Decided on July 29,1988



P.R.GOKULAKRISHNAN - (1.)This Special Civil Application is to declare Rule 2 of the General Rules & Directions for the Guidance of Contractor being Condition No. 2 regarding the cash security deposit in the alternatives Bank Guarantee or the Fixed Deposit is illegal ultra vires and violative of Art. 14 of the Constitution of India. There is a further prayer to issue a writ of mandamus or any other appropriate writ directing the respondent not to cash the Fixed Deposit Receipt No. 726464 dated 2-1-1988 with the Bank of Baroda Ukai for Rs. 10 54 200 which is accepted by them as security deposit. There is a further direction praying for a writ of mandamus directing the respondent No. 3 rot to cash the said Fixed Deposit Receipt in favour of the Gujarat Electricity Board.
(2.)Notice of Motion was given in this case with ad-interim relief as early as 22-4-1983. In response to the same Counsel for the 1st respondent Mr. B. C. Patel filed affidavit-in-reply. To this affidavit-in-reply the petitioner also filed affidavit-in-rejoinder. Mrs. K. A. Mehta was heard for the purpose of admission. The short facts of the case for the disposal of the case are that the petitioner herein deals with the sale of rejected coal and purchases such coal from Gujarat Electricity Board. The GuJarat Electricity Board invites tenders for sale of rejected seal on the terms and conditions mentioned for the said purpose by inviting tenders. The petitioner filled in such tender and as the price quoted by the petitioner was the highest his tender for purchase of rejected coal was accepted by the Gujarat Electricity Board. It is the case of the petitioner that he deposited Fixed Deposit Receipts duly endorsed by him for the sum of Rs. 10 54 200 with the Gujarat Electricity Board. The Gujarat Electricity Board wanted to encash the Fixed Deposit Receipt No. 726464 dated 2-1-1988 which is for a sum of Rs. 10 54 200 so as to comply with the conditions of the tender notice which according to the Gujarat Electricity Board states it must be in cash. Since there is the signature of the petitioner on the Fixed Deposit Receipt which will enable the person in possession of the same to encash it the Electricity Board encashed the same and deposited into its account. Pending admission a Bench of our High Court gave the ad-interim relief as follows:
"Ad interim relief to the effect that the Bank of Baroda Ukai Branch Ukai will not permit respondents Nos. 1 & 2 to so operate their non-operative current account as to fall short of Rs. 10 61 131.7 ps. The respondents Nos. 1 & 2 are also restrained from so operating such account so as to fall short of Rs. 10 61 131.7 ps. till further orders. Permitted to communicate the same telegraphically. Direct Service also permitted".

(3.)In these circumstances and in view of the player in the main Special-Civil Application Mrs. K. A. Mehta the learned counsel appearing for the petitioner submits that Rule 2 of the General Rules & Directions for the Guidance of Contractor offends Art. 14 of the Constitution. The said Rule which deals with Security Deposit states that the contractor shall within 10 days of the intimation to him of the acceptance of the tender pay the security deposit for the performance of the-contract and that the deposit shall be in cash or in G. P. Notes of Fixed Deposit Receipts which may be furnished as prescribed in Schedule C. Schedule C II deals with the Fixed Deposit Receipts 60 deposited. Mrs. Ketty Mehta states that the discretion for accepting security deposit either in cash or in G. P. Notes or Fixed Deposit Receipts gives uncontrolled and unbriddled power to the Board which may result in arbitrary exercise of power in demanding the security deposit. To substantiate this contention the learned counsel cited the decision reported in AIR 1979 SC Page 1628. In this decision the Supreme Court had occasion to consider the reasonableness of granting permission to run restaurants and Snack Bar in the Airport. The Supreme Court held that the qualification laid down as requisite qualification for getting the contract as per the tender must be there for granting the permission to run the restaurant and the Snack Bar. No doubt in this decision the Supreme Court laid down certain principles and one such principle is that The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Art. 14 and it must characterise every State action whether it be under authority of law or in exercise of executive power without making of law. The State cannot therefore act arbitrarily in entering into relationship contractual or otherwise with a third party but its action must conform to some standard or norm which is rational and non-discriminatory. Pressing this decision into service Mrs. Ketty Mehta submitted that if Rule 2 referred to above is allowed to stand it will lead to unreasonableness and arbitrariness. In the first place the decision referred to above cannot have any application to the facts of this case. Secondly if this rule applies in the present case the option is given to the contractor for depositing the security deposit either in cash or in G. P. Notes or in Fixed Deposit Receipt. Thirdly the party concerned with open eyes accepts the tender and enters into a contract and hence the stipulations which will equally apply to every tenderer who competes in the particular Tender Notice cannot be considered as discriminatory in respect of such class of persons who are in the field to compete in respect of the said tender. Hence we do not find any substance in the argument as if Rule 2 is ultra viras Art. 14 of the Constitution.

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