THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.4864 of 2010 Date:23.03.2010 Between: Sangepu Venkateswarlu. … Petitioner. and Khammam Municipality rep., by its Commissioner, Khammam Town and District and three others. … Respondents. THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.4864 of 2010 ORDER: Heard Sri D. Ramalinga Swamy, learned Counsel for the petitioner, Sri S. Nageswar Reddy, learned Standing Counsel appearing on behalf of respondent Nos.1 and 2 and Sri J. Prabhakar, learned Counsel for the 5th respondent. At their request the writ petition is being disposed of at the stage of admission. Failure of respondent Nos.1 and 2 to ratify the act of the Chairperson of Khammam Municipality in entrusting a civil work to the petitioner in view of its urgency, in anticipation of approval of the Council, is under challenge in this writ petition. The petitioner is a registered Class-III civil contractor and has been executing civil works ever since 1976. The 1st respondent Municipality took up developmental works such as widening of roads, laying of new drains on either side of the widened road, etc. As part of this exercise the pre-existing road, near the Municipal office in between 11th and 12th wards, was widened and a new road was laid for a width of 50 feet. Two separate works, for construction of C.C. drains on either side of the road, were approved and the Municipal Council passed a resolution on 31.10.2009 according administrative sanction at an estimated cost of Rs.28,60,000/- each. The proposed drains were from North to South on either side of the road. While the eastern drain fell in the 12th ward, the western drain was located in the 11th ward. The subject matter of this writ petition relates to the tender and entrustment of the work, of laying the eastern drain in the 12th ward, to the petitioner. Tenders were called for, by E-procurement, on 26.11.2009 pursuant to which the petitioner submitted his tender offering to execute the work at (-) 4.50% of the estimated cost i.e., for a net amount of Rs.20,92,900/-. Amongst the four tenders received, the petitioner’s tender was found to be the lowest. The tender was approved by the Superintending Engineer (Public Health) vide proceedings dated 18.01.2010. On the ground that the work of widening the road was required to be executed urgently, the Chairperson of the 1st respondent-Municipality accepted the petitioner’s tender in advance and entrusted the work to him for Rs.20,92,906/- subject to the approval of the Municipal Council. The petitioner claims to have deposited the EMD of Rs.52,500/- on 06.02.2010, to have erected a granite block at his cost on 05.02.2010 and to have incurred Rs.25,000/- for the foundation laying ceremony. He also claims to have placed orders for cement and metal. The Council meeting of the 1st respondent Municipality was scheduled to be held on 16.02.2010 for approval of entrustment of three works including the subject work. According to the petitioner there was a heated exchange of words between him and the 12th Ward Councilor at around 11.00 A.M. which incident was also reported in some news papers and, on the same day afternoon, the Council passed resolution No.508, at the instance of the 12th ward councilor, refusing to approve the advance entrustment of work to the petitioner and to call for tenders afresh. The work of laying a drain in Ward No.11 was, however, approved. The work allotted to the petitioner was cancelled on the ground that, for executing the work of laying the drain in Ward No.11, the least quoted tender price was (-) 13.29% whereas the petitioner had quoted a higher rate of (-) 4.5%. The 1st respondent Municipality issued notification dated 24.02.2010 inviting tenders afresh. Aggrieved thereby, the present writ petition. Sri D. Ramalinga swamy, learned Counsel for the petitioner, would submit that in case of emergency the Chairperson of the Municipality is authorized, under Section 49 of the A.P. Municipalities Act, 1965, (hereinafter referred to as the “Act”), to direct execution of any work which would, ordinarily, require the sanction of the council; the Chairperson had opined that there was an urgency to execute the work; and the decision of the Chairperson could not be nullified by the Municipal Council. Learned Counsel would submit that, even otherwise, the respondents had not adhered to the A.P. Municipalities Tender Rules, 1967, in as much as the rules required the lowest tenderer to be called for negotiations in case the rate quoted by him were found unacceptable. Sri S. Nageswar Reddy, learned Standing Counsel, would submit that, under Rule 11(1), the competent authority was empowered to reject all tenders previously received if they were found unacceptable and, thereafter, call for tenders afresh; as the Municipal Council was of the view that the rates quoted by the petitioner were higher than the rates quoted for a similar work in Ward No.11, the work was not awarded to the petitioner and fresh tenders were invited; and the power under Section 49 can be exercised only in case of an emergency and not in every case where the Chairperson was of the view that the work was required to be urgently executed. Sri J. Prabhakar, learned Counsel for the 5th respondent, would submit that, pursuant to fresh tenders having been invited, the 1st respondent was found to be the lowest bidder having quoted (-)13.62%; this bid was far more competitive than the rates quoted earlier by the petitioner herein; larger public interest would require this Court not to interfere as the 1st respondent Municipality would be monetarily benefited if the rates quoted by the 5th respondent were accepted. Before examining the rival contentions, it is necessary to note