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Calcutta High Court

Union Of India & Ors. vs Gangadharan Mohandas & Anr. on
14 October, 1996
Equivalent citations: (1998) 1 CALLT 229 HC
Author: G Bhattercharjee
Bench: G R Bhattacharjee, D K Jain

JUDGMENT G.R. Bhattercharjee, J.

1. This is an appeal being FMAT No. 2119/96 directed against the order
dated 24.6.1996 passed by B.P. Banerjee, J. in C. O. No. 9850(W) of
1996. by which the learned trial Judge allowed the writ application filed
by the respondent herein (G. Mohandas) and cancelled the impugned
order dated the 15th April, 1996 by which the auction in question was
cancelled and also directed the respondent who are appellants herein to
take steps pursuant to the order passed by the Lieutenant Governor,
Andaman and Nicobar Islands dated the 12th March, 1996 within a
specified period.

2. On the 7th February, 1996 the Deputy Commission at Port Blair.

Andaman published an auction notice notifying that the right to vend
beer, wines and other foreign liquor including Indian made Foreign
Liquor PMFL) in the shops at 13 specified locations at different places
as mentioned therein for the period from the 1st April, 1996 to 31st
March, 1997 would be sold by auction in one lot as a single auction to
be held on 22.2.1996 at the Conference Hall of the Deputy
Commissioner's Office at Port Blalr. It was mentioned in the said
auction notice that the presiding officer reserved the right to accept or
reject the highest bid without any reason (annexure-F to the Writ
petition). The terms and conditions subject to which bids were invited at
the said auction and the license would be granted, were referred to in
that notice. It was menUoned in the terms and conditions that a licence
would be issued under Rule 9 of the Andaman Excise Rules, 1934 in
accordance with the contract of sale. Clause 6(n) of the terms and
conditions provides inter alia that the highest bidder shall deposit 50%
of the money minus Rs. 75,00,000 of earnest money already deposited
by him on the fall of the hammer and the remaining bid money would be
deposited by him in five equal monthly instalments on or before 10th .of
every month starting with April 1996, falling which interest would be
charged at the Bank's rate. It was also menUoned therein that
acceptance of 50% of the bid money on the date of bid would not
however be construed as acceptance of the bid. In clause 6(s) it was
mentioned that the successful bidder would enter into an agreement with
the licensing authority to bind himself to the terms and conditions of the
auction.

3. After the publication of the aforesaid auction notice one Krishna Rao
filed a writ petition being C.O. No. 12(W) of 1996 against the Deputy
Commissioner and Others raising grievance against the single lot of
auction for all the 13 shops. By order dated the 19th November, 1996 in
the said C.O. No. 12(W) of 1996. N. K. Mltra, J. directed the matter to
come up in the list for hearing on 29th February, 1996 and also recorded
that in the meantime, if any auction took place that would abide by the
result of the writ petition. In that writ petition the respondent herein was
also added as a respondent. Auction was held, as per the publication of
auction notice, on 22nd February, 1996. The respondent herein offered
bid in that auction and he was the highest bidder, his bid amount Rs.
3,09,20,000. As per the terms of the auction notice the respondent
herein, who is the writ petitioner in the writ case from which this appeal
arises, then deposited a sum of Rs. 1,54,60.000 on the spot. The
respondent herein was thereafter awaiting invitation from the Deputy
Commissioner for entering into an agreement for vending liquor for the
year 1996-1997 as the successful bidder in the auction and for grant of
necessary licence for the said year. On 15th March, 1996 he had been to
the office of the Deputy Commissioner at Port Blair and there he was
arrested by the police pursuant to a warrant of arrest issued by the Chief
Judicial Magistrate, Nagpur in connection with one FIR lodged at
Nagpur, being crime No. 53/96. at the instance of the State Excise
(Departmental Flying Squad). Nagpur Division. Nagpur. Certain Excise
officers from Nagpur were also present when the petitioner was arrested
on 15th March, 1996 in the office of the Deputy Commissioner at Port
Blair. On that very day he was produced before the Chief Judicial
Magistrate, Port Blair who ordered for his production before the Chief
Judicial Magistrate at Nagpur and on 16th March. 1996 the writ
petitioner was taken away from Port Blalr and was ultimately produced
before the Chief Judicial Magistrate, Nagpur on 18th March, 1996 in
connection with the said crime No. 53/ 96 and he was granted ad-
interim bail on condition that he would not leave Nagpur for a period of
10 days and would make himself available at Nagpur for the purpose of
interrogation by the investigating Officer. In course of time the Deputy
Commissioner, Andaman issued order No.336 dated the 15th April,
1996 regarding cancellation of the entire auction proceedings held on
22nd February, 1996 and also issued on the same date a public notice
being No. 7-143/LS/95/1289 for the information of all concerned that
the auction held on 22.2.1996 stood cancelled due to administrative
reasons (vide annexure-JJ to the writ petition). Being aggrieved by the
said order No. 336 and the said public notice, both dated the 15th April,
1996 the writ petitioner G. Mahandas filed the writ petition, giving rise
to the present appeal, for quashing the same and for direction upon the
respondent authorities to allow the writ petitioner to run the business of
vending IMFL at Andaman and Nicobar Islands on the basis of the
auction held on 22nd February, 1996 and to take steps for execution of
agreement in terms of the said auction. As already mentioned, the
learned trial judge by the impugned order dated the 24th June, 1996
allowed the writ petition quashing the said order and public notice, both
dated the 15th March. 1996 and virtually directed the respondents to
enter into an agreement with the writ petitioner on the basis of auction
held on the 22nd February, 1996. Being aggrieved by the said order the
appellants who are the Union of India and the authorities of the
Andaman Administration have preferred the present appeal. Apart from
the incidents described above a lot of events, having bearing on the
question involved in the matter took place in the months of February,
and March 1996 and even thereafter which also we will have to take
stock of for appreciating the turn of events leading the matter to the
position where ultimately it found itself to be.

4. While the matters relating to the auction and the processes connected
therewith were proceeding in the normal course of things, certain events
were developing elsewhere in a different arena in February, March,
1996. The Divisional Deputy Commissioner of Slate Excise, Nagpur
sent a fax message together with xerox copies of five import permits
bearing Nos. 4299 to 4303 purportingly issued from the office of the
Deputy Commissioner, Andaman in the name of G. Mohandas and in
that fax message the Andaman administration was requested to ascertain
the genuineness of the said permits and the revalldallon entries thereon.
Since the said fax message was not tn the official letter pad, the office of
the Deputy Commissioner, Andaman advised the Nagpur authorities to
send the concerned message on their official letter pad through the
collector of Nagpur. Subsequently, after cross-checking of records the
office of the Deputy Commissioner came to the conclusion that the said
permits were all fake and fake forms were used, fake despatch numbers
had been incorporated and the signatures of Deputy Commissioner and
the dealing Assistant were forged. This was also communicated to the
State Excise Authorities at Nagpur by fax message on or about 23.3.96.
Sri B. S. Talang. Inspector of State Excise, Nagpur informed the
Andaman administration by letter dated 27.2.96 that 3,250 boxes of
IMFL items against fake import permits while being sent to the G.
Mohandas, had been seized by them and crime No. 53/96 under the
Bombay Prohibition Act. 1949 had been duly registered. It may be
mentioned here that the said crime No. 53/96 was registered on 23.2.96
at Nagpur implicating one Acchelal, one B. S. Puwlya who are officers
of the Kedia Castle Dellon Industries Ltd., G. Mahandas and others.
Involvement of Excise officer was also suspected. It will appear that the
said crime case was registered by lodging FIR with police under the
Bombay Prohibition Act, 1949 as it was detected that huge quantity of
IMFL/worth about Rs. 65,00,000 was being taken in five trucks under
the fake import permits in the name of G. Mohandas purporting to have
been granted by the Andaman administration. The revaluation of the
permits were also found to be fake. The Inspector of State Excise
Nagpur, B.S. Talang addressed a letter dated the 27th February, 1996 to
G. Mohandas informing about the seizure of IMFL items being exported
to him (G.Mohandas) by Kedfa Castle Dellon industries Ltd. Kedla
Nagar, Kumhari, Dist. Durg, Madhya Pradesh and registration of crime
No. 53/96 under the provisions of the Bombay Prohibition Act, 1949. In
that letter G. Mahandas was requested to appear before the Inspector of
State Excise, Nagpur along with necessary document of previous import
from Kedla Castle Dellon Industries Ltd. which company was exporting
the seized IMFL items. It was also mentioned in the said letter of the
said Inspector of State Excise that the presence of G. Mohandas was
required as an accused person in the said crime No. 53/96. That letter
was served on Sri Gangadharon, the power-of attorney-holder of G.
Mahandas at Port Blair by Andaman administration. The Divisional
Deputy Commissioner of State Excise, Nagpur by his letter dated
28.2.96 informed the Andaman administration that one B. S. Poovalah,
Deputy General Manager, Bangalore and one Acchelal Maji, Supervisor
of Kumhari liquor manufacturing unit of Kedla Castle Dellon Industries
Ltd. had been arrested at Nagpur and crime No. 53/96 had been
registered against them and others, being Kedia Castle Dellon Industries
Ltd., the Chairman of the Company and others, Ramgopal Sharma (Vice
President), Anand Mishra (General Manager), G. M. Rao (Production
Manager), Sumlt Modak (Sales Magager) and G. Mohandas. Attested
copies of certain documents were also forwarded to the Andaman
administration such as statement dated 22.2.96 of Sri Poovaiah, Permit
Sales Register, Andaman and Nlcobar Islands maintained in the office
of Kedia Castle Dellon Industries Ltd. at Bangalore etc. and on
examination of the said register and the despatch register maintained in
the District office at Port Blair, it was detected again by the Andaman
administration that import permits bearing Nos. 4274 to 4303 dated
14.9.95 (30 in number) were fake and forged. Thereafter, as we have
seen, two officers of the State Excise, Nagpur came to Port Blair with
warrant of arrest issued against G. Mahandas by the Chief Judicial
Magistrate Nagpur and G. Mohandas was accordingly arrested on
15.3.96 at the office of the Deputy Commissioner, Port Blalr and was
then produced before the Chief Judicial Magistrate, Port Blalr and was
ultimately transported and produced before the Chief Judicial
Magistrate, Nagpur.

5. On the other hand, as we hove seen the auction matter was

proceeding in its own way and G. Mohandas on 22.2.96 offered the
highest bid in the auction and also made the necessary deposit and
thereafter the same was being considered separately regarding the
question of finally accepting the bid and of finalising the matter. In that
connection the effect of the pendency of the said C.O. 12(W) of 1996
and the interim order passed therein was also being considered by the
Andaman Administration. The opinion of the Judicial Secretary
Andaman was also obtained in the matter. On 11.3.96 the Secretary
(Excise), Andaman in his note observed that the D.C. Andaman might
enter into an agreement with the successful bidder of the liquor auction
and issue a license to the said successful bidder of vending IMFL in the
Union Territory for the year 1996-97 after incorporating a condition that
the agreement thus entered into and the license thus issued would be
subject to the outcome of the said writ petition. He also proposed an
alternative course of action to request the High Court to clarify as to
whether the administration could enter into an agreement with the
successful bidder of the liquor auction and issue license to the said
bidder during the pendency of the writ petition. The file was then placed
before the Chief Secretary Narendra Prasad who endorsed the view of
the Secretary (Excise) on 11.3.96 and thereafter the file was placed
before the Lieutenant Governor of Andaman and Nicobar Islands. The
Lieutenant Governor on 12.3.96 observed that if they did not confirm
the auction, then the contractor would not get time to bring the materials
from the mainland before 1st April, which could also lead to another
litigation and that the Government Pleader who appeared before the
court in the case also said that the court had not stopped the Authority
from taking follow up action In the meantime. Accordingly the
Lieutenant Governor on 12.3.96 approved the proposal of the Secretary
(Excise) for formal acceptance of the highest bid of G. Mahandas and
for entering into an agreement with him and also for granting him
license to vend IMFL subject to the decision in the writ petition which
was then pending. The learned trial Judge has in his impugned Judgment
noted these facts.

