advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Tuesday, May 17, 2016

whether requirement to furnish Annual Turnover and Net Worth for last three years was a mandatory condition for infraction of which the bid made by the appellant had to be rejected. In Poddar Steel Corporation v. Ganesh Engineering Works and Others[1], this Court considered conditions which are essential conditions of eligibility and those which are ancillary or subsidiary with the main object to be achieved. It was observed in para 6 of the decision as under:- “…….As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in a appropriate cases.= the site in question was to be sold on outright sale basis. The advertisement or the stipulations therein did not contemplate creation and or continuation of any relationship between the parties calling for continued existence of any particular level of financial parameters on part of the bidder, except the ability to pay the price as per his bid. The condition was not an essential condition at all but was merely ancillary to achieve the main object that was to ensure that the bid amount was paid promptly. The advertisement contemplated payment of bid amount whereafter the Sale Deed would be executed and not a relationship which would have continued for considerable period warranting an assurance of continued ability on part of the bidder to fulfill his obligations under the arrangement. Nor was this condition aimed at ensuring a particular level of financial ability on part of the bidder, for example in cases where the benefit is designed to be given to a person coming from a particular financial segment, in which case the condition could well be termed essential. The idea was pure and clear sale simplicitor. As a matter of fact, the appellant did pay the entire bid amount within the prescribed period and the Sale Deed was also executed in his favor. In the circumstances the relevant condition in the advertisement would not fall in the first category of cases as dealt with by this Court in Poddar Steel Corporation (supra). The authorities could therefore validly deviate from and not insist upon strict literal compliance. The discretion so exercised by the authorities could not have therefore been faulted. Thus, the assessment made by the High Court that the condition in question was an essential condition for non-compliance of which, the bid furnished by the appellant was required to be rejected, in our view was not correct. We, therefore, allow this Appeal and set aside the decisions rendered by the Single Judge and the Division Bench of the High Court in the present matter. The Letter of Intent dated 02.03.2010 and consequent Sale Deed dated 31.03.2010 in favor of the appellant are held valid and correct.

                                                              Non-Reportable

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 5101 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO. 19310 OF 2013


Om Prakash Sharma                               ….Appellant


                                   Versus


Ramesh Chand Prashar & Ors.                           …. Respondents



                               J U D G M E N T

Uday U. Lalit, J.


Leave granted.



This appeal by special leave challenges  correctness  of  the  judgment  and
order dated 20.05.2013 passed by the  High  Court  of  Himachal  Pradesh  at
Shimla in L.P.A. No.441 of 2012 affirming the decision dated  14.08.2012  of
the Single Judge of the High Court in CWP No.1557 of 2010.


On 03.11.2008, an advertisement was  issued  by  Himachal  Tourism  inviting
bids from interested parties for  outright  purchase  of  sites  located  at
three places in Himachal Pradesh including Café Aabshar  in  District  Solan
situated  at  3  kilometers  from  town  named  Kandaghat.    The   relevant
conditions mentioned in the advertisement were as under:-

“A Bidder is free to bid for one  or  more  than  one  cafes.   However  all
bidders need to provide  the  following  information  for  consideration  of
their EOI.

Area of  business  interests  (please  enclose  firm  profile  or  corporate
brochure)

Annual turnover & Net worth in last three (3) years (please  submit  audited
financial statements and income Tax Return of  last  three  financial  years
supporting this information).

Interest in particular café(s) and proposed usage.
Offer to “Outright purchase of the café” (a separate  rate  will  be  quoted
for each café).”


In so  far  as  Café  Aabshar  was  concerned,  the  appellant  as  well  as
respondent No.1 participated in the bid process.  The bid submitted  by  the
appellant for Rs.27,15,000/- was the highest.  Respondent No.1 had  given  a
bid of Rs.  17,00,000/-  which  was  the   4th  highest.   The  bid  of  the
appellant having been found to be the highest, it was  accepted  and  Letter
of Intent was issued on 02.03.2010.  Thereafter Sale Deed in respect of  the
Café was executed in favour of the appellant on 31.03.2010.



After the execution of the Sale Deed, respondent No.1 who has  been  running
a Dhaba next to the site, filed CWP No.1557 of 2010 in  the  High  Court  of
Himachal Pradesh submitting that the appellant had not submitted his  annual
turnover  and  net  worth  for  last  three  years  as  stipulated  in   the
advertisement.   No  allegation  was  made  of  any   arbitrariness,   bias,
favoritism or malice in the auction process.  The appellant filed his  reply
in  opposition.   An  affidavit  in  reply  was  also  filed  by  the  State
Government  opposing  the  Writ  Petition  stating  that  the  highest   bid
submitted by the appellant was rightly accepted after due  consideration  by
the Committee comprising of  high  ranked  officials  and  that  the  entire
process was completely fair and transparent.


The aforesaid Writ Petition was allowed by Single Judge of  the  High  Court
by his judgment and order  dated  14.08.2012.   It  was  observed  that  the
condition regarding submission of  the  net  worth  was  mandatory  and  the
Committee could  not  have  over-looked  such  condition.   It  was  further
observed that the Expert Committee had fixed the reserve  price  in  respect
of the Café at Rs.30,78,000/- while the bid submitted by  the  appellant  at
Rs.27,15,000/- was accepted.  Interestingly,  respondent  No.1  himself  had
given a bid  for  Rs.17,00,000/-,  far  below  the  alleged  reserve  price.
However, the Single Judge while accepting the submissions made on behalf  of
the respondent No.1 allowed the Writ Petition  and  quashed  the  Letter  of
Intent dated 02.03.2010 and Sale Deed  dated  31.03.2010  and  directed  the
authorities to re-do the entire process of selling said Café  in  accordance
with law.


