Dismissed

Patel Veneersprivate Limited v. State of Karnataka

Karnataka HC9 Apr 2021WP/11928/2017

Case brief

AI extract

What is this about?

Writ petition filed by a timber exporter petitioner who was a successful bidder in an e-auction. Petitioner sought to quash orders cancelling the auction and directing acceptance of his bid. Court examined validity of cancellation based on low participation and price concerns raised by private owners.

What did the court decide?

Writ petition dismissed with no order as to costs.

Patel Veneersprivate Limited Vs State of Karnataka — Land Acquisition | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 9^TH DAY OF APRIL, 2021

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BEFORE

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THE HON’BLE MR. JUSTICE PRADEEP SINGH YERUR

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WRIT PETITION NO.11928 OF 2017 (GM-TEN)

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BETWEEN:

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PATEL VENEERS PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT PIONEER TOWERS, MARINE DRIVE SHANMUGHAM ROAD KOCHI – 682 031, KERALA REPRESENTED BY ITS DIRECTOR MR.BHARAT K.PATEL

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... PETITIONER

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(BY SRI THOMAS VELLAPALLY, ADVOCATE)

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AND:

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STATE OF KARNATAKA REPRESENTED BY PRINCIPAL SECRETARY TO GOVERNMENT, FOREST ENVIRONMENT AND ECOLOGY DEPARTMENT KARNATAKA GOVERNMENT SECRETARIAT ROOM NO.442, 4^TH FLOOR M.S.BUILDING, BENGALURU – 560 001

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THE PRINCIPAL CHIEF CONSEREVATOR OF FORESTS, ARANYABHAVAN, 18^TH CROSS, MALLESHWARAM, BENGALURU – 560 003

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THE CHIEF CONSERVATOR OF FORESTS, KODAGU CIRCLE, MADIKERI – 571 201

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THE DEPUTY CONSERVATOR OF FORESTS, MADIKERI DIVISION MADIKERI – 571 201 KODAGU

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THE RANGE FOREST OFFICER GOVERNMENT TIMBER DEPOT KUSHALNAGAR KODAGU – 571 201

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SMT.RESHMA W/O.MUDDURE SOMANNA AGED ABOUT 54 YEARS RESIDING AT ANJANAGERI, BETAGERI VILLAGE SUNTIKOPPA HOBLI, SOMAVARPET TALUK KODAGU DISTRICT – 571 237

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REPRESENTED BY ITS GPA HOLDER SRI EDWARD GEORGE WILLIAMS S/O.T.SELVARAJ AGED ABOUT 40 YEARS RESIDENT OF CSI CHURCH COMPOUND B.M.ROAD, SUNTIKOPPA KODAGU DISTRICT – 571 237

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... RESPONDENTS (BY SMT. SHILPA S.GOGI, HCGP FOR R-1 TO R-5 SRI M.S.CHANDRASHEKAR, ADVOCATE FOR R-6)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH ANNEXURE-G DATED 23.11.2016 AND DATED 3/7.3.2017 AT ANNEXURE-J LETTERS/ORDERS ISSUED BY THE R-3 AND R-4 ETC.,

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THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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Petitioner is before this Court seeking to quash Annexures-G and J and also sought for a direction to declare him as successful bidder in lot Nos. 950, 955, 1019 & 1456 in e-auction conducted at Government Timber Depot at Kushalanagara / Anekadu of Madikeri Division on 01.02.2017 and 02.02.2017. He also sought for a direction to the respondent Nos.3 and 4 to accept the balance price and complete sale of timber to the petitioner.

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Brief facts leading to filing of this writ

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petition are as under:

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Petitioner is a registered private limited company and is in the business of export of rosewood guitar finger board and rosewood veneers apart from engaging in the business of import of timber to India. Petitioner has been periodically participating in timber auction conducted across the State.

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In one such timber auction conducted by respondent No.4 for sale of timber and firewood at Government Timber Depot at Kushalanagara / Anekadu of Madikeri Division on 01.02.2017 and 02.02.2017 from 9.30am to 4.30pm, petitioner was a successful bidder with respect to four lots, ie., lot Nos. 950, 955, 1019 & 1456. As per the terms and conditions of the notification of e-auction the successful bidders were to pay 1/4^th value of the timber along with the taxes within 24 hours on completion of the auction. Petitioner being successful purchasers of four lots, as aforementioned, remitted an amount of Rs.13,60,000/- apart from Earnest Money Deposit of Rs.25,000/-, which was paid earlier and which amounts to more than 50% of the bid value towards said auction purchase. The said deposit of Rs.13,60,000/has been acknowledged by respondent No.4 as per Annexure-E.