However, after the order of the Lieutenant Governor the file was placed
before the Chief Secretary who signed the same and thereafter a note
was given that since the file was belonging to the District Office the
same might therefore be marked to the D.C., Andaman for taking
necessary action as per order of the Lieutenant Governor. This fact that
the Lieutenant Governor on 12.3.96 directed the administration to
accept the bid of G. Mahandas and enter into an agreement with and
also to issue license in his favour for 1996-97 as the successful bidder
was not stated in the affidavit-in-opposition filed in the writ proceeding
out of which the present appeal arises, but the learned trial Judge came
to know of this fact during the hearing of the writ petition when the
concerned file was produced by the administration for perusals of the
court. The learned trial Judge is of the view that since the Lieutenant
Governor on 12.3.96 directed the officers of the administration in the
file to accept the bid and enter into agreement regarding vending of
IMFL etc. with G. Mohandas for the year 1996-97 and also to issue
license to him accordingly it was incumbent upon the officers of the
administration to carry out the direction, but instead of doing that the
administration by the impugned order dated 15.4.96 improperly
cancelled the entire auction proceeding thereby frustrating the order of
the Lieutenant Governor dated 12.3.96. The learned Judge also found
fault with the officers of the administration including the Chief
Secretary and characterised their conduct in the matter as fraudulent and
subversive of good administration, and liberally used harsh epithets in
respect of them which in our opinion were not really warranted. It is to
be mentioned here that Sri V. Purushottam, the Lieutenant Governor
who directed in the file on 12.3.96 for grant of license for 1996-97 to G.
Mohandas, vacated the office thereafter and Sm. R. Bajpayee who was
the Lieutenant Governor of Pandlcherry took additional charge as the
Lieutenant Governor of Andaman and Nicobar Islands. The new
Lieutenant Governor on 25.3.96 accepted the proposal of the Chief
Secretary in the file to inter alia cancel the result of the auction held on
22.2.96 and this direction for cancellation of the result of auction was
reflected in the impugned order of the Deputy Commissioner dated
15.4.96 by which the auction proceeding was cancelled. The learned
trial Judge was very caustic in his remarks about the officers of the
Andaman Administration including the Chief Secretary. The learned
Judge was of the view the concerned officers including the Chief
Secretary obtained the order for cancellation of the auction proceeding
from the new Lieutenant Governor on 25.3.96 by exercising fraud and
by suppressing the fact from her that the earlier Lieutenant Governor
had already finalised the matter on 12.3.96 by directing that the bid be
accepted and agreement for vending IMFL etc. be entered with G.
Mohandas as successful bidder and a license for 1996-97 be issued in
his favour accordingly. Of the lengthy and revetitive invectives recorded
by the learned Judge the following is a random illustration :-

"The most surprising part of it was that the said Narendra Prasad, Chief
Secretary, suppressing the fact that earlier L.G. by his order dated
12.3.96 accepted the bid and directed the Department to enter into an
agreement of which Narendra Prasad was a party and placed a proposal
before Sm. Rajendra Bajpayee, the L.G., who was in dual charge of
Pondlcherry and Andaman and in the note a proposal was given for
cancellation of the auction held on 22.2.96 as also to blacklist the
petitioner and Smt. Bajpayee approved the proposal given by the Chief
Secretary. It is clear that the Chief Secretary is guilty of suppression of
the order passed earlier by the earlier L.G. and by misrepresentation and
playing trick obtained approval from the new L.G. as designed by them.
II is a clear case whether Sm. Bajpayee the new L.G. who was in dual
charge had acted on the machination motive of the officers who are all
subordinates to the L. G. * ' * In this case before notes placed before
Sm. Bajpayee the new L. G. was kept in dark that the earlier L.G. has
considered the matter looking into all pros and cons and passed the
order which is a speaking order in his own hand writing. The earlier
L.G. had not simply agreed and/or disagreed but he has considered the
note given by the Chief Secretary on the basis of the facts as revealed
from the file and on the basis whereof he passed the order. This order
was not made known to the new L.G. and it is a case where a clear fraud
was practised upon the new L.G. It is unthinkable that the Chief
Secretary could be a party to a machlnatlous and ultra virus motive
contrary to the final decision taken by the earlier L.G. It ts a clear case
where the Bureaucrats started playing a sinister game after departure of
the earlier L. G, may come and L.G. may go but the order passed by the
L. G. remains which is binding on all his subordinates and it is their
duty to carry it out. Unfortunately, in this case, the order of the L.G.
dated 12.3.96 was kept under the shoes of the Bureaucrats showing
disrespect to the order passed by the earlier L.G. It is a clear case of
gross misconduct on the part of the Chief Secretary and Law Officers
subordinate to him in dealing with the matter, in the manner indicated
above. This is a subversive for a good administration at least it is
expected from I.A.S. Officers that they should act fairly reasonably and
maintain discipline. *** It is outside the scope of the writ jurisdiction to
take action against these Officers but it is for the L.G. or the appropriate
authority to initiate proceedings against these Officers who had played a
sinister game and who had shown highest disrespect fan disregard to the
order of the L.G. and with the change of L.G. the colour of these
Officers also changed and they started moving in the matter to nullify
the order passed by the L.G. which they are not competent to do so. The
order passed by L.G. could not be allowed to be thrown into the waste
paper busket or keep it under the shoes of the bureaucrats which has
exactly been done in this case."

6. The learned trial Judge observed in the impugned Judgment that it

appeared that the then Lieutenant Governor V. Purushottam. had
resigned after March 12, 1996 and after his departure from the island a
game was started by the bureaucrats'. We would now examine how far
the learned trial Judge was Justified in observing that the bureaucrats
including the Chief Secretary obtained on 25.3.96 the order of
cancellation of the result of auction held on 22.2.96 from the new
Lieutenant Governor by concealing the fact that the matter had already
been finalised by the earlier Lieutenant Governor on 12.3.96 in the file
for entering into an agreement with G. Mohandas.

7. There is no doubt that the outgoing Lieutenant Governor immediately

before he relinquished the office of the Lieutenant Governor directed in
the office note on 12.3.96 for accepting the bid as also for entering into
an agreement for the year 1996-97 with G. Mohandas and for issuing
license accordingly. The question is whether this fact was concealed to
the new Lieutenant Governor by the bureaucrats including the Chief
Secretary. The file that went to the new Lieutenant Governor contained
a note of the Assistant Commissioner (HQ) dated 22.3.96 which is
annexure-I to the stay application. At the very beginning of that note
reference was made by the said Assistant Commissioner (HQ) to the
'notes of the Secretary (Excise) from para 49-n to 51-n on pre-page and
notes of the Hon'ble Lieutenant Governor at para 53-n of pre-page'. In
this context he also attracted attention to the enclosed linked file. It may
be mentioned here that the para 49-n to para 51-n and para 53-n as
referred to therein are the office notes and the note of the earlier
Lieutenant Governor whereby he approved the proposal for accepting
the bid of G. Mahandas as also for entering into agreement with G.
Mahandas and for granting license to him for 1996-97. When the
Assistant Commissioner (HQ) at the very beginning of his note clearly
and expressly referred to the file and the note regarding approval of the
earlier Lieutenant Governor for entering into an agreement with G.
Mohandas for 1996-97, there cannot be any question of suppression of
that fact. Far from suppressing the approval and order of the earlier
Lieutenant Governor, pointed attention was rather drawn to the same by
the Assistant Commissioner (HQ) at the very beginning of his note
dated 22.3.96 and even the linked file containing the notes in that
connection and the order of the earlier Lieutenant Governor was also
enclosed with the office note dated 22.3.96. We wonder, how therefore,
there can be a charge of suppression of the order of the earlier
Lieutenant Governor.

8. In the said note dated 22.3.96 the Assistant Commissioner (HQ)

recorded about the messages and communications received from the
State Excise Department, Nagpur and how in view of such messages
and intimation it was found on varification of the office records at
Andaman that a large number of import permits (5+30=35) purporting
to have been issued by the Andaman Administration and the purported
revalidatlon of some permits, all purportingly standing in the name of G.
Mohandas, were fake and forged and even the signatures of the Deputy
Commissioner and the dealing assistant were forged. In the said note the
Assistant Commissioner (HQ) also recorded that the State Excise,
Nagpur informed Andaman administration about the lodging of crime
case no. 53/96 at Nagpur under the Bombay Prohibition Act, 1949
against a number of persons including G. Mohandas for export of IMFL
by the manufacturer Kedia Castle Dellon Industries Ltd under fake
permits. It was also mentioned in the said note inter alia that a non-
bailable warrant was issued by the C.J.M. Nagpur to the Superintendent
of Police, Port Blair for arresting G. Mohandas and the said warrant was
executed and Mohandas was arrested on 15.3.96 and that S.P. Mooley,
the Sub-Inspector, State Excise (Nagpur) requested the D.C. Andaman
to seize all relevant records of fake permits and seal IMFL stocks in
various shops and godowns of G. Mohandas and further that prior to this
requisition the Andaman administration had given an opportunity to G.
Mohandas to furnish all pending monthly stock statements, monthly
volume of sales and the advice notes accompanying all consignments
brought agatnst the import permits, to the office at the Deputy
Commissioner, Port Blair By 5 p.m. on 15.3.96 but G. Mohandas failed
to submit the required statements. It is also recorded in the said note that
in view of the letter of Sri S. P. Mooley Sub-Inspector (State Excise,
Nagpur) to D.C. Andaman and in view of the persistent evasion of Sri
Mohan Das to submit relevant records and documents D. C. Andaman
authorised various officers to seize all relevant records and documents
and seal all his shops and godowns until production of required records
and documents to facilitate physical stock verification of his business
premises. It may be recalled that in the year 1995-96 the license was
granted to this very G. Mohandas as he was the highest bidder for that
year. As a matter of fact even in 1994-95 as well as for broken period in
1993-94 G. Mohandas was granted license. The fake and forged permits
by reason of which the crime case No. 53/ 96 was started against G.
Mohandas and others related to the year 1995-96 for which Mohandas
was granted license. In the said note of the Assistant Commissioner
dated 22.3.96 reference was made to the compliance report in respect of
seizure of documents and sealing of shops and godowns of Mohandas. It
is also mentioned in that notice was given to G. Mohandas on 16.3.96
directing him to produce all relevant records and documents by 5 p.m.
on 20.3.96, but the requisite information was not furnished by G.
Mohandas before the stipulated deadline. Accordingly the Assistant
Commissioner (HQ) in his said note dated 22.3.96 recorded a proposal
that the license of G. Mohandas for the year 1995-96 should be
cancelled forth with and he should be black-listed from participation in
all future auctions. It was also proposed in the said note that the auction
for the year 1996-97 in which G. Mohandas was the highest bidder
might be cancelled as he had committed clear and comprehensive
breach of license conditions during the current year, that is, 1995-96.
This note was also endorsed by the Deputy Commissioner on 22.3.96
and the file then went to the Excise Secretary who referred to the said
note and recorded on that very date that G. Mohandas had failed to
comply with the orders of the Deputy Commissioner to furnish all
pending monthly stock statements", monthly volume of sales even
though he was given adequate notice to do so by the Deputy
Commissioner and he had violated the terms and conditions of the
license issued to him. He also referred in that connection to clause 2(g)
of the terms and conditions of the license which required submission of
monthly statements of import, sales and stock position. He also referred
to clause 2(L) of the terms and conditions which provides that the
license issued to an auction purchaser shall be liable to be revoked in
case of persistent and serious violation of the terms of the contract of the
sale or violation of law. He also recorded that it appeared from the
concerned note of the Assistant Commissioner, (HQ)/ D.C. that prima
facie the licence G. Mohandas had used fake import permits and a
criminal case had been registered against him under the Bombay
Prohibition Act, 1949 and 3,250 boxes of IMFL items against fake
imports were seized by the Excise Authorities in Nagpur and the
licencee G. Mohandas was arrested in connection with crime case
No.53/96 on 15.3.96 on the basis of non-bailable warrant issued by the
C.J.M. Nagpur and there were therefore strong grounds to believe that
G. Mohandas was involved in serious violation of law. As such it was
recommended by the Excise Secretary also that the license issued to G.
Mahandas for the year 1995-96 might be revoked forthwith. As regards
the auction conducted on 22.2.96 for the year 1996-97 the Excise
Secretary specifically recorded that the bid of G. Mohandas was
accepted by the then Lieutenant Governor, vide minutes at page 53/n'.
He then recorded that 'however, in view of the fact that Sri G. Mohandas
is involved in the criminal case as mentioned above, we may now
review the decision'. The Excise Secretary accordingly proposed
cancellation of the result of the auction held on 22.2.96. Therefore we
see that even the Excise Secretary also in his note dated 22.3.96
expressly recorded, far from suppressing or concealing the fact, that the
bid of G. Mohandas was accepted by the previous Lieutenant Governor,
but in view of the prima facie and circumstances regarding the
involvement of G. Mohandas in the criminal case the earlier decision
might be reviewed. The express reference to the earlier approval of the
bid of G. Mohandas by the earlier Lieutenant Governor and the
necessary of reviewing the same in view of the facts and circumstances
stated in the note, all found place in paragraph 64 of the note of the
Excise Secretary and the earlier paragraph 63 contained the factual
background about the involvement of G. Mohandas in crime No. 53/96.
He also proposed for blacklisting him. in paragraphs 65 of his note
dated 22.3.96 the Exercise Secretary suggested that the matter might be
referred to the CBI for investigation as the State exchequer had been
deprived of its rightful dues and meanwhile pending the result of the
enquiry no license to vend beer, wine, foreign liquer including IMFL
might be issued and a fresh look at the liquor policy might be taken. The
file then went to the Judicial Secretary and on that very day, that is, on
22.3.96 the Judicial Secretary in his note referred to the earlier notes
including the decision of the earlier Lieutenant Governor dated 12.3.96
regarding the approval of the bid. Thus we find that the Judicial
Secretary also specifically referred to the earlier decision of the
Lieutenant Governor dated 12.3.96 by which the Lieutenant Governor
had accepted the bid and directed for entering into an agreement with G.
Mohandas and for issuing license in his favour for the year 1996-97. We
fall to understand how therefore it could be said that the bureaucrats
suppressed the earlier decision of the earstwhlle Lieutenant Governor.
As a matter of fact in every note, as we have seen, attention to the
earlier decision of the earstwhlle Lieutenant Governor dated 12.3.96
was drawn.

