M/S Garib Nawaz Corporation vs State Of Maharashtra & Ors

M/s Garib Nawaz Corporation ... Petitioner

Versus

State of Maharashtra & Ors. ... Respondents

WITH

SPECIAL LEAVE PETITION (C) Nos.4323-4324 OF 2008

Anees Ahmed ... Petitioner

Versus

Subhash R. Acharya & Ors. ... Respondents

ORDER

A. K. PATNAIK, J.

These special leave petitions under Article 136 of the

Constitution are directed against the judgment and order

dated 16.08.2007 of the Division Bench of the Bombay High

Court in Writ Petition No. 580 of 2007.

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2. The relevant facts very briefly are that on 30.12.2001 the

Chief Executive Officer, Aarey Milk Colony, Goregaon (East),

Mumbai (respondent no.4) invited tenders for recovery of toll

from private vehicles making use of the Aarey Road at the

three check posts at Goregaon, Marol and Powai of Aarey Milk

Colony and amongst the tenderers, M/s Garib Nawaz

Corporation was awarded the contract on 16.02.2002.

Accordingly, an agreement was executed between M/s Garib

Nawaz Corporation on the one hand and Government of

Maharashtra and the Chief Executive Officer, Aarey Milk

Vasahat, Goregaon (E), Mumbai, on the other hand. Under

the agreement, M/s Garib Nawaz Corporation was to collect

toll from private vehicles entering into the Aarey Milk Vasahat

at the three check posts and deposit with the Government a

sum of Rs.16,58,00,000/- for three years from 16.02.2005.

Under the agreement, M/s Garib Nawaz Corporation was also

to deposit 5% of the aforesaid amount as security deposit

which worked out to Rs.82,90,000/-. Condition No.5 of the

agreement further provided that if the contractor is unable to

carry out the contract, the contract will be cancelled and the 3

security deposit amount will not be refunded to the contractor

and if a new contractor is appointed for the work for a lesser

amount, the differential amount will be recovered by the

Government as a loss out of the security deposit amount.

Pursuant to the agreement, M/s Garib Nawaz Corporation

carried out the work of recovering tolls from private vehicles

for a period of three years and on expiry of the period of three

years, was granted extension for a further period of three years

from 17.02.2005 on the same terms and conditions with two

modifications. The royalty was increased by 5% and condition

no.5 was relaxed. Shri Subhash R. Acharya, respondent in

the two special leave petitions, challenged the extension of

three years granted to M/s Garib Nawaz Corporation in Writ

Petition No. 580 of 2007 before the Bombay High Court

contending inter alia that the orders of the authorities granting

the extension for three years to M/s Garib Nawaz Corporation

to collect toll and relaxing condition no.5 of the agreement

were clearly arbitrary and had caused a huge loss to the State

exchequer.

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3. After considering the allegations in the Writ Petition and

the replies filed by the respondents to the Writ Petition, the

High Court found in the impugned judgment and order that

the orders to grant the extension of the contract for a further

period of three years with an enhancement of royalty payable

by 5% and to waive Condition no.5 of the agreement were

taken by Shri Anees Ahmed, the then Minister for Dairy

Development, Agriculture and Animal Husbandry, Government

of Maharashtra, respondent no.6 in the Writ Petition. The

High Court further held in the impugned judgment and order

that orders appeared to be abuses of power and offended the

basic norms of public authority and public accountability

relatable to performance of public duty. The High Court

accordingly quashed the order dated 21.08.2004 granting

extension of the contract to M/s Garib Nawaz Corporation and

directed the State to invite fresh tenders for collection of tolls

at the three check posts at Goregaon, Marol and Powai of

Aarey Milk Colony. In the impugned judgment and order, the

High Court further directed the State of Maharashtra to

appoint a Committee to determine the loss caused to the State 5

exchequer as a result of waiver of Condition no.5 of the

original contract as well as from the order granting extension

for a period of three years to M/s Garib Nawaz Corporation

and further directed that this Committee shall compute the

loss for the period of extension, i.e. from 17.02.2005 till the

passing of the impugned judgment and order by the High

Court. The High Court further directed in the impugned

judgment and order that the loss determined by the

Committee for the extended period shall be recovered from

M/s Garib Nawaz Corporation and the loss suffered by the

State on account of deletion of Condition no.5 of the original

contract, as determined by the Committee, shall be recovered

from Shri Anees Ahmed, the then Minister for Dairy

Development, Agriculture and Animal Husbandry. The High

Court also directed that the State will ensure that no such

extension of contracts is granted by its various departments

and instrumentalities in future, except for valid reasons

recorded in writing.

