1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH, NAGPUR WRIT PETITION NO. 1973/2008 Vikas Traders, a proprietary concern, through its Proprietor Shri Anil Gokulchand Sharma, aged 37 years, New R.K. Plot, Akola, Tq. and Distt. Akola PETITIONER ...versus... 1. State of Maharashtra through Chief Secretary, Mantralaya, Mumbai-400 032. 2. Secretary, Department of Food, Civil Supplies and Consumer Protection Department, Mantralaya, Mumbai-400 032. 3. Maharashtra State Co-operative Marketing Federation Limited, Kanoor House, Majid Bhandar, Mumbai – 400 009 RESPONDENTS ====================================== Shri P.C.Madkholkar, Adv. for the petitioner. Smt. Bharti Dangre, Addl. Govt. Pleader for R-1 & 2 Shri M.P.Khajanchi, Adv. for R-3 CORAM : A.M.KHANWILKAR AND S.R.DONGAONKAR, JJ DATE : 4 th JULY, 2008 P.C. 1. The petitioner, in this petition is seeking writ, order or direction to quash the communication dated 30th April, 2008 2 (Annexure-I) by which his alleged concluded contract to supply Toor Dal to the relevant District Supply Offices etc., in Amravati and Aurangabad Revenue Division, that was allegedly settled in pursuance to the tender notice dated 10th April, 2008, was cancelled and also further tender process in pursuance to the tender notice dated 9th May, 2008 with corrigendum dated 15th May, 2008. 2. Petitioner is a trading company, dealing in Pulses etc. As there was high rise in the prices of essential commodities like Toor Dal, Rice, Palm Oil etc., beyond imagination. For making these articles available at a reasonable price to the people below poverty line through P.D.S., in a meeting dated 8.4.2008 under the Chairmanship of the Hon'ble Chief Minister, the matter was considered. As per the decision therein, Secretary, Food and Civil Supplies Department and Consumer Protection Department was directed to prepare a detailed proposal to be placed before the Cabinet. After approval of the proposal submitted by the Federation – Respondent No.3, Cabinet on 10.4.2008 approved the said 3 proposal and in terms of the decision, respondent no.3 was directed to go ahead with the tender process at the rates fixed in the proposal. By letter dated 11.4.2008, Department of Food and Civil Supplies had intimated Respondent no.3 – Marketing Federation that the Palm Oil, Rice and Toor Dal should reach to Taluka level godowns by 24.4.2008, so that the scheme of distribution of these articles could be initiated from 1st May, 2008 (Maharashtra Day). The tender notice was published in Daily Nav Shakti. Some 30 tenderers submitted their offers. It is alleged that after negotiations and following the required procedure and, as the petitioner's quotation was of lowest price, the same was accepted. According to the petitioner, the rate at which the Toor Dal to be supplied was Rs. 3767/- per quintal. It is alleged that the petitioner was conveyed by communication dated 17.4.2008 to submit the bank guarantee of Rs.1 crore, within two days as per the terms of the tender. Accordingly the bank guarantee was submitted. Thus according to the petitioner, all the essential terms and conditions of the contract were complied, so respondent no.3 Federation issued the work order on 19.4.2008. He was 4 directed to supply Toor Dal to two Revenue divisions – Amravati and Aurangabad, as per conditions stipulated in the work order. The petitioner specifically averred that the agreement in respect of other terms and conditions was to be executed separately. On 20.4.2008, the petitioner requested the District Supply Officers of the revenue division Amravati and Aurangabad to intimate the exact quantities of Toor Dal that is required taluka-wise so that the supply could be started to the respective godowns by 1st May, 2008. However, on 22.4.2008 the respondent Federation issued a letter to the petitioner directing to stop the supply of Toor Dal until further directions. It is alleged that the letter was ante-dated. It is further alleged that the petitioner then contacted the officials of the Federation, who had informed that the said stopping order would be lifted very soon as the targeted date was 1st May, 2008. On 30.4.2008, a news item was published in the newspapers that High Power Committee has cancelled the contract awarded to the tenderers whose tenders were accepted, one of them being petitioner. On 3.5.2008, petitioner filed this petition, when this court ordered, 'issue of 5 notice' and as regards interim relief, the petitioner was allowed to move the Court if he receives the official communication regarding cancellation of his contract. It is alleged that on 8.5.2008 the petitioner received a letter by which respondent no.3 Federation has requested to ignore the earlier tender. He was also forwarded with the copy of the letter written to the Managing Director of Respondent No. 3 Federation by the Under Secretary, Government of Maharashtra. 