9. The file then went to the Chief Secretary. The Chief Secretary in his
hand-written note expressly referred to the earlier notes. He recorded
that D.C.(AJ had recommended cancellation of the license of G.
Mohandas for the year 1995-96 forthwith and for black-listing him and
on the same ground (D.C. and others) had proposed cancellation of
auction for 1996-97 in which G. Mohandas had emerged as the highest
bidder. The Chief Secretary then recorded that the 'Secretary (Excise) in
his note in paras 63 and 64 for the reasons stated therein' had also
supported the proposal and recommended revocation of the license of G.
Mohandas for 1995-96 and cancellation of the result of auction held on
22.2.96 and also for black-listing him from further dealing with the
administration. The Chief Secretary also referred to the opinion
expressed by the Secretary (Judicial). Then the Chief Secretary recorded
that if the above proposal met the approval of Lieutenant Governor
(L.G.) then she might approve cancellation of G. Mohandas license for
the current year forthwith, blacklist him for further dealings with the
administration, cancel the result of auction hold on 22.2.96 and inform
the court accordingly and await further order of the court. He also
placed for consideration whether the matter might be referred to the CBI
as recommended by the Excise Secretary. This note was made by the
Chief Secretary on 22.3.96. The Lieutenant Governor R. Bajpayee then
on 25.3.96 endorsed her approval thereto. It has been submitted by the
learned Advocate for the appellants that the new Lieutenant Governor
who was the Lieutenant Governor of Pondicherry and was holding
additional charge of the Lieutenant Governor of Andaman and Nicobar
Islands was functioning from Pondicherry and the relevant file and all
connected flies and papers with notes of the officers including the Chief
Secretary dated 22.3.96 were sent from Port Blair to the new Lieutenant
at Pondicherry and the new Lieutenant Governor approved the proposal
of the Chief Secretary in the file at Pondicherry and thereafter the file
came back to Andaman and the file was dealt with at Andaman on
29.3.96 as would appear from the note of that date which is at page 532
of the paper book. In that note it was recorded that the file might be
returned to D. C. (Andaman) for further necessary action. The learned
trial Judge found fault with the notes dated 22.3.96 on the assumption
that the Chief Secretary and other officers deliberately suppressed and
concealed that the earlier Lieutenant Governor had already taken
decision to accept the bid of G. Mohandas for the year 1996-97. In our
opinion the view taken by the learned trial Judge is not only
uncharitable to the Chief Secretary and other officers but is also not
sustained by the facts. The note of the Chief Secretary cannot also be
stated to be misleading by any means. The Chief Secretary in this case,
recommended certain steps for the approval of the Lieutenant Governor
on the basis of recommendations made by certain other officers in the
continuing note. It cannot escape notice that in making these
recommendations the Chief Secretary approved the recommendations
which were made by the other officers in their notes in the file. It is also
a glaring fact that in his note the Chief Secretary while placing his
proposals, did not independently record any reason in support of the
proposed steps. There is no doubt that for the suggested steps there must
be reason. It is not a case that in suggesting or proposing the steps noted
by him for the approval of the Lieutenant Governor, the Chief Secretary
independently or expressly recorded some reason of his own while
suppressing some facts. In support of the proposed steps the Chief
Secretary did not give a single reason of his own. All that he did was
that he first referred to the note of the Deputy Commissioner wherein
the Deputy Commissioner, by endorsing the note of Assistant
Commissioner (H.Q) recommended certain steps in respect of G.
Mohandas. The Chief Secretary referred to the note of the D. C. (A)
wherein the D.C., by endorsement, recommended cancellation of the
license of G. Mohandas for 1995-96 forthwith. The said note endorsed
by the D.C. contained the reasons in support of the recommendation for
cancellation of the license for 1995-96. The Chief Secretary did not give
any independent reason of his own. He only referred to the
recommendation of the D. C. containing reasons for such
recommendation about the cancellation of the license for the year 1995-
96. The Chief Secretary thereafter expressly noted that 'on the same
ground they have proposed cancellation of auction for 1996-97.....' Here
also, regarding the proposal for cancellation of the auction for 1996-97
the Chief Secretary did not record any independent reason of his own
and he rather referred to the ground assigned in the note endorsed by the
Deputy Commissioner. In that note, we have seen, the note of the earlier
Lieutenant Governor was specifically referred to. Then again the Chief
Secretary in his note dated 22.3.96 expressly referred to the fact that the
Excise Secretary in his note in paras 63 and 64' for the reasons therein'
had also supported the proposal and recommended revocation of the
license of G. Mohandas for 1995-96 and cancellation of the result of
auction held on 22.2.96. Therefore here also the Chief Secretary while
referring to the proposal for cancellation of the result of the auction held
on 22.2.96 did not give any reason whatsoever of his own in support of
such proposal but expressly referred to the reasons recorded by the
Excise Secretary in paragraphs 63 and 64 of his note. As we have also
seen, the Excise Secretary tn paragraphs 63 and 64 elaborately recorded
the reasons in support of his proposals. In paragraph 64 the Excise
Secretary expressly recorded, as we have seen, that the bid of G.
Mohandas had been accepted by the then Lieutenant Governor vide
minutes at 53/n, but however in view of the fact that G. Mohandas had
been involved in the criminal case the said decision might be reviewed
and accordingly he proposed cancellation of the result of the auction
held on 22.2.96. Where then is the question of suppression of fact by the
Chief Secretary while proposing cancellation of the result of the auction
held on 22.3.96 ? The Chief Secretary in his note dated 22.2.96
expressly referred to the reasons assigned by the Excise Secretary in his
note of the same date for cancellation of the auction for 1996-97. In that
note the Excise Secretary expressly recorded the necessity of reviewing
the decision of the earlier Lieutenant Governor on the grounds stated in
the note and the Chief Secretary in his note also, instead of giving any
reason of his own, expressly referred to that portion of the note of the
Excise Secretary and the grounds stated therein regarding the proposed
cancellation of the result of the auction for 1996-97 after reviewing the
decision of the earlier Lieutenant Governor. The new Lieutenant
Governor while reading the note of the Chief Secretary or for that matter
any one reading the said of the Chief Secretary will find that the Chief
Secretary on the basis of the notes of the other officers are
recommending certain things including cancellation of the result of the
auction for 1996-97. The new Lieutenant Governor or for that matter
any one reading that note of the Chief Secretary will also find on a
simple perusal of the note of the Chief Secretary that the Chief Secretary
himself is not expressly recording any reason for the proposed steps. It
is only natural that the Lieutenant Governor reading the note of the
Chief Secretary proposing certain steps including cancellation of the
result of the auction will naturally pose a question to himself or herself
as to why the cancellation of the result of the auction is being proposed.
The Lieutenant Governor or for that matter any one going through the
note of the Chief Secretary is expected to search for the reasons in
support of the proposed steps. The Chief Secretary does not record any
independent reason of his own in his note. For reasons in support of the
proposed steps the Chief Secretary in his note expressly refers to the
note endorsed by the Deputy Commissioner and also expressly refers to
certain specified paragraphs in the note of the Excise Secretary where
the Excise Secretary for reasons stated therein supported the proposals
including the proposal to cancel the result of auction after reviewing the
decision of the earlier Lieutenant Governor. The Chief Secretary
therefore, instead of assigning any independent reason whatsoever by
expressly spelling out such reason, only adopts the reasons assigned by
the other officers in their concerned notes including the reasons assigned
by the Excise Secretary for cancellation of the result of the auction after
reviewing the decision of the earlier Lt. Governor. The Lieutenant
Governor therefore in order to know the reasons which prompted the
Chief Secretary to recommend the proposed steps must refer to the
relevant paragraphs of the note of the Excise Secretary to which her
attention has been drawn by the Chief Secretary by express reference to
those paragraphs for finding out the reasons in support of the proposal.
And once the new Lieutenant Governor peruses those paragraphs in the
note of the Excise Secretary to which the Chief Secretary his
specifically referred for appreciating the reasons in support of the
proposed steps including the cancellation of result of auction, the new
Lieutenant Governor will at once come to know that earlier the out-
going Lieutenant Governor had taken a decision for accepting the bid of
G. Mohandas but for reasons stated in the note of the Excise Secretary a
review of that decision of the earlier Governor was proposed and the
cancellation of the result of the auction for 1996-97 was proposed as a
direct sequel to such review of the decision of the earlier Lieutenant
Governor in the matter. The new Lieutenant Governor is presumed to
have made the exercise before approving the proposals of the Chief
Secretary because the Chief Secretary in his note did not say that there
was no reason to make the proposals nor did he independently record
any reasons and he rather only attracted the attention of the Lieutenant
Governor by expressly referring to certain portions of the note of the
Excise Secretary for finding out the reasons in support of the suggested
steps. There is therefore absolutely no scope of holding that there was
any suppression, far less any deliberate or fraudulent suppression of
facts from the new Lieutenant Governor while inviting her to consider
the proposals including the proposal to cancel the result of the auction
for 1996-97. The observations of the learned trial Judge against the
Chief Secretary and other officers condemning them in the manner in
which it has been done for wrongly assumed suppression of facts from
the new Lieutenant Governor is patently ill-founded and is not borne out
by records. The records rather show that everything was placed before
the new Lieutenant Governor including the decision of the earlier
Lieutenant Governor and the reasons that necessitated a review of such
decision. The charge of suppression of facts by bureaucrats from the
new Lieutenant Governor is rather misconceived and unwarranted.

