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Chhotabhai Jethabhai Patel and Co. a Firm Vs. State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 153 of 1965
Judge
Reported inAIR1966MP110
ActsMadhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 - Sections 12, 19 and 19(2); Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Niyamavali, 1965 - Rule 7, 7(6) and 7(7)
AppellantChhotabhai Jethabhai Patel and Co. a Firm
RespondentState of Madhya Pradesh and ors.
Appellant AdvocateR.S. Dabir, ;V.S. Dabir and ;P.S. Khirwadkar, Advs.
Respondent AdvocateR.J. Bhave, Govt. Adv. for Respondent Nos. 1 to 4 and ;Y.S. Dharmadhikari, Adv. for Respondent No. 5
DispositionPetition partly allowed
Cases ReferredGeneral v. De Keyser
Excerpt:
- - earnest money deposit shall, in case of an unsuccessful tenderer, be refunded to him, and in case of a successful tenderer, it shall, subject to the provision in sub-rule (10), be adjusted towards payment of security deposit required by sub-rule (11). 7. if the tenders received for a unit or units are not considered acceptable, the government may appoint as purchaser or purchasers for such unit or units any person or party or persons or parties, on such terms and conditions as may be mutually agreed, and such appointment need not be limited to persons who have submitted tenders for such unit or units. that this condition could be varied by the government at any time and was in fact varied and the variation that the tenders could be presented for the units at raipur as well was.....dixit, c.j.1. this order will also govern the disposal of misc. petitions nos. 154, 156 and 156, all of 1965.2. by these four applications under article 226 of the constitution messrs. chhotabhai jethabhai patel and company, a partnership firm engaged in the business of manufacture and sale of bidies, questions the validity of tenders submitted by the respondent messrs. vrajlal muljibhai and company, bilaspur, for the purchase of tendu leaves collected by government or by its officers or agents in four units of certain ranges of north bilaspur forest division, and seeks a direction restraining the respondents from acting in any manner on those tenders. the petitioner also prays for the issue of a direction commanding the opponents to entertain and consider the lenders it had submitted for.....
Judgment:

Dixit, C.J.

1. This order will also govern the disposal of Misc. Petitions Nos. 154, 156 and 156, all of 1965.

2. By these four applications under Article 226 of the Constitution Messrs. Chhotabhai Jethabhai Patel and Company, a partnership firm engaged in the business of manufacture and sale of bidies, questions the validity of tenders submitted by the respondent Messrs. Vrajlal Muljibhai and Company, Bilaspur, for the purchase of tendu leaves collected by Government or by its officers or agents in four units of certain ranges of North Bilaspur Forest Division, and seeks a direction restraining the respondents from acting in any manner on those tenders. The petitioner also prays for the issue of a direction commanding the opponents to entertain and consider the lenders it had submitted for the purchase of tendu leaves from the same units for which the aforesaid respondent had given its tenders.

3. The matter arises thus. In 1964, the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964, (hereinafter referred to as the Act) was enacted, 'for regulating in the public interest the trade of Tendu Leaves by creation of State monopoly in such trade' Section 5 of the Act provides that on the issue of a notification under Sub-section (3) of Section 1 bringing the Act into force in any area, no person other than the State Government, or an officer of the Slate Government authorized in writing in that behalf, or an agent in respect of the unit in which the tendu leaves have grown, shall purchase or transport tendu leaves. Section 3 enables the State Government to divide the area in which the Act has been brought into force into such number of units as it may deem fit. Section 4, inter alia, lays down that the State Government may for the purpose of purchase of, and trade in, tendu leaves on its behalf, appoint agents in respect of the different units. Under Sections 6 and 7 the tendu leaves are purchased from the growers by the Government or its authorized agents at a price fixed by it in consultation with an Advisory Committee constituted under Section 6. Section 12 then prescribes:

'Tendu leaves purchased by the State Government or by its officer or Agent, under this Act shall be sold or otherwise disposed of in such manner as the State Government may direct.'

Section 19, which is also material here, gives to the State Government the power to make rules. Sub-section (1) of that section says that :

'The State Government may, subject to the condition of previous publication, make rules to carry out all or any of the provisions of this Act.'

Sub-section (2) of section 19 then provides that-

'In particular and without prejudice to generality of the foregoing powers such rules may provide for all or any of the following matters, namely

* * * * * In the category of matters enumerated in Sub-section (2) the disposal of tendu leaves by the State Government or by its officers or agents is not included

4. The Rules framed by the Government in the exercise of its power under Section 19 of the Act bear the title 'the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Niyamavali, 1965 (hereinafter referred to as the Rules). Bute 7 deals with disposal of tendu leaves. That rule, so far as it is material here, is as follows :

'7. Disposal of Tendu leaves (i) Tendu leaves purchased or likely to be purchased from persons mentioned in items (b) and (c) of Sub-clause (ii) of Clause (d) of Section 2 and collected or likely to be collected from Government land by Government or by its officer or agent shall ordinarily be sold or otherwise disposed of by tender on such terms and conditions as are specified in the Tender Notice issued by the Government and in the Form of Tender.

