Calcutta High Court
Pawan Beriwal vs Board Of Trustees on 3 September, 2024
Author: Amrita Sinha
Bench: Amrita Sinha
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Original Side
Present :- Hon'ble Justice Amrita Sinha
WPO No. 215 of 2021
Pawan Beriwal
Vs.
Board of Trustees, Syama
Prasad Mookherjee Port
For the writ petitioner :- Mr. Mainak Bose, Adv.
Mr. Rishab Karnani, Adv.
Mr. Anurag Bagaria, Adv.
Mr. Aniket Nanda, Adv.
For the respondent :- Mr. Probal Kumar Mukherjee, Adv.
Mr. Snehashis Sen, Adv.
Heard on :- 30.07.2024 & 07.08.2024
Judgment on :- 03.09.2024
Amrita Sinha, J.:-
The petitioner challenges the act of the Kolkata Port Trust,
rechristened as Syama Prasad Mookherjee Trust, hereinafter referred to as
"KoPT" for the sake of brevity, in cancelling the first notice inviting tender
and proceeding with the second.
The facts of the case are as follows: -
The petitioner is one of the partners of a partnership firm engaged
in the business of iron and steel. He is already in occupation of a plot of land
belonging to KoPT and claims to be running business from the said plot of
land for nearly fifty years. The petitioner pays rent to KoPT as per the
schedule of rent notified by the Tariff Authority of Major Ports from time to
time.
KoPT published a notice inviting tender on 10th July, 2020 for
allotment of lease of the land possessed by the petitioner for thirty years on
'as is where is' basis with the first right of refusal. The last date of
submission of the bid was initially fixed on 12th August, 2020, later extended
to 1st September 2020. The petitioner participated in the said tender process
and submitted his bid.
By communication dated 13th October, 2020 the petitioner was
informed that the subject tender has been cancelled due to some
unavoidable reason and he was requested to participate in the fresh tender
process to get the benefit of the first right of refusal. The last date for
submission of the bid i.e. 20th October, 2020 was also intimated to him. The
petitioner, vide email communication dated 18th October, 2020, objected to
the retendering of the subject plot of land. He sought for the reasons for
cancellation and also requested for refund of the earnest money deposited by
him.
On 28th October, 2020 the petitioner intimated KoPT that the
second tender notice was not available in the website. By email
communication dated 29th October, 2020, the petitioner was informed that
the last date for submission of bid under the second e-tender was extended
till 3rd November, 2020. The petitioner refused to participate in the second
tender process on the ground that he was not given any reply to his
communication challenging cancellation of the first tender process. The
earnest money was refunded in November, 2020.
By a further communication dated 12th April, 2021 the petitioner
was informed that as he did not participate in the second tender process it
was understood that he was not interested in the subject property. The
petitioner was informed that the second tender has been finalised and the
subject plot will be allotted to the bidder offering the highest bid. The
petitioner was called upon to make over peaceful, vacant, clear and
unencumbered possession of the subject property to KoPT within twenty-one
days from the date of receipt of the letter. The petitioner immediately made a
request to the authority not to take any steps without hearing him.
The primary ground for challenge of the second tender notice is
that the first tender could not have been cancelled without specifying any
valid reason for the same. The tender could not have been cancelled even if
there is only one bidder because the land policy guidelines recognise the
right of a single bidder. The second tender process is absolutely mala fide
and has been floated only to frustrate the bid of the petitioner who
participated in the first bid and not in the second. The highest bidder in the
second bid has been handpicked by the authority to inflate the bid amount.
The process of second tender is erroneous and not in conformity with the
land policy guidelines of the port.
It has been contended that KoPT is not like any other landlord
offering land on tender. KoPT is a government body and is guided by the
land policy guidelines framed by the Ministry of shipping. KoPT is bound by
the schedule of rent fixed by the tariff authority of major ports. The
guidelines do not authorise or permit cancellation of tender in such an
arbitrary manner without disclosing any valid or genuine reason. The
authority should act in a fair manner complying with the principles of
natural justice.
The petitioner contends that KoPT ought to keep in mind that the
petitioner is already in possession of the said plot of land and is using the
same for business purpose. He has already invested a huge sum of money in
making construction thereon. Several persons are employed and earning
their living by engaging themselves in the business run by the petitioner.
The act of the authority is iniquitous and is liable to be set aside by the
Court.
Prayer has been made to set aside the second tender and all steps
taken pursuant thereto.
The petitioner relies upon the following decisions in support of his
submissions;
(1) Order dated 24.01.2019 passed in WP No. 308 (W) of 2019
(M/s. Karim Construction Pvt. Ltd. & Anr. Vs. The State of
West Bengal & Ors.).
