Brihan Mumb.Ele.Sup.Trans.Undertakng.&an Vs Laqshya Media P.Ltd..

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7907 OF 2009 (Arising out of S.L.P. (C) No. 363 of 2009)

Brihan Mumbai Electric Supply Transport Undertaking & Anr. .... Appellant(s)

Versus

Laqshya Media P. Ltd. & Ors. .... Respondent(s)

WITH

CIVIL APPEAL NOS.7908 & 7909 OF 2009 (Arising out of S.L.P.(c) Nos. 426 & 510 of 2009)

J U D G M E N T

P. Sathasivam, J.

1) Leave granted.

2) All these appeals are directed against the final order and

judgment dated 19.11.2008 passed by the High Court of

Judicature at Bombay in Writ Petition No. 1344 of 2007

whereby the High Court allowed the writ petition filed by

Laqshya Media Private Limited and Alok Jalan of Mumbai and

set aside the work orders/contracts awarded to Bennett

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Coleman & Co. Ltd.- Respondent No. 4 and Prithvi Associates-

Respondent No. 5 by the Brihan Mumbai Electric Supply &

Transport Undertaking (hereinafter referred to as the “BEST”)

in respect of Bus Queue Shelters and directed the BEST to

invite fresh tenders as required under Section 460M of the

Mumbai Municipal Corporation Act, 1888 (in short “MMC

Act”). Aggrieved by the said order, the BEST has filed

S.L.P.(C) No. 363 of 2009, Prithvi Associates has filed S.L.P.(C)

No. 426 of 2009 and Bennett Coleman & Co. Ltd. has filed

S.L.P. (C) No. 510 of 2009. Since all the appeals question the

correctness of the very same order of the High Court, they are

being disposed of by the following common order.

(3) For convenience, let us refer the parties as arrayed in

Civil Appeal arising out of SLP (C) No. 363 of 2009. Laqshya

Media Pvt. Ltd. and one Alok Jalan of Mumbai (Respondent

Nos. 1 and 2 herein) approached the High Court of Bombay

under Article 226 of the Constitution of India seeking to issue

a writ of mandamus in the nature of direction to the BEST, an

undertaking of the State of Maharashtra (Appellant No. 1

herein) to invite fresh tenders from the public by terminating

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the work orders/contracts awarded to Bennett Coleman & Co.

Ltd and Prithvi Associates – Respondent Nos. 4 & 5 herein

under the tender and to restrain the BEST from extending or

modifying the terms of the work orders/contracts awarded to

Respondent Nos. 4 and 5 following the tender system.

According to the appellants, on 31.03.2005, the BEST floated

a tender for awarding contracts of sole agency for

advertisement rights on Bus Queue Shelters in Brihan

Mumbai for 2005-2008. For operational ease, the entire area

of Brihan Mumbai was divided into three lots, namely, Lot

No.1 – Eastern Suburbs, Lot No. II – the Western Suburbs and

Lot No.III – the City. Tenderers were required to offer lump-

sum display charges for the period of contract, i.e., till

December, 2008. The tenders received would be evaluated on

the basis of total lump-sum display charges offered by the

tenderers for an individual lot. The contract would be

awarded for individual lots to different agencies depending on

the offers received. Respondent Nos. 1 and 2 herein, also

participated in the said tender for awarding contracts of sole

agency for advertisement rights on Bus Queue Shelters in

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Brihan Mumbai. But, as Bennett Coleman & Co. Ltd. (in short

‘BCCL’) – Respondent No. 4 was the highest bidder for Lot No.

II – the Western Suburbs and Lot No.III – the City and

Respondent No. 5, Prithvi Associates was the highest bidder

for Lot No. I – the Eastern Suburbs, the tender came to be

allotted in favour of them. However, no formal contract was

signed between the BEST and the BCCL and the Prithvi

Associates and that the tender came to be allotted on the basis

of the acceptance letters/work orders issued by the BEST

which was contrary to Clause 24 of the Conditions of Contract.

4) In December, 2006, the BEST floated the offer document

for erection of Bus Queue Shelters in place of existing Bus

Stop Poles and display of advertisement thereon under “First

Finder Scheme” (hereinafter referred to as the ‘Scheme’).

Respondent Nos. 1 and 2 tendered their bid for the Scheme. It

was their grievance that the tender having been called only for

display of advertisement on existing Bus Queue Shelters till

31.12.2008 not only is an unilateral extension thereof but an

act of arbitrariness and discrimination. It is their further

grievance that under the guise of extension, BEST favoured

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BCCL and Prithvi Associates by granting them a long

extension and new benefits under the original tender. The

action of the authorities in negotiating for extension of the

work orders without issuing tenders and their action in

refusing to act in fair and transparent manner or to disclose

their intention are arbitrary, discriminatory, illegal, mala fide,

contrary to the terms of the tender and violation of the

fundamental rights and thereby deprived Respondent Nos. 1

and 2 of their rights guaranteed under Article 19(1)(g) of the

Constitution of India, hence, they prayed for appropriate

directions by way of writ of mandamus.

5) Before the High Court, the BEST filed an affidavit

through its Chief Engineer explaining their stand. It was

stated therein that under the Scheme there is no question of

competitive bidding and parties are free to choose the specific

Bus Stops they wish to develop. The writ petitioners

(Respondent Nos. 1 and 2 herein) themselves selected 22 bus

stops under the Scheme without competitive bidding.

