Bombay High Court
Jayshree Ramakant ... vs Municipal Corporation Of Greater ... on 5 July, 2016
Bench: Shantanu S. Kemkar
PIL 51.16. reserved.doc
Urmila Ingale
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
PUBLIC INTEREST LITIGATION (L) NO. 51 OF 2016
Jayshree Ramakant Khadilkar - Pande .. Petitioner
Vs.
Municipal Corporation of Greater
Mumbai and ors. .. Respondents
Mr.Mihir Desai, Senior Counsel, Amicus Curiae, for the
Petitioner.
Mr.A.Y.Sakhare, Senior Counsel a/w Ms. Geeta Joglekar, for
Respondent No.1 - BMC.
Mr. M.P. Jadhav, AGP for State - Respondent No.2.
Mr.Shekhar Naphade, Senior Advocate a/w Dr.Abhinav
Chandrachud, Mr.S.D.Shetty, Mr.Kunal Chheda i/b M/s. M.V.Kini
& Co., for Respondent No.3.
Mr.Aspi Chinoy, Senior Counsel a/w Mr.Mahesh Londhe i/b
M/s.Sanjay Udeshi & Co., for Respondent No.4.
Mr.Amol Bavare a/w Mr. Yogesh Chawak and Mr.Chirag Dave i/b
Legasis Partners for Respondent No.5.
Mr. G.W.Mattos, for Respondent No.8.
CORAM : SHANTANU.S.KEMKAR &
M.S.KARNIK, JJ.
RESERVED ON : 23rd JUNE, 2016
PRONOUNCED ON : 05th JULY, 2016
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PIL 51.16. reserved.doc
JUDGMENT (PER M.S.KARNIK, J.) :
. 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 ad-interim 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
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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
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Commissioner, on 01/04/2016, the Additional Municipal
Commissioner by a detailed note proposed criminal action as
well as that of black-listing 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 black-listing / 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 black-listing / 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 black-listing or suspension of
registration. Respondent no.1 has taken every possible action
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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 to light. He highlighted various
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irregularities which have been observed with respect to 34 out
of these 200 road works. The decision of conducting enquiry
into these irregularities in the road works done in the MCGM
area was taken pursuant to the complaint and then the
Municipal Commissioner Mr.Sitaram Kunte, by his order dated
16/10/2015 directed the formation of a two-member committee
to examine in detail the various complaints of irregularities in
the road works.
8. According to the learned Amicus Curiae, the first
such interim report was submitted on 23/12/2015. However,
looking at the vast scope of the inquiry required to be
undertaken, an extension was sought and time was granted to
the two-member committee to file the interim report by
10/02/2016.
9. The learned Amicus Curiae invited our attention to
the letter dated 04/01/2016 suggesting the formation of
technical teams for carrying out site visits, scrutiny of RA bills,
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final bills, challans, verification of documents etc. Accordingly,
technical teams in terms of the proposal of the Chief Engineer
(Vigilance) were formed by the Assistant Municipal
Commissioner. On 15/01/2016, it was decided in a meeting
held by the Municipal Commissioner to take trial pits on internal
roads in the presence of the respondent no.1's roads staff and
representations of Third Party Quality Auditors (TPQA) with the
help of Municipal labourers. Accordingly, on 10/02/2016, 34
roads (selected as sample out of the total 200 road works) were
inspected and an interim report dated 24/02/2016 was filed by
the two-member committee.
10. Learned Amicus Curiae has invited our attention to
the interim report dated 24/02/2016 and to the conclusions
thereunder wherein discrepancies are found in base layers.
These discrepancies included the Wet Mix Macadam being of
lesser thickness than the design, lesser thickness of Granular sub
base, lesser overall design curst, asphaltic layers of roads have
lesser thickness than design etc.
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11. According to the learned Amicus Curiae, seriousness
of the major discrepancies can be discerned from the fact that
the interim report showed that in W-266 road work, the overall
crust was only 18% of the design crust. Similarly, in W-271, it
was found that the entire Sand blanket was not laid and the
overall crust was a mere 34% of the design crust. In several
cases, the thickness of various sub-base layers was found to be
100% deficient which means that the corresponding component
of work had not been executed at all by the concerned
contractors.
12. The interim report concluded that most of the
discrepancies are found in the sub-base layers of the road and
that all the road works in the work code allotted to the
contractors needs to be verified by respondent no.1. The
interim report also suggested that five teams be formed to do
the complete examination of the entire road works and to
quantify the total financial loss caused to the respondent no.1.
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13. The learned Amicus Curiae invited our attention to
the interim report dated 18/03/2016 of the trial pits. In the
said report, at point number 8 is a road workwise chart showing
the extent of major discrepancies for each of the 34 roads. This
chart also mentions the contractors responsible for each road
work and financial loss caused to respondent no.1 with respect
to the non -execution of each road work or a part thereof.
14. The Amicus Curiae pointed out that in the interim
report on trial pits of 18th March 2016, the Deputy Municipal
Commissioner (Z-III) recommended that the inspection of
remaining of the 200 road works of cost above Rs. 5 Crores
should be carried out in a similar manner.
15. The learned Amicus Curiae further invited our
attention to the preliminary report dated 01/04/2016 of the
Additional Municipal Commissioner. The said report dated
01/04/2016 mentions that it can be seen that these roads have
not been constructed to the designed strength and that there has
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been a large scale deficiency in quality and its manipulation
thereof. The Additional Municipal Commissioner concluded
thus:
A) From the above it is clearly seen that the officers of all
levels of Roads and Traffic department engaged in
execution of these works have failed to perform their
duties in spite of having knowledge of
irregularities/malpractices and responsibilities need to
be fixed on them.
B) Third Party Quality Auditors (TPQA) though having
knowledge that the works are not carried out as per
design and BOQ have given false certification to the
works which are actually not carried out enabling the
contractors to claim the amount for the same. Action
including blacklisting and filing a police complaint may
be taken against them.
C) The contractors with full knowledge and intention have
prepared false record of the work not actually executed
by them as per design and BOQ and have submitted
these claims for obtaining payments and received them.
Action including blacklisting and filing a police
complaint may be taken against them.
16. Our attention is invited to the noting of the
Municipal Commissioner dated 18/04/2016 which reads thus :
"From the report it appears that general responsibility is
fixed. While it is appreciated that it will take time to fix
individual charges, however in view of the gravity of the
irregularity a first stage responsibility and action that
needs to be taken should be enumerated. Please put up
with proposal for action to be taken."
17. A proposal was accordingly put up by the Additional
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Municipal Commissioner on 20/04/2016 for initiating
disciplinary proceedings against all officers who are involved in
the execution of the works and reports. Apart from other
actions recommended, proposal was also put forward for
initiating action of filing FIR and black-listing the contractors
and Third Party Quality Auditors which may be taken by the
Chief Engineer (Roads).
