THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY W.P.No. 21535 of 2005 7th December, 2005 Between: R.Hanumantha Rao and Others …Petitioners A N D 1. State of Andhra Pradesh, rep. By its Principal Secretary, to the Government Industries and Commerce Department, Hyderabad and Others …Respondents THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY W.P.No. 21535 of 2005 O R D E R : 1. This writ petition has been filed by the petitioners who are four in number assailing the action of the respondents in rejecting the bids/offers made by them for (i) Vemagiri, ii)Gopalapuram, (iii) Ankampalem and (iv) Atreyapuram reaches of sand bearing areas for which the public auction was conducted on 28-09-2005 at the Collectorate, East Godavari District, Kakinada. A declaration has been sought for that the re-auction Notification bearing No. 3933/2005/A-12, dated 28-09-2005 to the extent that it proposes to put the reaches/sand bearing areas to re-auction as illegal and arbitrary. 2. A District Level Committee for sand auctions, East Godavari, Kakinada issued a notification dated 14-09-2005 for conducting auction of various reaches of sand bearing areas as identified by the River Conservator. Sand bearing areas have been clubbed or joined together as packages and they are put to public auction. R.Hanumantha Rao-1st petitioner submitted bid for Reach No.48 between Vemagiri and Kadiappulanka, Km.0/0 to 8/0 with ramp at Km. 4.70. Kundula Ganapathi Rao- 2nd petitioner submitted bid for reach No. 42, Vasishtha Left Bank between Km 30/0 to 44/0 with ramp at Km 32.800 viz Gopalapuram reach. Medapati Venkateswara Reddy-3rd petitioner submitted bid for Ankapalem reach No.24 on Vasishtha Left Bank, between Km. 19/0 to 30/0 with ramp at Km 19/0-2. Sunkavalli Krishna-4th petitioner submitted bid for Atrayapuram reach No. 23 between Km. 9/0 to 16/0 with ramp at Km 13.100. The bids submitted by them were found to be highest for the respective reaches. The respondent authorities have not confirmed the bids/offers of the petitioners despite their offers/bids being the highest among the bids of respective reaches, and higher than the upset price. The respondent authorities have decided to re-auction the reaches without assigning any valid reasons and accordingly re-auction notification has been issued on 28-09-2005. The action of the respondent authorities, according to the petitioners in going for re-auction in respect of four reaches for which the bids/offers of the petitioners stood highest is arbitrary and illegal. To understand the grievance of the petitioners, I deem it appropriate to reproduce the relevant portion of the writ affidavit and it is thus; “There are absolutely no reasons much less, valid or justifiable ones for not accepting the bids and offers made by the petitioners herein for the respective reaches. The conclusion that if these reaches are put to re auction, they may fetch a higher revenue is not a reason by itself for the purpose of canceling the auctions that were conducted on 28-09-2005. I humbly submit that the very fact that several other reaches/packages for which auctions were conducted on 28- 09-2005 have been confirmed and the quarrying leasehold rights to collect seignrage fees has been correspondingly confirmed and conferred upon the highest bidders on 28-09- 2005. When no decision could be taken for putting them to re- auction, by parity of reason, the auctions that were conducted insofar as the reaches for which the writ petitioners herein have participated, cannot be denied or declined to be conferred or confirmed. I humbly submit that there is no rational basis upon which the decision has been arrived at for purpose of confirming the bids/offers in respect of certain reaches and the bids and offers in respect of other reaches. In the absence of any dividing line based upon any rational criteria or objective principles, the impugned exercise is liable to be dubbed as irrational one”. 3 . Writ Petitioners also moved WPMP No.27662 of 2005 seeking the following prayer: “For the reasons stated in the affidavit filed in support of the writ petition, it is also prayed that this Hon’ble Court, in the interests of justice, be pleased to direct the respondents not to conduct the re-auction insofar as the reaches/sand bearing areas for which the writ petitioners have earlier offered their bids so as to enable the respondents to confer/confirm the leasehold rights in favour of the writ petitioners for the respective reaches and pass such order or further orders as are deemed fit and proper in the circumstances of the case”. 