SCA/16062/2007 1/10 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 16062 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE M.S.SHAH AND HONOURABLE MR.JUSTICE RAVI R.TRIPATHI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= S.S.ENTERPRISE Versus CHIEF OFFICER AND OTHERS ========================================================= Appearance : MR ND NANAVATY with MR YASH N NANAVATY for the Petitioner MS SD NATANI, ASSTT GOVERNMENT PLEADER for Respondent Nos. 1 and 2 MR NAVIN PAHWA for M/S THAKKAR ASSOC. for Respondent No.3 ========================================================= CORAM : HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE RAVI R.TRIPATHI Date : 24/01/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE M.S.SHAH) SCA/16062/2007 2/10 JUDGMENT By this petition under Article 226 of the Constitution, the petitioner- proprietory concern of Bholanath R. Shukla has challenged the decision of the Chief Officer, Notified Area, Saputara in Dangs District awarding contract for Toll Tax collection on the Saputara Malegaon road at Girinagar Saputara to respondent No.3 -Chandarbhai Somabhai Gavit at monthly rate of Rs.5,79,000/-. 2. The petitioner has contended that the petitioner is a registered Contractor with Public Works Department, Surat and has been awarded various contracts for Toll Tax collection by the authorities in the State of Gujarat and the State of Maharashtra and has also been awarded contracts for running parking lots in Delhi and Mumbai. 3. Respondent No.1 had issued a public advertisement inviting bids for contract for collection of Toll Tax at Saputara Magdalla Road by 19.6.2007 and auction was scheduled to be held on 21.6.2007 at 3.00 p.m. The parties were required to submit application form alongwith deposit of Rs.56,000/-, being 10% of the upset price, which was fixed at Rs.5,60,000/- per month. The petitioner's case is that the petitioner had submitted application form quoting Rs.6,80,000/-. According to the petitioner, the petitioner had remained present at the office of respondent No.1, where the auction was to be held on 21.6.2007 at 3.00 p.m. But, respondent No.1 did not allow the petitioner to participate in the auction on the ground that the petitioner was neither a registered firm nor a registered company or having any legal entity. At the said auction, there were 38 applicants. However, most of them did not participate in the auction and the highest offer of Rs.5,80,000/- was made by respondent No.3 and the contract was awarded by respondent No.1 to respondent No.3. SCA/16062/2007 3/10 JUDGMENT 4. The present petition came to be filed on 25.6.2007 contending that the petitioner was a proprietorship concern of Bholanath R. Shukla and, therefore, the petitioner did have legal right to enter into the contract with the respondent authorities and also to participate in the auction. It is submitted that the petitioner was deliberately prevented from participating in the auction proceedings in order to award contract to respondent No.3 at much lower price of Rs.5,80,000/- per month as against the rate of Rs.6,80,000/-, which the petitioner is prepared to make. 5. In response to the notice issued by this Court, respondent Nos. 1 and 2 have appeared through the learned Assistant Government Pleader. Affidavit-in-reply dated 29.6.2007 has been filed by Mr. J.M. Pandya, Resident Deputy Collector, Dang and also Chief Officer, Notified Areas, Saputara denying the allegations and stating that the auction proceedings were video graphed and were conducted in accordance with law and that the petitioner not having participated in the auction proceedings has no right to challenge the decision. It is further stated in the reply affidavit that for the same contract for collection of Toll Tax at Saputara Malegaon, advertisement had been issued on 31.03.2007 in leading local newspaper 'Gujarat Mitra' (Surat) and that, against the upset price of Rs. 5 lac, highest offer of Rs.5,11,000/- per month was made by one Suryakant R. Gavit at the auction held on 17.4.2007 and respondent No.1 had decided to award the said contract to said Suryakant R. Gavit. That decision came to be challenged in Special Civil Application No.10756 of 2007 by a Co- operative Society and in the inter-se bidding held before the Court on 1.5.2007, that Co-operative Society had offered Rs.7,05,000/- per month and, as a result of which, respondent No.1 awarded the contract to the said Co-operative Society for a sum of Rs.7,05,000/- per month. However, that Co-operative society by letter dated 26.5.2007, declared that they were not interested to continue with the contract and they surrendered the SCA/16062/2007 4/10 JUDGMENT contract and, therefore, respondent No.1 issued advertisement on 8.6.2007 inviting fresh applications. It is further stated in the reply affidavit that the petitioner was found to be indulging into malpractices of collecting higher toll tax from the vehicles passing on Magdalla Tolnaka, for which he was awarded the contract of toll tax collection and that on account of such conduct and malpractice indulged into by the petitioner, the petitioner was not a fit person either to be awarded any such contract or to be entrusted with the writ of this Court. 6. Respondent No.3 has also appeared through his counsel Mr. Navin K. Pahwa and has also filed affidavit-in-reply dated 9.7.2007, pointing out that any interference with the contract awarded to respondent No.3 will cause serious prejudice and hardship to respondent No.3, who has already established infrastructure for operating the contract of collection of toll tax and has also employed 18 persons to implement the contract. Respondent No.3 has also stated that respondent No.3 himself is a tribal residing in the tribal, District of Dangs and the persons employed are also local tribals. Further affidavits are also filed by respondent No.3 on 30.7.2007 and 15.10.2007 placing on record various complaints against the petitioner and also orders passed by the concerned authorities at Mumbai and Delhi and also the orders passed by the Criminal Court in the complaints filed in respect of the irregularities committed by the petitioner while collecting toll tax on the National Highway, near Savitri River Bridge, Mahad. 