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As per notification at Annexure-A, the successful purchasers were to deposit the total value within 50 days of time and the petitioner was ready and willing to pay the balance purchase payment of timber

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and complete all the formalities with regard to the said auction, but since the respondent No.4 did not respond to complete the formalities, petitioner make telephonic enquiry with the respondent Nos.4 and 5 and they informed that lot for which Annexure-A was notified and petitioner was successful bidder, came to be cancelled. Later Petitioner received e-mail communication from respondent No.4, dated 23.11.2016 (wrong date mentioned), in which reference was made to the letter dated 20.02.2017 issued by respondent No.3. Petitioner came to know about the said e-mail as per Annexures-G and H, based on the alleged complaint made by certain private lot owners to reject the bidders as most of the Exporters have not participated and on account of the same price quoted was very low. Due to which respondent No.4 referred the matter to respondent No.3 to reject 152 lots in II Part and based on such recommendations respondent No.4 rejected and cancelled auction with regard to auction held on 01.02.2017.

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5. According to the petitioner, he is the

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successful bidder with regard to lot No.1456, vide Annexure-K as revised list was published on the portal, wherein 61 lots which was sold out of 1831 lots was confirmed. Therefore, though the cancellation of 152 lots has been made by the respondent No.4 on the ground that majority of the Exporters had not participated and since price was low, 61 lots was thereafter auctioned vide Annexure-K. Aggrieved by this order passed at Annexures-G and H rejecting the allotment of lots in e-auction/e-tender as illegal and unsustainable in law, petitioner has preferred the instant writ petition.

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Heard Mr.Thomas Vellapally, learned counsel for petitioner, Mr.M.S.Chandrashekhar, learned counsel for respondent No.6 and Smt.Shilpa S.Gogi, learned High Court Government Pleader appearing for respondent No.1 to 5.

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Learned counsel for petitioner vehemently contended that petitioner being a reputed exporter of

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rosewood guitar finger boards and rosewood veneers and importer of timber, has been in the business for more than 50 years and had participated in several auction conducted across the State including e-auction. He further contends that petitioner was successful bidder for purchase of four lots bearing No.950, 955, 1019 and 1456 and consequently, he had remitted a sum of Rs.13,60,000/- other than EMD of Rs.25,000/-, which is more than 50% of the bid value of the auction purchase.

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It is his contention that as per Annexure-A

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there is no bar in conducting e-auction and all rules and regulations and formalities have been followed in regard to Annexure-A despite which respondent Nos.3 and 4 cancelled the e-auction conducted on 01.02.2017 vide Official Memorandum published by respondent No.4 and 02.02.2017 vide Annexures-G & H. Learned counsel further contends that the notice issued by respondent Nos.3 and 4 in canceling certain lots out of the total lots offered for sale in e-auction after initial declaration that

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the petitioner is successful bidder / purchaser, is illegal and arbitrary.

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Learned counsel further contends that the impugned order passed by respondent Nos.3 and 4 are contrary to the notification at Annexure-A and hence same requires to be quashed. He further contends that respondent Nos.3 and 4 have adopted pick and chose method to suit their only requirement and have thereby rejected certain lots on the reasoning that price was los while confirming the other lots, which does not have any rationale and would not stand test all reasonableness and hence deserves to be set aside and rejected.

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Learned counsel further contends that respondent Nos.3 and 4 have passed order without providing any cogent reasons for cancellation of e- auction. He further contends that no valid reasons have been assigned by the respondent Nos.3 and 4 in rejecting certain lots and confirming other lots, which is arbitrary, favoritism and illegality. He further contends

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that respondent Nos.3 and 4 are duty bound to examine the matter in detail and pass a reasonable order, but they passed the order arbitrarily. He further contends that in the present case the action of the respondent Nos.3 and 4 in rejecting certain lots pertaining to the petitioner is tainted with arbitrariness and is in violation of Articles 14 and 19 of the Constitution of India.

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Learned counsel further contends that respondent Nos.3 and 4 did not have any valid reason to reject the bid of the petitioner in isolation and acted unfairly and passed an order of rejection with regard to certain lots after receiving more than 50% of the value of the auctioned amount towards the said lots. On the basis of these submissions, it is the contention of the learned counsel for petitioner that the impugned order passed by respondent Nos.3 and 4 is illegal and deserves to be quashed and set aside.

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Learned counsel further contends that as per Rule 93 of the Karnataka Forest Rules, 1969 (in short ‘the Rules’), the conduct and confirmation of sale

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has been prescribed. Sub-Rule (5) of Rule 93 reads as under:

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“When a sale is effected by public auction, tender or tender-cum-auction generally the highest bid of tender, if regular in all aspects, shall be accepted by the Sale Conducting Officer competent to conduct the sale under these rules, provided such offer is equal to or exceeds the sanctioned upset price. Where for any valid reason the highest bid or tender cannot be accepted, the Sale Conducting Officer may reject any bid or tender without assigning any reason. He shall, however, make a record of such rejection giving full reasons therefor. In cases where he is not competent to confirm the sale, he shall submit it along with the other sale records to the authority competent to confirm the sale.”

