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Beni Madhav Pandey v. State Of U.P. Thru' Secy. & Others - WRIT - C No. 62461 of 2005 [2005] RD-AH 3753 (30 September 2005)


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Chief Justice's Court

Civil Misc. Writ Petition No.62461 of 2005

Shri Beni Madhav Pandey


The State of U.P. & Others

Hon'ble Ajoy Nath Ray, CJ.

Hon'ble Ashok Bhushan, J.

All the parties before us have filed pleadings, which are all accepted and the parties are all heard and also the original file produced by the learned Standing Counsel is perused and the events of the auction date, i.e. 5th August, 2005 are noted.

The facts in this case are very simple. The auction was being held for leasing out the toll tax collection rights for the Bridge over the River Gomti at Chandwak.

The bridge was being auctioned for the first time. The reserve bid was Rs. 1.50 crore for a period of one year; the solvency certificate, usually granted by the District Magistrate, was fixed at Rs. 2 crore, as the minimum figure.

At present, the State is collecting the toll tax departmentally and the toll collection comes to approximately Rs. 25,000/- (Rupees twenty five thousand) per day.

The bid sheet of 5.8.2005 shows that there were six bidders, namely; Neeraj Upadhyay, Ashish Pandey, Vinay Kumar, Bijendra Upadhyay, Beni Madhav Pandey and Vinyendra Upadhyay.

Out of six, the bid sheet records that bids were made only by Ashish Pandey, Vinay Kumar and Beni Madhav Pandey, and the accepted bid of Pandey the petitioner was for Rs. 251 lacs; his solvency certificate  was for above Rs. 3 crore. Amongst the others who bid, the maximum bid of Vinay Kumar was 220 lacs and 11 thousand and the maximum bid of Ashish Pandey was 203 lacs.

The others, namely, Neeraj Upadhyay, Bijendra Upadhyay and Vinyendra Upadhyay did not bid at all.

The principal aggrieved party appearing before us through Mr. W.H. Khan, learned Advocate, is Neeraj Upadhyay. He wanted to bid even higher after Beni's bid had become the highest. He had not bid previously at all.

He was in a difficulty, because his solvency certificate did not go beyond 2.5 crore. He produced there and then a solvency certificate of an additional amount of a little below Rs. 2 crore, Rs. 1.88 lacs to be exact, and on the basis of the newly produced solvency certificate, he wanted to bid above Beni Madhav Pandey. All this was done when Beni Madhav Pandey had already become the highest bidder in accordance with all the normal practice and procedure. The Commissioner and the District Magistrate who were there at the auction as well as Joint Director (Treasury) and the Chief Engineer, P.W.D. decided that they would undo the auction because of the solvency certificate produced additionally after the auction was over. They purported to do so and for doing this their motive can be taken by us simply to be increase of governmental revenue. Any other motive would be improper.

They followed up this action by advertising again, and fixed a date for another auction which was to be held today. By our interim order passed yesterday, we have restrained the holding of such auction; at that time we had dictated part of our judgment and we had made up our minds by then.

In the advertisements, which were issued on 12.8.2005, the authorities took their earlier stand as taken on the date of the auction, to be a matter of principle, and inserted in the advertisement a particular clause, which provided that even during the running of the auction, additional solvency certificate could be produced by intending bidders.

We are of the opinion that this is not a clause, which is reasonable and which can be held as consistent with fair play and normal and above board procedure.

Since this is at the centre of the controversy, let us explain why we think so.

When the bidding is going on, it is not possible or feasible that a person who is bidding will run out of the room or approach the District Magistrate who is already on the high table and ask for additional solvency certificate by producing additional papers or documents.. This type of procedure would be simply pandemonium. The only other manner in which the production of additional solvency certificate, during the bidding, can be made is, if a bidder comes into the auction hall with additional solvency certificate in his pocket and keeps both the competing bidders and the authorities in the dark about it in the beginning.

In our opinion, this should not be encouraged. It militates against the normal rule of law, that in matters of open and above board bidding and in public matters, surprises amongst adversaries are to be avoided as far as possible. Secondly, permitting, and even encouraging, hidden material to be produced suddenly, will put a premium upon trickery and cleverness which are always frowned upon by the Court.

It has always been the practice, at least it should be the uniform practice, that all solvency certificates should be produced before the authorities by all competing bidders in the very beginning showing that they have financial strength to bid up to those limits.

