K. Poomalai v. The Director of SugarNo.690

petitioner in W.P. No.25230 of 2012 is one Integrated Service PointPvt. Ltd. and it is the fifth respondent in W.P. Nos.25116, 25212and 25250 of 2012 and it is a Company engaged in the business oftrading in various agricultural commodities, including molasses,with various foreign countries and it is recognised by theGovernment of India as an export-house.216 cooperative and public sector sugar mills in Tamil Naduare concerned in these writ petitions. These mills are under thecontrol of the Director of Sugar, the first respondent in all thewrit petitions and the Tamil Nadu Cooperative Sugar FederationLimited ("the Federation" for short), the second respondent in allthe writ petitions.3Those 16 cooperative and public sector sugar mills sold 1lakh MT of molasses, a commodity which comes as a by-product duringthe course of manufacture of sugar in sugar mills, to threecompanies, viz., Suraj Agimpex House, Integrated Service PointPrivate Ltd. and Imcola Exports Ltd., shortly called as “Suraj”,“Integrated” and “Imcola” respectively.4All the writ petitions, except the writ petition in W.P.No.25230 of 2012, question the sale of 1 lakh MTs of molasses tothe aforesaid three companies on the ground that the publicproperty, viz., molasses, is sold at a throw-away price ofRs.1,410/- per MT.5For the sake of clarity, the petitioners in all the writpetitions, except the petitioner in W.P. No.25230 of 2012, arecalled "the petitioners"6The facts leading to the filing of these writ petitionsby the petitioners are as follows:6.1The Special Officer of the Federation issuedopen auction-cum-tender notice dated 06.06.2012 forsale of 1 lakh MTs of molasses for the purpose ofexport to other countries. The said open-auction-cum-tender notice dated 06.06.2012 was published on07.06.2012 in the "Indian Express" in all its editionsand in the "Dhina Mani", a Tamil daily, in Tamil Nadu.By the said notice, sealed tenders were invited for thesale of molasses and qualified exporters alone wereeligible to participate in the open auction-cum-tender.6.2The aforesaid notice stated that the tenderdocuments could be obtained from the office of theFederation on payment of Rs.500/- by cash or demanddraft drawn in favour of the Federation at Chennai andthat the tender documents would disclose the quantityof molasses available mill-wise. 6.3As per the open auction-cum-tender notice https://hcservices.ecourts.gov.in/hcservices/ dated 06.06.2012 which was published on 07.06.2012 inthe dailies as stated above, the last date for issue oftender forms was 14.06.2012 and the last date forsubmission of filled up tender forms was 11.00 a.m. on15.06.2012 and the opening of Part-I tender was at11.30 a.m. on 15.06.2012. It was further stated in thesaid open auction-cum-tender notice that the tenderersshall pay Earnest Money Deposit at the rate of Rs.100per MT of the tendered quantity.6.4The aforesaid three companies participated inthe open auction-cum-tender. In the said open auction-cum-tender, 1 lakh MTs of molasses were sold at auniform price of Rs.1,410/- per MT to those threecompanies, the break-up being, 60,000 MTs were sold toSuraj and 20,000 MTs each were sold to Integrated andImcola.6.5According to the petitioners, the establishedprocedures with regard to the sale of 1 lakh MTs ofmolasses were not strictly followed for the reasonsbest known to the respondents 1 and 2 in order tobenefit the selected companies.6.6It is averred by the petitioners that 1 lakhMTs of molasses were sold at a throw-away price to theaforesaid three companies; while the respondents 1 and2 sold molasses of the cooperative sugar mills forexport purposes at the rate of Rs.4,100/- per MT duringthe year 2009, selling 1 lakh MT of molasses atRs.1,410/- per MT was only to favour the aforesaidthree companies. 6.7It is also pleaded by the petitioners that inPondicherry, molasses was sold at the rate of Rs.3,551per MT during March 2012 and at the rate of Rs.4,300/-per MT during July 2012 to exporters; in theneighbouring southern States, viz., Karnakata, AndhraPradesh, Kerala and also Maharashtra, molasses is soldat the rate of Rs.3,800/-, Rs.4,300/- and Rs.4,400/-per MT, excluding export fee or administrative servicefee; thus, the sale of 1 lakh MTs to the threecompanies at the rate of Rs.1,410/- per MT resulted inhuge loss to the tune of Rs.26,90,00,000/- (RupeesTwenty Six Crores and Ninety Lakhs) to the cooperativeand public sector sugar mills.7In these circumstances, W.P. No.25116, 25212 and 25250 of2012 were filed to quash the open auction-cum-tender notice dated06.06.2012 and for a direction to the respondents 1 and 2 to fixthe sale price for molasses on par with the sale price fixed by theneighbouring States of Tamil Nadu.8In W.P. No.23393 and 24821 of 2012, the sale order dated https://hcservices.ecourts.gov.in/hcservices/

06.07.2012 issued to Suraj for the sale of 60,000 MTs of molassesat the rate of Rs.1,410/- per MT was sought to be quashed.Further, in the said writ petitions, a direction was sought to theFederation to conduct a fresh auction.9W.P. No.25230 of 2012 was filed by Integrated seeking adirection to the three sugar mills arraigned as respondents 3 to 5as well as to the respondents 1 and 2, to act in terms of the saleorder dated 04.07.2012 issued by the second respondent allotting20,000 MTs of molasses to the said company. In the said writpetition, a direction was also sought to restrain the respondentsfrom interfering with the right of the petitioner to lift thebalance 7,070 MTs of molasses from the three mills arraigned asrespondents 3 to 5.10The petitioner in W.P. No.25230 of 2012, viz.,Integrated, has pleaded as under:10.1Pursuant to the advertisement which appearedin the newspaper notifying the open auction-cum-tenderfor sale of 1 lakh MTs of molasses, the petitionercompany purchased tender document and made valid tenderfor 20,000 MTs and also deposited Rs.20 lakhs towardsEarnest Money Deposit. The petitioner company soughtallotment of 20,000 MTs of molasses from any of thesixteen sugar mills, wherever it is available. TheMolasses Sales Committee conducted an open auction byfixing the upset price at Rs.1,375/- per MT. Duringthe auction, the petitioner company quoted a higherprice of Rs.1,390/- per MT for a quantity of 20,000MTs. This price was not accepted by the Molasses SalesCommittee. Thereafter, the committee opened the tendersand found that the price quoted in the tenders wereless than the price quoted in the open auction. Hence,the Molasses Sales Committee held negotiations toincrease the price. On account of negotiations, higherprice of Rs.1,410/- per MT was offered by thetenderers. The said price was accepted by theFederation and ultimately, the order dated 04.07.2012was issued allotting 20,000 MTs of molasses from sevensugar mills at the rate of Rs.1,410/- per MT forvarying quantity in each sugar mill ranging from 1,450MTs to 4,950 MTs. As per the sale order, the petitionercompany shall lift molasses within 60 days from thedate of receipt of ML-5 licence from the concernedDistrict Collector, permitting to lift the cargo. Thepetitioner company obtained ML-5 licence on variousdates for lifting molasses from respective sugar millslocated at various places. The petitioner company alsolifted 2,800 MTs from MRK Sugar Mill, 3,550 MTs fromKallakuruchi Sugar Mill, 3,400 MTs from Vellore SugarMill, 2,000 MTs from Tiruttani Sugar Mill and 1,180 MTsfrom Subramania Siva Sugar Mill. Thus, in all, 12,930MTs of molasses were lifted by the petitioner company https://hcservices.ecourts.gov.in/hcservices/ from five sugar mills. While the petitioner companywanted to lift the balance 7,070 MTs from the sugarmills of respondents 3 to 5, the respondents 3 to 5refused to permit the petitioner company to lift thecargo stating that there were some interim order inW.P. No.23393 of 2012. The petitioner company is not aparty in W.P. No.23393 of 2012 and hence, there is norestraint order against the petitioner company.However, the petitioner company was not permitted tolift the balance molasses.10.2The petitioner company entered into acontract dated 02.07.2012 with a foreign company forexport of 20,000 MTs of molasses to the Netherlands andif the cargo is not exported in time, the petitionercompany would incur a heavy loss. Besides, the qualityof molasses differs from factory to factory and themolasses from different factories shall not fetch thesame price due to variation in quality. The molassesoffered for sale by the Director of Sugar and theFederation is of inferior quality when compared to themolasses from other States, viz., Karnataka,Maharashtra, etc.11In these circumstances, W.P. No.25230 of 2012 was filedby Integrated seeking a direction to the respondents to permit themto lift the balance 7,070 MTs of molasses from the mills ofrespondents 3 to 5.12This Court admitted the writ petitions filed by thepetitioners on different dates and also granted interim order ofstatus quo.13While all the three companies are arraigned asrespondents in W.P. No.25116, 25212 and 25250 of 2012, Suraj aloneis arraigned as one of the respondents in W.P. Nos.23393 and 24821of 2012.14Suraj filed counter affidavit in W.P. No.23393 of 2012seeking to dismiss the writ petition and also filed M.P. No. 4 of2012 in the said writ petition to vacate the order of status quogranted on 28.08.2012 in M.P. No.2 of 2012.15Suraj sought to dismiss the writ petition in limine on theground of maintainability. According to this respondent, first ofall, a lone member of one of the cooperative sugar mills isincompetent to maintain a writ petition of this nature,particularly when molasses, a by-product of sugar, is controlled byMolasses Control Order, 1958; secondly, if at all, the writpetitioner has any grievance, she should have resorted to thealternative remedy available to her under the Cooperative SocietiesAct and shall not abuse the Writ jurisdiction of this Curt;thirdly, it is well settled that adequacy of consideration cannever form the subject matter of adjudication in a Court of law https://hcservices.ecourts.gov.in/hcservices/ unless and until the price consideration is illusory andunreasonable; by any stretch of imagination, the highest price ofRs.1,410/- per MT of molasses offered by this respondent cannot betermed as either illusory or unconscionable; hence, this writpetition is not maintainable; fourthly, on the ground of delay andlaches also, this writ petition is liable to be dismissed; next,the award of contract with respect to sale of 60,000 MTs ofmolasses at the rate of Rs.1,410/- per MT in favour of thisrespondent was concluded as early as on 06.07.2012; this respondenthad already lifted 26,212 MTs of molasses out of the awardedquantity of 60,000 MTs; for all these reasons, this writ petitionis not maintainable.16On merits, this respondent pleaded that when the firstrespondent was not able to sell molasses in the domestic market,the open auction-cum-tender process was announced for sale of 1lakh MTs of molasses for the purpose of export; in the domesticmarket, the price of molasses ranges between Rs.350 per MT andRs.800 per MT during 2012; this respondent made the highest offerranging between Rs.925/- per MT and Rs.1,050/- per MT in the sealedcover tender, for molasses of various cooperative sugar mills; theopen auction took place; after negotiations, the sale price wasuniformly fixed at Rs.1,410/- per MT for all sugar mills for atotal quantity of 60,000 MTs of molasses; this respondent enteredinto a contract with a foreign customer for export of molasses andany default in adhering to the time schedule stipulated in theback-to-back contract would result in termination of contract andthis respondent would have to pay enormous amount as compensationin such an event; the price mechanism is depending on numerousfactors, including demand and supply as well as quality of stockoffered for sale; hence, the petitioner is not correct in comparingthe sale of molasses at Rs.4,100/- per MT during July 2012 inPondicherry; the price of molasses came down during 2012-2013 inthe export market; in the tender process conducted on 22.09.2011 inTamil Nadu, the price offered for molasses ranged betweenRs.1,375/- per MT and Rs.1,550/- per MT; this respondent exported10,000 MTs of molasses to a foreign buyer after the tender processconducted on 22.09.2011 on being successful in the tender and hesuffered a claim of USD 198,999.76 from the foreign buyer onaccount of poor quality of molasses; in respect of molasses soldfrom the States of Pondicherry and Andhra Pradesh, the TSAI rangedbetween 53% and 54% while in Tamil Nadu, the TSAI was 43.5% whichis of unmerchantable quality; besides, there is no storage facilityfor the cooperative and public sector sugar mills in Tamil Nadu andif those sugar mills fail to sell molasses for the purpose ofexport, the problem will be two-fold, viz., loss of revenue andpollution.17While giving para-wise comment on the affidavit filed insupport of the writ petition, this respondent has averred that thesale of molasses in Pondicherry at Rs.3,551 per MT and Rs.4,100/-per MT as pleaded by the petitioner, is not within their knowledge;those sales were not for export and they were for a meagrequantity; further, this respondent has no knowledge of the sale of https://hcservices.ecourts.gov.in/hcservices/ molasses in Karnataka, Maharashtra and Kerala at the rate ofRs.3,800 per MT, Rs.4,300/- per MT and Rs.4,400/- per MTrespectively; the price fixation depends upon various factors suchas demand and supply, quality of molasses, industrial recession,etc.; this respondent denied the allegation that molasses was soldat a throw-away price; the allegation made by the writ petitionerrelating to lack of transparency in the tender process relating tohuge quantity of sale of molasses was denied; the sale of molassesat Rs.4,300/- per MT at Pondicherry cannot be relied on by thepetitioner as the same was sold within the country and not forexport; the sale of 40,000 MTs of molasses to Integrated and Imcolais not within the knowledge of this respondent, while 60,000 MTs ofmolasses were sold to this respondent in open auction. Thus, thisrespondent has sought dismissal of the writ petition and alsovacating the interim order of status quo.18Imcola, the 6th respondent in W.P. No.25116 of 2012 filedcounter affidavit almost on the same lines as that of the counterof Suraj in W.P. No.23393 of 201219The Federation has filed separate counter affidavit inW.P. Nos.23393, 24821, 25116, 25212 and 25250 of 2012. 20In W.P.No.25230 of 2012 filed by Integrated also, theFederation has filed counter affidavit in support of the writpetitioner. 21The first respondent in all the writ petitions, theDirector of Sugar also filed counter affidavit in W.P. No.25230 of2012 and the Director of Sugar pleaded that the counter affidavitfiled by the second respondent in W.P.No.25230 of 2012 could betreated as part and parcel of his affidavit. 22The main averments in the separate counter affidavitsfiled by the Federation in W.P. Nos.23393, 24821, 25116, 25212 and25250 of 2012 are as follows:22.1The Special Officer of the Federation, in hisletter dated 20.03.2012 informed the Director of Sugarthat the cooperative and public sector sugar mills arehaving a stock of 1,00,336 MTs of molasses for sale ason 15.03.2012 and those sugar mills will face storageproblem in the forthcoming period if the existingmolasses is not disposed of early. There will be anadditional quantity of molasses generation to the tuneof 70,000 MTs due to cane crushing after March 2012.The storage capacity will not be sufficient if molassesis not disposed of. Further, repair and maintenance ofmolasses tanks have to be carried out during off-season.22.2In the said circumstances, the Director ofSugar addressed letters dated 20.03.2012, 30.03.2012and 25.04.2012 to the Government seeking permission for https://hcservices.ecourts.gov.in/hcservices/ export of a minimum quantity of 1 lakh MTs of molassesto ease down the critical situation of storage ofmolasses in cooperative and public sector sugar millsand also to get a better price.22.3The Government, in its letter dated05.06.2012, granted approval for export of 1 lakh MTsof molasses.22.4The Director of Sugar forwarded the saidapproval to the Special Officer of the Federation fornecessary action. Thereafter, the second respondentfloated tender for sale of 1 lakh MTs of molasses byuploading the open auction-cum-tender notice on06.06.2012 in the Government's website and Tamil NaduCooperative Sugar Federation's website and alsopublished in English daily at national level as well asin Tamil daily within Tamil Nadu on 07.06.2012.22.5The tender forms for sale outside the countrywere received by three companies, viz., Suraj AgimpexHouse, Integrated Service Point Pvt. Ltd. and ImcolaExports Ltd. and the tender forms were submitted bythese companies within the stipulate time.22.6The Molasses Sales Committee met on18.06.2012 at 11.30 a.m. to open the tenders receivedfor export of molasses. All the tenderers werepresent. The Committee opened Part I-CommercialOffers, submitted by the three companies and found thatall the three tenderers are eligible for opening ofPart II tender.22.7Before conducting open auction, the MolassesSales Committee met and fixed the upset prise for openauction at Rs.1,375/-, taking into account, the sale ofmolasses during 2011 and also the prevailing marketrate.22.8Before the opening of Part II-tender (theprice bid), received from the tenderers, open auctiontook place in the presence of tenderers. In the openauction, all the three tenderers offered to payRs.1,390/- per MT for all the 16 cooperative and publicsector sugar mills.22.9It was found that, in the sealed covertenders, offers were received at various rates rangingfrom Rs.850/- per MT to Rs.1,100/- per MT and the sameare less than the offer made by the tenderers in theopen auction.22.10The Molasses Sales Committee decided to https://hcservices.ecourts.gov.in/hcservices/ negotiate with H-1 tenderer as per the tender terms andconditions. Accordingly, the H-1 tenderers presentwere called, one after another, for negotiation andthey were requested to increase the rate quoted bythem.22.11After a very long and protracteddiscussion, the tenderers finally agreed for a price ofRs.1,410/- per MT for all the mills.22.12The Molasses Sales Committee, aftercareful consideration and after detailed discussions,allotted 60,000 MTs to H-1 tenderer, viz., Suraj,20,000 MTs to another H-1 tenderer, viz., Imcola and20,000 MTs to yet another H-1 tenderer, viz.,Integrated at the rate of Rs.1,410/- per MT.22.13The break-up details of quantity of MTsthat was allotted to the three companies from each ofthe 16 cooperative and public sector sugar mills arestated.22.14Molasses was sold in accordance with theestablished procedure and the procedure followed wasvery much a transparent and impeachable one. In spiteof wide publication, only three companies participatedin the tender process.22.15The price of molasses varies dependingupon its quality. While the TRS value of molasses is53% in Pondicherry, the TRS value of molasses rangesfrom 43% to 47% in the cooperative and public sectorsugar mills in Tamil Nadu. 22.16The sugar mills requested for earlyliquidation of molasses due to storage problem and forrepairing molasses tanks. If molasses is notliquidated in time, there will be a serious storageproblem for the next crushing season. In such anevent, it will cause numerous sufferings to the canecrushers. In order to alleviate the sufferings of thecane crushers, tender was finalised after approval fromthe Government of Tamil Nadu to sell 1 lakh MTs ofmolasses.22.17If molasses is stored for long duration,its quality will get deteriorated and its TRS valuewill come down accordingly. Molasses cannot be let outin open pit as the same is objected to by the TamilNadu Pollution Control Board. If molasses is stored insteel tanks, it will lead to hazardous pollutionproblems. To avoid all these problems, molasses wasdisposed of early for a better price. https://hcservices.ecourts.gov.in/hcservices/