This decision of the Single Judge was challenged by the appellant by  filing
LPA No.441 of 2012.  The Division Bench upheld the view taken by the  Single
Judge on both counts namely that  offer  of  the  appellant  was  below  the
reserve  price  and  that  the  condition  regarding  submission  of  annual
turnover and net worth for last three years was not  complied  with  by  the
appellant. The Division Bench thus dismissed  LPA  No.441  of  2012  by  its
order dated 20.05.2013.


This appeal challenges the correctness of the decisions so rendered  by  the
High Court.  While issuing notice, this Court by order dated 04.07.2013  had
directed that Status quo be maintained by the parties.  By subsequent  order
dated 08.10.2014 the respondent No.1 was directed to deposit in  this  Court
a sum  of  Rs.30,00,000/-,  which  the  respondent  had  offered  after  the
finalization  of  the  bid.   The  amount  having  been  deposited  by   the
respondent No.1,  it  now  stands  invested  in  an  interest  bearing  term
deposit.


We have heard Mr. Tushar Bakshi, learned Advocate for the appellant and  Mr.
Mahavir  Singh,  learned  Senior  Advocate  for  respondent  No.1  and   Mr.
Suryanarayan Singh, Senior Additional Advocate General for the State.


Mr. Bakshi, learned Advocate is right in  his  submission  that  no  reserve
price was fixed while inviting bids from  interested  parties.   The  Expert
Committee may have  indicated  a  figure  as  reserve  price,  however,  the
advertisement did not indicate any.  Precisely for  this  reason,  even  the
bid given by respondent No.1 was far below  the  figure  of  Rs.30,78,000/-.
The High Court was clearly in error in accepting  this  plea  on  behalf  of
respondent No.1


Now, the question that remains to be considered is  whether  requirement  to
furnish Annual Turnover and Net Worth for last three years was  a  mandatory
condition for infraction of which the bid made by the appellant  had  to  be
rejected.  In Poddar Steel  Corporation  v.  Ganesh  Engineering  Works  and
Others[1], this Court considered conditions which are  essential  conditions
of eligibility and those which are ancillary or  subsidiary  with  the  main
object to be achieved. It was observed in para 6 of the decision as under:-


“…….As a matter of general proposition it cannot be held that  an  authority
inviting tenders is bound to give effect to  every  term  mentioned  in  the
notice in meticulous detail, and is not entitled to waive even  a  technical
irregularity of little or no significance.  The  requirements  in  a  tender
notice can be classified  into  two  categories-those  which  lay  down  the
essential  conditions  of  eligibility  and  the  others  which  are  merely
ancillary or  subsidiary  with  the  main  object  to  be  achieved  by  the
condition.  In the first case  the  authority  issuing  the  tender  may  be
required to enforce them rigidly.  In the other cases it  must  be  open  to
the authority to deviate from and not to  insist  upon  the  strict  literal
compliance of the condition in a appropriate cases.


In the present case, the site in question was to be sold  on  outright  sale
basis.  The advertisement or the stipulations therein  did  not  contemplate
creation and  or  continuation  of  any  relationship  between  the  parties
calling for  continued  existence  of  any  particular  level  of  financial
parameters on part of the bidder, except the ability to  pay  the  price  as
per his bid.  The condition was not an essential condition at  all  but  was
merely ancillary to achieve the main object that was to ensure that the  bid
amount was paid promptly.  The advertisement  contemplated  payment  of  bid
amount whereafter the Sale Deed would be executed  and  not  a  relationship
which would have continued for considerable period warranting  an  assurance
of continued ability on part of the bidder to fulfill his obligations  under
the arrangement.  Nor was this condition  aimed  at  ensuring  a  particular
level of financial ability on part of  the  bidder,  for  example  in  cases
where the benefit is designed  to  be  given  to  a  person  coming  from  a
particular financial segment, in which case  the  condition  could  well  be
termed essential.  The idea was pure  and  clear  sale  simplicitor.   As  a
matter of fact, the appellant did pay  the  entire  bid  amount  within  the
prescribed period and the Sale Deed was also executed in his favor.  In  the
circumstances the relevant condition in the advertisement would not fall  in
the first category of cases as dealt with by  this  Court  in  Poddar  Steel
Corporation (supra).  The authorities could therefore validly  deviate  from
and not insist upon strict literal compliance.  The discretion so  exercised
by the authorities  could  not  have  therefore  been  faulted.   Thus,  the
assessment made by the High Court that the  condition  in  question  was  an
essential condition for non-compliance of which, the bid  furnished  by  the
appellant was required to be rejected, in our view was not correct.



We, therefore, allow this Appeal and set aside  the  decisions  rendered  by
the Single Judge and the Division Bench of the High  Court  in  the  present
matter.  The Letter of Intent dated  02.03.2010  and  consequent  Sale  Deed
dated 31.03.2010 in favor of the appellant are held valid and correct.   The
Writ Petition namely CWP  No.1557  of  2010  preferred  by  respondent  No.1
stands dismissed.  The amount deposited by the  respondent  No.  1  in  this
Court pursuant to order dated 08.10.2014 shall  be  returned  to  respondent
No.1 along with interest accrued therein.


The appeal is disposed of accordingly without any order as to costs.



      ………………………..CJI.
      (T. S. Thakur)


                                           ……………………..……...J.
                              (Uday Umesh Lalit)
New Delhi,
May 13, 2016
-----------------------
[1]    (1991) 3 SSC 273

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.