4. While issuing rule nisi, the following interim order came to be passed in WPMP No. 27662 of 2005. “The auction scheduled on 15-10-2005 pursuant to auction notice NO. 3933/2005/A12,d dated 28-9-2005 published in the newspapers, dated 29-9-2005 may go on. But, the same shall not be confirmed until further orders on this application. Notice. 5. Respondents No.1 to 7 filed WVMP NO. 3036 of 2005 with a prayer to vacate the interim order dated 4-2-2005 passed in WPMP No. 27662 of 2005 6. Respondent No.2 filed counter affidavit. One Ch. Subramanayam has sworn to the counter affidavit. It is stated in the counter affidavit that the participants of the reaches stated supra formed into a ring and offered the bid amounts just higher than the upset price fixed by the Assistant Director (Mines and Geology) and therefore the District Level Committee (Sand Auctions) has taken a decision to go for fresh tenders. It is apposite to refer para 7 of the counter affidavit and it is thus; “It is further submitted that on 25-10-2005, auctions were held for the 4 sand packages and 7 sand reaches by the Joint Collector and Auctioning Authority, East Godavari. In the said auctions, in respect of Reach No. 23-Atreyapuram, 9 bidders have been participated and one Sri Edupuganti Harichandra Prasad, s/o: Venkata Rao has offered an amount of Rs. 19,00,199/- out of upset price fixed for Rs. 4,52,123/- for the said reach. In respect of Reach No.24-Ankampalem, 5 bidders have been participated in the auction, and one Sri Kovvuri Srinivasa Reddy s/o: Satyanarayana Reddy has offered an amount of Rs. 9,55,000/- out of the upset price fixed for Rs. 9,00,000/- ( earlier the upset prince fixed for the said reach is Rs. 7,77,700/-. In respect of Reach No. 42-Gopalapuram, 12 bidders have been participated in the auction and one Sri Kudapa Chakrapani s/o: Krishnamurthy has offered an amount of Rs. 81,23,445/- out of the upset price fixed for rs. 39,02,739. In respect of Reach No. 48-Vemagiri-Kadiyapulanka, due to certain technical objections raised by the superintending Engineer, Irrigation and Executive Engineer, Godavari Head Works, Dowlaiswaram the auction has not been done. Statement Showing the Amounts derived for the auctions conducted on 28-09- 2005 and 25-10-2005 Sl. Description of the Upset Price Amount offered Amount offered No. Package/Reach Fixed in the auction in the auction Difference Conducted on conducted on 28-09-2005 on 25-10-2005 1. Package No.3, Rs.1,19,99,998/- 1,20,25,000/- 6,02,999 Ravulapalem/ Ubalanka/ 1,15,06,847/- 1,26,27,999/- Meriapalem/ Komarajulanka 2. Reach No.23- 4,71,500/- 4,87,500/- 14,13,199/- Atreyapuram 4,52,123 19,00,199/- 3. Reach No.24- 7,77,700/- 8,00,000/- 1,55,000/- Ankampalem 9,00,000/- 9,55,000/- 4. Reach No. 28- 23,30,000/- 22,50,000/- 7,49,000/- Ainavilli Lanka- Veeravallipalem 29,99,000/- 5. Reach No. 42- 40,69.999 41,60,000/- 39,63,445/- Gopalapuram 39,02,739/- 81,23,445/- - - - - - - - - - Total: 68,83,643/- When compared to the 1st phase sand auctions, the amount of hike is Rs. 68,83,643/- in respect of Sand Package No.3, Reach No. 23,24,28 and Reach No.42. Thus it is clearly proved that the participants who participated in the 1st phase auction held on 28-09-2005 have formed into ring with each other and offered amounts just higher than the upset price amounts. But when we re-auctioned on 25-10-2005 an amount of Rs. 68.83 lakhs (approximately) is derived additionally. For the reasons stated above, the petitioner has not made out any prima facie case warranting interference of this Hon’ble Court under Art. 226 of the Constitution of India and the same is devoid of merits and is liable to be dismissed in limini”. 7. When the vacate stay petition came up for hearing, with the consent of both the parties, the writ petition itself is taken up for hearing. 8. Heard learned counsel for the petitioners and learned Government Pleader for Panchayath Raj and Rural Development appearing for the respondents . 9. Learned counsel appearing for the petitioners submits that the action of the respondent authorities to cancel the bids/offers in respect of four reaches for which the bids/offers submitted by the petitioners stood highest is arbitrary and a colourful exercise of power. A further submission has been made that if the forming of syndicate for four reaches for which the petitioners offers/bids stood highest as ground for cancellation of the auction, the same would be a valid ground to cancel the offers and bids made by others in respect of other reaches and since such course was not taken, it would indicate that cancellation of offers/bids in respect of the four reaches only amounts to colourful exercise of power by the respondents and therefore, the action of the respondents in issuing notification for re-auction of the four reaches is to be declared as null and void and the same is liable to be set aside. 