22.18There was no cartelisation of tenderers.Adequacy of sale consideration cannot form the subjectmatter of adjudication unless the price considerationis illusory and unconscionable.22.19In the domestic market, in the openauction-cum-tender that was held on 26.04.2012, theprice of molasses per MT ranged from Rs.350/- toRs.750/- per MT and the average rate works out toRs.533.62 per MT.22.20If the quantity of 1 lakh MTs of molassesis not sold for export, the Federation will be drivento a position of distress sales during the crushingseason and the sale during crushing season will fetchonly a lesser rate.22.21This respondent denied the allegation ofloss of Rs.26,90,00,000/- made by the petitioners.According to this respondent, there is a profit of morethan 8.76 crores to the sugar mills as the average saleprice of molasses is Rs.533.62 per MT in the domesticmarket while the Federation negotiated with the threecompanies for Rs.1,410/- per MT for export.22.22The market price of molasses cannot be afixed one all the time and it used to fluctuate.Besides, it depends upon the quality of molasses. Theother charges payable for export of molasses differfrom State to State, for example, export pass fee onmolasses is Rs.100/- per MT in Pondicherry, Rs.300/-per MT in Tamil Nadu and Rs.2,500/- per MT in AndhraPradesh.22.23Already, the successful tenderers lifted41,472 MTs out of 1 lakh MTs of molasses and thedetails of the same are provided in the counteraffidavit.22.24Above all, a writ petition against acooperative society is not maintainable in view of theLarger Bench judgment of this Court in K. Marappan vs.Deputy Registrar of Cooperative Societies, 2006 4 CTC689. Hence, the writ petitions filed by thepetitioners are not maintainable.23Heard both sides.24The learned counsel for the petitioners vehementlycontended that the molasses, a public property, was sold at athrow-away price of Rs.1,410/- per MT, thereby causing loss ofseveral crores of rupees. According to her, the action of therespondents 1 and 2 in selling molasses at a throw-away price isnothing but fraud committed on the people. She contended that https://hcservices.ecourts.gov.in/hcservices/ commission of fraud commenced in 2011 itself and merely because ofthe fact that the same was not questioned, the petitioners are notprecluded from questioning the same when it is perpetuated in 2012.25She submitted that always, there is a wide gap in therate of sale price of molasses between domestic market and foreigntrade by way of export. She took me through the data in support ofher claim. Based on the same, she argued that the price ofmolasses is many times higher if it is sold for export purpose.26She further submitted that there was no export ofmolasses during 2009 and 2010 and when molasses was sold rangingfrom Rs.1,396/- per MT to Rs.3,395/- per MT for export of aquantity of 1,05,000 MT in 2008, it was artificially brought downto the price range of Rs.1,375/- per MT to Rs.1,550/- per MT forexport during 2011 for a quantity of 1 lakh MTs. According to her,the same is perpetuated in 2012, that too, taking Rs.1,375/- per MTas upset price and not even taking Rs.1,550/- per MT as upsetprice; during the period 2011–2012, molasses was sold at the rateof Rs.3,551/- per MT, Rs.4,000/- per MT and Rs.4,300/- per MT inPondicherry. She took me through various documents in support ofher claim. She also submitted that molasses was sold in all Statesat a very much higher price when compared to the price ofRs.1,410/- per MT.27Her further contention is that in 2009, molasses was soldfor export purpose at the rate of Rs.4,100/- per MT and therefore,the sale of molasses during 2011 and 2012 at a price of Rs.1,375/-per MT and Rs.1,410/- per MT respectively are only to favour thethree companies at the cost of public interest. She took methrough the orders issued by the respondents 1 and 2 in 2009regarding sale of molasses at the aforesaid rate of Rs.4,100/- perMT. She claimed that the price of molasses in the Southern Statesis much higher during this period; therefore, the Molasses SalesCommittee as well as the respondents 1 and 2 failed to take intoaccount the prevailing market rate in the open auction-cum-tenderfor sale of molasses in Tamil Nadu.28She further contended that the Tamil Nadu Transparency inTenders Act, 1998 ("the Act" for short) was given a complete go-byin order to accommodate the three companies; when the sale of 1lakh MTs of molasses involves so many crores of rupees, there wasnot enough advertisement at the national level and the time of 8days for submission of filled up tender forms from the date ofpublication of advertisement is too short a period, particularly,when the amount involved in the sale of molasses runs to severalcrores of rupees and in view of this, there cannot be a realcompetition so as to fetch a better price for the public property,viz., molasses. She relied on Rules 20 and 21 of the Tamil NaduTransparency in Tenders Rules, 2000, in this regard. She alsocomplained that though as per the tender notification, the openingof tender shall take place on 15.06.2012, for no reason, it tookplace on 18.06.2012, i.e., three days after the closing of tender.29She vehemently contended that it is a clear case of https://hcservices.ecourts.gov.in/hcservices/ cartelisation by three companies so as to corner the entire sale ofmolasses amongst themselves; those companies deliberately submittedthe lowest rates in the tender forms ranging from Rs.850 per MT toRs.1,050/- per MT and the same is less than the upset price ofRs.1,375/- per MT fixed for public auction; therefore, the ratesquoted in the tender were rejected; the public auction was a stage-managed one and all the three tenderers quoted Rs.1,390/- per MTwhich is just Rs.15/- above the upset price while the upset priceitself was to suit the convenience of the tenderers forprofiteering.30According to her, it is surprising that all the threequoted the same amount of Rs.1,390/- per MT in the open auction andalso the same amount of Rs.1,410/- in private negotiations. Basedon this, it is her vehement contention that this is nothing but aformation of cartel by three companies.31She submitted that the aforesaid facts would clearlydisclose that the molasses was sold at a throw-away price ofRs.1,410/- per MT.32The learned counsel for the petitioners contested theclaim of the respondents about the quality of molasses in 16cooperative and public sector sugar mills, particularly, when noneof these tenderers tested the quality before giving their rates.According to her, no prudent businessman can quote the rate withouttesting the quality, unless the same is sold at a throw-away priceto his advantage. 33Her further submission is that it is also not practicablefor a tenderer to go to 16 mills that are situated at differentplaces in the vast State of Tamil Nadu to verify the quality ofmolasses within a short span of 8 days that was given for thesubmission of tender forms as the publication of tender was made on07.06.2012 in the newspapers and the last date for submission ofthe filled up tender forms was 15.06.2012; since there is a loss ofRs.26,90,00,000/- (Rupees Twenty Six Crores and Ninety Lakhs), thisCourt has to interfere in this matter in order to safeguard publicinterest and to enable the cooperative and public sector sugarmills to get a better price for molasses by ordering fresh auction.34She relied on the following judgments in support of hercontentions:iCDJ 2008 SC 725, Kisan Sahkari Chini MillsLtd. And Others vs. Vardan Linkers and Others. ii(2005) 3 SCC 275, Coal India Ltd. and othersvs. Imenk Sou and Others iii(1995) 2 SCC 462, South Indian Film Chamber ofCommerce, Madras and Others vs. EntertainingEnterprises, Madras and Others https://hcservices.ecourts.gov.in/hcservices/ 35The learned Additional Advocate General who appeared forthe Director of Sugar, the Federation and the cooperative andpublic sector sugar mills in Tamil Nadu, submitted that theGovernment wanted to get the best price for molasses and the openauction-cum-tender process was conducted in a very transparentmanner for the said purpose. He produced the entire file relatingto the sale of molasses to the three companies and submitted that aperusal of the file would disclose transparency in the matter. Hefurther submitted that besides uploading the open auction-cum-tender notice in the website of the Government and also theFederation, wide publicity was also made, all over India through"the Indian Express", an English daily and also a publication wasmade in Tamil Nadu through the "Dhina Mani", a Tamil daily.36Further, according to the learned Additional AdvocateGeneral, there is an acute storage problem of molasses in thecooperative and public sector sugar mills; unless the stock ofmolasses is cleared, there will be so many serious problems besidesstorage problem; there has always been fluctuation in the price ofmolasses in all the markets, either it be domestic market or exportmarket; there is nothing wrong in fixation of the upset price ofRs.1,375/- per MT, taking into account, the sale price of molassesduring 2011; the three companies quoted less rate in the sealedcover tender than the upset price fixed in the open auction; thethree companies offered Rs.1,390/- as the price of molasses per MTduring the open auction; later on, negotiations were held withthree companies and the three companies offered to take molasses atthe rate of Rs.1,410 per MT.37The learned counsel for Suraj vehemently contended thatno statute or rules fix the price of molasses and the price ofmolasses varies depending on various factors such as supply anddemand, quality, etc. and even administrative charges are fixeddifferently in different States; for instance, while the Tamil NaduGovernment charges Rs.300/- per MT towards administrative charges,the Andhra Pradesh Government charges Rs.2,500/- per MT for exportof molasses.38He took serious objection for one person objecting thesale of molasses in the entire cooperative and public sector sugarmills, without placing adequate materials relating to domestic andinternational demand with regard to molasses. He submitted thatwithout challenging the sale of molasses during 2011, the saleduring 2012 cannot be challenged, alleging that seriousirregularities took place from 2011 onwards. He argued that evenif there is any irregularity in the open auction-cum-tender processduring this year, the same can be regulated next year and thecompany cannot be prevented from lifting the balance molasses sincea portion of molasses has already been lifted. It is not unusual,according to him, for the prices to go down due to marketvariation. It was further submitted by him that quality ofmolasses in Tamil Nadu is not merchantable, unless it is mixed withthe molasses purchased from Pondicherry which is of superiorquality. https://hcservices.ecourts.gov.in/hcservices/ 39His next limb of argument is that the Act does not applyin the case of sale and the Act applies only in the case ofprocurement. According to him, the Act nowhere uses the word“sale”. He vehemently contended that this Court has very limitedjurisdiction in contractual matters and this Court cannot interferein the tender process, unless the public properties are disposed ofat an illusory or unconscionable price. He further submitted thatthe respondent company had a back-to-back contract and they were tofulfil the terms of contract by exporting molasses to a foreignbuyer and in view of the interim order of status quo, therespondent company is put to great hardship. According to him,there is nothing wrong in all the three companies quoting the sameprice during public auction while they are competitors. 40He relied on the following judgments in support of hissubmissions:i)AIR 1981 Madras 151, Dr. A.U. Natarajan and anothervs. Indian Bank, Madras.ii)(1986) 4 SCC 566, State of Madhya Pradesh andOthers vs. Nandlal Jaiswal and Others.iii)(1994) 6 SCC 651, Tata Cellular vs. Union of India.iv)AIR 1994 Kerala 286, K.M. Pareeth Labba vs. KeralaLivestock Development Board Ltd. and Others. v)(1995) 4 SCC 595, Chairman and Managing Director,SIPCOT, Madras and Others vs. Contromix Pvt. Ltd. andanother.vi)2012 (7) Scale 414, Michigan Rubber (India) Ltd.vs. The State of Karnataka and Others41The learned counsel for Integrated submitted that thetender conditions are so stringent and therefore, there will beonly a few players eligible to apply for open auction-cum-tenderfor the sale of molasses. He submitted that heavy reliance placedby the petitioners on the sale price of molasses in Pondicherry hasno merit since the quality of molasses in Pondicherry is ofsuperior one, while the quality of molasses in Tamil Nadu is farinferior; therefore, the petitioners are not correct in comparingthe rate of Rs.1,410/- per MT at which molasses was sold in theopen auction-cum-tender in question, with the rate of molasses perMT prevailing in Pondicherry. He submitted that already 10,000 MTsof molasses had been lifted and the respondent company is not ableto lift the balance quantity of molasses though it had paid theentire price for the 20,000 MTs of molasses. 42The learned counsel for Imcola submitted that the writpetitions are liable to be dismissed for non-joinder of necessary https://hcservices.ecourts.gov.in/hcservices/ parties as none of the other sugar mills have been arraigned asrespondents; Imcola is made as a party in W.P. No.25116, 25212 and25250 of 2012 and the petitioners in all these three writ petitionsare members of Kallakurichi Cooperative Sugar Mill; this respondentwas not allotted any molasses from that sugar mill; hence, the writpetitions are not maintainable against this respondent. Accordingto him, if the petitioners have grievance with regard to pricefixation by the Federation, they can very well claim the reliefagainst the Federation and they cannot seek relief againstexporters; while the petitioners are members of KallakurichiCooperative Sugar Mill, the relief is claimed against lifting ofmolasses from all the sugar mills as if it is a Public InterestLitigation.43He further submitted that the petitioners have not comewith clean hands while filing the writ petitions since liftment of4,000 MT of molasses out of 7,000 MT of molasses from KallakurichiSugar Mills was deliberately suppressed in the affidavits filed insupport of the writ petitions; besides, as the petitioners areshareholders of the said sugar mill, they are aware of the liftmentof 4,000 MT of molasses. 44He contended that the prayer in the writ petitions seekfixation of price based on neighbouring States which is notavailable and therefore, the prayer sought in the writ petitionscannot be granted; further, this Court cannot venture to fix theper MT price for molasses as the same would amount to interferingwith the Executive functioning and at the most, the Court can onlydirect the Federation to re-fix the price if the Court finds thatthe tender process is vitiated for one reason or the other; thesale price of molasses at the rate of Rs.1,410/- per MT is notarbitrary. In this connection, he produced the materials inconnection with the purchase made by this respondent from AndhraPradesh at the rate of Rs.1,400/- per MT during 2012.45He further submitted that the Act does not apply in thecase of sale and it applies only to procurement. He contended thatthis respondent stands to lose huge amount of money if he is notpermitted to lift the molasses and also will have to pay hugepenalty on account of failure to supply molasses to its buyer.46In support of his contention, he relied on the followingjudgment reported in (2004) 8 SCC 671, Anil Kumar Srivastava vs.State of Uttar Pradesh and another.47I have considered the submissions made by the respectivelearned counsel.48The issues which arise for determination in this batch ofwrit petitions are as under:(i)Whether the writ petitions, seeking todeclare the sale of molasses to three companies as https://hcservices.ecourts.gov.in/hcservices/ illegal as the public property was sold at a throw-awayprice and for a direction to hold fresh auction, aremaintainable?(ii)Whether the Act applies for "sale" of publicproperties and in the event of the Act being applicablefor "sale" of public properties also, whether the openauction-cum-tender process is vitiated for notfollowing the Act and the Rules made thereunder, in theprocess of sale of 1 lakh MT of molasses by theFederation?(iii)If the Act is not applicable for sale ofpublic properties, whether the open auction-cum-tenderprocess in respect of sale of 1 lakh MT of molasses tooutside country and State was made in a transparentmanner, giving wide publicity so as to get the bestpossible price for the public property and whetheradequate time was given for submission of filled uptender forms?(iv)Whether the Federation and the Molasses SalesCommittee erred in fixing Rs.1,375/- per MT as theupset price for public auction of molasses resulting inthe sale of 1 lakh MT of molasses at a throw-awayprice?(v)Whether the three companies formed cartel inthe sale of 1 lakh MTs of molasses and controlled thesale price by concerted action?(vi)Whether the action of the respondents 1 and 2in the entire process of sale of molasses is mala fide,so as to favour the three companies?Issue No.(i)49Coming to Issue No.(i) for determination, even thelearned counsel for the companies have admitted during the courseof their arguments that writ petitions are maintainable even incontractual matters if a question is raised that the State actedarbitrarily and in an un-fair manner.50The case of the petitioners is that the public property,viz., molasses belonging to the cooperative and public sector sugarmills is sold by the Molasses Sales Committee and respondents 1 and2 at a throw-away price to the three companies and hence, the writpetitions raising such an important issue, cannot be thrown away atthe threshold, on the ground that they are not maintainable.51It is now well-settled in a catena of decisions that evenin contractual matters, this Court can, while exercising itsjurisdiction under Article 226 of the Constitution of India, https://hcservices.ecourts.gov.in/hcservices/ interfere, particularly when the State action is questioned thatthere was arbitrariness and lack of fairness in the State actioncontravening Article 14 of the Constitution of India.52In this regard, it is apropos to refer paragraph no.105of a very recent judgment dated 27.09.2012 of the Apex Court in thePresidential Reference in Reference No.1 of 2012. Paragraph no.105of the said judgment is usefully extracted hereunder:“From a scrutiny of the trend of decisions it isclearly perceivable that the action of the State,whether it relates to distribution of largesse, grantof contracts or allotment of land, is to be tested onthe touchstone of Article 14 of the Constitution. Alaw may not be struck down for being arbitrary withoutthe pointing out of a constitutional infirmity asMcDowell's case (supra) has said. Therefore, a Stateaction has to be tested for constitutional infirmitiesqua Article 14 of the Constitution. The action has tobe fair, reasonable, non-discriminatory, transparent,non-capricious, unbiased, without favouritism ornepotism, in pursuit of promotion of healthycompetition and equitable treatment. It should conformto the norms which are rational, informed with reasonsand guided by public interest, etc. All theseprinciples are inherent in the fundamental conceptionof Article 14. This is the mandate of Article 14 ofthe Constitution of India.”53Furthermore, the Apex Court has held in no uncertainterms, in the judgment reported in 2012 (7) Scale Michigan Rubber(India) Ltd. vs. The State of Karnataka and Others, that the Courtscan interfere even in contractual matters, under certaincircumstances. The relevant paragraph of the said judgment isextracted hereunder:“20.. . . Therefore, a court before interfering in tender orcontractual matters, in exercise of power of judicial review,should pose to itself the following questions:i)Whether the process adopted or decision madeby the authority is mala fide or intended to favoursomeone; or whether the process adopted or decisionmade is so arbitrary and irrational that the court cansay:”the decision is such that no responsible authorityacting reasonably and in accordance with relevant lawcould have reached”? andii)Whether the public interest is affected?. . .”54In view of the above categorical pronouncements of theApex Court, it is held that these writ petitions cannot be thrownaway at the threshold and as such, they are maintainable. Issue https://hcservices.ecourts.gov.in/hcservices/ No.(i) for determination is answered accordingly.Issue No.(ii)55Coming to the second issue, the long title of the Act,i.e., the Tamil Nadu Transparency in Tenders Act, 1998, denotesthat the purpose of the Act is to ensure transparency in the matterof tenders, whether it be sale or purchase made by the Government.But, the Statement of Object of the Act uses the word "publicprocurement" only and the word "sale" is not used. The followingis the Statement of Object for enacting the statute.