Case: Purxomoma Ramanata Quenin Vs. Makan Kalyan Tandel &amp; Others

2. There is a distillery installation owned by the State at Daman. The Government has been leasing out the said distillery for specified period to members of the public for manufacture of country liquor. At the expiry of each lease, the Government used to invite fresh tenders from the public for the next lease and granted lease of the distillery to the person whose tender was accepted. For a number of years before 1973 the appellants tender in respect of the above distillery was accepted by the Government as the amount offered by him was the highest. The last lease in favour of the appellant expired on January 31, 1973. Before that by notice dated September 25, 1972 the Finance Secretary for the Union Territory of Goa, Daman and Diu invited tenders on behalf of the President of India from the public for the lease of the said distillery for a period of three years commencing from February 1, 1973 for the manufacture of country liquor. The terms and conditions of tender as framed by the Government were appended to the said notice. Clause 7 of those terms and conditions was ashighest tender shall ordinarily be accepted but the Government reserves the right to select any tender or reject all tenders without assigning any reasonto the notice the appellant and respondent No.1 submitted closed tenders to the Government in the prescribed form. The tenders were opened on December 20, 1972 in the office of the Commissioner of Excise in the presence of the tenderers. It was found that the tender of respondent No. 1 for an amount Rs. 3, 51, 345 was the highest, while that of the appellant for Rs. 3,25.000 was second. There was a third tenderer also, but his tender was the lowest and we are no longer concerned with him. As respondent No. 1 whose tender was for the highest amount, did not receive any communication regarding the acceptance of his tender, he wrote a letter on January 16, 1973 to the Finance Secretary calling upon him to accept the tender of respondent No.1 within 24 hours and to take necessary steps for the execution of the lease. On January 18, 1973 the Advocate of respondent No. 1 sent notice to the Finance Secretary to accept the tender of respondent No.1. Respondent No.1 then learnt that the distillery in question had been given on lease to the appellant for Rs. 3,52.345, i.e., Rs. 1,000 more than the amount mentioned in the tender of respondent No.1.3. Respondent No. 1 thereupon filed petition under Article 226 and 227 praying for the issuance of a writ to quash and set aside the grant of lease of the distillery in question in favour of the appellant and for directing the Government to grant the lease of the distillery in favour of respondent No.1. According to respondent No.1, it was incumbent upon the Government to give reasons for the rejection of his tender. It was further stated that in case the Government relied upon clause 7 of the terms and conditions in support of its action, the said clause was void for violation of Article 14 of the Constitution inasmuch as it enabled the Government to reject the highest tender without assigning any reason therefore.4. The petition was resisted by the appellant as well as by the State Government. It was stated in the reply filed on behalf of the State Government that the invitation of tenders did not give rise to any rights other than those stipulated in the terms and conditions upon which the tenders had been invited. As those rights were purely of a contractual nature, no relief could be granted by the court under its writ jurisdiction for alleged breach of contract. According further to the affidavit, the acceptance of the tender was solely within the discretion of the Government, uncontrolled by any statutory obligation or limitation and the rejection of the tender of respondent No.1 created no statutory rights in him. Clause 7 of the terms and conditions was stated to be valid and not violative of Article 14. The tender of respondent No. 1 was stated to have been rejected after the appellant had been informed that his tender could be accepted provide he raised his offer so as to pay an amount higher than that offered by the person with the highest tender. the appellant accordingly raised his offer and thereupon his tender was accepted. The grounds for the rejection of the tender of respondent No. 1 were stated to have been recorded in the file. It was, according to the affidavit, for the Government to choose the person to whom it would grant the lease and the party aggrieved could not claim the protection of Article 14.5. The learned Judicial Commissioner in the course of his judgment observed that the act of the Government in giving a lease of the distillery to the appellant for Rupees 3,52,345, i.e., Rs. 1000 more than the highest bid, by a private deal was not countenanced by law. The Judicial Commissioner then referred to the submission which was made during the course of arguments on behalf of the Government that the Government was prepared to annul the lease granted in favour of the appellant if the court were to so direct. The Judicial Commissioner thereupon directed that the lease in favour of the appellant be set aside. Dealing with the validity of clause 7 reproduced above the learned Judicial Commissioner observed that, to the extent it gave power to the Government to reject the highest tender without assigning any reason, it was ultra vires and should be struck down. In the opinion of the Judicial Commissioner, it was open to the Government to assign reasons for the rejection of the tender of respondent No.1 Opportunity was thereafter to be given to respondent No.1 to show that the reasons assigned by the Government were bad. The lease of the distillery granted in favour of the appellant was accordingly set aside and the Government was directed to deal with the tender of respondent No.1 according to law in the light of the observations made by the learned Judicial Commissioner.6. It may be stated that after the judgment of the Judicial Commissioner, letter dated April 10, 1973 was addressed on behalf of the Government stating that in pursuance of the decision of the Judicial Commissioner the Government had decided that the existing contract with the appellant be set aside and the lease of the distillery be granted in favour of respondent No.It may be stated that after the judgment of the Judicial Commissioner, letter dated April 10, 1973 was addressed on behalf of the Government stating that in pursuance of the decision of the Judicial Commissioner the Government had decided that the existing contract with the appellant be set aside and the lease of the distillery be granted in favour of respondent No.

