THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No. 13241 of 2010 Dated: 21.07.2010 Between Impressions Outdoor Advertising, Rep., by its Proprietor, Hyderabad. … Petitioner And The Greater Hyderabad Municipal Corporation Rep., by its Commissioner, Hyderabad. … Respondents THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No. 13241 of 2010 O R D E R : The petitioner is a proprietary firm carrying on the business of advertising contracts including the erection of hoardings and Uni- poles. This writ petition is filed seeking a declaration that the action of the Greater Hyderabad Municipal Corporation (hereinafter referred to as ‘the respondent Corporation’) in putting to auction the erection of uni-pole at MCH Park, Road No.36, Jubilee Hills, Hyderabad vide auction notice dated 12.05.2010 despite the subsistence of a valid contract in respect of the said Uni-pole in favour of the petitioner is arbitrary and illegal. It is not in dispute that the respondent Corporation issued a short tender notice dated 12.12.2006 inviting bids for the Fourth Open Bid cum Auction through Public Private Partnership (PPP) mode for various items under “Fund Your City” programme. Pursuant thereto, the open bid auction was held on 23.12.2006 in which the petitioner was declared as the highest bidder for erection of Uni-pole ( size of 50’ x 50’ x 2 sides) at MCH Park, opposite Orchids School, Road No. 36, Jubilee Hills, Hyderabad for a bid amount of Rs. 37 lakhs. Accordingly, the Corporation issued a provisional order dated 19.02.2007 accepting and approving the petitioner’s bid and calling upon the petitioner to fulfill the conditions specified therein, which included payment of first installment of 48% of the bid amount on or before 28.02.2007 and execution of agreement within 3 months from 19.2.2007. In the said order, the period of license was mentioned as six years from 1.4.2007 to 31.3.2013. The petitioner states that in compliance with the above conditions, a sum of Rs.17,76,000/- being 48% of the bid amount was paid by cheque dated 23.03.2007 and the signed non-judicial stamp papers were also submitted to the respondent for execution of an agreement. While so, an unfortunate incident took place on 11.04.2007 wherein a Uni-pole on Road No.2, Banjara Hills, collapsed resulting in a death and injuries to five persons. Having regard to the said incident, the respondent-Corporation called upon all the advertisement agencies not to erect the Uni-poles. Another notice dated 18.04.2007 was also served on the petitioner directing to limit the size of the Vinyl flex for hoardings or Uni-poles to 50 x 25 feet. Again by notice dated 14.9.2007 the respondent Corporation informed all the advertisement agencies, including the petitioner, to restrict the size of the Unipole to 40’ x 40’ (width x height). The petitioner states that they had already spent huge amounts on the preparatory work and construction of foundation for the unipole and fabrication of Unipole boards of size 50’x50’x2 apart from paying the bid amount of Rs.18,50,000/-. In the circumstances the petitioner by letter dated 18.9.2007 requested the respondent Corporation to permit them to erect the balance area at two other suitable locations on the same road totaling to 5000 square feet as allotted in the bid cum auction and also to extend the lease period from six to ten years. The petitioner claims that as there was no response to their representation, they had personally met the Commissioner and Special Officer of the Corporation who advised that to display a regular multi-stand hoarding at the allotted site after making prorata payment, to enable the petitioner to make up the losses being incurred by them. It is stated that the petitioner had accordingly paid a sum of Rs.3,70,000/- by cheque dated 27.08.2009 and the same was accepted by the Corporation. The petitioner had also submitted the structural stability certificate on 12.11.2009 and erected the hoarding. While so, the respondent-Corporation issued a notice dated 29.12.2009 stating that the erection of the hoarding by the petitioner was unauthorized and in contravention of the provisions of the Hyderabad Municipal Corporation Act, 1955 as well as the terms and conditions of allotment dated 19.02.2007 and therefore, the payment of Rs.3,70,000/- made by the petitioner towards ground rent was treated as penalty and that the petitioner was allowed to display the advertisement up to 31.03.2010 only. It is stated that the petitioner made several representations dated 26.04.2010, 28.05.2010, 31.05.2010 and 03.06.2010 to the various authorities of the respondent seeking appropriate remedy. There was no response and on the other hand by notification dated 12.05.2010 the Corporation invited fresh bids for several items, including erection of Uni-pole at MCH Park, Road No.36, Jubilee Hills and the auction was held on 4.6.2010. Though the petitioner submitted their protest by letter dated 04.06.2010, the respondent-Corporation did not consider and proceeded to finalize the bids. Hence the present writ petition seeking a declaration that the action of the respondent Corporation is arbitrary and illegal. The petitioner also sought a consequential direction to continue the petitioner’s contract in terms of the proceedings dated 19.2.2007. In the counter affidavit filed on behalf of the respondent- Corporation, it is stated that in view of the fact that one of the Uni-poles collapsed on 11.04.2007 in Road No.2 Banjara Hills, no agreement was entered into with any of the agencies who