TMI Blog2007 (2) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... . KAPADIA, JJ. JUDGMENT: Dr. ARIJIT PASAYAT, J. Challenge in these appeals is to the judgment of a Division Bench of the Kerala High Court holding that the order of cancellation dated 13.4.2005 passed by respondent No.2 was illegal and that respondent No.1 was entitled to further time to furnish the bank guarantee after the order granting exemption in terms of Section 81(3)(b) of the Kerala Land Reforms Act, 1963 (in short the Act ) is issued. The background facts in a nutshell are as follows: The State Government transferred 51.96 acres of land in favour of Goshree Island Development Authority (in short the GIDA) a non statutory State Government Undertaking to enable it to sell it and to use the proceeds for its developmental schemes. GIDA was authorized to sell the land in public auction in part or in full. GIDA invited tenders on several occasions but the tenders were cancelled. Finally, as per Notification dated 10.1.2005 fresh tenders were invited and pre bid meeting was held on 10.2.2005. Tenders were submitted, which were opened on 16.2.2005. In the tender documents four options were indicated. The individual extent of plots mentioned in option IV which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite bank guarantee was not furnished. A consequential prayer was made not to extend the time for furnishing bank guarantee and for a direction to GIDA to consider the appellant s tender which till then was not accepted. Learned Single Judge of the High Court passed an interim order restraining the alteration of the terms and conditions contained in the tender until further orders. In the meantime, Venus failed to furnish the bank guarantee and, therefore, GIDA issued letters of cancellation of the letters of confirmation issued earlier. The order of cancellation was challenged by Venus in respect of the concerned Plots in Writ Petition Nos. 15032/2005, 15048/2005 and 15052/2005. It is to be noted that the first two related to plot Nos. B, C3, C4 and C5. During the pendency of the writ petitions, the General Council of GIDA in its meeting on 21.5.2005 ratified the cancellation and directed forfeiture of the earnest money deposited in respect of the bids made by Venus in respect of the plots. In the said meeting in respect of plot Nos. D3, D4 and D5 it was resolved to accept the offers made by the appellant who had offered the same price as that offered by Venus earlier. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates to cases when a person either acquires any land after the notified date under Section 83 of the Act by gift, purchase, mortgage with possession, lease, surrender or any other kind of transfer inter vivos or by bequest or inheritance or by otherwise. It comes into existence once there is acquisition of title or interest over the property. The agreement for sale does not create any interest in the property and, therefore, the High Court was not justified in applying Section 87 to the facts of the case. In response, learned counsel for Venus-respondent No.1 submitted that Section 81(3)(b) of the Act relates to exemption. Section 82 specifies the ceiling area and, therefore, no person can hold land in excess of the ceiling limit. There is a total prohibition. Since the global tender notification was issued in respect of the entire 51 acres 96 cents of land, it was obvious that even if a bidder succeeds in the tender for more than 51 acres of land he cannot own or hold the land for any purpose without the exemption. Clause 14 of Tender Terms and Conditions provides that allottees can avail loan from the banks/financial institutions for effecting payment and for that purpose GIDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 011 before 3.00 P.M. on 16th February, 2005. Tender received after the time fixed will not be considered. The tenders will be opened by the Secretary, GIDA or an officer authorized by him at 4.00 P.M. on the same day at District Collector s Camp office, Club Road, Kochi-682 011 in the presence of the bidders or their authorized representative if present. xx xx xx 7. The tenders shall remain open for a period of 90 days. 8. The tenders received in each option, will be evaluated by the General Council and appropriate decision which is most advantageous to GIDA will be taken. The General Council is free to take any decision, which it deems fit in the best interest of GIDA. xx xx xx 10. Within 10 days of receipt of confirmation letter, the bidder shall furnish two bank guarantees each covering 20% of the bid amount for a period of 180 days. On failure of compliance, the tender shall stand cancelled without further notice and the earnest money deposit shall be forfeited. If the tenderer to whom the notice intimating confirmation is sent, fails to respond within the specified time of 10 days, GIDA will be free to consider any other tender without any further notice. Xx xx x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son exceeds the ceiling area, so much extent of land as is in excess of the ceiling area, shall be deemed to be land acquired after the said date. (1A) Any person referred to in sub-section (1) shall file a statement containing the particulars specified in sub- section (1) of section 85A within a period of three months of the date of the acquisition. (2) The provisions of sections 85 and 86 shall, so far as may be, apply to the vesting in the Government of the ownership or possession or both of the lands required to be surrendered under sub-section (1). It is clear that the Division Bench of the High Court was of the view that duty is cast on the Government as well as GIDA to inform the prospective bidders as to whether they propose to place any restriction or condition in granting exemption under Section 81(3)(b). The High Court also noted that both the Government and the GIDA were aware of the necessity of issuing a statutory notification in the gazette under Section 81(3)(b) of the Act failing which the entire contract would be rendered void and unworkable. Once the Government refuses exemption the entire contract would be frustrated, as also, the restrictions or condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption notification to be a condition precedent. Clause 11 also throws considerable light on the actual intention. The same when read with Clause 14 makes the position clear that if after payment of first installment the allottee desires to avail loan from a bank or financial institution for paying the second and third installments of the sale value