18. The learned Amicus Curiae invited our attention to
the noting dated 25/04/2016 of the Municipal Commissioner on
the said proposal dated 20/04/2016 which are as under :
"The enquiry report has brought out serious irregularities in
the execution of road works in the MCGM. From the report
it is clear that all 34 roads taken up for inspection have
irregularities of a serious nature and all 6 contractors are
found to be guilty. Not only this, even the third party
auditors have completely failed in their duties and are
involved in perpetuating this irregularity. This large
irregularity could not have taken place without the active
and passive involvement of senior officials and officials at all
ranks.
In view of the outcome of the report the following
action be taken to ensure that all guilty are punished and
further systems are put in place to ensure that public money
is spent with due care and achieves stated out comes.
1. The then C.E (Roads) Shri A.Pawar should be placed
under suspension forthwith. The C.E (Vigilance) has
already been suspended in another case. DMC (GA) to
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take action.
2. The responsibility on other officials be fixed and action
of suspension and other disciplinary action be taken in
stages. DMC (GA) to coordinate.
3. The process of blacklisting/deregistration of
contractors and third party auditors to begin immediately.
This action will be taken by Director (E.S.P) by following
due process of law.
4. In view of the magnitude of public money involved and
the large scale irregularity FIR be filed forthwith against
contractors and Third Party Auditors (TPA) by C.E.
(Roads) in consultation with DMC (GA).
5. The tender documents and tender procedure need to
be revamped. The C.B.(Roads) under supervision of the
Addl.M.C.(E.S.) will take up work of further revising of
tender documents. Further a stringent system will be put
in place to ensure quality of work being executed.
6. It is also observed that the road plan drawn up has
included roads that do not need repairs or upgradation.
The Addl. MC (E.S.) will take up work of viewing the
road works plan based on strict technical criteria.
7. The AMC (W.S) to draw up a schedule for the
remaining roads in view of the fact that the first stage of
enquiry has shown serious irregularity."
19. The learned Amicus Curiae pointed out that on the
basis of the above, FIR under Sections 120B, 197 and 420 of the
Indian Penal Code came to be filed against all the 6 contractors
including respondents no. 3 and 4 on 25/04/2016.
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20. The learned Amicus Curiae submitted that despite
the aforementioned findings and the proposed action against the
6 contractors including respondents No.3 and 4, respondent
no.1 by Standing Committee resolution dated 04/05/2016
awarded the contracts to respondents no.3 and 4. He contends
that the awarding these contracts to respondent no.3 and 4 is
contrary to the action proposed by the Municipal Commissioner
and the same is palpably against the public interest. According
to him the undue haste with which the contracts are awarded to
the contractors and the consequential delay in issuance of show
cause notice and taking appropriate action for blacklisting the
contractors by the MCGM is only with a view to favour the
contractors and therefore, action of respondent no.1 is arbitrary
and the same is against the public interest.
21. The learned Amicus Curiae would contend that it
was in public interest for the Corporation to have aborted the
contracts instead of hurriedly awarding the same. The MCGM
ought to have first proceeded with the action against the
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contractors including that of black-listing and then considered
the award of contracts.
22. The learned Amicus Curiae argued that in respect of
one of the contracts, the tender notice is published as far back
on 16/05/2015 and packet 'C' was opened on 04/09/2015 and
in respect of another contract, tender notice was published on
18/11/2015 and the packet 'C' was opened on 19/01/2016 and
therefore, the submission of the Corporation in its affidavit that
the delay in awarding the contracts of work nature will cause
great hardship and inconvenience to the public at large is not
justified. According to the learned Amicus Curiae year after
year, the public money is wasted as a result of shoddy and tardy
road works undertaken by these contractors. Moreover, in the
face of preliminary report and the action proposed, the manner
in which and the speed with which the MCGM has moved to
award the contracts reflect the arbitrariness of its decision.
23. The learned Amicus Curiae therefore, contends that
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despite glaring major discrepancies being found in the road
works executed by respondents no.3 and 4, action of awarding
further contracts to respondents no.3 and 4 in such a hurried
and hasty manner is wholly unreasonable and arbitrary.
SUBMISSIONS ON BEHALF OF RESPONDENT NO. 1.
24. Per contra, the learned Senior Counsel
Mr.A.Y.Sakhare for respondent no.1 - BMC justified the decision
of respondent no.1 in awarding contracts to respondents no. 3
and 4. Learned Senior Counsel would contend that all the
aforesaid works are of utmost urgent and important nature and
any delay of whatsoever nature will cause great hardship and
inconvenience to the public at large. The contract and work
order granted to the contractors for the 4 works enumerated is
within the framework of the law and that while carrying out the
said 4 works through the said contractors, total vigil will be kept
as far as quality of work is concerned. From the date of the
issuance of show cause notice (16/05/2016), the MCGM has not
issued any further work order to the said contractors and no
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new work will be granted to them, till the final order is passed
on the show cause notice.
25. Learned Senior Counsel for the MCGM invited our
attention to the chart which is at page 113 of the affidavit in
reply of respondent no.1 reproduced in paragraph 52 of this
order to show the manner in which the tenders progressed.
According to the learned Senior Counsel, in case of widening
and reconstruction of bridge across Mithi river at Dharavi near
Drive-in-theatre in H/East Ward, packet 'C' was opened as far
back on 04/09/2015 i.e. even before the decision was taken to
hold the preliminary enquiry in respect of road works. In other
cases, the tender notices are published on 25/01/2016,
21/01/2016 and on 18/11/2015. The tenders were processed
in its usual course and the same proceeded in the normal course
of the things as per the procedure for awarding work contracts
which culminated in the issuance of the work order on
06/05/2016.
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26. According to the learned Senior Counsel, the
Corporation is seized of the matter as regards action to be taken
against the contractors and various reports placed on record
would clearly go to show that respondent no.1 is taking all
possible steps against the contractors with utmost urgency.
27. According to learned Senior Counsel, the awarding
of the work contracts permitting participation of the respondents
no. 3 & 4 in the tender process has nothing to do with the action
initiated against the respondents no.3 & 4 and the same cannot
be interlinked. Learned Senior Counsel would submit that
respondent no.1 is bound to follow due process of law. In view
of Rule 8.1.2(a) of the Registration Rules of 2015 (for short
'Rules of 2015') as there was no show cause of blacklisting /de-
registration issued to the contractors on the date when the work
order was issued, therefore, as per the law laid down by the
Apex Court and this Court, MCGM could not have prevented
respondents no. 3 and 4 from participating in the said tender
process and taking it to its logical conclusion.
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28. Mr.Sakhare, learned Senior Counsel invited our
attention to the additional affidavit in reply filed by respondent
no.1. The relevant paragraphs are as under :
"2) "I say that on 25.4.2016 the Municipal Commissioner took
decision to lodge FIR and start process of black-listing the
contractors. I say that 5 departments are involved and after co-
ordinating with all departments, after taking legal advise from
the Law Officer and the Sr.Advocates, show cause notice was
prepared and served on the contractors on 16.5.2016. I say that
the following dates and events will show that without wasting
any time in shortest possible time show cause notice was
prepared, got approved and served upon the contractors.
