Full Judgment Text
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CASE NO.:
Appeal (civil) 2694-2695 of 2005
PETITIONER:
M/s Makhija Construction & Enggr. P. Ltd
RESPONDENT:
Indore Development Authority and Ors
DATE OF JUDGMENT: 19/04/2005
BENCH:
Ruma Pal & C.K. Thakker
JUDGMENT:
J U D G M E N T
(Arising out of SLP) Nos. 21113-21114 of 2001)
RUMA PAL, J.
Leave granted.
The appellant’s grievance is that his tender for allotment
of land reserved for educational use was not accepted by the
respondent- authority. The tender notice was published on
22nd September 1993. It invited tenders from "registered
institutions who manage educational activities or are constituted
for this purpose" for 10,340 sq. mtrs. of land reserved for
educational purposes under the respondent-authority’s scheme.
Of the tenders submitted the three tenderers were \026 the
appellant, Jagriti Bal Mandir Society (hereafter referred to as
’Jagriti’) and Crescent Public school (hereafter referred to as
’Crescent’) who bid Rs. 261 per Sq.m., Rs.201 per Sq.m. and
Rs. 177.60 per Sq.m. respectively. The appellant, as its name
suggests, is a construction company. However, one of its
objects in its Memorandum of Association is claimed to be to
construct and establish schools. Because the appellant did not
have any experience of managing an educational institution its
tender was rejected on 28th December 1993 and , the
respondent authority allotted the land in equal halves to Jagriti
and Crescent.
The appellant and Jagriti filed writ petitions in the Gujarat
High Court. The appellant’s grievance was that he was the
highest tenderer having quoted for the land at Rs.261 per sq.
mtr. and that his tender was rejected unreasonably. Jagriti’s
grievance was that it had bid for the land at Rs.201 per sq. mtr.
which was higher than the bid of Crescent which had offered
only Rs.177.60 per sq. mtr. Jagriti, therefore, claimed that the
whole of the land should have been made available to it.
Both the writ petitions were disposed of by an order dated
4th March 1998 by which the Court directed the respondent-
authority to consider the representations of the appellant and
Jagriti. The matter was re-considered by respondent No. 1 and
again by resolution dated 7th December 1998, the decision
taken earlier was re-affirmed. Pursuant to the decision, a letter
of allotment was issued to Jagriti and Crescent.
This led to a second round of litigation by the appellant
and Jagriti reiterating their earlier stand. Both the writ petitions
were allowed by a common order on 29th February 2000. The
learned Single Judge was of the view that the requirement in
the tender that the tender would be accepted only from
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registered institutions which are engaged in educational
activities had an alternative which was ignored by the
respondent No.1, namely, that the institutions constituted for
that purpose could also participate. Since the appellant’s
memorandum showed that the appellant was constituted, inter-
alia, for setting up schools, it could not be disqualified on this
ground. The respondent No. 1 was accordingly required to
decide the representations of the appellant and Jagriti afresh
with a speaking order without being influenced by the earlier
recommendations or earlier resolutions.
Three appeals were preferred from this order before the
Division Bench. One appeal was by Jagriti and two by
Crescent. Jagriti’s appeal was dismissed for default. One of
Crescent’s appeal was dismissed on the ground that the Single
Judge had done substantial justice.
The respondent No. 1 \026 authority then reconsidered the
matter again and by a resolution dated 18th September 2000, in
keeping with the observations of the High Court, held that the
appellant was competent to tender and accept the tender. Its
tender was accepted and allotment of the entire plot of 10,340
sq. mtrs. was made to the appellant.
Immediately after this, Jagriti’s Letters Patent Appeal was
restored and ultimately after hearing the parties allowed by the
impugned order. The learned Single Judge’s decision was set
aside and the respondent No. 1 was given the liberty to
implement and give effect to the advertisement published by it
on 22nd September 1993.
The appellant has challenged the decision of the Division
Bench contending that the dismissal of Crescent’s Letters
Patent Appeal from the order of the learned Single Judge
operated as res judicata and that in any event, the
advertisement had been misconstrued by the Division Bench to
mean that the tenderers had to be engaged in education
without considering that the advertisement allowed institutions
which were merely constituted for the purpose of education to
apply.
The respondents have submitted that there was no
question of the order of the Division Bench dismissing
Crescent’s appeal operating as res judicata against Jagriti
because Jagriti was only a co-respondent in Crescent’s appeal.
It is also argued that the principle of res judicata would only
apply if there was a hearing and a decision - both which were
absent when the order on Crescent’s appeal was passed. On
the question of the eligibility of the appellant to apply, it was
contended that irrespective of the construction of the
advertisement since Jagriti had established experience in the
field of education it was better qualified than the appellant. It is
submitted that the appellant could not be said to have been
constituted for the purpose of education. The objects of
Memorandum of Association merely list possible fields of
diversification. It is also submitted that there was nothing in the
advertisement from which it could be assumed that the tender
would be given to the highest bidder. In fact, money was not
the sole governing factor. In this connection, reference was
made to Government Order dated 28th August 1986 from
Madhya Pradesh Tender Advertisement Law Manual. It
records that the Government had taken a decision that public
institutions like educational, religious and charitable institutions
may be allotted space for the purposes for which they were set
up by determining the price of land allotted on the principle of
’No Profit No Loss’ basis.
On the merits, Jagriti’s submissions appear to be correct.
The tender notice had asked for bids from registered institutions
carrying on educational activities. The clear implication of the
language is that the institution must be one which is constituted
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for the purpose of educational activities, if it does not already
manage educational activities. The tender notice specified,
inter alia, that the tender form had to be accompanied with
"description of activities managed earlier by the society". In
response to the appellant’s tender, by letter dated
1st December, 1993, the respondent No.1 had informed the
appellant that it was required to submit the detailed particulars
of the educational activities of the institution.