Reasoning:
8. There is, in our opinion force in the contention advanced on behalf of the appellant that the Judicial Commissioner should not have without giving some cogent reason set aside the lease of the distillery in favour of the appellant. Pursual of the judgment shows that the main reason which weighed with the learned Judicial Commission in setting aside the lease in favour of the appellant was the submission made on behalf of the State that it was prepared without accepting the correctness of the contentions of respondent No.1 to set aside the lease if the court so desired.This circumstance in our opinion was hardly sufficient to warrant the setting aside of the lease in favour of the appellant. The person who was primarily affected by the setting aside of the lease was the appellant to whom the lease had been granted. In the absence of any concurrence of the appellant, the fact that the Government was prepared if the court so desired, to set aside the lease could hardly provide valid basis for the setting aside of the lease.We may now deal with the contention of Mr. Iyengar that the lease of distilleries is governed by para 2 of Article 9 of Legislative Diploma No. 1761. In this connection we find that the judgment of the learned Judicial Commissioner does not show that any such ground was urged before him. Mr. Parekh on behalf of the appellant submits that the said Legislative Diploma was no longer in force at the time the distillery was leased in favour of the appellant. It is, in our opinion, not necessary to go into this aspect because it does not appear that tenders were invited in connection with the lease of the distillery in pursuance of the provisions of Article 9 of the Legislative Diploma. According to para 2 of Article 9 upon which reliance has been place by Mr. Iyengar, the lease can be put to auction in the stipulated conditions when it is found not convenient to renewed the previous one. The aforesaid paragraph, it would thus appear, relates to auction and not to calling of sealed tenders. An auction, as stated in Halsburys Laws of England, Third Edition, Vol. 2, page 69, is a manner of selling or letting property by bids, and usually to the highest bidder by public competition. An invitation to tender is a mere attempt to ascertain whether an offer can be obtained within such margin as the building owner or employer is willing to adopt, or, in other words, is an offer to negotiate, an offer to receive offers, an offer to chaffer (see Halsburys Laws of England, Third Edition, page 422). There is, in our opinion difference between auction and invitation for tenders. As there was no auction but only invitation for tenders in the present case, it cannot be said that the lease of the distillery was governed by Article 9 of the Legislative Diploma.14. It has been argued by Mr. Iyengar that there must have been some negotiation between the Government and the appellant as a result of which the appellant raised his offer so that it might exceed that of respondent No. 1. This may have been so but it was apparently with a view to ensure that the pecuniary interest of the Government did not suffer as a result of the rejection of the tender of respondent N. 1. The appellant was consequently made to pay Rs. 1,000 more than what had been offered by respondent No. 1.It may be stated that no allegations were made in the writ petition by the respondent No. 1 that the act of the authorities in the grant of lease of the distillery in question to the appellant was mala fide. There arises consequently no occasion for us to into that aspect. Nor has the above act been shown to be vitiated by any such arbitrariness as should call for interference by the Court. Indeed, as mentioned earlier, the matter is concluded by the decisions of this Court.