10. The learned Government Pleader for Panchayath Raj appearing for the respondents submits that the respondent authorities, in the facts and circumstances of the case are justified in not approving the offers/bids made by the petitioners in respect of the four reaches. It is also submitted by him that the very fact of 3 reaches out of 4 reaches securing higher amounts, abnormally, in re-auction, when compared to offers/bids of the petitioners indicates the formation of syndicate in the earlier auction and that itself justifies the action of the respondent authorities in not approving offers/bids of the petitioners and going for re-auction. In support of his submissions reliance has been placed on the decisions of our High Court in P.L.Raju Construction Limited Vs. Chief Enginer (Fy), Hyderabad and Lotus Constructions, Vijayawada Vs. Government of A.P. Youth Advancement, Tourism and Culture Department, Hyderabad. In the first cited decision, it has been held that no right accrued to the tenderer to get the contract. Para 3 of the judgment needs to be noted and it is thus: “A large number of judgments have been referred to by the Counsel for the petitioner and he has argued in detail. I need not refer to any judgment which have been referred because of the simple reason that no right had accrued to the petitioner to get the contract. Only an offer had been made by him in response to a tender notice and it was in the process of consideration by the respondents. The respondents though ti proper to re-tender the work and there was no estopel in the way of the respondents in re-tendering the work when the tender of the petitioner had not been accepted. Although many judgments have been cited, the learned Counsel for the petitioner has not been able to show any judgment by which it can be said that the respondents were bound to allot the work to the petitioner and not to re-tender it. Before acceptance of tender, in my view, no rights or liabilities accrue to either of the parties. Even according to the pleadings of the petitioner, at no point of time there was a promise given to the petitioner that his tender would be accepted. All that the respondents were doing was that they were trying to see that the rates are lowered down and in order to take a final decision at one point of time they asked the petitioner to extend the validity of the offer. In my view, this would not be a promise and there would be no estopel for the respondents to re-tender the work. Re- tendering of work, in my view, is the most transparent air and open option which has been exercised by the respondents. In my case, the petitioner is not going to suffer. He can also participate in the re-tendering and the respondents have been fair and transparent and have not awarded the contract to anybody else after getting the offer of reduced rates from the petitioner and have re-tendered the work, I do not think any arbitrariness can be attributed to the respondents”. In the second cited decision, it has been held that the principle of promissory estoppel has no place in awarding leases or entering into contracts by Government with respect to its largesse. 12. The principal grievance of the petitioners is that the offers/bids made by them in respect of four reaches have not been approved by the respondent authorities while approving the offers/bids made by the others in respect of other reaches. The contention of the respondents is that the concerned authorities formed an opinion that the participants in respect of the four reaches with which the petitioners are concerned formed into a ring and offered bid amounts just higher than the upset price and thus the District Level Committee met on the date of the auction itself and ordered for re-notification. Pending disposal of the writ petition the reaches were put to re-auction. The offers/bids secured in the re-auction are abnormally on high side. The comparative table of the offers/bids secured in the auctions held on 28-9-1995 and 25-10-1995 has been stated in para 7 of counter affidavit which has been referred in the earlier paras of this order. The comparative table is sufficient to indicate that in the earlier auction the petitioners formed into a syndicate and quoted offers/bids just above the upset price. 13. In the circumstances, the respondent authorities are justified in not approving the offers/bids made by the petitioners in respect of the four reaches and going for re- auction of the said reaches. 14. In the result, the writ petition is devoid of merit and the same is hereby dismissed. No order as to costs. _____________________________ Justice B.Seshasayana Reddy 7th December, 2005 KM THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY W.P.No. 21535 of 2005 7th December, 2005.