Respondents 4 & 5 who, under their earlier licences/contracts

dated 09.06.2005 and 04.07.2005 respectively, had secured

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the right to advertise on existing Bus Queue Shelters which

was valid till 31.12.2008, were invited by the 2nd appellant as

suggested by the BEST Committee to participate in the

Scheme with reference to the existing bus shelters under their

control for modernizing the same.

6) It is the further case of BEST that the Government of

Maharashtra had constituted an Empowered Committee under

the Chairmanship of the Chief Secretary to monitor the

progress of implementation of Mumbai Transformation Project.

The Committee consisted of the Chief Secretary and other

Secretaries of various departments. Its agenda, Item No. 2(v)

referred to beautification of bus shelters and Item No. (6) of

the said Minutes of the Meeting referred to presentation to be

made on bus shelters and the approval of the model of Modern

Bus Queue Shelters presented by the BEST. As per the

decision recorded in the meeting dated 02.09.2006 of the

Empowered Committee, the BEST obtained prior approval

from the BEST Committee vide BCR 474 dated 07.12.2006 for

erection of Bus Queue Shelters in place of bus stop poles and

display of advertisement thereon. The idea was to call for bids

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to develop the Bus Queue Shelters on the basis of the Scheme.

Interested parties such as Respondent Nos. 1, 2, 4, and 5

could bid for as many Bus Stop Poles as they may wish to

develop and were free to choose any location they preferred.

Consequently, in implementation of the Scheme, the BEST in

the month of December, 2006 offered to interested persons,

documents for erection of Bus Queue Shelters in place of the

existing bus stop poles.

7) In response to the offer put up by the BEST, Respondent

Nos. 1 & 2 and other 12 parties came forward with their

proposal for construction/erection of Modern Bus Queue

Shelters in place of existing Bus Stop poles. All the 13 parties

were allotted with the work of construction of modern Bus

Queue Shelters. Against 2,384 bus stop poles available under

the Scheme, they were able to award only 483 bus stop poles

and that too, to 13 different parties. The Respondent Nos. 1

and 2 had also submitted proposal for construction of modern

Bus Queue Shelters under the Scheme and were successful in

getting 22 BEST bus stop poles. Under the Scheme, there is

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no tender procedure and the party who brings their proposal

first is entitled to work.

8) The BEST Committee, by their proceedings, dated

27.12.2006 had approved the proposal of successful parties

under the Scheme. Since the “Mumbai Transformation

Project” related to entire Mumbai, the BEST Committee, while

approving the said proposals, also suggested to the BEST that

it should invite a proposal from Respondent Nos. 4 and 5 who

held all Bus Queue Shelters in Eastern, Western Suburbs and

the City till the year 2008 in case they desire to construct the

modern Bus Queue Shelters in place of Old Bus Queue

Shelters under their respective jurisdiction. This suggestion of

BEST Committee had been communicated to Respondent Nos.

4 and 5 with a request to submit their proposal in the

prescribed format. Respondent Nos. 4 and 5 had existing

licences with BEST in respect of display of advertisements on

Bus Queue Shelters. Respondent No. 4 is in possession of 702

Bus Queue Shelters in the Western Suburbs “Lot No. II” and

717 Bus Queue Shelters in the City zone “Lot No. III” under

Work Order dated 09.06.2005. Respondent No. 5 is in

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possession of 724 Bus Queue Shelters in the Eastern Suburbs

“Lot No. I” under Work Order dated 14.07.2005. As per the

original terms of the licences, they were valid up to 31st

December, 2008 with an option to renew up to 31st December

2009. Since, the idea of the Empowerment Committee was to

implement the Mumbai Transformation Project, it was felt that

all Bus Queue Shelters in the city should be modernized

including those which are being operated by Respondent Nos.

4 and 5. Pursuant to the suggestions of the BEST Committee,

the decision was communicated to Respondent Nos. 4 and 5,

and they expressed their interest in constructing modern Bus

Queue Shelters as per the model approved by the

Empowerment Committee in the place of existing Bus Queue

Shelters which were under their contract. After prolonged

discussion, the proposal of Respondent Nos. 4 and 5 was put

to the BEST Committee for its consideration with the relevant

documents and details. BEST Committee in its meeting dated

12.06.2007, after detailed discussion, approved the proposal

of Respondent Nos. 4 and 5 with certain modification in the

terms and conditions. By the new contract with Respondent

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Nos. 4 and 5, the expected increase of revenue for the BEST is

to the tune of Rs. 69 lakhs per month. The aforesaid contract

was for a period of 15 years with effect from 01.10.2007 and

Respondent Nos. 4 and 5 are liable to pay increased rate of

display charges as per the renewed terms. There is neither

impropriety nor there is any illegality. The design of modern

Bus Queue Shelters are approved by the Empowered

Committee of Government of Maharashtra and since

Respondent Nos. 4 and 5 agreed to reconstruct all the Bus

Queue Shelters except those Bus Queue Shelters which are

situated within the Bus Station at their own cost as per the

model approved by the Empowered Committee, the BEST had

awarded the said contract for 15 years with effect from

01.10.2007. Under the present contract, Respondent Nos. 4

and 5 are required to reconstruct all the Bus Queue Shelters

in the pattern approved by the Empowered Committee and

also pay display charges from 01.10.2007 onwards at the

revised rates.

