THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.13388 of 2010 (01-07-2010) Between: B.Vijay Bhaskar Reddy S/o Budda Reddy R/o Sitaramapuram village, Nandipalli Post, Mahanandi Mandal, Kurnool District. …Petitioner A n d The Commissioner for Prohibition and Excise, Government of Andhra Pradesh, at Hyderabad. And others …Respondents THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.13388 of 2010 ORDER: This Writ Petition has been filed by B.Vijay Bhaskar Reddy assailing the order passed in C.R.No.8420/2010/CPE /M4dated 10.6.2010 passed by the Commissioner for Prohibition and Excise, Government of Andhra Pradesh, Hyderabad-1st respondent. 2. The District Collector and Auctioning Authority, Kurnool District-2nd respondent issued notification in District Gazette, Kurnool dated 27.05.2010 inviting tenders for the lease of right of selling of Indian made foreign liquor and foreign liquor by shop under Rule 5 of Andhra Pradesh Excise (Lease of Right of Selling by shop and Conditions of Licence) Rules, 2005 (for brevity, “rules 2005”). The petitioner and V.Pratap Reddy-4th respondent and four others submitted tenders in respect of G.Sl.No.114, i.e., shop in Gadivemula village and mandal, Kurnool District. The tenders were opened on 7.6.2010 and the 4th respondent became the highest bidder having offered Rs.2,07,99,999.99 ps. At the time of opening sealed tenders, the 4th respondent remained absent. Therefore, the petitioner being 2nd highest bidder having offered Rs.1,90,00,008/-has been declared as successful tenderer. The petitioner deposited an amount of Rs.27,18,168/- being 1/6th of the bid amount. His signature has been obtained in the register maintained under Rule 16 of the rules 2005. The 4th respondent made a representation dated 12.6.2010 to the 2nd respondent stating that he could not reach the auction hall in time and that there was no proper loud speaker system and that he being the highest tenderer, A-4 shop was allotted to him. The 2nd respondent forwarded the representation of the 4th respondent to the Commissioner for Prohibition and Excise-1st respondent. The petitioner on coming to know that representation of the 4th respondent was forwarded to the 1st respondent for consideration, he too made a representation to the 1st respondent claiming allotment of the shop in his favour since he has been declared as the successful tenderer. The 1st respondent heard the petitioner and the 4th respondent and clarified that the 4th respondent is to be declared as successful tenderer and accordingly issued proceeding Cr.No.8420/2010/CPE/M4 dated 10.6.2010. Assailing the said proceeding, the petitioner has filed this writ petition invoking the jurisdiction of this Court under Article 226 of the Constitution of India. For better understanding of the grievance of the petitioner, I deem it appropriate to refer paras 6 and 7 of the affidavit filed in support of the writ petition, which read as hereunder:- “6. I submit that the 4th Respondent herein was not present at the time of opening of the tenders and the 2nd Respondent herein after waiting for some time has declared me as the highest tenderer and also accepted the amount and my name was also entered in the register maintained by the 2nd Respondent as envisaged under Rule-16 of the Rules. It is respectfully submitted that the 1st Respondent herein came to the conclusion that the 4th Respondent was prepared to pay 1/6th of the bid amount and his request was not conceded to and the bid is knocked down in favour of the petitioner. It is submitted that the reasoning of the 1st Respondent in holding that the 4th Respondent had till time to pay the amount and the petitioner does not come into the picture unless the highest bidder failed to pay the lease amount is not correct and the same is contrary to the provisions of the Rules. The 1st Respondent failed to see that the Rules contemplate the presence of the bidder at the time of opening of the tenders and on his failure to accept the bid at the time of opening after the highest bid was announced, the 2nd Respondent is justified in accepting the second highest bidder. It is submitted that if the interpretation placed by the 1st Respondent is to be accepted, the 2nd Respondent cannot accept the 2nd highest bid on the same day and he has to wait till the highest bidder pays the amount. Hence, it is respectfully submitted that the reasoning of the 1st Respondent is contrary to the Rules. 