The appellant admittedly has no experience in
educational activities of any sort. The question then is- Was it
constituted for educational purposes? Out of 67 objects
mentioned in its Memorandum of Association, the main objects
of the appellant were to carry on the business of constructing,
building, roads, bridges etc. and to act as a supplier of
hardware, paints, sanitary fittings, construction material and so
on. The objects incidental or ancillary to the attainment of the
main objects, are specified in Clauses 3 to 28. Other objects
are mentioned in Clauses 30 to 67. These include a wide
variety of possible diversification of the appellants businesses.
The last Clause reads:
" 67. To establish and construct
shopping markets, show rooms Nursing
homes, schools, clubs houses, cinemas,
office premises and other buildings for
commercial purposes on lands seized
and licence basis".
We do not read this as in any way justifying the
appellant’s claim that it was constituted for educational
purposes. To be ’constituted for’ means the primary objective
of the constitution. The primary objective of the appellant was
certainly not to carry on educational activities. Besides the
language of Clause 67 does not indicate that even this object is
to carry on the running of the management of the school, but
rather pertains to the construction of school buildings. Where
the object was to carry on the business, this has been
specifically so stated in the remaining objects clauses, for
example in Clauses 30-31, 34-37, 40-42, 44-64 and 66 of the
Memorandum.
The importance of the requirement for being involved with
educational activities will also appear from the Regulations for
Transfer of Property and Other Ancillary Matters, 1987 framed
under the Madhya Pradesh Nagar Tatha Gram Nivesh
Adhiniyam 1973, where Regulation 33 (which refers to the
respondent No.1 as ’the Authority’) says that:-
(i) The Authority may transfer any property
ear-marked in the layout of any scheme
for fulfillment of any community needs
like education, medical, social, etc. by
direct negotiations with such registered
institutions which run hospitals, schools
or to such bodies dedicated to science,
art, music, literature etc. or engaged in
other social or community purposes.
(ii) The Authority shall determine the rate of
premium on "No profit No loss basis",
each year commencing from 1st
October, at which such property shall be
transferred to such institutions or
bodies."
The fact that the appellant had bid the highest was, in the
circumstances, immaterial as the object of allotting the land to
an educational institution was not the making of profit. The
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learned Single Judge was therefore wrong in construing the
advertisement dated 22nd September, 1993 in the manner he
did and the Appellate Court erred in dismissing Crescent’s
appeal. In our opinion the appellant was not competent to
participate in the tender.
However, the appellant is entitled to succeed on the
ground that the order of the Division Bench disposing of
Crescent’s appeal operated as res judicata to bind not only
Crescent but also Jagriti and the appellant. It makes no
difference that Jagriti was a co-respondent with the appellant.
The principle of res judicata has been held to bind co-
defendants if the relief given or refused by the earlier decision
involved a determination of an issue between co-defendants
(or co-respondents as the case may be). This statement of the
law has been approved as far back as in 1939 in Munni Bibi
vs. Trilokinath 58 I.A. 158,165, where it has been said that to
apply the rule of res judicata as between co-defendants three
conditions are requisite.
"(1.) There must be a conflict of interest
between the defendants concerned; (2.) it
must be necessary to decide this conflict in
order to give the plaintiff the relief he claims;
and (3.) the question between the defendants
must have been finally decided."
This view has been consistently followed by this Court.
[See: Iftikhar Ahmed Vs. Sahid Meharban Ali, (1974) 2 SCC
151 where the principle was extended to bind co-plaintiffs;
Mahboob Sahab vs. Syed Ismail AIR 1995 SC 1205].
In the present case the facts show that all the three
conditions were fulfilled. There was a conflict of interest
between the two co-respondents in Crescent’s appeal, namely
between Jagriti and the appellants. For the purposes of
deciding the relief, if any, to be granted to Crescent it was
necessary for the Appellate Court to decide whether the
appellant was entitled to participate. Although, the decision of
the Appellate Court is cryptic, nevertheless, it cannot be said
that the Court had not applied its judicial mind to the merits of
the case. The exact language of the order disposing of the
Crescent’s appeal reads as follows:-
" Heard.
Dismissed as the order of the Hon’ble Single
Judge has done substantial justice, it also
says that I.D.A. would decide the matter by all
considerations. This order is passed after
hearing the L/C for the parties for about an
hour."
Jagriti’s counsel was recorded as being present. The
fact that the Appellate Court was wrong in affirming the decision
of the learned Single Judge would not make the decision less
binding. [See: State of West Bengal vs. Hemant Kumar
Bhattacharjee AIR 1966 SC 1061; Gorie Gouri Naidu vs.
Thandrothu Bodemma AIR 1997 SC 808, 809]
The counsel for Jagriti has referred us to several
decisions viz. Gopal Upadhyaya and Ors. vs. Union of India
and Ors. 1986 (Supp) SCC 501, Ambica Quarry Works vs.
State of Gujarat & Ors. (1987) 1 SCC 213, Deena Alias Deen
Dayal & Ors. vs. Union of India & Ors. etc.etc. (1983) 4 SCC
645 and Krishena Kumar Vs. Union of India & Ors. (1990) 4
SCC 207. None of the decisions are apposite. They refer to
the principle of precedent which is distinct from the principle of
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res judicata. A precedent operates to bind in similar situations
in a distinct case. Res judicata operates to bind parties to
proceedings for no other reason, but that there should be an
end to litigation.
In the circumstances, the appeals are allowed without any
order as to costs.