A.S. Advertisers vs Municipal Corporation
2022 Latest Caselaw 450 Chatt

                                         1



                                                                             AFR
               HIGH COURT OF CHHATTISGARH, BILASPUR
                               WPC No. 3774 of 2021


A.S. Advertisers Through Ashish Agrawal S/o Shri Satya Narayan Agrawal,
Aged About 43 Years, Partner A.S. Advertisers, Office At First Floor,
Anand Bhawan, Guru Nanak Chowk Raipur, District Raipur, Chhattisgarh.
                                                                 ---- Petitioner
                                      Versus
1.      Municipal Corporation Bhilai Through Commissioner, Municipal
        Corporation Bhilai, District Durg, Chhattisgarh.
2.      Upper Commissioner, Municipal Corporation, Bhilai, District Durg,
        Chhattisgarh.
3.      Executive Engineer, Municipal Bhilai, District Durg, Chhattisgarh.
                                                             ---- Respondents

(Cause Title taken from Case Information System)

For Petitioner : Mr. Anup Majumdar, Advocate.

For Respondents : Ms. Fouzia Mirza, Senior Advocate.

Date of Hearing : 01.12.2021, 04.01.2022 and 05.01.2022

Date of Judgment : 25.01.2022

Hon'ble Mr. Arup Kumar Goswami, Chief Justice Hon'ble Mr. N.K.Chandravanshi, Judge

C A V Judgment

Per Arup Kumar Goswami, Chief Justice

Heard Mr. Anup Majumdar, learned counsel for the petitioner.

Also heard Ms. Fouzia Mirza, learned senior counsel assisted by Mr.

Sakib Ahmed, learned counsel for the respondents.

2. By filing this writ petition under Article 226 of the Constitution of

India, the petitioner has prayed for setting aside and quashing the order

dated 08.09.2021, whereby, the contract entered into with the petitioner

in connection with installation, operation and maintenance of traffic

signals and unipoles was cancelled and all signals and boards erected

by the petitioner were directed to be removed within a period of three

days.

3. The case presented in the writ petition, in short, is that the

petitioner, which is a partnership firm, is engaged in the business of

advertisement and it had responded to a tender issued by the Municipal

Corporation, Bhilai, (for short, 'the Corporation'), inviting bids for

installation of traffic signals at various locations under the Municipal

area, Zone No. 2, of the Corporation.

4. The Corporation, by an order dated 08.02.2021, offered the

petitioner to provide services for installation of traffic signals and

unipoles. Consequent thereto, the Corporation entered into a contract

dated 24.05.2021 for a period of five years for installation of traffic

signals and unipoles for advertisement. On the very date of execution of

the agreement, no objection certificate from Police authorities was

obtained. On receipt of a notice dated 28.05.2021 from the Executive

Engineer, Zone No. 2 to deposit exhibition fee, the petitioner deposited

the exhibition fee.

5. On completion of the requisite terms and conditions of the

contract, the work order was issued to the petitioner on 14.06.2021. The

petitioner had invested an amount of Rs. 1.25 crores for installation of

traffic signals and unipoles. However, on 08.09.2021, the respondent No.

2 cancelled the contract on the ground that the advertisement display

board is not within the standard parameters and is not safe from the

traffic point of view and that there was gross violation of condition Nos.

14 and 15 of the agreement.

6. It is pleaded that none have informed the petitioner about any

deviation from the standard parameters while installing traffic signals and

unipoles and that the respondent No. 2 acted on his whims and caprice

and the unilateral cancellation of the contract had taken place without

giving any opportunity of hearing to the petitioner and also without taking

into confidence the Commissioner of the Corporation.

7. It is urged that the impugned action of the authority is violative

of the principle of natural justice and Article 14 and 19 (1) (g) of the

Constitution of India.

8. A return was filed by the respondents, by way of preliminary

submission, without filing para-wise reply on the ground that preliminary

submission was sufficient to establish that the petitioner is not entitled to

the reliefs as claimed by him. It is also stated that the respondents

reserved their right to file a detailed para-wise reply to the petition, if the

occasion arises or is directed by the Court.

