KERALA SAMSTHANA VYAPARI VYAVASAYI SAMITHI v. State of Kerala & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** **TUESDAY,THE 10TH DAY OF DECEMBER 2013/19TH AGRAHAYANA.1935** **WP(C).No. 27770 of 2013 (U) ----------------------------** **PETITIONER : ----------KERALA SAMSTHANA VYAPARI VYAVASAYI SAMITHI REG.NO.TCR 72/89, RICE BAZAR, THRISSUR-680001 REPRESENTED BY ITS PRESIDENT, BINNY EMMATTI S/O.JOSEPH, EMMATTI HOUSE, EAST FORT P.O., THRISSUR-680005.** **BY ADVS.SRI.SANTHOSH MATHEW SRI.SATHISH NINAN SRI.ARUN THOMAS SRI.JENNIS STEPHEN** **RESPONDENTS :** **1. STATE OF KERALA** - **REPRESENTED BY THE SECRETARY TO GOVERNMENT TOURISM DEPARTMENT, GOVERNMENT SECRETARIAT THIRUVANANTHAPURAM-695001.** **2. GRANT KERALA SHOPPING FESTIVAL (G.K.S.F.)** - **DEPARTMENT OF TOURISM, G-2, J.N.W.A. NEAR L.P.SCHOOL, JAWAHAR NAGAR, KOWDIAR THIRUVANANTHAPURAM-695003 REPRESENTED BY ITS DIRECTOR.** **3. KERALA VYAPARI VYAVASAYI EKOPANA SAMITHI REG.NO.262/81, VYAPAR BHAVAN, BANK ROAD CALICUT.** **ADDFL.R4 IMPLEADED :** **4. KERALA CHAMBER OF COMMERCE & INDUSTRY** **CHAMBER CORNER, SHANMUGHAM ROAD, COCHIN -682031 REPRESENTED BY ITS SECRETARY SRI.A.J.RAJAN I.A.S.(RETD.) ADDL. R4 IS IMPLEADED AS PER ORDER DATED 26/11/2013 IN IA 15864/2013.** **R1 & R2 BY STATE ATTORNEY SRI.P.VIJAYARAGHAVAN R3 BY ADV. SRI.C.P.MOHAMMED NIAS ADDL.R4 BY ADV. SRI.P.RAMAKRISHNAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29-11-2013 , ALONG WITH WPC. 28486/2013, WPC. 28487/2013,THE COURT ON 10/12/2013 DELIVERED THE FOLLOWING:** **BP** ## **WP(C).No. 27770 of 2013 (U)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS :** **P1: COPY OF THE MOU DT 18/10/2013 EXECUTED BETWEEN THE R2 AND THE R3.** ## **RESPONDENT'S EXHIBITS :** **EXT.R3(a): COPY OF THE COPY OF THE NOTICE ISSUED BY THE R3 TO ITS UNITS IN CONNECTION WITH GKSF** **EXT.R4(a): COPY OF THE REPRESENTATION TO THE HON'BLE CHIEF MINISTER OF KERALA.** **//TRUE COPY//** **P.A. TO JUDGE** ## **BP** ## **P.R. RAMACHANDRA MENON, J.** .............................................................................. ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013** ......................................................................... **Dated this the 10[th] December, 2013** ## **J U D G M E N T** Execution and enforcement of Ext.P1 MoU brought about between the second and third respondents, in connection with the _**Grant Kerala Shopping Festival**_ ( **GKSF** in short) proposed to be conducted during December 2013-January,2014 is under challenge in these writ petitions. W.P.(C)Nos. 27770 of 2013 and 28487 of 2013 have been filed by the two different Associations representing various Mercantile Establishments while the other writ petition (W.P.(C)No.28486 of 2013 ) has been filed by the petitioner, who happens to be a State Executive Committee member of the 3[rd] respondent /beneficiary, in his individual capacity, . 2. A detailed statement has been filed on behalf of the first and second respondents in W.P.(C)No.27770 of 2013, which is sought to be adopted in the other two cases. The third respondent has also filed a counter affidavit in W.P(C)No.27770 of 2013 and an undertaking/additional affidavit dated 29.11.2013 by way of I.A.No.16177 of 2013. The second respondent has ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 2** also filed an affidavit dated 25.11.2013, in assertion of the factual particulars. Besides filing a reply affidavit with some more documents in W.P.(C) 28486 of 2013, the petitioner therein has filed I.A.No.15852 of 2013 seeking to accept an additional document in support of the pleadings. For convenience, pleadings and proceedings are referred to as given in W.P.(C) 27770 of 2013 . 3. It is the common case of the petitioners that, till the year 2012, the **GKSF** was being conducted by the State to promote Trade and Commerce, generating funds by way of _Registration Fees, Gift Coupon sales_ and also by way of Sponsorship, besides allotting appropriate extent of Grants, which in the last year, i.e. 2012, was to the tune of Rs. 25 crores. Gift coupons were being printed by the Government to be purchased by the registered Mercantile Establishments and various prizes/gifts on the basis of Lucky Draws were being provided, to attract customers and to promote Trades. In respect of the year 2013-2014, Ext.P1 MoU has been signed between the second and third respondents, whereby the proposal mooted by the third respondent to provide necessary logistic support to the Government for conducting the Shopping Festival ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 3** was accepted; whereby it has been agreed that the entire expenses for printing and distribution of Coupons will be met by the third respondent; that no registration fee will be charged from any of the establishments for participating in the event; that the number of Draws will stand increased; that a minimum of one lakh Mercantile Establishments will be caused to be registered with the initiative of the second respondent; that a minimum sale of 'two crores' Coupons will