the relevant statutory provisions. Section 43 of the Act prescribes the authority to contract and the contractual powers of persons appointed by the Government. Under sub-section (1) thereof the power of making, on behalf of the council, any contract where the value did not exceed the monetary limits specified in column (2) of the table thereunder, is required to be exercised by the authority specified in column (3). Under sub-section (2), the power of making a contract, whose value exceeded the monetary limits specified in sub-section (1), is required to be exercised by the Council. Since the value of the work in question is higher than the monetary limits specified in the table under Section 43(1), the power of making the contract vests only with the Council. Section 44 stipulates that the power conferred, by Section 43, to make or sanction contracts is subject to such rules as may be prescribed in regard to the conditions on which, and the mode in which, contracts may be made or sanctioned by or on behalf of the Council. Section 49 relates to emergency powers of the Chairperson and reads as under: Emergency powers of the Chairperson:- The Chairperson may, in cases of emergency, direct the execution of any work or the doing of any act which would ordinarily require the sanction of the council and the immediate execution or doing of which is, in his opinion, necessary for the service or safety of the public and may direct that the expense of executing such work or doing such shall be paid from the municipal fund: Provided that- (a) he shall not act under this section in contravention of any resolution of the council prohibiting the executing of any particular act; and (b) he shall report the action taken under this Section and the reasons therefor to the council at its next meeting. Section 326 confers powers on the Government to make rules and, under Section 326(2)(a), the Government may make rules with reference to all matters expressly required or allowed by the Act to be prescribed. In exercise of the powers conferred by Section 326(2) (a) read with Section 44 of the Act, the A.P. Municipalities Tender Rules, 1967, (hereinafter called the “Rules”) were made for invitation and disposal of tenders by the Municipal Council. Rule-2 relates to the tender notice, selection of persons offering tender, entering into contracts with them etc. Rule-3 requires tenders to be invited for execution of every work the estimated cost of which exceeds Rs.2,000/-. Rules 4 and 5 deal with the manner of inviting tenders and its consideration. Rule 6 stipulates that the lowest tender should, ordinarily, be accepted. However, when it is considered undesirable to accept the lowest tender, the next lower tender should be accepted unless adequate grounds can be recorded for rejecting that tender also. Rule 6 also requires reasons to be recorded in writing for rejection of these tenders or for the acceptance of any other tender. Rules 9 and 11 read as under: Rule-9: In no case shall a tender be accepted at rates other than the rates specified in that tender. If, however, the authority competent to accept the tender considers that the rates for certain items in an otherwise lowest tender, which is under consideration, are pitched too high it may negotiate with the tenderer and secure reasonable rates for those items. Rule-11: (1) If none of the tenders is acceptable to the competent authority fresh tenders may be invited rejecting all the tenders previously received and the reasons for rejecting them shall be recorded in writing and made available for audit. (2) Immediately after an agreement is entered into with the tenderer whose tender has been accepted the Commissioner shall intimate the other tenders that the earnest money deposited by them will be refunded on the receipt of an application for refund with necessary acquittance. (3) The Commissioner shall make arrangements for the refund within one month from the date of receipt of an application from any tenderer of the earnest money deposited by him unless it has been forfeited under Clause (ix) of sub-rule (2) of Rule 4. The power conferred on the Chairman, under Section 49 of the Act, can only be exercised in case of emergency. The New Collins Concise English Dictionary defines “emergency”, as an unforeseen or sudden occurrence or of danger demanding immediate action. All that the Chairman has recorded in the note file is that there was an urgency for execution of the work. Every case of urgency would not result in a situation of emergency for it is only in case of unforeseen events which have suddenly occurred, or there is danger demanding immediate action, can a situation of emergency be said to have arisen. The note of the Chairman does not indicate any such emergency having arisen necessitating exercise of powers under Section 49 of the Act. Further the Chairman is empowered to exercise powers, under Section 49 of the Act, only if he forms the opinion that immediate execution of the work is necessary for the service or safety of the public. Formation of opinion must be preceded by application of mind as regards consideration of relevant factors and rejection of irrelevant ones. (Hindustan Petroleum Corpn. Ltd. v. Darius Shapur Chenai[1]; Devinder Singh v. State of Punjab[2]). The Chairman is required to form an opinion from circumstances suggesting what is set out in Section 49 of the Act. No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. (Barium Chemicals Ltd. v. Company Law Board[3]; Swadeshi Cotton Mills v. Union of India[4]). If the satisfaction, in regard to the existence of any of the conditions stipulated in Section 49 of the Act, is based on no evidence, or on irrelevant evidence or on extraneous considerations, the