9) Respondent Nos. 4 and 5 who were awarded contract by

the BEST also filed their affidavit conveying their stand.

10

According to them, there is no illegality in the award of

contract since they were having valid existing licences for the

display of advertisements on all those Bus Queue Shelters till

31st December, 2008 and renewable till 31st December, 2009 at

the told contractual rates. There is no illegality or impropriety

whatsoever. All the reconstructed Bus Queue Shelters are for

greater public good and will provide world class infrastructure

to the city of Mumbai, added to it, the BEST is continuously

earning revenue therefrom.

10) By the impugned order, the Division Bench of the High

Court after holding that the subject contract had been

awarded to Respondent Nos. 4 and 5 bypassing the statutory

provisions by negotiation on the terms and conditions offered

by them as if no other party were ready to do it on better terms

and conditions, quashed the Work Order/Contract awarded to

Respondent Nos. 4 and 5 and directed the BEST to invite fresh

tenders as required under Section 460 M of MMC Act of 1888.

11) Heard Mr. G.E. Vahanvati, learned Attorney General for

India for the BEST, Mr. Harish N. Salve, learned senior

counsel for Prithvi Associates, Mr. K.K. Venugopal, learned

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senior counsel for Bennett Coleman & Co. Ltd., Mr. Mukul

Rohtagi, learned senior counsel and Mr. P.H. Parikh, learned

senior counsel for the Laqshya Media Pvt. Ltd. and for Alok

Jalan.

12) The following issues that are to be considered are:

(i) Whether the appellants were justified in awarding work

order/contract in favour of Respondent Nos. 4 & 5 without

resorting to public tender?

(ii) Whether proviso to sub-section (2) of Section 460M of the

Mumbai Municipal Corporation Act enables the BEST to

award contract without inviting tenders?

(iii) Whether the High Court is justified in setting aside the

work order/contract to Respondent Nos. 4 & 5 and directing

BEST to invite fresh tenders as required under sub-section (1)

of Section 460M of the Mumbai Municipal Corporation Act?

13) Initially, the BEST administration floated a tender in

2005 for sole advertisement rights on Bus Queue Shelters. It

is not in dispute that in the said tender, Prithvi Associates,

BCCL and Laqshya Media P. Ltd. had participated, however,

12

the contract was awarded to Prithvi Associates and BCCL –

Respondent Nos. 4 & 5 herein. The said contract was for a

period of three years, which was to expire on 31.12.2008 with

an option for extension of one year till 31.12.2009.

Admittedly, there is no dispute about the said tender. This

contract was only for display of advertisements on the existing

Bus Queue Shelters and there was no obligation on the part of

the successful parties to carry out any construction or

maintenance or repairs of the said shelters.

14) The BEST, in consultation with the Government of

Maharashtra, introduced a Scheme known as “First Finder

Scheme” in December, 2006 whereby interested parties were

invited to choose and select Bus Queue Poles in the city of

Mumbai, as per their liking, for the purposes of converting

them into modernized Bus Queue Shelters and display of

advertisements thereon. It is relevant to point out that this

Scheme contemplated both construction of Bus Queue

Shelters in the place of bus poles, maintenance of the same

and also display of advertisements. This Scheme was for a

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longer period, i.e., ten years. Display charges for the said

modernized Bus Queue Shelters to be built by the successful

applicants was fixed by the BEST. According to the BEST

administration, 2384 poles were offered under the Scheme out

of which 2136 bus poles were applied for. However, only 483

bus poles were finally allotted inasmuch as many of the

participants had evinced more interest only on the saleable

poles. It was brought to our notice that approximately 1/3rd of

the bus poles could be allotted for conversion into Bus Queue

Shelters. Laqshya Media P. Ltd. – first respondent herein,

applied for 200 bus poles and was finally allotted only 22. It is

relevant to mention that bus poles were allotted on first come

first serve basis through open offer and there was no tender

floated by the BEST. Those contracts under the Scheme

were allotted under Section 460K(c) of the Act. Since the

response was found to be poor under the Scheme, a decision

was taken to implement the Mumbai Transformation Project of

02.09.2006. It was considered that, (a) Respondent Nos. 4 & 5

had contracts valid till December, 2009 extendible till

December, 2009; (b) There were many advertisers already

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advertising under contracts entered into by the Appellant and

the 4th respondent; and (c) The First Finder Scheme had been

a complete failure as only 1/3rd poles got to be taken. In such

a situation, in order to make a uniform renovation of all bus

shelters whether saleable or non-saleable, the appellants were

asked to give their proposals. Under the 2007 contract, the

earlier tender contract of 2005 in favour of Respondent Nos. 4

& 5 was extended on the terms and conditions of the Scheme

in order to include all those bus shelters which had been

allotted to them for the purposes of display of advertisements.

By this extension or new contract, Respondent Nos. 4 & 5

had to construct new and modernized bus shelters in the

entire city of Mumbai. The said decision was taken pursuant

to the Mumbai Transformation Project undertaken by the

Empowered Committee meeting held on 02.09.2006. As

stated earlier, the said project envisaged, inter alia,

modernization of all bus shelters and bus poles.