be ensured by the third respondent; that the Coupon cost shall be reduced to Rs.10/- out of which, the third respondent will get Rs.3/- per coupon upto two crores, beyond which it shall be Rs. 5/- per coupon, also incorporating such other clauses providing for an Arbitration to resolve the dispute if any, which may arise during the validity period of the MoU; i.e. till 31.03.2014. According to the petitioners, the said deal was struck between the second and third respondents without any notice to the petitioners or the general public, as a result of which, they could not submit their proposals and were virtually denied participation, in turn leading to extension of undue advantage to unconscionable extent to the third respondent and hence the challenge. 4. As mentioned already, the petitioner in W.P.(C) ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 4** No.28486 of 2013 is a State Executive Member of the _**Kerala Vyapari Vyavasayi Ekopana Samithi**_ , i.e. the third respondent. The contention is that the third respondent is not authorised to have entered into any exercise of profit making by virtue of Ext.P1 MoU, because of the mandate under _**Clause 65**_ of Ext. P3 Bye-Laws of the third respondent . It is also stated that the actual President of the third respondent is somebody else and that the 3[rd] respondent and the 4[th] respondent, who claims to be the President of the third respondent, are virtually restrained by way of Ext. P4 interim order of injunction passed by the Prl. Munsiff's Court-I, Kozhikode in I.A. 1392 in O.S.No.347 of 2011 (dated 31.05.2013), from convening any meeting and conducting election to the District and State Committee of the Vyapari Vyavasayi Ekopana Samithi in the year 2013 without giving any legal notice to the petitioners therein. It is stated that by virtue of the interim order, the third respondent herein was not in a position even to have submitted Annexure R1(c) proposal dated 19.07.2013, for want of necessary authorisation, to be followed by Ext.P1 MoU. It is also the case of the petitioner, that the 4[th] respondent, who claims to be the President of the third respondent and some ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 5** others, is involved in serious mis-appropriation case in connection with the disbursement of the relief to the victims of earth quake in Gujarat and that a vigilance case is pending against him. 5. The respondents contend that the plea of ignorance is not at all correct and that intimation was given to all the Trade Associations as discernible from Annexure.R1(a) invitation and also as borne by Annexure.R1(b) E-mail invitation to the President of the petitioners' Association ( in W.P.(C) 27770 of 2013). Annexure-R1(d) minutes of the meeting held on 26.09.2013 reveals the sequence of events and incorporation of the suggestion made by the various participants including the President of Petitioners' Association. It is pointed out that the minutes have been signed by all concerned including the petitioner in W.P.(C)No.27770 of 2013 and this being the position, the said writ petition filed by the petitioners is by way of suppression of material facts is sought to be dismissed on this score alone, in the light of the ruling rendered by the Apex Court in _**K.D. Sharma vs. Steel Authority of India Limited and others**_ .[ **(2008) 12 SCC 481].** 6. Pursuant to the direction given by this Court, the relevant files are made available by the learned State Attorney. Heard the ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 6** learned Counsel for the petitioners, the learned State Attorney and the learned Counsel appearing for the concerned party respondents at length. 7. At the very outset, it has to be borne in mind that the scope of judicial scrutiny has to be confined to the 'Decision making process' and not against the decision as such, in view of the settled position of law governing the realm of contract. Whether there is anything arbitrary or malafide in giving shape to Ext.P1 MoU and whether there is any element of discrimination intending to extend undue favours to anybody, is of course a matter for consideration. But what should be the extent of participation; how the Shopping Festival is to be conducted, what should be the terms or what should be the extent of consideration/commission/returns payable, are normally not the matters for this Court, to be probed into . 