AS No. 266/2001 & CRP Nos. 2105/2001, 2106/2001

``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 1 ``` ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE P.SOMARAJAN ``` ``` FRIDAY, THE 3[RD] DAY OF MARCH 2023 / 12TH PHALGUNA, 1944 ``` ## **`AS NO. 266 OF 2001`** ``` AGAINST THE DECREE AND JUDGMENT DATED 10.10.2000 IN OS 1111/1994 OF ``` ``` PRINCIPAL SUB COURT, THIRUVANANTHAPURAM ``` ## **`APPELLANT/DEFENDANT:`** ``` THE PROPRIETOR,M/S.ACCURATE EXTRUSIONS, H-3, RATLAMKOTHI, KANCHAN BAGH, INDORE - 452001 BY ADVS. SRI.JAMES KURIAN K.K.VIJAYAN ``` ## **`RESPONDENT/PLAINTIFF:`** ``` 1N.JAYACHANDRAN,PRORIETOR, M/S. HYDRO AIDS, POOJAPPURA, THIRUVANANTHAPURAM. ``` ``` ADDL.R2THE KERALA WATER AUTHORITY REPRESENTED BY THE MANAGING DIRECTOR IS IMPLEADED AS ADDITIONAL RESPONDENT 2 IN THE APPEAL, VIDE ORDER DATED 20/12/22 IN AS 266/01. ``` ``` R1 BY ADVS.ANOOP BHASKAR AMMU MANOHARAN NARAYANAN R2 BY ADV.P.M.JOHNY ``` ``` THIS APPEAL SUIT HAVING COME UP FOR HEARING ON 03.03.2023, ALONG WITH CRP.2105/2001, 2106/2001, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 2 ``` # **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE P.SOMARAJAN ``` ``` FRIDAY, THE 3[RD] DAY OF MARCH 2023 / 12TH PHALGUNA, 1944 CRP NO. 2105 OF 2001 ``` ``` AGAINST THE ORDER DATED 7.8.2001 IN IA 2760/2001 IN OS 1111/1994 OF ``` ``` PRINCIPAL SUB COURT, THIRUVANANTHAPURAM ``` ## **`REVISION PETITIONER/COUNTER PETITIONER/PLAINTIFF:`** ``` N.JAYACHANDRAN, PROPRIETOR, M/S HYDRO AIDS, POOJAPPURA, THIRUVANANTHAPURAM ``` ``` BY ADVS. ``` ``` N.JAYACHANDRAN(Party-In-Person) ANOOP BHASKAR AMMU MANOHARAN NARAYANAN ``` ## **`RESPONDENT/PETITIONER/DEFENDANT:`** ``` THE PROPRIETOR, M/S. ACCURATE EXTRACTIONS, H3, RATHLAMKOTHI, KANCHANBAGH, INDORE ``` ``` BY ADV SRI.JAMES KURIAN ``` ``` THIS CIVIL REVISION PETITION HAVING COME UP FOR HEARING ON 03.03.2023, ALONG WITH AS.266/2001 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 3 ``` # **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE P.SOMARAJAN ``` ``` FRIDAY, THE 3[RD] DAY OF MARCH 2023 / 12TH PHALGUNA, 1944 CRP NO. 2106 OF 2001 ``` ``` AGAINST THE ORDER DATED 7.8.2001 IN I.A.2802/2001 IN OS 1111/1994 ``` ``` OF PRINCIPAL SUB COURT, THIRUVANANTHAPURAM ``` ## **`REVISION PETITIONER/PETITIONER/PLAINTIFF:`** ``` N.JAYACHANDRAN, PROPRIETOR, M/S HYDRO AIDS, POOJAPPURA, THIRUVANANTHAPURAM ``` ``` BY ADVS. ``` ``` N.JAYACHANDRAN(Party-In-Person) ANOOP BHASKAR AMMU MANOHARAN NARAYANAN ``` ## **`RESPONDENT/COUNTER PETITIONER/DEFENDANT:`** ``` THE PROPRIETOR, M/S.ACCURATE EXTRACTIONS, H3, RATHLAMKOTHI, KANCHANBAGH, INDORE ``` ``` BY ADV SRI.JAMES KURIAN ``` ``` THIS CIVIL REVISION PETITION HAVING COME UP FOR HEARING ON 03.03.2023, ALONG WITH AS.266/2001 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 4 ``` ## **`JUDGMENT`** ``` The prime questions came up for consideration are whether it is permissible to employ a third person on commission basis in a public auction conducted by the State Government and whether it would oppose public policy as embedded under Section 23 of the Indian Contract Act, if so, to what extent, such contract/agreement would stand unenforceable, apart from the issue pertaining to legality and sustainability of the decree granted by the trial court in the factual scenario involved in the case. ``` ``` 2. It is the defendant who came up in appeal against the grant of decree by the trial court for recovery of a sum of Rs.1,86,490/- by way of commission to the plaintiff. Two civil revision petitions are also preferred against the order passed in I.A.No.2760/2001 and I.A.No.2802/2001 directing release of an amount of Rs.10 lakhs from the court deposit to the respondent by accepting the bank guarantee furnished. ``` ``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 5 ``` ``` 3. It is based on Ext.A2 communication issued by the defendant to participate in the auction/tender of Kerala Water Authority for the supply of PVC pipes after the bidding of tender, Ext.B11 agreement was entered into by the defendant with the