3) I say that the officers of the MCGM have not wasted
any time in preparation of the show cause notice. I say that the
administration while issued show cause notice has to give the
facts and keep in mind legal provisions. I say that there was no
attempt or intention to delay the issuance of show cause notice.
I, therefore, submit that the Respondents herein cannot be
faulted. I crave leave to refer to and rely upon the office record
as and when produced.
4) I say that on 22.04.2016 draft letter to Municipal
Secretary for the proposal to be placed before Standing
Committee was approved by the Municipal Commissioner, copy
thereof is enclosed herewith and marked as Exhibit 1."
29. Learned Senior Counsel for MCGM categorically
submitted that a conscious decision was taken to go ahead with
the tender process and the Municipal Commissioner as well as
the Standing Committee was aware of the proposed action of
black-listing. The specific stand of the respondent No.1 is that
once the tender notice is published, the cases then have to be
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considered and taken to its logical end. Based on some
allegations or some findings in preliminary enquiry, the Rules do
not permit non consideration of the said tenders. As there was
nothing adverse against them till the issuance of work order, the
respondent no.1 had no alternative but to award these contracts
to respondents no.3 & 4 is the submission of the learned Senior
Counsel.
30. The learned Senior Counsel for the respondent no.1
submitted that the decision of the MCGM to initiate the process
of black-listing was taken only on 25/04/2016 and even on that
date, there was no suspension of registration and therefore, the
MCGM was justified in awarding the contract in respect of
which work order was issued on 06/05/2016. According to the
learned Senior Counsel, the reading of the said Rules of 2015,
more specifically, 8.1.2 clearly mentions that by suspension of
registration it is meant that the contractors will not be
considered for award of works for bids in progress. In the
present case, decision of suspension of the registration was
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taken only on 16/05/2016 and therefore, it will not affect the
contract in respect of which the work order has already been
issued so the Senior Counsel would submit.
31. Learned Senior Counsel would contend that as the
show cause notice is issued only on 16/05/2016, it is only
thereafter that respondents no. 3 and 4 will not be issued any
further work order till the final order is passed on the said show
cause notice. Learned Senior Counsel would further contend
that action of the Corporation is bonafide and in accordance
with law.
SUBMISSIONS ON BEHALF OF RESPONDENT NO.3.
32. Learned Senior Counsel Mr.Naphade on behalf of respondent
no.3 invited our attention to the reliefs claimed in the PIL and
contended that most of the reliefs are worked out as the process
of blacklisting has commenced against the respondents and the
FIRs have also been registered and action taken is with
promptitude. Nothing survives in prayer clauses (a), (b),
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(d). Insofar as prayer clause (c) is concerned, learned senior
Counsel would submit that the contracts are awarded after
following due procedure and therefore, no relief can be granted.
Insofar as prayer clause (e) is concerned, now appropriate
action of blacklisting and departmental as well as criminal
action has been taken and therefore, there is no reason to
distrust the Corporation that it will not take the proposed action
to its logical end. There is further no material placed on record
which would go to show that the Corporation is not acting
against the respondents.
33. Learned Senior Counsel invited our attention to the
affidavit in reply dated 27/05/2016 filed on behalf of
respondent no.3. According to the learned Senior Counsel,
respondent no.3 is having unblemished credibility in civil
contractual works for over 30 years and it is one of the leading
contractors to have successfully completed very prestigious
projects of the cumulative value of more that Rs.1000 Crores
per annum for the last five years. He invited our attention to the
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various projects successfully completed. Learned Senior Counsel
invited our attention to the prestigious clients for whom,
respondent no.3 has successfully completed various projects and
in fact, respondent no.3 has been awarded with various awards
by reputed institutions. It is further brought to our notice that
respondent no.3 has on its direct payroll over 4,500 employees
and there are equal number of contract workers and sub-
contract workers. All these employees are skilled, semi skilled
and non skilled employees and they are all fully dependent upon
respondent no.3 company.
34. Learned Senior Counsel for respondent no.3
submitted that any hindrance as attempted by the petitioner
shall necessarily delay the contractual work which has chain
reactions of multiplying the cost and consequently project
derailment. The learned Senior Counsel would further contend
that allegations and contentions in the Petition are nothing but
an attempt made to defame and malign the name and goodwill
of the respondent no.3 by certain persons with vested interest.
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The learned Senior Counsel invited our attention to the interim
enquiry report at Exhibit 'C' which specifies that there was a
decision taken by the MCGM to collect samples/trial pits in the
presence of the contractor or the authorised officers of the
contractor, but, factually no intimation was given to the
respondent no.3 nor respondent no.3 was aware of the same.
Thus, learned Senior Counsel would submit that principles of
the natural justice had not been followed and that these test
reports cannot be relied upon against the respondents as they
have no evidentiary value. The tests conducted and reports
prepared are behind the back of the respondent no.3.
35. Learned Senior Counsel would further contend that
the said Rules have no statutory force and are but in the nature
of guidelines. He would, therefore, submit that it is only when
the proposed action of black-listing is taken to its logical
conclusion then the respondent no.3 can be prohibited from
participating in the further tender process. In the present case,
since the contract has already been awarded, Rule 8.1.2, in any
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case, has no application.
36. According to learned Senior Counsel, all the works
were executed under the strict and direct control and
supervision of respondent no.1 and therefore, the entire action
on the part of respondent no.1 in proceeding against respondent
no.3 is apparently because of newspaper reports scandalizing
the affairs without any grounds. According to the learned
Senior Counsel there is a very limited scope of judicial review of
government contracts and the Court will only see whether there
is any infirmity in the decision making process. The fact finding
enquiry, action of black listing and the criminal trial is yet to
conclude and therefore, the petition as regards decision of the
Corporation to award the contract to respondent no.3 cannot be
faulted with or interdicted by this Court.
37. According to the learned Senior Counsel the scope of
public interest litigation cannot be enlarged and though it is
termed as public interest litigation, proceedings continues to be
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one under Article 226 of the Constitution of India and therefore,
the limited scope of judicial review in contractual matters as
applicable to writ petition under Article 226 equally applies to a
public interest litigation.
38. Learned Senior Counsel has invited our attention to
the Statement which is at paragraph 52 of this order.
Respondent no.3 is concerned with the reconstruction of
Hancock Bridge and construction of Vehicular Bridge of Yari
Road. The tender notice was published on 25/01/2016
culminating in the issuance of work order which is issued on
06/05/2016. As on the date of the work order, there was no
order suspending registration and there was no show cause
notice and order suspending the registration of respondent no.3.
The show cause notice keeping the registration of the
respondents under suspension was issued only on 16/05/2016
and therefore, prior to that date, there was no impediment for
the Corporation to have considered the bid of the respondents
and consequentially awarding of the contract.
