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2010 Supreme(Bom) 1279
High Court of Judicature at Bombay
MR. JUSTICE P.B. MAJMUDAR & THE HONOURABLE MR. JUSTICE R.M. SAVANT
Sonalaxmi Machhimar Sahakari Soc. Ltd.
Versus
The State of Maharashtra, Fishery Department of State Government & Others
WRIT PETITION NO. 958 OF 2002 along with Civil Application No. 1541 of 2010
Decided on: 08-09-2010
For the Petitioner:S.P. Thorat, Advocate. For the Respondents:R1 & R2, A.B. Vagyani, Assistant Government Pleader, R3 to R5, R.S. Apte, Senior Advocate, instructed by Mandar Limaye, R6, Smt. Gauri Godse, Advocates.
Headnote:
MUNICIPAL CORPORATION - LEASE AGREEMENT - PUBLIC INTEREST - ARBITRARINESS - ARTICLE 14 - TENDER - CONTRACT - PUBLIC AUCTION - SECTION 74, 79 OF BOMBAY PROVINCIAL MUNICIPAL CORPORATIONS ACT, 1949 - PUBLIC POLICY - MALA FIDE - CONTRACT FOR CLEANING, FISHING AND BOATING - CONTRACT FOR 25 YEARS - SPECIAL CIRCUMSTANCES - PUBLIC EXCHEQUER - LOSS TO STATE LARGESSE - CONTRACTOR'S INVESTMENT - EXPERTISE - REASONABLE PRICE - FAIR PLAY - ADMINISTRATIVE LAW - RULE OF LAW - EXECUTIVE AUTHORITY - GOVERNMENT PROPERTY - STATE EXECUTIVE - CONSTITUTIONAL COURTS - PRAGMATIC ADJUSTMENTS - POLICY DECISION - HIGH SECURITY REGISTRATION PLATES - SOPHISTICATED MATERIALS - NETWORK AND INFRASTRUCTURE - LONG TERM CONTRACT - VIABILITY AND FEASIBILITY - DISCRIMINATORY - MYSTERIOUS DECISIONS - ECOLOGICAL CONSIDERATIONS - RELEVANT CONSIDERATIONS - PROPRIETORY CONCERN - RATIONAL AND RELEVANT PRINCIPLE - NON-DISCRIMINATORY - EXTRANEOUS OR IRRELEVANT CONSIDERATION - DENIAL OF EQUALITY - SETTLED LEGAL POSITION - ARBITRARY AND UNCONSTITUTIONAL.
Fact of the Case:
The petitioner, a Cooperative Society, challenged the action of the Thane Municipal Corporation in giving the cleaning, fishing and boating contract to respondent No.6 without giving any public advertisement or inviting tenders. The petitioner was given the lease for boating in Masunda lake, which was about to expire. The Corporation executed a lease agreement of fishing, cleaning and boating with respondent No.6 for a period of 25 years. The petitioner contended that the action of the Corporation was arbitrary and illegal, contrary to the Resolution passed by the Corporation, and against the public interest. The petitioner also contended that the Corporation had not invited tenders or issued any advertisement for the contract, and that the lease agreement was executed without the authority of the Commissioner. The Corporation submitted that the contract was given to respondent No.6 because it had the necessary machinery and infrastructure for cleaning the lake, and that the petitioner had not shown any interest in fishing and cleaning the lake. The Corporation also submitted that the lease agreement was executed in accordance with the Resolution passed by the Corporation, and that the Commissioner had the authority to execute the lease agreement.
Finding of the Court:
The Court held that the action of the Corporation in giving the contract to respondent No.6 for a period of 25 years without inviting tenders or public advertisement was arbitrary, illegal and de hors the public interest. The Court found that there were no compelling circumstances to deviate from the general rule of inviting tenders. The Court also found that the Corporation had not considered other eligible persons who might have been willing to undertake the work. The Court further found that the investment made by respondent No.6 was questionable, and that the Corporation had spent a large amount of money for the beautification of the lake. The Court also found that the Corporation had not acted in accordance with the Resolution passed by it, and that the lease agreement was executed without the authority of the Commissioner. The Court held that the lease agreement was arbitrary and unconstitutional, and quashed and set aside the same. The Court directed the Corporation to invite fresh tenders for the contract.
Issues: 1. Whether the action of the Corporation in giving the contract to respondent No.6 for a period of 25 years without inviting tenders or public advertisement was arbitrary, illegal and de hors the public interest? 2. Whether the Corporation had considered other eligible persons who might have been willing to undertake the work? 3. Whether the investment made by respondent No.6 was questionable? 4. Whether the Corporation had acted in accordance with the Resolution passed by it? 5. Whether the lease agreement was executed without the authority of the Commissioner?
