Madhya Pradesh High Court
Sona Matasya Udhyog Sahkari Sanstha ( ... vs The State Of Madhya Pradesh on 1 March, 2024
Author: Gurpal Singh Ahluwalia
Bench: Gurpal Singh Ahluwalia
1 W.P.No.4684/2024
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE GURPAL SINGH AHLUWALIA
ON THE 1st OF MARCH, 2024
WRIT PETITION No. 4684 of 2024
BETWEEN:-
SONA MATASYA UDHYOG SAHKARI
SANSTHA (MARYADIT ) THROUGH THE
PRESIDENT AMAN BATHAM S/O SHRI
SANJAY BAHTAM AGED ABOUT 20
YEARS OFFICE OF SONA MATASYA
UDHYOG (MARYADIT) GODHAPACHAD
DISTRICT BHOPAL (MADHYA PRADESH)
.....PETITIONER
(BY SHRI ATUL NEMA - ADVOCATE)
AND
1. THE STATE OF MADHYA PRADESH
THROUGH PRINCIPAL SECRETARY
DEPARTMENT OF COOPERATIVE
VALLABH BHAWAN BHOPAL
DISTRICT BHOPAL (MADHYA
PRADESH)
2. THE COLLECTOR BHOPAL
DISTRICT BHOPAL (MADHYA
PRADESH)
3. CHIEF EXECUTIVE OFFICER
OFFICE OF ZILA PANCHAYAT
BHOPAL DISTRICT BHOPAL
(MADHYA PRADESH)
4. DEPUTY COMMISSIONER
COOPERATIVE SOCIETY BHOPAL
DISTRICT BHOPAL (MADHYA
PRADESH)
5. ASSISTANT COMMISSIONER
(AUDITOR) COOPERATIVE
SOCIETY BHOPAL DISTRICT
BHOPAL (MADHYA PRADESH)
6. ASSISTANT DIRECTOR FISHERIES
2 W.P.No.4684/2024
MATASYA UDHYOG BHOPAL
DISTRICT BHOPAL (MADHYA
PRADESH)
.....RESPONDENTS
(SMT.SWATI ASEEM GEORGE - GOVERNMENT ADVOCATE FOR THE
RESPONDENTS/STATE)
...................................................................................................
This petition coming on for admission this day, the court passed
the following:
ORDER
This petition under Article 226 of Constitution of India has been
filed against the advertisement dated 21.09.2024 by which the
condition of audit of 3 years has been made mandatory for the
cooperative societies to participate in the auction of fisheries rights of
Kaliasot Pond.
2. It is submitted by counsel for petitioner that as per the bylaws of
the society, the Kaliasot Pond is the working area of the society. As per
the guidelines dated 08.10.2008 issued by Fisheries Department,
priority shall be given to the cooperative societies for carrying out
fisheries in the ponds falling within their working areas.
3. It is submitted that in the impugned advertisement although the
priority clause is mentioned but the only hurdle before the petitioner-
society is that the audit report of last 3 years has been demanded
whereas no audit has been done.
4. It is further submitted by counsel for petitioner that earlier the
petitioner had approached this Court by filing Writ Petition
No.29543/2023 seeking a direction to the Registrar to get the audit
done and accordingly, the said writ petition was disposed of with a
direction to the authorities that in case if the petitioner submits a fresh
representation before the Assistant Commissioner (Auditor),
Cooperative Society, Bhopal within a period of 15 days along with the
certified copy of the said order, then the grievance raised therein shall
be considered and decided on its own merits within a period of 30 days.
5. It is submitted that accordingly the Assistant Commissioner
(Auditor), Cooperative Society, Bhopal has issued a letter dated
27.12.2023 to the Cooperative Inspector to submit the audit report.
However, the audit report has not been submitted and in the meanwhile
the impugned advertisement has been issued.
6, It is submitted that since it was the duty of the Cooperative
department to get the audit of the society conducted and since that was
not done, therefore, the society will not be in a position to participate
and even if it participates, it will stand disqualified on account of
absence of audit report of 3 years.
7. Considered the submissions made by counsel for petitioner.
8. The first question for consideration is as to whether it is the duty
of the cooperative department to get the audit of a cooperative society
done or it is the duty of the cooperative society to get the audit done?
9. Section 58(1)(a) of M.P. Cooperative Societies Act, 1960 (in
short "Act 1960") provides that every cooperative society shall cause
the accounts to be audited by an auditor or auditing firm appointed by
the general body of the cooperative society from a panel approved by
the Registrar and pay the audit fee, as may be prescribed. However, if
the general body of society fails to appoint an auditor or auditing firm
within the stipulated time, only then the Registrar shall appoint the
auditor or auditing firm and shall cause the accounts to be audited.