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39. Learned Senior Counsel invited our attention to the
Rules governing the registration of contractors for Civil,
Mechanical, Electrical and Electronic Engineering Works 2015.
He invited out attention to the following relevant provision of
Rule 2.11 which reads thus :
"Suspension" shall mean temporary prevention in
participating in any of the tender activity."
Rule 8.1.2 - Suspension Of Registration reads thus :
"Suspension of Registration is meant that no new tender
copy will be issued to the contractor/s and he will not be
considered for award of works for the bids in process.
Registration of contractor/s may be suspended as following,
as the case may be.
(a) Whenever any Show Causes Notice is issued to the
contractor/s calling for the explanation on the alleged
lapses by him, the registration of contractor/s may be
suspended up to the arrival of final outcome of the said
Show cause notice, depending on the seriousness of the
reasons for which show cause notice is issued by the officer
(not below the rank of Executive Engineer) of MCGM,
Director (E.S. & P.) or concerned Deputy Municipal
Commissioner (Engineering wing) is the competent
authority to suspend the registration in such cases. Circular
of suspension of registration till further orders shall be
circulated to all departments of MCGM by Head of the
executing department i.e. Chief Engineer of concerned
department / Zonal Deputy Chief Engineer of concerned
Ward.
The registration of the contractor/s will be restored
depending on the final outcome of the process of the said
Show Cause Notice and circular to that effect shall be issued
by concerned Head of the Department."
40. Learned Senior Counsel would contend that without
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prejudice to the submission that said Rule 8.1.2 do not have any
statutory force, even then, this Rule specifically provides that by
suspension of registration is meant that no new tender copy will
be issued to the contractor/s and he will not be considered for
award of works for the bids in process. According to the learned
Senior Counsel, the work order was already issued on
04/05/2016 and suspension order was issued only on
16/05/2016 and therefore, award of contract is in accordance
with the provision of law.
41. Learned Senior Counsel relied upon various
decisions of the Apex Court on the issue of blacklisting. He
relied upon the decision in the case of M/s.Erusian Equipment
& Chemicals Ltd., Vs. State of West Bengal and anr., (1975)
1 Supreme Court Cases 70. The learned Senior Counsel took
us through paragraph 5 of the said decision. He also invited our
attention to paragraph 13 to 15 and 17 to 20 which read thus :
"13. But for the order of blacklisting, the petitioner would
have been entitled to participate in the purchase of
cinchona. Similarly the respondent in the appeal would
also have been entitled but for the order of blacklisting to
tender competitive rates.
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14. The State can enter into contract with any person it
chooses. No person has a fundamental right to insist that
the Government must enter into a contract with him. A
citizen has a right to earn livelihood and to pursue any
trade. A citizen has a right to claim equal treatment to
enter into a contract which may be proper, necessary and
essential to his lawful calling.
15. The blacklisting order does not pertain to any
particular contract. The blacklisting order involves civil
consequences. It casts a slur. It creates a barrier between
the persons blacklisted and the Government in the matter
of transactions. The blacklists are "instruments of coercion
17. The Government is a government of laws and not of
men. It is true that neither the petitioner nor the
respondent has any right to enter into a contract but they
are entitled to equal treatment with others who offer
tender or quotations for the purchase of the goods. This
privilege arises because it is the Government which is
trading with the public and the democratic form of
Government demands equality and absence of
arbitrariness and discrimination in such transactions.
Hohfeld treats privileges as a form of liberty as opposed to
a duty. The activities of the Government have a public
element and, therefore, there should be fairness and
equality. The State need not enter into any contract with
any one but if it does so, it must do as fairly without
discrimination and without unfair procedure. Reputation
is a part of person's character and personality. Blacklisting
tarnishes one's reputation.
18. Exclusion of a member of the public from dealing with
a State in sales transactions has the effect of preventing
him from purchasing and doing a lawful trade in the
goods by discriminating against him in favour of other
people. The State can impose reasonable conditions
regarding rejection and acceptance of bids or
qualifications of bidders. Just as exclusion of the lowest
tender will be arbitrary similarly exclusion of a person
who offers the highest price from participating at a public
auction would also have, the same aspect of arbitrariness.
19. Where the State is dealing with individuals in
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transactions of sales and purchase of goods, the two
important factors are that an individual is entitled to trade
with the Government and an individual is entitled to a fair
and equal treatment with others. A duty to act fairly can
be interpreted as meaning a duty to observe certain
aspects of rules of natural justice. A body may be under a
duty to give fair consideration to the facts and to consider
the representations but not to disclose to those persons
details of information in its possession. Sometimes duty to
act fairly can also be sustained without providing
opportunity for an oral hearing. It will depend upon the
nature of the interest to be affected, the circumstances in
which a power is exercised the nature of sanctions
involved therein.
20. Blacklisting has the effect of preventing a person from
the privilege and advantage of entering into lawful
relationship with the Government for purposes of gains.
The fact that a disability is created by the order of
blacklisting indicates that the relevant authority is to have
an objective satisfaction. Fundamentals of fair play require
that the person concerned should be given an opportunity
to represent his case before he is put on the blacklist."
42. Learned Senior Counsel also relied upon the
decisions of the Apex Court in the case of Joseph Vilangandan
Vs. The Executive Engineer, (PWD), Ernakulam and ors.
(1978) 3 Supreme Court Cases 36 and in the case of
Raghunath Thakur Vs. State of Bihar and ors. (1989) 1
Supreme Court Cases 229 which reiterated the principle of
law in the case of M/s.Erusian Equipment & Chemicals Ltd.
(supra).
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43. Learned Senior Counsel also relied upon the decision
of this Court in the case of State Bank of India Vs. Kalpaka
Transport Company Private Ltd., The Bombay Law Reporter,
Vol. LXXXII, page 318. The Division Bench of this Court was
pleased to uphold the order of the learned Civil Judge which
had held thus :
"On these pleadings, and after hearing the parties, the
learned trial Judge came to the conclusion that the State
Bank of India is a "State" or "other authority" within the
meaning of that expression used in Article 12 of the
Constitution of India. He further held that the respondents
were already on the approved list of the Bank. To remove
them from the list amounts to black-listing. The wholesale
ban to deal with the Kalpaka Transport Company amounted
to blacklisting of the said Company. It affected the
reputation of the respondents and also their business, and
such a decision by the State Bank of India was not valid
without following the principles of natural justice and
without giving reasonable opportunity to the respondents to
present their case before the Bank authorities. In this view,
the learned single Judge allowed the petition and issued a
direction to the appellant-Bank to give a reasonable hearing
to the respondents before delisting them from the approved
list of transport operators".
44. Learned Senior Counsel invited our attention to
Section 69(c) of the Mumbai Municipal Corporation Act which
read thus:
"69. With respect to the making of contracts under or for
any purpose of this Act, the following provisions shall have
effect namely : -
(a) ...