15) Before going into the correctness of the decision arrived

at by the Empowered Committee and the ultimate work order

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by the BEST in favour of Respondent Nos. 4 & 5, it is useful to

refer the relevant provisions from the Act. Section 460A

empowers the General Manager to manage the BEST and

perform all acts necessary for the economical and efficient

maintenance, operation, administration and development of

the Undertaking. Among the various provisions, we are very

much concerned with Sections 460K, 460L and 460M of the

Act which reads as under:

“460K. Making of contracts

With respect to the making of contracts for the purposes of the Brihan Mumbai Electric Supply and Transport Undertaking (including contracts relating to the acquisition and disposal of immovable property or any interest therein, or any right thereto) the following provisions shall have effect, namely:-

(a) every such contracts shall be made on behalf of the corporation by the General Manager;

(b) no such contract for any purpose which, in accordance with any provision of this Chapter, the General Manager may not carry out without the approval or sanction of some other municipal authority, shall be made by him until or unless such approval or sanction has first been duly given;

(c) no contract which will involve an expenditure exceeding ten lakhs rupees shall be made by the General manager unless the same is previously approved by the Brihan Mumbai Electric Supply and Transport Committee:

Provided that, where the previous approval of Committee is sought for any such contract by the General manager, the

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Committee shall consider and dispose of such proposal within thirty days from the date of on which the item is first included in the agenda of any meeting of the Committee, failing which, the previous approval shall be deemed to have been given by the Committee for such contract on the last day of the period of thirty days aforesaid. A report to that effect shall be made by the General Manager to the Committee;

(d) every contract made by the General Manager involving an expenditure exceeding one lakh rupees shall be reported by him within fifteen days after the same has been made to the Brihan Mumbai Electric Supply and Transport Committee;

(e) the foregoing provisions of this section shall, as far as may be, apply to every contract which the General Manager shall have occasion to make in the execution of this Act; and the same provisions of this section which apply to an original contract shall be deemed to apply also to any variation or discharge of such contract.”

460L Mode of executing contracts.

(1) Every contract entered into by the General Manager on behalf of the corporation for the purposes of the Brihan Mumbai Electric Supply and Transport Undertaking shall be entered into in such manner and form as would bind the General Manager if such contract were on his own behalf, and may in the like manner and form be varied or discharged:

Provided that every contract for the execution of any work or the supply of any materials or goods which will involve an expenditure exceeding ten lakh rupees or for the disposal of property of the corporation exceeding twenty-five thousand rupees in value shall be in writing and shall be signed by the General Manager and countersigned by two members of the Brihan Mumbai Electric Supply and Transport Committee.

(2) No contract which is not executed in accordance with the provisions of sub-section (1) shall be binding upon the corporation.

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460M Mode of executing contracts.

(1) Except as is hereinafter otherwise provided, the General Manager shall, at least seven days before entering into any contract for the execution of any work or the supply of any materials or goods which will involve an expenditure exceeding fifty thousand rupees, given notice by advertisement in the local newspapers inviting tenders for such contract.

(2) The General Manager shall not be bound to accept any tender which may be made in pursuance of such notice, but may accept, subject to the provisions of clause (c) of section 460K, any of the tenders so made which appears to him, upon a view of all the circumstances, to be the most advantageous:

Provided that the Brihan Mumbai Electric Supply and Trnasport Committee may authorize the General Manager for reasons which shall be recorded in their proceedings to enter into a contract without inviting tenders as herein provided or without accepting any tender which he may receive after having invited them.”

A reading of the above provisions makes it clear that the

General Manager is the ultimate authority in all respects

including maintenance, operation, administration and

development of the BEST. Sub-section (1) of Section 460M

makes it clear that for execution of any work or the supply of

any materials or goods which will involve an expenditure

exceeding fifty thousand rupees, the General Manager is

mandated to give notice by advertisement in the local

newspapers inviting tenders for such contract. However,

proviso to sub-section(2) enables the BEST Committee to

18

authorize the General Manager to enter into a contract without

inviting tenders as provided in sub-section(1) or without

accepting any tender which he may receive after having invited

them. The only condition is that the BEST Committee has to

specifically authorize the General Manager and reasons for

deviating for inviting tender are to be recorded in writing

before such authorization.

16) Mr. Mukul Rohtagi and Mr. P.H. Parikh, learned senior

appearing for the Laqshya Media P. Ltd. and Alok Jalan, by

drawing our attention to the ‘heading’ of Section 460M

submitted that it is but proper to give importance to the same.

The heading of the Section reads as under:

“Tenders to be invited for contracts involving expenditure exceeding rupees fifty thousand”.