8. As a matter of fact, there is no dispute with regard to the factual position that the Shopping Festival was being conducted by the State till the last year investing huge amounts and also generating some funds by way of Registration, Sponsorship and Coupon sales. The pleadings and proceedings also reveal that the extent of participation/registration was not to ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 7** the desired level all throughout and it was decided by the Government to have better participation from all corners, also with intent to promote Trade/Merchandise in the Small Scale sector as well. It was in the context of such declaration/proclamation, that the third respondent submitted Annexure-R1(c) proposal dated 19.07.2013 before the concerned Minister, seeking for appointment on any day after 08.08.2013 to offer the terms/suggestions for providing logistic support. An endorsement was made on Annexure R1(c) by the Hon'ble Minister to hold a meeting on 13.08.2013 at 3.00 p.m. It is the case of the State/third respondent that the said meeting was advanced to 04.08.2013(because of some personal inconvenience of the Minister) to discuss proposal of the third respondent (not given in writing) and it was thereafter, that a meeting of all concerned was sought to be convened on 26.09.2013 issuing Annexures- R1(a) and R1(b) invitations leading to Annexure- R1 (d) minutes. It is stated that, in the meeting held on 26.09.2013, the third respondent did not participate and that the proposal mooted by the third respondent on 04.08.2013 was conveyed to all, discussed and the recommendations/suggestions made by the participants were recorded. It was pursuant to ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 8** Annexure.R1(d) that Ext.P1 MoU was executed between the second and third respondents, which is now under challenge in these writ petitions. 9. In response to the case of the respondents 1 to 3 that Ext.P1 MoU was executed, after revealing all the facts and figures to all, as borne by Annexure R1(d) minutes of the meeting held on 26.09.2013, it is contended by the petitioners that they do not have a case that they were not informed of the meeting held on 26.09.2013. Their specific case is that, they were never told about the course being taken to assign coupon distribution and opportunity to give logistic support exclusively to the third respondent, for the commission at the rate of Rs. 3/- per ticket upto to two crores and at the rate of Rs.5/- per coupon for above two crores. They were made to believe that it was being done by the State as ever before with participation of all concerned, including the third respondent. 10. Mr. K. Jaju Babu, the learned Counsel appearing for the petitioner in W.P.(C) 28487 of 2013 and Mr. Santhosh Mathew, the learned Counsel appearing for the petitioner in W.P.(C) 27770 of 2013 submitted that the petitioners are also ready to extend the very same support subject to the same terms and ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 9** conditions. They further submit that the unilateral authorisation given to the third respondent, to the exclusion of all others is per se wrong and illegal in all respects and that the said petitioners are ready to meet the entire expenditure in connection with the printing of coupons, if effected by the State already and to have the matter reconsidered with notice to all concerned. It is also pointed out that, no prejudice whatsoever will be caused to anybody and that there is no sanctity for the particular date for commencement of the shopping festival. 11. On going through the files produced before this Court, it is seen that the so called proposal made by the third respondent was never put in black and white as it was admittedly not in writing, but by way of oral submissions. The proceedings of the meeting ordered to be held pursuant to Annexure.R1(c) proposal, originally scheduled to be held on 13.08.2013 and later advanced to 04.08.2013 are not seen in the files. Similarly, Annexure R1 (a) and R1(b) intimations stated as sent to all the Trade Associations with regard to the meeting scheduled to be held on 26.09.2013 do not contain any reference to the meeting with the third respondent/Vyapari Vyavasayi Ekopana Samithi held on 04.08.2013 , or as to the crux of the proposal which was sought ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 10** to be discussed in the meeting scheduled on 26.09.2013. No 'Agenda' is seen prepared as to the points sought to be discussed, with reference to the proposal mooted by the third respondent and admittedly, no 'Expression of Interest' was called for from anybody before executing Ext.P1 MoU between the second and third respondents. 12. On approaching the issue in the above background, the point to be considered is whether the petitioners or such other Associations were told/informed as to the terms and conditions or as to the specific proposal made by the third respondent, either before or in the course of the meeting held on 26.09.2013. The only document available is Annexure R1(d) minutes of the meeting held on 26.09.2013, wherein it is stated that the Minister explained the position to all concerned as to the meeting held on 04.08.2013 with the third respondent to ascertain the field of interest for their co-operation and support. The data informed to the participants ( in which the third respondent was not present) with reference to the proposal made by the third respondent, was as to the 'help assured' by the third respondent to ensure participation of at least one lakh Mercantile Establishments and as to the assured distribution of a ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 11** minimum of two crore Coupons under the leadership of the third respondent. In other words, the terms of 'Understanding', as to the price of Coupon, commission payable or as to the steps being taken to entrust the task of distribution of Coupons exclusively to the third respondent were never put to the participants, as discernible from Annexure- R1(d) Minutes. It is true that the suggestions made by some of the participants, including the petitioner in W.P.