“An Act to provide for transparency in the publicprocurement and to regulate the procedure in invitingand accepting tenders and matters connected therewithor incidental thereto.Whereas to maximise economy and efficiency inGovernment procurement;And whereas to foster and encourage effectiveparticipation by tenderers in the process of tenders;And whereas to promote healthy competition amongtenderers;And whereas to provide for fair and equitabletreatment of all tenderers;And whereas it is expedient to eliminateirregularities, interference and corrupt practices inthe matters relating to tender processes by providingtransparency in such matters;And whereas to promote the integrity of theprocess of tenders and to promote fairness and publicconfidence in the processing of tenders by ensuringtransparency in the procedure relating to procurement;56Though, at three places in the above extracted portion ofthe Statement of Objects, the word "procurement" occurs, in myconsidered view, the aforesaid objects could apply both for“procurement” and “sale”. The very purpose of the Act is to ensuretransparency and fairness and to avoid arbitrariness in the Stateaction in commercial matters. Therefore, the statute cannot beinterpreted narrowly by confining only to the case of “procurement”and not in the “sale” of public properties.57It is true, as contended by the learned counsel for thecompanies that the Act and the Rules framed thereunder use the word"procurement" and not "sale" and likewise, use the phrase "lowesttender" and "lowest evaluated price". But, by applying theprinciple of casus omissus, I am of the considered view that the https://hcservices.ecourts.gov.in/hcservices/ word “sale” can be read into wherever the word "procurement" isused. Similarly, the phrases "highest evaluated price" and"highest tender" can be read into wherever the phrases "lowestevaluated price" and "lowest tender" are used. Such aninterpretation is only in consonance with the object of the Act.Otherwise, if it is held that the transparency required under theAct is not applicable in the matter of “sale” of public propertiesby the Government and that the Act is applicable only in the caseof “procurement” by the Government, the same will lead only toabsurdity. Further, the various objects, as stated above, that aresought to be achieved, could be achieved, only if the Act is readto include “sale” also.58At this juncture, it is also useful to refer to Rule 29(3) of the Rules which states that private negotiation ispermissible for "best possible procurement price".“29Determination of the lowest evaluated price:“(3)In order to secure the best possibleprocurement price, negotiations with tendererdetermined as per clauses (1) and (2) above arepermissible subject to provisions in Section 10 of theAct.”59Keeping in mind the objects with which the Act wasenacted, I am of the considered view that in the case of sale ofpublic properties also, the object is to get the "best possiblesale price" and in order to secure the same, negotiation withtenderers could be made statutorily by interpreting to include"sale" wherever procurement occurs in the Act/Rules.60The above reasoning and conclusion of mine are fortifiedby the judgment reported in (1980) 2 SCC 593, Gujarat Steel TubesLtd. and others vs. Gujarat Steel Tubes Mazdoor Sabha and Others.The said case arose out of industrial disputes relating to non-employment of a large number of workmen and also other issues. Theparties agreed to go before an Arbitrator under the IndustrialDisputes Act. The Arbitrator passed an award. The issue thatarose before the Apex Court was, as to whether the Arbitrator haspower under Section 11-A of the Industrial Disputes Act to re-appreciate evidence and to award lesser punishment when the word"Arbitrator" does not find place in Section 11-A of the IndustrialDisputes Act. The Apex Court read into Section 11-A of theIndustrial Disputes Act, the word "Arbitrator" also along with thewords "Labour Courts", "Tribunals" and "National Tribunals" andheld that the Arbitrator is also entitled to exercise power underSection 11-A of the Industrial Disputes Act. While holdiing so,the Apex Court had considered the principle of casus omissus andhad given detailed reasons for reading the word "Arbitrator" alsoin Section 11-A of the Industrial Disputes Act, along with LabourCourts and Industrial Tribunals. In my considered view, thatsquarely applies to this case. Paragraph nos.89 to 103 of the saidjudgment which are apposite are extracted hereunder: https://hcservices.ecourts.gov.in/hcservices/ "89. Here we come upon a fundamental dilemma ofinterpretative technology vis-a-vis the judicativefaculty. What are the limits of statutory construction?Does creativity in this jurisprudential area permittravel into semantic engineering as substitute forverbalism? It is increasingly important for developingcountries, where legislative transformation of theeconomic order is an urgent item on the nationalagenda, to have the judiciary play a meaningful role inthe constitutional revolution without ferreting outflaws in the draftsman, once the object and effect areplain. Judges may not be too “anglophonic” lest thesystem fail.90. It is edifying to recall from Robert Stevens'Law and Politics of the House of Lords as a judicialbody:“Moreover, Macmillan, who began tospecialise in the increasingly frequent taxappeals, continued to develop this highlyartificial approach. In Inland RevenueCommissioners v. Ayrshire Employers MutualInsurance Association when Parliament hadclearly intended to make the annual surplusesof mutual insurance companies subject to tax,Macmillan found a particularly formalisticargument to show that this had not been theeffect of Section 31 of the Finance Act of1933. He was then happily able to announce,‘The legislature has plainly missed fire’. Ofthis decision Lord Diplock was later to saythat if, as in this case, the courts canidentify the target of Parliamentarylegislation their proper function is to seethat it is hit: not merely to record that ithas been missed. Here is judicial legislationat its worst'.We would rather adopt Lord Diplock's thought and havethe court help hit the legislative target, withinlimits, than sigh relief that the legislative fire hasmissed the bull's eye. Of course, the social philosophyof the Constitution has, as ruled by this Court inseveral cases, a role in interpretative enlightenmentand judicial value vision.91. We may reinforce this liberal rule ofstatutory construction, being a matter of importance inthe daily work of the Court, by reference even to Romanlaw from Justinian's days down to the American SupremeCourt. “Not all special cases can be contained in thelaws and resolutions of the Senate”, said the Roman https://hcservices.ecourts.gov.in/hcservices/ Jurist Jullianus. “but where their meaning is manifestin some case, the one who exercises jurisdiction mustapply the provision analogously and in this wayadminister justice.” Prof. Bodenheimer has explainedthat civil law does not regard words as the sole basisof law but allows it to be modified by purpose. Celsusadded the following admonition to these generalprinciples of interpretation: “The laws should beliberally interpreted, in order that their intent bepreserved”.92. “Samuel Thorne has shown that, during certainperiods of English medieval history, the position ofthe common law towards the construction of statutes wassimilar to the general attitude of the Roman and CivilLaw. Statutes were frequently extended to situationsnot expressly covered by them.”93. Plowden pointed out that “when the words of astatute enact one thing, they enact all other thingswhich are in the like degree”. Plowden demonstratedthat a statutory remedy at that time was deemed to bemerely illustrative of other analogous cases thatdeserved to be governed by the same principle.94. “Our law (like all others) consists of twoparts viz. of body and soul, the letter of the law isthe body of the law, and the sense and reason of thelaw is the soul of the law... And it often happens thatwhen you know the letter, you know not the sense, forsometimes the sense is more confined and contractedthan the letter, and sometimes it is more large andextensive.”95. Prof. Bodenheimer states that the Americantrend is towards a purpose-oriented rather than aplain-meaning rule in its rigid orthodoxy. In UnitedStates v. American Trucking Association the U.S.Supreme Court wrote:“When the plain meaning has led toabsurd or futile results. . . this Court haslooked beyond the words to the purpose of theAct. Frequently, however, even when the plainmeaning did not produce absurd results butmerely an unreasonable one ‘plainly atvariance with the policy of the legislation asa whole’ this Court has followed that purposerather than the literal words. When aid toconstruction of the meaning of words, as usedin the statute, is available, there cancertainly be no ‘rule of law’ which forbidsits use, however clear the words may be on‘superficial examination’.” https://hcservices.ecourts.gov.in/hcservices/

96. In the present case, as the narration of thefacts unfolded, the reference of the dispute was to anarbitrator. He reinvestigated and reassessed theevidence bearing on the guilt of the discharged workmenafter giving an opportunity to both sides to adduceevidence thereon. Admittedly, he had this power. Buthad he the follow-up power, if he held the men guiltyof punitive misconduct, to reweigh the quantum ofpunishment having regard to the degree of culpability?This jurisdiction he enjoys if Section 11-A includes“arbitrators”. This, in turn, flows from our inferenceas to whether the word “tribunal” takes in anadjudicatory organ like the arbitrator. It is plainthat the expression “arbitrator” is not expresslymentioned in Section 11-A. Nevertheless, if the meaningof the word “tribunal” is wider rather than narrower,it will embrace arbitrator as well. That is how thedynamics of interpretation are, in one sense, decisive,of the fate of the present appeal.97. Competing interpretative angles have contendedfor judicial acceptance. English preferences apart,Indian socio-legal conditions must decide the choice ineach situation. Sometimes judges are prone to castigatecreative interpretation in preference to petrifiedliterality by stating that Judges declare the law andcannot make law. The reply to this frozen faith is bestborne out by Lord Radcliffe's blunt words:“There was never a more sterile controversythan that upon the question whether a Judgemakes law. Of course he does. How can he helpit?. . . Judicial law is always areinterpretation of principles in the lightof new combinations of facts. . . . (J)udgesdo not reverse principles, once wellestablished, but they do modify them, extendthem, restrict them and even deny theirapplication to the combination in hand”.98. Lord Devlin in his “Samples of Lawmaking”,agreed that judges are fashioners of law, if notcreators out of material supplied to them and went on toobserve:“If the House of Lords did not treat itself asbound by its own decisions, it might do itsown lopping and pruning . . . and perhaps evena little grafting, instead of leaving all thatto the legislature. But it could not greatlyalter the shape of the tree.”99. Even so eminent a judge as Lord Reid leaned to https://hcservices.ecourts.gov.in/hcservices/ the view that the law should be developed since it wasnot static and, in this limited sense, Judges are law-makers although this view prevented “technical mindedJudges (from pressing) precedents to their logicalconclusions”. On the whole, a just and humanistinterpretative technique, meaning permitting, is thebest. We do not means to conclude that Judges can takeliberties with language ad libitem and it is wholesometo be cautious as Lord Reid in Shaw v. D.P.P. warned:“Where Parliament fears to tread it is not for thecourts to rush in”.100. We are persuaded that there is much to learnfrom Lord Denning's consistent refrain about theinevitable creative element in the judicial process inthe interpretative area. We permit ourselves a quotefrom Lord Denning because Shri A.K. Sen did draw ourattention to straightening the creases as permissiblebut not stitching the cloth, making a criticalreference to the controversial activism of which LordDenning was a leading light:“The truth is that the law is uncertain. Itdoes not cover all the situations that mayarise. Time and again practitioners and Judgesare faced with new situations where thedecision may go either way. No one can tellwhat the law is until the courts decide it.The Judges do every day make law, though it isalmost heresy to say so. If the truth isrecognised then we may hope to escape from thedead hand of the past and consciously mouldnew principles to meet the needs of thepresent.”101. Mr Justice Mathew in Kesavananda Bharati casereferred with approval — and so do we — to theobservations of Justice Holmes:“I recognise without hesitation thatjudges do and must legislate, but they can doso only interestitially; they are confinedfrom molar to molecular motions.”102. Arthur Selwyn Miller writes, “Some havecalled it (the Supreme Court) the highest legislativechamber in the nation. Although there is no questionthat the Court can and does make law, and does soroutinely. . .103Assuming the above approach to be toocreatively novel for traditionalism, let us approachthe same problem from a conventional angleauthenticated by case-law. The question of construction https://hcservices.ecourts.gov.in/hcservices/ of s. 11A was argued at length, as to whether anomission of any reference to Arbitrator appointed unders. 10A in s. 11A would suggest that the Arbitratorunder s. 10A, notwithstanding the terms of reference,would not enjoy the power conferred on all conceivableindustrial adjudicators under s. 11A. It was said,after referring to the objects and reasons in respectof the bill which was moved to enact s. 11A in theIndustrial Disputes Act, that while the I.L.O. hadindicated that an arbitrator selected by the partiesfor adjudication of industrial dispute must be investedwith power by appropriate legislation as found in s.11A, the Parliament, while enacting the section in itswisdom, did not include the Arbitrator even thoughother adjudicators of industrial disputes have beenconferred such power and, therefore, it is a case ofSasus omissions. Reliance was placed on Gladstone v.Bower where the question arose whether a reference to atenancy from year to year in s. 2(1) of theAgricultural Holdings Act, 1948 would also cover atenancy for 18 months which could be terminated at theend of the first year. The submission was that eventhough no notice was necessary at common law becausethe tenancy would automatically terminate at the expiryof the specified period of tenancy, the tenancy tookeffect as tenancy from year to year by virtue of S. 2(1) of the Act so that it continued until terminated bynotice to quit and, therefore the landlord was notentitled to possession without notice. It was furthercontended that if a tenancy from year to year was toget the protection of the Act it is inconceivable thattenancy for a longer duration would not qualify forthat protection. Court of Appeal negatived thiscontention holding that this is a case simply of casusomissus and the Act is defective. The court furtherheld that if it were ever permissible for the Court torepair a defective Act of Parliament, the Court wouldbe very glad to do so in this case so far as the Courtcould. The Court will always allow the intention of astatute to override the defects of wording buts theCourt's ability to do so is limited by the recognisedcanons of interpretation. The Court may, for example,prefer an alternative construction which is less well-fitted to the words but better fitted to the intentionof the Act. But here, for the reasons given by thelearned Judge, there is not alternative construction;it is simply a case of something being overlooked. TheCourt cannot legislate for a casus omissions. To do sowould be to usurp the function of the legislature [seeMagor & St. Mellons Rural District Council v. NewportCorporation. Where the Statute's meaning is clear andexplicit, words cannot be interpolated. Even where themeaning of the statute is clear and sensible, eitherwith or without the omitted word, interpolation is https://hcservices.ecourts.gov.in/hcservices/ improper, since the primary source of the legislativeintent is in the language of the statute [seeCrawford's "Construction of Statutes". 1940 Edn., p.269 extracted in S. Narayanaswami v. G. Panneerselvam.]Undoubtedly, the Court cannot put into the Act wordswhich 'are not expressed, and which cannot reasonablyhe implied on any recognised principles ofconstruction. That would be a work of legislation, notof construction, and outside the province of the Court[see Kamalaranjan v. Secretary of State(3).] Similarly,where the words of the statute are clear it would notbe open to the Court in order to obtain a desiredresult either to omit or add to the words of thestatute. This is not the function of the Court chargedwith a duty of construction. This approach has,however, undergone a sea change as expressed byDenning, I.. J. in Seaford Court Estates Ltd. v. Asherwherein he observed as under:"When a defect appears a Judge cannotsimply fold his hands and blame the draftman.He must set to work on the constructive taskof finding the intention of Parliament....and then he must supplement the written wordsso as to give 'force and life' to theintention of legislature ...., A judge shouldask himself the question how, if the makersof the Act had themselves come across thisruck in the texture of it, they would havestraightened it out ? He must then do as theywould have done. A judge must not alter thematerial of which the Act is woven, but hecan and should iron out the creases."(Approved in State of Bihar & Anr. v. Dr. Asis KumarMukherjee & ors. where in he observed as under: 195“61Hence, for the above said reasons, I am of the consideredview that the Act covers the sale of public properties as well. Inview of my conclusion, the Act is applicable to "sale" of molassesby the Federation.62Having held that the Act is applicable to the “sale” ofpublic properties also, the next aspect to be looked into is, as towhether the open auction-cum-tender process is vitiated for notfollowing the relevant provisions contained in the Act and theRules framed thereunder. In this regard, it is useful to note thatthe open auction-cum-tender notice was uploaded in the website ofthe Government and the Federation on 06.06.2012 and in the dailies,viz., Indian Express (all editions) and Dhina Mani (Tamil Nazduedition), it was advertised on 07.06.2012. The schedule of theopen auction-cum-tender notice reads as under: https://hcservices.ecourts.gov.in/hcservices/ 1Last date and time for issue oftender forms14.06.2012 upto 05.00p.m.2Last date and time forsubmission of tender15.06.2012 at 11.00a.m.3Opening of Part-1 tender15.06.2012 at 11.30a.m.4EMD – Rs.100/- per MT of the tendered quantityThus, even if a tenderer receives the tender forms immediately onpublication of the open auction-cum-tender notice, only 8 days timewas provided for him to submit his tender.63Further, it is admitted that as per the terms andconditions for open auction-cum-tender for sale of molasses, thePart-I tender would be opened on 15.06.2012 at 11.30 a.m. and theeligible tenderers would be declared and immediately on the sameday, the public auction would be conducted by permitting theparticipation of eligible tenderers and thereafter, sealed tenderswould be opened at the end of public auction. But, the same didnot take place on 15.06.2012. Public auction took place on18.06.2012 and the sealed tenders were also opened on 18.06.2012.64At this juncture, it is relevant to extract Rules 20 and21 of the Rules in this regard.“20Minimum time for submission of tenders:(1)The Tender Inviting Authority shall ensure thatadequate time is provided for the submission of tendersand a minimum time is allowed between date ofpublication of the notice inviting tenders in therelevant Tender Bulletin or in the newspapers whicheveris later and the last date for submission of tenders.This minimum period shall be as follows:(a)For tenders up to rupees two crores in value,fifteen days; and(b)For tenders in excess of rupees two crores invalue, thirty days.(2)Any reduction in the time stipulated as persub-rule (1) has to be specifically authorised by anauthority superior to the Tender Inviting Authority forreasons to be recorded in writing.21Opening of tenders:1All the tenders received by the Tender AcceptingAuthority shall be opened at the time specified in thenotice inviting tenders and in cases where an extensionof time for the submission of tenders has been givensubsequent to the original notice inviting tenders in https://hcservices.ecourts.gov.in/hcservices/ accordance with sub-rule (5) of Rule 18 at the time sospecified subsequently. The e-submitted tenders may bepermitted to be opened by a Tender Inviting Authorityor a member of the Tender Scrutiny Committee from theirnew location if they are transferred after the issue ofNotice Inviting Tender and before tender opening andwhere the new incumbent is yet to obtain his digitalsignature certified.2The time specified for the opening of tendersshall be immediately after the closing time specifiedfor the receipt of tenders allowing a reasonableperiod, not exceeding one hour, for the transportationof the tenders received to the place they are to beopened in the presence of the tenderers who choose tobe present.3The tenders will be opened in the presence of thetenderers or one representative or the tenderer whochooses to be present.”65A reading of Rule 20 extracted above would clearlyindicate that in the case of tenders the value of which exceedsRs.2 crores, minimum time of 30 days shall be provided by thetender inviting authority for submission of tenders. Further, Rule21(2) of the Rules extracted above contemplates that the opening oftenders shall be immediately after the closing time specified forreceipt of tenders. But, none of these two conditions has beenfollowed. 