Court will be justified in quashing such an illegal order. (Swadeshi Cotton Mills4). The record placed before this Court does not disclose formation of any opinion that execution of the work is necessary for the service or safety of the public. As the material on record does not disclose formation of the requisite opinion, as stipulated under Section 49 of the Act, entrustment of the work to the petitioner, by the Chairman of the 1st respondent Municipality, is not referable to Section 49 of the Act. The resolution of the Municipal Council refusing to approve the action of the Chairman cannot, therefore, be faulted on this ground. While Rule 6 of the Rules stipulates that the lowest tender should, ordinarily, be accepted it also enables the competent authority to accept the next lowest tender in case he considers it undesirable to accept the lowest tender. Rule 6 has no application as the 1st respondent, in the present case, has not accepted the second lowest tender ignoring the claims of the petitioner as the lowest tenderer. Rule 9 applies to cases where the competent authority considers the rates quoted by the tenderer, in the lowest tender, as having been pitched too high. In such a situation Rule 9 enables the competent authority to negotiate with the lowest tenderer and secure a reasonable rate for those items. It is evident from the resolution of the Municipal council that it is only because a lower tender had been received for a similar work in Ward No.11 that they decided to cancel the tenders invited for the subject work and issue a notification inviting tenders afresh. As the Municipal Council considered the rates quoted by the petitioner as having been pitched too high, Rule 9 required the competent authority to negotiate with him and ascertain whether he was willing to quote a rate comparable to the rates submitted for a similar work in Ward No.11. Such an exercise has not been done in the case on hand. While Rule 11(1) does empower the competent authority, if it finds that none of the tenders are acceptable, to invite tenders afresh rejecting all the tenders previously received, the said Rule would come into play only when the lowest tenderer, on being called for negotiations under Rule 9, is not willing to reduce the rates quoted by him in his tender. As the petitioner has not even been called for negotiations the action of the Municipal Council in cancelling the tenders, and inviting tenders afresh, falls foul of Rule 9. While this Court would, ordinarily, have quashed the notice inviting bids afresh for non-compliance of Rule 9, the fact remains that, in the case on hand, while the rates quoted for a similar work in Ward No.11 was (-) 13.29%, the lowest tender received, consequent upon a fresh notification being issued, is (-) 13.62%. Even if the petitioner was asked to match the rates quoted by the tenderer for a similar work in Ward No.11, the 1st respondent would still be put to financial loss as, on fresh tenders being invited, they have received a bid which is even lower than the tender submitted for the similar work in Ward No.11. It is well to remember that exercise of jurisdiction under Article 226 of the Constitution of India is discretionary and a Writ is not issued as of right or as a matter of course. (C.R.Reddy Law College Employees’ Association, Eluru W.G.District v. Bar Council of India, New Delhi[5]). The power, under Article 226 of the Constitution of India, need not be exercised in every case where there is an error of law. This Court would not allow itself to be turned into a court of appeal to set right mere errors of law which do not occasion injustice. (Sangram Singh v. Election Tribunal, Kotah[6]). Even when some defect is found in the decision making process, this Court will exercise its discretionary power, under Article 226 of the Constitution of India, with great caution and only in furtherance of public interest and not merely on the making out of a legal point. This Court is required to keep larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to the conclusion that overwhelming public interest requires interference, would it intervene in the matter. (Air India limited v. Cochin International Airport Limited[7]). Keeping larger public interest in mind what order should this Court pass? Sri D. Ramalinga Swamy, learned Counsel for the petitioner, on instructions, submitted that the petitioner was willing to execute the work in question either at the rates quoted for the similar work in Ward No.11 i.e., (-) 13.29% or as per the lowest tender, in the tender process initiated on 24.02.2010, i.e., at (-) 13.62%. His submission in this regard was made part of the order of this Court dated 10.03.2010. I consider it appropriate, in larger public interest, to direct the 1st respondent to negotiate both with the petitioner and the 5th respondent and, thereafter, take necessary action, with regards acceptance or otherwise of the tenders submitted by the petitioner and the 5th respondent, in accordance with law. The 1st respondent shall not accept rates higher than the rates which the petitioner had agreed to before this Court on 10.03.2010 or what the 5th respondent had quoted in his tender. In case the 1st respondent decides to accept the rates offered, after negotiations, either by the petitioner or the 5th respondent it shall record reasons therefor and communicate its decision in writing to both of them. The writ petition is, accordingly, disposed of. However, in the circumstances, without costs. Date: 23.03.2010 ___________________________ RAMESH RANGANATHAN, J MRKR/ASP [1] (2005) 7 SCC 627 [2] (2008)1 SCC 728 [3] AIR 1967 S.C. 295 [4] (1981) 1 SCC 664 [5] 2004(5) ALD 180 (DB) [6] AIR 1955 SC 425 [7] 2000(2)SCC 617