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  • R.S Pathak, J.
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Smart Summary

Factual and Procedural Background

The petitioner and the fourth respondent both submitted tenders in response to a notice dated 17 May 1963 (issued by the Executive Engineer, P.W.D., Banda) inviting tenders for the lease of tolls of two public ferries: (1) the ferry on the river Jamuna connecting Hamirpur town with Rampur village, and (2) the ferry on the river Betwa connecting Hamirpur town with Kuchecha village. The fourth respondent's tender was higher, and on 19 June 1963 the Commissioner accepted the fourth respondent's joint tender for both ferries for Rs. 7,87,906 and sanctioned a lease in his favour under Section 8 of the Northern India Ferries Act for three years commencing 16 October 1963.

The lease could not be executed immediately. The State Government continued to manage the ferries until 28 February 1966, when possession was handed over to the fourth respondent. The State Government proposed that the three-year lease period be computed from the date of delivery of possession; the fourth respondent accepted this proposal. The petitioner asked the State Government to invite tenders for the period commencing 16 October 1966 and offered Rs. 1 lakh in excess of the fourth respondent's tender, but the Government did not accede to this request and executed the lease in favour of the fourth respondent for 28 February 1966 to 28 February 1969 on the basis of the 1963 tender.

Procedurally, the petitioner had earlier filed writ petition No. 3069 of 1963, obtained an interim order on 16 August 1963 (affirmed on 9 October 1963), and was permitted to continue toll collection for short specified periods in late 1963. A dispute over stamp duty for the lease deed was referred to the Collector under Section 31 of the Stamp Act on 15 July 1963; the Collector's order reducing the initially demanded stamp duty was made on 4 February 1966. The fourth respondent had deposited security, made operational preparations, and repeatedly requested handover (letters dated 12 June 1964 and 18 August 1964). The fourth respondent accepted the Government's condition that he would not claim compensation for delay and that the three-year lease period would run from the actual handover; the lease deed was executed on 22 February 1966.

The petitioner then applied under Article 226 of the Constitution seeking a mandamus directing the State Government, the Commissioner and the Executive Engineer to invite tenders for the two ferries for the period commencing 16 October 1966. The court dismissed the petition with costs.

Legal Issues Presented

  1. Whether, under Section 8 of the Northern India Ferries Act, the State Government—by sanctioning a lease—was required to let the tolls only by a procedure that allowed public participation (i.e., public auction or open tenders), or whether the statute permits letting "otherwise" (including private negotiation) when the State Government gives prior sanction.
  2. Whether the petitioner had a legal right to require the authorities to invite fresh tenders for the period commencing 16 October 1966, notwithstanding that a lease had been sanctioned in favour of the fourth respondent in 1963 and executed only on handover in 1966 due to intervening events.
  3. Whether the facts and delay (including interim judicial orders and stamp duty referral) justified the State Government computing the three-year lease period from the date of handover to the fourth respondent rather than fixing the lease to end on 15 October 1966 as stated in the original tender notice.

Arguments of the Parties

Petitioner's Arguments

  • Section 8 contemplates letting the tolls in accordance with a procedure that permits general public participation—i.e., members of the public should be able to submit tenders or bid so that everyone has an opportunity to apply for the lease.
  • It was not open to the authorities to let out the tolls to an individual by private negotiation without throwing the matter open to the public generally; private negotiation was not within the contemplation of Section 8.
  • Because the State Government executed the lease in favour of the fourth respondent without inviting public participation for the 1966–1969 period, the procedure adopted contravened Section 8.
  • Relied upon precedents: State of Assam v. Keshab Prasad Singh (AIR 1953 SC 309) and K.N. Guruswamy v. State of Mysore (AIR 1954 SC 592) as supporting the proposition that statutory procedures governing grant of leases/licenses must be followed.