4. Aggrieved by these directions in the impugned judgment

and order of the Division Bench of the High Court, M/s Garib 6

Nawaz Corporation and Shri Anees Ahmed, the Minister, have

filed the two special leave petitions. On 01.10.2007, this

Court while issuing notice in S.L.P. (C) No.17756 of 2007

directed that in the meantime if a Committee is constituted

pursuant to the directions of the impugned judgment and

order of the High Court, the Committee may continue with the

enquiry but no amount shall be recovered from the petitioner.

5. During the pendency of the special leave petitions, the

State of Maharashtra constituted a Committee, as directed in

the impugned judgment and order, comprising Dr. Pradeep

Vyas, Secretary (Expenditure), Finance Department, as the

Chairman; Mr. M. N. Gilani, Pricipal Secretary & PLA, L & J

Department, and Mr. Rajesh Aggarwal, Secretary, Animal

Husbandry, Dairy & Fisheries Department, as Members and

Mr. S.V.R. Srinivas, Dairy Development Commissioner, as

Member Secretary and this Committee has submitted its

report dated 20.07.2009, which is annexed to the application

for permission to file additional documents on record filed in

S.L.P. (C) No.17756 of 2007 as Annexure A-2. Paragraph 15 of

the report of the Committee is extracted hereinbelow: 7

"15. Based on above, it is seen that though in the tender floated on 13th July, 2007 the rates received were higher compared to amount being received by the Government from the extended contract period of M/s Garib Nawaz Corporation, but the higher bidders did not continue with the contract for long and discontinued the same in 19 days (M/s Shrikrishna Khandsari Sugar Mills, Nandurbar) and 169 days (M/s Vipul Octroi Center) and the collection by the CEO, Aarey, was on an average Rs.1,33,702 and Rs.1,27,165 and paise 64 per day respectively, which is less than the rate which was being paid by M/s Garib Nawaz Corporation at Rs.1,58,987/- during the extended period. The present toll collection rate as per the contract awarded to M/s Kohinoor Enterprises, Kurla, is Rs.1,43,836 and paise 33 per day. So the Committee feels there is no material on record to indicate that the loss has been caused to the State exchequer from the order granting extension for a period of three years to M/s Garib Nawaz Corporation (Paragraph 34(iii) of High Court Order in W. P. No. 580 of 2007 dated 16.08.2007)."

6. It will be clear from Paragraph 15 of the report of the

Committee constituted pursuant to the directions in the

impugned judgment and order of the High Court that there

was no material before the Committee to show that any loss

has been caused to the State exchequer from the order

granting extension for a period of three years to M/s Garib

Nawaj Corporation. Hence, no loss was to be recovered 8

from the security deposit of M/s Garib Nawaz Corporation

in accordance with Condition no.5 of the original contract

which was waived by Shri Anees Ahmed, the Minister for

Dairy Development, Agriculture and Animal Husbandry,

while granting extension to M/s Garib Nawaz Corporation.

Thus, the directions in the impugned judgment and order

for recovery of loss, if any, determined by the Committee

from the two petitioners, M/s Garib Nawaz Corporation and

Shri Anees Ahmed, have not ultimately affected the said two

petitioners. The remaining directions in the impugned

judgment and order of the High Court to the authorities to

issue fresh tenders for recovery of toll from private vehicles

at the three check posts of Aarey Milk Colony and not to

grant extensions in future, except for reasons to be recorded

in writing, do not affect the two petitioners and are meant to

ensure that no loss is caused to the public exchequer in

future by grant of extensions. For these reasons, we are not

inclined to interfere with the impugned judgment and order

of the High Court.

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The Special Leave Petitions stand disposed of with no

order as to costs.

.............................J. (R. V. Raveendran)

.............................J. (A. K. Patnaik)

New Delhi, December 06, 2010.