2. The Tender Notice shall be published in the official gazette and advertised in newspapers and in such other manner as the Government may deem fit, inviting sealed tenders from persons or parties desirous of purchasing Tendu leaves collected or likely to be collected by Government or by its Officers or Agents on the terms and conditions specified in the aforesaid Tender notice and Form of Tender.

3. The Tender form shall be available from the office of the Divisional Forest Officer on payment of Rs. 25 for each Form. The payment shall be made by sending a crossed postal order for the amount, marked payable to the Divisional Forest Officer at the post office of the place where the headquarters of the Divisional Forest Officer is located.

4. Unless otherwise specified, there shall be separate Tender for each unit and every tender must be submitted to such authority and in such manner and on such date as may be specified in the Tender Notice.

5. Every tender shall be accompanied by the following:

(a) Treasury challan showing cash deposit under the head 'Revenue Deposit,' equal to an amount specified in the Tender Notice, to be deposited as earnest money. Chalans for making revenue deposit may be obtained from the Divisional Forest Officer concerned.

(b) A certificate of personal solvency or that of an independent surety holding such certificate along with an undertaking of the surety that he is willing to stand as surety for the Tenderer. The solvency shall be for an amount specified in the Tender Notice.

(6) The Government may accept or reject all or any of the tenders so received without assigning any reason therefor. Earnest money deposit shall, in case of an unsuccessful tenderer, be refunded to him, and in case of a successful tenderer, it shall, subject to the provision in Sub-rule (10), be adjusted towards payment of security deposit required by Sub-rule (11).

7. If the tenders received for a Unit or Units are not considered acceptable, the Government may appoint as purchaser or purchasers for such Unit or Units any person or party or persons or parties, on such terms and conditions as may be mutually agreed, and such appointment need not be limited to persons who have submitted tenders for such Unit or Units. All the rules applicable to a successful tenderer shall apply mutatis mutandis to persons or parties appointed as purchasers under this sub-rule.

8. Notwithstanding anything contained in the foregoing provisions, Government may sell or otherwise dispose of Tendu leaves collected or likely to be collected by Government or by its Officers or Agents by auction on such terms and conditions as may be decided by the Government.

* * * * The successful tenderer or successful bidder, on being appointed as purchaser for a particular unit is required to execute an agreement in the prescribed form and within the prescribed time. He has to purchase in such manner and on such terms and conditions as may be specified in the agreement executed by him the entire quantity of tendu leaves collected or likely to be collected from such unit or such lesser quantity out of it as may be offered to him by the Government or its officer or agent in such unit.

5. After the coming into force of the Act in North Bilaspur Forest Division the Government divided that Division into 51 units which included the units involved in these petitions, namely, Gudu unit in Kenda range, Dipka unit in Katghora range. Yetma unit in Kendai range and Jetka unit in Pasan range. Thereafter on 9th February 1965 the Government issued a Notice inviting tenders from persons or parties desirous of purchasing tendu leaves purchased or likely to be purchased, collected or likely to be collected by Government or its officers or agents in the various Tendu Patta Units, a list of which was appended to the Notice. The Notice stated the terms and conditions of the tender. That notice first stated that a tender shall be submitted in the form appended to the Notice that it shall be accompanied by a treasury challan shewing the deposit of the requisite amount and a certificate of personal solvency or that of an independent surety holding such certificate; and that only persons or parties registered as manufacturers of bidis and/or exporters of Tendu leaves as required by the Act or the Rules will be entitled to be appointed as purchasers. It then said that the tender complete in all respects shall be submitted in a closed and sealed cover addressed to the Conservator of Forests in the manner indicated in the Notice. The Notice then contained the following direction which is all material in the present cases:

'The cover containing the tenders shall either be presented personally to the Conservator of Forest in charge of territorial Circle in whose jurisdiction the Unit is situated, or his Office Superintendent after obtaining dated acknowledgment of the receiver concerned or sent by post 'Registered Acknowledgment Due' so as to reach the Conservator of Forests or his Office by 2nd March 1965 upto 15.00 hours Tenders received or presented after the above date and time shall not be entertained.'

6. According to condition 8 of the tender Notice the place, date and time fixed for the opening of the tenders received in respect of the units in question were Raipur, 2nd March 1965 from 16.00 hours to 20.00 hours and subsequent dates from 9.00 hours to 12.00 hours and then from 15.00 hours to 20.00 hours each day. The tenders were to be opened by the Conservator of Forests, Bilaspur. Condition 9 gave to the Government the power to accept or reject all or any of the tenders received without assigning any reason therefor.

