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HON'BLE SRI JUSTICE D.V.S.S.SOMAYAJULU
WRIT PETITION No.28921 of 2021
ORDER :
This Writ Petition is filed challenging the Notification dated 01.12.2021 issued by the 2nd respondent as illegal, inoperative and contrary to law.
This Court has heard Sri V.S.R.Anjaneyulu, learned senior counsel for the petitioner, Sri Shaik Karimulla, learned standing counsel appearing for the 2nd to 4th respondents and Sri G. Ramgopal, learned counsel for the unofficial respondents and the learned Government Pleader for Social welfare appearing for the 1st respondent.
The petitioner in this case is questioning the actions of the Waqf Board and in particular the 3rd respondent who according to the petitioner granted some "extra bounty" and privileges to the 5th respondent in a tender. Learned senior counsel has filed a list of dates, which are taken on record. He relied upon the said dates to argue that the entire action in this case is vitiated. He points out that the issue in this case relates to the tender dated 07.07.2021 for about 17 items which were later reduced pursuant to the order of the Court. Learned senior counsel submits that the terms and conditions of the tender are reproduced in the writ affidavit itself and they are not denied. As per him there is a strict time frame even for payment of the sums due. It is his contention that 20% should be paid on the day of the auction, 2 30% within seven days and 50% within 90 days as per the tender conditions. He also says that penal consequences are attached to the same. Therefore, learned senior counsel argues that the action of the respondents in granting time to the 5th respondent extending time upto March, 2022 under various letters, which are filed, clearly amounts to an undue favour. He points out that even in the Writ Appeal which was filed against the learned single Judge's order, the permission was given to make a representation only, but the said representation cannot be disposed of contrary to the terms of the tender. Learned counsel argues in this case if the tender conditions were to be relaxed, all the tenderers should be given equal opportunity to pay the money in installments etc. He also argues that the counter is only filed by the 5 th respondent and despite the allegations made the 3rd respondent has not filed a counter denying the allegations. It is also pointed out that when the Writ Appeal was being heard against the order in W.P.No.20624 of 2021 the Waqf Board did not raise a proper protest or seek to adjudicate the case on merits. As a result of which, he says that the 5th respondent has got undue benefit.
The essential arguments in this case are advanced by Sri G. Ramgopal, learned counsel for the 5th respondent. He submits that his client is being unnecessarily penalized. It is admitted that the 5th respondent is a successful tendered in the tender referred to above. The Chief Executive Officer 3 initially granted 15 days time to pay the amount as per the Bid. Thereafter, on 31.08.2021, due to covid calamity the 5th respondent made a representation to grant installments and considering the situation the 3rd respondent permitted him to pay by installments. This is based upon an earlier precedent of January, 2017, where a similar benefit was extended to the tenderer in that case. With regard to the Writ Appeal it is submitted that the Division Bench gave permission to the 5 th respondent to make a representation and did not impose any other conditions on the 3rd respondent to take a decision. The 3rd respondent considering the facts and circumstances took a decision granting time to pay the amounts considering the financial scenario in the country, covid, droppage in the market etc. It is also submitted that in the interest of revenue generation, the said order was passed, therefore, it is not an unreasoned order. Learned counsel submits that the petitioner is essentially ventilating his grievances against the Board because of other reasons and if the overall situation is considered there is no mistake in the orders passed. It is reiterated that as the 5th respondent has paid substantial sums of money; the Writ Petition should be dismissed, the interim order should be vacated and he should be permitted to continue the tender.
Sri Shaik Karimulla, learned standing counsel argues for the Waqf Board and justifies the action of the 3rd respondent.
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This Court is of the opinion that to decide this matter the terms of the tender are to be considered. The tender in this case was floated on 07.07.2021. It is for a period of one year. A substantial part of Item No.1 of the tender is involved in the present dispute. The terms and conditions of the tender which are of the consequence and important are as follows:
"7. Immediately after conclusion of the bid the successful bidder shall remit the amount in the Board's treasury as follows:
(a) 20% of the total auction amount in cash or in shape of D.D. on the same day i.e., on the day of auction itself.