Ratio Decidendi: The Court held that the action of the Corporation in giving the contract to respondent No.6 for a period of 25 years without inviting tenders or public advertisement was arbitrary, illegal and de hors the public interest. The Court found that there were no compelling circumstances to deviate from the general rule of inviting tenders. The Court also found that the Corporation had not considered other eligible persons who might have been willing to undertake the work. The Court further found that the investment made by respondent No.6 was questionable, and that the Corporation had spent a large amount of money for the beautification of the lake. The Court also found that the Corporation had not acted in accordance with the Resolution passed by it, and that the lease agreement was executed without the authority of the Commissioner. The Court held that the lease agreement was arbitrary and unconstitutional, and quashed and set aside the same. The Court directed the Corporation to invite fresh tenders for the contract.
Final Decision: The Court held that the action of the Corporation in giving the contract to respondent No.6 for a period of 25 years without inviting tenders or public advertisement was arbitrary, illegal and de hors the public interest. The Court found that there were no compelling circumstances to deviate from the general rule of inviting tenders. The Court also found that the Corporation had not considered other eligible persons who might have been willing to undertake the work. The Court further found that the investment made by respondent No.6 was questionable, and that the Corporation had spent a large amount of money for the beautification of the lake. The Court also found that the Corporation had not acted in accordance with the Resolution passed by it, and that the lease agreement was executed without the authority of the Commissioner. The Court held that the lease agreement was arbitrary and unconstitutional, and quashed and set aside the same. The Court directed the Corporation to invite fresh tenders for the contract.
P.B. Majmudar, J.
The action of the Thane Municipal Corporation in giving the cleaning, fishing and boating contract to respondent No.6 without giving any public advertisement or without inviting tenders is challenged by the petitioner by way of this petition under Article 226 of the Constitution of India.
2. The petitioner is a Cooperative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and Rules framed thereunder. Initially the petitioner was given the contract of boating in Masunda lake situate in the heart of the Thane city. When the lease given to the present petitioner was about to expire and during the existence of the aforesaid lease, the Municipal Corporation of Thane executed a lease agreement of fishing, cleaning and boating with respondent No.6. The said lease agreement is executed for a period of 25 years . By way of this petition, the petitioner has prayed that the lease agreement dated 19th September, 2001 may be declared as illegal and unconstitutional and it may be held that the same is contrary to the Resolution No. 201 dated 19th July, 2001 passed by the Corporation. It is also prayed that appropriate writ and directions may be issued directing the Corporation to invite tenders which may be published in the newspaper in connection with cleaning, boating and fishing at Masunda Lake at Thane.
3. Masunda Lake is located in the heart of Thane City wherein cleaning, fishing and boating activities are going on. It is the case of the petitioner that prior to the present disputed lease agreement which has been executed in favour of respondent No.6 by the Corporation, the petitioner was given the lease and the said lease was in existence upto 22nd October, 2001. The grievance of the petitioner is that even though the lease agreement was subsisting, the Corporation executed fresh lease agreement in favour of respondent No.6 and that too without inviting any tender or without issuing any advertisement. Even though as per the policy of the State Government, such contract is required to be given only to the Co-operative Societies, yet the same has been given to respondent No.6 which is a proprietory concern. It is the submission of the petitioners that the said action of the Corporation is arbitrary and illegal and the Corporation has acted against its own financial interest in the matter of granting lease in favour of respondent No.6. It is the case of the petitioner that initially General Body of the Corporation passed a resolution bearing No. 201 dated 19th July, 2001 and by virtue of condition Nos. 1 to 6, Respondent No. 6 was permitted to execute separate agreement with the petitioner in connection with boating in the said lake. According to the petitioner, the said lease executed by the Corporation with respondent No.6 is contrary to the aforesaid resolution of the Corporation. It is further submitted that the Deputy Municipal Commissioner, who is the signatory to the lease agreement had no power to sign such agreement as it is only the Commissioner who is empowered to do the same. It is submitted that in order to favour one of the employees of the Corporation viz. Dinanath Kashinath Thanekar that the lease agreement is given to respondent no.6. The proprietor of respondent No.6 is the mother of the aforesaid employee of the Corporation. It is submitted that since the Corporation is dealing with the public property, it was not open to the Corporation to lease the property for such a long period without inviting public advertisement or inviting tenders. It is further submitted that at the time when the petitioner was given the lease agreement, the yearly amount was Rs. 4,27,000/-. As against that, in the present lease agreement, respondent No.6 has been given the lease agreement for breeding, fishing and boating only at the rate of Rs. 2 lacs per year. It is submitted that the Corporation has, therefore, acted against the interest of the Corporation and such