7. There is no dispute that no tenders were received for the four units stated earlier at Bilaspur upto 15.00 hours of 2nd March 1965. The respondent Messrs Vrajlal Muljibhai and Company, however, presented its tenders in respect of these units at Raipur on 2nd March 1965 in sealed covers addressed to the Conservator of Forests, Bilaspur, 'through the Conservator of Forests, Raipur'. The sealed covers were delivered to the Conservator of Forests, Raipur. On 5th March 1965 the Government issued a Notice inviting sealed tenders for purchase of tendu leaves of undisposed of units in all Conservator-Circles except Raipur and Bastar Circles. The sealed covers containing the tenders in respect of the undisposed or units were required to be addressed to the Conservator in whose jurisdiction the undisposed of unit was situated and had to be presented to the Divisional Forest Officer having jurisdiction or any territorial Conservator of Forests or his Office Superintendent or sent by post 'Registered A.D.' before 17.00 hours of 16th March 1965. The four units in question were not included in the list of undisposed of units for which tenders had been invited by the Notice dated 5th March 1965. Yet the petitioner presented to the Office Superintendent of the Conservator of Forests, Bilaspur, his tenders for those units before 5 p.m. of 16th March 1965.

8. In the return filed on behalf of the respondents Nos. 1 to 4 it has been averred that a representation was made by traders wishing to offer tenders for units of Raipur, Bilaspur and Bastar Circles that it was difficult for them to go to all the three places and present their tenders in the short time available to them after completing all the formalities; that, therefore, they asked for the facility of being allowed to present their tenders at Raipur for Bilaspur and Bastar Circles also; and that this facility was granted and accordingly the respondent Messrs. Vrajlal Muljibhai and Company submitted its leaders for the four units at Raipur. Learned Government Advocate placed before us a copy of the telegram sent by the Conservator, Tendu Leaves, to the Conservator of Forests. Raipur, on 26th February 1965 containing the message that

'If some tenderers wish to submit tender for Bilaspur and Baster Circles at Raipur receive them and hand them over to Conservators concerned '

In its return the respondent No. 5, Messrs Vrajlal Muljibhai and Co., has sought to explain the submission of its tenders at Raipur thus:

'(i) The Tendu Patta Act was introduced in the State of Madhya Pradesh for the first time in the month of February, 1986. The persons who were either carrying on the trade and business of sale and purchase of tendu leaves were seriously affected by the new legislation. Such interested persons formed two distinct groups. One group represents the manufacturers of bidis and the petitioners fall in that group. The second group consists of persons who purchase tendu leaves and sell those in the market either in M.P or outside M.P. The answering respondent falls in that group. The interests of these two groups were conflicting. They have got their association. The Chhatisgarh Bidis and Bidi Leaves Associations of which the petitioner and the answering respondent are members held a meeting at Raipur on 27th February 1965 of its members to consider the steps to be taken to meet the difficulties created by the Legislation After deliberations they sent a delegation to see the Conservator of Forests Bidi leaves concerned, Shri S. S. Shri-vastava, who happend to be at that time at Raipur in the Conservator's office, Raipur at about 8 p.m. Shri S. S. Shrivastava assured the members of the Association that he will look to their interests and try to resolve the difficulties. He asked the members of the Association to submit their tenders before the prescribed date. The members of the Association at that time told him, that it was impossible to submit the tenders before 2nd March, 28th February being a Sunday and 1st March, being a holiday of Shivratri. Under those circumstances, they will not be able to go to respective places, i.e. Bilaspur and Jagdalpur, and to complete the formalities of deposits etc. The Conservator of Forests Bidi Leaves thereupon told them to submit their tenders atRaipur in the Conservator's office and askedits staff to keep the offices open on 28th February and 1st March, to receive tenders. Healso directed the Conservator's office to acceptthe security amount of any unit. Thereupon,several persons numbering more than 150 submitted their tenders at Raipur on 2nd March1965 with appropriate deposits. The tendersfrom all different units were received at Raipur on 2nd March, 1965.

* * * * * On 2nd March, 1965, all tenders received in time were transported to Raipur and all those tenders were opened at one place at Raipur by the Conservator concerned i.e. the Conservator of the area '

9. On 25th March 1965 the Conservator of Forests, Bilaspur Circle, addressed a letter to the Deputy Secretary to Government, in the Forest Department informing him that on 16th March 1965 seven tenders, the details of which were given in the letter, had been received for those units 'for which acceptable tenders on 2-3-1965 or acceptable offers on 7-3-1965 had already been received.' Thereafter, by a letter dated 3rd April 1965 the Conservator of Forests, Bilaspur, was informed by the Undersecretary to Government that the Government had accepted the tenders and offers received on 2nd March 1965 at Raipur in respect of the units of North Bilaspur and South Sarguja Divisions.