Respondents' / Court's Factual and Legal Position (as framed by the opinion)

  • Section 8 expressly permits tolls to be let "by public auction or otherwise than by public auction" when the State Government accords previous sanction; the statutory language permits modes other than public auction.
  • The lease in favour of the fourth respondent was sanctioned in 1963; execution was delayed by factors beyond his control (the petitioner's interim order, stamp duty dispute referred to the Collector, and procedural delays). The fourth respondent took preparatory steps and repeatedly sought handover.
  • The State Government legitimately decided to compute the three-year lease period from the date of actual handover (28 February 1966) provided the fourth respondent would not claim compensation for delay; the fourth respondent accepted these conditions and the lease was executed.
  • On the facts and the language of Section 8, the Government was not precluded from granting the lease by means other than an open public procedure in cases where the State Government gives prior sanction; the petitioner had no statutory right to demand fresh tenders for the 1966 commencement period.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
State of Assam v. Keshab Prasad Singh, AIR 1953 SC 309 Illustrates a situation where a lease had been settled in favour of a party and where the State's cancellation and regrant to another party could be challenged, particularly when statutory procedure was contravened. The court held that this case did not assist the petitioner because in that case a lease had in fact been settled and the statutory procedure had been contravened; by contrast, in the present case the court found no contravention of Section 8 on the facts.
K.N. Guruswamy v. State of Mysore, AIR 1954 SC 592 Concerned a scheme with a detailed statutory procedure (liquor licences) and the Supreme Court's finding that the prescribed procedure had not been followed. The court observed this precedent was inapposite because it involved a detailed statutory procedure that was not followed; here, Section 8 did not impose the same kind of procedure and no breach of Section 8 was shown.

Court's Reasoning and Analysis

The court began from the text of Section 8 of the Northern India Ferries Act, which provides that "The tolls of any public ferry may, from time to time, be let by public auction for a term not exceeding five years, with the approval of the Commissioner or by public auction or otherwise than by public auction for any term with the previous sanction of the State Government." The court read this language as dispositive of the permissible modes of letting: when the term does not exceed five years, letting may be by public auction with the Commissioner's approval; where the State Government gives prior sanction, the tolls may be let for any term "by public auction or otherwise than by public auction."

From this textual construction the court drew two key conclusions: (1) the statute's plain language contemplates modes "other than by public auction" when the State Government sanctions the letting, and (2) there is nothing in Section 8 that requires the "otherwise" mode to be one that necessarily opens the letting to the general public. The court rejected the petitioner's inference that Section 8 mandates a public-participation procedure whenever the State Government accords sanction.

Turning to the facts, the court emphasized that the lease in favour of the fourth respondent had been sanctioned in 1963 but could not be executed because of an interim order obtained by the petitioner (writ No. 3069 of 1963) and later affirmed, and because of a delay caused by a reference under Section 31 of the Stamp Act regarding stamp duty (the Collector's order finally made on 4 February 1966). The fourth respondent had deposited security, readied equipment and labour, and repeatedly sought handover; the Government offered that the three-year term would be computed from the date of handover if the fourth respondent did not claim compensation for the delay—a proposal the fourth respondent accepted.

Given these circumstances, the court concluded that the executed lease was the same lease contemplated when tenders were invited in 1963 and that the Government was entitled to modify the period of operation in light of events outside the control of the fourth respondent. The court found no infringement of any right of the petitioner: submitting a tender did not create a statutory entitlement to require the authorities to re-invite tenders for a later period, nor did Section 8 confer such a right.

The court also considered the precedents relied upon by the petitioner and explained that they were distinguishable: both involved circumstances where a detailed statutory procedure had been contravened or where a settled lease was improperly cancelled and regranted; in the present matter the court did not find any contravention of Section 8, and hence the precedents did not assist the petitioner.

Holding and Implications

Holding: Petition dismissed with costs.

Direct effect on the parties: the lease granted to the fourth respondent was upheld as validly executed for the period computed from the date of handover (28 February 1966 to 28 February 1969), and the petitioner has no entitlement under Section 8 to require the authorities to invite fresh tenders for the period commencing 16 October 1966. The court found no infringement of any right of the petitioner.

The opinion did not purport to set a novel legal precedent beyond its interpretation that Section 8, by its plain language, permits modes of letting other than public auction when the State Government gives prior sanction; the court expressly noted that the precedents relied upon by the petitioner were distinguishable and did not assist.

Show full summary ...