7. It is respectfully submitted that the 1st Respondent herein has no power or jurisdiction to pass the impugned order in exercise of the power conferred under Rule 60 of the Rules. Rule 60 of the Rules only contemplate with regard to any doubt or dispute regarding the application or interpretation of any of the Rules. In the present case, after the decision is taken by the 2nd Respondent and after the amount was accepted from the petitioner, he has sought for clarification. The order which is passed by the 1st Respondent amounts to setting aside the decision taken by the 2nd Respondent and such a power is not conferred on the 1st Respondent herein. It is respectfully submitted that the action of the 1st Respondent in passing the impugned order on the ground that in the register maintained under Rule 16 of the Rules, an endorsement is made seeking clarification and in the meanwhile kept in abeyance. It is respectfully submitted that the endorsement made by the 2nd respondent in the register does not empower the 1st Respondent to give the impugned directions. Hence, it is submitted that the impugned order passed by the 1st Respondent is not legal and valid.” 3. Rule nisi came to be issued on 15.6.2010. An interim order keeping the proceedings issued by the 1st respondent in suspension, came to be passed on the even date, vide W.P.M.P.No.16876 of 2010. 4. When the vacate stay petition came up for consideration, with the consent of counsel appearing for the parties, the writ petition is taken up for final disposal. 5. Heard Sri O.Manoher Reddy, learned counsel appearing for the petitioner and learned Government Pleader for Prohibition and Excise appearing for respondents 1 to 3 and Sri B.Vijay Bhaskar, learned counsel appearing for the 4th respondent. 6. Learned counsel appearing for the petitioner submits that the 4th respondent having remained absent, at the time of opening of tenders and having failed to deposit 1/6th of the amount on the date of opening tenders, cannot be permitted to contend that he is entitled for allotment of shop having offered highest amount. A further contention has been made that the 4th respondent despite of repeated calls made by the Auctioning Authority on the opening of the tenders failed to respond, and thereupon, the Auctioning Authority considered the amount offered by the petitioner and the petitioner being the 2nd highest bidder, the bid came to be knocked down in his favour, and thereupon, he paid 1/6th of the amount as contemplated under rules 2005 on the same day. He would also contend that the 1st respondent is not empowered to give any clarification, in the given facts and circumstances, in exercise of powers under Rule 60 of rules 2005. Since there is ambiguity with regard to finalization of tenders in respect of Shop No.114, exercise of jurisdiction by the 1st respondent under the guise of Rule 60 of the rules 2005 is wholly unwarranted. Learned counsel took me to the procedure contemplated under Rule 14 of the Rules with regard to submission and finalization of tenders. 7. Learned Government Pleader for Prohibition and Excise submits that the 1st respondent exercised his jurisdiction under Rule 60 of the rules 2005 and clarified the position and consequently, directed the Auctioning Authority-2nd respondent to allot A-4 shop to the highest tenderer, i.e., 4th respondent and permit him to fulfill other statutory obligations. He would also submit that the Auctioning Authority, in the given facts and circumstances, is justified in seeking clarification from the 1st respondent. At this juncture, I deem it appropriate to refer relevant portion of the order impugned in the writ petition, which reads as hereunder:- “ In this case the auction for A4 shop with Gazette Sl.No.114 was conducted on 7.6.2010. It was noticed that the highest tenderer Sri V.Pratap Reddy was not present at the time of opening of the tenders. The course of action available to the Auctioning Authority in those circumstances under the above legal frame work is that he should first accept the tender submitted by him as his was the highest tender. In case he has failed to remit the1/6th of the lease amount on the same day i.e. on 07.6.2010, the shop could be allotted to the next highest tenderer on 8.6.2010. As seen from the representation addressed to the Auctioning Authority Kurnool District by the highest tender dated 07.6.2010 it is clear that though he was absent in the auction hall for a while at the time of opening of tender, he was ready to pay the 1/6th amount on the same day. It is not established that he has failed to remit the 1/6th of the lease amount on the same day, i.e. on 07.6.2010. His request to permit him to pay the 1/6th lease amount was not conceded and he was thrown into the jeopardy of paying the resultant loss of about Rs.17,00,000/- lakhs without doing any business. By not conceding the request of the highest tenderer the Auction Authority has deprived the highest tenderer of his right to get the lease of the A4 shop for the lease period 2010-2012. The second highest tenderer will not come into picture, until the failure of highest tenderer to pay 1/6th of the lease amount on 07.6.2010 is clearly established. Without concluding that Sri V.Pratap Reddy has failed to remit the 1/6th lease amount on the same day, the Auctioning Authority can not accept the tender of Sri B.Vijay Bhasker Reddy, who is the 2nd highest tenderer on 07.6.2010. He can do so only on 8.6.2010. Since the Auctioning Authority by an endorsement in the auction register sought clarification and kept the auction result in abeyance, the above clarification order is issued U/R 60 of the Rules requesting the Auctioning Authority to allot the A4 shop to the highest tenderer i.e Sri V.Pratap Reddy and permit him to fulfill the other statutory obligations as per Rules”. 