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Learned counsel has also relied on Rule

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86(1) of the Rules to contend as to the upset price and how it has to be determined while fixing and sanctioning of the upset price.

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Per contra, learned counsel for respondent No.6 – Mr. M.S. Chandrashekar, who is none other than

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the owner of the timber of Sy. Nos.36 & 39 of Anjanageri – Betageri Village, has vehemently contended that at his instance and objections raised by him before respondent Nos.3 and 4 by way of letter with regard to one specific lot bearing No.1456 of bete timber, that the respondent Nos.3 and 4 have acted upon unfairly and cancelled the auction in Kushalanagara Wood Depot on 01.02.2017.

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Learned counsel further contends that the purpose of conducting auction is to facilitate owner and the Government to fetch a better revenue during e- auction. He further contends that being the owner of the timber logs, having put the same for auction in e-auction, if less amount is secured then he would suffer financially and would be put to hardship and inconvenience. There is no option for him to sell the same in Government auction. He cannot get the basic price of the value of the timber and certainly not a lesser price, which is contrary to the Rule prescribed under Forest Manual as market price will have to be

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considered before fixing the standard upset price for timber.

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Learned counsel further contends that some of the Exporters and owners of the private lots opposed the e-auction tender process as several Exporters have not participated in the tender. Hence, the tender price which was shown to be less was illegal. Accordingly, owners of the private lots and some of the Exporters requested through writing letters to respondent Nos.3 and 4 to reject the above said e-auction and it is based on this reason respondent Nos.3 and 4 have rightly rejected the auction conducted on 01.02.2017. He further contends that there is no hardship or loss that would be caused to the petitioner, whereas irreparable loss, hardship would be caused to the owners like him and other Exporters, who have not participated in the e- tender auction. He supports the orders passed by respondent Nos.3 and 4.

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Smt. Shilpa S. Gogi, learned High Court Government Pleader appearing on behalf of respondent

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No.1 to 5 – State, would contend that the order impugned herein is very well reasoned order and does not deserve to be quashed as the same is in accordance with law. She contends that notification vide Annexure-J of e-auction conducted by respondent Nos.3 and 4 is in accordance with Rules and Regulations of Karnataka Forest Laws and in terms of the notification published vide Anneuxre-A.

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Learned Government Pleader further contends that as per Clause 17 of the notification at Annexure-A the Sale Conducting Officer may reject any bid and at any time without assigning any reasons and as per Clause 19, which contains that e-auction is subject to the confirmation by the Competent Authority who may at their discretion accept and reject and stop the bid without assigning any reason. She further contends that prima facie in the notification vide Annexure-A itself is very clearly mandated that the Competent Authority empowered to accept or reject the bid without assigning any reason and even she has relied on Rule 95(5) of the Rules based on which the

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notification has been issued, whereunder the Sale Conducting Officer, may reject any bit or tender without assigning any reason. She further contends that pursuant to conduct of e-tender and e-auction it was realized that there was no good price secured and therefore, in the interest of securing better rate for the private owner as well as Government auction came to be cancelled.

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Learned Government Pleader further

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contends that primarily while participating in the e- tender itself the petitioner was very well aware of the terms and conditions of the auction sale. She further contends that petitioner is a successful bidder but not a successful purchaser. She contends that in a public auction there has to be a healthy competition and all parties who are entitled to participate are permitted to participate in the auction for enabling better revenue for private owners as well as the Government.

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In the present case on the basis of the objections received by respondent Nos.3 and 4 from

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some of the Exporters and private owners of the lots, it was found that there has been no proper participation and that the sale was being made on a dead amount then what was expected or market value, respondent Nos.3 and 4 as per Rules thought it fit to cancel the e-auction. Accordingly, they have cancelled the e-auction vide notification dated 20.02.2017.

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Learned Government Pleader further contends that pursuant to the cancellation of e-auction petitioner has been refunded with the amount deposited as EMD by him along with the amount paid by petitioner after bidding to his account, which is fairly admitted by the learned counsel for petitioner.

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Learned Government Pleader further contends that there is discrepancy in the date mentioned in Annexure-G, which is mentioned as 23.11.2016, it ought to be shown as 01.02.2017. She further contends that rejection of the lot made in e- auction has been done in accordance with Rules and Regulations and there is no violation of principles of

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natural justice, much less, violation of Article 14 and 19 of Constitution of India.

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Learned Government Pleader further

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contends that petitioner is not a successful purchaser and is only a successful bidder and respondent Nos.3 and 4 were empowered to cancel the auction in view of the objections raised by private owners and some of the Exporters, who had not participated in the e-auction. On the basis of these submissions she prays to reject the present writ petition as no illegality has been committed in the impugned order.

