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