 12. I am also not satisfied that Ext.P9 is invalid for any reason. The 1st respondent has given very valid reasons for deciding that re-auction is the best option. Ext.P9 itself shows that the 1st respondent was satisfied that the price of the property had appreciated much and that response to Exts. P1 to WPC 1982/07 :9 : P3 was very poor. These are certainly matters, which are relevant and I cannot find fault with the 1st respondent for its conclusions in Ext.P9. If Ext.P9 is not invalid, necessarily Ext.P10 by which his EMD has been returned also has to be upheld. 13. As already found by me, subject to its obligation be fair and reasonable to a citizen dealing with it, the Board has to be guided by commercial considerations when it deals with its assets. The petitioner cannot complain that the Board has acted unfairly or unreasonably in as much as petitioner does not allege any procedural irregularities on the part of the Board in deciding to cancel the auction and to go in for re-auction. If that be so, the question that survives is whether on commercial considerations the Board was justified in deciding to cancel the auction. For an answer to this question, one need not labour much. While the petitioner was the highest bidder with the offer of Rs.1,01,00,013/-, in the re-auction that was held, not only that the response was much better with the participation of 5 persons, but also that the highest offer received was for Rs.4.10 crores. The difference of more than Rs.3 crores itself justifies the decision of the Board in cancelling the auction. 14. I should also bear in mind that repeatedly the WPC 1982/07 :10 : Supreme Court has held that in matters of this nature, interference of the Court is justified only when public interest demands such interference. In its judgment in Air India Ltd v. Cochin International Airport Ltd. (AIR 2000 SC 801), the Supreme Court has summarised the law as follows: “The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in R.D.Shetty v. International Airport Authority (1979) 3 SCC 498: (AIR 1979 SC 1628); Fertilizer Corporation Kamgar Union v. Union of India, (1981) 1 SCC 568: (AIR 1981 SC 844); Asstt. Collector, Central Excise v. Dunlop India Ltd., (1985) 1 SCC 260: (AIR 1985 SC 330); Tata Cellular v. Union of India, (1994) 6 SCC 651: (1994 AIR SCW 3344: AIR 1996 SC 11); Ramniklal N. Bhutta v. State of Maharashtra, (1997) 1 SCC 134: (1997) AIR SCW 1281: AIR 1997 SC 1236) and Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492: (1999 AIR SCW 53 : AIR 1999 SC 393). The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bonafide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, is corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that WPC 1982/07 :11 : decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by malafides, unreasonableness and arbitrariness. The state, is corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene”. 15. From the above judgment it is evident that this court can interfere in matters of this nature only when public interest warrants it and not on the making of a legal point. I am satisfied that in this case not only that none of the legal rights of the petitioner are not violated but also that the Board has by deciding to re-tender, safeguarded public interest by realizing a far higher value for the property that is sought to be disposed of. 16. The counsel for the petitioner made reference to the judgment of the Supreme Court in the case of M/s. Puravankara Projects Ltd. v. M/s. Hotel Venus International and Others (2007 (2) KLT 943) and contended that appreciation in price of the property cannot be a reason for cancellation of the tender. On reading the aforesaid judgment, I WPC 1982/07 :12 : am not in a position to hold that the Apex Court has held as contended by the learned counsel for the petitioner. In the judgment referred to by the counsel, the Supreme Court was concerned more with the adherence of the tender conditions and the case was decided on that basis. Although it considered a belated appeal filed by the Kerala State also pleading that the prices have gone up and therefore the property shall not be allowed to be given to the appellant matching the highest offer, that issue is not seen decided to be followed in this case as a precedent. In this case, not only that there was enhancement in price, but also there are other vitiating circumstances pointed out in Ext.P9 and justifying cancellation of the auction. Therefore, I do not think that the judgment relied on by the counsel for the petitioner, is relevant for deciding this case. In the result, I am satisfied that the petitioner is not entitled to any relief and the writ petition deserves to be dismissed and I do so. ANTONY DOMINIC, JUDGE. Rp