(C)No. 27770 of 2013 were incorporated in the said Minutes, but the 'will' of the participants as to whether they were ready to make a better offer or whether they were having any objection with regard to the course intended to be pursued to entrust the task exclusively with the third respondent is not discernible from Annexure R1 (d) Minutes. As such, the version of the respondents that the petitioner in W.P.(C)No.27770 of 2013 has approached this Court suppressing material facts, especially as to the course and events pertaining to the meeting participated by them on 26.09.2013 and that the writ petition is liable to be dismissed on this score alone in the light of the decision rendered by the Apex Court in _**K.D. Sharma vs. Steel Authority of India Limited and others**_ **[(2008) 12 SCC 481]** is not liable to be accepted. ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 12** 13. On going through Ext.P1 MoU executed between the second and third respondents, it is not clear as to how and to what extent, the second respondent can proceed against the third respondent, if any violation of the terms is committed by the third respondent, particularly as to the non-satisfaction of the requisite extent of Coupon sale/procurement of revenue or as to the assured participation of minimum of one lakh Mercantile Establishments and such other events. Clause 2 under the head-. 'Other Conditions' stipulates provision for penalty to the following effect: _“2. Penalty: Violation of any one or more of the clauses in the MoU by the SECOND PARTY or delay/dereliction on the part of the SECOND PARTY will entail penalty which will be assessed and charged by APEX/EXECUTIVE COMMITTEE from time to time on the SECOND PARTY on the actual quantum of damage suffered to Government. Additionally, Director, GKSF can charge penalty upto 10% on the approved estimate of expenditure. The penalty, if any, shall be fixed only after giving the SECOND PARTY a fair chance for explaining the position why penalty shall not be charged. Appeal against such penalty charged by Director, GKSF shall lie with_ ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 13** _APEX/EXECUTIVE COMMITTEE._ Obviously, the above clause does not give any concrete idea as to the quantification of penalty and the course and procedure to assess the quantification and satisfaction of loss, if any. There is no specific clause in the MoU, which binds the third respondent to compensate for the loss, if any, caused to the first and second respondents, if the assured terms are not fulfilled by the third respondent. 14. Condition No.1 under the same Head reserves the right of the FIRST PARTY/second respondent to modify the MoU or alter any or all of the clauses or conditions, depending upon the specific direction of the Government or if the FIRST PARTY so desires, and also as to the right reserved to include any additional clause or clauses or conditions without showing any reason. This Clause is rather vague and does not reflect **consensus ad idem** of the contracting parties and it puts things in a fluid state of affairs. This Court does not propose to express any opinion in this regard as it does not come within the scrutiny of this Court for the time being, except to have the issue evaluated as a whole in the background as already mentioned herein before. ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 14** 15. As mentioned herein before, the crucial aspect to be considered is whether the proceedings pursued in the course of the meeting held on 26.09.2013 as borne by Annexure R1(d) minutes, leading to Ext. P1 Mou executed on 18.10.2013 have been finalised with transparency and with proper sense of understanding among all concerned . 16. Annexure R1(a) and (b) notices issued to the petitioner and other associations do not refer to the proposal made by the third respondent or as to the minutes of the meeting with the third respondent held in the chambers of the Hon'ble Minister on 04.08.2013. Admittedly, no written proposal was submitted by the third respondent nor is there any proceedings put in writing as to the alleged proposal put forth by the third respondent in this regard, but for the oral version. No such material is produced either with the statement/affidavit of the respondents 1 and 2 or with the counter affidavit filed by the third respondent. It does not find any place in the files as well produced by the learnred State Attorney appearing for the Respondents 1 and 2. The only material available is the minutes of the meeting held on 26.09.2013 [Annexure R1(d)] which suggests that, what transpired in the meeting held on 4.8.2013 was explained by the ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 15** Minister to all those who were present. Obviously, the third respondent was never present in the said meeting held on 26.09.2013. The only information passed on to the participants as discernible from Annexure R1(d), was to some 'proposal' stated as made by the third respondent in the meeting held on 04.08.2013 and that the third respondent had assured to provide necessary logistic support for the conduct of the GKSF with a minimum participation of one lakh Mercantile Establishments and as to the distribution of a minimum of two crore coupons under the leadership of the third respondent. Whether the task of distribution of coupons was being exclusively given to the third respondent; the prize structure to be provided by the State; the 'Commission' to be given to the third respondent; the obligations to be performed/satisfied by the third respondent etc are not discernible from Annexure R1(d) minutes. The ' **Conclusion'** as to the decision taken on 26.09.2013 is in the following terms: _“The suggestions to dispense with registration fee in the GKSF Season 7 and to realise Rs.10/- per coupon was welcomed by all the participants ._ _The representatives of the_ ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 16** _participant Associations/Organisations generally welcomed the changes sought to be implemented with prize structure. The meeting opined that drawing of the lots might be effected by the GKSF at public places. The Hon'ble Minister informed that enhancement of the number of weekly draws from 6 to 84 would be actively considered. Meeting disbursed at 1.00 pm._ 17. There is obscurity as to the course intended to be pursued with regard to the task of distribution of coupons. Whether it was to be undertaken by the State itself as in previous years, or whether it was to be entrusted with the third respondent on 'commission basis', paying only Rs. 7/- per coupon with liberty to appropriate Rs.3/- per coupon upto two crores and at the rate of Rs.5/- per coupon above two crores is not discernible from Annexure R1(d) . This Court finds considerable force in the said submission made from the part of the petitioners that they were never taken into confidence while finalising the proceedings as above and that they did not have any idea as to the intended steps which came to be finalised as per Ext.P1 MoU. ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 17** 18. Coming to the scope of judicial interference, the learned State Attorney submits that till the last year, huge expenditure was being incurred by the State to conduct GKSF through the involvement of Event Management Agencies and that by virtue of the course adopted now, it is reduced to a considerable extent and as such, the action is bonafide. Placing reliance on the decision rendered by the Apex Court in _**State of M.P. vs. Nandlal**_ **[AIR 1987 SC 251]** the learned State Attorney submits that, in so far as the State Action is bonafide and reasonable, it is not proper to interfere merely on the ground that no advertisement was given or publicity made or tenders invited. 19. It has been observed by the Apex Court in paragraph 37 of the said judgment that, when the State Government is granting licence for putting up a new industry, it is not at all necessary that it should advertise and invite offers for putting up such industry. The State Government is entitled to negotiate with those who come up with an offer to set up such industry. A policy decision was taken by the Madhya Pradesh Government as a measure of promotion of industrialisation, and entered into contract with three manufacturers giving them the right to set ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 18** up factories in the State for the manufacture of resin, turpentine and other derivatives, making available to them an assured supply of specified quantity of resin for the year by giving them 'tapping contract'. This was challenged raising the plea of violation of Article 14 of the Constitution of India and contending that the State had not issued any advertisement inviting offers for award of tapping contract or stating that the tapping contract would be given to any party, who would be prepared to put up a factory for manufacture of resin, turpentine and other derivatives within the State. Referring to the decision of the Supreme Court in _**Kasturi Lal Lakshmi Reddy vs. State of Jammu & Kashmir**_ ( **AIR 1980 SC 1992** ) , the Bench observed that the predominant purpose of the transaction was to ensure setting up of a factory, as part of industrialisation of the State, for which assured supply of the raw materials was essential . But, it is also observed in paragraph 37 of the above verdict that, if the State is giving 'tapping contract simpliciter', there can be no doubt that the State will have to auction or invite tenders for securing the highest price, subject , of