3. On 9.5.2008 fresh tender notice was issued. It may be stated that, according to the petitioner, after first tender process was completed and work order was issued to the petitioner, there were complaints made by one Shri Gopaldas Agrawal, M.L.A and one Shri J.P. Sharma, alleging that large scale corruption and bungling had taken place in the first tender process, therefore, inquiry was requested. In the meanwhile, it is alleged that the matter was also discussed in the Legislative Assembly. Thereafter, the order regarding stopping of the tender process was issued. As such, the petitioner was directed to stop all steps to be taken, in 6 furtherance of alleged contract, which was to come in force in pursuance to the tender. 4. It may be stated that the other traderers whose tenders were accepted i.e. in respect of transport of palm oil as well as supply of rice had also moved this Court in Writ Petition No. 2166/08 (M/s. Parasmal Uttamchand Pagaria vs. The Maharashtra State Cooperative Marketing Federation Ltd., and another) and 2167/2008 (M/s. Parasmal Pagaria & Sons vs. The Maharashtra State Cooperative Marketing Federation Ltd., and another), claiming similar reliefs as this petitioner. It may be mentioned that this petition was pending before this Court and the other two petitions referred above were pending before other Division Bench of this Court. As the hearing was proceeded in those petitions, this petition with the consent of the parties, was fixed for hearing, awaiting the orders of this Court in those petitions. However, later on those petitions were withdrawn by the petitioners therein. The following order was passed in those petitions. “Shri Manohar learned counsel for the petitioner seeks permission to withdraw the present petition. 7 Request has not been objected by the counsel for the other side. However, in the larger interest of the society, before we permit the petitioner to withdraw the petition, want to express that while finalising the tender process initiated pursuant to the tender notice dated 09.05.2008, we want High Power Committee to ensure that the price bid apart from being lowest must be less than the market price of the commodity in question, prevalent at the relevant time. With these observations, writ petition disposed of as withdrawn”. That is how, this petition is being heard by this Court. Principal reliefs claimed by the petitioner are; (A) Command the respondents to place the High Court Committee decision of cancellation of tender contract given by respondent no. 3 Maharashtra State Cooperative Marketing Federation Ltd., Mumbai, before this Hon'ble Court within three days from the date of order with a leave to amend to the petitioner, to challenge the said High Power Committee decision, so far it relates to supply of Toor Dal to Amravati and Aurangabad Revenue Division and further; (A1) By suitable writ, order or direction to quash and set aside the order at Annexure-O dated 8.5.2008 passed by respondent no.3 Maharashtra State Cooperative Marketing Federation Ltd., Mumbai and order at Annexure-O1 dated 30th April, 2008, passed by Respondent no.1 , State of Maharashtra and further be pleased to quash and set aside the tender notice published in Daily Lokmat dated 9th May, 20-08, at Annexure-P and its Corrigendum dated 15th May, 2008 at Annexure-P1 with a further 8 declaration that the decision of the so called High Court Committee is illegal, bad in law and is inoperative and, therefore, quash and set aside the same. (B) By suitable writ, order or direction the decision of High Power Committee, published in Daily Lokmat dated 30.4.2008 and placed before this Hon'ble Court at Annexure-M and M1, and challenged as per direction contained in Prayer (A) be quashed and set aside; (C ) During the pendency of present petition, respondents be restrained from restarting tender process for supply of Toor Dal, Rice and Transportation of Palm Oil, OR respondents be restrained from calling any tender for supply of Toor Dal to Amravati and Aurangabad Revenue Divisions. (D) Quash and set aside the order of Respondent NO.3 Maharashtra State Cooperative Marketing Federation Ltd., Mumbai, sent through Fax Message dated 22.4.2008 at Annexure-L (E) Stay the effect, operation and implementation of the stay order dated 22.4.2008 and the respondent no. 3 Marketing Federation be directed to issue necessary orders continuing contract of petitioner in relation to the supply of Toor Dal to Amravati and Aurangabad Revenue Divisions. (E1) That, by ad interim order, the respondent no.2 Marketing Federation be restrained from going ahead with the tender process, which is initiated by advertisement dated 9th May, 2008, in Daily Lokmat at Annexure-P and Corrigendum dated 15th May, 2008, at Annexure-P1, during the pendency of present Petition. 