10. As we have already seen a warrant of arrest against G. Mohandas

was issued in connection with crime No. 53/96 by the Chief Judicial
Magistrate, Nagpur and in execution of the said warrant G. Mohandas
was arrested on 15.3.96 in the office of the Deputy Commissioner, Port
Blair when two officers of the State Excise Department, Nagpur were
present there. It is also to be noted here that on 15.3.96 in the forenoon
the Deputy Commissioner, Port Blair wrote a letter to G. Mohandas
stating that on perusal of office records it was found that he had not
submitted the monthly stock statement of liquor and the monthly
volume of sales since September, 1995; it was further stated in that
letter that such lapse on the part of G. Mohandas occurred despite
repeated reminders from the end of the Deputy Commissioner. It is also
mentioned therein that even the dealing assistant had been sent to him
several times for personally obtaining the returns but to no effect. It was
pointed out that lapse in the matter constituted clear breach of license
conditions. It may be mentioned here that the clause 6(1) of the terms
and conditions subject to which bids were invited and subject to which
the agreement was made with G. Mohandas for 1995-96 and the clause
2(g) of the license granted of him for the year 1995-96, in express terms,
required the auction purchaser licensee to furnish to the Deputy
Commissioner monthly statements of imports, sale and stock position by
the 5th of the succeeding calender month. Since G. Mohandas was the
licensee for the year 1995-96 it was therefore incumbent upon him in
view of the terms and conditions of the agreement and the license issued
for the said year to regularly submit monthly statements of imports, sale
and stock position to the office of the Deputy Commissioner by the 5th
of the succeeding month. in the letter dated the 15th March, 1996 issued
to G. Mohandas the Deputy Commissioner was pointing out that in
breach of such license conditions G. Mohandas did not submit the
monthly stock statement of liquor and the monthly volume of sales for
the past period mentioned therein inspite of repeated requests and
accordingly G. Mohandas was once again directed finally to submit the
pending monthly stock statements, monthly volume of sales and the
advice notes accompanying all consignments brought against Import
permits, by 5 p.m. 15.3.96. He was reminded that failure to do so would
entail stringent action as deemed appropriate. The said letter was served
at 11 a.m. on 15.3.96. it may be mentioned here that the condition 2(1)
of the license granted to the G. Mohandas for the year 1995-96
stipulated that the license would be liable to be revoked in case of
persistent or serious violation of the terms of the contract of sale or
violation of law. The statements required to be submitted in view of the
letter dated 15.3.96 were however not submitted within the stipulated
time and in view of the FIR lodged at Nagpur by the Slate Excise
Nagpur and on the request of the State Excise Authorities of Nagpur,
under the direction of the Deputy Commissioner, Port Blair, the officers
of Andaman administration inspected the places of business of G.
Mohandas in the night of 15th March, 1996 and made seizure of
documents and sealed his shops and godowns. On 16.3.96 the Deputy
Commissioner, Andaman again issued a notice requiring G. Mohandas
to produce the monthly stock statements, the monthly sales position and
the advice notes on or before 5 p.m. on 20.3.96 and it was also
mentioned that till then the shops and godowns would remain sealed. To
the said letter of the Deputy Commissioner dated 16.3,96 a reply was
sent on behalf of G. Mohandas on 18.3.96 requesting the Deputy
Commissioner that the office copies of the monthly sales and stock
statements and permit register which were at that time in the office of
the Deputy Commissioner might be returned so as to enable preparation
and submission of the required statements. In that letter dated 18.3.96
request was also made for physical verification of the stocks in the
shops and godown without delay and allow opening of the shops and
godown immediately. In reply to the said letter dated 18.3.96 issued on
behalf of G. Mohandas the Deputy Commissioner with his letter dated
19.3.96 furnished xerox copies of monthly sales register, stock register
and permits register in 13 items as mentioned in the said letter and G.
Mohandas was directed also to submit (further) certain additional
documents and records mentioned therein so as to facilitate expeditions
physical verification of shops and godowns. Although the said letter was
issued by the office of the Deputy Commissioner on 19.3.96 along with
xerox copies of 13 items of documents, yet the same was received in the
office of G. Mohandas not earlier to 11 a.m. on 21.3.96. The Deputy
Commissioner's subsequent letter dated the 21st March, 1996 addressed
to G. Mohandas shows that the said letter dated 19.3.96 issued by the
Deputy Commissioner's officer was not accepted by Yusuf (who wrote
the earlier letter on behalf of G. Mohandas) or any one else in the office
of C. Mohandas on the ground that they were not authorised to accept
the communication on behalf of the license, and the reply was ultimately
accepted at 11 a.m. on 21.3.96 after inordinate delay. It thus prima facie
appears that although the administration in reply to the letters issued on
behalf of the licencee dated 18.3.96 promptly supplied copies of
documents numbering 13 items along with their letter dated 19.3.96 yet
the same were not accepted in the office of the llcencee till 21.3.96
whereas the dead-line fixed by the letter dated 16.3.96 issued by the
administration for receiving reply from the licensee expired at 5 p.m. on
20.3.96. if anybody has to be blamed for not receiving the documents
sent by the administration on 19.3.96 it is licensee or his agents and
employees who refused to accept the same even on tender till 21.3.96
and the administration cannot be blamed for this. However on 21.3.96 a
letter was written on behalf of the liceiicee asking for certain documents
from the Deputy Commissioner with reference to the letter dated
19.3.96 issued by the Deputy Commissioner. A letter was also written
on 21.3.96 from the Deputy Commissioner's Office to G. Mohandas that
since the required records and documents were not submitted by the
llcencee insplte of the expiry of the deadline, the administration was
constrained to keep his shops and godowns sealed. By that letter the
licencee was further directed to explain as to why his license for the
year 1995-96 should not be cancelled in view of his persistent default
and intentional avoidance which constituted a clear and comprehensive
breath of license conditions and why the auction for 1996-97 also
should not be cancelled. The reply was wanted by 5 p.m. on 22.3.96.
That letter of the administration dated 21.3.96 was also not complied
with.

11. As we have already seen, a note was then initiated on 22.3.96 by the
administration recording therein the Nagpur incident, the detection of
fake and forged IMFL permits.in the name of G. Mohandas, the lodging
of FIR and starling of crime No. 53/96 against him and others at Nagpur
and also about his failure to submit the required statements thereby
exposing him to action for violation of the license conditions and also
for violation of law. Accordingly it was proposed that his license for
1995-96 might be cancelled, he might be black-listed, the result of the
auction for 1996-97 might also be cancelled and the matter might be
referred to CBI for investigation. The note of the Excise Secretary not
only referred to the earlier decision of the outgoing Lieutenant Governor
to accept the bid of G. Mohandas, but also specifically recommended
for review of that decision and taking of the proposed actions. That was
also endorsed by the Chief Secretary on 22.3.96. The file then went to
Pondlcherry and there the new Lieutenant Governer approved the
proposals in the flle on 25.3.96. Then file came back from Pondicherry
to Port Blair and after such return of the file it was dealt with first on
29.3.96 by a note in which the file was directed to returned to the D.C.
(A) for further ncecessry action.

12. However in the meantime G. Mohandas filed two writ petitions one
being C.O. No. 26(W) of 1996 and the other being C.O. No. 27(W) of
1996. Both these writ petitions, it appears, were moved on behalf of G.
Mohandas on 26.3.96 before U.C. Banerjee, J. The writ petition 26(W)
of 1996 was mainly against the sealing of shops and godowns of the
licencee G. Mohandas by the Andaman Administration in the night of
15.3.96. We have already seen that the Andaman Administration in that
night inspected the shops and godowns of the licencee G. Mohandas.
sealed the same and also seized documents. That was done in the
background of the Nagpur incidents and on the request of the State
Excise authorities, Nagpur. The learned Judge was of the opinion that
even assuming that the proceeding had been initiated against the
petitioner at Nagpur by reason of user of forged permits, yet the matter
was still at the stage of investigation and it could not be said to be in
consonance with the concept of Justice that only by reason of a pending
investigation and without any further materials on record, the petitioner
should be deprived of his right to carry on his trade or business. The
learned Advocate for the writ petitioner. G. Mohandas who is the
respondent herein wanted to argue that in view of such observation of
the learned Judge it was not open any more to the administration to take
any further steps even regarding the cancellation of the auction for
1996-97 on the ground which was not found sufficient by the learned
Judge to deprive the licencee of his right to carry on his trade or
business. The learned Advocate for the respondent herein in this
connection also tried to import the principle of res-Judicate on the basis
of the above observation. In our considered view there cannot be any
question of res judicata by reason of anything stated by the learned
Judge in the order dated 26.3.96 which was concerned with the question
of depriving the licencee of his right to carry on his trade or business in
respect of which he was already holding a license for a specified period.
In the said writ petition C.O. 26(W)/96 no question of cancellation of
the auction for 1996-97 was at all involved nor did the orders passed in
that case say anything about the legality or propriety of any possible or
anticipated action for cancellation of the auction for 1996-97. However
it must not be missed that even whatever observation was made by the
learned Judge in that connection in C.O. 26(W)/96, It was made in the
perspective that 'by reason of a pending investigation and without any
further materials on record', the licensee should not be deprived of his
right to cany on his trade or business '. Now as we will see from a
perusal of the impugned order dt. 15.4.96 by which the auction
proceeding for the year 1996-97 was cancelled, such cancellation of the
auction was based not only on the ground of pending criminal
investigation against G. Mohandas but also on the further ground of
detected discrepancies as mentioned in the annexures-A and C, to the
administration's letter dated 29.3.96 and which discrepancies could not,
in the opinion of the administration, be satisfactorily explained by G.
Mohandas. Therefore the factual matrix was also not the same when the
impugned order dated 15.4.96 passed as it was when the learned Judge
considered the matter involved in C.O.26(W) of 1996. Consequently
when the matters for consideration were altogether different--one being
against deprivation of existing right under a continuing license and the
other being cancellation of auction for the succeeding year when no
right under any license for that year had yet accused in favour of any
one--and the factual matrix was also not the same in the two situations
by reason of the discrepancies subsequently detected, there cannot be
any question of res judlcata. it has also to be noted here that by order dt.
26.3.96 the learned Judge permitted the administration to make an
inventory of the goods lying in the shops and godowns of C. Mohandas,
Then after the inventory was made, the learned Judge in the order dated
27.3.96 expressly granted liberty to the Dy. Commissioner to take steps
in accordance with law if there had been any infringement of the terms
of license. The administration was therefore within its right and liberty
to lake action in accordance with law for the discrepancies detected on
the basis of inventory where such discrepancies indicated violation of
the terms and conditions of the license. Such detected and unexplained
discrepancies thus furnished an additional ground for the administration
to cancel the auction for 1996-97 as recorded in the impugned order
No.336 dated. 15.4.96. There is nothing out of track in it.

13. it has been argued before us on behalf of G. Mohandas that on

27.3.96 when his learned Advocate submitted before U.C. Banerjee, J.
in C.O.26(W) of 1996 that inventory had been made but nothing
objectionable was found, the same was not controverted at that time by
the learned Advocate appearing for the administration. In our opinion
there is nothing unusual or wrong in it as the stage for controverting the
same was not yet ripe. Whether the stocks found on inventory contain
anything contrary to the terms of the license obviously cannot be
detected on the spot and this can be detected only after verification of
the inventory items with reference to the office records and other
relevant documents which obviously has to be done not at the time of
making the inventory but subsequently. On the basis of such inventory
the administration made verification of the stocks found on inventory
with reference to the relevant records and documents is the office of the
Dy. Commissioner and on 29.3.96 informed licencee about the
discrepancies detected by such verification and awaited explanation.

