Disposed

The Fishermen Cooperative Society Ltd., No.C-54, v. The Government of Andhra Pradesh, rep. by its

Telangana HC14 Nov 2008WP/25004/2008

Case brief

AI extract

What is this about?

Single common order dismissing writ petitions challenging non-grant of sand leases. Court directed appointment of an inquiry committee to investigate allegations of syndicate manipulation, procedural deviations, and determination of refunds or forfeiture of deposits.

What did the court decide?

Directed Chief Secretary to appoint an Inquiry Committee within two weeks to investigate auction irregularities and determine the fate of deposits.

The Fishermen Cooperative Society Ltd… — Public Procurement and Tenders | Telangana HC (2008)

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THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY W. P.Nos. 19290, 24508, 24809 & 25004 OF 2008

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COMMON ORDER:

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Inasmuch as huge money without any effort is involved in sand reaches, one after the other irregularities are taking place, in the context of award of leases, particularly in the major rivers. The lobby of contractors has become so powerful, that they have acquired the status of dictating the terms to the officials involved.

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The bids were invited on 4.9.2007 for 22 reaches in the Godavari River, passing on East Godavari side. The lease was to be initially from 1.10.2007 to 31.3.2008, renewable thereafter up to 31.3.2009, with enhancement of the amount by 20%. Leases in respect of 8 packages, covering 20 reaches, were awarded for about Rs.9.74 crores. For the remaining two reaches, auction was conducted on 17.10.2007 and it fetched about Rs.3.45 crores. Thus, for the initial spell of six months, up to 31.3.2008, about Rs.13 crores was fetched as lease amount. The corresponding amount for the next year, up to 31.3.2009, with 20% enhancement works out to Rs.24.22 crores.

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Out of the lessees for 22 reaches, those for 8 reaches came forward to pay the corresponding amount, for the next year, and others backed out, in one form or the other. Some of them have approached the court,

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claiming some relief. Taking the totality of the circumstances, into account, the District Level Committee proposed to conduct auction on 3.4.2008. Only one bid was received for package No.2, for a sum of about Rs.2.2 crores. The District Level Committee reviewed the matter and reduced the upset price, by 20%. Subsequent auctions were conducted on 25.4.2008 and successful bidders were issued proceedings on 15.5.2008. It is these proceedings, that have given rise to filing of W.P.No.23845 of 2008. On noticing that several irregularities have taken place, the steps in pursuance of the order dated 15.5.2008 were discontinued, and notice dated 3.11.2008 is issued, proposing to conduct auction, in respect of all the reaches in the District. These writ petitions are filed either by the individuals or agencies, that were issued proceedings dated 15.5.2008, or those who intend to challenge the notice on other grounds.

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The contention advanced on behalf of the petitioners is that when the competent authority has already awarded leases, there was absolutely no basis for not proceeding with the same and to resort to fresh auction. Objection raised by some others is about the grouping of the reaches into packages. These are mostly societies, and according to them, the grouping would disqualify them, from availing the benefit of 10% of concessional rate. Learned counsel for the petitioners submitted extensive arguments, with reference to the relevant records and provisions of law.

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Learned Advocate General had advanced arguments, narrating various developments that have taken place in the previous round of auctions and the factors that led to issuance of present notification.

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There does not appear to be any serious infirmity, or illegality, in conducting auctions on 4.9.2007, or grant of leases for the initial period of six months from 1.10.2007 to 31.3.2008. It is thereafter that the prescribed procedure was deviated from, wantonly or inadvertently. When the stage has reached for renewal or extension of leases for the subsequent years also, it is not known as to on what basis the unintending or unwilling lessees for the initial six months period were permitted to walk away from the leases. Obviously on account of a plan of operation by various contenders, the effort of the government to conduct auction of the reaches on 3.4.2008 was frustrated. Lease could be granted for only one reach. The upset amount was reduced by 20% and auctions were conducted on 25.4.2008.