66Further, in the instant case, 1 lakh MT of molasses wassold in the open auction-cum-tender at the rate of Rs.1,410/- perMT. Thus, the sale proceeds of 1 lakh MT of molasses works out toRs.14,10,00,000/-. (Rupees Fourteen Crores and Ten Lakhs). Besides,the purchasers have to pay Rs.300/- per MT towards administrativecharges to the State in the case of purchase of molasses forexport. Thus, by way of administrative charges, the State wasbenefitted by Rs.3,00,00,000/- (Rupees Three Crores). But, Rule 20and Rule 21 are not complied with in the sale of molasses by openauction-cum-tender.67Hence, I am of the considered view that since theaforesaid Rules have not been complied with, the open auction-cum-tender process conducted is vitiated and the second issue fordetermination is answered accordingly.Issue No.(iii)68Coming to the third point for determination, even if theAct is not applicable for “sale” of public properties, it is wellsettled that the State is bound to ensure transparency and fairnessin the matter of sale of public properties. Transparency andfairness demand that open auction-cum-tender notice relating tosale shall be given wide publicity by publishing advertisement in https://hcservices.ecourts.gov.in/hcservices/ various editions of an English daily all over India that has alarge circulation.69In this case, the open auction-cum-tender notice waspublished in the English daily, viz., Indian Express in all itseditions all over India and in Dhina Mani, in the Tamil Naduedition. 70Besides, at this juncture, it is also relevant to noteRule 11(2) of the Rules which reads as under:“11Publication of notice inviting tenders innewspapers(2)The number, editions and the language of thenewspapers in which the notices inviting tenders shallbe published will be based on the value ofprocurement.”71On perusing the file, I find that the open auction-cum-tender notice was published in the following editions. The Indian Express:EditionDate ofinsertionChennai, Madurai,Kovai, Tirchy,Bangalore, Shimoga,Belgaum, Kozhikode,Thiruvananthapuram,Hyderabad, Vijayawada,Vishakapatnam,Bhubaneswar,Chandigarh, Nagpuri,New Delhi, Kolkata,Lucknow, Mumbai, Pune,Ahmedabad, Vadodara07.06.2012Kochi08.06.2012The Dinamani:EditionDate ofinsertionChennai, Madurai,Kovai, Trichy, Nellai,Vellore and Dharmapuri07.06.2012Further, as already stated, the Federation also has uploaded theopen auction-cum-tender notice in its website and also in thewebsite of the Government of Tamil Nadu. https://hcservices.ecourts.gov.in/hcservices/ 72While dealing with the third issue for determination, thenext aspect to be looked into is as to whether adequate time wasgiven for submission of tender forms. Admittedly, the value ofmolasses sold in the open auction-cum-tender process is more thanRs.10 crores. That is a relevant factor in deciding about thegrant of time for submission of filled up tender forms. 73In this case, the open auction-cum-tender notice waspublished on 07.06.2012 calling the tenderers to get tender formsfrom that day onwards and the tender forms were made available upto5.00 p.m. of 14.06.2012 and the last date for submission is15.06.2012, i.e, a period of only 8 clear days was given forsubmission of tender forms. 74Along with the tender forms, terms and conditions foropen auction-cum-tender for the sale of molasses was issued. Asper the terms and conditions, there are two parts, viz., Part-I andPart-II. Clause 2 of Part-II of tender states that the tenderermay inspect the stock and check up the quality of molasses beforequoting the rates. No prudent trader will buy the commoditywithout inspecting the stock and checking up its quality. In thiscase, the companies as well as the respondents 1 and 2 stated thatthe price of molasses depends on the quality. Therefore, theinspection and ascertaining of quality of molasses becomes all themore necessary by the tenderer. 75Admittedly, 1 lakh MTs of molasses were not stocked atone place. They were stocked at as many as 16 cooperative andpublic sector sugar mills spread over the entire State of TamilNadu. Therefore, the tenderer should have a reasonable time to goaround Tamil Nadu to inspect the stock and also to check up thequality of molasses. Hence, this relevant aspect should have beenkept in mind while stipulating time-limit for submission of tenderforms. Besides the fact that the value of the tendered commodityis huge, the commodity that was put to sale was located atdifferent places and this is a relevant criterion in fixing thetime limit for submission of filled up tender forms. At thisjuncture, Rule 20 of the Rules extracted above can be usefullyreferred to. 76 In all these cases, the tender forms were purchased byall the three companies only on 14.06.2012. I fail to understandas to how they quoted rates on 15.06.2012 while submitting thefilled up tender forms. I am also not able to understand as to howthe companies gave different rates in respect of molasses to belifted from different sugar mills without checking the quality ofmolasses.77When the learned counsel for Integrated argued thematter, this Court pointed out as to how the Certificate ofAnalysis relating to quality of molasses is dated after 15.06.2012,viz., the date of opening of tender forms and also as to how, insome cases, it is prior to 07.06.2012., viz., the date ofpublication of open auction-cum-tender notice, as seen from the https://hcservices.ecourts.gov.in/hcservices/ typed set of papers dated 25.09.2012 produced in W.P. No.25230 of2012. In response, the learned counsel came with another typed setof papers dated 08.10.2012, giving the analysis report dated12.06.2012. On perusing these documents, I am not convinced withthe reports dated 12.06.2012 and these reports seem to have beenprepared to answer my query. 78Further, it is not explained either in the counteraffidavit or during the course of arguments as to, on what basis, 8days time was provided for submission of filled up tender forms bythe tenderers. Hence, in the circumstances of the case, I am ofthe considered opinion that the Federation failed to give adequateand reasonable time for submission of filled up tender forms by thetenderers. At this juncture, it is relevant to note that noneapplied for tender documents from "outside" the State and the threecompanies in Tamil Nadu applied for export to outside the country.This might be due to not giving adequate and reasonable time forsubmission of filled up tender forms. This resulted in thecurtailment of competition and the same ultimately defeated thevery purpose of getting the best price for the public properties.79For all the aforesaid reasons, I am inclined to hold thatthough the Federation published the open auction cum-tender noticewidely, all over the country, it miserably failed to provideadequate and reasonable time for submission of tender forms. Inany event, not giving adequate and reasonable time for submissionof tender forms would vitiate the tender process. The third issuefor determination is answered accordingly.Issue No.(iv)80Coming to the fourth issue for determination as towhether the Federation and the Molasses Sales Committee erred infixing Rs.1,375/- per MT as the upset price for public auctionresulting in the sale of 1 lakh MTs of molasses at a throw-awayprice, it is to be noted that this Court has limited jurisdictionover contractual matters. The fixation of upset price is purelywithin the domain of the executive authority. Unless it is shownthat the upset price was fixed arbitrarily and without applicationof mind, the same cannot be interfered with.81According to the petitioner, the respondent authoritiesindulged in selling molasses at a throw-away price from 2011onwards, thereby causing huge loss to the cooperative and publicsector sugar mills.82At this juncture, it is relevant to extract the quantityof molasses sold for export and also the price for which it wassold during the period 2006 to 2008, as per the counter affidavitof the Federation and the same is extracted hereunder: https://hcservices.ecourts.gov.in/hcservices/ S.No.YearMolasses soldfor export(MTs)Price Range(Rs./MT)1200680383750-175022007199000306-1750320081050001396-339542009NIL--52010NIL--620111000001375-155083As per the counter affidavit of the respondentauthorities, molasses was not exported during 2009 and 2010; in2011, 1 lakh MTs of molasses were sold for export at a priceranging from Rs.1,375 per MT to Rs.1,550 per MT. This pricefixation during 2011 is questioned by the petitioners asunconscionable and illusory and that the same is perpetuated in2012. 84I have perused the minutes of the Molasses SalesCommittee meeting held on 08.09.2011. As per the said minutes, thelast tender for export of molasses was held on 10.04.2008 andthereafter, export of molasses was not allowed by the Government.The Government accorded permission by letter (D) No.165, H, P & E(VIII) dated 25.08.2011 for export of 1 lakh MTs of molasses fromcooperative and public sector sugar mills. Before 25.08.2011, openauctions-cum-tenders were held on 24.01.2011, 08.02.2011,25.02.2011, 01.06.2011 and 17.06.2011 for sale of molasses in thedomestic market.85The aforesaid open auctions-cum-tenders were not forexport and they were meant only for domestic market. The highestrates quoted in the sealed tender bid (H-1 rate) during those fiveoccasions are as under:Date oftenderH-1 received24.01.2011170008.02.2011120025.02.2011104001.06.2011150017.06.20111550The details of quantity of molasses sold during the four occasionsviz., 24.01.2011, 08.02.2011, 25.02.2011 and 01.06.2011 are notavailable. https://hcservices.ecourts.gov.in/hcservices/ 86On 17.06.2011, the tendered quantity was 40,000 MT. Asstated above, the H-1 rate received in the sealed cover tender wasRs.1,200/-. The Molasses Sales Committee fixed the upset price foropen auction at Rs.1,550/- per MT. In these circumstances, therewas a sale of 5,125 MTs of molasses. 87Only after those 5 occasions, the Government accordedpermission for export in August 2011, as stated above. Based onthe approval granted by the Government as stated above,advertisement was given on 30.08.2011 calling for open auction-cum-tender on 08.09.2011 for sale of 50,000 MTs of molasses. As perthe minutes of the Molasses Sales Committee dated 08.09.2011,before opening the sealed cover tenders, the Molasses SalesCommittee fixed the upset price at Rs.1,330/- per MT which is saidto be the average of H-1 rates on five occasions, viz., 24.01.2011,08.02.2011, 25.02.2011, 01.06.2011 and 17.06.2011 for the publicauction. In the open auction, there was no bidding for any of themills. Obviously, no tenderer could come for open bidding sinceall the three tenderers quoted a higher rate of Rs.1,550/- per MTin the sealed cover for 14,500 MTs of molases than the upset pricefixed by the Molasses Sales Committee.88As per the Minutes, after the completion of open auctionon 08.09.2011, sealed tenders were opened. Thereafter, theMolasses Sales Committee negotiated with H-1 tenderers andrequested the H-1 tenderers to offer a higher price. But, all thethree tenderes stuck to their respective rate. Obviously, thetenderers refused to offer a higher price during negotiation sincethe upset price fixed by the Molasses Sales Committee itself wasRs.1,330/- per MT. Ultimately, the Molasses Sales Committeeaccepted the rate of Rs.1,550/- per MT and sold 14,500 MTs ofmolasses.89The above said narration of facts itself would make itclear that the process adopted by the Molasses Sales Committee ishighly deprecatory. It is quite astonishing that the MolassesSales Committee comprising 7 high-level officers did not apply itsmind. The rate of molasses meant for domestic market and the rateof molasses meant for export, are totally different. The rate ofmolasses meant for export is at least three-fold of the rate ofmolasses meant for domestic market. This fact is discernible fromthe comparative statement of prices enclosed in the typed set ofSuraj. Therefore, there is no logic in fixing the average of 5 H-1rates in respect of domestic market as the upset price for molasseswhich is meant for export. At the risk of repetition, the rate ofmolasses meant for domestic market and the rate of molasses meantfor export, are totally different. In any event, assuming that theMolasses Sales Committee wanted to take the rate in the domesticmarket for fixation of upset price, the highest rate shall be takenas the upset price and not the average of 5 H-1 rates.90The very fixation of Rs.1,330/- MT as upset price forpublic auction, when the tenderers themselves had quoted Rs.1,550/-per MT in the sealed cover tenders would make it crystal clear that https://hcservices.ecourts.gov.in/hcservices/ the Molasses Sales Committee failed to fix the upset price based onthe prevailing market rate, i.e., the Molasses Sales Committeefailed to take into account the price at neighbouring States.Otherwise, the open auction shall be done without fixation of upsetprice. In fact, the terms and conditions of sale of molassesenclosed with the tender form do not contemplate fixation of upsetprice. In that event, the tenderers could have come forward forpublic auction to quote at a price higher than Rs.1,550/- per MTfor which they expressed their willingness to purchase, in thesealed cover tender. The Kerala High Court in the judgment reportedin 1994 AIR Kerala 286, at paragraph no.11, has held that it is notnecessary to fix upset price. This judgment is considered indetail at a later part of this judgment. Such a ridiculous act wasdone by the Molasses Sales Committee. Having noticed such afoolish act committed by the respondent authorities, thebusinessmen acted smartly and shrewdly and they did not comeforward for negotiation and the Molasses Sales Committee was forcedto sell molasses at Rs.1,550/- per MT, as quoted in the sealedcover tender. At this juncture, it is relevant to take note ofparagraph no.14 of the judgment reported in (2004) 8 SCC 671,wherein, the Apex Court found that the upset price was fixedcorrectly as per the guidelines, by fixing 1 ½ times the marketrate.91Out of 1 lakh MTs of molasses, 14,500 MTs of molasseswere sold on 08.09.2011. There was a balance quantity of 85,500MTs of molasses. Based on the advertisement made on 13.09.2011calling for open auction-cum-tender, open auction-cum-tender was totake place on 22.09.2011. 92This time also, the Molasses Sales Committee committedthe same blunder which was committed on 08.09.2011. In otherwords, the Molasses Sales Committee fixed the upset price atRs.1,330/- per MT based on the average of five H-1 rates on fiveoccasions relating to domestic market. A sorry state of affairs isthat they did not even fix the rate of Rs.1,550/- which was the H-1rate quoted by the tenderers in the earlier sale process andmolasses was sold at the rate of Rs.1,550/- per MT on 08.09.2011and the molasses was sold at the rate of Rs.1,550/- per MT on08.09.2011 On the other hand, the Molasses Sales Committee fixedRs.1,330/- per MT as the upset price. 93On this occasion, three tenderers participated as in thelast occasion. The tenderers in the sale process that took placeon 22.09.2011 are the three companies who are before this Court.There was no bidding for any of the mills by the tenderers in theopen auction. The tenderers were shrewd enough in not quoting ahigher H-1 rate than the upset price in sealed tender, as in theprevious occasion on 08.09.2011. Suraj quoted in the sealed tenderranging from Rs.1,150/- per MT to Rs.1,310/- per MT, i.e.,different rates from Rs.1,150/- to Rs.1,310/- per MT are quotedfor molasses of different cooperative and public sector sugarmills. Likewise, Integrated quoted in the range of Rs.1,025/- perMT to Rs.1,300/- per MT and Imcola quoted different rates ranging https://hcservices.ecourts.gov.in/hcservices/ from Rs.1,160/- to Rs.1,300/- per MT. 94Thus, in short, all the three companies quoted rates lessthan the upset price in the sealed cover tenders and in the earlieroccasion, the tenderers quoted higher amount in the sealed covertenders than the upset price. Of course, those tenderers aredifferent. But, these businessmen know what is actually going onin the tender process. This time, these businessmen acted smartlyand offered a lesser rate in the sealed tender. In view of thehigher rate quoted in the sealed tender in the last occasion, theywere to take molasses at the rate quoted by them, i.e., when theupset price fixed by the Molasses Sales Committee was Rs.1,330/-per MT, they quoted Rs.1,550/- in the sealed cover and therefore,they had to pay the price of Rs.1,550/- per MT. This time, asstated above, they quoted lesser rate in the sealed cover.Therefore, during negotiations, they offered the price that wasless than Rs.1,550/- per MT and the sale price was fixed atRs.1,375/- per MT which is much lesser than Rs.1,550/- per MT,i.e., the rate quoted by the earlier tenderers in the sealed coverin the last occasion on 08.09.2011.95In the instant case, the open auction-cum-tender processwas to take place on 15.06.2012. But, in fact, the open auction-cum-tender process took place on 18.06.2012. The upset price wasfixed by the Molasses Sales Committee at Rs.1,375/- per MT, takinginto account, the highest offer of Rs.1,375/- per MT on 22.09.2011and also considering the five open auctions-cum-tenders held forsale of molasses within the State and for export. The relevantpassage from the Minutes dated 18.06.2012 of the Molasses SalesCommittee Meeting is extracted hereunder:"2In the last five open auction-cum-tenders heldfor sale of molasses within the State and for export,the following H-1 rates were obtained:Date oftenderH-1 ratereceived(Rs./MT)17.06.2011(domestic)1,200/-20.09.2011(")1,100/-26.04.2012(")800/-08.09.2011(export)(outsideState)1,550/-22.09.2011(")(outside State)1,405/-22.09.2011 (")(outsidecountry)1,375/-In the last tender held on 22.09.2011 for export ofmolasses outside the country, the highest offer receivedwas Rs.1375 per MT and a total quantity of 72,100 MTswas sold @ Rs.1375/- per MT for export to outside the https://hcservices.ecourts.gov.in/hcservices/ country.Considering the above and the prevailing marketrate, the Committee has unanimously decided to fixRs.1,375/- per MT as upset price for all the 16 sugarmills."96Therefore, from a reading of the above-extracted portion of the Minutes, it is clear that theupset price was fixed based on the rates in the domesticmarket which is not relevant, in my considered view, forsale of molasses for export. The upset price is alsosaid to be based on the prevailing market rate for whichthere is no material. Prevailing market rate is therate that is obtaining at least in the neighbouringStates, if not in the northern States. The judgment ofthe Apex Court in CDJ 2008 SC 725 held that the price ofmolasses in the neighbouring State shall be taken noteof. The said judgment is considered in detail, at alater part of this judgment. Admittedly, the prevailingrate during that time in Pondicherry is much higher. InPondicherry, it was sold at Rs.3,551/- per MT in March2012. This was not at all taken into account by theMolasses Sales Committee. The molasses was sold inAndhra Pradesh at Rs.1,400/- per MT during this period.It is relevant that the administrative charges per MTfor the purpose of export payable to the Andhra PradeshState Government, is Rs.2,500/- and the same shall betaken into account while taking into account theprevailing market rate, since the administrative chargesfor the purpose of export in Tamil Nadu is Rs.300/- perMT and it is Rs.100/- per MT in Pondicherry.97While addressing letter to the Government, the Directorof Sugar stated that by selling 1 lakh MTs of molasses, theGovernment would get a revenue of Rs.3 crores at the rate ofRs.300/- per MT towards administrative charges. As far as thebusinessmen are concerned, the price of molasses per MT is theprice that they can negotiate in the open auction-cum-tender +Rs.300/- per MT in Tamil Nadu and the price of molasses per MT inAndhra Pradesh is Rs.1,400/-+Rs.2,500/- per MT which is equal toRs.3,900/.98Now, it is sought to be distinguished saying that themolasses in Pondicherry and in other States is of a superiorquality. But, it