(b) 30% of the total auction amount in cash or in shape of D.D. within (7) days from the date of auction, then only the Proceedings to collect the offerings items will be issued to the Contractor.
c) 50% of the total auction amount in cash or in shape of D.D. within (90) days from the date of auction, excluding the E.M.D. amount, failing which the contract shall stand cancelled and the right of the Contractor to collect the offerings in the Hundi shall be rescinded and the Waqf Board shall take control of the Hundi and auction items by giving one weeks advance notice to the Contractor.
d) 1% of the bid amounts towards auction expenses shall be borne by the highest bidder and the said amount shall be deposited in cash, or in the shape of D.D. on the day of auction.
8. The successful bidder should execute an agreement with tile Chief Executive Officer, Waqf Board immediately after the auction is concluded.
9. If the successful bidder fails to remit the bid amount as mentioned above or commits default in any manner whatever amounts deposited by him shall be forfeited and he will not have any right whatsoever to claim the amount remitted/ deposited by him in respect of this auction. Further the auctioned items would be taken under the Direct Management of the A.P. State Waqf Board, and the Hundi amount would directly collected by 5 the officer deputed by the Warq Board. The rights of the default bidder would be forfeited.
10. The defaulter Contractor of the previous Auction or the present auction shall not be allowed to participate in future auctions conducted by the Waqf Board, since he will be debarred from participating in the auction permanently.
11. If the successful bidder fails to remit the amount within the stipulated time the Waqf Board reserves the right to renotify the auction or to conclude the auction in favour of the 2nd highest bidder and the defaulting bidder shall be liable to pay any loss or shortage that may occur due to reauction."
As can be seen from the record on 10.08.2021 the quotation of the 5th respondent is accepted and he was directed to pay the bid amount within 15 days from the date of receipt of the intimation. Thereafter, the petitioner made a representation for paying the amount due in installments, which was negatived / refused by orders dated 14.09.2021. This was assailed in W.P.No.20624 of 2021. The learned single Judge by his orders dated 27.09.2021 clearly held that the terms of the contract of tender or any provision of law do not enable the petitioner to seek installments. Therefore, learned single Judge ultimately held that the petitioner is not entitled to pay the bid amount in installments.
Thereafter, a Writ Appeal was filed by the 5th respondent. In the Writ Appeal the learned counsel appearing for the 5th respondent submitted that 50% of the amount would be deposited within two weeks and the balance 50% will be deposited within four weeks thereafter. This proposal 6 was accepted by the counsel for the Waqf Board. The matter was adjourned from 08.10.2021 after the proposal was noted in the order. On 06.10.2021, again Waqf Board wrote a letter to the 5th respondent to pay the amount due and gave him 48 hours time.
Pursuant to the submission made in the Court the petitioner again submitted a representation dated 20.10.2021 in which he said 50% of the amount would be deposited today i.e., Rs.86 lakhs out of Rs.1,72,00,000/- and the balance amount would be deposited within four weeks. On the same day the 5th respondent also gave eight DDs totaling an amount of Rs. 86 lakhs to the 3rd respondent. Thereafter, the Writ Appeal was heard on 25.11.2021, and on that date the Writ Appeal was withdrawn by the 5th respondent herein, who is the petitioner therein, stating that he intends to make a representation for redressal of his grievances. The Division bench permitted the withdrawal of the Writ Appeal granting liberty as prayed for. Thereafter, a final order dated 01.12.2021 is passed, by which the outstanding amount of Rs.86 lakhs was directed to be paid in two further installments. This is the subject matter of the Writ Petition. This Court finds that in the impugned order dated 01.12.2021 it is agreed that time upto 10.12.2021 would be given to pay Rs.25 lakhs and the balance amount should be paid within 90 days from the date of allotment of the contract. The date of allotment is fixed as 10.12.2021, by which date the 7 petitioner had to pay Rs.25 lakhs. Therefore, the effect of this order is that if Rs.25 lakhs was paid by 10.12.2021, the 5th respondent would get a further period of 90 days i.e., upto March, 2022 to pay the balance of Rs.62.72 lakhs. This is the order challenged in this case.
Lot of arguments were advanced by the learned senior counsel for the petitioner of the alleged bios etc. This Court is not proposing to go deeper into the matter of bias since clear pleading to prove the same are not there. Reading of the facts support the conclusion this Court is arriving at basing upon the law on the subject.
It is clear that if there is a term in the contract which also stipulates penalty or stipulates the consequences, it is an essential term. The terms of the tender are also to be construed carefully. If the terms of the tender make it clear that there would be consequences if the term is not adhered to. The Hon'ble Supreme Court has clearly held that it is an essential term of the contract. If it is essential term of the contract it cannot be relaxed. If it is to be relaxed, all the tenderers should be given an equal opportunity. The judgment in The judgments of the Hon'ble Supreme Court in Kanhaiya Lal Agarwal v Union of India1.