14. The other writ petition, namely, C.O. No. 27(W) of 1996 which was
also moved on 26.3.96 was disposed of by the same learned Judge,
namely, U.C. Banerjee, J. by order dated 28.3.96. The same and the
resultant developments and correspondence between the parties
however need not detain us because the impugned order No.336 dated
15.4.96 is not based on factor involved in that writ petition, namely non-
compliance of administration's letter dt. 16.3.96

15. Now going back to the administration's letter dt.29.3.96, it is to be

noted that the stocks found on inventory were verified with reference to
the records maintained by the administration and several discrepancies
were detected by such verification. The nature of the detected
discrepancies was that stocks were found in shops and godowns bearing
manufacturing dates which were subsequent to the date of arrival of
consignment as per records. This prima facie indicated import of stock
on fake permits. As many as 36 instances of this nature were catalogued
in annexure-A to the administration's letter dated 29.3.96. Then again,
stocks were found in different shops although no permits for such stocks
were issued in respect of these shops. As many as 54 instances of this
nature were catalogued in annexure-C to the said letter. The licencee G.
Mohandas was asked to produce on 1.4.96 all documents relating to the
import of the listed items. The discrepancies noted in annexure-B to the
said letter are however not mentioned here because the explanation
subsequently offered by the licensee G. Mohandas in respect of the
same was found satisfactory by the administration as communication by
their letter dated 1.4.96. In reply to the administration's letter dated
29.3.96, the licensee's office wrote a letter dt. 31.3.96 in which it was
stated inter alia that the books of accounts were lying with their auditors
in mainland and it would take time to give the particulars of the
previous year. It was also stated in that letter of the licencee that the
administration was asking for same documents which (In the opinion of
the licensee) were neither relevant nor required to be filed by the
licensee. He even threatened to open his shop from 1st April pending
execution of agreement and issuance of license. He however also tried
to explain in his own way. as far as he could, the discrepancies pointed
out to him and also stated that further details would be submitted within
15 days. No such further details were however submitted. It appears that
as regards the discrepancies mentioned in annexure-A to the
administration's letter dt. 29.3.96, the licensee could not virtually offers
any explanation in his reply dated 31.3.96. However what in substance
is stated by the licensee in his said reply in respect of discrepancies
pointed out in annexures-A & C to the administration's letter dated
29.3.96 is that the licensee imports consignments from mainland
through Madras Port and it docs not became possible to segregate the
goods brought against different permits in respect of different shops and
they are stored in the Central godown at Andaman from which they are
supplied to the different shops according to requirement of the
respective shops irrespective of whether such supply conforms to the
permits issued for the respective shops. This reply of the licensee dated
the 31st March, 1996 prfma/acte shows two things. One is that the
consignments of liquor for the licensee were being transported through
Madras Port. The other is that there were goods in different shops which
were not meant for such shops as per the permits issued for the
particular shops. The discrepancies pointed out in the Administration's
letter dated 29.3.96 that the manufacturing dates of a number of items of
goods were found to be later in point of time than the date of arrival of
the consignments under permits issued by the administration has not
been practically sought to be explained by the licensee in his reply dated
31.3.96. The question whether the explanation offered by the licensee in
respect of the detected discrepancies are acceptable or not is a matter
primarily for the administrative authorities to consider and decide. On
consideration of the said reply of licensee dated the 31st March, 1996
the administration wrote a letter to the G. Mohandas on 1st April, 1996
wherein they clearly stated that the reply to annexure-B to the
administration's notice dated 29.3.96 was found satisfactory and the
same was accepted, but the reply to annexure-A and C was however
found not satisfactory and specific instances were again mentioned
where the manufacturing date was found to be latter in point of time
with reference to date of arrival of consignment as per records. in this
background it was staled in the said letter of the administration dated
1.4.96 that there was no plausible reason as to how a consignment with
manufacturing date later than the date of last arrival could reach Port
Blair except with the help of fake/forged permit. The inference drawn
by the administration from the facts and circumstances cannot be said to
be arbitrary or unreasonable, at least prima facie. Ultimately by the
impugned order No.336 dated the 15th April, 1996 the entire auction
proceeding held on 22nd February. 1996 was cancelled and a public
notice to that effect was also issued by the impugned public notice dated
15th April, 1996.

16. Now let us examine whether any interference by the writ court with
the impugned order of cancellation of the auction is warranted. We have
seen that the steps taken by the administration in this regard are mainly
based on two factors. One is the existence and use of fake and forged
permits in the name of G. Mohandas for transporting huge quantity of
IMFL and starting of criminal case No. 53/96 in that connection at
Nagpur against G. Mohandas and others leading to his arrest. The other
is the detected discrepancies in the stocks of IMFL found in the shops
and godowns of G. Mohandas at Andamans which could not be
explained by him inspite of opportunity given for the purpose and the
inference drawn by the Andaman administration from such unexplained
discrepancies that stocks were brought with the help of fake permits or
by other illegal means, which in ference has been recorded in the
impugned order No.336 dated 15.4.96. The fact what G. Mohandas was
the highest bidder for 1996-97 and had deposited 50% of the bid money
did not by itself give any contractual right to him to ask for a license
from the Administration. Clause 6(11) of the terms and conditions of the
auction clearly stipulates that acceptance of 50% of bid money on the
date of bidding will not be construed as acceptance of the bid. The bid
was an offer under the Indian Contract Act, 1872. Such offer does not
give any contractual right. in order to give any contractual right the offer
has to be accepted by the other side and such acceptance has to be
communicated to the person making the offer. Under section 4 of the
Indian Contract Act the communication of acceptance is complete, as
against the proposer, when it is put in a course of transmission to him,
so as to be out of the power of the acceptor, and as against the acceptor,
when such communication comes to the knowledge of the proposer. We
have seen, in the present case, by reason of the order of the earlier
Lieutenant Governor in file on 12.3.96, there was only a decision--
obviously an administrative decision--to accept the offer of G.
Mohandas. That decision to accept the offer was however not
communicated to G. Mohandas and was virtually revoked by the
subsequent order of the learned Governor dated 25.3.96 and the
impugned order dated 15.4.96. Therefore there was no enforceable
agreement or contract between the parties in the matter. It may be noted
here that section 5 of the Contract Act inter alia provides that an
acceptance may be revoked at any time before communication of the
acceptance is complete as against the acceptor. Therefore G. Mohandas
has no contractual right in the matter.

17. It has been argued on behalf of G. Mohandas that even in matters

pertaining to auction the State authorities cannot act arbitrarily in
violation of Article 14. A number of decisions also have been cited on
behalf of G. Mohandas in support of the argument that State action
should not be arbitrary or unfair (viz. S.L. Kapoor v. Jagmohan, , Olga
Tellis v. Bombay Municipal Corpn., , Erusian Equipment v. State of
West Bengal, , Ramana v. I.A. Authority of India, , Jonaky Ganguly v.
Union of India, 1994(2) CLJ 320. etc.). It is however not necessary here
to discuss all these decisions because the law is now well settled that
state action even in respect of matters relating to auction must not be
arbitrary or offensively discriminatory,--in other words, must not be
violatlve of Article 14. The decision to accept the bid of G. Mohandas
as taken by the then Lieutenant Governor as recorded by him In file on
12.3.96 is indeed an administrative decision. As we have seen, this
decision was subsequently reviewed by the administration upto the level
of the new Lt. Governor for recorded reasons. There is no denying of
the fact that an administrative decision can be reviewed by the
administrative authority if the situation so demands. Of course, such
review must not be for whimsical or arbitrary reasons. In the present
case can it be said that the review of the earlier decision was made on
whimsical or arbitrary reasons? In our considered view, definitely it
cannot be said so. Not only that a criminal case was started at Nagpur
against some persons including G. Mohandas for transportation of IMFL
by using fake and forged permits standing in the name of G. Mohandas,
but even on subsequent inventory of stocks found in the shops and
godowns of G. Mohandas at Andamans it was prima facie detected on
verification of the records maintained by the administration that there
were discrepancies--unexplained discrepancies at that--suggesting that
stocks had been brought to Andamans in the shops and godowns of G.
Mohandas by using fake permits or by other illegal means. The entire
panorama of all these facts were evidently not there before the
administration on 12.3.96 when the earlier Lieutenant Governor directed
for accepting the bid of G. Mohandas. It was only on 15.3.96 that G.
Mohandas was arrested at Port Blair in execution of a warrant of arrest
issued by CJM Nagpur in connection with a case for illegal importation
of IMFL. Although earlier the Andman administration was replying to
the quarfes coming from the State Excise, Nagpur relating to G.
Mohandas, yet understandably the matter precipitated for the Andaman
administration when an Excise team from Nagpur arrived at Port Blalr
with a warrant for arrest of G. Mohandas and he was arrested at Port
Blalr in execution of that warrant in connection with the Nagpur case
regarding illegal transportation of IMFL. In view of such subsequently
developed situation of a precipitative nature, the Andaman
administration had to be circumspect at that stage and had to think of
taking a second look before finalising the IMFL trade matter with G.
Mohandas for the succeeding year. Such circumspection, in view of the
developing situation, was rather only a natural and prudent reaction for
any responsible state authority amenable to administrative
accountability. The subsequent developments leading to detection of
discrepancies by inventory, suggesting importation of IMFL by G.
Mohandas by using fake permits or by illegal means rather prime facie
added a corroborative dimension to the culpable situation that involved
him in the Nagpur crime case. In our considered view, in view of the
back-grounds and the developments mentioned in the impugned order
No.336 dated 15.4.96 it would have been an irresponsible act on the part
of any administration worth the name to enter into an agreement with
the same person for 1996-97 and issue license to him when tangible
facts were thrown up prima facie showing culpable violation of the
terms and conditions of the license for the current year, namely, 1995-
96 in respect of the same subject-matter, namely, trading in IMFL.

18. The question is not whether the guilt of the licensee or his culpable
involvement in IMFL-related crime has been proved beyond doubt.
Rather the question is whether in view of the facts and circumstances
appearing in the scene it can be said that the subsequent decision of the
administration to review its earlier decision regarding the auction can be
said to be arbitrary or discriminatory. We have seen how the subsequent
inventory when compared with the records of the administration rather
prima facie indicated the involvement of the licensee in illegal
importation of stocks at Andaman, and the same also has been projected
in the impugned order No.336 dated 15.4.96. The ultimate decision
taken by the administration to cancel the auction proceeding itself in the
background of the facts and circumstances obtaining in the matter, far
from being arbitrary or discriminatory, is rather a very reasonable
course adopted by the administration by way of reviewing its earlier
decision to accept the bid before the said decision was communicated to
G. Mohandas or was put to effect in any way. No question of
discrimination in the matter arises because it is not that the
administration has chosen to given the license to another bidder of a
lower bid in preference to G. Mohandas. Such decision also cannot be
termed as arbitrary, because the decision, as we have seen, has been
taken by circumspection based on facts and factors which cannot be said
to be irrelevant. In this case, as we have noticed, G. Mohandas was also
given opportunity to explain the discrepancies detected by the
administration but the explanation furnished by him was found to be
unsatisfactory by the administration for reasons stated in their letter
dated 1.4.96, so far as the discrepancies mentioned in annexures-A and
C of the administration's letter dated 29.3.96 were concerned while the
explanation relating to annexure-B was found satisfactory. That being so
there is no scope of arguing that the G. Mohandas was not given any
opportunity to explain the discrepancies which were indicative of illegal
importation of IMFL to Andamans beyond permits actually issued by
the administration for the year 1995-96. The decisions of the Supreme
Court in S.L. Kapoor v. Jagmohan, AIR 1981 SC 134 and Olga Tellis v.
Bombay Municipal Corpn., as cited by the learned Advocated for G.
Mohandas are not applicable to the facts of our present case. In the case
of S.L. Kapoor (supra) the Municipal Committee was superseded during
its tenure without giving any opportunity to offer explanation. In our
present case, as we have seen, G. Mohandas had no accured right yet in
his favour to have the license for 1996-97. His only right with regard to
auction was that the administration in dealing with the same must not
act discriminatorily or arbitrarily in Violation of Article 14 and we have
seen that the steps taken by the administration in the matter can not be
said to be vlolative of article 14 by any means. In the case of Olga Tellis
(supra), the matter involved was eviction of payment dwellers. The
Supreme Court in that case, it seems, (vide paragraph 49 of the decision)
was of the view that the payment dwellers, even if they were trespassers,
were not criminal trespassers but were trespassers in tort and such
trespassers should be given a reasonable opportunity to depart before
force is used to expel them. it need not be said that the facts of our
present case are totally different. In this connection we would also like
to refer to paragraph 51 of the decision in Olga Tellis (supra) wherein
the Supreme Court observed that normally their Lordships would have
directed the Municipal Commissioner to afford an opportunity to the
peiltioners to show why the encroachments committed by them on the
pavements or footpaths should not be removed, but that was not done in
view of fact that both sides made their contentions elaborately on facts
as well as on law before the Supreme Court and having considered the
same the Supreme Court was of the opinion that the Commissioner was
justified in directing the removal of the encroachments. As we have
seen, in our present case the Andaman administration gave opportunity
to G. Mohandas to explain the discrepancies mentioned in the annexures
to the administration's letter dated 29.3.96 and G. Mohandas also
submitted elaborate explanation in writing on a consideration of which
the administration accepted the explanation offered in respect of
annexure-B as satisfactory but found that no satisfactory explanation
was given in respect of discrepancies catalogued in annexure-A and C
and which discrepancies indicated importation of IMFL to Andamans
by illegal means or by fake permits. The fact that a portion of the
explanation was accepted as satisfactory rather clearly indicates an
unbiased and bona fide approach on the part of the administration.

