Karnataka H.C : This matter coming up for orders, is taken up for final disposal and after hearing learned counsel on both sides, is disposed of by the following order.

High Court Of Karnataka

Sri Srinivasa Saw Mills & Wood Industries vs. Deputy Commissioner & Ors.

M. P. Chandrakantaraj Urs, J.

WP Nos. 21461 to 21467 of 1986

23rd November, 1987

Counsel Appeared

B. G. Sridharan, for the Petitioner : U. Abdul Khader, S. N. Keshamurthy & P. V. Shetty, for the Respondents.


This matter coming up for orders, is taken up for final disposal and after hearing learned counsel on both sides, is disposed of by the following order.

As agreed to on the last occasion, when the matter earlier appeared on 16th Nov., 1987, I recorded in the order sheet as follows : “Heard in part. Prima facie, there is no cause shown for interfering with the order. The short question which falls for determination is whether the Dy. CIT who imposed some conditions while calling for tenders has the power to relax some of those conditions in public interest, particularly, in accounting for considerable savings in the outlay of expenditure for building Janatha houses. Sri Sridharan says that the Dy. CIT does not have such power and that he will support that proposition by judicial authority. Call this matter next week. ” Today, the Government advocate has produced the records for the perusal of the Court. Sri Sridharan has strenuously contended that the learned Dy. CIT who invited tenders for supply of wooden materials in the tender notice had set out certain conditions which he has arbitrarily waived and accepted the tenders of respondent No. 3 in these cases, thereby affecting the public interest. The tender notice inviting supply of certain wooden materials for construction of Janatha houses dt. 21st Oct., 1986, was issued specifying the requirements of such materials. Altogether, there are as many as 9 conditions imposed. Mr. Sridharan, learned counsel for the petitioner, has pointed out that conditions Nos. 4, 7, 8 and 9 being crucial conditions, have been waived arbitrarily thereby not only affecting the rights of the petitioner but also public interest. The thrust of the argument is that he had no power to relax those conditions or waive them, having imposed them while inviting the tenders.Condition No. 4 has specified that tenderers must be either owners of saw mills or must be registered contractors. If they are registered contractors, they should indicate their registration number and the registration certificate should accompany the tender. Condition. No. 7 provides that the determined earnest money should be deposited along with the tender. It further states that tenders, which are not accompanied by the earnest money deposit receipt will be rejected. It further states that without assigning any reasons, either the lowest tender or the highest tender may be rejected by him. Condition No. 8 provides that the tenderers must within the specified time execute an agreement with the Block Development Officer within 3 days on stamp paper of Rs. 5 value if they are successful in winning the contract. Condition No. 9 provides that the tender should be accompanied by income-tax as well as sales tax clearances certificates.

The allegation by the petitioner is that the successful 3rd respondents-tenderers along with their tenders submitted their registration certificates as contractors to evidence not being saw mill owners and also did not enclose sales tax and income-tax clearance certificates, and, therefore, they were ineligible to be considered. In that view of the matter, those documents being the very basis for judging their suitability or eligibility, relaxing the production of those documents tantamounted to total arbitrariness and, therefore, violative of the public interest as well as, of course, the commercial interest of the petitioner who admittedly had tendered a higher price for the same material than respondent No. 3 in the batch of petitions.

From the records produced by the learned Government advocate, I have seen the tender made by Zenith Industries as well as Kothari Wood Industries. It is seen that after citing the tender invitation, he has quoted the price for the materials to be supplied and indicated that the earnest money deposit of Rs. 5,000 has been made by enclosing a demand draft bearing No ……. dt. 5th Nov., 1986, drawn on the State Bank of Mysore. He has also indicated in the letter that he is willing to supply the materials at the price quoted by him. There is an endorsement apparently made subsequently on 5th Nov.,1986, some time later which says that the tender was opened in his presence. That it is not accompanied by any certificate, there cannot be any doubt. Similar is the position in regard to Zenith Industries. Now, it is not the case of the petitioner that any penal consequence should follow if the conditions are not faithfully obeyed by the tenderers. At annexure-E, the order by which the respondent-Dy. CIT, Chickmagalur District, has clearly stated that each tender was carefully scrutinised and the conditions relating to income-tax and sales tax clearance certificates did not provide that the tenders would be rejected if those documents were not accompanied by those certificates and, therefore, despite some of the tenders which have been accepted though not accompanied by those certificates have been approved on account of the cost, saving which amounts to Rs. 700 to Rs. 800 per house and, therefore, he has relaxed the said condition and accepted the lowest rates offered for the specified wooden materials.

The importance of calling for tenders at competitive prices for building Janatha houses is to keep the cost of construction as low as possible without allowing the quality of the materials supplied to be inferior. If that object of inviting tenders is borne in mind, then the submission made by Sri Sridharan for the petitioner that the income-tax and sales tax clearance certificates would demonstrate the credibility of the tenderers and, therefore, public interests are better served only by those who produce those documents and who qualify by due eligibility in strict compliance with the terms of the tender and acceptance, relaxing those conditions, would not be in public interest would lose all its importance if the escalation of cost by accepting the tender of a person would result in each case in the cost of each house going up by Rs. 700 to Rs. 800 on account of the wooden materials only. Therefore, the person, namely, the Dy. CIT who invited the tenders and imposed the conditions published, having regard to the normal procedure adopted in inviting Government tenders, must be credited with some discretion in the matter of relaxing any of the conditions if public interest is served. If saving the exchequer a considerable amount of money is not public interest, I fail to see what other factors like production or non-production of income-tax and sales tax clearance certificates would outweigh the saving to the exchequer.

In that view of the matter, despite the very earnest attempt made by Sri Sridharan, I must hold that the Dy. CIT had the power to relax those conditions which were not statutory conditions, but conditions imposed by him while inviting tenders. My attention was drawn to a Division Bench ruling of this Court in the case of Rudraiah Raju vs. State of Karnataka, ILR (1986) Kar 587. That matter related to excise contractors who are governed by the provisions of the Karnataka Excise Act and the numerous rules made thereunder. While dealing with the power of the State in exercise of its executive power under Art. 162 of the Constitution, one of the learned judges has held that in matters of deciding on policy, it is open to the executive to take any decision which, in the opinion of the executive, is given to the State and the fact of taking such a policy decision could be gathered from the decision itself. That, in my view, instead of assisting the petitioner, defeats his argument. In any event, the power exercised under Art. 162 of the Constitution is attributed to the Government as a whole and the Dy. CIT does not exercise power under Art. 162. He only acts as the agent of the Government as one of its senior officers who is statutorily entrusted with several tasks in the performance of which he must take decisions exercising discretion in the best interests of the State.

Having regard to the totality of circumstances and having perused the records, I am satisfied that the public interest has in no way suffered by the Dy. CIT relaxing the conditions to which reference has already been made and accepting the lowest tender for the supply of wooden materials which I am informed from the bar will save more than Rs. 25,00,000 to the exchequer.

In that view of the matter, this cannot be treated as a litigation in public interest, but litigation prosecuted by a rival trader who has not been successful and even if there is any slight irregularity, it does not give a rival trader any locus standi to question it having regard to the rulings of the Supreme Court in the case of Jasbhai Motibhai Desai vs. Roshan Kumar, Haji Bashir Ahmed, AIR 1976 SC 578, which followed the earlier decision of the Supreme Court in Nagar Rice & Flour Mills’ case AIR 1971 SC 246, which went from this Court to the Supreme Court.

Therefore, these petitions have no merit in them and as such they are dismissed.

No costs.

[Citation : 172 ITR 571]

Malcare WordPress Security