8. Learned counsel appearing for the 4th respondent submits that at the time of opening of tenders, he could not reach the place of auction and by the time, he reached the auction place, the Auctioning Authority confirmed the shop in favour of the Writ Petitioner, though the writ petitioner quoted amount less than the 4th respondent. He further submits that the petitioner approached the Auctioning Authority on the same day, explained the reasons for his absence at the time of opening of tenders and requested him to confirm the shop in his favour as he happens to be the highest tenderer. However, the Auctioning Authority without confirming the shop in favour of the 4th respondent kept the result in abeyance and sought clarification from the 1st respondent. It is also contended by him that the 4th respondent paid 1/6th of the bid amount after the 1st respondent clarifying the position to the 2nd respondent. 9. The issue that calls for adjudication in this writ petition is: Whether the proceeding issued by the 1st respondent directing the 2nd respondent to allot A4 shop to the highest tenderer i.e., 4th respondent is in accordance with rules 2005? 10. Rule 14 of the rules 2005 deals with submission and finalization of tenders, which reads as hereunder:- “14 Submission and finalisation of tenders:- (1) The tenders shall be submitted by the tenderer in a sealed envelope addressed to the auctioning authority on or before the last date and time notified for receipt of tenders along with the following particulars; (i) Name of the tenderer and his father's name and tenderer's address; (ii) Serial number in the Gazette, Name of the area/locality of the shop for which he has offered his tender; (iii) Lease amount offered for the lease period in figures as well as in words. (iv) Challan for Rs.5,000/- (Rupees five thousand only) being non- refundable participation fee. (v) Two recent passport size photographs (vi) Demand Draft(s) towards EMD equal to 5% of the Upset price of the A-4 shop as required under proviso to Rule-12. (2) The tenders not accompanies by A-1 declaration, A-2 affidavit, A-3 declaration, challan for participation fee, two recent passport size photographs and EMD, shall be forthwith rejected by the auctioning authority (3) The closed envelope containing the tender shall be superscribed with the words Tender for the lease of right for the years 2005-06 to sell Indian Liquor and Foreign Liquor by shop at ...............(Sl.No. of the Gazette, Name of the Locality/ area). The tenderer may obtain acknowledgment for the envelope presented. (4) Every tender shall be taken into consideration if it is presented on or before the prescribed date and time and no tender shall be received after the prescribed date and time notified by the Auctioning Authority. (5) The auctioning authority may if he so desires first announce at the commencement of the auction, the names of persons and the number of persons who had sent tenders for a particular shop. (6) The tenderer shall be present at the place of auction at the time of opening of the tenders, but his absence shall not affect his tender or the auction proceedings. (7) The auctioning authority shall open sealed tenders for each shop notified for auction. The highest tender may be accepted if the lease amount offered is higher than the upset price notified by way of announcement by the auctioning authority at the place of public auction, o the name of the highest tenderer and the lease amount offered and the rest of the tenders shall be rejected. Notwithstanding the absence of the tenderer, the acceptance of the highest tender by the auctioning authority shall be binding on the tender. Provided that when on the opening of the sealed tenders it is found that two or more tenderers have quoted the same highest amount, the successful auction purchaser among such tenderers shall be selected by drawal of lots: Provided further that if the highest tender is less than the upset price notified, the auctioning authority may provide an opportunity to the highest tenderer to increase his offer to an amount higher than the upset price and accept the offer. If the highest tenderer is not willing to increase his offer to an amount higher than the upset price, the second highest