Provided further if State Government has contributed to the share
capital or has given loan of financial assistance or has guaranteed the
repayment of loans granted in any other form or the society does
Government Sponsored Business or undertakes an activity as a
representative or agent of the Central or State Government and the
turnover of the above two businesses, together or separately, constitutes
50% or more of its total business, then the Auditor or auditing firm
shall be appointed by the Registrar for audit from an approved panel.
10. It is not the case of the petitioner that petitioner-society falls
within second proviso to section 58(1)(a) of Act 1960.
11. The sub-section (1) of Act 1960 was substituted by M.P.Act 12
of 2013, which came into force w.e.f.13.02.2013. Prior thereto the
provision was that every society shall get the accounts audited once
atleast every year by the person authorized by the Registrar in writing
by general or special order in this behalf and shall pay the audit fee, as
may be prescribed. Thus, after the amendment of section 58(1) of Act
1960 now the burden is on the societies to cause the accounts to be
audited by an Auditor or auditing firm appointed by the general body of
the cooperative society from a panel approved by the Registrar and pay
the audit fee as may be prescribed.
12. Admittedly, the petitioner-society did not get its accounts audited
by an Auditor or auditing firm appointed by its general body of the
cooperative society from a panel approved by the Registrar.
13. Furthermore, it is not the case of petitioner that the petitioner-
society had failed to appoint an Auditor or auditing firm in the general
body of the society requiring the interference of the Registrar, as per
first proviso to section 58(1)(a) of Act 1960.
14. Furthermore, it is clear that if the society fails to function in
accordance with the provisions of law then the Registrar can pass an
order thereby winding up the society or can dissolve the Board of
Directors, as the case may be.
15. Be that whatever it may be.
16. It was not the duty of the Registrar to get the audit done but it
was the duty of the society to get the audit done and if the society has
failed in doing so then it has to face the adverse consequences instead
of putting a blame on the Registrar.
17. The imposition of condition of submitting audit report of 3 years
in the advertisement dated 21.09.2023, cannot be said to be irrational
because if the department wants to verify the financial capacity of the
bidder then there is nothing wrong in it.
18. Furthermore, this Court in exercise of power under Article 226
of Constitution of India has a limited scope of interference in
contractual matters.
19. The Supreme Court in the case of Uflex Limited Vs.
Government of Tamil Nadu and others reported in (2022) 1 SCC
165 has held as under:-
"2. The judicial review of such
contractual matters has its own limitations. It
is in this context of judicial review of
administrative actions that this Court has
opined that it is intended to prevent
arbitrariness, irrationality, unreasonableness,
bias and mala fides. The purpose is to check
whether the choice of decision is made
lawfully and not to check whether the choice
of decision is sound. In evaluating tenders
and awarding contracts, the parties are to be
governed by principles of commercial
prudence. To that extent, principles of equity
and natural justice have to stay at a distance.
[Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517].
3. We cannot lose sight of the fact that
a tenderer or contractor with a grievance can
always seek damages in a civil court and thus,
"attempts by unsuccessful tenderers with
imaginary grievances, wounded pride and
business rivalry, to make mountains out of
molehills of some technical/procedural
violation or some prejudice to self, and
persuade courts to interfere by exercising
power of judicial review, should be resisted".
[Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517]
20. The Supreme Court in the case of Caretel Infotech Ltd. Vs.
Hindustan Petroleum Corporation Limited and others reported in
(2019) 14 SCC 81 has held as under:-
37. We consider it appropriate to make
certain observations in the context of the
nature of dispute which is before us.
Normally parties would be governed by their
contracts and the tender terms, and really no
writ would be maintainable under Article 226
of the Constitution of India. In view of
Government and public sector enterprises
venturing into economic activities, this Court
found it appropriate to build in certain checks
and balances of fairness in procedure. It is
this approach which has given rise to scrutiny
of tenders in writ proceedings under Article
226 of the Constitution of India. It, however,
appears that the window has been opened too
wide as almost every small or big tender is
now sought to be challenged in writ
proceedings almost as a matter of routine.
This in turn, affects the efficacy of
commercial activities of the public sectors,
which may be in competition with the private
sector. This could hardly have been the
objective in mind. An unnecessary, close
scrutiny of minute details, contrary to the
view of the tendering authority, makes
awarding of contracts by government and
public sectors a cumbersome exercise, with
long drawn out litigation at the threshold. The
private sector is competing often in the same
field. Promptness and efficiency levels in
private contracts, thus, often tend to make the
tenders of the public sector a non-competitive
exercise. This works to a great disadvantage
to the Government and the public sector.