9. When a return is filed, the answering respondent is required to

take all such pleas as may be available and has to deal with the case

presented in the writ petition. The respondents cannot take a chance in

the context of adversarial litigation that after arguing on the basis of

preliminary submissions and failing therein, they would seek further

opportunity to file a detailed para-wise reply. It is also not understood

how the respondents can reserve their right on their own to file a detailed

reply later on. If at all any such recourse is to be taken, appropriate

orders have to be obtained from the Court before filing a return by way of

making preliminary submission and reserving liberty to file a detailed

para-wise reply later on.

10. It is for the Court, in an appropriate case, to grant further liberty

to the respondents to file additional pleadings to bring in further details or

better particulars, but the respondents cannot claim as a matter of right

that it will file para-wise reply, if the preliminary submissions fail to

support the case.

11. Having said so, we take note of the stand taken in the return

filed by the respondents. It is stated that invitation of Expression of

Interest, (for short, EOI) for 19 square spots, was advertised in two local

vernacular dailies, namely, Patrika and Nav pradesh on 31.01.2021. On

07.02.2021, four bidders including the petitioner submitted their offers.

As two bidders did not submit relevant documents in respect of Envelope

B, their Envelope C was not opened. As the petitioner had offered

highest offer, which is Rs. 10,000/- per square spot per year, his offer

was accepted. The financial offer was presented before the Tender and

Purchase Committee and it recommended the matter to be placed for

permission for issuance of work order. A complaint was received in

respect of the unipoles installed and on an enquiry conducted pursuant

to the receipt of such complaint, it was found that apart from financial

irregularities, the Executive Engineer, who is Zone Commissioner No. 2,

executed an agreement dated 24.05.2021 in violation of the terms and

conditions of the EOI and issued the work order dated 14.06.2021

without the aproval of the sanctioning authority, which is the Mayor in

Council and the approval of the Commissioner, Municipal Corporation

Bhilai, and accordingly, notice dated 08.09.2021 was issued. It is

pleaded that Clause 8 of the agreement is in violation of Clauses 14 and

15 of the EOI and Clause 19 of the agreement is in violation of Clause

26 of the EOI.

12. On that very date itself, i.e., on 08.09.2021, a show cause

notice was issued to the Executive Engineer concerned to submit his

explanation with regard to the irregularities and illegalities committed by

him in execution of the agreement and issuance of the work order within

a period of three days. Subsequently, by an order dated 16.09.2021, he

was placed under suspension. A complaint was also filed on 16.09.2021

before the Station House Officer, Supela Bhilai, on the basis of audit

report prepared by the Chartered Accountant in connection with

irregularities, corruption and huge loss to the Corporation. It is pleaded

that the Executive Engineer colluded with the petitioner and by practising

fraud, executed the agreement and issued the work order.

13. A rejoinder-affidavit was filed by the petitioner to the aforesaid

return wherein it is stated that the tender notice was the 3 rd tender notice

issued on the subject. It is stated that Clauses of the agreement dated

24.05.2021 would indicate that the approval was obtained by the

Commissioner, Municipal Corporation.

14. Admitting that Clauses 14, 15 and 19 were modified in the

contract, it is asserted that such modification was on the demand of the

petitioner. It is asserted that the Commissioner was well aware of the

contract and the conditions mentioned therein by the Executive Engineer

(Zonal Commissioner) and that the issue has been raised at the behest

of rival groups. The drawings and designs of unipoles and traffic signals

submitted by the petitioner were duly deliberated upon and thereafter

only, agreement was entered into with the petitioner. The petitioner had

installed four signals and he is continuing to maintain the same. It is

stated that financial offer was opened only when technical offer was

found to be compliant and that letter dated 26.03.2021 issued to the

petitioner conveys that Municipal Commissioner had given his approval

and asked for the agreement.

15. It is stated that the contract for traffic signals for the period of

2016-2021 granted in favour of the petitioner was also cancelled without

any justification and the Corporation had paid maintenance charges in

lakhs to some other vendor. No case is set out by the respondents that

the Executive Engineer / the Zonal Commissioner had no authority to

award the work and prescribe the terms and conditions of the contract.