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It is rather astonishing that right from the insistence on payment of 25% of the upset amount, as a condition precedent for submitting tender, to the examination of the individual tenders, were completely deviated by the concerned authorities. The proceedings themselves reveal that a syndicate was formed, and instead of curbing it, or ensuring proper compliance with

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the rules, the syndicate was permitted to operate, in deviation of all the prescribed rules. Initial deposit of 25% of the upset amount was permitted to be deposited collectively, by the syndicate. Thereafter, the consideration was not with reference to individual reaches and respective tenderers. Here again, the syndicate has dictated the terms, as to who should be awarded, which reach. The result is that a semblance of payment of the required amount by the successful bidders was made, and that is no way nearer to the actual amount that is required to be deposited. The chaos in the matter is reflected by the fact that the benefit of a demand draft/cheque of Rs.95 lakhs is claimed not only by individuals, but also by societies. The officials themselves are not clear as to who made the deposits in respect of which reaches, and towards which account.

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The syndicate appears to have developed some cracks, and one after the other members fell apart. This led to non-execution of lease deeds, even after several months from the stipulated date. The officials have extended their helping hand, by giving temporary permits, even to the successful tenderers. This is totally unheard of. Any default in payment of the balance amount was to result in forfeiture of the amounts that are already paid. However, the deviation was rewarded.

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Though the learned Advocate General submits that the efforts were made only to ensure that the leases are

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operated, in one form or the other to prevent illegal mining of sand, that cannot constitute the basis to totally deviate from the prescribed procedure. It hardly needs any emphasis that even with the best of the intentions, an authority cannot deviate from the prescribed procedure, that too without the prior approval of the superior authority. The loss to the exchequer is to the tune of several crores.

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It is essential that an agency, headed by a fairly senior officer, enquires into the matter. The question as to whether the amounts deposited by the successful tenderers, either individually or in syndicate, are to be refunded or adjusted towards the temporary permits, or forfeited to the State, can be determined, only after the enquiry is conducted into the matter.

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Though the writ petitions are filed, challenging the action of the respondents, in not granting leases in pursuance of the orders dated 15.5.2008 which in turn, are on the basis of the auction conducted on 25.4.2008, this court is not inclined to grant any relief to them, since the entire thing originated from blatant illegality. At least at a belated stage, the concerned officials have woken up and have thought it fit to conduct fresh auction. This court is not inclined to interfere with the proposed auction, since no illegality is pointed out in it.

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Hence, the writ petitions are disposed of, directing that the Chief Secretary, Government of A.P., shall appoint an Inquiry Committee, headed by an officer of

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not less than rank of a Secretary to Government, and comprising of officials of the Revenue, Mining and Panchayat Raj Departments, to conduct inquiry into the auction of sand reaches at Godavari River in East Godavari District on 25.4.2008 and the various steps that have taken, thereafter. The Committee shall enquire into;

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i) whether any deviations have taken place in the matter of conducting auction, or issuing orders to the highest bidders;

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ii) whether any laxity was exhibited, when the non-compliance with the conditions was noticed;

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iii) whether there was any justification, in granting temporary permits, even to those tenderers, who did not comply with the conditions, as to deposit.

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It shall also indicate the manner in which the amounts deposited by the successful tenderers shall be dealt with.

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The Committee shall be constituted within two weeks, from the date of receipt of a copy of this order, and the Committee shall submit its report to the Chief Secretary within two months, thereafter. The consequential orders shall be issued by the concerned authorities, depending on the outcome of the inquiry and it shall be open to the respective parties to work out their remedies, in accordance with law.

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There shall be no order as to costs.

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______________________ 14^th November 2008 Note: Issue C.C. in three days. (B/o) PAN

The Fishermen Cooperative Society Ltd., No.C-54, v. The Government of Andhra Pradesh, rep. by its

Case brief

What is this about?

What did the court decide?

The Fishermen Cooperative Society Ltd., No.C-54, v. The Government of Andhra Pradesh, rep. by its

Case brief

What is this about?

What did the court decide?

What the court decided

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