A perusal of the terms of the contract which are included in the writ affidavit and are also not denied makes it very clear that the following schedule must be followed. 1 (2002) 6 SCC 315 8 On the conclusion of the bid the bidders shall remit the amount as follows:
(a) 20% on the date of the auction;
(b) 30% within seven days and then only the proceedings to move forward will be given;
(c) 50% of the amount within 90 days from the date of the amount, failing which the contract shall stand cancelled and the right of the contractor shall be rescinded.
(d) 1% of the bid amount towards auction expense shall be deposited on the date of the auction.
(e) Clause 8 also states that the successful bidder should execute an agreement with Chief Executive Officer immediately after the auction is concluded.
(f) Clause 9 states if the successful bidder fails to remit the amount or commits default the amounts deposit shall be forfeited and he shall not have a right to claim the amounts. The auctioned items will be taken under the direct Management of the Board and the rights of the bidder will be forfeited.
(g) Clause 10 states that the defaulting contractor shall not be allowed to participate in the future auction.
(h) Lastly, it is also stipulated that the Board reserves a right to conclude the auction in favour of the 2 nd highest bidder and the defaulter bidder shall be liable to pay the loss and shortage.
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In the light of these penal consequences, this Court is of the firm opinion that the time schedule mentioned above is an essential part or an essential term of the contract. It cannot be relaxed. The law on the subject is also sufficiently clear that an essential term of the contract cannot be relaxed. The same need not be repeated hear.
If the present case is examined against the law it is clear that the tender dated 07.07.2021 was accepted on 10.08.2021. This is not in dispute. As per the above schedule the deposits were to be made. The 5th respondent was given 15 days time to pay the amount. Just before the 15 day period was to elapsed he made a representation, which was rejected on 14.09.2021. He challenged the same before the learned single Judge in W.P.No.20624 of 2021, which was dismissed. Writ Appeal was also dismissed on 20.10.2021. He made a representation offering to pay a sum of Rs.1.72 crores in two installments. The 1st installment of Rs.86 lakhs was in fact paid on 18.10.2021. He sought four weeks time to pay the balance 50%. However, when the Writ Appeal was taken up for hearing on 25.11.2-21 he informed the Court that he will be making representation and therefore the Division bench permitted the petitioner to make a representation. By that date he already made a representation. Even though the petitioner sought four weeks time to pay the balance amount the 3rd respondent in his wisdom granted 10 days time to pay Rs.25 Lakhs and a 10 further period of 90 days i.e., 12 weeks to pay the balance amount. In the opinion of this Court this action is totally flawed and contrary to the terms of the tender. If the period granted by the 3rd respondent to the 5th respondent is counted it will be extending to March, 2022. As per the terms and conditions of the auction 50% of the amount should be paid within seven days from the date of the auction and the balance 50% of the amount within a period of 90 days. From 14.08.2021 the 5th respondent had seven days to pay 50% and a further period of three weeks to pay the balance. While this Court does not want to reproduce the strong language used by the learned senior counsel on these concessions, the fact remains that this Court holds that the action of the 3rd respondent in granting the bounty to the 5th respondent is contrary to the terms and conditions of the auction. It is also to be noticed that the litigation was started by the 5th respondent himself. Therefore, he cannot take this advantage of his own wrong and claim the benefits.
This Court unhesitatingly holds that the action of the 3rd respondent in granting this liberty is totally contrary to law and opposed to terms and conditions of the tender. Therefore, the Writ Petition is allowed.
In view of the interim order the work was not actually executed. Therefore, there shall be a direction to the 3 rd respondent to refund all the amounts that are paid by the 5 th respondent in this case to him and to conduct a fresh action 11 within 30 days. The judgments of the Hon'ble Supreme Court of India and the law on the subject should be kept in mind while framing the terms and conditions of the auction and in taking decision. The 3rd respondent Chief Executive Officer as a guardian and "caretaker" of the religions institution should be scrupulously careful in dealing with the properties of the institution. There shall be no order as to costs.
Consequently, the Miscellaneous Applications pending, if any, shall stand closed.
__________________________ D.V.S.S.SOMAYAJULU,J Date:05.05.2022 Ssv