Role of the Commissioner is also suspicious inasmuch as no objection

was raised by his office prior to receipt of the complaint. The allegation of

fraud and mis-representation was also denied.

16. The learned counsel for the parties have furnished English

translation of (i) Clauses 6, 14, 15, 16, 24, 26, 32 and 35 of the EOI, (ii)

Clauses 4, 8, 17, 19, 25 and 37 of the agreement and (iii) a comparative

chart, which is part of paragraph 11 of the reply of the respondents as

well as (iv) letter dated 25.01.2021, which was filed by the petitioner with

covering memo dated 21.09.2021.

17. Mr. Anup Majundar, learned counsel appearing for the

petitioner, by drawing attention of the Court to the letter dated

25.01.2021, submits that the petitioner had submitted a format for the

advertisement and it was indicated therein that the petitioner would be

willing to do the work if it is granted the work as per the format of the

unipoles for advertisement annexed by the petitioner and therefore, it

cannot be said that the petitioner had resorted to any unfair practice. On

due consideration, the proposal of the petitioner was accepted by all

concerned and then only the agreement was executed and the work

order issued in favour of the petitioner. It is submitted that the plea taken

that the Executive Engineer acted on his own without obtaining any

sanction from any authority is a plea taken for the purpose of this case

without any material to substantiate the said allegation. It is also

submitted by him that the complaint was engineered by the rival group

for its own vested interest. The petitioner having invested huge sum of

money, which is to the tune of about Rs. 1.25 crores, the cancellation of

the contract arbitrarily without affording any opportunity of showing

cause cannot be sustained in law.

18. Ms. Fouzia Mirza, learned senior counsel appearing for the

respondents submits that the execution of the contract agreement was in

violation of terms and conditions of the EOI and therefore, it cannot be

urged that as the agreement is executed, the parties are bound by the

terms and conditions of the executed contract. It is submitted by her that

without obtaining any approval from the Competent Authority, the

Executive Engineer executed the contract agreement and also issued

the work order and therefore, he was placed under suspension on

16.09.2021 and subsequently, a charge-sheet was issued against him

on 22.11.2021. It is submitted that while the EOI required that the size of

the standard advertisement board would not be more than 3 meter x 1

meter and because of safety concerns, the same is required to be

installed at 4.50 meters from the road, in the agreement, the size of the

Board was altered to 6 x 6 meters and installation of the Board at 7

meters. Similarly, the penalty clause was also altered to the advantage

of the petitioner by deviating from what was stipulated in the EOI. It is

submitted that the entire exercise was tainted and the award of contract,

cannot, in any view of the matter, be justified. By placing the relevant

records and drawing the attention of the Court to pages 28 and 29 of the

records, she submits that it is manifest from the above that the

concerned file was not sent to the Commissioner. Ms. Mirza submits that

setting aside of the order of cancellation dated 08.09.2021 would result

in an illegal order. She has placed reliance on the decisions of Hon'ble

Supreme Court in the cases of Gadde Venkateswara Rao v.

Government of Andhra Pradesh and Others, reported in AIR 1966

Supreme Court 828 , Raj Kumar Soni and Another v. State of U.P. and

Another, reported in (2007) 10 SCC 635 and Municipal Council,

Neemuch v. Mahadeo Real Estate and Others, reported in (2019) 10

SCC 738 .

19. We have considered the submissions of learned counsel for the

parties and have perused the materials on record as well as the file

produced by Ms. Mirza.

20. At page 10 of the writ petition, there is an EOI dated

11.01.2021, by which offers were called for on or before 27.01.2021 from

entities as indicated therein with regard to the subject matter of the

present writ petition. At page 11, similar EOI dated 29.01.2021, whereby,

offers were invited on or before 08.02.2021. In the said EOI, it is

indicated that the same has been issued for the 3 rd time. In the

pleadings, no such details have been given but it would appear that for

the subject matter of the present tender, notice was issued earlier on two

occasions.