Whether they reach the ceiling limits disclosed by them or not, is a matter of their choice. There is no surprise on trickery or cleverness in a normal bidding process. The ordinary method of auction used for a very long time should also be used in the auction of toll tax rights in U.P. We are of the opinion that uniformity in these matters is to be very strongly encouraged.

A government order of 1985, which is annexed in our paper book at page 28 mentions that all bids should be backed up by a matching solvency certificate; there is another Government order of 1982 to that effect also. Whether these Government orders are known specifically or not, or published from time to time or not, it can be seen even from the facts of the present auction that all bidders understand the necessity and importance of a solvency certificate. Indeed a governmental auction is to be made on the basis that the accepted party will not prove later on to be one who is unable to pay his bid, and all his collections go away in meeting his undisclosed financial commitments and involvements.

Although Mr. Khan appearing for Neeraj Upadhyay, submitted that a solvency certificate can both be produced as a new document during bidding and that the only necessity is to furnish the solvency certificate of the minimum amount mentioned in the advertisements, we clearly cannot accede to such a submission. In this case, the minimum solvency certificate needed, was for Rs. 2 crore. It cannot be that on that basis the Government will permit a bid which is Rs.50 lac or Rs. 1 crore more than the minimum solvency certificate submitted. If one is able to pay Rs. 2 crore, that does not mean that one is also able to pay Rs. 2.50 crore or Rs. 3 crore. So eager was Mr. Khan's client to go into bidding once again, that yesterday Mr. Khan was there and then willing to give an undertaking on behalf of his client Neeraj Upadhaya that today's bidding would be started by him with an offer of Rs. 2.75 lacs. We fully understood the responsibility with which Mr. Khan made his submission.  We are quite aware that by passing our order we are causing loss to the U.P. Government of at least Rs. 25 lacs, if not more. Our clear opinion, however, is that in public matters, there are other things which are at least as important as money if not even more important. Avoidance of trickery, avoidance of surprise, following of pre set norms, abiding by a contract which  has been entered into between the Government and a citizen, these are other factors which stand at least on an equal footing with money.

We do not deny that cases will be found whether the Courts have permitted auctions and bids to be undone because a higher bid would then come into being. Cases are also there where the Courts have held that the Government should stick to the contract that has already come into existence.

As an example, we quote the last sentence of paragraph 6 of the judgment given in the case of Beg Raj Singh reported at (2003) 1 Supreme Court Cases 726 :- "Merely because a little higher revenue can be earned by the State Government that cannot be a ground for not enforcing the obligation of the State Government which it has incurred in accordance with its own policy decision."

On this basis, although we have allowed the intervention application of Mr. Khan's client and we have heard him out and although we have heard out the State, which seeks to support the actions which had been undertaken by the State Officers, and which supports the case of Neeraj Upadhyay, and supports the practice of bringing in new solvency certificates even when the process of bidding is going on, we order and declare, that the bid of the petitioner already accepted by the State Government, shall be treated as final and concluded. The acceptance, if not yet formally made, must be treated as made by a court of equity, as  it should have been so made. Equity looks upon that as done, which should have been done. If the authorities were clear in their minds that the procedure of provision of new solvency certificates produced during bidding is impermissible, then and in that event, there were no two options open; the only option was to accept the highest bid of Beni Madhav Pandey.

In the earlier auction, i.e. the auction of 5.8.2005,  where Beni Madhav Pandey was the highest bidder, Rs. 20 lacs was the security deposit. Beni Madhav Pandey has kept that security and has deposited a further sum of Rs. 25 lacs for today's bidding. Litigation is uncertain; he could not have been certain that he will win the case so completely and thoroughly; and as such he kept his option open. We find nothing wrong in that. Neeraj Upadhyay has withdrawn his earlier security of Rs. 20 lacs and has put in 25 lacs for  today's auction, which has been stopped by us.

As such, we direct the State authorities to complete formalities and to award the contract and sign all papers in favour of Mr. Shashi Nandan's client. He will, no doubt, strictly adhere to his financial commitments and make all payments in due time, failing which usual steps might be taken against him. Let Mr. Shashi Nandan's client be given  toll tax collection rights from tomorrow.

Certificate for fitness is prayed for under Article 134-A read with Article 133 of the Constitution of India. Such certificate is refused, as it is a matter covering only a single auction procedure, and is not a matter of any general importance. We direct immediate putting into effect of our order, as the State is collecting only 25,000/- Rupees per day from the Bridge whereas Mr. Shashi Nandan's client will pay according to his accepted bid 75,000/- Rupees per day.

With the above observations and directions the writ petition is disposed of.




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