    Baij Nath Prasad v. The State Of U.P And Others

    1. The petitioner and the fourth respondent offered tenders for the lease of tolls of the ferries on the river Jamuna connecting the town of Hamirpur with the village of Rampur and on the river Betwa connecting the town of Hamirpui with the village of Kuchecha in the district of Hamirpur. Both the ferries are public ferries. This was pursuant to a notice dated May 17, 1963 issued by the Executive Engineer, P.W.D, Banda inviting tenders for the collection of tolls in respect of the aforesaid two public ferries. It was stated in the notice that the period of the lease would end on October 15, 1966, “even if there is some delay in handing over at the beginning” The tender made by the fourth respondent was higher than that offered by the petitioner in respect of the two ferries. On June 19, 1963, the Commissioner accented the tender of the fourth respondent jointly for both the ferries for Rs. 7,87,906/- and sanctioned the lease in his favour under Section 8 of the Northern India Ferries Act for collection of tolls of both the ferries for three years commencing October 16, 1963. The lease was not executed in favour of the fourth respondent for a considerable time and the State Government continued to manage the I wo ferries directly until February 28, 1966. It was only on that date that the possession of the two ferries was handed over to the fourth respondent. The State Government proposed to give the lease for three years from the date of delivery of possession and the fourth respondent accepted that proposal. The petitioner, however, requested the State Government to invite tenders for the period commencing October 16, 1966 and stated that he was ready to offer Rs. 1 lac in excess of the tender made by the fourth respondent. The State Government did not accept the request of the petitioner and executed the lease in favour of the fourth respondent for the period February 28, 1966 to February 28, 1969 on the basis of the tender offered by that respondent in 1963.

    2. The petitioner now applies under Article 226 of the Constitution against the grant of the lease to the fourth respondent and prays for mandamus directing the State Government, the Commissioner and the Executive Engineer to invite tenders in respect of the two ferries for the period commencing October 16, 1966.

    3. I see no merit in this petition. Section 8 of the Northern India Ferries Act provides:

    “The tolls of any public ferry may, from time to time, be let by public auction for a term not exceeding five years, with the approval of the Commissioner or by public auction or otherwise than by public auction for any term with the previous sanction of the State Government”.

    4. It is apparent that where the term does not exceed five years the tolls may be let out by public auction with the approval of the Commissioner. If the State Government accords its previous sanction the tolls may be let out for any term either by public auction or otherwise.

    5. The petitioner says that Section 8 contemplates the letting of the tolls in accordance with a procedure under which the members of the public generally will be permitted to offer tenders or bid or otherwise participate so that every one of them is entitled to apply for letting of the tolls in his favour. It is not open to the authorities, urges the petitioner, to let out the tolls to an individual without throwing the matter open to the public generally. According to the petitioner, letting out tolls by private negotiation with an individual is not within the contemplation of Section 8. Therefore, it is pointed out, when the State Government sanctioned a lease in favour of the fourth respondent for the period February 28, 1966 to February 28, 1969; it did so by private negotiation with a single individual and inasmuch as the procedure adopted precluded the public generally from entering upon the scene and applying also for the lease, the provisions of Section 8 were contravened. After careful consideration. I am unable to accept the contention.

    6. The power to let the tolls of a public terry is confined within Section 8. How that power shall be exercised is not set out in any other provision of that Act, and my attention has not been drawn to any body of rules framed for the purpose. Section 8, which appears to be the entire repository of the power and the manner of its exercise does not, it seems to me, limit the manner of granting the lease, where the State Government accords its sanction, to a procedure in which the public generally is entitled to participate. The language is clear. The tolls may be let by public auction or otherwise than by public auction. Where the procedure of a public auction is not accepted, any other procedure is open. There is no indication that this procedure must be of the same nature as that of a public auction.

    7. There is nothing in Section 8 suggesting the inference that the tolls must be let under a procedure which throws the letting open to the members of the public, not has the petitioner been able to establish that in the nature of the letting of the tolls of a public ferry there is something which requires that every member of the public should be entitled to apply for the lease I am not satisfied that in letting out the tolls of a public terry under Section 8, in a case where the State Government accords its sanction, it is not open to the authority to grant the lease by private negotiation in favour of an individual.

