Standard Metals Kandathara v. Kerala Small Industries Development Corporation (SIDCO) & Ors.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE ACTING CHIEF JUSTICE MRS.MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE V.CHITAMBARESH MONDAY, THE 26TH DAY OF MARCH 2012/6TH CHAITHRA 1934 WA.No. 302 of 2012 () IN WPC/2032/2012 --------------------------------------AGAINST THE JUDGMENT IN WPC.2032/2012 DATED 16-02-2012 APPELLANT(S)/PETITIONER: ---------------- STANDARD METALS KANDATHARA, ALLAPRA P.O., PERUMBAVOOR ERNAKULAM, REPRESENTED BY C.A.SHABEER ALI PROPRIETOR. BY ADVS.SRI.S.M.PREM SMT.K.P.SANTHI SRI.P.K.NIJOY RESPONDENT(S)/RESPONDENTS: -------------------------- 1. KERALA SMALL INDISTRIES DEVELOPMENT CORPORATION P.B.NO.50, HOUSING BOARD BUILDING, SANTHI NAGAR THIRUVANANTHAPURAM-695001. 2. P.R. V.CONSTRUCTIONS PRIVATE LIMITED, NO.6/73, NORTH SILVER STREET, ST.THOMAS MOUNT CHENNAI REPRESENTED BY ITS MANAGING DIRECTOR V.G.THANKAPPAN. ADDL.3. SREE DURGA CASHEW FACTORY THEKKUMCHERI, PUTHOOR P.O. KOLLAM - 691 507 (IMPLEADED AS ADDL. R3 AS PER ORDER DATED 7.3.2012 IN I.A.NO.186 OF 2012) BY ADV. SRI.P.K.RAVINDRANATHA MENON (SR.) BY ADV. SRI.R.T.PRADEEP BY ADV. SRI.N.SUKUMARAN (SR.) BY ADV. SRI.R.ARUN BY ADV. SRI.KURUVILLA JOHN BY ADV. SRI.LATHEESH SEBASTIAN THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 12-03-2012, THE COURT ON 26/03/2012 DELIVERED THE FOLLOWING: **“C.R.”** ## **MANJULA CHELLUR Ag.C.J. &** ## **V.CHITAMBARESH, J.** ------------------------------- ## **W.A.No.302 of 2012** ------------------------------- ## **Dated this the 26[th] day of March, 2012** ## **J U D G M E N T** ## Chitambaresh, J. Should not the disposal of public property by auction be fair and transparent and beyond reproach ? This is the important question mooted in this writ appeal. 2. The Government of Kerala transferred 25 acres of land of Kerala State Salicylates and Chemicals Ltd. to Kerala Small Industries Development Corporation ('SIDCO' for short). This was for the purpose of setting up a proposed telecom city with an estimated cost of Rs.400-450 crores. The machineries in Kerala State Salicylates and Chemicals Ltd. had been remaining idle in an acidic atmosphere for quite long. The machineries had become scrap due to the proximity of the plant to the sea and deserved to be sold in ' _as is where is_ ' condition. The Government accorded sanction for the disposal of the plant and machinery of the defunct company through open tender. The SIDCO thereupon issued Ext.P1 WA.No.302 of 2012 2 notification inviting sealed tenders under two part bid system (pre-qualification bid and price bid). The relevant part of the calender of events as per the tender notification is as follows:- Last date and time of issue of tender form : 23.1.2012 till 11 AM. Last date and time of submission of tender : 23.1.2012 till 3 PM. Date and time of opening of tender(cover I) : 23.1.2012 at 3.30 PM. 3. The appellant purchased Ext.P2 tender form for ` 25,000/- in time and had allegedly submitted the same along with an Earnest Money Deposit of ` 12,50,000/-. The appellant contended that SIDCO refused to accept the tender form so submitted before 3 PM. on 23.1.2012. The appellant alleged that it could witness a heated discussion in the office of SIDCO about the postponement of the opening of tender. A melee followed and the tender submitted by the appellant was refused to be accepted unjustifiably by SIDCO as belated. The writ petition was filed seeking a direction to SIDCO to consider the tender of the appellant as having been submitted in time. 4. The SIDCO on the other hand contended that the WA.No.302 of 2012 3 appellant had submitted the tender only at 3.45 PM on 23.1.2012 beyond the cut off time. The SIDCO justified its action in not accepting the tender submitted by the appellant on the ground that it was belated. The SIDCO however conceded that the opening of tender did not take place as scheduled and was postponed as alleged. The reason stated for the postponement was the judgment in W.A.No.1985 of 2011 filed by a society who did not submit any tender. 5. The learned single Judge dismissed the writ petition on the premise that the time of submission of tender is a question of fact which could be decided in a suit only. The learned single Judge observed that the issue requires to be decided on the basis of the evidence therein. The appellant in this writ appeal urges that the process of acceptance of tender by SIDCO has not been transparent enough. The additional third respondent who is said to be the successful tenderer also supported the stand of SIDCO. The additional third respondent contended that it had quoted ` 3,66,00,001/- for the scrap and WA.No.302 of 2012 4 that its tender was duly accepted by SIDCO. 