(2) Order dated 24.01.2019 passed in WP No. 309 (W) of 2019
(M/s. Debasish Chatterjee & Anr. Vs. The State of West
Bengal & Ors.).
(3) Judgment delivered by the Hon'ble Division Bench of this Court
on 13.02.2019 in CAN 1072 of 2019 in MAT 162 of 2019
(M/s. Karim Construction Company & Anr. Vs. The State of
West Bengal & Ors.).
Learned senior counsel representing KoPT opposes the prayer of
the petitioner. It has been submitted that despite the petitioner being made
aware of the second tender process, he voluntarily and deliberately refused
to participate in the same. He was also intimated about the last date of
submission of bid. As the first tender process did not evoke much response,
the authority with the view to generate more earning, decided to cancel the
first tender process and proceed with the second one. There is no mala fide
intension or arbitrariness on the part of the authority in going for the second
tender. The bid amount offered by the bidders in the first tender has not
been disclosed to any of the parties. In fact, the bid submitted by the bidders
in the first tender process has not been opened at all.
It has been submitted that KoPT has every right to do business and
to earn money from the same. The authority has the right to secure higher
rate by leasing out its land. With a view to fetch a good rate of rent, the
second tender process was floated. The petitioner did not acquire any right
by participating in the first tender process. The authority is not obliged to
put forth any reason at the time of cancellation of the tender.
The land policy guidelines permit the authority to cancel any bid
without affording any reason. The reason for cancellation of the first tender
has been disclosed in the affidavit in opposition filed by the authority. The
petitioner has not challenged the terms and conditions of the land policy
guidelines which reserves the right of the authority to accept or reject any or
all tenders without assigning any reason thereof.
The offers in the second tender have been opened and it has been
seen that the highest bidder has offered an amount which is far above the
current rent that is being paid by the petitioner. Despite being aware of the
H-1 bid, the petitioner did not disclose the amount that he quoted in the first
tender; neither did he disclose as to whether he is agreeable to match up to
the bid that has been quoted by the highest bidder in the second tender
process.
It has been submitted that the petitioner approached the Court
late in the year 2021. The intimation regarding cancellation of the first
tender was made to the petitioner in October, 2020. The writ petition ought
not to be entertained as the petitioner chose to approach the Court long
after cancellation of the first tender notice.
The successful bidder has not been impleaded as party respondent
despite disclosure of his name in the affidavit in opposition. Any order that
may be passed herein may prejudicially affect the successful bidder.
The respondent prays for dismissal of the writ petition.
In support of the aforesaid prayer the respondent relies upon the
decision delivered by the Hon'ble Supreme Court in State of Jharkhand &
Ors. Vs. CWE-Soma Consortium reported in (2016) 14 SCC 172 wherein
the Court held that the right to refuse the lowest or any other tender is
always available to the Government. So long as the bid has not been
accepted, the highest bidder acquired no vested right to have the auction
concluded in his favour. The State is well within its right to reject the bid
without assigning any reason thereof. The Court reiterated that while
exercising the power of judicial review, the Court does not sit as appellate
Court over the decision of the Government but merely reviews the manner in
which the decision was made.
Reliance has also been placed on the judgment delivered by the
Division Bench of this Court in the matter of Biswanath Saha vs. State of
West Bengal & Ors. reported in AIR 2022 Cal 279 wherein the Court held
that in each and every case State or its authority is not required to give
reasons for cancellation of a bid.
I have heard and considered the rival submissions made on behalf
of both the parties and have perused the documents placed before the
Court.
Article 298 of the Constitution of India gives right to the State to
carry on any trade or business and make contract for acquisition, holding
and disposal of property.
According to Section 34 (1) of the Major Port Trust Act, 1963, ports
are empowered to lease out land. KoPT is one of the major ports of this
country. To regulate allotment of land and to maintain a competitive
environment, the Government of India, Ministry of Shipping (Ports Wing)
issues guidelines from time to time and the guidelines are reviewed
periodically. The Policy Guidelines for Land Management of Major Ports,
2015 is currently in operation.
The guidelines mention that as per the provisions contained in the
Major Port Trust Act, 1963 ports are empowered to lease out their land for a
period up to thirty years. The main objective of the policy is to ensure that
the land resources are put to optimum use and optimum value is realised by
licensing/leasing port land through a transparent tender cum auction
methodology. The policy prescribes the procedure for revision of rates to
enable maximum resource generation for the ports and the methodology for
regular updating of the rates in line with the market value.
There is a specific provision for renewal of existing/earlier leases.
In cases of renewal of existing leases, the land is to be put to tender cum
auction with the first right of refusal to be extended to the existing lessee.