In support of the above contention, they relied on the following

decisions of this Court:

1. Industrial Finance Corporation of India Ltd. vs. Cannanore Spinning & Weaving Mills Ltd. & Ors. (2002) 5 SCC 54

2. Oriental Insurance Co. Ltd. vs. Hansrajbhai V. Kodala & Ors. (2001) 5 SCC 175

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3. K.P. Varghese vs. Income Tax Officer, Ernakulam & Anr. (1981) 4 SCC 173

4. Madhav Rao Jivaji Rao Scindia vs. Union of India (1971) 1 SCC 85

5. British Airways PLC vs. Union of India & Ors. (2002) 2 SCC 95

6. Chairman, Indore Vikas Pradhikaran vs. Pure Industrial Coke & Chemicals Ltd. & Ors. (2007) 8 SCC 705.

The ratio in all these cases leads to a conclusion that heading

in a particular section lends, though not normally a part of the

statutory provision, assistance in interpreting the statutory

intent since the ‘heading’ always serves as a guide to depict

the intention. It also makes it clear that the marginal note to

a section cannot be referred to for the purpose of construing

the section but it can certainly be relied upon as indicating the

drift of the section. It also shows that the heading/marginal

notes, prima facie, furnish some clue as to the meaning and

purpose of the section. In the light of the above principles, we

hold that the ‘heading’ of 460M has some bearing while

construing the sub-sections (1) & (2) therein.

17) Coming to the language of sub-section (1) of Section

460M that “tenders to be invited for contracts involving

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expenditure exceeding rupees fifty thousand”, learned senior

counsel heavily relied on the following decisions of this Court:

1) Mahesh Chandra vs. Ragional Manager, U.P. Financial Corporation & Ors. (1993) 2 SCC 279

2) Haryana Financial Corporation & Anr. Vs. Jagdamba Oil Mills & Anr. (2002) 3 SCC 496

3) Ram and Shyam Company vs. State of Haryana & Ors. (1985) 3 SCC 267

4) Nagar Nigam, Meerut vs. Al Faheem Meat Exports (P) Ltd. (2006) 13 SCC 382

5) Reliance Energy Ltd. & Anr. Vs. Maharashtra State Road Development Corporation Ltd. & Ors. (2007) 8 SCC 1

6) M.I. Builders Pvt. Ltd. vs. Radhey Shyam Sahu & Ors. (1999) 6 SCC 464

7) Aggarwal & Modi Enterprises (P) Ltd. & Anr. Vs. New Delhi Municipal Council (2007) 8 SCC 75

8) Sterling Computers Ltd. vs. M/s M & N Publications Ltd. (1993) 1 SCC 445

In all these cases, this Court has emphasized that the public

property owned by the State or by any instrumentality of the

State should be generally sold by public auction or by inviting

tenders. This Court has been insisting upon that rule, not

only to get the highest price for the property but also to ensure

fairness in the activities of the State and public authorities. It

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also emphasizes that the authority should justify the action

assailed on the touchstone of justness, fairness,

reasonableness and as a reasonable prudent owner.

18) In the light of the abovementioned legal principles

enunciated by this Court, let us test the decision of the BEST

in awarding work orders/contract in favour of Respondent

Nos. 4 & 5. Sub-section (1) of Section 460M makes it clear

that the General Manager is one who authorized to manage

and perform all acts necessary for efficient maintenance,

operation, development and administration of the BEST. It

also emphasizes that in all action or execution of any work

including supply of materials or goods which exceeds fifty

thousand rupees, the General Manager is bound to give notice

by advertisement in the local newspaper inviting tenders for

such work orders/contracts. However, Mr. Vahanvati, learned

Attorney General, appearing for the BEST, Mr. Harish N. Salve

and Mr. K.K. Venugopal, learned senior counsel appearing for

the successful contractors, submitted that while there is no

doubt about the proposition mentioned above, however,

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pointed out that proviso to sub-section (2) of Section 460M

authorizes the General Manager to enter into a contract

without inviting tenders as provided in sub-section(1) and the

only condition is that the BEST Committee has to authorize

him by recording adequate reasons. It is not in dispute that

the ‘First Finder Scheme’ was introduced in December, 2006

whereby interested parties were invited to choose and select

Bus Queue Poles in the city of Mumbai as per their liking for

the purpose of converting them into modernized Bus Queue

Shelters and display of advertisements thereon. It was pointed

out that approximately only 1/3rd of the poles could be allotted

for conversion into shelters. Even one of the contesting

parties, namely, Laqshya Media P. Ltd. applied for 200 bus

poles and was finally allotted only 22. According to the BEST,

as the response was found to be poor under the Scheme and

taking note of the fact that Respondent Nos. 4 & 5 have

contracts valid till December 2008 extendible till December,

2009, in order to make a uniform renovation of all Bus Queue

Shelters and to implement the Mumbai Transformation

Project, they were asked to give their proposals. From this it

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is clear that the BEST administration wanted to implement the

Mumbai Transformation Project at the earliest and the initial

work under the ‘First Finder Scheme’ was not fully successful

as estimated. Annexure P-5 which is available in Vol.II placed

by the appellant – BEST shows that it obtained approval from

the BEST vide BCR 474 dated 07.12.2006. Annexure P-6 is

the approval given by the BEST Committee vide BCR 507

dated 27.12.2006. Since it was heavily contended that the

BEST Committee approved the proposal to engage Respondent

Nos. 4 and 5 instead of public tender in order to implement

the Mumbai Transformation Project as early as possible, let us

verify the materials placed by the appellants.