10. It was argued by Shri Dabir, learned counsel appearing for the petitioner, that under Section 12 of the Act the disposal of tendu leaves purchased by the State Government or by its officers and agents could only be in the manner directed by the State Government; that this direction of the Government was embodied in the form of Rules made under Section 16 of the Act; that according to Rule 7(1) tendu leaves could be sold or otherwise disposed of by tender only on the terms and conditions specified in the Tender Notice issued by the Government; that when, therefore, the Tender Notice expressly stated that the cover containing the tenders was either to be presented personally to the Conservator of Forests in charge of territorial Circle in whose jurisdiction the unit was situated, or his Office Superintendent, or sent by post 'Registered Acknowledgment Due' so as to reach the Conservator of Forests or his Office by 2nd March 1965 upto 15.00 hours, any tender presented in a manner contrary to this direction would be invalid; that consequently the handing over of sealed covers containing tenders by the respondent-firm to the Conservator of Forests Raipur at Raipur could not constitute a valid presentation of the tenders in accordance with the term contained in the Tender Notice about presentation of tenders; and that, therefore, the tenders submitted by the respondent-firm were all invalid.

Learned counsel proceeded to say that as no valid tenders were received by the Conservator of Forests, Bilaspur, before 2nd March 1965 upto 3 p.m. in respect of the four units, those units remained 'undisposed of'; and that being so, the petitioner could submit its tenders for those undisposed of units till 16th March 1965 upto 5 p.m. according to the Tender Notice issued on 5th March 1965; and that the petitioner's tenders for the four units were validly presented in accordance with the Tender Notice dated 5th March 1965 and the Government should have entertained and considered those tenders.

11. In answer, the arguments of Shri Bhave, learned Government Advocate appearing for the respondents Nos. 1 to 4 and Shri Dharmadhikari, learned counsel appearing for the respondent Messrs Vrajlal Muljibhai and Co. ran on the same lines. They contended that the applicant never submitted any tender for the units in question on or before 2nd March 1965; that the tenders it submitted on 16th March 1965 were unsolicited as by the Tender Notice issued on 5th March 1965 no tenders had been invited for the purchase of tendu leaves from the four units concerned; that the applicant had, therefore, no locus standi to challenge the validity of the aforesaid respondent's tenders or the acceptance thereof by the Government; that the condition in the Tender Notice about the presentation of tenders to the Conservator of Forests in charge of territorial Circle in whose jurisdiction the unit was situated, or his Office Superintendent, or by registered post was only for the convenience of persons making tenders and the Department and that requirement was directory and not mandatory; that this condition could be varied by the Government at any time and was in fact varied and the variation that the tenders could be presented for the units at Raipur as well was intimated to those who were present at the meeting held on 27th February 1965 in the Office of the Conservator of Forests, Raipur, and that, therefore, the tenders submitted by the respondent-firm at Raipur to the Conservator of Forests, Raipur, but addressed to the Conservator of Forests, Bilaspur, were validly presented and accepted by the Government.

It was further urged by them that even if the respondent-firm's tenders were not valid, still as under Sub-rules (7) and (8) of Rule 7 of the Rules the Government had the power to appoint purchasers of tendu leaves on such terms as may be mutually agreed upon between the purchaser and the Government, the Government acted within its right in accepting the respondent-firm's tenders. Shri Dharmadhikari, while not going so far as to urge that the Rules made by the Government for the disposal of tendu leaves were ultra vires the power conferred on the Government by Section 19, said that even after making rules for the disposal of tendu leaves the Government could still issue a direction under Section 12 of the Act for sale or disposal of the tendu leaves. It was further submitted that as the Tender Notice dated 5th March 1965 did not at all invite tenders for the units in question, the Government was not bound to consider the uninvited tenders submitted by the petitioner for those units on 16th March 1966.

12. On the arguments advanced before Us by learned counsel appearing for the parties four questions arise for determination. They are :

(1) Whether the tenders submitted by the respondent Messrs. Vrajlal Muljibhai and Co. were validly presented in conformity with condition 7 of the Tender Notice dated 9th February 1965?

(2) If not, whether the acceptance of those tenders by the Government was in the valid exercise of the powers conferred on the Government by the Act and the Rules for the disposal of the tendu leaves?

(3) Whether the tenders submitted by the petitioner on 16th March 1965 could at all be taken into consideration? and

(4) Whether the petitioner has a locus standi to question the validity of the respondent-firm's tenders or their acceptance by the Government

13. It is evident that the Act which gives to the Government or its officers or agents the sole right to purchase tendu leaves from the growers, also regulates the sale or disposal of tendu leaves after they are purchased by the State Government or its Officers or agents. Section 12 of the Act says that such tendu leaves purchased by the State Government or its officers or agents shall be sold or otherwise disposed of in such manner as the State Government may direct. It is open to the Government to give the directions for the sale or disposal of tendu leaves in the form of executive instructions or embody them in the form of rules made under the Act. The words 'may direct' used in Section 12 do not prohibit the Government from making rules under Section 19 of the Act for regulating the sale or disposal of tendu leaves. There is no such prohibition even in Section 19 of the Act which confers on the Government the power to make rules under the Act.