38. In Afcons Infrastructure
Ltd. v. Nagpur Metro Rail Corpn. Ltd. (2016)
16 SCC 818, this Court has expounded
further on this aspect, while observing that
the decision-making process in accepting or
rejecting the bid should not be interfered
with. Interference is permissible only if the
decision-making process is arbitrary or
irrational to an extent that no responsible
authority, acting reasonably and in
accordance with law, could have reached such
a decision. It has been cautioned that
constitutional courts are expected to exercise
restraint in interfering with the administrative
decision and ought not to substitute their view
for that of the administrative authority. Mere
disagreement with the decision-making
process would not suffice.
39. Another aspect emphasised is that
the author of the document is the best person
to understand and appreciate its requirements.
In the facts of the present case, the view, on
interpreting the tender documents, of
Respondent 1 must prevail. Respondent 1
itself, appreciative of the wording of Clause
20 and the format, has taken a considered
view. Respondent 3 cannot compel its own
interpretation of the contract to be thrust on
Respondent 1, or ask the Court to compel
Respondent 1 to accept that interpretation. In
fact, the Court went on to observe in the
aforesaid judgment that it is possible that the
author of the tender may give an
interpretation that is not acceptable to the
constitutional court, but that itself would not
be a reason for interfering with the
interpretation given. We reproduce the
observations in this behalf as under: (Afcons
Infrastructure Ltd. case [Afcons
Infrastructure Ltd. v. Nagpur Metro Rail
Corpn. Ltd., (2016) 16 SCC 818] , SCC p.
825, para 15)
"15. We may add that the
owner or the employer of a
project, having authored the
tender documents, is the best
person to understand and
appreciate its requirements
and interpret its documents.
The constitutional courts must
defer to this understanding
and appreciation of the tender
documents, unless there is
mala fide or perversity in the
understanding or appreciation
or in the application of the
terms of the tender conditions.
It is possible that the owner or
employer of a project may
give an interpretation to the
tender documents that is not
acceptable to the
constitutional courts but that
by itself is not a reason for
interfering with the
interpretation given."
40. We may also refer to the judgment
of this Court in Nabha Power Ltd. v. Punjab
State Power Corpn. Ltd., (2018) 11 SCC 508
: (2018) 5 SCC (Civ) 1, authored by one of us
(Sanjay Kishan Kaul, J.). The legal principles
for interpretation of commercial contracts
have been discussed. In the said judgment, a
reference was made to the observations of the
Privy Council in Attorney General of
Belize v. Belize Telecom Ltd. [Attorney
General of Belize v. Belize Telecom Ltd.,
(2009) 1 WLR 1988 : 2009 Bus LR 1316
(PC)] as under: (Nabha Power Ltd.
case [Nabha Power Ltd. v. Punjab State
Power Corpn. Ltd., (2018) 11 SCC 508 :
(2018) 5 SCC (Civ) 1] , SCC pp. 534-36, para
45)
"45. ... '16. Before
discussing in greater detail
the reasoning of the Court of
Appeal, the Board will make
some general observations
about the process of
implication. The court has no
power to improve upon the
instrument which it is called
upon to construe, whether it
be a contract, a statute or
articles of association. It
cannot introduce terms to
make it fairer or more
reasonable. It is concerned
only to discover what the
instrument means. However,
that meaning is not
necessarily or always what
the authors or parties to the
document would have
intended....
***
19. ... In Trollope & Colls
Ltd. v. North West
Metropolitan Regional
Hospital Board [Trollope &
Colls Ltd. v. North West
Metropolitan Regional
Hospital Board, (1973) 1
WLR 601 (HL)] Lord
Pearson, with whom Lord
Guest and Lord Diplock
agreed, said: (WLR p. 609 B-
D)
"...the court does not make a
contract for the parties. The court
will not even improve the contract
which the parties have made for
themselves, however desirable the
improvement might be. The
court's function is to interpret and
apply the contract which the
parties have made for themselves.
If the express terms are perfectly
clear and free from ambiguity,
there is no choice to be made
between different possible
meanings: the clear terms must be
applied even if the court thinks
some other terms would have
been more suitable. An
unexpressed term can be implied
if and only if the court finds that
the parties must have intended
that term to form part of their
contract: it is not enough for the
court to find that such a term
would have been adopted by the
parties as reasonable men if it had
been suggested to them: it must
have been a term that went
without saying, a
term necessary to give business
efficacy to the contract, a term
which, though tacit, formed part
of the contract which the parties
made for themselves."...'