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(b)..
(c) no contract, other than a contract relating to the
acquisition of immovable property or any interest therein or
any right thereto, which involves an expenditure exceeding
rupees [fifty lakhs but not exceeding rupees seventy-five
lakhs], shall be made by the Commissioner, unless the same
is previously approved by the Mayor. For contracts involving
expenditure in [excess of seventy-five lakh rupees], approval
of the Standing Committee shall be necessary:
[Provided that, every contract made by the Commissioner
involving an expenditure exceeding five lakh rupees and not
exceeding seventy-five lakh rupees shall be reported by him
within fifteen days after the same has been made to the
Standing Committee:]
[Provided further that], the total amount of all sanctions
granted by the Mayor shall not exceed [seven crore fifty lakh
rupees] during a year."
45. Learned Senior Counsel would contend that
statutory power of awarding the contract is with the Standing
Committee's approval for contracts involved in excess of Rs. 75
Crores. Learned Senior Counsel would therefore, contend that
once the statutory duty conferred on the respondent no.1 is
discharged in accordance with provisions of Section 69(c) , the
same cannot be interfered with by this Court while exercising its
limited power of judicial review. The statutory function has to
be discharged by the concerned statutory authority alone in
accordance with the provisions of law. Learned Senior Counsel
relied upon the decision of the Apex Court in the case of
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Supreme Court Bar Association Vs. Union of India and anr.,
(1998) 4 Supreme Court Cases 409 and invited our attention
to the provisions of paragraphs 47, 48 and 58. Paragraphs 48 &
58 read thus :
"48. The Supreme Court in exercise of its jurisdiction under
Article 142 has the power to make such order as is
necessary for doing complete justice " between the parties
in any cause or matter pending before it." The very nature
of the power must lead the court to set limits for itself
within which to exercise those powers and ordinarily it
cannot disregard a statutory provision governing a subject,
except perhaps to balance the equities between the
conflicting claims of the litigating parties by "ironing out
the creases" in a cause or matter before it. Indeed this Court
is not a court of restricted jurisdiction of only dispute
settling. It is well recognised and established that this Court
has always been a law-maker and its role travels beyond
merely dispute settling. It is a "problem solver in the
nebulous areas". [See. K. Verraswami vs. Union of India
(1991) (3) SCC 655] but the substantive statutory
provisions dealing with the subject matter of a given case,
cannot be altogether ignored by this Court, while making
an order under Article 142. Indeed, these constitutional
powers cannot, in any way, be controlled by any statutory
provisions but at the same time these powers are not meant
to be exercised when their exercise may come directly in
conflict with what has been expressly provided for in
statute dealing expressly with the subject.
58. After the coming into force of the Advocates Act, 1961,
exclusive power for punishing an advocate for "professional
misconduct " has been conferred on the State Bar Council
and the Bar Council of India. That Act contains a detailed
and complete mechanism for suspending or revoking the
licence of an advocate for his "professional misconduct".
since, the suspension or revocation of licence of an
advocate has not only civil consequence but also penal
consequences, the punishment being in the nature of
penalty, the provisions have to be strictly construed.
Punishment by way of suspending the licence of an
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advocate can only be imposed by the competent statutory
body after the charge is established against the Advocate in
a manner prescribed by the Act and the Rules framed
thereunder."
46. Learned Senior Counsel thus, would contend relying
upon the decision of the Supreme Court Bar Association
(supra) that even the Apex Court while exercising its power
under Article 142 has observed that the constitutional power
cannot, in any way, be controlled by any statutory provisions,
but at the same time, these powers are not meant to be
exercised when their exercise may come directly in conflict with
what has been expressly provided for in a statute dealing
expressly with the subject. In paragraph 58, it has been held
that punishment by way of suspending the licence of an
advocate can only be imposed by the competent statutory body
after the charge is established against the advocate in a manner
prescribed by the Act and the Rules framed thereunder. Learned
Senior Counsel, therefore, submitted that respondent no.1 has
exercised its statutory functions in accordance with the
provisions of law and hence, decision of MCGM cannot be held
to be arbitrary.
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SUBMISSIONS ON BEHALF OF RESPONDENT NO.4.
47. Learned Senior Counsel Mr.Aspi Chinoy on behalf of
respondent no.4 took us through the statement reproduced in
paragraph 52 to contend that if the tender process is normal,
legitimate and as per the procedure, the Court must act with
restraint while exercising judicial review.
48.
Learned Senior Counsel invited our attention to the
affidavit in reply filed by respondent no.1 - MCGM. According
to him, the tender process insofar as respondent no. 4 started
way back on 16/05/2015 and 18/11/2015 culminating into
issuance of the work order on 06/05/2016. Till the issuance of
the work order, there was no embargo in law to prevent
respondent no. 4 from participating in the tender process. The
show cause notice was issued only on 16/05/2016 from which
date respondent no. 1, at the highest, may be justified in not
awarding the work contract if the tender was not finalised.
According to the learned Senior Counsel, the MCGM is proactive
and well seized of the matter as appropriate action, criminal as
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well as black-listing is already initiated. The learned Senior
Counsel would contend that if the subjective satisfaction of the
statutory authority is based on materials on record, it is not the
scope of the writ Court to arrive at its own independent findings
based on the same material. The decision to award the contract
was a conscious decision as the respondent no.1 was aware of
the proposed action at all stages. Respondent no.1 was aware of
all the reports and there has been no suppression of any kind
whatsoever. The decision of the respondent no.1, therefore,
does not warrant any interference. The MCGM will take these
actions to its logical conclusion . At this stage, therefore, there
is no reason to invoke the extraordinary writ jurisdiction.
49. Learned Senior Counsel relied upon the decision of
this Court in the case of Dalichand G.Shah Vs. The Municipal
Corporation of Greater Mumbai, 2016 SCC On Line Bom 338
in Writ Petition (L) No. 3565 of 2015 to support the
submission that mere direction of commencement of process of
blacklisting will not dis-entitle the respondent no. 4 from
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participating in the tender process.
50. Learned Senior Counsel also relied upon the decision
of the Punjab & Haryana High Court in the case of M/s. KCC
Buildcon Private Limited Vs. State of Haryana, 2014 SCC On
Line P&H 11393 in Writ Petition No. 1832 of 2014 and ors
and other companion matters to contend that unless the
process of blacklisting attains finality, it cannot be an
impediment for awarding of contract.
CONSIDERATIONS :
51. Having given our anxious consideration to the
submissions canvassed on behalf of the respective parties, we
find that insofar as the contentions of learned Senior Counsel for
respondents no. 1, 3 & 4 on the issue of black-listing, there is no
disputing the proposition that till the order of blacklisting or
suspension of registration is passed, respondents no.3 and 4
cannot be prevented from participating in the tender process.
The law laid down by the Apex Court is well settled.