9 (E2) That, by ad interim order, the respondent no.1 State of Maharashtra, be directed not to finalise, any tender contract or to award any tender contract in terms of advertisement which is published in Daily Lokmat dated 9th May, 2008, and Corrigendum dated 15th May, 2008, inviting fresh tenders in respect of supply of toor dal to Amravati and Aurangabad Revenue Divisions, by issuing that order. (F) Pending decision on interim order, ad interim order in terms of prayer clause (c ) and (E) be granted. (G) This petition be allowed with such other reliefs as are necessary in the interest of justice, including cost of Rs. 1 Lakh to be paid to the petitioner. 5. Respondent Nos. 1 & 2 have contended that the scheme for supply of these articles was initiated in the larger public interest for the benefit of the persons below poverty line (BPL), above poverty line (APL), Antyoday Yojna etc. It is contended that Respondent No.3 Maharashtra State Cooperative Federation Ltd., was to be involved in the matter as Nodal agency. However, Respondent No. 3 published the tender notice in only newspaper “Nav Shakti” having low circulation. Later on, during finalization process, it was found that respondent No. 2 had issued preliminary instructions to Respondent No.3 and also to various Food & Civil Supply Offices. It is contended that there were complaints in respect of 10 the first tender process. These respondents have referred to the Call Attention Motion moved by Shri Gopaldas Agrawal, M.L.A., in the Legislative Assembly, which was accepted by the Legislative Assembly. Thereafter, referring to the recommendations of Justice S.C. Pratap Committee and contending that earlier similar transactions were initiated with the approval of High Power Committee, which was constituted as per those recommendation by G.R. dated 3rd November, 1997, this matter was referred to the said High Power Committee. The constitution of the same is mentioned in the reply. It is specifically contended that the decision to cancel the earlier tender process was because of complaints received from various corners. It was also because of the discussion in the Assembly. It was also contended that Respondent no.3 was directed to call fresh tenders and therefore, there was no interference by the High Power Committee regarding the decision in respect of the first tender process. It is specifically contended that the High Power Committee had taken the decision in the larger interest of the public and in view of the circumstances and in the backdrop of the complaints received 11 from various corners. Therefore, it is contended that the petition is liable to be dismissed. 6. The main contestant i.e. Respondent No. 3, while denying the material contentions raised by the petitioner has contended that the contract with the petitioner was not a concluded contract. According to this respondent, some of the terms and conditions were not at all complied with. According to this respondent further, on 21st April, 2008 “ A Lakshvedhi Suchana” (calling attention motion) was moved by Shri Gopaldas Agrawal, Member of Legislative Assembly, pointing out the irregularities in the tender process. It is also pointed out that later on there was a meeting of the High Power Committee in which issue of tender process was discussed and it was decided to issue fresh tenders giving sufficient time to the bidders, so also making large publicity in the newspapers as the earlier tender notice was published in one newspaper having circulation only in Bombay. He has submitted that there was no contract signed by the petitioner as well as this respondent no.2, no bank guarantee was furnished and other 12 terms & conditions for supply of Toor Dal were not complied with and though the process was heading towards the finalization of the contract, the same was not concluded as there was no execution of an agreement as was required by the rules, and even as per the letters exchanged between the parties. According to the respondent, in the larger public interest, fresh tender process was initiated to avoid the State to suffer unnecessary losses to a large extent. 7. Since during the pendency of this petition, fresh tenders were issued, the petitioner has sought quashing of that process including tender notice published in Daily Lokmat on 9th May, 2008. He has also claimed a direction against the respondents for restraining them from restarting tender process and as already stated above, quashing of the communication issued by respondent no.3 to the petitioner dated 22.4.2008 to stop the supply of Toor Dal to various places in the Revenue division of Amravati and Aurangabad. 