course, to any other relevant overriding considerations of public wealth or interest . But in a case where the State is allocating resources ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 19** such as water, power, raw materials etc for the purpose of encouraging setting up of industries within the State, the State is not bound to advertise and tell the people that it wants a particular industry to be set up within the State and invite those interested to come up with proposals for the purpose. The factual scenario and the circumstances in which the above observations are made stand entirely on a different pedestal, which does not get attracted to the case in hand, as the predominant purpose of sale of Coupons in the instant case is to promote Trade and business itself . 20. The law laid down by the Apex Court in **[(1997) 1 SCC 738]** _**(Asia Foundation & Construction Ltd. vs. Trafalgar House Construction (I) Lt. And others**_ ) and in _**Jagdish Mandal vs. State of Orissa and others**_ **[(2007) 14 SCC 517),** sought to be relied on by the learned State Attorney is also to the effect that, interference in contractual matters invoking the power of judicial review, is not to be made as a matter of course, but only if instance of ulterior motives, favouritism, malice or mala fides is brought to light. It is also pointed out that, since the process adopted is reasonable and it is a matter of commercial importance, principle of equity and ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 20** natural justice should stay at a distance; since judicial interference in contractual matters is permissible only if (i) the process adopted or decision made is mala fide or intended to favour someone or (ii) the same is so arbitrary and irrational that no responsible authority acting under law could have arrived at it or (iii) it affects the public interest. 21. It is pointed out with reference to the decision rendered by the Apex Court in _**Bharat Sanchar Nigam Limited and another vs. Bhupender Minhas and others**_ **[(2008) 11 SCC 273]** that there cannot be interference in 'policy matters'. There cannot be any dispute in this regard. The decision rendered by the Apex Court in _**S. Subramaniam Balaji vs . State of Tamil Nadu and others [**_ **(2013) 9 SCC 659** ] cited by the learned State Attorney and by the learned Counsel for the third respondent, seeking to decline interference, involves the challenge raised against the Scheme framed by the State for distribution of free goods (“freebies”) as part of Public Welfare Schemes in fulfillment of Election promises made by the winning political party in its 'Election Manifesto', upon coming to power. After analysing the facts and figures, in the light of existing law, it was declared by the Apex Court that the Scheme challenged ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 21** therein fell within the realm of fulfilling 'Directive principles of State policy' and that the Court had only limited jurisdiction to interfere with such Scheme . It was accordingly, that necessary directions were given to the Election Commission of India, to take up the issue therein at the earliest, owing to its utmost importance, with reference to the mandate of Article 324 of the Constitution of India and the relevant provisions of the Representation of the Peoples Act, 1951. 22. The crux of the decisions sought to be relied on from the part of the respondents 1 and 2 is only to the effect that there cannot be interference with the policy decision of the Government. The policy of the Government to conduct **GKSF** and the manner in which it is to be conducted is, of course, not for this Court to consider or adjudicate. The only question is whether the 'decision making process' was transparent, more so when it was claimed to be taken with the participation of all concerned including the petitioners providing a level playing field for all. 23. The learned Counsel for the third respondent refers to the decision in _**Dr. Subrahmaniam Swamy vs. State of Kerala**_ [ **2011 (1) KLT 807** )( to which I was a also a member), to ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 22** contend that entrustment of the task of distribution of gift coupons to the third respondent is not liable to be branded as an instance of distribution of largesse of the State and hence that invitation by public advertisement is not at all warranted. It was a case where the Government had entrusted the KSIDC (The Kerala State Industrial Development Corporation) to conduct studies and look into various aspects of formation of an Islamic Investment Company in Kerala for attracting investments in a right manner as per the 'Shariah' of the Muslim Community for the development of the common public at large. After studies, existence of a genuine 'commercial potential' was identified and the decision of the KSIDC to incorporate a Company with 11% share contribution from the KSIDC and the remaining 89% from private investors was approved, which was sought to be challenged