Case: M/S. Makhija Construction &amp; Enggr.P.Ltd Vs. Indore Development Authority

The tender notice was published on 22nd September 1993. It invited tenders from registered institutions who manage educational activities or are constituted for this purpose for 10,340 sq.mtrs. of land reserved for educational purposes under thes scheme. Of the tenders submitted the three tenderers werethe appellant, Jagriti. Bal Mandir Society (hereafter referred to as Jagriti) and Crescent Public school (hereafter referred to as Crescent) who bid Rs. 261 per Sqm. Rs. 201 per Sq.m. and Rs. 177.60 per Sq.m. respectively. The appellant, as its name suggests, is a construction company. However, one of its objects in its Memorandum of Association is claimed to be to construct and establish schools. Because the appellant did not have any experience of managing an educational institution its tender was rejected on 28th December 1993 and, the respondent authority allotted the land in equal halves to Jagriti and Crescent3. The appellant and Jagriti filed writ petitions in the Gujarat High Court. The appellants grievance was that he was the highest tenderer having quoted for the land at Rs. 261 per sq. mtr. and that his tender was rejected unreasonably. Jagirits grievance was that it had bid for the land at Rs. 201 per sq.mtr. which was higher than the bid of Crescent which had offered only Rs. 177.60 per sq.mtrs. Jagriti, therefore, claimed that the whole of the land should have been made available to it4. Both the writ petitions were disposed of by an order dated 4th March 1998 by which the Court directed they to consider the representations of the appellant and Jagriti. The matter wasd by respondent No.1 and again by resolution dated 7th December, 1998, the decision taken earlier was. Pursuant to the decision, a letter of allotment was issued to Jagriti and Crescent5. This led to a second round of litigation by the appellant and Jagriti reiterating their earlier stand. Both the writ petitions were allowed by a common order on 29th February 2000. The learned Single Judge was of the view that the requirement in the tender that the tender would be accepted only from registered institutions which are engaged in educational activities had an alternative which was ignored by the respondent No.1, namely, that the institutions constituted for that purpose could also participate. Since the appellants memorandum showed that the appellant was constituted,, for setting up schools, it could not be disqualified on this ground. The respondent No.1 was accordingly required to decide the representations of the appellant and Jagriti afresh with a speaking order without being influenced by the earlier recommendations or earlier resolutions6. Three appeals were preferred from this order before the Division Bench. One appeal was by Jagriti and two by Crescent. Jagritis appeal was dismissed for default. One of Crescents appeal was dismissed on the ground that the Single Judge had done substantial justiceauthority then considered the matter again and by a resolution dated 18th September 2000, in keeping with the observations of the High Court, held that the appellant was competent to tender and accept the tender. Its tender was accepted and allotment of the entire plot of 10,340 sq.mtrs. was made to the appellant8. Immediately after this, Jagritis Letters Patent Appeal was restored and ultimately after hearing the parties allowed by the impugned order. The learned Single Judges decision was set aside and the respondent No.1 was given the liberty to implement and give effect to the advertisement published by it on 22nd September, 19939. The appellant has challenged the decision of the Division Bench

Reasoning:
11. On the merits, Jagritis submissions appear to be correct13. We do not read this as in any way justifying the appellants claim that it was constituted for educational purposes. To be constituted for means the primary objective of the constitution. The primary objective of the appellant was certainly not to carry on educational activities. Besides the language of Clauses 67 does not indicate that even this object is to carry on the running of the management of the school, but rather pertains to the construction of school buildings. Where the object was to carry on the business, this has been specifically so stated in the remaining objects clauses, for example in Clauses4 and 66 of the Memorandum15. The fact that the appellant had bid the highest was, in the circumstances, immaterial as the object of allotting the land to an educational institution was not the making of profit. The learned Single Judge was therefore wrong in construing the advertisement dated 22nd September, 1993 in the manner he did and the Appellate Court erred in dismissing Crescents appeal. In our opinion the appellant was not competent to participate in the tender16. However, the appellant is entitled to succeed on the ground that the order of the Division Bench disposing of Crescents appeal operated as res judicata to bind not only Crescent but also Jagriti and the appellant. It makes no difference that Jagriti was at with the appellant. The principle of res judicata has been held to binds if the relief given or refused by the earlier decision involved a determination of an issue betweens as the case may be). This statement of the law has been approved as far back as in 1939 in Munni Bibi vs. Trilokinath 58 I.A. 158, 165, where it has been said that to apply the rule of res judicata as betweens three conditions are requisite17. This view has been consistently followed by this Court. (See: Iftikhar Ahmed vs. Sahid Meharban Ali, (1974) 2 SCC 151  where the principle was extended to bind; Mahboob Sahab vs. Syed Ismail AIR 1995 SC 1205 )18. In the present case the facts show that all the three conditions were fulfilled. There was a conflict of interest between the twos in Crescents appeal, namely between Jagriti and the appellants. For the purposes of deciding the relief, if any, to be granted to Crescent it was necessary for the Appellate Court to decide whether the appellant was entitled to participate. Although, the decision of the Appellate Court is cryptic, nevertheless, it cannot be said that the Court had not applied its judicial mind to the merits of the case19. Jagritis counsel was recorded as being present. The fact that the Appellate Court was wrong in affirming the decision of the learned Single Judge would not make the decision less binding. (See: State of West Bengal vs. Hemant Kumar Bhattacharjee AIR 1966 SC 1061 ; Gorie Gouri Naidu vs. Thandrothu Bodemma AIR 1997 SC 808 , 809)20. The counsel for Jagriti has referred us to several decisions viz. Gopal Upadhyaya and others vs. Union of India and others 1986 (Supp) SCC 501, Ambica Quarry Works vs. State of Gujarat and others (1987) 1 SCC 213 , Deena Alias Deen Dayal and and others vs. Union of India and others etc. etc. (1983) 4 SCC 645  and Krishena Kumar vs. Union of India and others (1990) 4 SCC 207. None of the decisions are apposite. They refer to the principle of precedent which is distinct from the principle of res judicata. A precedent operates to bind in similar situations in a distinct case. Res judicata operates to bind parties to proceedings for no other reason, but that there should be an end to litigation.