21. In the writ petition, it is stated that EOI was issued for Municipal

Area, Zone No. 2. In the reply of the respondents, it is stated that the

same was for installation of traffic signals in various locations under the

Municipal Corporation, Bhilai. A perusal of the EOI dated 29.01.2021

would go to show that the EOI was issued in respect of Bhilai Municipal

Corporation Area and not to Zone No. 2 only. It was indicated that the

terms and conditions can be obtained from and deposited in the office of

Executive Engineer, Zone No. 2 of Bhilai Municipal Corporation and that

tenders will be scrutinized in the office of Executive Engineer, Zone No.

2 of Bhilai Municipal Corporation.

22. It appears that the traffic signals are to be set up and erected

by the successful bidder and he would be allowed to recover cost of

signals by generating income by flashing and displaying advertisement.

23. Clauses 6, 14, 15, 16, 24, 26, 32, 34, 35 of translated version of

the EOI, read as follows:

" Clause 6 : The work of installation of traffic signal

would have to be done as per the drawing/design

approved by Commissioner Municipal Corporation

Bhilai.

Clause 14: The size (square) of the advertisement

board which would be displayed by the agency on

standard traffic pole would not be more than 3

meter x 1 meter and in view of the safety the

advertisement board would be installed at the

height of 4.50 meter from the road.

Clause 15: The advertisement board on the

cantilever traffic pole, by the agency would be

installed at the maximum 3 meter x 1 meter and at

the height of approximately more than 7 meters

from the traffic, so that it should not cause any

type of hindrance to the traffic.

Clause 16 : All advertisement boards/patal should

be installed by the agency as per the safety norms

and in the event of fall etc. of any of the above the

second party would be responsible for the

accident.

Clause 24 : Municipal Corporation Bhilai reserves

the right to cancel the advertisement right (NOC)

given in the event of non-compliance of the

prescribed terms and conditions by the agency.

Clause 26 : Maintenance of Traffic Signals etc.

would be done continuously by the agency and in

case of the traffic signals being off, it would be

started as soon as possible within 24 hours. If

signals remain closed for more than 24 hours then

penalty of Rs. 1000/- per hour would be imposed,

which has to be deposited by the agency within a

working day or else further proceedings for the

cancellation of the agreement would be initiated.

Clause 32: In case of any dispute or objection at

any intersection/square, the offer may be partially

or fully cancelled and in that situation the decision

of Commissioner would be final and binding.

Clause 35: The Agency would have to mandatorily

follow the laws and bye-laws, decisions and the

instructions given by the Government from time to

time."

24. Clauses 4, 8, 17, 19, 25, 37 of translated version of the

agreement, read as follows:

" Clause 4: The work will be done by the agency,

as per the terms and conditions on the basis of

structural design of the Unipole for the

advertisement which is attached with the tender. If

a suitable place would not be found at any of the

squares and intersections for the installation for

the installation of the unipole then the permission

would be granted by Municipal Corporation to

install the Unipole at the place selected by the

Agency under the jurisdiction of Municipal

Corporation.

Clause 8: The agency as per the map attached

with the tender, would at every square, install 4

numbers of unipole (Double Side) signals. Size

(square) would not be more than 6 x 6 meter and

in view of safety advertisement, board would be

installed at a height of 7 meters from the road, so

that there should not be any obstruction in the

traffic.

Clause 17: The Municipal Corporation Bhilai

reserves the right to cancel the advertisement

rights (NOC) given in the event of non-compliance

of prescribed conditions by the agency.

Clause 19: Maintenance etc. of traffic signals

would be continuously done by the agency. In the

event of signals remaining off, then the

maintenance work would be started as soon as

possible within 24 hours. If the signals remain off

for more than 24 hours then a penalty of Rs. 100/-

per hour would be levied which has to be

deposited by the agency within a working day,

otherwise the contract would be cancelled and

further proceeding would be initiated.

Clause 25 : In case of any dispute or objection at

any square or intersection, the offer can be

partially or completely terminated and in this

situation, the decision of Commissioner would be

final and valid.