The first sub-section of Section 19 lays down that the State Government may, subject to the condition of previous publication, make rules to carry out all or any of the provisions of the Act. The other sub-section provides that 'in particular and without prejudice to generality of the foregoing powers such rules may provide for all or any of the following matters', that is to say, matters enumerated in Sub-section (2). It is true that in Sub-section (2) the sale or disposal of tendu leaves is not one of the enumerated matters. But the absence of such enumeration does not take away the Government's powers under Subsection (1) to make rules with regard to the sale and disposal of tendu leaves. The use of the expression in Section 19(2) 'without prejudice to generality of the foregoing powers' makes it clear that the items enumerated in Sub-section (2) do not exhaust or otherwise control the power conferred by Sub-section (1) and that the enumeration in Sub-section (2) only amounts to statutory recognition that all those items are within the scope of the generality of the powers conferred by Section 19(1) of the Act.

If any authority is needed for this view it is sufficient to refer to Emperor v. Sibnath Banerji, AIR 1945 PC 156 where with reference to the rule making power conferred by Sub-section (1) of Section 2 of the Defence of India Act, 1939, it was pointed out that the function of Sub-section (2) of Section 2 was merely an illustrative one, the rule-making power was conferred by Sub-section (1) and the rules which were referred to in the opening sentence of Sub-section (2) were rules which were authorised by and made under Sub-section (1) and that the provisions of Sub-section (1) were not restrictive of Sub-section (1). The State Government could, therefore, validly provide by rules made under Section 19(1) for the sale or disposal of tendu leaves. As stated earlier, the State Government had no doubt the choice of directing by executive instructions or by rules the sale or disposal of tendu leaves. But it decided to reg ate the sale and disposal of tendu leaves by rules and did not leave the matter to unfettered executive discretion for the very good reason of eliminating suggestions of favouritism, nepotism and mala fides in the sale or disposal of tendu leaves.

14. Now, Sub-rule (1) of Rule 7 of the Rules prescribes that tendu leaves shall ordinarily be sold or otherwise disposed of by tender on such terms and conditions as are specified in the Tender Notice issued by the Government and in the form of Tender. The normal method of sale or disposal of tendu leaves is thus by inviting tenders. The other mode of disposal of tendu leaves has been indicated in Sub-rules (7) and (8) which give to the Government the power to appoint purchasers on terms and conditions mutually agreed upon if the tenders received for any unit are not considered acceptable and also gives the power to sell or dispose of tendu leaves by auction instead of inviting tenders. Where the method of disposal by tenders is adopted, then the sale or disposal of tendu leaves can only be on the terms and conditions specified in the Tender Notice issued by the Government. The power given to the Government to sell or dispose of tendu leaves by accepting a tender can be exercised by the Government only if the tender has been made in conformity with the terms and conditions notified in the Notice inviting tenders.

The condition in the Tender Notice dated 9th February 1965 that covers containing the tenders shall either be presented personally to the Conservator of Forests in charge of territorial Circle in whose jurisdiction the unit is situated or his Office Superintendent or sent by registered post is a mandatory requirement and not a directory one as was suggested on behalf of the respondent. The mandatory character of the condition becomes clear if the scope and object of the condition, the importance of the condition in relation to the general object intended to be secured by regulating the sale and disposal of tendu leaves by rules made under the Act, and considerations of public interest or private rights are borne in mind. The object of regulating by rules instead of executive instructions the sale and disposal of tendu leaves being to eliminate the possibility of the Government or its officers being exposed to allegations of nepotism, favouritism, mala fides in the disposal of tendu leaves, it was very necessary to provide that tenders presented in a particular manner and before a particular date and time shall alone be entertained.

The object underlying the rules would be altogether defeated if it were to be held that the condition about presentation of tenders in a particular manner and before a particular date and time was only directory, so as to permit tenders submitted in disregard of the condition being entertained and considered. The Act creates a monopoly in favour of the State in the trade of tendu leaves. It gives to the Government the power or right to dispose of tendu leaves in such manner as it may direct, and the direction with regard to disposal of tendu leaves has been embodied in statutory rules.

It is a settled rule of construction of statutes that statutory provisions which regulate the manner in which the Government or public officials shall exercise the power vested in them and which are intended for the protection of public interest and private rights are to be construed mandatory rather than directory. It has been stated in Maxwell on Interpretation of Statutes, Eleventh Edition at page 364 that

'Where powers, rights or immunities are granted with a direction that certain regulations, formalities or conditions shall be complied with, it seems neither unjust nor inconvenient to exact a rigorous observance of them as essential to the acquisition of the right or authority conferred, .. .. .. '

Here, the Act confers on the Government the right of sale or disposal of tendu leaves, and the Government has chosen to frame rules for regulating this right in order to avoid its being exposed to charge of favouritism, nepotism and mala fides in the matter of sale or disposal of tendu leaves. When, therefore, the rules prescribe that tendu leaves can be disposed of by inviting tenders submitted in a particular form and presented in a particular manner, then the Government can exercise its power of disposal of tendu leaves by accepting only that tender or tenders which was or were submitted and presented in conformity with the rules.