19. The learned Advocate for G. Mohandas argued that the decision of
the Supreme Court in Tata Cellular v. Union of India would show that
even pendency of CBI investigation is no bar for granting license in
favour of the person against whom the investigation is pending. in our
opinion, on this score the decision in Tata Cellular has not been
correctly read on behalf of G. Mohandas. In that decision the selected
bidders were notified of their provisional selection. There Starling
Cellular which was a bidder was rejected at certain earlier stage on the
ground that some investigation was then pending before the CBI.
However the Minister reversed that decision as to the exclusion of
Starling Cellular and accordingly the Starling Cellular also found place
in the list of finally approved bidders. When the matter went to the High
Court in writ petition the High Court in upholding the selection noted
that there was nothing on record to suggest that any CBI enquiry was
pending against the company (when the decision for inclusion in the list
was taken). There was no FIR and no preliminary report adverse to the
company and it was felt by the High Court that the ghost of CBI had
been unnecessarily brought into play and the company appeared to have
been punished for no sin of Us. It was only thereafter an FIR was filed
by CBI. The pendency of such subsequent CBI enquiry, it seems, was
considered inconsequential in respect of the earlier decision. In our
present case the facts are different. The Nagpur crime case was there at
all material times and the police investigation was also very much there
which was however not taken into consideration at the earlier stage but
was subsequently considered leading to review of the earlier decision
when the earlier decision was not yet communicated or made known to
the person concerned. In our opinion, there is nothing in the case of Tafa
Cellular which warrant a conclusion that the pendency of a criminal
investigation is not matter for consideration in the decision-making
process relating to an administrative decision on a subject closely
associated with the subject involved in the criminal investigation. As we
have seen, Jn our present case, there was not only pendency of criminal
investigation but certain discrepancies were also detected suggesting
prima facie illegal activity in respect of IMFL trade at Andamans by G.
Mohandas and a cumulative consideration of those circumstances
prompted the administration to abandon the auction itself before any
right had accrued in favour of G. Mohandas except the right to have a
decision of the administration in the matter free from any arbitrariness
or discrimination. It has to be noted here that the decision of the
Supreme Court in Tata Cellular (supra) rather supports the proposition
that in respect of Government contracts and tenders while the decision
and action of the Stale must be in consonance with Article 14. It is only
the decision-making process and not the merits of the decision itself
which is amenable to Jud(cla) review and the court does not sit as
appellate court while exercising the power of judicial review.

20. The learned Advocate for G. Mohandas also cited certain decisions
relating to legitimate expectation. The principle enunciated in those
decisions are not in dispute. If G. Mohandas as the highest bidder had
any legitimate expectation that his case would be considered by the
administration with due regard to his legitimate expectation in the
matter, we cannot say that the same was ignored by the administration
in taking their impugned decision. That G. Mohandas was the highest
bidder and was entitled to contract in normal circumstances was all
through in the consideration of the administration as reflected in the
impugned order and also in the relevant notes but they thought it fit to
cancel the auction proceeding itself for overriding reasons recorded in
the impugned order itself. The contention of the learned Advocate of G.
Mohandas on the score of legitimate expectation is therefore of no avail
in this case. The learned Advocate for the appellants however relied on
the Supreme Court decision in Madras City Wine Merchants' Assn. v.
State of T.N., where it was held that the doctrine of legitimate
expectation was not tnvocable by the bar licensees as there was no
expectation, not any promise by Government.

21. The learned Advocate for the appellants also referred to the Supreme
Court decisions in Hari Sankar v. Dy E.&T. Commissioner, and Khoday
Distilleries Ltd. v. State of Karnataka, in support of his contention that a
citizen has no fundamental right to trade or business in liquor. The
learned Advocate for the appellants also relied on the decision of the
Supreme Court in State of U.P. v. Vijay Bahadur Singh, in support of
his contention that the administration had the right to revise its decision
to grant license to the highest bidder in auction and to cancel the entire
auction proceeding.

22. It has to be noted here that of the two grounds mentioned in the
impugned order No.336 dated 15.4.96, for one, namely the prima/ocle
involvement of G. Mohandas in the Nagpur case relating to user of fake
and forged permits for importing IMFL there was the approval of the
new Lieutenant Governor for cancellation of the result of the auction for
1996-97 tn the file recorded on 25.3.96 and as we have seen that was
done by way of a review of the earlier decision of the previous
Lieutenant Governor in the matter. That aspect of the order of the new
Lieutenant Governor has been reflected in the impugned order No.336
dated 15.4.96. The other aspect of the grounds mentioned in the
impugned order No.336, namely, the unexplained discrepancies
regarding the stocks found on inventory no specific order of the
Lieutenant Governor is, however forth coming, but the approval of the
Lieutenant Governor has been attributed to that ground also in the
impugned order No.336. This in our opinion is of no material
consequence or significance, firstly because the discrepancy-aspect only
prima facie lends support, as mentioned in the impugned order itself, to
the prima facie involvement of G. Mohandas in the importation of IMFL
by illegal means which is a prominent aspect of the criminal case started
at Nagpur and secondly because by the order of U.C. Banerjee, J. dated
27,3.96 the Deputy Commissioner was granted liberty by the learned
Judge to take action in accordance with law if any infringement of the
license conditions were detected. Therefore the Deputy Commissioner
himself was entitled to take action for the infringement of license
conditions which was projected by the discrepancies detected on
verification of the stocks found on inventory with reference to the office
records. Consequently, in our opinion even if there has been any
imperfection in the language used in the impugned order that by itself is
not a sufficient ground for the court to interfere with the said order
particularly in the back-ground of the facts and circumstances obtaining
in the case. It has also to be mentioned here that subsequently it was
also detected by the administration that fake permits standing in the
name of G. Mohandas were also used for importation of iMFL from two
other separate distilleries at different times. For that two other FIRs
were also lodged by the Andaman administration with the CB1. Having
regard to all the facts and circumstances we are of the opinion that this
was not at all a fit case for the interference of the writ court as the
impugned action of the administration cannot by any means be said to
be arbitrary, discriminatory, unfair, irrational or illegal so as to mark
such action as an infringement of Article 14 or otherwise bad in law.
The decision taken by the administration to cancel the auction
proceeding itself in the background of the projected facts and
circumstances is nothing but a decision taken for administrative reason
and therefore there is nothing wrong also in describing such action as an
action taken for administrative reasons. We are therefore of the opinion
that the learned trial Judge was not justified in allowing the writ petition
and in directing the administration to enter into an agreement with G.
Mohandas for the year 1996-97 and also to issue license to him for the
said year on the basis of the decision of the earlier Lieutenant Governor
recorded in the file on 12.3.96

23. In the impugned order the learned trial Judge has also imposed a
cost of Rs.7500 to be paid personally by Sri Vlkram Dev Dutt who is
the Assistant Commissioner (HQ) of Andaman District being
respondent No.8 tn the writ petition. The cost has been imposed
personally on the officer concerned by the learned trial Judge on the
ground that the affidavit affirmed by him in the writ petition was
misleading and false inasmuch as he did not disclose in his affidavit the
decision of the earlier Lieutenant Governor dated 12.3.96. In our
considered opinion the imposition of such cost is also not Justified. In
paragraph 45 of the said affldavit-in-opposltlon the deponent has stated
that the affidavit had to be prepared and settled within a period of four
days only and that too after the court was closed for summer holidays.
Even then in the said paragraph of the affidavit-in-opposition it was
expressly stated that in view of the shortness of the time liberty might be
given to the answering respondents to produce other or further materials
at the time of hearing. We have seen, records were produced at the time
of hearing. At any rate when we find that the decision of the previous
Lieutenant Governor dated 12.3.96 was reviewed and a fresh decision
was taken by the new Lieutenant Governor and when we find in that
back-ground that even if the earlier decision of the previous Lieutenant
Governor is brought into the picture, the same does not, in the factual
matrix of the case, help the writ petitioner G. Mohadas for reasons we
have elaborately discussed, the imposition of a fine of Rs. 7,500 upon
the officer concerned on that score is not Justified. In view of the
decision we have already taken it is not necessary for us to consider
further regarding change of policy decision and return of deposit money
and the impact of the same as argued at the bar.

24. It is true that in the impugned order No.336 the writ petitioner has
been stated to be an unfit person for liquor business under license and it
is argued on behalf of G. Mohandas that this amounts to blacklisting
him which cannot be done without giving him an opportunity to
represent his case before he is put on the black list. The learned
Advocate also refers to certain decisions of on this aspect, such as, E.E.
& c. Ltd. v. State of W.B.. , etc. The principle is however not in dispute.
But in our present case the impugned order really does not blacklist the
writ petitioner nor has it any such effect. The operative part of the
impugned order No. 336 only cancelled the entire auction proceeding
reserving at the same time the right to take necessary legal action
against G. Mohandas under law as may be required from time to time.
This is really not a blacklisting order. If in future the administration
again wants to take recourse to the process of auction regarding vending
of IMFL etc and they want to debar G. Mohandas from participating in
such auction, in that case they will have to take a prior formal decision
in accordance with law after giving him opportunity to represent his
case before he is put on the blacklist The impugned order of cancellation
of auction is however not a blacklisting order.

25. It has been contended on behalf of G. Mohandas that in the C.O. No.
26(W) of 1996 and C.O. No. 27(W) of 1996 it was not disclosed before
the court that the new Lieutenant Governor had already accepted on
25.3.96 the proposal of the Chief Secretary inter alia to cancel the
license for 1995-96 and also the result of the auction for 1996-97. As we
have seen, both the said C.O. No. 26(W) of 1996 and C.O. No. 27(W) of
1996 were dealt with and disposed of during the period from 26th to
28th March, 1996. The reason for not bringing the decision of the new
Lieutenant Governor to the notice of the court when the aforesaid two
writ petitions were dealt with and disposed of is quite understandable
inasmuch as the concerned file was dealt with by the new Lieutenant
Governor on 25.3.96 at Pondlcherry and not at Andaman and obviously
there must have been a time gap thereafter before the file came back to
Andaman from Pondlcherry. We have also seen that even on 29th
March, 1996 the file did not come back to the office of the Deputy
Commissioner. Evidently when the file came back to the office of the
Deputy Commissioner at Andaman and the decision of the new
Lieutenant Governor became known to the Deputy Commissioner the
aforesaid two writ petitions were no more alive or pending before the
court.

26. The argument advanced on behalf of G. Mohandas that the FIR in

Crime case No. 53/96 does not implicate G. Mohandas as an accused is
not correct. In paragraph 15 of that FIR he has been specifically named
as an accused. The learned Advocate also argued that in the said FIR it
was indicated that some one else was putting black money for
converting it into white money. Even then, that does not necessarily
exculpate G. Mohandas. The entire matter was under investigation and
Mohandas was also arrested in that connection. In this background the
administration did not do anything unreasonable or arbitrary by
cancelling the auction proceeding itself instead of issuing license in
favour of Mohandas or any other bidder of a lower bid. The learned
Advocate for G. Mohandas also attracted our attention to the
recommendations made by the Chief Secretary in his note dt. 22.3.96
including the recommendation to cancel the result of the auction and
inform the court accordingly and await further order of the court. It is
however to he noted in this connection that the court referred to therein
was the court dealing with C.O. 12fW) of 1996 and obviously it had no
reference to the subsequent writ petitions filed by G. Mohandas.
Moreover the Chief Secretary did not say that the cancellation of the
result of the auction required the rectification of the court. The import of
the Chief Secretary's note was that further order of the court was to be
awaited for action in the post-cancellation situation with which we are
not concerned in the present writ petition. Here the grievance of the writ
petitioner is against the cancellation of auction and once we find, as we
do. that there is no reason to interfere with the cancellation of auction,
the matter ends there and we are not required here to concern ourselves
with the post-cancellation situation or development.
27. During the hearing of this appeal the learned Advocate for G.
Mohandas produced before us a copy of an order of the Nagpur Bench
of the Bombay High Court in relation to certain other accused of the
crime case in which G. Mohandas has been involved. In our opinion in
the said proceeding (Cr. writ 85/96) the matter was considered from the
angle of view relating to the petitioner therein and this can not have any
bearing on this appeal, far less on the impugned order.

28. In the result this appeal is allowed and the impugned Judgment and
order of the learned trial court including the order imposing cost on
Vikram Dev Dutt is hereby set aside and the writ petition itself stands
dismissed. All adverse remarks in the Judgment of the learned trial
Judge against bureaucrats in general and against particular officers also
stand expunged. No cost is however ordered. In view of our above order
in FMAT 2119/96 the other appeal, namely. PMAT 2118/96 also stands
disposed of accordingly D.K. Jain, J.