Clause 37: The agency would have to comply

with the applicable and prevalent Rules, Acts,

Orders, Decisions, Resolutions of the Central

Government, State Government, Local Bodies

and Municipal Corporation from time to time, the

fee to be imposed in future and the surcharge etc.

has to be paid compulsorily."

25. A perusal of the clauses above would go to show that there is

vast difference in respect of the size of the advertisement board. While

Clause 4 of the EOI permitted the board to be 3 meters x 1 meter, which

is equivalent to 3 square meters, in the agreement it was increased to 6

meters x 6 meters, which is equivalent to 36 square meters. Similarly,

penalty has been reduced in Clause 19 of the agreement dated

24.05.2021 by 10 times inasmuch as while the EOI fixed a penalty of

Rs.1,000/- per hour if the signal remains closed for more than 24 hours,

the same was reduced to Rs.100/- per hour. The height for installation of

the board was also increased to 7 meters in the agreement from the

permissible limit of 4.50 meters from the road due to safety

considerations as indicated in the EOI.

26. When the EOI laid down the parameters and the terms and

conditions, the same have to be scrupulously complied with.

27. It appears that the petitioner had given a counter-offer with

regard to the size of advertisement boards and yet, in the letter dated

25.01.2021, it was indicated by the petitioner that the petitioner would do

the work in terms of Clause 14 of the tender notice which laid down the

size of the board and the height of installation. Even if it is assumed for a

moment that the Executive Engineer had the authority to award the

contract, he could not have executed a contract with the petitioner,

fundamentally changing the terms and conditions from the EOI.

28. A perusal of the file produced by Ms. Mirza would go to show

that the file was not sent to the Commissioner of Bhilai Municipal

Corporation for approval.

29. In Gadde Venkateswara Rao (supra), the Hon'ble Supreme

Court observed that High Court was right in refusing to exercise its extra-

ordinary discretionary power under Article 226 of the Constitution of

India, as if the High Court had quashed the order, it would have restored

an illegal order inasmuch as it would have given the health center to a

village contrary to the valid resolutions passed by the Village Panchayat

Samithi.

30. In the same vein, the Hon'ble Supreme Court in Raj Kumar

Soni (supra), held that even if there was any technical violation of rules

of natural justice, that was not a fit case for interference, as such

interference would result in restoration of an illegal order.

31. In case of Municipal Council, Neemuch (supra), the Hon'ble

Supreme Court observed that interference by the High Court would be

warranted only if the decision impugned is vitiated by an apparent error

of law i.e. when the error is apparent on the face of the record and is

self-evident. The High Court would be empowered to exercise the

powers when it finds that the decision impugned is so arbitrary and

capricious that no reasonable person would have ever arrived at such a

decision. It has been reiterated that the test is not what the Court

considers reasonable or unreasonable but a decision which the Court

thinks that no reasonable person could have taken. Not only this but

such a decision must have led to manifest injustice.

32. The contract agreement dated 24.05.2021 entered into by

respondent No. 3 with the petitioner and the work order issued violate

principles governing distribution of public largess. Entering into a

contract in gross deviation of the terms and conditions of the EOI and

resultant issuance of the work order cannot be countenanced as the

same is against public interest. It is in that circumstance, notice dated

08.09.2021 was issued cancelling the contract.

33. Assuming that there was breach of natural justice or any other

legal infirmity in issuing the notice dated 08.09.2021, we are of the

considered opinion that this Court ought not to exercise its discretion to

set aside the notice dated 08.09.2021 as setting aside will result in

resurrection of the contract agreement dated 24.05.2021 and the work

order dated 14.06.2021, which are patently illegal.

34. Taking that view, the writ petition is dismissed.

35. We, however, hasten to add that we have not expressed any

opinion on the allegations of fraud and corruption as articulated by Ms.

Mirza, as a disciplinary proceeding as well as an FIR / complaint are

pending. We place it on record that we have decided the case only on

the basis of legal principles governing award of contract.

36. No cost.

                   Sd/-                                        Sd/-
            (Arup Kumar Goswami)                          (N.K.Chandravanshi)
               CHIEF JUSTICE                                   JUDGE


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