15. The respondent-firm's tenders were admittedly not presented personally to the Conservator of Forests, Bilaspur Circle, or to his Office Superintendent at Bilaspur or sent to them by registered post as required by condition 7 of the Tender Notice dated 9th February 1965. It delivered the sealed covers containing its tenders to the Conservator of Forests, Raipur. The justification for this course was sought in the instructions issued by the Conservator, Tendu Leaves, Bhopal. to the Conservator of Forests. Raipur that lenders for Bilaspur and Baslar Circle should be received at Raipur and handed over to the Conservator concerned. The instructions issued by the Conservator, Tendu leaves, Bhopal, making a modification in the manner of presentation of tenders could not clearly override condition 7 of the Tender Notice which was prescribed by the Government in the exercise of the powers conferred on it by Rule 7(1) of the Rules. They could not control the legal interpretation of the condition and were utterly ineffective for making the tender presented in a manner contrary to condition 7 as one validly presented. It follows, therefore, that the Government acted in breach of the rules when it accepted the tenders submitted by the respondent-firm on 2nd March 1965 and which had not been presented in conformity with condition 7 of the Tender Notice dated 9th February 1965.

16. The contention advanced on behalf of the respondent that even if the tenders submitted by the respondent-firm were not presented in accordance with condition 7 of the Tender Notice dated 9th February 1965, the Government could appoint the firm as purchaser in the exercise of its powers under Sub-rule (7) of Rule 7 is untenable. The power given to the Government to appoint any person as purchaser for any unit on such terms and conditions as may be mutually agreed upon can be exercised only when valid tenders have been received for a unit or units but the Government finds all those tenders unacceptable. Sub-rule (7) uses the words 'if the tenders received' and 'not considered acceptable'. These words are significant and they point to the fact that Sub-rule (7) comes into play when the Government in the exercise of its discretion conferred by the preceding sub-rule, namely Sub-rule (6), thinks that all the tenders, though validly submitted, should not be accepted.

It would be altogether unreasonable to hold that Sub-rule (7) contemplated a situation arising from all tenders submitted being invalid. If a tender is invalid, then it is not a 'tender' at all and consequently the further question of its being considered acceptable or unacceptable cannot arise. That Sub-rule (7) speaks of valid tenders but unacceptable on merits for securing the revenue of the State becomes clear when it is noted that the sub-rule immediately follows Sub-rule (6) giving to the Government the power 'to accept or reject all or any of the tenders so received without assigning any reason therefor.' It cannot be doubted that Sub-rule (6) deals with the acceptance or rejection of tenders validly submitted. The words 'so received' mean tenders submitted in conformity with the preceding sub-rules and the terms and conditions specified in the Tender Notice.

If a tender is not valid, it cannot be entertained at all and there can be no question of its acceptance or rejection without assigning any reason therefor. It is for meeting a situation arising from the rejection on merits of valid tenders by the Government in the exercise of the discretion given to it by Sub-rule (6) that Sub-rule (7) immediately makes a provision enabling the Government to appoint any person as purchaser on terms and conditions mutually agreed upon. Sub-rule (8) has no applicability here. That rule gives to the Government the power to sell or dispose of tendu leaves by auction. That method was not adopted here and the respondent-firm was not appointed as purchaser consequent to the acceptance of any bid made by it at any auction.

17. It was also suggested on behalf of the respondent that irrespective of the Rules the Government could 'by direction' appoint purchaser or purchasers for a unit or units in the exercise of its powers under Section 12. The short answer to this contention is that when the Government deemed it wise to control by rules made under the Act the discretion given to it in the matter of' sale and disposal of tendu leaves by issuing directions, then so long as those rules stand the Government cannot claim the power to sell or dispose of tendu leaves in any manner it likes. There can.be no doubt as regards the principle to be applied in the cases before us. That principle is that when by the rules framed under a statute a power given by the statute is to be exercised in a certain manner, that power should be exercised in that particular manner and in no other manner. When rules have been framed for the exercise of the genera1 power conferred by Section 12, then the rules must be read so as to import a prohibition restraining the Government from selling or disposing of tendu leaves in contravention of the rules.