of the land, GIDA will issue NOC in favour of bank/financial institution. Therefore, only after the payment of the first instalment, the question of GIDA issuing NOC arises, that too when the allottee desires to avail loan for paying the second and third installments. Clause 13 provides for forfeiture in case of non-payment of the first instalment and permits the bank guarantee to be invoked without further notice. It specifically provides for furnishing of bank guarantee in respect of the required percentage of the bid amount and permits cancellation of the tender and forfeiture of the amount deposited. The High Court also has held that the exemption notification can be treated as part of implied terms. It is to be noted that the Government itself permitted GIDA to sell the property initially. Section 23 of the Contract Act has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness and favouritism which are totally opposed to the rule of law and our constitutional values. The very purpose of issuing rules/instructions is to ensure their enforcement lest the rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under the ITB, by the State or its agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest. 30. Though clause 29 in this case appears to be similarly worded as in the bid documents in Spina case a close reading of these clauses shows that no power of waiver is reserved in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is well settled now that the courts can scrutinise the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India (1994 (6) SCC 651). After examining the entire case-law the following principles have been deduced: (SCC pp. 687-88, para 94) "94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the courts to say whether the conditions prescribed in the tender under consideration were better than the ones prescribed in the earlier tender invitations". In Har Shankar and Ors. v. The Dy. Excise and Taxation Commr. and Ors. (1975 (1) SCC 737) the case of a bid with full knowledge was considered. It was observed as follows: "15. Learned counsel for the respondents raised a preliminary objection to the maintainability of the writ petitions filed by the appellants to the grant of reliefs claimed by them. He contends that the appellants who offered their bids in the auctions did so with knowledge of the terms and conditions attaching to the auctions and they cannot, by their writ petitions, be permitted to wriggle out of the contractual obligations arising out of the acceptance of their bids. This objection is wellfounded and must be accepted. 16. Those interested in running the country liquor vends offered their voluntarily in the auctions held for granting licences for the sale of country liquor. The terms and conditions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject since the suit was based on breach of contract alone and the arbitrator who proceeded only on that basis to grant the reliefs. It is urged that for this reason the further questions of public law do not arise on the facts of the present case. The next contention is that the relief of restoration of the contract granted by the arbitrator is contrary to law being against the express prohibition in Sections 14 and 16 of the Specific Relief Act. It is urged that the contract being admittedly revokable at the instance of either party in accordance with clause 28 of the agreement, the only relief which can be granted on the finding of breach of contract by the appellant-Corporation is damages for the notice period of 30 days and no more. It was then urged that the reasons given in the award for granting the relief of restoration of the distributorship are untenable, being contrary to law. Shri Salve contended that the propositions of law indicated in the award and applied for granting the reliefs disclose an error of law apparent on the face of the award. It was also urged that the onus of proving valid termination of the contract was wrongly placed by the arbitrator on the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain types of contracts. It is, therefore, in this background that we proceed to consider and decide the contentions raised before us". In essence, it was held that tender terms are contractual and it is the privilege of the Government which invites its tenders and Courts did not have jurisdiction to judge as to how the tender terms would have to be framed. By observing that there was implied term which is not there in the tender, and postponing the time by which the bank guarantee has to be furnished, in essence the High Court directed modification of a vital term of the contract. In M/s New Bihar Biri Leaves Co. and Ors. v. State of Bihar and Ors. (1981 (1) SCC 537) it was observed at para 48 as follows: "48. It is a fundamental principle of general application that if a person of his own accord, accepts a contract on certain terms and works out the contract, he cannot be allowed to adhere to and abide by some of the terms of the contract which proved advantageous to him and repudiate the other terms of the same contract which might be disadvantageous to him. The maxim is qui approbat non reprobate (one who approbates cannot reprobate). This principle, though originally bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use it would improve the contract or make its carrying out more convenient. "the touchstone is always necessity and not merely reasonableness". \005\005"A term will not be implied if it would be inconsistent with the express wording of the contract". In Halsbury s Laws of England, 4th Edn, Vol. 9, the expression "implied terms" reads as follows: "In practice, logically implied terms and the other three types of implied terms tend to merge imperceptibly into each other, all the categories being justified to some extent by reference to the intention of the parties; and the distinctions between classes of implied terms tend to be based on convention rather than logic. The conventional distinction which will be adopted here, are as follows: (1) terms implied by custom; (2) terms implied by law; (3) other terms implied by the courts. The relationship between the parties may be a matter of profound importance in determining whether a contract contains a term implied under one of these heads. xx xx xx xx Implication by law- There are many cases where apart from local custom or usage, the common law has recognized a general custom that certain terms be incorporated into parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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