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52. For the sake of convenience, we are listing herein
below the sequence of the events which have taken place as
regards : -
(A) Initiating action against respondents no.3 and 4
culminating into the order of suspension of registration on
16/05/2016 :
A complaint is received by respondent no.1
pertaining to the irregularities in the road works done
in the MCGM area during the period 2013-14, 2014-
15, 2015-16 approximately 200 works (almost Rs.5
Crores each).
16/10/15 The Municipal Commissioner formed two-member
committee to examine the complaint.
23/12/15 The first interim report of the two-member committee
was submitted to the Municipal Commissioner.
However, looking at the vast scope of the inquiry
required to be undertaken, an extension was sought.
04/01/16 The Chief Engineer (Vigilance) suggested the
formation of technical teams for carrying out site
visits, scrutiny of RA bills, final bills, challans,
verification of documents etc. Accordingly, technical
teams were formed.
15/01/16 In the meeting held by the Municipal Commissioner,
it was decided to take trial pits on iternal roads in the
presence of the respondent no. 1's roads staff and
representations of Third Party Quality Auditors.
10/02/16 34 roads (selected as sample) were inspected. The
total cost of inspected road works was to the tune of
Rs.352.16 Crores.
24/02/16 An interim report (concerning the 34 road works)
was filed by the two member committee. Major
discrepancies were found in all the inspected roads.
The interim report concluded that most of the
discrepancies are found in the sub-base layers of the
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road and that all the road works in the work code
allotted to the contractors needs to be verified by
respondent no.1. It also suggested that five teams be
formed to do the complete examination of road
works.
18/03/16 A further interim report on trial pits (concerning 34
road works) was prepared. At point no. 8 of the said
interim report, is a road work-wise chart showing the
extent of major discrepancies for each of the 34 road
works. Serious major discrepancies are found in road
works awarded to respondents no.3 & 4.
01/04/16 On consideration of the interim reports, the
Additional Municipal Commissioner put up his report
to the Municipal Commissioner observing that the
roads have not been constructed to the designed
strength and there are large scale deficiencies in
quality and manipulation thereof.
18/04/16 The Municipal Commissioner noted that individual
responsibility be fixed and proposal be put up for
action to be taken.
20/04/16 The Additional Municipal Commissioner submitted a
note for taking action against the officials of the
Corporation. The note also provided for taking action
of suspension and other disciplinary action in stages
and for beginning process of black-listing/ de-
registration of contractors and Third Party Quality
Auditors. (The detailed note is at paragraph 34).
25/04/16 The Municipal Commissioner directed process of
black-listing/ de-registration of contractors and filing
FIR. (The detailed note is at paragraph 36).
27/04/16 1. FIR lodged.
2.Ch. Officer Enquiry sent the copy of direction of the
Municipal Commissioner to Director (ES&P).
29/04/16 Receipt of paper from the Enquiry Officer to the
Director (ES&P).
30/04/16 Dir (ES&P) informed Ch.Eng (Rds & Tr) to prepare
draft show cause notice in consultation with
Ch.Officer Enquiry, Ch.Eng (Vig), Law Officer.
04/05/16 Meeting held in the office of Director (ES&P) with Ch.
Eng (Rds&Tr), Ch.Eng (Vig), City Engineer,
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Ex.Engineer (M&R) and Ch.Officer Enquiry (in person
or their representative) to discuss the issues for
preparation of show cause notice.
05/05/16 Meeting with Sr. Counsel to finalise the format of
show cause notice.
12/05/16 Ch.Eng (Rds & Tr) submitted the draft show cause
notice to Director (ES&P).
13/05/16 Director (ES&P) personally discussed the matter with
A.M.C. (WS) and Municipal Commissioner about the
draft show cause notice.
16/05/16 Show cause notices issued to the contractors.
and
(B) steps indicating how the tender progressed:
Statement
Name of the work Tender Notice Packet "A" Packet "B" Packet "C" DL to MS SCR No. Work Remarks
published on opening opening opening Sanction and date order
date date date date issued
Reconstruction of 139 dt.
Hancock Bridge at 25/01/16 22/02/16 22/02/16 22/03/16 22/04/16 04/05/16 06/05/16 Work
Shivdas Chapsi Marg, started
Mazgaon in "B" Ward.
Widening and
reconstruction of 141 dt. Work
Bridge across Mithi 16/05/15 28/07/15 12/08/15 04/09/15 22/04/16 04/05/16 06/05/16 started
River at Dharavi near
Drive-in-Theater in
H/East ward.
Construction of
Vehicular Bridge at
Junction of Yari Road 21/01/16 24/02/16 10/03/16 31/03/16 22/04/16 138 dt. Work
and Lokhandwala back 04/05/16 06/05/16 started
Road near Amernath
Towar building K/West
ward.
Construction of ROB in
lieu of L.C.No. 14 at Work
Vikhroli Railway 18/11/15 29/12/15 08/01/16 19/01/16 22/04/16 140 dt. 06/05/16 started
Station (Excl. Railway 04/05/16
Span and Slip Road
Work.)
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53. While referring to the above statement, the relevant
portion of which is reproduced from the Chart Exhibit 'I' at page
113 of the affidavit in reply filed by respondent no. 1, learned
Senior Counsel Mr.Aspi Chinoy invited our attention to one date
which is not reflected in the said Chart. He points out that on
07/04/2016, the tender committee meeting is held to evaluate
and make recommendations on the bid.
54. From the above, what can be deciphered is that till
the opening of packet 'C', the tender progressed in a normal and
legitimate course. The tender notices in respect of these 4
separate and distinct contracts were published on 25/01/2016,
16/05/2015, 21/01/2016 and 18/11/2015. The opening dates
of packet 'C' are 22/03/2016, 04/09/2015, 31/03/2016 and
19/01/2016. At least in 2 cases, packet 'C' was opened as far
back as on 04/09/2015 and one on 19/01/2016. The interim
report about major discrepancies noted in the work contracts is
dated 24/02/2016. Further interim report indicating major
discrepancies after a detailed inspection is dated 18/03/2016.
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The report of the additional Municipal Commissioner
recommending action including black-listing and filing of police
complaint is dated 01/04/2016. On 18/04/2016, the Municipal
Commissioner called upon the concerned to put up proposal for
action to be taken. At this stage, it is pertinent to note that
tenders in process were all considered together on 07/04/2016
when the tender committee met to evaluate and made their
recommendations on the bids. Thereafter, on 22/04/2016 itself,
in respect of all these tenders, draft letter was sent to the
Municipal Secretary for approval. On 04/05/2016, the Standing
Committee passed a resolution and on 06/05/2016, work order
came to be issued.
55. The sequence of events therefore indicates that till
opening of packet 'C', the tenders did proceed in the normal and
legitimate course of things as observed earlier. All these tenders
were processed separately. It is only after 01/04/2016 when the
Additional Municipal Commissioner proposed action against the
contractors that suddenly from 07/04/2016 onwards all tenders
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of respondents no. 3 & 4 were processed on the same dates.