18. This principle has been laid down in K. N. Guruswamy v. State of Mysore AIR 1954 SC 592: 1955-1 SCR 805. That case dealt with the question of disposal of the privilege of retail vend of intoxicating liquors under the Rules framed under the Mysore Excise Act. One of the rules prescribed that the privilege of retail vend of excisable articles shall be disposed of either by auction or such other method as may be notified by Government. Another rule said that in case the right of retail vend is to be disposed of by calling tenders, a notification calling for the same shall be published in three successive issues of the Mysore Gazette after obtaining the previous approval of the Government therefor. In an auction for the sale of the privilege of retail vend a contract was knocked down in favour of the highest bidder. Then another person, who was present at the auction but did not bid, saw the Excise Commissioner and offered Rs. 5,000/- in excess of the bid offered by the highest bidder at the auction. This offer was accepted and the bid of the person who made the highest bid at the auction was cancelled.

The Supreme Court held that the cancellation of the bid of the highest bidder, though irregular, was proper; but the action of the authorities in giving contract to the person offering Rs. 5,000/- in excess of the bid made by the highest bidder was wrong as it was in contravention of the rules. It was pointed out by the Supreme Court that under the Mysore Act and the Rules thereunder liquor licensing in the Mysore State could only be done in certain specified ways and such discretion as was left to the authorities was strictly controlled by Statute and Rules, that the authorities were not tied down to the methods of auction and tender; that they had a discretion to adopt other method also for the disposal of the privilege of retail vend but this they could do only after due notice and publicity given to the otherwise method in a Government notification as required by Rule 1; and that under the relevant rules a departure from the methods of auction and tender had to be sanctioned by the Government and had to be notified. The Supreme Court observed that:

'Whatever is done must be done either under the Rules or under a Notification which would receive like publicity and have like force, and of which the people at large would have like notice. Arbitrary improvisation of an 'ad hoc' procedure to meet the exigencies of a particular case is ruled out.

* * * * * The procedure of tender was not open here because there was no notification and the furtive method adopted of settling a matter of this moment behind the backs of those interested and anxious to compete is unjustified. Apart from all else, that in itself would in this case have resulted in a loss to the State because, as we have said, the mere fact that the appellant has pursued this writ with such vigour shows that he would have bid higher. But deeper considerations are also at stake, namely the elimination of favouritism and nepotism and corruption; not that we suggest that that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the legislature in its wisdom has. endeavoured to avoid. All that is part and parcel of the policy of the legislature. None of it can be ignored.'

19. The ratio of the decision of the Supreme Court in Guruswamy's Case AIR 1954 SC 592: 1955-1 SCR 305 (supra) is that where the discretion of the Government in the matter of sale of licences and privileges forming lucrative source of revenue is strictly controlled by statutes and rules, then it is not open to the Government to dispose of the licences or privileges arbitrarily and in manner contrary to the rules. The present case fully and squarely falls within this principle laid down by the Supreme Court. The monopoly created by the Act in favour of the State in regard to sale of tendu leaves is not different in nature from the right the State has in the disposal of liquor licences or fishery licences. It cannot be denied that this monopoly is a lucrative source of revenue Again, though the Act gave to the Government discretion to sell or dispose of tendu leaves in such manner as it may decide to direct, the Government thought it fit to regulate and control this discretion by making rules under the Act. Those rules 'must be treated for ail purposes of construction or obligation exactly as if they were in the Act.' (See Maxwell on Interpretation of Statutes, Eleventh Edition, page 49 and State of U.P. v. Babu Ram, AIR 1961 SC 751). When, therefore, the Rules framed under the Act 'tied down' the Government to the method of tender, of settlement by mutual agreement in the event of all tenders being unacceptable as already explained, and the method of auction, the Government could not claim the power to accept the respondent-firm's invalid tenders contrary to the Rules on the supposition that even after the framing of the Rules the power given to it under Section 12 was uncontrolled.

20. Shri Dabir, learned counsel for the petitioner, referred us to Attorney-General v. De Keyser's Royal Hotel, Ltd. 1920 AC 508 as an illustration of the application of the principle that discretionary power cannot be asserted alongside with the statutory power governing a matter. In that case the taking of the possession of the De Keyser's Royal Hotel premises by the Government under the Defence of Realm Act, 1914, and the Regulations made thereunder was sought to be justified on the ground that whether the property was or was not taken under the Act or the Regulations it was taken de facto and that the taking was justified under the prerogative powers of the Crown. That case thus raised the question whether the powers which the executive exercised without parliamentary authority and comprised under the comprehensive term 'prerogative' can be exercised as prerogative powers when Parliament has intervened and has provided by statute for powers previously within the prerogative being exercised in a particular manner. The House of Lords held that the Crown could not take the property under its prerogative. Lord Atkinson expressed himself thus on the point:

'It is quite obvious that it would be useless and meaningless for the Legislature toimpose restrictions and limitations upon, andto attach conditions to, the exercise by theCrown of the powers conferred by a statute,if the Crown were free at its pleasure to disregard these provisions, and by virtue of itsprerogative do the very thing the statutesempowered it to do. One cannot in theconstruction of a statute attribute to the Legislature (in the absence of compelling words)an intention so absurd.