    8. In the instant case, the position appears to be different on facts from that envisaged by the petitioner. The Commissioner had sanctioned the lease in favour of the fourth respondent for the period commencing October 16, 1963. The lease could not be executed because, meanwhile, the petitioner had filed a writ petition (No. 3069 of 1963) praying that no lease should be executed by the State and obtained an interim order on August 16, 1963 which was affirmed on October 9, 1963. The petitioner had been the lessee in respect of the two public ferries during the immediately preceding term, and by virtue of the interim order he was permitted to continue to collect the tolls up to November 1, 1963 in the case of the Jamuna Ferry, and up to November 16, 1963 in the case of the Betwa Ferry. In the circumstances, although the lease was sanctioned in favour of the fourth respondent on July 4, 1963, he was informed by the Executive Engineer by a letter dated November 7, 1963 that on account of the order of the Court the charge of the ferries could not be handed over to him.

    9. The fourth respondent was prepared to deposit the security amounting to Rs. 45,768/- and maintain arrangements for operating the ferries. He kept boats and employed labour and accumulated material for building the necessaiy pontoon bridges and pile bridges. Then, it seems, here was considerable delay in the execution of the lease deed the question as to the sufficiency of the stamp in respect of such lease deed was referred to the Collector under Section 31 of the Stamp Act on July 15, 1963 and the order was made as late as February 4, 1966 virtue of that order, the stamp duly initially demanded at Rs. 35,505/- was reduced to Rs. 11,835/-. Meanwhile, the fourth respondent repeatedly requested the State Government to hand over charge of the ferries to him. There are letters dated Tune 12, 1964 and August 18, 1964 from the fourth respondent to the State Government in this behalf. The State Government, however, did not accept the request. The fourth respondent was then informed by the State Government that if he did not claim any compensation for the delay in executing the lease, the period of three years of duration of the lease would be computed from the date on which the charge was handed over to the fourth respondent. The fourth respondent appears to have accepted this offer, and accordingly the lease deed was executed on February 22, 1966. It is clear from these facts that the lease granted to the fourth respondent was the lease in the contemplation of the State Government at the time when tenders were invited in 1963. And for circumstances beyond the control of the fourth respondent the lease which was sanctioned in his favour in 1963 could not be executed until February, 1966. It was open to the State Government to modify the period during which that lease was to operate, having regard to the circumstances in which the parties were placed, and I find nothing to preclude the Government from doing so.

    10. The petitioner points out that the terms of the notice of May 17, 1963 inviting tenders specifically stipulated that the period of lease would end on October 15, 1966 even if there was some delay in handing over charge in the beginning. The provision regarding delay contemplated only such delay as ordinarily arises in the handing over of the charge. It could not have been intended by that stipulation that the period of the lease would end on October 15, 1966 even though the enjoyment of the lease intended for three years was reduced to a mere six months by the delay in handing over charge. In the circumstances the State Government could bona fide infer that it would be exposed to a claim for damages. To safeguard itself against such claim, it considered it appropriate to treat the period of three years as commencing from February 28, 1966.

    11. Then, there is no right of the petitioner which has been infringed by the respondents. Although he submitted a tender for the lease, it was not granted to him. There is also nothing in Section 8 entitling him to require the State Government, the Commissioner and the Executive Engineer to invite tenders for the grant of a lease in respect of the tolls for any period. The petitioner relies upon State of Assam v. Keshab Prasad Singh, AIR 1953 SC 309. In that case, however, a lease had in fact been settled in favour of the respondent Keshab Prasad Singh and he was, therefore, entitled to agitate against its cancellation and regrant to another party, particularly when the State Government contravened the statutory procedure in accordance with which the lease could be settled. The other case K.N Guruswamy v. 1. State Of Mysore., AIR 1954 SC 592, upon which the petitioner relies is also a case where there was a detailed statutory procedure circumscribing the grant of liquor licences. In that case the Supreme Court found that the procedure had not been followed. Neither case assists the petitioner. In the view that I have taken, no provision of Section 8 has been infringed. The petition fails and is dismissed with costs.

    TVN/G.G.M

    12. Petition dismissed.

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    Comments

    Baij Nath Prasad v. The State Of U.P And Others
    (Jan 10, 1967)