is not stated in the Minutes of the Molasses SalesCommittee that the upset price was fixed at Rs.1,375/- per MT asthe quality is an inferior one. 99As usual, in this case, the tenderers quoted much lesserthan the upset price because these tenderers are the same tendererswho participated in the earlier tender that took place on22.09.2011. https://hcservices.ecourts.gov.in/hcservices/ 100Suraj quoted the rate ranging from Rs.925/- per MT toRs.1,050/- per MT to different mills. Integrated quoted in therange of Rs.900/- per MT to Rs.1,080/- per MT and Imcola quoted inthe range of Rs.850/- per MT to Rs.1,075/- per MT to differentcooperative and public sector sugar mills. In the open auction, asusual, the tenderers did not bid. In the sealed tender, theyquoted much less than the upset price of Rs.1,375/- per MT. Then,they agreed for an increase of Rs.15/- per MT, i.e., they offered aprice of Rs.1,390/- per MT. In the negotiation, finally, the priceper MT was fixed at Rs.1,410/-. Therefore, the entire process offixing the upset price was done in an irrational and illogicalmanner by the Molasses Sales Committee without application of mind.No prudent Government authority dealing with public propertieswould act like this.101Even from the typed set of papers that is filed by Suraj,it is seen that the price of molasses for local sales is very muchless than the price of molasses meant for export purpose. As perthe comparative statement of export price and local price furnishedby Suraj in the typed set of papers, during 2006-2007, the exportprice ranged from Rs.1,250/- per MT to Rs.1,650/- per MT and thelocal price ranged from Rs.200/- per MT to Rs.350/- per MT. 102Likewise, as per the comparative statement for the year2007-2008 furnished by Suraj in the typed set of papers, the exportprice ranged from Rs.334/- per MT to Rs.720/- per MT for the saleof 1,05,000 MTs of molasses from cooperative and public sectorsugar mills and 70,000 MTs of molasses were sold for the priceranging from Rs.420/- per MT to Rs.800/- per MT. But, the rate inthe domestic market ranged from Rs.175/- per MT to Rs.275/- per MT. 103But, for the period 2011-2012, the price of molasses inthe domestic market was ranging from Rs.1,550/- per MT toRs.2,400/- per MT, as per the comparative statement furnished bySuraj in the typed set of papers. But, the molasses of thecooperative and public sector sugar mills were sold at a pricerange of Rs.1,375/- per MT to Rs.1,550/- per MT. It is stated inthe comparative statement submitted by Suraj which is found at pageno.38 of the typed set of papers that the offer ranging fromRs.1,550/- per MT to Rs.2,400/- per MT for local market wasrejected by the Tamil Nadu Sugar Federation. Such an action issurprising.104Thus, a comparison of the rates during 2006-2007 and2007-2008 on the one hand and the rates in 2011-2012 on the otherhand, makes it crystal clear that the respondent authorities haveacted recklessly and the molasses was sold at Rs.1,410/- per MT ata throw-away price. https://hcservices.ecourts.gov.in/hcservices/ 105The aforesaid typed set of papers of Suraj itselffortifies my conclusion that the upset price was fixed in anirrational manner without due application of mind in the year 2011,when 1 lakh MTs of molasses were permitted by the Tamil NaduGovernment for sale by way of export. This was perpetuated in 2012,in the present case. As stated above, there was a grave mistake infixing the upset price based on domestic market and in not takinginto account, the price in the neighbouring States. On the facts,the ultimate sale price totally depends on the fixation of upsetprice. In the result, the molasses was sold at an unconscionableprice, as per the materials furnished. The arbitrary action of theauthorities without application of mind to the issue resulted inselling the public property at a throw-away price. The fourth issuefor determination is answered accordingly.Issue No.(v):106The fifth issue for determination is as to whether thethree companies formed cartel in the sale of 1 lakh MTs of molassesand controlled the sale price by concerted action. 107In the instant case, three tenderers offered toparticipate in the open auction-cum-tender process for sale ofmolasses. They are Suraj Agimpex House, Integrated Service PointPvt. Ltd and Imcola Exports Ltd. 108In the sealed tender, all of them quoted in almostsimilar terms and more importantly, the rates were lesser than theupset price fixed by the Molasses Sales Committee. The mill-wiserates offered by these three companies in the sealed tender and therate quoted by them in the public auction, are as under: https://hcservices.ecourts.gov.in/hcservices/ S.No.Name ofthe MillsQty.availableforsaleMTsExport to outside the countrySURAJIMCOLAINTEGRATEDQtyTenderRs.AuctionQtyTenderRs./MTAuctionQtyTenderAuction1Ambur46002ArignarAnna90003Chengalarayan74004Cheyyar48005Dharmapuri70006Kallakurichi – I71007Kallakurichi - II75008MRK56009Madurantakam200010National930011NPKRR440012Perambalur720013S. Siva640014Tirupattur530015Tiruttani560016Vellore680060000MTsforallmills10009251000105092510201050100010509259509509251050105010501390perMTforallmills30000MTsforallmills100085097510759301025102595097590098094090097511009751390/-perMTforallmills20000MTsforallmills10259051025106091010081035102510259009509709401040108010351390per MTfor allmillsTotal qty.available100000109If any one of them had quoted above the upset price, thatparty could have been H-1 tenderer and the said party could havebeen called for negotiation. But, all of them quoted rates lesserthan the upset price of Rs.1,375/- per MT. The manner of sale hasalready been dealt with extensively in this order while dealingwith Issue No.(iv). However, this alone is not sufficient to holdthat the three companies formed cartel and cornered the business. https://hcservices.ecourts.gov.in/hcservices/ 110The open auction took place before the opening of thesealed tenders. In the open auction, all the three companiesquoted a price of Rs.1,390/- per MT which is just Rs.15/- higherthan the upset price. When the rates offered in the sealed tenderswere lesser than the upset price fixed by the Molasses SalesCommittee for open auction, the offers made in the sealed tenderswere rejected. This created a suspicion in the conduct of thethree companies as to whether they acted in concert to advancetheir business interest and to control the sale price. However,suspicion cannot take the place of proof.111Later, private negotiation was held with the threecompanies separately. In the private negotiation, each of thecompanies quoted Rs.1,410/- per MT. This created a strongsuspicion for formation of cartel. 112Apart from that, a clinching documentary evidence thatproves the formation of cartel among the three companies is thefilled up tender form of Imcola. Imcola submitted the filled uptender form dated 14.06.2012. The said tender form was filled byusing a pen. In clause 9 of Part I tender of the said tender form,it was written that they require 30,000 MT (minimum). 113As per the advertisement notifying the sale of 1 lakh MTsof molasses by open auction-cum-tender process, the tenderers shallpay Earnest Money Deposit of Rs.100/- per MT for the tenderedquantity. Imcola enclosed along with the tender form, two DemandDrafts and the details of the two Demand Drafts are furnished inclause no.9, wherein, the details of the Demand Drafts were to beshown. The number of one Demand Draft is 538366 and it is forRs.10,00,000/- (Rupees Ten Lakhs) and the number of the otherDemand Draft is 538367 and it is for Rs.20,00,000/- (Rupees TwentyLakhs). Thus, the total amount deposited as Earnest Money Depositis Rs.30 lakhs. The details as written by Imcola in Clause no.9 isas follows:20,00030,000 MTs (Minimum) https://hcservices.ecourts.gov.in/hcservices/ Sl.No.Name of thesugar millsQty. InMtsDetails of EarnestMoney Deposit1Ambur46002Arignar Anna90003Chengalvarayan74004Cheyyar48005Dharmapuri70006Kallakurichi – I71007Kallakurichi –II75008MRK56009Madurantakam200010National930011NPKRR440012Perambalur720013Subramania Siva640014Tirupattur530015Tiruttani560016Vellore 6800DD No.538366 –amountRs.10,00,000 andDD No.538367 –amountRs.20,00,000.Total Rs.30,00,000114Besides, Imcola sent a covering letter dated 14.06.2012along with the filled up tender form. Second and third paragraphsof the said covering letter that are in typed form, are extractedhereunder:“We enclose the tender form duly filled in alongwith our Pay Order bearing no.538367 and 538366 dated14.06.2012 for Rs.30,00,000/- (Rupees thirty lakhsonly) drawn on Andhra Bank, Mount Road, Chennai towardsEMD payable for 30,000 Mts @ Rs.100/- (Rupees Hundredonly) per M/T. 20,000We enclose our application for the quantity of30,000 M/Ts stored in the steel tank. Our price quoteis negotiable.”Later in paragraph no.3 alone, a correction is made by using a penby scoring out 30,000 and inserting minimum 20,000. (Thecorrections are also shown in this order). However, no correctionsin paragraph no.2 were made, though paragraph no.2 states thatthey enclosed Demand Draft for Rs.30 lakhs. It is not known as towhen these corrections were made. Likewise, a correction is madein clause 9 of Part-I Tender by scoring out 30,000 and writing inpen as 20,000. It is not known as to when this scoring out of30,000 limiting it to 20,000 took place. https://hcservices.ecourts.gov.in/hcservices/ 115In my view, this correction did not take place on14.06.2012/15.06.2012 when Imcola submitted the filled up tenderform and the covering letter and the same took place thereafterpursuant to an understanding reached among the parties on the saleof molasses. Had Imcola intended to restrict on 15.06.2012, wheythey submitted the tender form, they could have simply taken backone Demand Draft for Rs.10,00,000/- (Rupees Ten Lakhs), by scoringout that portion. Paragraph no.2 of the covering letter could alsobe corrected accordingly.1161 lakh MTs of molasses were for sale. The tenderedquantity of Suraj and Integrated was 60,000 MTs and 20,000 MTsrespectively. The tendered quantity of Imcola at the time ofsubmission of the tender form was 30,000 MTs. No businessman couldhave made an extra Earnest Money Deposit of Rs.10 lakhs, if theywanted only 20,000 MTs. 117Another worth-mentioning feature has also taken place inthe tender process. As per clause III of the terms and conditionsof open auction-cum-tender for sale, the open auction should havetaken place immediately after the evaluation of Part I tender bythe Molasses Sales Committee and on opening the same.118Clause III of the tender condition is extractedhereunder:"IIIOPENING OF TENDER AND CONDUCTING AUCTION:Part-I tender will be opened by the MolassesSales Committee on 15.06.2012 at 11.30 AM in thepresence of the tenderers or theirrepresentatives chosen to be present at the timeof opening.After evaluation of Part-I tender by theMolasses Sales Committee, the eligible tendererswill be declared and afterwards open auction willbe conducted on the same day immediately. Theeligible tenderers alone will be allowed toparticipate in the open auction.Eligible sealed tender (Price Bid) will beopened after the end of the open auction in thepresence of the available tenderers/bidders."119The schedule of open auction cum tender notice wasadvertised and the same has already been extracted in paragraphno.62 of this order. However, at the cost of repetition, the sameis extracted hereunder: https://hcservices.ecourts.gov.in/hcservices/ 1Last date and time for issue oftender forms14.06.2012 upto 05.00p.m.2Last date and time forsubmission of tender15.06.2012 at 11.00a.m.3Opening of Part-1 tender15.06.2012 at 11.30a.m.4EMD – Rs.100/- per MT of the tendered quantity120Part-I tender was not evaluated on 15.06.2012 asnotified. Open auction also did not take place on 15.06.2012 asscheduled as per Clause III of the terms and conditions of thetender.121In my view, the three companies and the Molasses SalesCommittee colluded and a stage-managed affair took place. Therespondents 2 and 3 approved the action of the Molasses SalesCommittee without application of mind. As per the open auction-cum-tender notice, the opening of Part-I tender should have takenplace at 11.30 a.m. on 15.06.2012 and thereafter, as per sub-clauseIII of the terms and conditions of the tender, open auction shallbe held immediately and after the open auction, sealed tendersshall be opened. But the schedule was not followed as notified.Therefore, opening of Part-I tender did not take place at 11.30a.m. on 15.06.2012 and thereafter, open auction also did not takeplace immediately and the opening of the sealed tenders also didnot take place immediately after the conclusion of the openauction.122The reason for not conducting open auction on 15.06.2012is curious. As per the Minutes of the Molasses Sales Committeedated 15.06.2012, it was decided to open the tenders on 18.06.2012at 11.30 a.m. in the presence of the Chairman, Molasses SalesCommittee, as the Chairman of the Molasses Sales Committee was oncasual leave on 15.06.2012. The relevant passage from the Minutesof the Molasses Sales Committee is extracted hereunder:"As scheduled, the Molasses Sales Committee met at11.30 A.M. on 15.06.2012. As the Chairman of the Molasses Sales Committee ison Casual Leave, it is decided by the members presentto open the tender on 18.06.2012 at 11.30 a.m., in thepresence of the Chairman, Molasses Sales Committee.Accordingly, the information is conveyed to the threetenderers, to be present on 18.06.2012 at 11.30 A.M. atthe time of tender opening."123Firstly, this Court is not able to understand the way inwhich the Chairman behaved, if he went on casual leave really on15.06.2012, when the tender was to be opened as per the schedulenotified. It is a different matter had he fallen ill and the https://hcservices.ecourts.gov.in/hcservices/ meeting was adjourned indefinitely without specifying a particulardate. A note-worthy aspect in this regard is that the Chairman ofthe Molasses Sales Committee is the Additional Director of Sugar-II. The Minutes of Meeting dated 15.06.2012 bears his signature.Had he been on casual leave, his signature could not be there inthe Minutes. That is why the Minutes itself was prepared pursuantto the collusive action among the parties. Later, the stage-managed auction took place on 18.06.2012 and the sale of molassestook place at a throw-away price.124At this juncture, it is relevant to take note of the factthat nowhere, the term "cartel" was statutorily defined before thesame was defined in the Competition Act, 2002. That is why, I amnot looking into the dictionary meanings of the word "cartel" thatwere relied on by the learned counsel for the petitioners. TheStatement of Objects and Reasons for enacting the Competition Actmakes it clear that in the era of globalisation resulting inliberalisation, it was necessary to prevent practices havingadverse effect on competition and to promote and sustaincompetition in market. 125It is stated in the Objects and Reasons of theCompetition Act that the Monopolies and Restrictive Trade PracticesAct has become obsolete in certain respects in the light ofinternational economic developments, relating more particularly tocompetition laws and there is a need to shift the focus fromcurbing monopolies to promote competition.126The Statement of Objects and Reasons of the CompetitionAct contains 8 paragraphs. Paragraphs 1 to 3 are extractedhereunder:"1In the pursuit of globalisation, India hasresponded by opening up its economy, removing controlsand resorting to liberalisation. The natural corollaryof this is that the Indian market should be geared toface competition from within the country and outside.The Monopolies and Restrictive Trade Practices Act,1969 has become obsolete in certain respects in thelight of international economic developments relatingmore particularly to competition laws and there is aneed to shift to our focus from curbing monopolies topromoting competition.2The Central Government constituted a HighLevel Committee on Competition Policy and Law. TheCommittee submitted its report on the 22nd May, 2000 tothe Central Government. The Central Governmentconsulted all concerned including the trade andindustry associations and the general public. TheCentral Government after considering the suggestions ofthe trade and industry and the general public decidedto enact a Law on Competition. https://hcservices.ecourts.gov.in/hcservices/ 3The Competition Bill, 2001, seeks to ensurefair competition in India by prohibiting tradepractices which cause appreciable adverse effect oncompetition in markets within India and, for thispurpose, provides for the establishment of a quasi-judicial body to be called the Competition Commissionof India (hereinafter referred to as CCI) which shallalso undertake competition advocacy for creatingawareness and imparting training on competitionissues."127Further, the word “cartel” is defined under Section 2(c)of the Competition Act and the same is extracted hereunder:"cartel includes an association of producers,sellers, distributors, traders or service providerswho, by agreement amongst themselves, limit, control orattempt to control the production, distribution, saleor price of, or trade in goods of provision ofservices;"128The word “agreement” is also defined under Section 2(b)of the Competition Act and a wider meaning is given to the word“agreement”. As per the said definition, “agreement” also includesany arrangement or understanding or action in concert and thearrangement or understanding or action may not be in writing andthe arrangement or understanding or action may not be enforceableby legal proceedings. Section 2(b) of the Competition Act isextracted hereunder:"Agreement includes any arrangement or understanding oraction in concert,-i)whether or not, such arrangement,understanding or action is formal or in writing; orii)whether or not such arrangement,understanding or action is intended to be enforceableby legal proceedings;"129Section 3 of the Competition Act prohibits anti-competitive agreements. Section 3 of the Competition Act containsfive sub-clauses. For the purpose of this case, Clauses 3(1) to 3(3) are extracted hereunder:"3Anti-competitive agreements1)No enterprise or association ofenterprise or person or association ofpersons shall enter into any agreement inrespect of production, supply, distribution,storage, acquisition or control of goods orprovision of services, which causes or islikely to cause an appreciable adverse effecton competition within India. https://hcservices.ecourts.gov.in/hcservices/ 2)Any agreement entered into incontravention of the provisions contained insub-section (1) shall be void.3)Any agreement entered into betweenenterprises or associations of enterprises orpersons or associations of persons or betweenany person and enterprise or practice carriedon, or decision taken by, any association ofenterprises or association of persons,including cartels, engaged in identical orsimilar trade of goods or provision ofservices, which-a)directly or indirectly determinespurchase or sale prices;b)limits or controls production,supply, markets, technical development,investment or provision of services;c)sharers the market or source ofproduction or provision of services by way ofallocation of geographical area of market, ortype of goods or services, or number ofcustomers in the market or any other similarway;d)directly or indirectly results inbid rigging or collusive bidding, shall bepresumed to have an appreciable adverse effecton Competition:Provided that nothing contained in thissub-section shall apply to any agreemententered into by way of joint ventures if suchagreement increases efficiency in production,supply, distribution, storage, acquisition orcontrol of goods or provision of services.Explanation:For the purposes of this sub-section, "bidrigging" means any agreement, between enterprises orpersons referred to in sub-section (3) engaged inidentical or similar production or trading of goods orprovision of services, which has the effect ofeliminating or reducing competition for bids oradversely affecting or manipulating the process forbidding."130Any agreement that is likely to cause an appreciableadverse effect on competition within India is declared as voidunder Section 3(1) read with Section 3(2) of the Act. The word"cartel" is used in Section 3(3) of the Act. Section 3(3)(a) of https://hcservices.ecourts.gov.in/hcservices/ the Act states that even indirect determination of sale pricepursuant to the agreement between enterprises shall be presumed tohave an appreciable adverse effect on competition. Agreementbetween enterprises even indirectly resulting in bid-rigging orcollusive bidding is also presumed to have an appreciable adverseeffect on competition. Bid-rigging is explained by way ofexplanation appended to Section 3(3) of the Act.131The word "enterprise" is