* * * * * after the statute has been passed, and while it is in force, the thing it empowers the Crown to do can thenceforth only be done by and under the statute, and subject to all the limitations, restrictions and conditions by it imposed, however unrestricted the Royal Prerogative may theretofore have been.'

The claim advanced on behalf of the State that the respondent-firm's tenders could be and were accepted by the Government in the exercise of its discretionary power under Section 12 cannot therefore be upheld. It is also manifest from the record that the acceptance of the respondent-firm's invalid tenders by the Government purported to be in the exercise of its powers under the Rules and not de hors the Rules. If the contention that irrespective of the Rules the Government had the power to entertain and accept the respondent-firm's tenders were to be accepted, then logically it must be held that the Government could not in the exercise of the same power refuse to entertain the petitioner's tenders on the ground that they were not submitted in response to the Tender Notice dated 9th February 1965 or that the subsequent Tender Notice dated 5th March 1965 did not invite tenders for the units in question.

21. Coming now to the petitioner's tenders submitted on 16th March 1965 the State Government was clearly right in refusing to entertain and consider them when they were not submitted within the time-limit prescribed by the Tender Notice dated 9th February 1966 and when no tenders had been invited for the units in question by the second Tender Notice dated 5th March 1965. Learned counsel for the petitioner, however, submitted that by the second Tender Notice tenders had been invited for the purchase of tendu leaves of 'undisposed of units'; that as the respondent-firm's tenders for the four units were not valid in law and as there were no other tenders for those units, they remained 'undisposed of units' and consequently the petitioner could in response to the second Tender Notice give its tenders for the units.

We are unable to accede to this contention. In the second Tender Notice the reference to undisposed of units was clearly to those units for which no tenders had in fact been received and accepted by the Government. The Tender Notice specifically mentioned that the details of the undisposed of units could be obtained from the Divisional Forest Officer concerned. The undisposed of units did not include any unit for which on receipt of tenders the Government had rightly or wrongly accepted a tender. The scope of the Tender Notice dated 5th March 1965 must be determined on the intention of the Government as expressed by the wording of the Tender Notice and not on the opinion entertained by a person whether the acceptance of a tender for a unit was or was not valid in law and whether it was an undisposed of unit, or any adjudication on the point.

To say that undisposed of units referred to in the second Tender Notice included even those units which in law remained undisposed of is really not to raise a question as to the scope of the Notice, which after all must be determined by the intention of the person inviting tenders for the sale of a particular property, but to question the legality of the acceptance of a tender by the Government for a unit on a previous occasion. The scope of the Tender Notice must be determined by what is actually included therein and not by what in law should have been included. The petitioner is, therefore, not entitled to any direction requiring the State to entertain and consider its tenders submitted on 16th March 1965

22. There remains the question whether the petitioner has any locus standi to challenge he validity of the acceptance by the Government of the respondent-firm's tenders. Learned counsel for the respondents put forward the submission that the petitioner never submitted any lender in response to the Tender Notice dated 9th February 1965; that its tenders dated 16th March 1905 were to no purpose when the second Tender Notice dated 5th March 1965 did not invite any lenders for disposed of units: and that, therefore, it had no legal specific right entitling it to assail the Government's acceptance of the respondent-firm's tenders. In our view, the contention is without any force. The petitioner is not claiming to enforce any contractual right in its favour arising out of the lenders submitted by it. Its claim is based on the breach of a statutory obligation imposed upon the State in the matter of sale and disposal of tendu leaves. It was not disputed that the applicant was eligible to make an offer for the purchase of tendu leaves for the units, and for being considered for appointment as purchaser in respect of the units. What the petitioner is seeking to enforce is its right to make an offer for the purchase of tendu leaves and to have the offer considered by the Government. This he cannot do in respect of the units in Question unless he first challenges the validity of the acceptance of the respondent firm's tenders for those units on the grounds open to it. It is only when the petitioner is able to challenge successfully the acceptance of the respondent-firm's tenders that the petitioner can have an opportunity of making offers for the purchase of tendu leaves from the four units. In our opinion, the petitioner has locus standi to file these petitions.

23. For the foregoing reasons, our conclusion is that the tenders submitted by therespondent-firm M/s Vrajlal Muljibhai and Co.for the four units in question were invalid andconsequently the acceptance of those tendersby the State Government was also invalid. Allthese petitions are, therefore, allowed in part,and the opponent-State is restrained from giving effect in any manner to those tenders andto the acceptance thereof. The petitioner'sprayer for a direction to the opponent-Stateto entertain and consider its tenders submittedon 16th March 1965 is rejected. The respondent-firm shall pay to the petitioner costs ofthese petitions. Counsel's fee in each case isfixed at Rs. 100/-. The outstanding amount ofthe security deposit shall be refunded to thepetitioner in each case.


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