The existing lessee is to be allowed to match the H-1 bid. The bidding option
is only on the reserve price of the land. With a view to dissuade non-serious
bids, earnest money deposit for a valid bid is fixed at 10% of the latest
schedule of rent or the price quoted by the existing lessee in the tender cum
auction, whichever is higher. The provision of first right applies to expired
lease in addition to existing leases.
KoPT published a notice inviting tender on 10th July, 2020 inviting
bids for allotment of subject land on long term lease on 'as is where is' basis.
The reserved annual rent of the subject land which is occupied by the
petitioner is Rs. 1,23,357/-. In response to the notice inviting tender the
petitioner submitted his bid but the tender floated on 10th July, 2020 was
cancelled due to some unavoidable reason. The petitioner's firm was
requested to participate in the fresh e-tender-cum-e-auction procedure and
first right of refusal was granted. It was specifically mentioned that to
exhaust the option of first right of refusal, the participation of the firm in the
tender process was required.
The authority, in the affidavit in opposition, has disclosed that the
petitioner along with one M/s. Jai Gurudev Creations participated in the
first tender, but because the said tender did not draw adequate competition
and participation of bidders, the competent authority of the respondent
though it prudent to cancel the process and advised for fresh tender in
anticipation of larger participation of bidders with a view to augment
revenue for the subject plot of land.
What is to be answered is whether it was proper for the authority
to cancel the tender process without disclosing any reason. Can the act of
the authority be held to be so unreasonable, mala fide or arbitrary calling for
interference by the writ court? The answer is an emphatic no for the
following reasons.
The petitioner was duly intimated about the cancellation of the
tender process. He was also intimated about the date and time for
submission of bid in respect of the fresh tender. In case of any problem
related to the tender the contact details of the person of the respondent
authority was mentioned. By reply mail the petitioner's firm categorically
mentioned that it would not participate in the tender. The earnest money
deposited by the petitioner was refunded on request.
Had it been a case that the tender in which the petitioner
participated was cancelled and the petitioner was not intimated about the
second tender, then the allegation of mala fide may have been accepted.
Here, enough opportunity was provided to the petitioner to participate in the
second tender process. No prejudice has been caused to the petitioner on
cancellation of the first tender as he was afforded opportunity to participate
in the second one.
In Karim Construction (supra) and Debashis Chatterjee (supra)
relied upon by the petitioner, a coordinate Bench of this Court held that
without communicating a reasoned order the authority ought not to have
initiated the second e-tender process. The Hon'ble Division Bench affirmed
the order passed by the learned Single Judge.
The Hon'ble Supreme Court in CWE-Soma Consortium (supra)
relied upon various judgments of the Supreme Court and concluded that the
decision of the tender committee not to proceed with the tender without any
responsive bid available and to proceed with fresh tender to make the same
more competitive, cannot be said to be arbitrary or unreasonable. It is the
right of the authority to decide whether to enter into a contract or not
subject only to the requirement of reasonableness under Article 14 of the
Constitution of India. It was conclusively held that so long as the bid has not
been accepted, the highest bidder acquires no vested right to have the
auction concluded in his favour.
In Biswanath Saha (supra) the Court held that in each and every
case the State is not required to give reasons for cancellation of a bid.
The ratio laid down by the Hon'ble Supreme Court has to be
followed as the law of the land.
In the instant case, the authority asserts that the bids of the first
tender were not opened at all. As there wasn't much participation, the
authority proceeded to float a second tender notice. The bidder who
participated along with the petitioner in the first tender appears to have
participated in the second one also and has emerged successful. As there
was no participation from the end of the petitioner, KoPT went ahead with
the tender process and finalized the same without the petitioner who is the
existing lessee.
The evaluation criteria in the techno commercial bid of the notice
inviting tender dated 22nd September, 2020 being annexure VII clearly
mentions that participation of the bidder enjoying the first right of refusal in
the tender is a must to exercise first right of refusal. The same implies that
participation of the person who is in possession of the plot of land put up for
tender is indispensable for finalizing the tender. (underlined to give
emphasis)
The land policy guidelines of the authority and the tender
document both disclose the importance of the participation of the existing
lessee. The land policy guidelines mentions that if the existing lessee is the
only bidder then the annual lease rental would be determined on the basis
of the latest schedule of rent or the price quoted by the existing lessee in the
tender-cum-auction, whichever is higher. The same implies that the existing
lessee is required to quote his bid in the tender-cum-auction. (underlined to
give emphasis)
The respondent may not be compared to a private landlord who
has the liberty to let out his land on his own terms and conditions; but the
Constitution permits the State to do business and to enter into contract in
the process of the business. The land policy guidelines of the respondent
speak about resource generation. The very idea of allotment of land through
the tender-cum-auction process is for the purpose of generation of
maximum revenue for the Government. There is nothing wrong for the
authority to reject a bid if the same does not meet the desired result. As long
as the authority acts in a fair and transparent manner, the same ought not
to be interfered with. The petitioner has not disclosed the bid amount that
he quoted in response to the first tender. The bid amount of the second
tender has, however, been disclosed by the authority in the affidavit in
opposition.