defined under Section 2(h) ofthe Act and the word “enterprise” is given a wider meaning also.The relevant portion from the definition of the word “enterprise”is extracted hereunder:"Enterprise means a person or a department of theGovernment, who or which is, or has been, engaged inany activity, relating to the production, storage,supply, distribution, acquisition or control ofarticles or goods, or the provision of services, of anykind, or in investment, or in the business ofacquiring, holding, underwriting or dealing withshares, debentures or other securities of any otherbody corporate, either directly or through one or moreof its units or divisions or subsidiaries, whether suchunit or division or subsidiary is located at the sameplace where the enterprise is located or at a differentplace or at different places, but does not include anyactivity of the Government relatable to the sovereignfunctions of the Government including all activitiescarried on by the departments of the Central Governmentdealing with atomic energy, currency, defence andspace."132A Competition Commission is established under Section 7of the Act. The composition of Commission is dealt with underSection 8 of the Act. 133I am not going into other details except extractingSection 27 of the Act as under:“27.Orders by Commission after inquiry into agreementsor abuse of dominant position:Where after inquiry the Commission finds that anyagreement referred to in section 3 or action of anenterprise in a dominant position, is in contraventionof section 3 or section 4, as the case may be, it maypass all or any of the following orders, namely:-adirect any enterprise or association ofenterprises or person or association of persons,as the case may be, involved in such agreement, orabuse of dominant position, to discontinue and notto re-enter such agreement or discontinue suchabuse of dominant position, as the case may be; https://hcservices.ecourts.gov.in/hcservices/ bimpose such penalty, as it may deem fit whichshall be not more than ten per cent of the averageof the turnover for the last three precedingfinancial years, upon each of such person orenterprises which are parties to such agreementsor abuse:Provided that in case any agreementreferred to in section 3 has beenentered into by any cartel, theCommission shall impose upon eachproducer, seller, distributor, trader orservice provider included in thatcartel, a penalty equivalent to threetimes of the amount of profits made outof such agreement by the cartel or tenper cent of the average of the turnoverof the cartel for the last precedingthree financial years, whichever ishigher;caward compensation to parties in accordancewith the provisions contained in section 34;ddirect that the agreements shall standmodified to the extent and in the manner as may bespecified in the order by the Commission;edirect the enterprises concerned to abide bysuch other orders as the Commission may pass andcomply with the directions, including payment ofcosts, if any;frecommend to the Central Government for thedivision of an enterprise enjoying dominantpositiongpass such other order as it may deem fit.”134Under Section 27 of the Competition Act, the Commissionhas the power to direct the enterprise to dis-continue agreementand also to impose penalty besides awarding compensation to theparties.135Section 34 of the Competition Act empowers the Commissionto award compensation to the affected party due to the formation ofcartel. The said Section reads as under:"34.Power to award compensation:1Without prejudice to any other provisionscontained in this Act, any person may make anapplication to the Commission for an order for the https://hcservices.ecourts.gov.in/hcservices/ recovery of compensation from any enterprise for anyloss or damage shown to have been suffered, by suchperson as a result of any contravention of theprovisions of Chapter II, having been committed by suchenterprise.2The Commission may, after an inquiry madeinto the allegations mentioned in the application madeunder sub-section (1), pass an order directing theenterprise to make payment to the applicant, of theamount determined by it as realisable from theenterprise as compensation for the loss or damagecaused to the applicant as a result of anycontravention of the provisions of Chapter II havingbeen committed by such enterprise.3Where any loss or damage referred to in sub-section (1) is caused to numerous persons having thesame interest, one or more of such persons may, withthe permission of the Commission, make an applicationunder that sub-section for and on behalf of, or for thebenefit of, the persons so interested, and thereupon,the provisions of rule 8 of Order 1 of the FirstSchedule to the Code of Civil Procedure, 1908 (5 of1908), shall apply subject to the modification thatevery reference therein to a suit or decree shall beconstrued as a reference to the application before theCommission and the order of the Commission thereon."136In view of broad definition of the words “agreement” and“enterprise”, the concerted action of the three companies involvedin this case shall be prohibited under Section 3 of the CompetitionAct. Since it is a prohibited act, the resultant sale of 1 lakhMTs of molasses shall be declared void.137Hence, for the reasons stated above, I am of theconsidered view that the three companies formed cartel in the saleof 1 lakh MTs of molasses and controlled the sale price byconcerted action. This resulted in huge loss of many crores ofrupees to the cooperative and public sector sugar mills. Issue No.(v) for determination is answered accordingly.Issue No.(vi)138Coming to Issue No.(vi) for determination, viz., whetherthe action of the respondents 1 and 2 in the entire process of saleof molasses is mala fide so as to favour the three companies, it isworth pointing out that the Federation sent a letter to theDirector of Sugars on 20.03.2012, requesting him to address to theGovernment seeking permission to export 1 lakh MTs of molasses asin 2011. It is stated that the price in the local market is lessand therefore, they seek sale of molasses in the export marketwhich is wide. https://hcservices.ecourts.gov.in/hcservices/ 139Based on the said letter, the Director wrote lettersdated 22.03.2012, 30.03.2012, 25.04.2012 and 08.05.2012 to theGovernment, requesting for permission to export 1 lakh MTs ofmolasses. The Director of Sugar has stated that the price in thelocal market is less, while the export market is wide and that theycould get the best price. In the letter dated 30.03.2012, theDirector has stated that there will not be any shortfall ofmolasses for IMFL/Ethanol for domestic requirement if permission isgiven for sale of 1 lakh MTs of molasses by way of export. Thus, itis clear that the first priority is sale of molasses toIMFL/Ethanol for domestic requirement. It is further stated thatthe State will also get Rs.300/- per MT, by way of administrativecharges, if export of 1 lakh MTs of molasses is made and in thatprocess, the State would get a revenue of Rs.3 crores.140Based on the same, the Government gave permission intheir letter in Letter (D) No.100/H, P & E.VIII/2012 dated05.06.2012, allowing the Director of Sugar to export 1 lakh MTs ofmolasses from cooperative sugar mills. The said letter wasreceived on 06.06.2012. The original file bears the seal of theDirector of Sugar and also the signature for receiving theGovernment's letter on 06.06.2012 Thereafter, the Director ofSugar addressed a letter dated 08.06.2012 to the Federation inRc.No.9884/S&M/2011 dated 08.06.2012 enclosing the aforesaid letterdated 05.06.2012 of the Government directing the Special Officer ofthe Federation to take necessary action. The Director of Sugarsigned the said letter dated 08.06.2012 on 11.06.2012 and the samebears the seal of the Federation dated 11.06.2012, meaning thereby,that the letter was received by the Federation on the same day. 141While so, it is quite surprising that the Federation senta letter dated 06.06.2012 itself in Rc.No.4352/2012-13/E/Mol./Export, to the Director of Information and PublicRelations, to arrange to publish the notice in the tender column inthe Indian Express and a Tamil Daily, for sale of molasses by wayof export. The Federation is at Nandhanam, Chennai, while theDirector of Information and Public Relations is at Fort St. George,Chennai. Immediately, the Director of Information and PublicRelations made arrangements for publication on 07.06.2012 itself inthe Indian Express, an English Daily and in the Dhina Mani, a TamilDaily. 142The aforesaid facts are culled out from the original filethat was produced for perusal of the Court. 143It is not known as to how things took place in such alightning speed and it is also not known as to why only 8 daystime was given for submission of tender, though the value of thetendered quantity is more than Rs.10 crores. Even assuming butwithout admitting that the Act is not applicable in respect of“sale” of public properties, if the principle is applied, theFederation should have given 30 days time for submission of tenderforms. The purpose of giving adequate time to tenderers to submitthe filled up tender forms, is to get more competitors so as to get https://hcservices.ecourts.gov.in/hcservices/ the best price. But, the way in which the events had taken placecreated a lot of suspicion.144Likewise, the statement of molasses production for theyear 2011-2012 (as on 01.03.2012) in Tamil Nadu that is availablein the file, makes it clear that 13.90 lakh MTs of molasses areavailable from 45 sugar mills out of which 26 are private sugarmills and 16 are cooperative sugar mills and 3 are public sectorsugar mills. Out of these 13.90 lakh MTs, 11.03 MTs are for 17functioning distilleries and cattle feeds in the domestic market inTamil Nadu. Therefore, while 11.03 MTs was the expectedrequirement of molasses for 17 functioning distilleries and cattlefeeds in the domestic market in Tamil Nadu, the quantity ofmolasses for which export order was issued as per the GovernmentOrder dated 25.08.2011 is 1 lakh MTs. Provision is made forreserved molasses at 10%.145The aforesaid details will make it very clear that thereis sufficient market for molasses, particularly to distilleries andcattle feeds domestically. Therefore, I am of the view that theargument of the first and second respondents as well as the threecompanies to whom molasses was sold, that if molasses was not soldin the lightning speed immediately, the same would lead to distresssale, lacks substance.146Besides, I am of the view that the advertisement dated07.06.2012 made by the Federation, calling for open auction-cum-tender, is misleading. In the advertisement, it is stated thatsealed tenders are invited from valid licence holders who areinterested in purchasing molasses stored in steel tanks of the co-operative and public sector sugar mills in Tamil Nadu, for thepurpose of export to other States and other countries. 147It is common knowledge that there cannot be export toother States. This could be yet another reason for no participantsfrom other States besides the reason that the advertisement gaveonly 8 days time for submission of filled up tender forms. I havealready held in the third issue for determination that adequatetime was not given for submission of filled up tender forms.148Furthermore, in the entire original file running tonearly 500 pages, there is nothing to suggest that the quality ofmolasses in Tamil Nadu is of inferior quality. Thus, the way inwhich the impugned sale took place suggests that the respondents 1and 2 did not act bona fidely and the public property, viz.,molasses, was sold recklessly at a throw-away price compared to theprevailing market rate in Pondicherry and in other States. Thus,Issue No.(vi) for determination is answered accordingly.149The learned counsel for the petitioners has relied on thejudgment reported in CDJ 2008 SC 725, Kisan Sahkari Chini MillsLtd. And Others vs. Vardan Linkers and Others. https://hcservices.ecourts.gov.in/hcservices/ 150It is also a case relating to the sale of molasses. Itarose from the State of Uttaranchal. The sale of molasses was from5 cooperative and public sector sugar mills. The policy of theState Government at the relevant time was to dispose of 70%molasses to distilleries and chemical factories within the State,10% to manufacturers of country liquor within the State and 20% tobona fide consumers (distilleries and chemical industries) outsidethe State. 151The tender notice was published on 23.02.2004 invitingoffers from bona fide consumers for the sale of molasses producedby five cooperative and public sector sugar mills. The firstrespondent in that case and two more tenderers submitted tenderforms. The first respondent applied for purchase of 15,000 quintals(1500 MTs) of molasses from one of the sugar mills. Privatenegotiations were held. Initially, the first respondent offeredRs.101/- per qunital (Rs.1,010 per MT). During negotiations, heoffered Rs.127/- per quintal (Rs.1,270/- per MT). The two othertenderers offered Rs.117/- per quintal (Rs.1,170/- per MT) and Rs.126/- per quintal (Rs.1,260/- per MT) respectively. 152The Assistant Cane Commissioner, in his letter dated15.03.2004, permitted the first respondent to lift 5,000 quintals(500 MTs) of molasses at the rate of Rs.127/- per quintal(Rs.1,270/- per MT).153The first respondent requested allotment of 1,02,000quintals (10,200 MTs) that were available with all the fivecooperative and public sector sugar mills at the rate quoted above.154The Assistant Cane Commissioner passed an order dated26.03.2004 permitting the first respondent to lift a total quantityof 85,000 quintals (8,500 MTs) at the rate of Rs.127/- per quintal(Rs.1,270/- per MT). 155The State Government received several reports that theprevailing price of molasses was much higher. On 06.04.2004,letters were written by distilleries from Jaipur in Rajasthan andKapurthala in Punjab, offering to purchase molasses at the rate ofRs.260/- per quintal and Rs.250/- per quintal respectively(Rs.2,600/- per MT and Rs.2,500/- per MT respectively). M/s. UttarPradesh Sahkari Sugar Mills Sangh Limited, Lucknow, informed theUttaranchal Government that the molasses lying with the cooperativesugar mills in the State of Uttar Pradesh was sold to ChandigarhDistillers and Bottlers Ltd. at the rate of Rs.300/- per quintal(Rs.3,000/- per MT). Information was also received that molasseswas being sold by neighbouring private sugar mills in Uttaranchalat the rates ranging from Rs.310/- per quintal to Rs.330/- perquintal (Rs.3,100/- per MT to Rs.3,300/- per MT). In view of thesame, the matter was looked into by the higher authorities and theSecretary, Cane Development and Sugar Industries, cancelled theorder of the Assistant Cane Commissioner dated 26.03.2004 by hisorder dated 24.04.2004, on the ground that the 5 cooperative andpublic sector sugar mills would suffer a loss of more Rs.1.40 https://hcservices.ecourts.gov.in/hcservices/ crores, if they were required to sell molasses at the rate ofRs.127/- per quintal (Rs.1,270/- per MT) to the first respondent. 156The said order dated 24.04.2004 was challenged before theHigh Court of Uttaranchal. A Division Bench of the High Court ofUttaranchal allowed the writ petition and permitted the firstrespondent to lift molasses of 85,000 quintals (8,500 MTs.). TheUttaranchal High Court, while allowing the writ petition, held thatthe State Government was not competent to cancel the valid contractand also applied the doctrine of part-performance. 157The matter was taken to the Apex Court. The Apex Courtreversed the judgment of the Division Bench of the Uttaranchal HighCourt. The Apex Court recorded a finding that the 20% of sale ofmolasses outside the State is always at a higher rate than the saleof molasses within the State and therefore, the Molasses SalesCommittee, in that case, was not correct in comparing the rate ofRs.117/- per quintal of molasses sold within the State in the 70%local quota, to justify the sale of molasses under 20% outsidequota.158Paragrah no.9, paragraph no.12(viii) and relevantpassages from paragraph nos.30 and 31 of the aforesaid judgment,which are apposite in this regard, are extracted hereunder:“9.Around that time, the State Governmentreceived several reports that the prevailing price ofmolasses was much higher. On 06.04.2004, M/s.Associated Alcohols and Breweries Ltd., Jaipur and M/s.Jagjit Industries Ltd., Kapurthala, wrote letters tothe District Magistrate, Udham Singh Nagar, offering topurchase molasses from the sugar mills of Kiccha,Sitarganj, Gadarpur, Nadehi and Doiwala at the rate ofRs.260/- and Rs.250/- per quintal respectively. M/s.Uttar Pradesh Sahkari Sugar Mills Sangh Ltd., Lucknow,informed the Government of Uttaranchal by a fax messagethat the stock of molasses lying at the cooperativesugar mills in the State of U.P. at Sarsawa, Bagpat andMorna Distilleries were sold to M/s. ChandigarhDistillers and Bottlers Ltd. On 08.04.2004 at the rateof Rs.300/- per quintal. Information was also receivedthat molasses were being sold by the neighbouringprivate sector sugar mills in Uttaranchal at ratesranging from Rs.310/- to Rs.330/- per quintal. In viewof it, the Additional Secretary, Cane Development andSugar Industries submitted a report to the Secretary,Cane Development and Sugar Industries, (for short“Secretary (Sugar)” referring to the irregularities inthe proposal for supply of 85,000 quintals to firstrespondent and stating that the six sugar mills wouldsuffer a loss of more than Rs.1.40 crores if they wererequired to sell molasses at the rate of Rs.127/- perquintal to the first respondent. The Secretary/(Sugar), by letter dated 08.04.2004 addressed to the https://hcservices.ecourts.gov.in/hcservices/ five sugar mills, stayed the operation of the letterdated 26.03.2004 issued by the Assistant CaneCommissioner allotting 85,000 quintals of molasses tofirst respondent until further orders.12 (viii)From the facts available on file, it isobserved that one M/s. Chandigarh Distillers ispurchasing molasses @ Rs.300/- per quintal from theCooperative Sugar Mills of UP which were near to thesugar mills of State of Uttaranchal. Moreover, theprivate sector mills in the State of Uttaranchal, likeLaksar Uttam, Iqbalpur and Kashipur are selling themolasses @ Rs.330, Rs.320, Rs.320 and Rs.310 perquintal of molasses respectively. As such without anyvalid contract with the mill of State of Uttaranchal tosale the molasses @ Rs.127/- per quintal to M/s. VardanLinkers is against the rules.30The first respondent does not dispute that70% of the molasses were earmarked for supply todistilleries and chemical factories in the State ofUttaranchal and 10% for manufacturers of country liquorin the State and only 20% was earmarked for use by bonafide consumers, that is, distilleries and chemicalfactories outside the State. Obviously, the price foresale to each category would be different. The price atwhich 70% is sold to the distilleries and chemicalfactories within the State will normally be less thanthe price at which 20% is sold to distilleries orchemical factories outside the State. The tenders wereinvited in regard to the quota earmarked for bona fideconsumers where distilleries and chemical factoriesoutside the State could participate. In spite of it,the District Magistrate, Udham Singh Nagar, prepared anote for the attention of the Chairman of the Committeewherein he referred to the price of Rs.117/- perquintal at which molasses were being sold to IGL whichwas a distillery within the State covered by 70% localquota, to justify the sale of molasses to the firstrespondent under 20% outside quota though it was not abona fide consumer at a price of Rs.127/- perquintal. . . 