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.  

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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,  

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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  

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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

19

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  

20

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  

21

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,  

22

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  

23

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

24

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

25

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

26

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.

28

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  

31

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  

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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  

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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.

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