7. At the hearing of this petition, Mr. N.D. Nanavati, learned senior advocate with Mr. Yash Nanavaty for the petitioner, have vehemently submitted that since the petitioner was excluded from participating in the auction proceedings only on the ground that the petitioner was not a registered firm, the decision was illegal and and arbitrary and on this ground alone, the petition should be SCA/16062/2007 5/10 JUDGMENT allowed and the contract awarded in favour of respondent No.3 should be quashed and set aside and the respondent authorities be directed to award the contract to the petitioner, who is offering higher amount of Rs.6,80,000/- per month and, therefore, the public interest will be better served as public exchequer will get rupees one lac more every month, i.e. Rs.12,00,000/- per annum. 8. It is also submitted by Mr. Nanavaty that the so-called allegations of irregularities against the petitioner are made after the petitioner was prevented from participating in the auction proceedings on 21.6.2007 and the authorities are, therefore, bent upon harping on the alleged irregularities against the petitioner only in order to justify their arbitrary decision of excluding the petitioner from participating in the auction proceedings on 21.6.2007. It is further stated that if there was any substance in any of the complaints in the matter of collection of toll tax at Magdalla Bridge, the authorities would have discontinued the contract. On the contrary, even after letter dated 27.6.2007 of Collector, Surat, Executive Engineer, Magdalla has by order dated 4.7.2007 renewed the contract for collecting toll tax at Magdalla. Similarly, the contracts awarded in favour of the petitioner for collection of toll tax have been renewed by the authorities at Mumbai and Delhi and, therefore, the respondents cannot be permitted to prejudice the petitioner's case by relying upon such allegations. It is submitted that in spite of letter dated 27.6.2007 of Collector, Surat recommending to the State Government blacklisting the petitioner, the State Government has not passed any order blacklisting the petitioner nor the petitioner has received any show cause notice from the State Government for any blacklisting and, therefore also, no adverse order may be passed against the petitioner on the ground of such correspondence. SCA/16062/2007 6/10 JUDGMENT 9. On the other hand, Ms. S.D. Natani, learned Assistant Government Pleader for respondent Nos. 1 and 2, and Mr. Navin K. Pahwa, learned counsel for respondent No.3, have opposed the petition and submitted that the very fact that earlier when Suryakant Gavit had made offer of Rs. 7,05,000/- and taken the contract on that basis, but even before expiry of one month, surrendered the contract was sufficient to show that price of Rs.7,05,000/- or Rs.6,80,000/-, being offered by the petitioner, is unrealistic and that a contractor can afford to pay such price only if higher toll tax than permissible amount is illegally collected by the contractor from the persons plying their vehicles on the concerned highway. It is submitted that when the persons driving the vehicles with goods and passengers are forced to pay higher amount of toll tax, they have no option but to succumb to the pressure of the contractors acting in a high-handed manner through their employees and that merely because such complaints did not always reach the concerned authorities or even on recommendation of the concerned authorities, still the higher authorities did not take any concrete action, cannot be a ground to condone the misconduct of the contractor. It is submitted that in any view of the matter, the competent authority to award the contract in question was respondent No.1 and both, respondent No.1 and his higher officer, Collector, Surat- respondent No.2 having formed a view that the petitioner has been committing irregularities at other places, is sufficient to reinforce their decision not to award the contract to the petitioner and to award the contract to respondent No.3, who is local tribal and who had made the highest offer of Rs.5,80,000/- at the auction held on 21.6.2007. 10. Having heard the learned counsel for the parties, on the first question whether the petitioner was excluded from participating in the auction proceedings, although, prima facie, SCA/16062/2007 7/10 JUDGMENT this may appear to be a disputed question of fact inasmuch as the petitioner's version that he was prevented from participating in the auction proceedings has been disputed by respondent No.1, a perusal of the rojkam prepared by respondent No.1 on 21.6.2007 and particularly the opening para of the rojkam does lend credence to the petitioner's case that the petitioner was not permitted to participate in the auction proceedings on the ground that the petitioner was not a legal entity in the form of a registered firm or a company. The petitioner had filled in the application form in the name of “S.S. Enterprise, A Sole Proprietorship Firm through its Proprietor Bholanath R. Shukla”. Obviously, the proprietorship concern like this is not required to be registered under the provisions of any Statute. It is only a partnership firm, which would be required to be registered under the provisions of the Partnership Act or a company, which would be required to be registered under the provisions of the Companies Act. The proprietor of the said Proprietary concern is a legal entity, entitled to enter into a contract and, therefore, the view of respondent No.1 that an unregistered firm cannot participate in the auction proceedings, cannot be accepted insofar as the case of a proprietorship concern is involved. We are, therefore, inclined to accept the petitioner's contention that the petitioner was wrongly excluded from participating in the auction proceedings held on 21.6.2007. 