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2016 Supreme(Bom) 795
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SHANTANU S. KEMKAR & M.S. KARNIK, JJ.
Jayshree Ramakant Khadilkar Pande – Petitioner
Versus
Municipal Corporation of Greater Mumbai and Ors. – Respondents
PUBLIC INTEREST LITIGATION (L) NO. 51 OF 2016
Decided On : 05-07-2016
For the Petitioner: Mr. Mihir Desai, Senior Counsel, Amicus Curiae.
For the Respondent:Mr. A.Y. Sakhare, Senior Counsel, Mr. M.P. Jadhav, AGP, Ms. Geeta Joglekar, Mr. Shekhar Naphade, Senior Advocate, Dr. Abhinav Chandrachud, Mr. S.D. Shetty, Mr. Kunal Chheda, M/s. M.V. Kini, Mr. Aspi Chinoy, Senior Counsel, Mr. Mahesh Londhe, M/s. Sanjay Udeshi, Mr. Amol Bavare, Mr. Yogesh Chawak and Mr. Chirag Dave, Legasis Partners and Mr. G.W. Mattos.
Headnote:
JUDGMENT - MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) - AWARD OF CONTRACTS - IRREGULARITIES - BLACKLISTING - JUDICIAL REVIEW: The High Court of Bombay quashed the contracts awarded by the Municipal Corporation of Greater Mumbai (MCGM) to two contractors for four road works due to irregularities and the MCGM's failure to follow proper procedures. FACT OF THE CASE: - A Public Interest Litigation (PIL) was filed alleging irregularities in the awarding of contracts by MCGM to the contractors. - An interim stay was granted on the contracts awarded to the contractors. - The MCGM defended its decision, stating that the contractors were not debarred from participating in the tender process as there was no order of blacklisting or suspension of registration at the time of issuing the work order. - The Amicus Curiae appointed by the Court highlighted various irregularities found in the road works executed by the contractors. - The MCGM submitted interim reports indicating discrepancies in the road works and proposed action against the contractors, including blacklisting and criminal prosecution. - Despite the proposed action, the MCGM awarded contracts to the contractors, prompting the PIL. FINDING OF THE COURT: - The Court found that the MCGM had taken steps to initiate action against the contractors, including criminal prosecution and blacklisting. - However, the Court held that the MCGM's decision to award the contracts to the contractors was arbitrary and against the public interest. - The Court noted that the MCGM was aware of the irregularities and the proposed action against the contractors but still proceeded with the award of contracts. - The Court found that the MCGM's action was intended to favor the contractors and was contrary to the larger public interest. ISSUES: - Propriety of the MCGM's decision to award contracts to the contractors despite irregularities and proposed action against them. - Whether the MCGM's action was arbitrary, unreasonable, and against the public interest. - Applicability of the Rules governing the registration of contractors for Civil, Mechanical, Electrical, and Electronic Engineering Works 2015. RATIO DECIDENDI: - The Court held that the MCGM's decision to award the contracts to the contractors was arbitrary, unreasonable, and against the public interest. - The Court found that the MCGM had not acted fairly and justly in exercising its power to award the contracts. - The Court held that the MCGM's action was intended to favor the contractors and was contrary to the larger public interest. - The Court relied on various Supreme Court precedents emphasizing the principles of fairness, equality, and reasonableness in government contracts. FINAL DECISION: - The Court quashed and set aside the contracts awarded to the contractors by the MCGM. - The Court declined to monitor the proceedings as the MCGM had already initiated action against the contractors. MAIN LEGAL POINT: - The Court reiterated the principles of fairness, equality, and reasonableness in government contracts, emphasizing that the State must act fairly and justly without discrimination and unfair procedure. CATEGORY: Public Interest Litigation SUB-CATEGORY: Municipal Contracts - Irregularities - Judicial Review
M.S. KARNIK, J.
1. Heard Mr.Mihir Desai, learned Senior Counsel appointed Amicus Curiae, Mr.A.Y.Sakhare, learned Senior Counsel for respondent No.1, Mr.M.P.Jadhav, learned AGP for respondent no.2, Mr.Shekhar Naphade, learned Senior Counsel for respondent no.3, Mr.Aspi Chinoy, learned Senior Counsel for respondent no.4, Mr.Chirag Dave, learned Counsel for Respondent no.5, Mr.G.W.Mattos, learned Counsel for respondent no.8. Respondents no. 6 & 7 are not represented, in any case, their presence is not necessary for deciding the present controversy.
2. This PIL was first moved on the 27/05/2016 before the Vacation Court. By an interim order dated 27/05/2016, the contracts awarded by respondent no.1 to the respondents no. 3 & 4 are stayed. The said adinterim order is made operative for a limited period i.e. till the regular Bench hears the matter.
3. Thereafter it was heard for admission on 09/06/2016 when the objection was raised as regards locus of the petitioner. Instead of going into same as agreed to in place of the petitioner prosecuting the matter, Mr.Mihir Desai was requested to act as 'Amicus Curiae' in the matter to assist the Court.
4. The subject of the present PIL pertains to awarding of 4 contracts to respondents no.3 & 4 on 06/05/2016 by respondent no.1 – Municipal Corporation of Greater Mumbai (hereinafter referred to as 'MCGM' for short). In the PIL, it is alleged that respondents no. 3, 4, 5, 6 & 7 are the contractors to whom a number of road works approximately 200 works (of which most are over Rs. 5 Crores each) during the period 2013-14, 2014-15, 2015-16 were awarded by MCGM across Mumbai. Pursuant to a complaint of corruption received by respondent no.1, various irregularities were noticed as regards the quality of the works and thereby causing heavy financial loss to respondent no.1. Based on the interim reports submitted from time to time by the committee appointed by the Municipal Commissioner, on 01/04/2016, the Additional Municipal Commissioner by a detailed note proposed criminal action as well as that of blacklisting the contractors which included respondents no.3 & 4 also. The Municipal Commissioner by order dated 25/04/2016 directed filing of FIR including action of blacklisting / suspension of registration of respondents no.3 & 4. FIR was registered on 26/04/2016. It is therefore alleged that despite the interim reports indicating large scale irregularities and despite filing of FIR and the proposed action of blacklisting / suspension of registration, respondent no.1 awarded the contracts to respondents no.3 & 4.
5. Respondent no.1 – MCGM by filing a detailed reply and also additional reply defended its decision of awarding the contracts to respondents no.3 & 4. According to respondent no.1, respondents no.3 & 4 cannot be debarred from participating in the tender process as on the date of issuance of work order, there was no order of blacklisting or suspension of registration. Respondent no.1 has taken every possible action against respondents no.3 & 4 including criminal prosecution. The contracts awarded to respondents no.3 & 4 are pursuant to a tender process which progressed in the normal and legitimate course of things.
6. Respondent no.3 by filing a detailed affidavit supported the stand of respondent no.1. Respondent no.3 prayed for dismissal of PIL as it is motivated to tarnish the reputation of respondent no.3.
SUBMISSIONS OF THE LEARNED AMICUS CURIAE
7. The learned Amicus Curiae has invited our attention to the various interim enquiry reports enclosed along with the PIL. According to him, respondent no.1 – MCGM which is a statutory body is responsible for carrying out maintenance and construction of municipal roads in the MCGM area. Respondent no.1 awarded approximately 200 road works during the period 2013-14, 2014-15 and 2015-16 in which grave irregularities and corruption has come