had been allotted Uni- poles, including the petitioner. Thus, the allotment order dated 19.02.2007 ceased to be in force and the cheque submitted by the petitioner for a sum of Rs.17,76,000/- dated 23.03.2007 was not en- cashed by the Corporation. It is alleged that the petitioner did not pay 48% of the bid amount within the time prescribed in Condition No.1 of the Provisional order, dated 19.2.2007 and that the petitioner had erected the hoarding un-authorizedly without any permission and when the Corporation questioned the same, they sought permission to erect hoarding in place of Uni-pole. Having considered the same, the respondent-Corporation by letter dated 29.12.2009 informed the petitioner that the sum of Rs.3,70,000/- paid by them towards ground rent was accepted as a penalty and the petitioner was allowed to display the advertisement till 31.03.2010 only. After the expiry of the said period, the Corporation had rightly issued the tender notice dated 12.05.2010 inviting fresh bids, including the Uni-pole which was earlier allotted to the petitioner. I have heard the learned counsel for both the parties and perused the material available on record. The learned counsel for the petitioner while submitting that pursuant to the acceptance of the petitioner’s bid vide respondent’s proceedings dated 19.2.2007, the contract between the petitioner and the respondent was concluded, vehemently contended that as no notice was issued to the petitioner at any point of time withdrawing the acceptance or terminating the contract, it was not open to the respondent to put to auction the item which was the subject-matter of the said contract. To substantiate the said contention, the learned counsel relied upon HAR SHANKAR v. DY. E. & T. COMMR. [ AIR 1975 SC 1121 ]. While pointing out that the specific plea in the writ petition that the petitioner had erected the hoarding instead of Unipole after receiving the permission from the Commissioner of the Corporation was not controverted or denied in the counter-affidavit, the learned counsel for the petitioner further contended that the said uncontroverted averment shall be taken to have been admitted and consequently the action of the respondent in imposing the penalty alleging that the hoarding was erected unauthorizedly was arbitrary and illegal apart from being without authority. The learned counsel for the petitioner also contended that pursuant to the permission granted by the Commissioner of the Corporation for erection of a hoarding at the site allotted there was a novation of the contract and therefore in the absence of termination following due process of law it was not open to the respondent Corporation to include the site allotted to the petitioner in the impugned auction notice. On the other hand, the learned Standing Counsel appearing for the respondent Corporation contended that as the proceedings dated 29.12.2009 were allowed to become final, it was not open to the petitioner to challenge the auction conducted under the impugned notice on any ground whatsoever. As could be seen all the contentions raised on behalf of the petitioner are based on an assumption that there was a concluded contract between the parties. Hence the first question that requires consideration is whether in the facts and circumstances of the present case there is a concluded contract between the parties which can be enforced by law. There can be no dispute that the petitioner’s bid in the auction held on 23.12.2006 for erection of Unipole constituted an offer to the respondent’s invitation to offer vide auction notice dated 12.12.2006 and the provisional order dated 19.2.2007 constituted acceptance. However the provisional order dated 19.2.2007 itself stipulated that the petitioner should pay the first installment of 48% of the bid amount on or before 28.2.2007 and that an agreement should be executed within three months from the date of the said order. Admittedly both the said conditions were not fulfilled. The petitioner made the payment of Rs.17,76,000/- being 48% of the bid amount by cheque dated 23.3.2007 i.e., beyond the time fixed in the provisional order dated 19.2.2007 and the said cheque was not encashed at all by the Corporation. Similarly agreement as required under the provisional order dated 19.2.2007 could not be executed between the parties. It is true that the execution of an agreement is not absolutely essential in every case so as to complete the contract between the parties. However in the absence of such agreement the question as to whether there is any concluded contract between the parties would depend upon the intention of the parties and the circumstances of each case. It is relevant to note that the order dated 19.2.2007 was only a provisional order under which the petitioner’s bid was accepted subject to fulfillment of the conditions specified, including payment of 1st installment of 48% of bid amount on or before 28.2.2007. Thus it is clear that the payment of the said amount within the stipulated period was one of the necessary conditions for concluding the contract. As the petitioner failed to pay the amount within the stipulated period and the cheque sent by the petitioner beyond the stipulated period was not encashed by the Corporation, no binding contract can be said to have come into existence between the petitioner and the respondent Corporation. Yet another important aspect is that in spite of the fact that the petitioner’s bid was accepted in the provisional order dated 19.2.2007 for locating the Unipole at MCH