IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (C) No.17756 OF 2007

M/s Garib Nawaz Corporation                          …     Petitioner

Versus

State of Maharashtra & Ors.                             … Respondents

WITH

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

Anees Ahmed                                  …     Petitioner

Versus

Subhash R. Acharya & Ors.                              … Respondents

O R D E R

A. K. PATNAIK, J.

These  special  leave  petitions  under  Article  136  of  the  

Constitution  are  directed  against  the  judgment  and  order  

dated 16.08.2007 of the Division Bench of the Bombay High  

Court in Writ Petition No. 580 of 2007.

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

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

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

from private  vehicles  making  use  of  the  Aarey  Road at  the  

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

Colony  and  amongst  the  tenderers,  M/s  Garib  Nawaz  

Corporation  was  awarded  the  contract  on  16.02.2002.  

Accordingly, an agreement was executed between M/s Garib  

Nawaz  Corporation  on  the  one  hand  and  Government  of  

Maharashtra  and  the  Chief  Executive  Officer,  Aarey  Milk  

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

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

toll from private vehicles entering into the Aarey Milk Vasahat  

at the three check posts and deposit with the Government a  

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

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

to  deposit  5%  of  the  aforesaid amount  as  security  deposit  

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

agreement further provided that if the contractor is unable to  

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

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security deposit amount will not be refunded to the contractor  

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

amount,  the  differential  amount  will  be  recovered  by  the  

Government  as  a  loss  out  of  the  security  deposit  amount.  

Pursuant  to  the  agreement,  M/s  Garib  Nawaz  Corporation  

carried out the work of recovering tolls from private vehicles  

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

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

from 17.02.2005 on the same terms and conditions with two  

modifications.  The royalty was increased by 5% and condition  

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

the  two  special  leave  petitions,  challenged  the  extension  of  

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

Petition  No.  580  of  2007  before  the  Bombay  High  Court  

contending inter alia that the orders of the authorities granting  

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

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

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

exchequer.   

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3. After considering the allegations in the Writ Petition and  

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

High Court found in the impugned judgment and order that  

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

period of three years with an enhancement of royalty payable  

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

taken  by  Shri  Anees  Ahmed,  the  then  Minister  for  Dairy  

Development, Agriculture and Animal Husbandry, Government  

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

High Court further held in the impugned judgment and order  

that orders appeared to be abuses of power and offended the  

basic  norms  of  public  authority  and  public  accountability  

relatable  to  performance  of  public  duty.   The  High  Court  

accordingly  quashed  the  order  dated  21.08.2004  granting  

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

directed the State to invite fresh tenders for collection of tolls  

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

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

High  Court  further  directed  the  State  of  Maharashtra  to  

appoint a Committee to determine the loss caused to the State  

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

original contract as well as from the order granting extension  

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

and further directed that this Committee shall  compute the  

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

passing  of  the  impugned  judgment  and  order  by  the  High  

Court.   The  High  Court  further  directed  in  the  impugned  

judgment  and  order  that  the  loss  determined  by  the  

Committee  for  the  extended  period  shall  be  recovered  from  

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

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

contract, as determined by the Committee, shall be recovered  

from  Shri  Anees  Ahmed,  the  then  Minister  for  Dairy  

Development, Agriculture and Animal Husbandry.  The High  

Court  also directed that the State will  ensure that no such  

extension of contracts is granted by its various departments  

and  instrumentalities  in  future,  except  for  valid  reasons  

recorded in writing.   

4. Aggrieved by these directions in the impugned judgment  

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

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Nawaz Corporation and Shri Anees Ahmed, the Minister, have  

filed  the  two  special  leave  petitions.   On  01.10.2007,  this  

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

directed that in the meantime if  a Committee is constituted  

pursuant  to  the  directions  of  the  impugned  judgment  and  

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

enquiry but no amount shall be recovered from the petitioner.

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

State of Maharashtra constituted a Committee, as directed in  

the  impugned  judgment  and order,  comprising  Dr.  Pradeep  

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

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

Department,  and  Mr.  Rajesh  Aggarwal,  Secretary,  Animal  

Husbandry, Dairy & Fisheries Department, as Members and  

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

Member  Secretary  and  this  Committee  has  submitted  its  

report dated 20.07.2009, which is annexed to the application  

for permission to file additional documents on record filed in  

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

the report of the Committee is extracted hereinbelow:  

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

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

Committee  constituted  pursuant  to  the  directions  in  the  

impugned judgment and order of the High Court that there  

was no material before the Committee to show that any loss  

has  been  caused  to  the  State  exchequer  from  the  order  

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

Nawaj  Corporation.   Hence,  no  loss  was  to  be  recovered  

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from the security deposit of M/s Garib Nawaz Corporation  

in accordance with Condition no.5 of the original contract  

which was waived by Shri Anees Ahmed, the Minister for  

Dairy  Development,  Agriculture  and  Animal  Husbandry,  

while granting extension to M/s Garib Nawaz Corporation.  

Thus, the directions in the impugned judgment and order  

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

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

Shri Anees Ahmed, have not ultimately affected the said two  

petitioners.   The  remaining  directions  in  the  impugned  

judgment and order of the High Court to the authorities to  

issue fresh tenders for recovery of toll from private vehicles  

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

grant extensions in future, except for reasons to be recorded  

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

ensure that no loss is caused to the public exchequer in  

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

inclined to interfere with the impugned judgment and order  

of the High Court.  

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The  Special  Leave  Petitions  stand disposed  of  with  no  

order as to costs.     

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

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

New Delhi, December 06, 2010.    

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