31. . .he was also aware of the prevailingsale prices in regard to molasses to be sold to bonafide consumers outside the State at much higher pricethan what was offered by first respondent and also ofthe fact that the price for the sale of molasses toconsumers within the State was much less than the ratefor sale of molasses to bona fide consumers outside theState, he proceeded to negotiate with the firstrespondent taking only one more member (DistrictMagistrate) into confidence. The manner in which theentire matter was proceeded with, showed collusion https://hcservices.ecourts.gov.in/hcservices/ between the first respondent on one hand and theDistrict Magistrate, Udham Singh Nagar and theAssistant Cane Commissioner, Udham Singh Nagar on theother hand, to dispose of large quantities of valuablemolasses at a throw-away price without propernegotiations and without valid authority from theMolasses Sales Committee to a party who was notentitled to purchase molasses as a bona fidepurchaser.”159The aforesaid extracted portion from the judgment of theApex Court would make it amply clear that the Molasses SalesCommittee in the instant case also, has committed the same mistakewhile accepting the price of Rs.1,410/- per MT in the Minutes ofthe meeting dated 18.06.2012, based on the sale price of molasseswithin the State. Likewise, the Molasses Sales Committee hereinalso, committed the same mistake by not taking into account, theprevailing rate of molasses by comparing with the sale price in theadjoining State.160The rate of molasses for sale outside the State during2004 can be judiciously taken note of, for the sale of molasses foroutside the country during 2012. In 2004, the UttaranchalGovernment found that the order of the Molasses Sales Committee tosell molasses at the rate of Rs.127/- per quintal (Rs.1,270/- perMT) is far below the rate prevailing at the relevant point of timeand that could cause loss of Rs.1.40 crores. The same logic wouldapply squarely to the case in hand also.161The other judgments, viz., the one reported in in (2005)3 SCC 275, Coal India Ltd. and others vs. Imenk Sou and Others andthe one reported in (1995) 2 SCC 462, South Indian Film Chamber ofCommerce, Madras and Others vs. Entertaining Enterprises, Madrasand Others, relied on by the learned counsel for the petitioners,do not have any application to this batch of cases.162Per contra, the learned counsel for Suraj has relied on aDivision Bench judgment of this Court reported in AIR 1981 Madras151, Dr. A.U. Natarajan and another vs. Indian Bank, Madras.163The above said judgment is relating to fixation of upsetprice by the executing Court in the sale of a property in civilproceedings. Paragraph no.20 of the judgment which is extractedhereunder, far from supporting the case of the company, supports ofthe case of the petitioners."20.We have already pointed out the difference inmeaning between the words 'value' and 'upset price' or'reserve price'. What the proviso in question laysdown is that in a proclamation of sale the estimate ofthe value of the property as given by either or boththe parties, should necessarily find a place. But, noduty was cast on the court to enter in the saleproclamation its own estimate of the value of the https://hcservices.ecourts.gov.in/hcservices/ property. The reason for the Legislature having wordedthe proviso in the manner done is not far off to see.The court making an estimate of the value of theproperty and entering it in the proclamation of salewould become necessary only when an upset p rice has tobe fixed for the property. Since the Legislature hasnow made it obligatory that the estimate of the valueof the property as given by either or both the parties,should necessarily find a place in the proclamation ofsale, the need for the Court to fix an upset price maynot arise in all cases. The procedure indicated byP.N. Ramaswami, J. in Yellappa Naidu vs. VenugopalNaidu (1957) 70 Mad. LW 815: (AIR 1958 Mad 423) can beresorted to i.e., the sale will have to commence at thehigher price given by the judgment-debtor and, in theabsence of bidders, the price will have to beprogressively brought down till it reaches the figuregiven by the decree-holder and again raised up,depending upon the availability of bidders. If, inspite of such a procedure, the sale does not take placefor want of bidders, then it is open to the court, onthe application of the decree-holder, to fix an upsetprice for the property at a rate as near as theproperty would be worth in the estimation of the court.If, even then, the sale does not take place, thedecree-holder can move the executing court to reducethe upset price. It will be open to the executingcourt to reduce the upset price or not, depending uponthe circumstances of the case and if a reduction is tobe made, to decide the extent to which the upset priceshould be reduced. It is only for these reasons, thelegislature should have enacted the proviso in twoparts, the first part relating to the discretionarypower of the Court to give its own estimate of thevalue of the property in the sale proclamation and thesecond part relating to the obligation of the court toinclude in the sale proclamation the estimate, if any,given by either of the parties. The first part of theproviso is in the negative and the second part, in theaffirmative. Till significance of the manner ofdrafting cannot be missed. The affirmative is used togive a mandate and the negative is used only toemphasise that the court is not under a duty to enterits own estimate in the proclamation of sale. If itwas the intention of the legislature that the Courtshould, in no circumstances, give its own estimate ofthe value of the property, then the wording of thefirst part of the proviso would have been entirelydifferent. The legislature would have clearlymentioned that the court was precluded from making itsown estimate of the value of the property and that theproclamation shall not include the estimate, if any,made by the Court." https://hcservices.ecourts.gov.in/hcservices/ 164In the aforesaid case, the Division Bench held that thesale will have to commence at a higher price given by the judgmentdebtor and in the absence of bidders, the price will have to beprogressively brought down till it reaches the figure given by thedecree holder and again raised up depending upon the availabilityof bidders. 165The aforesaid narration of details and facts makes itclear that the same was not adopted in this case. The upset pricewas not fixed at a higher level and fixed only at Rs.1,375/- perMT, to favour the three companies. The same is contrary to thejudgment of the Division Bench.166The second judgment relied on by the learned counsel forSuraj is the one reported in (1986) 4 SCC 566, State of MadhyaPradesh and Others vs. Nandlal Jaiswal and Others.167In the aforesaid case, the distilleries manufacturingspirit in the State of Madhya Pradesh were established by the StateGovernment. The practice followed by the Excise Department inregard to working of these distilleries was to invite tenders andthe person whose tender was accepted for any particular distillerywas given D.2 licence for working the distillery and also D.1licence was given for wholesale supply of country liquormanufactured in that distillery to retail vendors in the areaattached to the distillery. These D.1 and D.2 licences were issuedfor a period of five years.168In course of time, there was enormous demand for countryliquor. Most of the distilleries were situated in thicklypopulated localities, causing water, air and environmentalpollution. The State Government was seized of those issues. Atthat time, the Madhya Pradesh Distilleries Association made arepresentation for transferring these distilleries to privateownership.169The said application of the Association was examined bythe State Government at different levels. A Cabinet Sub-Committeewas constituted to give its recommendations on the issue. High-level officers were to assist the Cabinet Sub-Committee. Afterhearing the representatives of the Association and consideringvarious aspects, the Cabinet Sub-Committee submitted its report.Based on the same, the Cabinet took a policy decision on 30.12.1984enforcing the recommendation of the Sub-Committee. Pursuant to thepolicy decision dated 30.12.1984, a letter of intent dated01.02.1985 was issued by the State Government in favour of 7persons who were existing contractors for grant of D.2 licence andfor construction of distillery at a new site for the purpose ofmanufacturing country liquor with effect from 01.04.1986. Thosepersons had D.1 and D.2 licences upto 31.03.1986. Those 7 personspurchased land and constructed huge buildings and also purchasedplant and machinery. At that juncture, the policy decision of theGovernment was put to challenge before the High Court of MadhyaPradesh. https://hcservices.ecourts.gov.in/hcservices/ 170The High Court of Madhya Pradesh divided the policydecision into two parts. The first part related to the grant forconstruction of new distilleries by the existing contractors bymaking huge investments and that part was already completed by theconcerned persons. As far as the first part was concerned, theHigh Court refused to interfere with the policy decision on theground that there was inordinate delay in approaching the HighCourt. By the time the petitioners approached the High Court, theconcerned persons had completed their task. The second part relatedto the grant of licence for manufacture and wholesale supply ofliquor with effect from 01.04.1986 to those 7 persons who wereexisting contractors. The policy decision relating to this partwas struck down by the Division Bench. When the State approachedthe Apex Court, the Apex Court reversed the judgment of theDivision Bench.171The Apex Court held that the policy decision was aninstitutionalised, informed and reasoned decision arrived at afterdetailed enquiries, fact-finding efforts and reports spreading overa period of a year and a half; the decision was not arrived at by asingle individual in the secrecy of his chamber; it was taken bythe entire Cabinet and it was based on the recommendations made bythe Cabinet Sub-Committee which was composed of four Ministersassisted by high officers from different departments; there wascomplete openness of discussion and deliberation; there was nosuddenness, no impulsive caprice or arbitrariness in reaching thedecision; the State Government did not concede whatever wasdemanded by the existing contractors; it is not possible to discernany mala fides or any improper or corrupt motive on the part of theState Government in reaching the policy decision.172The Apex Court also held that the impugned decision was anintegrated policy decision and it could either be sustained orstruck down as a whole; sustaining one part of the policy decision,while striking down the other, would amount to creating a newpolicy for the State Government and would also be detrimental tothe interest of the State.173I am not able to understand as to how the said judgmentwould help the cause of the company.174The third judgment relied on by the learned counsel forSuraj is the one reported in (1994) 6 SCC 651, Tata Cellular vs.Union of India. Paragraph nos.68 to 94 relied on by the learnedcounsel are relating to the scope of judicial review in contractualmatters. 175In the aforesaid case, the Apex Court held that the Stateshall not act arbitrarily in contractual matters. There cannot beany quarrel over the said proposition. I am at a loss tounderstand as to how the same would advance the case of thecompany. https://hcservices.ecourts.gov.in/hcservices/ 176The fourth judgment relied on by the learned counsel isthe Kerala High Court judgment reported in AIR 1994 Kerala 286,K.M. Pareeth Labba vs. Kerala Livestock Development Board Ltd. andOthers. 177I have perused the aforesaid judgment. In fact, the saidjudgment, far from supporting the case of the company, supports thecase of the petitioners. 178In the said case, Kerala Livestock Development Boardinvited tenders for the disposal of trees in Block I, IV and V oftheir farm at Mattupatti. As per the tender document, theestimated value of the trees in Block I, IV and V were Rs.10.02lakhs, Rs.5.03 lakhs and Rs.7.40 lakhs respectively. Thepetitioner in that case quoted an amount of Rs.10,47,101/- in thetender relating to Block I and Rs.5,17,250/- in respect of Block IVand Rs.7,59,500/- in respect of Block V. 179The Kerala Livestock Development Board issued notice toconduct a fresh auction. Thereafter, tender notification was alsoissued. Both the notice to conduct fresh auction and also thetender notification were challenged by way of two writ petitions.The petitioner therein contended that he was the highest bidder inrespect of Block I. There were only two tenderers including thepetitioner in respect of Block-I. The other tenderer quoted lessthan the amount quoted by the petitioner. Hence, according to thepetitioner therein, the tender should have been awarded to him inrespect of Block I. In respect of Blocks IV and V, there was noother tenderer except the petitioner therein. According to thepetitioner therein, since there was no other tenderer, the offermade by him should have been accepted and the trees in Block IV andV should have been sold to him.180Such a plea of the petitioner therein was rejected by theKerala High Court. The Court found that in the earlier occasion,tender was called for in respect of sale of trees at Block I.There were 11 tenderers. The highest tenderer quoted Rs.14.4lakhs. The next person quoted Rs.13,01,101/-. Both of them did notcome forward to purchase the trees. In those circumstances, thesecond tender was issued and the petitioner therein applied for thesame. This time also, the Government decided to conduct a freshauction and a tender notification was issued for the third time.The same was put to challenge. If the said judgment is applied tothe case in hand, the respondents 1 and 2 should have ordered freshauction, refusing to accept the sale price of Rs.1,410/- per MT,offered by the companies. 181The Kerala High Court held as follows:"10.The fact that there was limited numbertenders and there was no valid competition itself is aground for rejecting the tender offered by thepetitioner." https://hcservices.ecourts.gov.in/hcservices/ 182Furthermore, the Kerala High Court has extracted paragraphnos.12 and 25 of the judgment of the Apex Court reported in (1979)3 SCC 489 in R.D. Shetty vs. International Airport Authority ofIndia. Those paragraphs are extracted hereunder:"12.The State need not enter any contract withanyone, but if it does so, it must do so fairly withoutdiscrimination and without unfair procedure. Thisproposition would hold good in all cases of dealing bythe Government with the public, where the interestsought to be protected is a privilege. . . It must,therefore, be taken to be law that where the Governmentis dealing with the public, whether by way of givingjobs or entering into contracts or issuing quotas orlicences or granting other forms of largesse, theGovernment cannot act arbitrarily at its sweet willand, like a private individual, deal with any personit pleases, but its action must be in conformity withstandard or norms which is not arbitrary, irrational orirrelevant. The power or discretion of the Governmentin the matter of grant of largesse including award ofjobs, contracts, quotas, licences, etc. must beconfined and structured by rational, relevant and non-discriminatory standard or norm and if the Governmentdeparts from such standard or norm in any particularcase or cases, the action of the Government would beliable to be struck down, unless it can be shown by theGovernment that the departure was not arbitrary, butwas based on some valid principle which in itself wasnot irrational, unreasonable or discriminatory.25The Government was not bound to accept thetender of the person who offered the highest amount andif the Government rejected all the bids made at theauction, it did not involve any violation of Articles14 or 19(1)(g)."183The petitioner therein questioned that while in theprevious tender, upset price was fixed, the tender notificationthat was challenged did not fix upset price. The Kerala High Courtheld in paragraph no.11 of its judgment as follows:"11.The counsel for the petitioner furthercontended that in the second notification respondents 1and 2 had not given the approximate value of the treesas mentioned in Ext. P 1 notification. This accordingto the petitioner is clear illegality and thatrespondents 1 and 2 wanted to withhold these detailsfrom the prospective tenderers. I do not find muchforce in this contention. The value of the trees couldbe assessed by the tenderers and they can quote theamount chosen by them. It is not necessary that sellershould fix the approximate value of the goods to besold. It is open to the tenderers to quote their https://hcservices.ecourts.gov.in/hcservices/ prices. . "184Therefore, the aforesaid judgment relied on by thelearned counsel for the company is of no use to the company. Infact, it supports the case of the petitioners.185The fifth judgment relied on by the learned counsel forSuraj is the one reported in (1995) 4 SCC 595, Chairman andManaging Director, SIPCOT, Madras and Others vs. Contromix Pvt.Ltd. and another. 186The aforesaid case also, far from helping the company,supports the case of the petitioners.187In the aforesaid case, Small Industries PromotionCorporation of Tamil Nadu Ltd. ("SIPCOT" for short), a FinancialCorporation established under the provisions of the State FinancialCorporations Act, 1951, is the appellant before the Apex Court. Thefirst respondent applied for two term-loans amounting to Rs.44.80lakhs during 1987 and the same were sanctioned. The firstrespondent executed a registered mortgage for securing the term-loans. However, the first respondent committed defaults many atime. SIPCOT gave many an opportunity and re-scheduled therepayment of the term-loans. Still, the first respondent committeddefaults forcing the SIPCOT to take action under the StateFinancial Corporations Act and the SIPCOT took possession of theunit in August 1992.188The first respondent filed a writ petition before thisCourt questioning the same. This Court granted relief to the firstrespondent therein on certain conditions for payment of the amountdue to the SIPCOT. This Court directed that if there was defaultin complying with the conditions, SIPCOT could proceed under theState Financial Corporations Act. The first respondent therein didnot comply with the directions issued by this Court. Hence, theSIPCOT again took possession of the mortgaged assets of the firstrespondent in January 1993. Those mortgaged assets were valued bythe SIPCOT at Rs.36.44 lakhs. SIPCOT issued advertisement invitingoffers for sale of the mortgaged assets. No offer was received inresponse to the said advertisement. The second advertisement wasissued in the Indian Express. In response to the saidadvertisement, the second respondent made an offer to purchase theassets for a sum of Rs.14.26 lakhs. Since the said offer was toolow, the SIPCOT held negotiations and as a result of suchnegotiations, the second respondent agreed to revise the offer andto pay a sum of Rs. 38 lakhs.189The sale of mortgaged assets to the second respondent wasquestioned by the first respondent again before this Court. Alearned Single Judge of this Court allowed the writ petition andset aside the sale on the ground that no public auction wasconducted for sale of the mortgaged assets. While setting asidethe sale, the learned Single Judge directed that unless the firstrespondents deposits the sale price of Rs.38 lakhs within the https://hcservices.ecourts.gov.in/hcservices/ stipulated time, he is not entitled to the relief.190The first respondent filed a writ appeal questioning theaforesaid order passed by the learned Single Judge of this Court.A Division Bench of this Court disposed of the said writ appealholding that the properties could not have been sold in 1993 forthe same amount of Rs.38 lakhs only when the unit was worth morethan Rs.44.80 lakhs in 1987. It was also held that the sale wasnot held by auction and the sale which was held by invitingtenders, followed by negotiations and not by way of public auction,is opposed to the judgment of the Apex Court reported in (1993) 2SCC 279, Mahesh Chandra vs. Regional Manager, U.P. FinancialCorporation and hence, the said sale was illegal. The DivisionBench set aside the sale by tender and directed that before theunit was brought for sale afresh, a reasonable time should be givento the first respondent to make payment of the loan. This wasquestioned before the Apex Court.191The Apex Court allowed the appeal and held that MaheshChandra's case cannot be construed as laying down that a sale bytender is impermissible and invalid. The Apex Court further heldthat the properties were sold at Rs.38 lakhs which was more thanRs.36.44 lakhs at which rate, the unit had been valued before thesale. The Apex Court also held that the value of plant andmachinery could have fallen on account of its being used during theperiod 1987-1993 or due to the same getting out-dated and hence,the sanction of Rs.44.80 lakhs in 1987 cannot afford the basis forholding that the value of the unit in 1993 could not be less thanRs.44.80 lakhs. Thus, the Apex Court reversed the findings of theDivision Bench of this Court. 192The learned counsel for Suraj sought to argue that theApex Court upheld the sale of the property at Rs.38 lakhs in 1993,while the value was Rs.44.80 lakhs in 1987. I am not able toappreciate the said submission of the learned counsel. Theproperty sold included plant and machinery. Reasons were given bythe Apex Court for the sale at Rs.38 lakhs and the value of theproperty assessed at Rs.36.44 lakhs, was taken note of. Thus, thesale of molasses cannot be compared with the sale of plant andmachinery, as in the case of plant and machinery, as observed bythe Apex Court, the value of the same could have fallen on accountof its being used or due to the same getting out-dated. 