8. It may be stated that during the pendency of the 13 proceedings, the Maharashtra State Cooperative Consumer Federation Ltd., sought to intervene by Civil Application No. 3839/08. The said Federation has offered lowest bid in the second tender process. Besides submitting that earlier tender process was irregular and illegal, it is submitted by this intervenor that in the second tender process 13 bid documents were submitted and the earlier tender process was totally unsustainable at law. According to him, the second tender process was legal and the intervenor's interest was being adversely affected because Respondent No.3 is not taking further steps in respect of second tender process. 9. Shri P.C.Madkholkar, learned counsel for the petitioner has submitted that the contract with the petitioner in pursuance to the earlier tender notice was concluded in view of the correspondence between the petitioner and respondent no.3. He has specifically pointed out the letter dated 17.4.2008 which was sent by respondent no. 3 to the petitioner says that there was discussion about the tender terms and the rates proposed on 16.4.2008. That the petitioner accepted the 14 quoted rates for supply of Toor Dal at the rate of Rs. 3767/- per quintal. The petitioner was asked to furnish the bank guarantee of Rs. one crore. He also pointed out the letter dated 19.4.2008 submitted by the petitioner to show that he had produced the bank guarantee of Rs. One crore as directed by respondent no.3. The zerox copy of the said bank guarantee is also produced on record. He has also referred to the letter of Respondent no.3 dated 19.4.2008 by which the petitioner was informed that as per the offer in the tender and discussion dated 15.4.2008, the rate was settled to Rs. 3767/- per quintal for its supply at the taluka level. It was directed to start the supply as per terms mentioned in the said letter. He has further pointed out a letter dated 20.4.2008 by which the petitioner had written a letter to District Supply Officer, Amravati, asking him to inform as to the requirement of Toor Dar and to issue orders of supply Toor Dal, as he was appointed as “supplier” as per the work order. In short, he has submitted that the contract between the parties i.e. respondent no.3 and the petitioner was concluded and in fact, the petitioner was ordered to supply Toor Dal to the District 15 Supply Offices or to the Godowns as per their requirements and therefore, the only thing that was to be done was to settle the modalities of supply of Toor Dal, as per the requirements and the rate was settled. The approximate requirement was also quoted and only requirement of Toor Dal to various godowns and Offices was only a matter that was solicited. According to him, in the facts of the case, the inevitable conclusion is that the contract between the petitioner and the Federation was a concluded contract. As such, according to him, as this is a case of concluded contract, the rules of natural justice should have been followed before any cancellation or revocation of the said contract. As no such notice was issued, nor any explanation was sought before revoking the concluded contract, the petitioner is entitled for the relief of getting the said communication intimating the cancellation of contract and stoppage of supply until further orders cancelled and quashed. He also submitted that as a necessary consequence, second tender process which is settled in favour of the intervenor, also needed to be quashed. According to him, the suit contract could not have been revoked at the instance of any third party, 16 including the State of Maharashtra. It could have been done only by following the principles of natural justice i.e. after offering an opportunity of being heard and allowing the Petitioner to submit explanation. It is also contended as there was no cabinet decision to initiate second tender process by cancelling the contract with the petitioner and because the order of stopping the supply and discontinuing the supply to be undertaken in compliance of the work order, was not a reasoned order, the same is liable to be quashed. 10. He has relied on some authorities in support of his contentions. Brief reference to the same would suffice. (I) 2008 (3) SCC 440; FOOD CORPORATION OF INDIA & ORS. VS. SEIL LTD., AND ORS. (II) 2005 (3) MH.L.J. 297; MANOHAR GALGHATE VS. SARASWATI CO.OP.HOUSING SOCIETY. (III) 1999 (1) SCC 1; RICHMERS VERWALTUNG GMBH VS. INDIAN OIL CORPORATION LTD. (IV) 1998 (2) SCC 502; DR. ASHOK KUMAR MAHESWARI VS. STATE OF U.P. & ORS. (V) AIR 1983 SC 848; THE GUJRAT STATE FINANCIAL CORPORATION VS. M/S. LOTUS HOTELS PVT. LTD. 17 (VI) 2006 (6) ALL MR 209; M/S R.B.CONTRACTORS VS. STATE OF MAHARASHTRA AND OTHERS (VII) AIR 1989 SC 620; RAGUNATH THAKUR VS. STATE OF BIHAR; (VIII) AIR 1984 SC 1271; LIBERTY OIL MILLS VS. UNION OF INDIA AND OTHERS (IX) AIR 1978 SC 851; MAHINDER SINGH GILL AND OTHERS VS. CHIEF ELECTION COMMISSIONER (X) AIR 1952 SC 16; COMMISSIONER OF POLCIE BOMBAY VS. GORDHANDAS BHANJI (XI) AIR 1999 SC 22 WHIRLPOOL CORPORALTION VS. REGISTRAR OF TRADE MARKS (XII) AIR 2003 SCW 126; HARBHANSLAL SAHRIA VS. INDIAN OIL (XIII) AIR 1990 SC 1031; MAHABIR AUTO STORES VS. INDIAN OIL CORPN. LTD. (XIV) AIR 2006 SC 871; DERESSER RAND S.A. VS. M/S. BINDAL AGRO CHEM LTD. AND ANR. (XV) 2007 ALL MR 57; MAESH PUROHIT VS. STATE OF MAHARASHTRA AND OTHERS. 