(Attorney General of Belize
case [Attorney General of
Belize v. Belize Telecom Ltd.,
(2009) 1 WLR 1988 : 2009 Bus
LR 1316 (PC)] , WLR pp. 1993
A-B, F-H & 1994 A, paras 16 &
19)"
(emphasis in original)
41.Nabha Power Ltd. [Nabha Power
Ltd. v. Punjab State Power Corpn. Ltd.,
(2018) 11 SCC 508 : (2018) 5 SCC (Civ) 1]
also took note of the earlier judgment of this
Court in Satya Jain v. Anis Ahmed
Rushdie [Satya Jain v. Anis Ahmed Rushdie,
(2013) 8 SCC 131 : (2013) 3 SCC (Civ) 738]
, which discussed the principle of business
efficacy as proposed by Bowen, L.J. in The
Moorcock [The Moorcock, (1889) LR 14 PD
64 (CA)] . It has been elucidated that this test
requires that terms can be implied only if it is
necessary to give business efficacy to the
contract to avoid failure of the contract and
only the bare minimum of implication is to be
there to achieve this goal. Thus, if the
contract makes business sense without the
implication of terms, the courts will not imply
the same.
42. The judgment in Nabha Power
Ltd. [Nabha Power Ltd. v. Punjab State
Power Corpn. Ltd., (2018) 11 SCC 508 :
(2018) 5 SCC (Civ) 1] concluded with the
following observations in para 72: (SCC p.
546)
"72. We may, however, in the
end, extend a word of caution.
It should certainly not be an
endeavour of commercial
courts to look to implied terms
of contract. In the current day
and age, making of contracts
is a matter of high technical
expertise with legal brains
from all sides involved in the
process of drafting a contract.
It is even preceded by
opportunities of seeking
clarifications and doubts so
that the parties know what
they are getting into. Thus,
normally a contract should be
read as it reads, as per its
express terms. The implied
terms is a concept, which is
necessitated only when the
Penta test referred to aforesaid
comes into play. There has to
be a strict necessity for it. In
the present case, we have
really only read the contract in
the manner it reads. We have
not really read into it any
"implied term" but from the
collection of clauses, come to
a conclusion as to what the
contract says. The formula for
energy charges, to our mind,
was quite clear. We have only
expounded it in accordance to
its natural grammatical
contour, keeping in mind the
nature of the contract."
43. We have considered it appropriate
to, once again, emphasise the aforesaid
aspects, especially in the context of
endeavours of courts to give their own
interpretation to contracts, more specifically
tender terms, at the behest of a third party
competing for the tender, rather than what is
propounded by the party framing the tender.
The object cannot be that in every contract,
where some parties would lose out, they
should get the opportunity to somehow pick
holes, to disqualify the successful parties, on
grounds on which even the party floating the
tender finds no merit.
21. The Supreme Court in the case of Tata Cellular Vs. Union of
India reported in (1994) 6 SCC 651 has held as under:-
94. The principles deducible from the
above are:
(1) The modern trend points to judicial
restraint in administrative action.
(2) The court does not sit as a court of
appeal but merely reviews the manner in
which the decision was made.
(3) The court does not have the
expertise to correct the administrative
decision. If a review of the administrative
decision is permitted it will be substituting its
own decision, without the necessary expertise
which itself may be fallible.
(4) The terms of the invitation to
tender cannot be open to judicial scrutiny
because the invitation to tender is in the realm
of contract. Normally speaking, the decision
to accept the tender or award the contract is
reached by process of negotiations through
several tiers. More often than not, such
decisions are made qualitatively by experts.
(5) The Government must have
freedom of contract. In other words, a fair
play in the joints is a necessary concomitant
for an administrative body functioning in an
administrative sphere or quasi-administrative
sphere. However, the decision must not only
be tested by the application of Wednesbury
principle of reasonableness (including its
other facts pointed out above) but must be
free from arbitrariness not affected by bias or
actuated by mala fides.
(6) Quashing decisions may impose
heavy administrative burden on the
administration and lead to increased and
unbudgeted expenditure.
Based on these principles we will
examine the facts of this case since they
commend to us as the correct principles.
22. It is well established principle of law that a writ petition for
enforcement of contract is not maintainable. The Supreme Court in
the case of Surjeet Singh Sahni Vs. State of U.P. and Ors. by
order dated 28.02.2022 passed in SLP(C) No.3008/2022 has held
as under:-
"6.........No writ under Article 226 of the
Constitution of India shall be maintainable
and/or entertainable for specific performance
of the contract........."
23. This Court in exercise of power under Article 226 of
Constitution of India cannot substitute the conditions imposed in the
advertisement unless and until they are contrary to law. Merely because
one of the conditions is not suitable to one of the bidder, cannot be a
ground to quash the same.
24. As no case is made out warranting interference, the petition fails
and is hereby dismissed.
(G.S.AHLUWALIA)
JUDGE
TG/-
TRUPTI GUNJAL
2024.03.05 18:51:32
+05'30'