193Furthermore, the relevant passage in paragraph no.12 ofthe said judgment which is extracted hereunder also supports thecase of the petitioners, far from supporting the case of thecompany."12.In the matter of sale of public property, thedominant consideration is to secure the best price forthe property to be sold. This can be achieved only whenthere is maximum public participation in the process ofsale and everybody has an opportunity of making anoffer. Public auction after adequate publicity ensures https://hcservices.ecourts.gov.in/hcservices/ participation of every person who is interested inpurchasing the property and generally secures the bestprice. But many times it may not be possible to securethe best price by public auction when the bidders jointogether so as to depress the bid or the nature of theproperty to be sold is such that suitable bid may notbe received at public auction. In that even, the othersuitable mode for selling of property can be byinviting tenders. In order to ensure that such sale bycalling tenders does not escape attention of anintending participant, it is essential that everyendeavour should be made to give wide publicity so asto get the maximum price. . . "194In the sixth judgment relied on by the learned counselfor Suraj, reported in 2012 (7) Scale 414, Michigan Rubber (India)Ltd. vs. The State of Karnataka and Others, the appellant is a tyrecompany. The respondent-Karnataka State Transport Corporation("KSRTC" for short) floated tender for the supply of tyres, tubesand flaps, specifying certain pre-qualification criteria. The pre-qualification criteria were that (i) the tenderer should havesupplied a minimum average of 5,000 sets of tyres, tubes and flapsper annum in the preceding three years and (ii) the tenderer shouldhave minimum average annual turnover of Rs.500 crores in thepreceding three years from the sale of tyres, tubes and flaps. 195The aforesaid prescription of pre-qualification wasquestioned by the appellant before the Karnataka High Court. TheKarnataka High Court refused to interfere with the same. Thematter was taken to the Apex Court. The Apex Court dismissed theappeal and held that the tender conditions were stipulated by wayof a policy decision and that the said tender conditions wereimposed with a view to obtain good quality materials from reliableand experienced suppliers. After analysing the various judgmentsof the Apex Court, the Apex Court, in paragraph no.19, stated theprinciples emerging from those judgments. Paragraph no.19 (e) ofthe said judgment, which is germane in this regard, is extractedhereunder:"(e)If the State or its instrumentalities actreasonably, fairly and in public interest in awardingcontract, here again, interference by Court is veryrestrictive since no person can claim fundamental rightto carry on business with the Government."Therefore, the aforesaid judgment also, far from helping the caseof the company, supports the case of the petitioners.196The learned counsel for Integrated has relied on thejudgment reported in (2004) 8 SCC 671, Anil Kumar Srivastava vs.State of Uttar Pradesh and another with Anil Kumar Srivastava vs.State of Uttar Pradesh and another. https://hcservices.ecourts.gov.in/hcservices/ 197The appellant in the aforesaid case challenged the awardof tender to M/s. DLF Universal Limited in relation to constructionof a commercial hub at Noida. The impugned scheme awards 54,320.18sq. metres of prime commercial land for construction of commercialhub consisting of a shopping mall, multiplexes, show-rooms, retailoutlets, hotels, restaurants and offices with matching parkingfacility providing 2,800 estimated car spaces. Wide publicity wasgiven by way of advertisement inviting tenders. Though 9 companiesreceived tender documents, only one company submitted the tenderform. The upset price was fixed at Rs.27,500/- per sq. metre. Thetenderer quoted Rs.31,850/- per sq. metre. The same was acceptedand the same was the issue in the litigation.198The fixation of upset price came up for considerationbefore the Apex Court. The Apex Court held as follows regarding thefixation of upset price:"14.. . .we find that the reserve price has beenfixed by taking into account several factors. Firstly,in the past tenders invited for relatively smallerplots with higher reserve price had failed. It isimportant to bear in mind that the tender process is anexpensive exercise. To resort repeatedly to thisexercise is a costly affair. Secondly, in the presentcase, the reserve price was fixed by taking intoaccount the comparative offers/sales in the adjoiningsectors. That the average of such sales has been takeninto account while fixing the reserve price in terms ofclause 4(c) of the resolution dated 10.07.2003, whichreads as under:"4(c)In developed sectors wheretenders have been received earlier, fixationof rates is proposed to be on the basis ofaverage price arrived at prior to the schemeof fixation of reserve price, on the basis ofrate arrived on the above principle,whichever is more. In such a situationaverage rate is proposed to be fixed as perthe category and user mentioned in thepreceding paragraph."Thirdly, the developer/tenderer is obliged toconstruct a matching car parking facility of 2800ECS whose cost is required to be added to thereserve price of Rs.27,500 per sq. m. Lastly, inthe present case it has been submitted that underclause 2(e), reserve price had to be fixed at 1 ½times the sector rate . . ."In the said circumstances, the Apex Court held that there was noinfirmity in the fixation of upset price. https://hcservices.ecourts.gov.in/hcservices/ 199If the aforesaid extracted passage of the judgment of theApex Court is applied to the facts of this case, I am of the viewthat the fixation of upset price was made arbitrarily and withoutapplication of mind.200Further, the Apex Court noted that the reserve price wasfixed, taking into account, the comparative offers for sale in theadjoining sectors. In the case before the Apex Court, thecommercial hub was to come in a particular sector and the landcomprised in the said sector was at issue. In that context, theApex Court held as stated above.201In the instant case, the comparative sales in Pondicherryand southern States were not taken into account. 202Besides, the Apex Court has noted that the upset pricewas fixed 1 ½ time the sector rate. Therefore, such a guidelinewas in existence in the case before the Apex Court. But, in theinstant case, there is no such a guideline. That apart, if asimilar yardstick is applied, the upset price should have beenfixed definitely very much higher than Rs.1,375/- per MT.203Furthermore, the Apex Court also considered the judgmentof the Division Bench of this Court in Dr. A.U. Natarajan andanother vs. Indian Bank, Madras. AIR 1981 Madras 151, referred toabove and held as follows in paragraph no.13 of this judgment:" 13.. . . in the case of A.U. Natarajan (Dr.) v.Indian Bank it has been held that the expressions "valueof a property" and "upset price" are not synonymous buthave different meanings. That the term "upset price"means lowest selling price or reserve price. Thatunfortunately in many cases the word "value" has beenused with reference to upset price. That the sale hasto commence at the higher price and in the absence ofbidders, the price will have to be progressively broughtdown till it reaches the upset price. That the upsetprice is fixed to facilitate the conduct of thesale. . ."204Besides, the Apex Court held in paragraph no.13 of theaforesaid judgment that even when a bidder offers a higher amountthan the upset price, still, the sale is open to challenge on theground that the property has not fetched the proper price and thesale can be set aside. The relevant passage from paragraph no.13is usefully extracted in this regard.". . . However, notwithstanding the fixation ofupset price and notwithstanding the fact that a bidderhas offered an amount higher than the reserve/upsetprice, the sale is still open to challenge on the groundthat the property has not fetched the proper price andthat the sale be set aside." https://hcservices.ecourts.gov.in/hcservices/ 205In the case before the Apex Court, it was held that thetender price of Rs.31,850/- per sq. metre is not under-stated.But, in the instant case, I have recorded a finding that the saleprice of molasses, for the purpose of export, at the rate ofRs.1,410/- per MT, is under-stated, taking into account, theprevailing rate in Pondicherry and Andhra Pradesh. Hence, thisjudgment also, far from helping the company, helps the petitioners.206The learned counsel for Imcola has relied on the judgmentreported in (2000) 8 SCC 606, Centre for Public Interest Litigationand another vs. Union of India and Others.207In the aforesaid case, the Government of India took apolicy decision to award contract to private parties fordevelopment of medium-sized oil-fields on joint venture bases.Based on the said policy decision, the Government of India invitedbids for 12 medium-sized oil fields. In response to the invitationof the Government of India in regard to two medium-sized oilfields, viz., Panna and Mukta, 8 consortia offered their bids.After short-listing, the respondents 4 and 5 were awarded thecontract. The same was questioned by the appellant before theDelhi High Court. The appellant sought to cancel the contract,besides seeking criminal investigation on the matter.208The Delhi High Court dismissed the writ petition. Thematter was taken to the Apex Court. The facts of the case areunique. The matter is also relating to policy decision of theGovernment to award contract of some oil-fields on joint venturebasis to private firms. Serious allegations were levelled that theMember(Exploration) and the Chairman and Managing Director of Oiland Natural Gas Commission, after retirement, joined the company towhich the award was granted. CBI investigation and prosecution wasalso sought. 209The Apex Court upheld the judgment of the Delhi HighCourt and refused to interfere with the policy decision of theGovernment. Paragraph nos.20 and 22 of the above said judgments areextracted hereunder:"20It is clear from the above observation ofthis Court that it will be very difficult for thecourts to visualise the various factors like commercial/ technical aspects of the contract, prevailing marketconditions, both national and international andimmediate needs of the country, etc. which will have tobe taken note of while accepting the bid offer. Insuch a case, unless the court is satisfied that theallegations levelled are unassailable and there couldbe no doubt as to the unreasonableness, mala fide,collateral considerations alleged, it will not bepossible for the courts to come to the conclusion thatsuch a contract can be prima facie or otherwise held tobe vitiated so as to call for an independentinvestigation, as prayed for by the appellants. https://hcservices.ecourts.gov.in/hcservices/ Therefore, the above contention of the appellant alsofails.22Applying the above principle, we find itdifficult to come to the conclusion that the decisionof GOI in accepting the bid of Respondents 4 and 5 onthe advice of the Committee of Secretaries is sounreasonable as to accept the prayer of the appellantsto grant the reliefs sought for in this appeal."210Furthermore, in paragraph no.20 of the aforesaidjudgment, as extracted above, the Apex Court has held that if theallegations are unassailable and there is no doubt as to theunreasonableness in the award of contract, the Court can come tothe conclusion that the contract is vitiated.211In this case, the allegations made by the petitioners areunassailable and the award of contract to the companies is alsounreasonable. I have given detailed reasons for this conclusion ofmine. Hence, this judgment relied on by the learned counsel is ofno use to the company.212The learned counsel for Imcola has relied on anotherjudgment reported in (2003) 1 SCC 341, Rayalseema Paper Mills Ltd.and another vs. Government of Andhra Pradesh and Others.213In the aforesaid case, the Government of Andhra Pradeshwas supplying hard and soft wood, viz., forest produce, to certainpaper mills in the State for manufacture of paper. The rates ofroyalty for such supply were being fixed for five years. The ratesof royalty fixed by the Government Memorandum dated 02.09.1975 atRs.60/- per tonne for bamboo and Rs.30/- per tonne for hard woodwas for the period 01.10.1975 to 30.09.1980. The Governmentdecided to revise the royalty rates for the next five years.Hence, the Government appointed a committee of officials toconsider the issue. Based on the recommendation of the committee,the Government issued G.O. Ms.No.538 dated 04.11.1981, enhancingthe royalty rate to Rs.284/- per MT in the case of bamboo andRs.135/- per MT in the case of hard wood. It was to be applicablefor next five years. 214This increase in price of forest produce that was to besupplied by the Government to the paper mills, was questionedbefore the Andhra Pradesh High Court. A Division Bench of theAndhra Pradesh High Court dismissed the writ petition. The matterwas taken to the Apex Court. The Apex Court confirmed the judgmentof the Andhra Pradesh High Court. 215Paragraph no.15 of the aforesaid judgment of the ApexCourt is relied on by the learned counsel in support of hiscontention that in the case of price fixation of forest produce,there is no statute and similarly, in the case of fixation of pricefor molasses also, there is no statute governing the issue andhence, the Courts cannot interfere in contractual matters. https://hcservices.ecourts.gov.in/hcservices/ 216I am not able to appreciate the above argument of thelearned counsel for the company. In fact, the following passage inparagraph no.15 of the aforesaid judgment makes it clear that theApex Court held that various factors shall be taken into account,while selling forest produce and that the Government took intoaccount, all those aspects. "15.It is open to the Government to fix suchprice as it thinks appropriate having regard to publicinterest, which inter alia, may include interest ofrevenue, environmental, ecology, the need of mills andthe requirements of other consumers. The price is notto be fixed keeping in mind the requirements of themills alone."Therefore, in my view, the aforesaid judgment also is of no use tothe company.217The third judgment relied on by the learned counsel forImcola is the one reported in (2012) 6 SCC 464, Tejas Constructionsand Infrastructure Pvt. Ltd. vs. Municipal Council, Sendhwa andanother. This judgment has been relied on by the learned counsel insupport of his contention that when a portion of molasses hasalready been lifted, at this juncture, this Court cannot interferein the contractual matter and the company shall be permitted tolift the balance molasses.218In the aforesaid judgment, the issue was awarding ofcontract in relation to water supply scheme in a Municipality. Theun-successful bidder questioned the same in the High Court ofMadhya Pradesh at Indore. He questioned the award of contract ontwo grounds, viz., (i) the successful bidder had not filed therequisite Balance Sheet for five years preceding the issue oftender notice and (ii) the successful bidder did not have therequisite experience of executing a single integrated water supplyscheme of the required value. The High Court, on facts, found thatthe allegations are not sustainable and dismissed the writpetition. The Apex Court concurred with the conclusions of theHigh Court.219Moreover, taking into account that the scheme is relatingto water supply in the Municipality, the Apex Court was of the viewthat the same cannot be interfered with, when a major portion ofthe work was completed. Paragraph nos.32 and 33 of the judgment ofthe Apex Court are extracted hereunder:"32.We may while parting point out that out of atotal of Rs.19.5 crores representing the estimatedvalue of the contract, respondent 2 is certified tohave already executed work worth Rs.11.50 crores andreceived a sum of Rs.8.79 crores towards the said work.More importantly the work in question relates to adrinking water supply scheme for the residents of a https://hcservices.ecourts.gov.in/hcservices/ scarcity-stricken municipality. The project issponsored with the Central Government assistance underits urban infrastructure scheme for small and middletowns. The completion target of the scheme isSeptember 2012. Any interference with the award of thecontract at this stage is bound to delay the executionof the work and put the inhabitants of the municipalarea to further hardship.33.Interference with the ongoing work is,therefore, not conducive to public interest which canbe served only if the scheme is completed asexpeditiously as possible giving relief to the thirstyresidents of Sendhwa. This is particularly so when theallotment of work in favour of respondent 2 does notinvolve any extra cost in comparison to the cost thatmay be incurred if the contract was allotted to theappellant company."220I am unable to understand as to how the paragraphsextracted above relied on by the learned counsel, would help thecompany, when the Apex Court held that the water supply schemeshall be expeditiously completed to give relief to the thirstyresidents of Sendhwa. In any event, removal of a portion ofmolasses cannot be compared with the completion of a part of thewater supply scheme in a village.221In the result, W.P. No.25230 of 2012 is dismissed. Nocosts. Connected Miscellaneous Petition is closed.222As far as the rest of the writ petitions are concerned, Ihold that the entire sale process relating to 1 lakh MTs ofmolasses through advertisement on 07.06.2012 by the Federation isvitiated and therefore, the sale of molasses made to Suraj,Integrated and Imcola, is void.223Hence, the respondents 1 and 2 are directed to conductfresh auction for the remaining molasses, by giving wide publicityand also giving adequate time for submission of filled up tenderforms.224Further, the Chief Secretary to the Government of TamilNadu and the Secretary, Home, Prohibition and Excise (VIII)Department, Government of Tamil Nadu, are directed to takenecessary measures to ensure that the sale of molasses, a publicproperty, shall be made, to get the maximum price for the State.They are also directed to take appropriate action against theofficials who have erred in the conduct of sale of molasses, inthis case.225The respondents 1 and 2 are directed to take appropriatesteps to approach the Competition Commission of India, seekingcompensation and penalty, besides other action against thecompanies which indulged in the formation of cartel. https://hcservices.ecourts.gov.in/hcservices/ 226With the aforesaid directions, W.P. Nos.23393, 24821,25116, 25212 and 25250 of 2012 are disposed of. ConnectedMiscellaneous Petitions are closed.227Suraj, Integrated and Imcola are directed to payRs.50,000/- each, as costs, at the rate of Rs.10,000/-, to each ofthe petitioners in W.P. Nos.23393, 24821, 25116, 25212 and 25250 of2012. Since I have come to the conclusion that the three companiesformed cartel and controlled the sale price of molasses and causedhuge loss in crores of rupees to the cooperative and public sectorsugar mills, I have imposed the aforesaid costs, though in some ofthe writ petitions, Integrated and Imcola are not respondents.Sd/-Deputy Registrar/true copy/Sub Asst.Registrarcad1.The Chief SecretaryGovernment of Tamil Nadu 2.The SecretaryHome, Prohibition and Excise (VIII) DepartmentGovernment of Tamil Nadu3The Director of SugarNo.690, Anna SalaiPeriyar Building, V FloorNandanam, Chennai 600 0354The Additional Registrar/Special OfficerNo.690, Anna SalaiPeriyar Building, V FloorNandanam, Chennai 600 0355The Special OfficerSugar Mills LimitedKallakurichi II Cooperative Sugar Mills Ltd.Kallakurichi 606 202, Villupuram District6The Puducherry Cooperative Sugar Mills Ltd.Lingareddy PalayamKatterikkuppam PostPuducherry 605 502 https://hcservices.ecourts.gov.in/hcservices/

7.The Special Officer, National Co-operative Mills Mettupatti Village 605 502 Alanganallur Taluk, Madurai District.8.The Chief Executive, Perambalur Sugar Mills, Eraiyur-621 1339The General Manager Suraj Agimpex HouseIII Floor, St. Thomas Building150 Luz Church RoadMylapore, Chennai 600 00410The General Manager Integrated Service PointG 1 Kamala Lakshman ApartmentNo.32 VOC ColonyNear Midhra HospitalAnna Nagar East, Chennai 600 10211The General Manager Imcola ExportsNeelandri, III FloorNo.9, Cenotaph RoadAlwarpet,Chennai 600 0183 cc to Mr.V.P.Raman, Advocate, SR.No.661586 cc to M/s. Mani Sundar Gopal, Advocate, SR.No.661502 cc to Mr.R.Saravana Kumar, Advocate, SR.No.661234 cc to M/s.A.Arulmozhi, Advocate, SR.No.66091, 66095, 66094, 66093+1 cc to Government Pleader SR.66074 common order inW.P. Nos.23393,24821, 25116,25212, 25250 and 25230 of 2012(Molasses batch)CKN {CO}TP/19.10.2012.