“THE BRIHAN MUMBAI ELECTRIC SUPPLY & TRANSPORT UNDERTAKING

(BRIHAN MUMBAI MAHANAGARPALIKA)

CIVIL ENGINEERING BRANCH

Item No. 356 27 December, 2006

NOTE TO THE BEST COMMITTEE DATED 26.12.2006

Ref : GM/AGM(c)/373/2006

Sub: Erection of Bus Queue Shelters in place of existing Bus Stop Poles and display of advertisement thereon under First Finder Scheme

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1. The BEST Committee vide BCR 474 dated 07.12.2006 has approved the introduction of First Finder Scheme in the Undertaking for converting the bus stop poles into Bus Queue Shelters.

2. Accordingly, the Scheme was notified in local newspaper on 11.12.2006. In response, various advertising agencies have submitted their offers in the prescribed forms issued by the Undertaking. As on 18.12.2006, offers have been received from 20 agencies. The First Finder for bus stop poles applied by the Agencies have been finalized, according to the serial number on the receipt of process fee of Rs.750/- per bus stop pole paid by these agencies.

3. Accordingly, the list of agencies have been prepared along with the No. of location applied by these agencies for erection bus queue shelters in place of existing bus stop poles, which are as under:

S.No. Name of Agency No. of Bus stop poles applied for

No. of Bus stop poles proposed to be allotted

Receipt No.

(Processing fee)

1. M/s Pioneer Publicity Corporation

129 Nos. 129 Nos. 0040827

11.12.06

2. M/s Symbiosis Advertising

40 Nos. 3 Nos. 0040831

11.12.06

3. M/s Shreeji Enterprises

150 Nos. 81 Nos. 0040834

11.12.06

4. M/s Clear channel Communication (I) Pt. Ltd.

90 Nos. 31 Nos. 0040835

11.12.06

5. M/s Manta Media 40 Nos. 2 Nos. 0040836

11.12.06

6. M/s Shivraj Advertising

55 Nos. 12 Nos. 0040838

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11.12.06

7. M/s S.V. Advertising 125 Nos. 58 Nos. 0040839

11.12.06

8. M/s Prabha Advertising

200 Nos. 73 Nos. 0040841

11.12.06

9. M/s One ad Display Pvt. Ltd.

82 Nos. 10 Nos. 0040847

11.12.06

10. M/s Prachar Communication Ltd.

450 Nos. 202 Nos. 0040851

11.12.06

11. M/s Medial Tacks 18 Nos. Nil 0040856

11.12.06

12. M/s Attitude 25 Nos. 5 Nos. 0040857

11.12.06

13. M/s J.C. Decauz Advertising India Pvt. Ltd.

400 Nos. 116 Nos. 0040873

11.12.06

14. M/s Positive Advt. Pvt. Ltd.

30 Nos. Nil 0040878

11.12.06

15. M/s Enkon Pvt. Ltd. 20 Nos. 2 Nos. 0040879

11.12.06

16. M/s Times Media Publication

14 Nos. 1 Nos. 0040891

11.12.06

17. M/s Sporting & Outdoor Solution

26 Nos. 1 Nos. 0040910

12.12.06

18. M/s OM Jal 30 Nos. 6 Nos. 0040912

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12.12.06

19. M/s Laqshya Media Pvt. Ltd.

200 Nos. 22 Nos. 0040915

12.12.06

20. M/s Ashok Sharma & Associates Pvt. Ltd.

12 Nos. 11 Nos. 0041013

14.12.06

Total 2136 Nos. 765 Nos.

4. It is pertinent to point out here that as per Clause 47 of the Terms & Conditions of Contract, the Agency has to pay an amount of Rs. 750/- for each location of bus stop poles as processing fees, which is non-refundable. However, it is felt unjust to forfeit the said amount of processing fees of Agencies for the sites which are not awarded to them. Hence, it is proposed to refund the said amount of processing fees to the Agencies for the sites which are not awarded to them.

5. Further, while approving the proposal for introduction of the scheme, the BEST Committee resolved that excluding the Property Tax, the Licence Fees, etc. shall be borne by the Agency. Hence the word ‘Property Tax’ shall stand deleted from the Clause (e) & 18(i) of the Terms and Conditions of the Scheme.

6. The approval of the BEST Committee is, therefore, requested.

i) To award the contract under First Finder Scheme under all Terms & Conditions’ of approved scheme to 18 Agencies for 765 bus stop poles as detailed in Annexure ‘A’ to ‘R’ & Annexure ‘S’ under First Finder Scheme and to enter into the contract with them under Section 460 ‘K(C)’ of MMC Act-1888 as amended upto date.

ii) To refund an amount of Rs. 750/- per bus stop pole to all the agencies for the sites which are not awarded to them.

While speaking on the subject, Shri Ravi Raja stated that, the Administration had in the past, with the approval of the B.E.S. & T. Committee, awarded the contract for display of advertisements

27

on the bus queue shelters of the Undertaking by dividing the same between the firms M/s. Prithvi Associates & M/s. Bennet & Colemn within the limits of the Brihan Mumbai Mahanagar Palika. He further stated that, instead of constructing the bus queue shelters by the BEST Undertaking, if the said Agencies construct the bus queue shelters within the limits of the Brihan Mumbai Mahanagar Palika, they may be permitted to display the advertisements on the said bus queue shelters. Also, they may be included in the said scheme.

The General Manager stated that, if the said Agencies are complying with the terms and conditions of the Scheme by constructing new bus queue shelters in place of the existing bus queue shelters, they will also be included in the said Scheme.