Park, opp. Orchids School, Road No.36, Jubilee Hills, the petitioner went on addressing letters to the respondent Corporation requesting to allow them to erect the second board at a suitable alternate location stating that on account of huge trees existing at the site allotted, they were unable to erect the Unipole with back to back double sided board. In their letter dated 21.3.2007 the petitioner even went upto the extent of stating that the amount quoted by them would be paid after the site was cleared of the trees. Again on 7.4.2007 the petitioner addressed another letter to the Corporation stating that as it was not possible to erect the second board facing Road No.36, Jubilee Hills, at the location allotted to them, they may be permitted to shift the second board at a suitable location in the same vicinity or in the alternative to allow them to erect smaller boards at four different places mentioned therein so that the total area of the boards would be equal to 60’ x 50’ area allotted to them. The petitioner renewed the said request in their letter dated 10.4.2007 stating that if such permission was granted, they could pay the full amount of Rs.37,00,000/- quoted in the bid. The fact that the petitioner went on making alternative proposals with regard to the location as well as the payment of bid amount even after the respondent’s provisional order dated 19.2.2007 would go to show that the essential terms were not settled between the parties and the petitioner never construed the provisional order dated 19.2.2007 as a concluding contract binding both the parties. It is also relevant to note that even before the 48% of the bid amount was accepted by the Corporation and the agreement could be executed between the parties, an accident took place on 11.4.2007 resulting in the decision of the respondent Corporation to prohibit the erection of unipoles and restrict the sizes of the hoardings as well as the size of the flex on hoardings. Notices were served by the respondent Corporation on all the advertising agencies, including the petitioner, from time to time informing the restrictions and calling upon them to follow the same. The change of circumstances due to unforeseen incident that forced the respondent Corporation to alter the policy in connection with the permissions to uni-poles and hoardings is undoubtedly an important factor which needs to be taken into consideration to decide the question whether there was a concluded contract between the petitioner and the Corporation. Having regard to the facts and circumstances noticed above, particularly the fact that the petitioner failed to pay the 48% of the bid amount within the stipulated period, the fact that the terms with regard to the location, size of the Unipole as well as the flex on hoardings which constitute the essential terms of the contract were not finalized, firstly on account of certain objections raised by the petitioner that the location allotted was not suitable for erecting the Unipole and secondly on account of the accident that took place on 11.4.2007 resulting in change of policy of the Corporation with regard to the erection of Unipoles and hoardings, I am of the considered opinion that the provisional order dated 19.2.2007 itself is not enough to bring into operation a binding contract between the petitioner and the respondent Corporation. The intention of the parties that there was no concluded contract is clear from the conduct of the petitioner in addressing repeated letters for altering the location for erecting the hoardings and also making it clear that the full amount of Rs.37,00,000/- quoted by them would be paid subject to granting permission to erect the second board at a suitable location. For the aforesaid reasons, the only conclusion that can be arrived at is that there was no concluded contract between the petitioner and the respondent Corporation as sought to be contended by the learned counsel for the petitioner. Even assuming that on the basis of the oral permission said to have been granted by the Commissioner of the Corporation the petitioner had proceeded with the erection of a hoarding at the allotted site, the same under no circumstances can be held to be continuation of the acceptance of the petitioner’s bid in the auction held on 23.12.2006. In the light of the finding recorded above that there was no concluded contract between the parties pursuant to the acceptance of the petitioner’s bid under the provisional order dated 19.2.2007, the so-called novation of the contract claimed by the petitioner cannot be accepted. For the same reason, it is not necessary for this Court to go into the other contentions raised by the petitioner. Admittedly, by order dated 29.12.2009, the respondent Corporation informed that the petitioner was allowed to display the hoarding till 31.03.2010 only. The said order dated 29.12.2009 was not challenged by the petitioner before any forum and the same was allowed to become final. In the circumstances it is not open to the petitioner now to contend that the said order was without authority or illegal. As the permission granted to the petitioner, by proceedings dated 29.12.2009 came to an end on 31.3.2010, the impugned action of the respondent Corporation in issuing the auction notice dated 12.5.2010 for erection of Unipole at MCH Park, Road No.36, Jubilee Hills, Hyderabad, cannot be held to be arbitrary or illegal on any ground whatsoever. Accordingly, the Writ Petition is dismissed. No costs. ______________ G. ROHINI, J. Date: 21.07.2010 Klp/gbs