tenderer may be given a similar opportunity. If both the tenderers are not willing to increase the offer to an amount higher than the upset price, all the tenders in respect of that shop shall be rejected and it shall be put to re-auction. Provided also that if the auctioning authority considers that the auction should be postponed for a future time and date for any reason he may do so without opening the tenders. Provided also that it shall be open to the auctioning authority to refuse to knock down the auction in favour of the highest tenderer if such authority is satisfied after a perusal of the affidavit that such tenderer cannot reasonably be expected to discharge his/her liabilities in terms of the lease. Provided also that where the highest tender is not accepted the auctioning authority shall record the reasons thereof. (8) The auctioning authority, may by order reject any tender on the ground that the tender is of benami in nature or that there is collusion among the tenderers who participated in the auction for the lease of any shop. (9) After rejecting, the highest tender the auctioning authority may either accept the next highest tender if it is higher than the upset price or dispose off the shop afresh at any subsequent notified auction as the case may be. (10) No person shall be entitled to obtain the lease of more than one shop. In the event of a person being successful auction purchaser of a shop, all the other tenders filed by him in respect of any other shop/shops shall automatically become invalid. 11. It is evident from sub-rule (6) of Rule 14 of the rules 2005 that the absence of tenderer shall not affect his tender or the auction proceedings, and therefore, the Auctioning Authority has to open tenders even if the tenderers chose to remain absent. The Auctioning Authority has to accept the highest tender if the amount offered is higher than the upset price notified, by way of announcement at the place of public auction, of the name of the highest tenderer and the lease amount offered. The name of the highest tenderer is required to be mentioned in the auction register. 12. During the course of hearing, learned Government Pleader for Prohibition and Excise placed on record the Auction Register. The Auction Register does not contain that the petitioner stood as the highest tenderer having offered Rs.1,90,00,008/-. It does not indicate that the bid has been knocked down in favour of the petitioner though he stood as the highest tenderer. It is evident from the record that the Auctioning Authority has proceeded to ignore the tender offered by the 4th respondent and proceeded to accept the tender of the writ petitioner who stood in the 2nd place. The very procedure followed by the Auctioning Authority is contrary to Rule 14 of the rules 2005. Probably that prompted the Auctioning Authroity-2nd respondent to seek clarification from the 1st respondent. Under Rule 60 of the rules 2005, the Commissioner is empowered to clarify any doubt or dispute regarding application of interpretation of any of the rules. The Commissioner heard the petitioner and 4th respondent and considered the material brought on record before him and proceeded to give clarification that allotment of shop to the writ petitioner is contrary to the rules and thereby, directed the Auctioning Authority to allot A-4 shop to the 4th respondent who is the highest tenderer. 13. It is evident from the Rules that as soon as the tenders are opened, the name of the highest tenderer is to be announced and the same is to be recorded in the Auction Register after knocking down the bid in favour of the highest tenderer and in case, highest tender fails to deposit the money on that day, then the Auctioning Authority can proceed to consider the next highest bid offered by the tenderers. Since the 2nd respondent accepted the bid offered by the writ petitioner without providing an opportunity to the 4th respondent, who is highest tenderer, to pay 1/6th of the offered amount, the auction confirmed in favour of the writ petitioner cannot be sustained. The 1st respondent considered the material brought on record in a right perspective and proceeded to direct the 2nd respondent to allot A-4 shop i.e., Gadivemula village in favour of the 4th respondent. The order passed by the 1st respondent is in accordance with Rule 14 of the rules 2005. I do not see any flaw in the order impugned in the writ petition warranting interference of this Court in exercise of powers under Article 226 of the Constitution of India. 14. Accordingly, the Writ Petition fails and the same is hereby dismissed. The interim order granted on 15.6.2010 shall stand vacated. There shall be no order as to costs. _____________________ B.SESHASAYANA REDDY, J Dt.01-7-2010 RAR THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.13388 of 2010 DATED : 01-07-2010