I agree

29. Appeal allowed

Anil Kumar Srivastava vs State Of U.P. & Another on 20 August, 2004

Author: Kapadia
Bench: Ashok Bhan, S.H. Kapadia
CASE NO.:
Appeal (civil) 5402 of 2004

PETITIONER:
Anil Kumar Srivastava

RESPONDENT:
State of U.P. & Another

DATE OF JUDGMENT: 20/08/2004

BENCH:
ASHOK BHAN & S.H. KAPADIA

JUDGMENT:
J U D G M E N T [Arising out of SLP (C) No.7790 OF 2004] WITH TRANSFERRED
CASE No.54 OF 2004.

Anil Kumar Srivastava Petitioner

Versus

State of U.P. & Another Respondents

KAPADIA, J.

Leave granted in SLP.

Anil Kumar Srivastava claiming to be a public spirited citizen residing in Sector 14,
Noida, U.P. moved Allahabad High Court in Civil Misc. Writ Petition No.10137 of 2004
[Transferred Case No.54 of 2004 herein] challenging the Scheme bearing No.2003-2004
(Commercial Hub) Sector 18 floated by New Okhla Industrial Development Authority
(NOIDA) for construction of a commercial hub on a plot bearing no.M-3 in Sector 18,
Noida as arbitrary and violative of norms contained in the Board Resolution dated
10.7.2003 and the precedents with regard to size and reserve price, resulting in the loss to
the State exchequer of Rs.340 crores. In the writ petition, it is alleged that the impugned
Scheme awards 54,320.18 sq. mtrs. of prime commercial land, without precedent, at 1/4th
of the prevailing market price and by fixing the reserve price at abysmally low, throw
away, price; that the said Scheme is, therefore, arbitrary and violative of Article 14 of the
Constitution. In the writ petition, the petitioner prayed for setting aside the Scheme.
Pending hearing and final disposal, the petitioner sought interim reliefs restraining
NOIDA, respondent no.2 herein, from giving effect to the said Scheme. By impugned
order dated 12.3.2004, the High Court refused the interim relief as prayed for. Aggrieved,
the original petitioner came to this Court by special leave. Vide order dated 28.4.2004,
this Court stayed the operation of the impugned Scheme. By order dated 9.7.2004, the
Court presided by Hon'ble the Chief Justice, at the request of respondent nos.2 and 3
herein, directed Writ Petition no.10137 of 2004 pending in the Allahabad High Court to
be transferred to this Court under Article 139A of the Constitution..

By order dated 23.7.2004, the Court presided by Hon'ble the Chief Justice, on the joint
prayer made by all the counsel, directed the matter to be listed for final hearing and
accordingly this matter has come for hearing.

As stated, the impugned Scheme is for development of plot no.M-3 admeasuring

54,320.18 sq. mtrs. in sector 18 by constructing thereon a commercial hub consisting of a
shopping mall, multiplexes, showrooms, retail outlets, hotels, restaurants and offices with
matching parking facility in order to decongest the said sector which has now become a
centre for small enterprises. That shopping habits have changed resulting in a demand for
shopping malls and entertainment centres, which require bigger plots. That the object of
the said Scheme was integrated development of the sector. The salient features of the
Scheme were : 30% ground cover; 150 floor area ratio (FAR) and provision for 2800
estimated car spaces (ECS). The reserve price was fixed at Rs.27,500/- per sq. mtr. The
Scheme was kept open from 18.2.2004 up to 9.3.2004. It was widely advertised in Times
of India, Hindustan Times, Economic Times, Business Standard and Amar Ujala. That
nine reputed developers including MGF, Unitech, Sun City, Sahara India and Omex
purchased the brochures. However, on the closing date i.e. 9.3.2004, only one tender of
M/s DLF Universal Ltd., respondent no.3 herein, was received and evaluated by the
technical committee on whose recommendation the financial tender was opened on
12.3.2004. Respondent no.3 quoted Rs.31,850/- per sq. mtr. in their financial tender,
which was 15.81% higher than the reserve price of Rs.27,500/- per sq. mtr. Other
developers like Unitech, Sahara India, Omex, MGF, Sun City etc. also purchased the bid
documents but they abstained from bidding. Since respondent no.3 was the only bidder
and since it had quoted the price which was higher than the reserve price, its tender was
accepted vide letter dated 12.4.2004 (hereinafter referred to as "the allotment letter"). In
the meantime, on 10.3.2004, the petitioner herein moved the Allahabad High Court as
stated above.

By the allotment letter, respondent no.3 was informed that its bid stood accepted; that the
tender price was Rs.31,850.00 per square metre; that the total premium was
Rs.173,00,97,733.00; that earnest money to be deposited was Rs.3 crores; that the
allotment money to be deposited was Rs.43,25,24,433.25; that the balance allotment
money to be deposited by 26.4.2004 was Rs.40,25,24,433.25 whereas balance premium
amounting to Rs.129,75,73,299.75 had to be deposited by 10.7.2004. It may be clarified
that earnest money of Rs.3 crores was adjustible against allotment money of
Rs.43,25,24,433.25. Till date, respondent no.3 has deposited the earnest money of Rs.3
crores and Rs.40,25,24,433.25 on 23.4.2004. However, respondent no.3 has not deposited
the balance premium payable on 10.7.2004 as the Scheme was stayed by this Court vide
order dated 28.4.2004.

It is the case of the petitioner that respondent no.2 is the statutory authority under U.P.
Industrial Area Development Act, 1976; that it is responsible for the development of the
area in terms of the Master Plan for Noida; that it has framed Building Regulations w.e.f.
1.2.1986 containing guidelines of occupancy, building permits and floor area ratio.
According to the petitioner, the reserve price of Rs.27,500/- per sq. mtr. in the present
case for a plot admeasuring 54,320.18 sq. mtrs. was abysmally low, particularly in view
of the fact that under the Board Resolution dated 10.7.2003, the reserve price of plots
measuring 5001 or more square metres had to be fixed at 1= times the sector price which
according to the petitioner was Rs.90,000/- per sq. mtr. In this connection, the petitioner
has relied upon earlier Schemes of NOIDA for the year 2002 under which reserve price of
plots admeasuring 6000 to 7000 sq. mtrs. in sector 18 was fixed at Rs.40,000/- to
Rs.75,000/- [See: Annexure P1]. That for plots in same sector-18 admeasuring 60 sq.
mtrs. to 90 sq. mtrs., the reserve price was fixed at Rs.1,90,600/- (See: Annexure P2). It
has been further alleged that the tender price at the rate of Rs.31,850/- per sq. mtr. is also
undervalued. According to the petitioner, the said rate is 1/4th of the prevailing market
rate. That such low rates would result in unjust enrichment of the developer at the cost of
the exchequer and consequently, the Scheme needs to be set aside as arbitrary and
violative of Article 14 of the Constitution of India.

In reply, respondent no.2 has pointed out that the impugned Scheme was given wide
publicity; that the development of the plot admeasuring 54320.18 sq. mtrs. became
necessary to decongest sector-18 where car parking has become an acute problem; that
decongestion could be achieved by constructing shopping malls with matching parking
facility; that although the area of the plot in question is 54,320.18 sq. mtrs., the FAR is
restricted to 150 and ground cover is restricted to 30% unlike the instances of plots
submitted by the petitioner where for a smaller plots of 6000 to 7000 sq. mtrs., the FAR is
150 and for still smaller plots of 600 sq. mtrs, the FAR is 250 (See: Annexure P1). That
by offering the said plot admeasuring 54,320.18 sq. mtrs, the Authority is saving on
internal development for amenities, parking etc. That in the past, respondent no.2 invited
bids for plots admeasuring 7000 sq. mtrs. with 30% ground cover and FAR of 150 with
reserve price of Rs.40,000/- per sq. mtr., which failed. It is further pointed out, that, the
reserve price is not understated as alleged. In this connection, it is pointed out that the
developer has tendered the rate of Rs.31,850/- per sq. mtr. which is the rate higher than
the rate of Rs.27,500/- per sq. mtr. That in addition to the reserve price, the tenderer has
to provide for 2800 cars parking space (minimum) in the basement level. That if the cost
of 2800 cars parking space is taken into account, it cannot be said that reserve price is
understated. That in the past, higher reserve price(s) for comparatively smaller plots did
not attract the developers. That the petitioner has confused the sector rate with circle rate.
The circle rate is the notified rate. It is fixed by the Government for the guidance of the
Sub-Registrar. The circle rates are not fixed by respondent no.2. That under the Board
Resolution dated 10.7.2003, the reserve price of commercial plots measuring 5001 sq.
mtrs. and above is to be fixed at one and half times the sector rates. That under the
resolution, the reserve price for commercial plot measuring 5001 sq. mtrs. and above
should be fixed on the basis of average rate of adjoining sectors. In this connection, it is
pointed out that sector 18 abuts sectors 17 and 27 (residential) and sector 16A
(institutional); that average rate in these sectors is Rs.12000/- per sq. mtr. and on the basis
of 1= times the average rate of these sectors, the reserve price came to Rs.18000/-. That
even on the basis of the Highest Rate in sector-17, being Rs.15,700/- per sq. mtr., the
reserve price comes to Rs.23,050/- per sq. mtr. In the circumstances, respondent no.2 has
submitted that while fixing the reserve price in the present case at Rs.27,500/- per sq.
mtr., it has complied with the principles embodied in the Board Resolution dated
10.7.2003. It is further pointed out that relatively smaller commercial plots in sector-18
sold in last six years indicate the prevailing price of Rs.22,500/- per sq. mtr. (including
escalation of 15% per annum). Lastly, it has been pointed out that the impugned Scheme
was kept open from 18.2.2004 to 9.3.2004; that it was widely advertised; that on the
closing date, only one tender was received; that respondent no.3 quoted Rs.31,850/- per
sq. mtr. in its financial tender which was 15.81% higher than the reserve price of
Rs.27,500/- and in the circumstances, its tender was accepted. In the circumstances,
respondent no.2 submitted that the reserve price was not understated and that the rate
offered by the tenderer at Rs.31850/- per sq. mtr. cannot be said to be under valued as
alleged. According to the petitioner, the current notified rate in sector 18 was Rs.90,000/-
per sq. mtr. and consequently, the rate offered by the tenderer and accepted by respondent
no.2 at Rs.31,850/- per sq. mtr. was abysmally low. In the counter, respondent no.2 has
pointed out that there is no factual basis on which the petitioner has alleged that the
prevailing market rate is Rs.90,000/- per sq. mtr. It is submitted that the petitioner has
confused the sector rate with the circle rate. That in the absence of sale instances and
valuation report, it cannot be alleged that the rate offered by respondent no.3 is
understated/undervalued. In the circumstances, it is submitted that the petition has no
merit.

In its counter, respondent no.3 the developer has pointed out that urban population today
prefer shopping malls which are self contained in a closed building vis-`-vis traditional
markets; that the planning Authorities encourage the construction of these malls as the
administration is freed from maintaining and servicing traditional market places for which
it incurs huge expenditure. As far as the impugned Scheme is concerned, it has been
pointed that the developer is put under obligation to construct a shopping mall with
matching car parking facilities in the basement and around the mall; that the cost of
providing this facility has to be added to the reserve price; that under the impugned
Scheme, NOIDA gets Rs.174 crores (approx.) within 90 days; that the reserve price of
smaller plots with different FARs and ground cover cannot be relied upon for determining
the reserve price under the impugned Scheme, which applies to the plot measuring
54,320.18 sq. mtrs. with 30% ground cover and FAR of 150. That in the earlier instances
of sales of plots bearing nos.M-30, M-13, K-1A and K-1B, auctions had failed in the past.
That on the contrary, in case of auction of two plots, L1 and L2 in sector-18, the reserve
price was Rs.22,500/- per sq. mtr. based on actual sales of adjoining plots in last six
years. That such reserve price of Rs.22,500/- per sq. mtr. was lower than the impugned
reserve price of Rs.27,500/- per sq. mtr. in the present Scheme. In the circumstances, it
has been urged in the counter filed on behalf of respondent no.3 that the reserve price of
Rs.27,500/- per sq. mtr. has been fixed taking into account the previous experiences and
the prices prevailing in the adjoining sectors.