11. The authorities referred by him are mainly on the issues of contractual disputes involving public law elements and undertaking amenable to writ jurisdiction; when principle of promissory estoppal can be invoked to restrain the Government from acting arbitrarily so as to avoid harm and 18 injury to the individual; when the contracts can be said to be concluded & following of principles of natural justice, while taking decision adverse to the parties. 12. Smt. Bharti Dangre, learned Addl. Government Pleader for Respondent Nos. 1 & 2 has submitted that the scheme of providing Toor Dal, Rice and Palm Oil was at the instance of the Government. Public funds were involved in the matter. The tender process was required to be conducted with the consultation of High Power Committee, which was established in pursuance to Justice S.C.Pratap Committee's report by G.R. dated 3.11.1997. The said committee comprises of the Minister, Food & Civil Supplies; Minister, Finance and Planning; Minister, Animal Husbandry; Minister of State, Food and Civil Supplies and concerned Secretaries to the Government. It is submitted that the earlier tender process was suffering from the vice of serious irregularities including the publication of the tender notice in only one newspaper 'Nav Shakti'. It was not widely published. The Toor Dal to be supplied as per that tender notice in the case of the petitioner 19 was at the rate of Rs. 3767/- per quintal, which was much more than the then market rate of Toor Dal. She has also submitted that the said process had resulted in hi-jacking of the suit tender process by Ulhas Pagariya and Parasmal Pagariya (petitioners in other writ petitions). It is also submitted that in Call Attention Motion in the Maharashtra Legislative Assembly, the said matter was hotly discussed. It is also submitted that the said Ulhas Pagariya was personally present in the Assembly House at the relevant time and the Hon'ble Speaker of the Assembly had asked to stay further proceedings of the said tender process. Making further submissions, learned Addl. Govt. Pleader contended that the earlier tender process was revoked by the respondents because of the serious allegations and irregularities in the process and therefore, with the consultation and approval of the High Power Committee, fresh tender process was initiated on 9.5.2008 by giving reasonable opportunities to all the persons in the State of Maharashtra; by publishing the same in 7 newspapers - Regional, State and National level Newspapers. Thereafter, after considering pros and cons, the tender of Toor Dal in favour of the intervenor 20 was finalized. She has given the details of comparative analysis of both tender process in her written submissions, which was incidentally the part of the submissions in others petitions which were ultimately withdrawn by the petitioners, referred above. She has also pointed out that there were many other participants in the second tender process. Therefore, according to her, the first tender process had to be cancelled because of the allegations of rampant corruption therein, which consequently would have adversely affected the State exchequer. It was also cancelled because of serious irregularities. The second tender process was transparent, and as such was liable to be approved in the larger public interest. According to her, the writ jurisdiction of this Court cannot be invoked in the circumstances of the case, particularly in view of the decisions of the Apex Court in; (1) 2007 (1) SCC 477; RAJASTHAN HOUSING BOARD AND ANR VS. G.S.INVESTMENT AND ANOTHER; (2) (2007) 2 SCC 588; RAMCHANDRA MURARILAL BHATTAD AND ORS VS. STATE OF MAHARASHTRA AND OTHERS; (3) (2000) 2 SCC 617 AIR INDIA LTD VS. COCHIN INTERNATIONAL AIRPORT LTD. AND OTHERS. 21 According to her, as the larger public interest is involved in the present matter and because the petitioner was allowed to participate in the second tender process, if he intended to do so and as there was no concluded contract between Respondent no.3 and the petitioner, the petition has to be dismissed. More so because, the writ jurisdiction cannot be invoked to challenge the administrative decision of the respondents. 13. Shri Khajanchi, learned counsel for respondent no. 3 has submitted that the correspondence between the petitioner and the respondents does not conclusively show that there was a concluded contract between the parties. According to him, the petitioner has not complied with the material terms and conditions of the tender notice. He has referred to the letter of the petitioner dated 19.4.2008 to show that he had himself requested the respondent no.3 to finalize the contract. He has referred to Term Nos. 2, 5 & 6 referred in