Kerala Water Authority for the supply of PVC pipes. The specific case advanced by the plaintiff is that the defendant in turn issued Ext.A2 letter to the plaintiff expressing their willingness to pay commission at the rate of 4% of the tender amount in the event of successful bidding of tender in their favour. ``` ``` 4. The concept of public tender is intended to give sufficient transparency in the dealings of State Government or public authority with private persons and it shall not be amenable for any kind of commission to a third person so as to get any public tender or auction. Any arrangement made between the person who bid the tender with any other third person for payment of commission based on the tender amount would stand hit by public policy as embodied under Section 23 of the Contract Act. Any agreement either to facilitate or to prevent attendance in a public ``` ``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 6 ``` ``` auction or tender or agreement to prevent or facilitate public tender by a third person would come under the mischief of Section 23 of the Contract Act as it is opposed to public policy, which would ultimately destruct the very principle in conducting a public tender/public auction. The Apex Court in Gurmukh Singh v. Amar Singh [(1991) 3 SCC 79] had laid down the very principle while dealing with a case wherein six bidders participated in an auction in which the parties to the auction in turn contracted that the appellant would participate on their behalf in a public auction to purchase the evacuee property and the appellant would convey half the property, purchased at the auction, to the respondent would be injurious to the debtor and against public policy. It is further held that an agreement between all competing bidders at an auction sale to form a ring and peg down the price and purchase the property at a knock-out price would be injurious to the debtor and against the public policy. ``` ``` 5. In the instant case, the agreement between the ``` ``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 7 ``` ``` plaintiff and the successful bidder, the defendant to pay 4% of the tender amount to the plaintiff would indirectly enhance the cost of goods to be supplied to the extent of 4%. It would really escalate the amount to be paid under the tender and would be injurious to the State Government or the authority under the State Government, the Kerala Water Authority. Hence, if the case advanced by the plaintiff is accepted for getting 4% of the tender amount by way of commission, it would amount to perpetuating an illegality and would fall under the mischief of Section 23 of the Contract Act. This has to be distinguished from a genuine agreement between the parties to bid or with a third person to exchange or to sub-contract any work or any part thereof under the tender and it shall not be a prior understanding or prior agreement, but should be an independent one, uninfluenced by any prior act before or at the time of tender or the liability thereunder either to reduce or to escalate. Bidding of a tender on a higher rate influenced by any commission to be payable to a third person or any of the participant ``` ``` AS No.266/2001 & CRP.NOS. 2105/2001, 2106/2001 ``` ``` 8 ``` ``` of the bid would stand opposed to public policy and will come under the mischief of Section 23 of the Contract Act. Necessarily, such kind of agreement for getting commission cannot be enforced through court, otherwise it would amount to perpetuating the illegality or to sanctify the act opposed to public policy. Hence, the decree granted by the trial court cannot be sustained. The trial court ought to have dismissed the suit as it is opposed to public policy and for enforcement of something opposed to public policy. ``` ``` The appeal will stand allowed by setting aside the decree and judgment of the trial court and the suit will stand dismissed. Both the C.R.Ps. will stand dismissed accordingly. ``` ## **`Sd/-`** ## **`P.SOMARAJAN`** ## **`JUDGE`** msp