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Having heard learned counsel for petitioner

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and learned counsel for respondents, the points that arise for consideration before this Court are:

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“(1) Whether the cancellation of e-auction conducted by respondent Nos.3 and 4 suffers from arbitrariness and illegality?

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(2) Whether same is sustainable in law?”

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It is not in dispute that the respondent had

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notified Annexure-A for e-auction of the Forest Timber to be conducted on 01.02.2017 and 02.02.2017. It is

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also not disputed that petitioner had participated and was a successful highest bidder and had also deposited the sale price amount as notified in Annexure-A that being Rs.13,60,000/- apart from Rs.25,000/- deposited as EMD before e-auction. It is also not in dispute that private lot owners and some of the Exporters have raised objection with regard to conducting of the e- auction as they could not participate in the same and also to the effect that the price quoted in the e-auction is very less, it would be detrimental to the interest of the private lot owners and hence sought for rejection and cancellation of the said e-auction.

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On careful perusal of the notification at Annexure-A, it is not in dispute that as per Clause 17 and 19 of the said notification, the Sale Conducting Officer is empowered to reject any bid or stop sale at any time without assigning any reason there for. Rule 17 and 19, reads as under:

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“17. The highest bidder shall ordinarily be the purchaser. The Sale Conducting Officer, may, however, reject any bid or stop the same at

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any time without assigning any reason, there for.

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The e-auction is subject to confirmation by the competent authority, who may at his / her discretion accept or reject any bid without assigning any reason thereof.”

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Therefore, on a bare reading of the notification at Annexure-A respondent Nos.3 and 4 are empowered to either accept or reject the bid without assigning any reason. This fact was within the knowledge of the petitioner at the time of participating in the e-tender and e-auction, it cannot be gainfully said by the petitioner now that the rejection or cancellation of the e-auction by respondent Nos.3 and 4, is arbitrary and illegal. It is no doubt true that merely because the notification containing clauses for rejection or cancellation without assigning any reason, the same could be done by respondent Nos.3 and 4. However, this aspect is very clearly stated in sub-rule (5) of Rule 93 of the Rules, as aforementioned. Sub-rule (6) of Rule 93 of the Rules, provides that competent Sale Conducting Officer is empowered to reject any tender or

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bid without assigning any reason. However, he could make record of such rejection with reason.

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In the present case on hand, it is noticed that rejection and cancellation of the e-auction has been done for the reason that respondent Nos.3 and 4 has received the objections from the private lot owners and also from the Exporters, who had not participated in the e-tender process, which is clearly forthcoming in Annexure-H, wherein it is stated that Exporters were not participated and hence very less price was quoted for this reason, which reads thus:

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“In the auctions conducted in 2 days as shown above, total 207 Lots of 3^rd Call, 338 Lots of 2^nd Call were auctioned. Among these, requested to confirm 186 Lots of 2^nd Call in Anekadu Wood Depot on 02.02.2017. Further, 152 Lots of 2^nd Call of auction and 7 Lots of 3^rd Call in auction conducted in Kushal Nagar Wood Depot on 01.02.2017, the exporters were not participated hence very less price was available for this reason, the private parties filed application and requested to reject, hence, recommended to

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reject Lots of 2^nd Call. Accordingly, the following Order is made.

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ORDER

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In the background of the points explained in the preamble, among 338 lots of auctioned for 2^nd Call in E-Auction on 01.02.2017 and on 02.02.2017 in Kushal Nagar Government Wood Depot of Madikeri Division, 186 Lots as per Conferred Power at Sl.No.16 (B) are confirmed. Among these 152 Lots of 2^nd Call auctioned in Kushalnagar Wood Depot on 01.02.2017 are rejected.”

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Therefore, respondent Nos.3 and 4 narrated and explained the reason for rejection and cancellation of e-auction and the reasons assigned by the Officer on receipt of complaint and objections by the private lot owners and Exporters, who had not participated in the e-tender. The reason is also justified as less amount was secured to the State by way of e-auction, which was not in the interest of private owners, who are selling their lots in e-auction. However, though the auction is cancelled and the said lots were rejected, are directed to be disposed of in the next auction as per

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Annexure-G. Therefore, all doors have not been closed as petitioner would still have a chance to participate in the next e-auction to be conducted by respondent Nos.3 and 4 and he would certainly be at liberty to participate in the said auction along with others.

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In the light of reasons stated above, I do not find any illegality or arbitrariness in the impugned order passed by respondent Nos.3 and 4. Accordingly, I pass the following order:

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ORDER

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Writ petition is dismissed.

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No order as to costs.

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Sd/-

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JUDGE

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Patel Veneersprivate Limited v. State of Karnataka

Case brief

What is this about?

What did the court decide?

Patel Veneersprivate Limited v. State of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Statutes considered

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