56. A profitable reference can be made to the decision of
the Apex Court in the case of S.R.Tewari Vs. Union of India,
reported in 2013(6) Supreme Court Cases 602. The
parameters of the Court's power of judicial review of
administrative or executive action on which the Court can
interfere is set out in the following paragraphs which read thus :
19. In CIT v. Mahindra & Mahindra Ltd., AIR 1984 SC
1182, this Court held that various parameters of the court's
power of judicial review of administrative or executive
action on which the court can interfere had been well
settled and it would be redundant to recapitulate the
whole catena of decisions. The Court further held: (SCC
p.402, para 11)
"11...it is a settled position that if the action or
decision is perverse or is such that no reasonable body
of persons, properly informed, could come to, or has
been arrived at by the authority misdirecting itself by
adopting a wrong approach, or has been influenced
by irrelevant or extraneous matters the Court would
be justified in interfering with the same."
20. The court can exercise the power of judicial review if
there is a manifest error in the exercise of power or the
exercise of power is manifestly arbitrary or if the power is
exercised on the basis of facts which do not exist and
which are patently erroneous. Such exercise of power
would stand vitiated. The court may be justified in
exercising the power of judicial review if the impugned
order suffers from mala fide, dishonest or corrupt practices,
for the reason, that the order had been passed by the
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authority beyond the limits conferred upon the authority
by the legislature. Thus, the court has to be satisfied that
the order had been passed by the authority only on the
grounds of illegality, irrationality and procedural
impropriety before it interferes. The court does not have
the expertise to correct the administrative decision.
Therefore, the court itself may be fallible and interfering
with the order of the authority may impose heavy
administrative burden on the State or may lead to
unbudgeted expenditure. (Vide: Tata Cellular v. Union of
India, People's Union for Civil Liberties v. Union of India
and State (NCT of Delhi) v. Sanjeev.
21. In Air India Ltd. v. Cochin International Airport Ltd.,
this Court explaining the scope of judicial review held that
the court must act with great caution and should exercise
such power only in furtherance to public interest and not
merely on the making out of a legal point. The court must
always keep the larger public interest in mind in order to
decide whether its intervention is called for or not.
22. There may be a case where the holders of public offices
have forgotten that the offices entrusted to them are a
sacred trust and such offices are meant for use and not
abuse. Where such trustees turn to dishonest means to gain
an undue advantage, the scope of judicial review attains
paramount importance. (Vide: Krishan Yadav v. State of
Haryana ).
23. The Court must keep in mind that judicial review is not
akin to adjudication on merit by re-appreciating the
evidence as an appellate authority. Thus, the court is
devoid of the power to re-appreciate the evidence and
come to its own conclusion on the proof of a particular
charge, as the scope of judicial review is limited to the
process of making the decision and not against the decision
itself and in such a situation the court cannot arrive on its
own independent finding. (Vide: High Court of Judicature
at Bombay v. Udaysingh, State of A.P. v. Mohd. Nasrullah
Khan and Union of India & Ors. v. Manab Kumar Guha."
57. A useful reference can also be made to the decision
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of the Apex Court in the case of Kumari Shrilekha Vidyarthi
Vs. State of U.P. reported in (1991) 1 Supreme Court Cases
212. The scope of judicial review in contractual matters has
been laid down in the said decision. The relevant paragraph
read thus :
24. The State cannot be attributed the split personality of
Dr. Jekyll and Mr. Hyde in the contractual field so as to
impress on it all the characteristics of the State at the
threshold while making a contract requiring it to fulfil the
obligation of Article 14 of the Constitution and thereafter
permitting it to cast off its garb of State to adorn the new
robe of a private body during the subsistence of the con-
tract enabling it to act arbitrarily subject only to the
contractual obligations and remedies flowing from it. It is
really the nature of its personality as State which is
significant and must characterize all its actions, in whatever
field, and not the nature of function, contractual or
otherwise, which is decisive of the nature of scrutiny
permitted for examining the validity of its act. The
requirement of Article 14 being the duty to act fairly, justly
and reasonably, there is nothing which militates against the
concept of requiring the State always to so act, even in
contractual matters. There is a basic difference between the
acts of the State which must invariably be in public interest
and those of a private individual, engaged in similar
activities, being primarily for personal gain, which may or
may not promote public interest. Viewed in this manner, in
which we find no conceptual difficulty or anachronism, we
find no reason why the requirement of Article 14 should
not extend even in the sphere of contractual matters for
regulating the conduct of the State activity.
27. Unlike a private party whose acts uninformed by
reason and influenced by personal predilections in
contractual matters may result in adverse consequences to
it alone without affecting the public interest, any such act
of the State or a public body even in this field would
adversely affect the public interest. Every holder of a public
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office by virtue of which he acts on behalf of the State or
public body is ultimately accountable to the people in
whom the sovereignty vests. As such, all powers so vested
in him are meant to be exercised for public good and
promoting the public interest. This is equally true of all
actions even in the field of contract. Thus, every holder of a
public office is a trustee whose highest duty is to the people
of the country and, therefore, every act of the holder of a
public office, irrespective of the label classifying that act, is
in discharge of public duty meant ultimately for public
good. With the diversification of State activity in a Welfare
State requiring the State to discharge its wide ranging
functions even through its several instrumentalities, which
requires entering into contracts also, it would be unreal
and not pragmatic, apart from being unjustified to exclude
contractual matters from the sphere of State actions re-
quired to be non-arbitrary and justified on the touchstone
of Article 14.
29. It can no longer be doubted at this point of time that
Article 14 of the Constitution of India applies also to
matters of governmental policy and if the policy or any
action of the government, even in contractual matters, fails
to satisfy the test of reasonableness, it would be
unconstitutional. (See Ramana Dayaram Shetty v.
International Airport Authority of India and Kasturi Lal
Lakshmi Reddy v. State of Jammu and Kashmir. In Col. A.S.
Sangwan v. Union of India while the discretion to change
the policy in exercise of the executive power, when not
trammelled by the statute or rule, was held to be wide, it
was emphasised as imperative and implicit in Article 14 of
the Constitution that a change in policy must be made
fairly and should not give the impression that it was so
done arbitrarily or by any ulterior criteria. The wide sweep
of Article 14 and the requirement of every State action
qualifying for its validity on this touchstone, irrespective of
the field of activity of the State, has long been settled. Later
decisions of this Court have reinforced the foundation of
this tenet and it would be sufficient to refer only to two
recent decisions of this Court for this purpose."
58. The above mentioned list of dates and events would
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clearly reveal that on 18/04/2016, upon consideration of
various preliminary enquiry reports which reveal large scale
irregularities in the works performed by respondents no.3 & 4,
the Municipal Commissioner had on 18/04/2016 taken a
decision for fixing individual responsibilities and for proposal to
be put up for action to be taken. On 20/04/2016, a proposal
was put up for initiating the action of black-listing/de-
registration of respondents no. 3 & 4 by the Additional
Municipal Commissioner.