6. We have heard Mrs.K.P.Santhi, Advocate on behalf of the appellant, Mr.P.K.Ravindranatha Menon, Senior Advocate duly instructed by Mr.R.T.Pradeep, Advocate on behalf of SIDCO and Mr.N.Sukumaran, Senior Advocate instructed by Mr.R.Arun, Advocate on behalf of the additional third respondent. 7. The Supreme Court had occasion to observe in **Dutta Associates (P) Ltd. v. Indo Mercantile (P) Ltd.** (1997 (1) SCC 53) as follows:- We reiterate that whatever procedure the Government proposes to follow in accepting the tender must be clearly stated in the tender notice. The consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. (emphasis supplied) The procedure proposed in Ext.P1 notification was to open the tender at 3.30 PM on 23.1.2012 which had admittedly been postponed by SIDCO unilaterally. The reason stated is the judgment in W.A.No.1985 of 2011 filed by a society seeking WA.No.302 of 2012 5 consideration of its representation. The judgment therein was on 13.1.2012 in which case SIDCO could have as well postponed the entire tender process. The fact that SIDCO changed the calendar of events in Ext.P1 notification at least in regard to the opening of tender raises suspicion. ## 8. The Supreme Court in **V.Purushotham Rao v. Union of India** (2001 (10) SCC 305) has held as follows:- The disposal of a public property undoubtedly partakes the character of a trust and therefore, in the matter of such disposal, there should not be any suspicion of a lack of principle. (emphasis supplied) ## The Supreme Court in **Agarwal & Modi Enterprises (P) Ltd.** ## **v. New Delhi Municipal Council** (2007 (8) SCC 75) has again held as follows:- Disposal of public property partakes the character of trust and there is distinct demarcated approach for disposal of public property in contradistinction to disposal of private property, i.e., it should be for public purpose and in public interest. Invitation for participation in public auction ensures transparency and it would be free from bias or discrimination and beyond reproach. (emphasis supplied) WA.No.302 of 2012 6 ## 9. The Supreme Court has again in **Meerut Development Authority v. Association of Management Studies** (2009 (6) SCC 171) as follows:- It is so well settled in law and needs no restatement at our hands that disposal of the public property by the State or its instrumentalities partakes the character of a trust. The methods to be adopted for disposal of public property must be fair and transparent providing an opportunity to all the interested persons to participate in the process. (emphasis supplied) We therefore called for the records and SIDCO produced the tender documents submitted by 9 tenderers in addition to the one submitted by the appellant. (The tender submitted by the appellant had been provisionally accepted pursuant to the interim order passed in the writ petition) The records did not inspire confidence in us as regards the transparency, fairness and openness to be maintained in the tender process. 10. The inward register maintained by SIDCO did not contain the signature of the persons who had allegedly submitted tenders in time. A mere scribbling of the time in the WA.No.302 of 2012 7 corner of the tender cover is not sufficient enough to fix the time of its receipt and is also not tamper free. The appellant had dispatched Ext.R1(a) letter on 23.1.2012 itself to SIDCO complaining about the refusal to accept its tender. The fact that the opening of tender was admittedly postponed by SIDCO probabalises the case of the appellant. The plea of the appellant that there was a heated discussion in SIDCO relating to such postponement cannot be brushed aside. 11. We find that the appellant had quoted `.6,00,10,000/- in its tender far exceeding `.3,66,00,001/quoted by the additional third respondent. This Court would be perfectly justified to interfere with the award of the contract when there is an element of public interest. ( _See_ _**Cherian**_ _**Varkey Contruction Co.P.Ltd. v. Union of India and others** (2012 (1) KHC 814_ ) We are not satisfied that the disposal of the public property in the instant case has been fair, transparent and beyond reproach as is warranted in law. We also note that the site has not yet been handed over to the additional third WA.No.302 of 2012 8 respondent due to the interim order in this writ appeal. Interest of justice warrants that SIDCO re-tenders the work of sale and removal of scrap with a fresh calendar of events. Needless to say that the same shall be scrupulously followed by SIDCO to be above the board of suspicion from any quarter. 12. The judgment under appeal is set aside. The writ appeal is allowed. No costs. **MANJULA CHELLUR, Acting Chief Judge** . **V.CHITAMBARESH, Judge.** nj./19.3.12 **MANJULA CHELLUR, Ag.C.J. & V.CHITAMBARESH, J.** -------------------------------------- W.A.No.302 of 2012 ## **JUDGMENT** Dated:- 26[th] March, 2012 --------------------------------------