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ANDHRA PRADESH HIGH COURT
SYED SHAH MOHAMMED QUADRI, J.
A.K. Baig Enterprises, partnership concern, represented by Managing Partner, A.K. Baig - Petitioner
Versus
Executive officer, Sccnnderabad Cantonment Board, Sccnnderabad and others - Respondent
Write Petition Nos. 3589 and 3590 of 1987
Decided on : 26-6-1987
The power of the Officer Commanding-in-Chief under Sec. 83 of the Cantonments Act, 1924, is limited to granting sanction for leasing the collection of Octroi and Toll Tax, and does not extend to accepting or rejecting tenders or directing re-tenders.
Headnote:
CANTONMENTS ACT, 1924 - SECTION 83 - LEASE OF OCTROI, TERMINAL TAX OR TOLL - SCOPE OF POWER OF OFFICER COMMANDING-IN-CHIEF - PREVIOUS SANCTION FOR LEASING COLLECTION OF OCTROI AND TOLL TAX - WHETHER SECOND SANCTION BY WAY OF APPROVAL OF HIGHEST TENDER BY OFFICER COMMANDING-IN-CHIEF IS NECESSARY - INTERPRETATION OF SECTION 83.
Fact of the Case:
Petitioner, the highest tenderer for the lease of Octroi and Toll Tax collection rights for the year 1987-88, challenged the decision of the Officer Commanding-in-Chief (3rd respondent) to re-invite tenders, alleging that it was arbitrary and violative of Art. 14 of the Constitution. The Cantonment Board (1st respondent) contended that the 3rd respondent had the power to direct the re-tender under Sec. 83 of the Cantonments Act, 1924, and that the re-tender was in the interest of public revenue.
Finding of the Court:
The court held that the 3rd respondent's order directing the re-tender was not authorized under Sec. 83 of the Act, as the power of the 3rd respondent under that section was limited to granting sanction for leasing the collection of Octroi and Toll Tax, and did not extend to accepting or rejecting tenders or directing re-tenders. The court also held that the 3rd respondent's action was arbitrary and violative of Art. 14 of the Constitution, as the petitioner had a legitimate expectation of his tender being accepted based on the unanimous recommendation of the Cantonment Board.
Issues: 1. Whether the 3rd respondent had the power under Sec. 83 of the Cantonments Act, 1924, to direct the re-tender of Octroi and Toll Tax collection rights for the year 1987-88. 2. Whether the 3rd respondent's action in directing the re-tender was arbitrary and violative of Art. 14 of the Constitution.
Ratio Decidendi: 1. The court interpreted Sec. 83 of the Cantonments Act, 1924, and held that the power of the 3rd respondent under that section was limited to granting sanction for leasing the collection of Octroi and Toll Tax, and did not extend to accepting or rejecting tenders or directing re-tenders. The court reasoned that the Act did not provide any mechanism for the collection of these taxes, and that Sec. 83 was an enabling provision that authorized the Cantonment Board to lease out the collection of these taxes with the previous sanction of the 3rd respondent. The court further held that the conditions and parameters of the lease were specified in Sec. 83 itself, and that the 3rd respondent had no role to play in the process of calling for tenders, accepting tenders, and matters incidental and relating thereto. 2. The court held that the 3rd respondent's action in directing the re-tender was arbitrary and violative of Art. 14 of the Constitution, as the petitioner had a legitimate expectation of his tender being accepted based on the unanimous recommendation of the Cantonment Board. The court reasoned that the 3rd respondent's decision to re-tender was not based on any cogent reasons, and that the petitioner had not been given a reasonable opportunity to be heard before the decision was made.
Final Decision: The court quashed the 3rd respondent's order directing the re-tender of Octroi and Toll Tax collection rights for the year 1987-88, and directed the 2nd respondent to consider the tenders and pass an appropriate order in accordance with law within two weeks.
ORDER :
1. These two writ petitions raise common questions of facts and law, therefore they are being disposed of together.
2. Purporting to act under Sec. 60 of the Cantonments Act, 1924 (for short ‘the Act’) the first respondent issued notification inviting tenders for lease of collection right of Octroi for the year 1987-88 through Tender Notice No. 3252 dated 23rd december, 1986. On the same date another tender notice No. 3253 was issued inviting tenders for lease of collection rights for Toll Tax for the year 1987-88. The petitioner who was holding lease hold rights for the year 1986-87 and three other persons submitted tenders. The tenders of the petitioner were the highest both for Octroi and toll tax. The Cantonment Board met to consider the tenders submitted for grant of lease for collection of Octroi/Toll Tax and appointed a committe to negotiate with the petitioner. During the negotiations the petitioner enhanced the tender offer by Rs. 15,000/- for Octroi and by Rs. 5,000/- for Toll Tax. In the meanwhile the next highest tenderer, the fourth respondent herein, sent a letter making offer to enhance Rs. 2 to 3 lakhs towards Octroi and Toll Tax. Having considered the said letter the Committee again negotiated and the petitioner made a further enhancement of Rs. 70,000/- for Octroi and Rs. 10,000/- for Toll Tax. Thus his final offer for Octroi was Rs. 27,12,000/- and Rs. 2,80,000/- for toll tax. Under the terms of tender notice the Cantonment Board is the authority to accept or reject the tender. The Cantonment Board in its meeting held on 25-2-1987 resolved to approve the same and sent it to the officer Commanding-in-Chief, South-ern Command, Pune, the third respondent for acceptance and sanction. The fourth respondent addressed a letter to the third respondent who having considered the resolution of the Board and the letter of the fourth respon-dent passed an order directing respondents 1 and 2 to re-invite the tenders. This decision of the third respondent was not communicated to the petitioner. However, he noticed the same in the News Paper dated 17-3-1987 and 18-3-1987. It is submitted that without assigning any reason the action of the Cantonment Board in re-inviting the tenders is illegal, void and viola-tive of Art. 14 of the Constitution of India. The Cantonment Board being a statutory authority ought to have acted fairly and reasonably and it should have accepted the highest tender. It cannot reject the same without assign-ing any reason and communicating the same to the petitioner. It is also submitted that the third respondent, a statutory authority feiled to act fairly and reasonably. It noted arbitrarily in directing retender and that the procedure adopted by third respondent is violative of Art. 14 of the Consti-tution. In so doing, it is alleged, the third respondent was influenced by the letter of the fourth respondent. Having invited the sealed tenders and having negotiated for further enhancement there was no alternative to the third respondent except to accept the offer of the petitioner. Without taking a definite decision, the third respondent is not justified in re-inviting the tenders. In these circumstances in W.P. No. 3589 of 1987, the petitioner prays for a writ of mandamus restraining the respondents 1 to 3 from proceeding with re-tender notice dated 17-3-1987 published on 18-3-1987 and accept the tender of the petitioner lor collection of Octroi duty for the year 1987-88. In W.P. No. 3590 of 1987 the relief relates to restraining respon-dents 1 to 3 from proceeding with re-tender notice dated 17-3-87 published on 18-3-1987 and accepting the tender of the petitioner for collection of toll tax for the year 1987-88 made pursuant to the notice, dated 23-12-1986.
3. The respondents filed common under affidavits in both writ petitions stating that to safeguard the public revenue the third respondent had directed the Board to invite fresh tenders. By mere tendering the peti-tioner has not acquired