11. Ordinarily, this might have been sufficient to allow the petition and to interfere with the contract awarded by the respondent authorities in favour of respondent No.3. However, apart from the fact that this Court had after hearing all the parties concerned, declined to grant interim relief while admitting the petition on 30.7.2007, serious allegations are made against the manner in which the petitioner has been collecting toll tax at other places and has also been running parking plots elsewhere. While in this proceeding, we are not called upon to SCA/16062/2007 8/10 JUDGMENT examine the correctness or otherwise of those allegations, we cannot overlook the fact that Collector, Surat in his report dated 27.6.2007 to the Secretary, Roads and Buildings Department, Gandhinagar had reported that, as against the permissible amount of Rs.5/- for four wheeler, the petitioner was collecting Rs.15/- or Rs.20/- and as against permissible amount of Rs.15/- (for single trip) or Rs.22/- (for return trip) from bus, taxes and other vehicles, the petitioner was collecting Rs.50/- from such vehicles plying on the Magdalla Bridge. In fact, the report further states that the petitioner some times recovered Rs.100/- from the drivers of the heavy vehicles like tankers and when drivers resisted such demand, the petitioner's employees abused them and threatened physical violence and the drivers had to pay higher toll tax to the petitioner's employees out of fear. The Collector's report also referred to the complaint of one truck driver- Babusinh Mohansinh Chauhan with his truck number, who had produced two receipts of Rs.50/- each and complained that higher toll tax was being recovered from him. The Collector's report further states that the contractor authorized to collect toll tax is not permitted to charge Rs.50/- from any vehicle passing near the toll booth. But, the petitioner's employees had overwritten 'R' on figure of Rs.7/- in the receipt for Rs.7.50 and by such interpolation made a receipt for R-50 and in this manner, the petitioner's employees were collecting Rs.50/- from the truck/ tanker as against the permissible limit of Rs.15/- for a truck and Rs. 20/- for heavy vehicles, mobile cranes, etc. 12. Our attention is also invited to the F.I.R. filed against the petitioner at Mahad Police Station. The complaint was lodged on 24.9.2007 by none other than Assistant Executive Engineer, PWD, Mahad alleging that on 23.9.2007, between 18.45 hrs. and/to 19.15 hrs., near Bombay-Goa Toll Check Post, on Savitri River Bridge, the petitioner's employees were issuing printed false/ bogus receipts and were collecting Rs.150/- from each vehicle. SCA/16062/2007 9/10 JUDGMENT The police had also obtained remand for the petitioner and his employees. Similarly, the Railway authorities at New Delhi had also informed that the petitioner was allotted Car Parking contract at New Delhi Railway Station, Pahadganj for two years' period from 14.6.2004 to 13.6.2006 and the contract was terminated with effect from 5.2.2005 due to non-payment of the licence fees. The Municipal Corporation of Greater Mumbai had also mentioned in their communication that the petitioner was awarded the contract for running Pay and Park Scheme, but, thereafter debarred from continuing the tender process for 18 months in the year 2002 on the ground of misconduct, mis-behaviour and overcharging and that the petitioner had not paid the monthly licence fees for five locations since last three months amounting to Rs.4,29,768/-. 13. When such material is placed on record, we would not be justified in quashing and setting aside the contract awarded by respondent No.1 authority in favour of respondent No.3, who is a local tribal of Dangs district and who is employing local tribals for collecting toll tax and against whom no such complaints are made. Respondent No.3 has also placed on record the figures of toll tax collected, which indicate that the toll tax being collected by respondent No.3 has not exceeded Rs.6.30 lacs per month as against the amount of Rs.5.80 lacs, being paid by respondent No.3 to the authorities every month. 14. In view of the above discussion, while we are not interfering with the impugned decision of the respondent authorities in awarding the contract for collection of toll tax at Saputara Magdalla Road for the period from 1.7.2007 to 30.6.2008 in favour of respondent No.3, we direct respondent Nos. 1 and 2 to issue fresh advertisement in early June, 2008 for awarding the contract for the subsequent period from 1.7.2008 and if the respondent authorities propose to debar the petitioner from participating in the next tender process for the period from SCA/16062/2007 10/10 JUDGMENT 1.7.2008 onwards, respondent No.1/2 shall give the petitioner an opportunity of being heard before taking any decision to disqualify the petitioner from submitting the next tender. Such inquiry shall be held and completed as expeditiously as possible, and in any case by 31.05.2008. 15. The petition is disposed of in the above terms. Rule is discharged. Interim relief granted earlier stands vacated. A copy of this judgment shall be sent to the respondent Nos.1 and 2 expeditiously. (M.S. SHAH, J.) (RAVI R.TRIPATHI, J.) omkar