The Chairman stated that, if the concern Agencies approach the Undertaking for construction of new bus queue shelters in place of the existing bus queue shelters and if the said Agencies are fulfilling the terms and conditions of the Scheme, they may be included in the said Scheme.

Thereafter, as their was no further discussion in the matter, the Chairman put the proposal submitted by the Administration to vote and since it was not opposed by anyone, he declared that it was carried unanimously.

Thereafter

507 No.507- Resolved: “That, the approval be and is hereby given to the proposal containing Para no. 6 of the Note of the Committee.”

19) The contract in favour of Respondent Nos. 4 and 5 for

modernization and advertising on new BQS was approved by

the BEST Committee vide item No. 112 dated 12.06.2007 as

under:-

“Ref: Note to the BEST Committee dated 08.06.2007 No. GM/AGM(C)/114/2007.

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148. No.148 – RESOLVED: “That approval be and is hereby given, as required under Section 460 K(e) of the Mumbai Municipal Corporation Act, 1888 as amended upto date of extend the contracts as proposed in para no.6 to 9, except sub-para (B) of para no.9 of the note to the Committee.

2. “That, approval be and is hereby also given for extension period of the contract and display charges as per this Scheme shall start from the 1st October, 2007, instead of from the 1st day of following month in which the said proposal is approved by the BEST Committee, as proposed in sub-para (B) of para 9 of the Note to the Committee.

B.C.R.No.148 Sd/-

Dated 12.06.2007. SECRETARY

AGM(C)”

20) By pointing out the approval given by the BEST, the

appellants submitted that no expenditure is to be incurred by

the BEST. On the other hand, the Corporation is to earn both

from the display charges and the construction of bus Queue

Shelters, which belong to the Corporation itself and at the end

of the 15 year term, revert back to the Corporation. It is the

Respondent Nos. 4 and 5 who are to spend money on

modernization as per the approved plan of BEST and

maintenance of BQS and in return the BEST is to receive

revenue on display charges payable by Respondent Nos. 4 and

5. In these factual aspects, it was pointed out that there has

29

been no violation of any statutory provision in awarding the

contract in favour of respondent Nos. 4 and 5.

21) It is not in dispute that the initial tender contract

awarded to respondent Nos. 4 and 5 was up to 31.12.2008

and extendable for a period of one year. However, it was only

for display of advertisement in the Bus Queue Shelters and

not the construction of any Bus Queue Shelters. The Mumbai

Beautification Project was envisaged on 02.09.2006 under

which one of the resolutions was to beautify all the bus

shelters in the city of Mumbai. As part of the said project,

BEST came up with the Scheme in December, 2006. The

main grievance of the BEST was that there was no proper

response in respect of non-saleable bus shelters, hence BEST

administration on 27.12.2006, decided that in order to

implement the Mumbai Transformation Project and ensure

uniformity in the modernization process of BQS and bus

queue poles in the city of Mumbai, it was agreed that the

Scheme should be extended to Prithvi Associates and BCCL.

The said Meeting was attended by the Chairman as well as the

30

General Manager of the BEST. It was pointed out that item

No. 356 dated 27.12.2006 (which we have extracted above)

clearly records suggestion made by both the General Manager

and the Chairman of the BEST to initiate dialogue and

negotiations with Prithvi and BCCL for the purpose of

modernization of the BQS who were using the same for

displaying advertisement under the 2005 contract, there is no

procedural illegality and violation of any statutory provisions.

22) The appellants heavily relied on the note placed before

the BEST Committee and approval for entrusting the work

relating to BQS in favour of Respondent Nos. 4 and 5. It was

pointed out that during the discussion in the meeting dated

27.12.2006 one Shri Raviraja, one of the Committee members,

had mentioned the firms of Prithvi Associates and BCCL who

were awarded contract for display of advertisements in the

BQS. He suggested that instead of constructing the BQS by

the BEST undertaking, if the said agencies (Prithvi Associates

and BCCL) construct BQS within the limits of Brihan Mumbai

Mahanagar Palika, they may be permitted to display the

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advertisements on the said BQS. By pointing out the same, he

requested that they may also be included in the Scheme. The

note – Item no. 356 further shows that the General Manger

has expressed that if the said agencies are complying with the

terms and conditions of the Scheme by constructing new BQS

in the place of existing BQS, they will also be included in the

said Scheme. The Chairman also expressed the same view.

Thereafter, the Chairman put the proposal submitted by the

administration to vote, since it was not opposed by anyone, he

announced that it was carried unanimously. It may be

relevant to mention that the Empowered Committee consisted

of the Chief Secretary and other top administrative officers of

various Departments including the General Manager of the

BEST.

23) In the light of the language used in sub-section (1), we

are of the view that calling for tenders is a rule and finalizing

any contract without inviting tenders as provided in sub-

section (1) is an exception. We have already adverted to

various decisions of this Court as to how properties belonging

32

to Central/State/its instrumentalities are to be dealt with.

Learned senior counsel appearing for the appellants as well as

Respondent Nos. 4 and 5 pointed out that all the decisions

relied on by Respondent Nos. 1 and 2 related to the sale of

public properties, hence those principles are not applicable to

the case on hand. They also highlighted that as per the

contract, Respondent Nos. 4 and 5 have to build bus shelters

as designed by the BEST, advertise, earn income and also pay

the agreed amount to the BEST and after 15 years all the bus

shelters have to be handed over to the BEST administration.