59. Faced with these materials, at least prima facie
indicating large scale irregularities and the decision to put up a
proposal to initiate action on 18/04/2016, it is surprising that a
draft letter to the Municipal Secretary for approval of the
tenders is issued on 22/04/2016. Respondent no.1 in its
affidavit has given reason that aforesaid works are of utmost
urgent and important nature and therefore, delay of whatsoever
nature will cause great hardship and inconvenience to the public
at large. We cannot loose sight of the fact that at least in 2
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cases, the tender notices were published as far back as on
16/05/2015 and 18/11/2015 and in other two cases, the same
were published on 21/01/2016 and 25/01/2016. This clearly
would go to show that the cases of respondents no. 3 & 4 for
awarding and concluding the contracts gained momentum only
after the report dated 01/04/2016 of the Additional Municipal
Commissioner about the large scale deficiencies in quality and
its manipulation thereof.
60. In the affidavit in reply dated 27th May 2016, the
MCGM has stated in paragraph 27 that based on a report of
March 2006 to widen the Mithi river, one of the tender is
issued. In paragraph 31, it is stated that as the level crossing at
Vikhroli is closed in 2012, the tenders for ROB are published.
Even in respect of tenders for reconstruction of Hancock bridge,
the bridge was closed almost for 3 ½ years before the tender
was published.
61. Undoubtedly, the MCGM is expected to undertake
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these works with utmost urgency and expedition. In this case,
however, we find that the urgency shown by the MCGM is not
for the public interest as projected, but only to justify the award
of the contracts to respondents no.3 & 4. Having taken all steps
in the right direction while ordering inquiry right upto the
initiation of criminal action and black-listing, the MCGM, by
delaying the suspension of registration has virtually allowed the
respondents no.3 & 4 to walk away with these contracts.
62. Having regard to the materials on record and the
fact that the action of suspension of registration of respondents
no.3 & 4 was taken only on 16/05/2016 after the work order is
issued on 06/05/2016, leaves us with no manner of doubt that
the order of suspension of registration was delayed only with a
view to award the contracts to respondents no.3 & 4. The
decision to award the contract to the respondent no.3 & 4 is
with undue haste and by so doing now a contention is raised
that the situation is fait accompli in view of Rule 8.1.2. In the
face of such large scale irregularities observed by the respondent
PIL 51.16. reserved.doc
no.1 themselves, the action of suspension of registration so
imminent, the hurry shown in awarding the contracts and the
consequential delay in suspending the registration compels us to
interdict in the decision making process.
63. According to us, therefore, the action of respondent
no.1 in awarding the contract to respondents no. 3 & 4 is
manifestly arbitrary. We are more than satisfied that the
decision of awarding the contracts by respondent no.1 to
respondents no.3 & 4 is illegal and irrational. We are pained by
the thought of such important and urgent public works getting
further delayed inconveniencing the public at large, however,
we cannot allow the action of the MCGM to stand at the cost of
larger public interest.
64. We are satisfied that larger public interest required
that before actually awarding the contract, respondent no.1
ought to have awaited action of issuance of show cause notice
for black-listing and/or at least the decision of suspension of
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registration instead of hurriedly awarding the contract to
respondents no.3 & 4 projecting public interest. While
exercising the power of judicial review, we have kept in mind
the larger public interest while coming to the conclusion that
our intervention is called for.
65. It shocks our conscience that respondent no.1
though fully aware of the preliminary enquiry reports and the
decision of the Municipal Commissioner to initiate action of
black-listing and also criminal action, decision to award the
contract is taken first and immediately thereafter a decision to
suspend the registration. The Apex Court in the case of M/s.
Erusian Equipment & Chemicals Ltd. (supra) has in paragraph
17 held that neither the petitioner nor the respondent has any
right to enter into a contract but they are entitled to equal
treatment with others who offer tender or quotations for the
purchase of the goods. The activities of the government have a
public element and therefore, there should be fairness and
equality. The State need not enter into any contract with any
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one but if it does so, it must do so fairly without discrimination
and without unfair procedure.
66. In our considered opinion, respondent no.1 ought to
have first decided the question, at least, that of suspension of
registration as contemplated by Rule 8.1.2 of the said Rules and
thereafter, proceeded with the awarding of the contracts instead
of allowing the situation to be fait accompli and plead
helplessness by citing Rule 8.1.2. We are of the view that the
decision of respondent no.1 is against the larger public interest.
Though respondent no.1 submitted that the procedure as laid
down has been followed while awarding the contract, in our
considered opinion, the circumstances are so compelling that we
are inclined to interfere. We are of the view that power of
respondent no.1 under Section 69(c) of the MMC Act to award
the contract has not been exercised fairly and justly and in fact,
the same has been exercised with a view to defeat the public
interest.
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67. Having regard to the aforesaid facts, it is clear that
while awarding the contract in favour of Respondent Nos. 3 and
4, hot haste has been shown by the authority competent to
award the contract. When the Commissioner had already taken
a decision to issue show cause notice to these contractors and to
lodge First Information Report in regard to their involvement in
the alleged scam in respect of the roads inspected which are
constructed at the cost of Rs.352 Crores, in all fairness, the
decision which was long pending could have been deferred for
few days till issuance of the show cause notice for which the
decision was already taken. However, it appears that in view of
the Rule 8.1.2 apprehending that if the show cause notice is
issued, they would not be able to award tenders, the hurried
steps for the award of contracts has been taken as if heaven
were going to fall. The decision taken by the respondent no.1 in
our considered view is intended to favour Respondent Nos. 3
and 4. In the circumstances the same is undoubtedly arbitrary,
unreasonable and the same has been taken contrary to the
larger public interest. Therefore when illegality, arbitrariness
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and favoritism is apparent on the face of record, we have no
option but to allow this Petition and quash the impugned
decision.
68. We make it clear that we have not examined the
contract awarded by respondent no.8 in favour of respondent
no.3 concerning Metro VII project as apart from the fact that
there is no sufficient material on record to go into the question
of legality or otherwise of the contract, even the learned Amicus
Curiae has not advanced any submission on this aspect.
69. We are not inclined to monitor the proceedings as
prayed for as we find that the Corporation has already initiated
action of black-listing and also set the criminal machinery in
motion. There is nothing on record to suggest that the same
will not be taken to its logical conclusion. In this view of the
matter, we decline the request to monitor the proceedings.
In view of what is stated hereinabove, we pass the
following order.
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O R D E R
1. The present PIL is partly allowed.
2. The contracts awarded to respondents no.3 & 4 in
respect of 4 works mentioned in the Statement in
paragraph 52 are quashed and set aside.
3. No order as to costs.
(M.S.KARNIK, J.) (SHANTANU.S.KEMKAR, J.)