by the petitioners by way of Public Interest Litigation. The observation made by this Court in paragraph 61 is relevant and is extracted below: _“In our opinion, calling of tenders is not the only procedure which answers the requirement of non-arbitrariness on the part of the State. When the State is intending to purchase or sell property or goods or seeking_ **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 23** _to have certain work like construction of a building or a project etc. to be done by private parties inviting competitive bids, from persons interested is generally a rational and transparent process, but even in such cases courts have recognised exceptions to the rule. However, in a case like the one on hand where the State is proposing to carry on some business by participating in a venture jointly with others, the decision cannot in any way be called distribution of largess. It is not the case of either of the petitioners that they are also interested in carrying on the same business that is to be carried on by the 6[th] respondent, nor some other persons would be interested in such business and if only the State of Kerala advertised its intention to participate in such business venture there would have been more competition enabling the State of Kerala to take a decision which would be economically more beneficial to the State. We are of the opinion that by the very nature of the impugned decision, it is incompatible with the process of inviting tenders. We therefore reject this submission.”_ 24. As evident from the above observation, it was not a case of either of the petitioners, that they were also interested in carrying on the same business, that was to be carried on by ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 24** th the 6 respondent (beneficiary) nor that some other persons would be interested in such business and if only the State of Kerala advertised its intention, to participate in such business venture there would have been more competition enabling the State of Kerala to take a decision, which would have been economically more beneficial to the State . Unlike the factual position in the said case, it is the other way round, in the present case . It has been held in _**Usha Mehta vs. Government of Andhra Pradesh**_ [ **(2012) 12 SCC 419** ] that, in cases involving distribution of State Largesse/Government Contracts, the decision of the State to confer such benefit must be founded on sound, transparent , discernible and well defined policy known to public at large and in a non-discriminatory and non-arbitrary manner. It has been simultaneously alerted that the State cannot exclude other eligible persons in considering allotment and if the State instrumentalities treat such exercise as a private venture, it would amount to a flagrant violation of the principles of equality . 25. On analysing the pleadings and proceedings in the above background, this Court does not find anything wrong on the part of respondents 1 and 2 in deciding to conduct GKSF ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013 25** reducing the economic burden of the State and in seeking for logistic support from elsewhere. But when it comes to the 'litmus test' as to whether the 'decision making process' was done in a fair and transparent manner, it cannot but be answered in the negative, as the files, pleadings and proceedings including the contents of the Annexure- R1(d) minutes of the meeting held on 26.09.2013 do not reveal the course proposed to be pursued by extending the benefits exclusively to the third respondent and fixing payment of commission to the extent as now sought to be justified, which hence, is not above board and requires to be re-considered. 26. In the above circumstance, Ext.P1 MoU impugned in these writ petitions is hereby set aside. It is for the first and second respondents to convene a fresh meeting of all concerned and deliberate with proper sense of understanding as to the course proposed to be pursued and the result intended to be achieved, eliciting better options, if any . The proceedings should be finalised accordingly. 27. In view of the undertaking given during the course of hearing from the part of the petitioners in W.P.(C) Nos. 27770 of 2013 and 28487 of 2013 through their learned Counsel, that ## **W.P.(C)Nos. 27770, 28486 & 28487 OF 2013** ## **26** their attempt is also to protect the best interest of the State in conducting the GKSF with maximum support and participation and that they are ready to meet the entire expenditure of the coupon printing, if already effected by the State, it is open for the respondents 1 and 2 to inform the position to the petitioners in the said two cases as to the actual expenditure incurred, if any, in this regard, on which event, it shall be shared equally and satisfied by the said petitioners, honouring the commitment made before this Court and discharging the 'undertaking' as aforesaid. All the writ petitions are allowed to the above extent. No cost. ## **P.R.RAMACHANDRA MENON JUDGE** lk