In other words, according to them, there is no element of sale

or disposal of public property as claimed by the contesting

respondents. It is true that by entering into a contract with

Respondent Nos. 4 and 5, the BEST administration has not

lost its title over the property, but on the other hand assured

of getting regular income without any financial implications

apart from providing better facilities for the public.

24) We have already extracted the entire note placed before

the Committee for discussion which did disclose reasons for

33

not adhering to public tender and entering into a contract with

Respondent Nos. 4 and 5 alone. The ‘Note” also discloses that

thorough discussion was held among the members of the

Committee, General Manager and Chairman. There is no sale

or element of sale in the impugned transaction. However, to

ensure fairness in the activities of the State and public

authorities, their dealing should be above board. Nothing

should be done by the public authorities which gives an

impression of bias, favoritism and ordinarily these factors

would be absent if the matter is brought to public auction by

inviting tenders. We have no doubt that in exceptional cases

having regard to the nature of the trade or largesse or for some

other good reason, a contract may have to be granted by

private negotiation, but clearly that should not be done

without adequate reasons as it shakes the public confidence.

In the case on hand, in view of proviso to sub-section (2) of

Section 460M, BEST Committee after due deliberation

authorized the General Manager to enter into contract

without inviting tenders, since it is beneficial to the BEST and

general public.

34

25) The materials placed show that (a) the contractors,

namely, Respondent Nos. 4 and 5 were having existing

agreement with the BEST administration for the display of

advertisements in the bus shelters/poles till 31.12.2008 and

extendable by one more year (b) In the First Finder Scheme in

spite of wide publicity, response was very poor and only 483

saleable bus shelters/poles allotted (c) Mumbai

Transformation Project requires urgent attention and timely

completion of the work (d) Due to enormous financial

implication, BEST was not in a position to undertake

demolition and construction of new bus shelters (e) By this

method, the BEST without spending their money through the

existing contracts (Respondent Nos. 4 and 5) could complete

the modernization work and also earn sizeable income by way

of advertisement (f) Ownership always lies with the BEST, after

expiry of the contractual period these bus shelters revert back

to the BEST.

26) In the light of the above discussion, we arrive at the

following conclusion:-

35

(a) Generally disposal of public properties owned by the

State or its instrumentalities should be by public auction by

inviting tenders. In the case on hand, the bus shelters belong

to the BEST and Respondent Nos. 4 & 5 were permitted to

build bus shelters as per the norms, display advertisements

and pay charges to the BEST in terms of contract.

(b) Proviso to sub-section (2) of Section 460M enables

General Manager to deviate the process of inviting tenders

subject to reasons duly recorded by the BEST Committee.

(c) Empowered Committee of BEST consisting of the Chief

Secretary and other senior officers of various departments

after deliberation and taking various relevant aspects

authorized the General Manager to finalise the work with

Respondent Nos. 4 & 5 since they are having existing contract

in advertisement in bus shelters/poles. Further, the ‘First

Finder Scheme’ was not successful.

(d) By Mumbai Transformation Project, the BEST is to

complete the work relating to bus shelters without any

financial commitment and also get its share of revenue.

36

(e) By this contract with Respondent Nos. 4 & 5, the BEST

administration is assured of not only regular revenue but also

better facilities to the general public as well.

27) It is brought to our notice that even during the hearing

before the High Court it was submitted that pursuant to the

contract, Respondent No. 4 has constructed about 1/3rd of the

total Bus Queue Shelters allotted to it and Respondent Nos. 5

has constructed about 40% of the Bus Queue Shelters allotted

to it. This was the position prior to November, 2008. On

19.11.2008, the High Court while passing orders at the

request of Respondent Nos. 4 and 5, suspended its order for a

period of eight weeks and this Court while ordering notice on

13.01.2009, extended the order of stay. Though on equity,

they can not have better claim, but the fact remains that

Respondent Nos. 4 and 5 were continuing the contract work

throughout during the pendency of the proceeding before the

High Court and in this Court. Taking note of all these aspects

and peculiar position as mentioned above and in order to

render substantial and complete justice to the parties, we feel

37

that at this juncture, continuation of the contract by BEST

with the Respondent Nos. 4 and 5 is the only acceptable

solution.

28) With the above conclusion, we modify the impugned

order of the High Court and direct the Respondent Nos. 4 and

5 to adhere to the terms of contract strictly. We make it clear

that if there is any

38

breach or violation, BEST is at liberty to act in accordance

with law. All the three appeals are disposed of on the above

terms. No costs.

.….…….……………………CJI. (K.G. BALAKRISHNAN)

...…………………………………J. (P. SATHASIVAM)

...…………………………………J. (J.M. PANCHAL)

NEW DELHI; DECEMBER 1, 2009.

39

BRIHAN MUMB.ELE.SUP.TRANS.UNDERTAKNG.&AN Vs LAQSHYA MEDIA P.LTD..

BRIHAN MUMB.ELE.SUP.TRANS.UNDERTAKNG.&AN Vs LAQSHYA MEDIA P.LTD..