Mr. L. Nageshwar Rao, learned senior counsel appearing on behalf of the petitioner
submitted that the reserve price fixed by respondent no.2 at the rate of Rs.27,500/- per sq.
mtr. is contrary to clause 2 (e) of the Board Resolution dated 10.7.2003; that under the
said clause, the reserve rate of commercial plots admeasuring 5001 sq. mtrs. or more was
one and half times the sector rate; that the sector rate was Rs.90,000/- per sq. mtr.; that
the reserve price of Rs.27,500/- per sq. mtr. for the plot admeasuring 54,320.18 sq. mtrs.,
without sub- division, was abysmally low and understated. That in the past, respondent
no.2 had never invited tenders for such a large sized plot with such low reserve price. It
was further urged that the impugned reserve price was not only contrary to the Board
Resolution, it was also contrary to the past precedents, both in terms of area/size of the
plot and the reserve price. In this connection, reliance was placed on annexures 'P1' and
'P2' to show that for plots admeasuring 6000/7000 sq. mtrs., the reserve price fixed was in
the range of Rs.40,000/-/Rs.75,000/- per sq. mtr. It was submitted that transfer of the said
plot admeasuring 54,320.18 sq. mtrs. at such a low reserve price of Rs.27,500/- per sq.
mtr. would result in causing huge loss of Rs.340 crores to the State exchequer. It was next
contended that even the tender price of Rs.31,850/- per sq. mtr. at which the offer of
respondent no.3 has been accepted is ridiculously low particularly when the notified rate
prevailing in sector 18 is Rs.90,000/- pr sq. mtr. to Rs.1,00,000/- per sq. mtr. Hence, it
was submitted, that the reserve price has been fixed arbitrarily and in breach of clause
2(e) of the resolution dated 10.7.2003 as also in contravention of the precedents in
relation to the area of the plot and the reserve price. It was submitted that the fixation of
the impugned reserve price was arbitrary, unreasonable and violative of Article 14 of the
Constitution.

On the above submissions, the central point which arises for determination is : whether
the tender price of Rs.31,850/- per sq. mtr. is understated. In the present case, respondent
no.2 invited offers for the plot admeasuring 54,320.18 sq. mtrs. for the shopping mall
with 2800 ECS in order to decongest sector 18. Wide publicity was given. Several
reputed developers bought tender documents. However, at the end of the day, there was
only one bidder (respondent no.3) in the field. In the present case, malafides have been
alleged, but not pressed. Therefore, the question before us is : whether respondent no.2's
decision in accepting the bid of respondent no.3 was arbitrary, unreasonable and in
violation of the Board Resolution dated 10.7.2003.

Before coming to the above challenge, we would like to examine the concepts of
'valuation' and 'upset/reserve price'. In the case of McManus v. Fortescue & another
reported in [1907 Vol.II K.B. page 1] it has been held by Court of Appeal that in a sale by
auction, subject to reserve, every offer/bid and its acceptance is conditional. That the
public is informed by the fact, that the sale is subject to a reserve, that the auctioneer has
agreed to sell for the amount which the bidder is prepared to give only in case that
amount is equal to or higher than the reserve. That the reserve puts a limit on the
authority of the auctioneer. He cannot accept a price below the upset/reserve price. That
he could refuse the bid which is below the upset price.

The aforestated ruling explains the meaning of the term 'reserve price'. It indicates the
object behind fixing the reserve price viz. to limit the authority of the auctioneer. In the
present case, the board resolution is meant to guide the officers of the second respondent.
The resolution prescribes the guidelines for fixing the reserve price. The concept of
reserve price is not synonymous with 'valuation of the property'. These two terms operate
in different spheres. An invitation to tender is not an offer. It is an attempt to ascertain
whether an offer can be obtained with a margin. [See: Pollock & Mulla on Indian
Contract & Specific Relief Acts (2001) 12th Edition. Page 50].

Valuation is a question of fact. This Court is reluctant to interfere where valuation is

based on relevant material. [See: Duncans Industries Ltd. v. State of U.P. &
others reported in (2000) 1 SCC 633]. The difference between valuation and upset price
has been explained in the case of B. Susila & another v. Saraswathi Ammal &
others reported in [AIR 1970 Madras 357] in which it has been held that fixation of an
upset price may be an indication of the probable price which the land may fetch from the
point of view of intending bidders. However, notwithstanding the fixation of upset price
and notwithstanding the fact that a bidder has offered an amount higher than the
reserve/upset price, the sale is still open to challenge on the ground that the property has
not fetched the proper price and that the sale be set aside. That the fixation of the reserve
price does not affect the rights of the parties. Similarly, in the case Dr. A. U. Natarajan &
another v. Indian Bank, Madras reported in [AIR 1981 Madras 151] it has been held that
the expressions "value of a property" and "upset price" are not synonymous but have
different meanings. That the term "upset price" means lowest selling price or reserve
price. That unfortunately in many cases the word "value" has been used with reference to
upset price. That the sale has to commence at the higher price and in the absence of
bidders, the price will have to be progressively brought down till it reaches the upset
price. That the upset price is fixed to facilitate the conduct of the sale. That fixation of
upset price does not preclude the claimant from adducing proof that the land is sold for a
low price.

Applying the above tests to the facts of this case, we find that there is no material on
record to show that the tender price of Rs.31,850/- per sq. mtr. is a low price. The entire
edifice of the petition is based on the challenge to the reserve price of Rs.27,500/- per sq.
mtr. As stated above, fixation of the reserve price is to facilitate the conduct of the sale. It
was open to the petitioner to challenge the tender price of Rs.31,850/- per sq. mtr. as
understated, notwithstanding the fixation of the reserve price. No comparative sales
instances, with similar parameters of ground cover of 30% and 150 FAR, have been
placed before us. No figures of cost of 2800 ECS have been placed before us as such
costs would increase the reserve price. On the other hand, we find that the reserve price
has been fixed by taking into several factors. Firstly, in the past tenders invited for
relatively smaller plots with higher reserve price had failed. It is important to bear in
mind that tender process is an expensive exercise. To resort repeatedly to this exercise is
a costly affair. Secondly, in the present case, the reserve price is fixed by taking into
account the comparative offers/sales in the adjoining sectors. That the average of such
sales has been taken into account while fixing the reserve price in terms of clause 4(c) of
the Resolution dated 10.7.2003, which reads as under: "4(C) In developed sectors where
tenders have been received earlier, fixation of rates is proposed to be on the basis of
average price arrived at prior to the scheme of fixation of reserve price, on the basis of
rate arrived on the above principle, whichever is more. In such a situation average rate is
proposed to be fixed as per the category and user mentioned in the preceding paragraph."

Thirdly, the developer/tenderer is obliged to construct a matching car parking facility of

2800 ECS whose cost is required to be added to the reserve price of Rs.27,500/- per sq.
mtr. Lastly, in the present case it has been submitted that under clause 2(e), reserve price
had to be fixed at 1= times the sector rate which according to the petitioner was
Rs.90,000/- per sq. mtr. Clause 2(e) reads as under:"2(e) Commercial Plots measuring
One and a half times 5001 sq. metres or more of sector rates"

Reading of the said clause indicates that the figure of Rs.90,000/- is not mentioned. It is a
figure alleged by the petitioner. As stated above, there is a difference between the circle
rate and the sector rate. The petitioner has confused the two. The circle rate is notified by
the Government for the guidance of the sub-registrar. They are notified for revenue
purposes. There is nothing to show that Rs.90,000/- per sq. mtr. was the sector rate. In the
present case, we are concerned with a larger plot of 54,320.18 sq. mtrs. with different
variables of 30% ground cover and 150 FAR. Keeping in mind all these factors, the
Authority has fixed the reserve price. In the present case, undue importance has been
given to the fixation of the reserve price. As stated above, notwithstanding the reserve
price, the petitioner could have brought before the Court material, if any, to show
undervaluation. In the present case, the tender price is Rs.31,850/- per sq. mtr. It is higher
than the reserve price. There is no material to show whether the tender price is
understated. In the circumstances, there is no merit in the contention of the petitioner that
the land is sold at abysmally low price.
In the case of Tata Cellular v. Union of India reported in [(1994) 6 SCC 651], it has been
held, while discussing the scope of judicial review, that Courts do not sit in appeal; that
the Courts merely review the manner in which the administrative decision was made; that
the Court cannot substitute its own decision as it has no expertise to correct the decision.
Applying the above test to the facts of this case, we find that tender invitation was given
wide publicity; that although nine bidders bought the tender documents, only respondent
no.3 offered its bid; that the financial committee has recommended its acceptance keeping
in mind the prior experience and the terms and conditions of the Resolution dated
10.7.2003 in the matter of fixation of sector price and reserve price. Hence, there is no
merit in the above contentions.

Mr. L. Nageshwar Rao, learned senior counsel for the petitioner submitted that under the
impugned Scheme, two concessions have been given arbitrarily to benefit the developer
at the cost of the State exchequer. In this connection, reliance is placed on clause
10(A)&(B) and clause 15 of the terms and conditions of the Scheme. For the sake of
convenience, we quote herein below the aforestated clauses:"10. GROUND
RENT/LEASE RENT:

In addition to tendered amount, the allottee/lessee shall have to pay yearly ground
rent/lease rent in the manner indicated below: (A) The ground rent/lease rent shall be
charged @ 2.5% p.a. of the total premium of the plot for the first 10 years from the
stipulated date of execution of lease deed. However, the ground rent/lease rent shall be
charged @ Rs.1/- per sq. mtr. per year for the first three years from the stipulated date of
execution of lease deed.

(B) The ground rent/lease rent shall be enhanced after expiry of 10 years from the
stipulated date of execution of lease deed. The enhancement will be 50% of lease
rent/ground rent last thus fixed.

OR The allottee has the option to pay 11 years lease rent @ 2.5% p.a. of the total
premium as one time lease rent within first 10 years of allotment.

Thereafter, 11 times of the prevailing rate shall be payable as one time lease rent. In such
case, the allottee has to clear outstanding of lease rent and interest first

15. TRANSFER:

The lessee can transfer the built-up premises over the plot with prior permission of the
Authority subject to the rules and regulations for transfer and on payment of transfer
charges prevailing at the time of such transfer. No transfer charges shall be applicable in
case of transfer of built up commercial space during the first 2 years from the date of
completion. Thereafter, transfer charges shall be payable on pro-rata basis as applicable.
However, the purchaser shall be required to pay pro-rata lease rent as applicable. The
sub-lessee shall be required to make the built up space functional with in one year from
the date of sub-lease and submit the prescribed documents to the Authority in proof
thereof. Thereafter, extension charges shall be payable, as applicable.
All the terms and conditions of the brochure/allotment/permission for grant of transfer
and lease deed shall be applicable on the allottee/lessee/transferee."

As can be seen from the above two clauses, in addition to the tendered amount, the
allottee is obliged to pay ground rent; that the ground rent is payable at 2.5% of the total
premium of Rs.173 crores (approximately) during the first 10 years from the date of the
lease. However, for first three years, concession is given in payment of rent to enable the
developer to attract entrepreneurs to put up hotels, restaurants, multiplexes etc. So also
for the first two years, transfer charges are not payable in cases of transfer of built up
commercial spaces. We do not find any merit in the argument of the petitioner that these
concessions/incentives are arbitrarily given as largesse to the tenderer. These concessions
are a part of terms and conditions of the Scheme, which was kept open for all eligible
bidders. Further, we do not have any figures to show the alleged loss to the exchequer.
Further, when a Scheme is challenged, we have to look at it as an entire package. We
have to see the tender price, the cost of putting up amenities like ECS, the cost-benefit
ratio, the future projections in terms of increase in revenue, employment etc. None of
these facts have been brought out in the petition. Hence, there is no merit in the
contention that the above concessions have been given arbitrarily to the developers.

For the foregoing reasons, we do not find any merit in the Civil Appeal No. 5402 of 2004,
arising out of SLP (C) No.7790 of 2004, as well as in the Transferred Case No.54 of 2004
[Writ Petition No.10137 of 2004 of Allahabad High Court] and the same are accordingly
dismissed, with no order as to costs. We direct respondent no.3 to pay respondent no.2 the
balance 75% of the premium in terms of Item 12 of letter of allotment dated 12.4.2004
within one week from the date of pronouncement of this judgment.