It is noticed that the bidding process was initiated in July, 2020
and the second tender was floated in September, 2020, both in the midst of
the Covid pandemic. It may be for the reason of the pandemic that adequate
response to the notice inviting tender was not received.
Though the petitioner has alleged mala fide and arbitrariness on
the part of the authority in cancelling the first tender and proceeding to
finalise the second one, but it does not appear to the Court that the act of
the authority was either mala fide or based on extraneous consideration, as
alleged. The petitioner was duly intimated about his first right of refusal. He
was also intimated about the last of submission of bid and the extension of
time for the submission. The authority was not bound to disclose the reason
for cancellation of the bid.
As per the land policy guidelines if the existing lessee quotes a rate
lower than the H-1 bid, the authority is liable to give an opportunity to the
existing lessee to match the H-1 bid. Giving such opportunity to the existing
lessee cannot be said to cause any prejudice to the H-1 bidder. It is only
when the existing lessee fails to match up the bid submitted by the
successful bidder, does the successful bidder acquire a right to proceed with
the bid. If the existing lessee refuses to match up the highest bid, he loses
his right to continue with the lease.
The right of first refusal of the existing lessee has been recognized
by the authority with a view to maintain the continuity of the lease. The very
purpose for which the lease was obtained may be severely hampered if the
lease is not extended or terminated midway. With the intension to not
disturb the existing lessee, the said right has been preserved. In line with
the said objective, opportunity was granted to the petitioner to submit his
bid, which he plainly refused. He also sought for refund of his earnest
money deposit which was duly refunded.
Ideally, on refusal to participate in the tender process, it has to be
taken that the petitioner being the existing lessee waived or surrendered his
right to continue with the lease, but for the first right of refusal mentioned in
the land policy guidelines and the notice inviting tender, his right is saved.
The Court at the interim stage protected the rights of both the
parties. The respondent was restrained from awarding the lease to anyone in
terms of the second tender and further restrained from dispossessing the
petitioner from the subject plot of land without due process of law during
the pendency of the writ petition. The respondent was given liberty to
recover the difference of the rate of rent from 9th June, 2021 till recovery of
possession of the subject plot of land in the event the writ petition of the
petitioner fails. No appeal being preferred by either of the parties, the said
interim order has attained finality by now.
The Court is convinced that the participation of the existing lessee
in the tender process is imperative. The petitioner has deliberately chosen
not to participate in the second tender process despite opportunity granted
to him. His bid in the first tender is yet to be opened. There is a requirement
of quoting the bid by the existing lessee in the tender process. Because of
non-participation in the second tender process there is no bid from the side
of the existing lessee. The bidder who quoted the highest price in the second
tender i.e, M/s. Jai Gurudev Creations was a participant in the first tender
also. Had the bids in the first tender been opened, the competition would
have been between the petitioner and M/s. Jai Gurudev.
As the petitioner has expressed his willingness to continue with
the lease and as he claims to have invested a considerable sum for making
structures at the subject plot of land used for business purpose where quite
a few number of persons are employed, accordingly, for providing equitable
justice and to preserve the right of first refusal, one opportunity should be
given to the petitioner to match up the H-1 bid of the second tender. If the
petitioner is able to match up the highest bid then the lease may be granted
in his favour. If the petitioner is unable or fails to match up the highest bid,
it will be open for the respondent authority to proceed to settle the land in
accordance with its guidelines.
Though M/s. Jai Gurudev is not a party in the instant writ petition
but the direction passed herein will not prejudice the said bidder in any
manner as the bidder ought to be aware of the provision of the right of first
refusal.
As the Court is of the considered opinion that there was no mala
fide or arbitrariness in the decision making process of the respondent in
cancelling the first tender and going ahead with the second one, accordingly,
in terms of the interim order passed by the Court the respondent authority
will be at liberty to recover the difference of rent from the petitioner on and
from 9th June, 2021 till recovery of possession of land from the petitioner if
he fails to match the H-1 bid or till the date of execution of fresh lease in his
favour if he emerges successful. There should not be any loss of rent in the
process.
The writ petition stands disposed of.
No costs.
Urgent certified photocopy of this judgment, if applied for, be supplied
to the parties or their advocates on record expeditiously on compliance of
usual legal formalities.
(Amrita Sinha, J.)
