1999 Supreme(Gau) 248

GAUHATI HIGH COURT
J.N.Sarma, J.
United Assam Company -Appellant
Versus
State of Assam and Ors. -Respondent
Civil Rule No. 6611 of 1998
Decided On : 26-07-1999

Extension of contract period - Private negotiation - Legality - Assam Excise Act and Rules, 1945 - Rule 93, 94, 178 (4).

Headnote:

EXCISE - Tender - Extension of contract period - Private negotiation - Legality - Assam Excise Act and Rules, 1945 - Rule 93, 94, 178 (4).

Fact of the Case:

The petitioner, United Assam Company, submitted a tender for the contract of Excise Warehouse at Jorhat for 3 years. The respondent, Chavelier Enterprises, also submitted a tender. The contract was awarded to the petitioner at the rate of Rs. 15.25 per LPL. The respondent filed a civil rule to quash the tender. The High Court dismissed the writ petition. The respondent filed a writ appeal and the Division Bench of the High Court set aside the contract in favor of the petitioner and directed for fresh settlement. The State Government canceled the order in favor of the petitioner and settled the warehouse in favor of the respondent at the rate of Rs. 9.45 LPL. The petitioner filed a civil rule challenging the settlement in favor of the respondent. The respondent filed a civil rule for enhancement of the rate and extension of the term. The High Court disposed of the civil rules directing the State Government to consider the tender and application for extension submitted by the respondent in accordance with the Assam Excise Act and Rules.

Finding of the Court:

1. The extension of the contract period in favor of the respondent was illegal as it was granted by way of private negotiation, which is contrary to the judgment of the High Court and the Supreme Court. 2. There is no provision under the Assam Excise Act and Rules for granting any extension after the expiry of the earlier lease period. 3. The contract with the petitioner was not canceled or withdrawn and was still valid, therefore, no extension could have been given to the respondent after 1.1.99. 4. The respondents acted in an unfair manner in granting extension to the respondent even by incurring loss of Government revenue. 5. The respondent failed to disclose the pendency of a Bakijai proceeding against him, which is a violation of the tender notice clause requiring disclosure of any legal suit or financial involvement.

Issues: 1. Whether the extension of the contract period in favor of the respondent was legal. 2. Whether there is any provision under the Assam Excise Act and Rules for granting any extension after the expiry of the earlier lease period. 3. Whether the contract with the petitioner was canceled or withdrawn. 4. Whether the respondents acted in an unfair manner in granting extension to the respondent. 5. Whether the respondent disclosed the pendency of a Bakijai proceeding against him.

Ratio Decidendi: 1. The extension of the contract period in favor of the respondent was illegal as it was granted by way of private negotiation, which is contrary to the judgment of the High Court and the Supreme Court. 2. There is no provision under the Assam Excise Act and Rules for granting any extension after the expiry of the earlier lease period. 3. The contract with the petitioner was not canceled or withdrawn and was still valid, therefore, no extension could have been given to the respondent after 1.1.99. 4. The respondents acted in an unfair manner in granting extension to the respondent even by incurring loss of Government revenue. 5. The respondent failed to disclose the pendency of a Bakijai proceeding against him, which is a violation of the tender notice clause requiring disclosure of any legal suit or financial involvement.

Final Decision: The High Court quashed the orders granting extension in favor of the respondent and directed the authorities to make a fresh settlement of the Jorhat Excise Warehouse by inviting fresh tenders within a period of one month.