Construction & Enggr. Pvt. Ltd Vs. Indore Development Authority & Ors  Insc 258 (19 April 2005)
Pal & C.K. Thakker
out of SLP) Nos. 21113-21114 of 2001) RUMA PAL, J.
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.
tenders submitted the three tenderers were the appellant, Jagriti Bal Mandir
Society (hereafter referred to as 'Jagriti') and Crescent Public
referred to as 'Crescent') who bid Rs. 261 per Sq.m., Rs.201 per Sq.m. and Rs.
177.60 per Sq.m. respectively. The appellant, as its name suggests, is a
construction company. However, one of its objects in its Memorandum of
Association is claimed to be to construct and establish schools. Because the
appellant did not have any experience of managing an educational institution
its tender was rejected on 28th December 1993 and, the respondent authority allotted the land in equal halves to Jagriti
appellant and Jagriti filed writ petitions in the Gujarat High Court. The
appellant's grievance was that he was the highest tenderer having quoted for
the land at Rs.261 per sq. mtr. and that his tender was rejected unreasonably. Jagriti's
grievance was that it had bid for the land at Rs.201 per sq. mtr. which was
higher than the bid of Crescent which had offered only Rs.177.60 per sq. mtr. Jagriti,
therefore, claimed that the whole of the land should have been made available
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.
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.
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.
respondent No. 1 authority then reconsidered the matter again and by a
resolution dated 18th
September 2000, in
keeping with the observations of the High Court, held that the appellant was competent
to tender and accept the tender. Its tender was accepted and allotment of the
entire plot of 10,340 sq. mtrs. was made to the appellant.
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.
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
respondents have submitted that there was no question of the order of the
Division Bench dismissing Crescent's appeal operating as res judicata against Jagriti
because Jagriti was only a co-respondent in Crescent's appeal.
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
merits, Jagriti's submissions appear to be correct.
tender notice had asked for bids from registered institutions carrying on
educational activities. The clear implication of the language is that the
institution must be one which is constituted 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
appellant admittedly has no experience in educational activities of any sort.
The question then is- Was it constituted for educational purposes? Out of 67
objects mentioned in its Memorandum of Association, the main objects of the
appellant were to carry on the business of constructing, building, roads,
bridges etc. and to act as a supplier of hardware, paints, sanitary fittings,
construction material and so on. The objects incidental or ancillary to the
attainment of the main objects, are specified in Clauses 3 to 28. Other objects
are mentioned in Clauses 30 to 67. These include a wide variety of possible
diversification of the appellants businesses.
last Clause reads:
67. To establish and construct shopping markets, show rooms Nursing homes,
schools, clubs houses, cinemas, office premises and other buildings for
commercial purposes on lands seized and licence basis".
not read this as in any way justifying the appellant's claim that it was
constituted for educational purposes. To be 'constituted for' means the primary
objective of the constitution. The primary objective of the appellant was
certainly not to carry on educational activities. Besides the language of
Clause 67 does not indicate that even this object is to carry on the running of
the management of the school, but rather pertains to the construction of school
buildings. Where the object was to carry on the business, this has been
specifically so stated in the remaining objects clauses, for example in Clauses
30-31, 34-37, 40-42, 44-64 and 66 of the Memorandum.
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:-
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.
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."
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.
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.
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.
There must be a conflict of interest between the defendants concerned;
must be necessary to decide this conflict in order to give the plaintiff the
relief he claims; and
question between the defendants must have been finally decided." This view
has been consistently followed by this Court.
where the principle was extended to bind co-plaintiffs; Mahboob Sahab vs. Syed Ismail
AIR 1995 SC 1205].
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:-
as the order of the Hon'ble Single Judge has done substantial justice, it also
says that I.D.A. would decide the matter by all considerations. This order is
passed after hearing the L/C for the parties for about an hour." Jagriti's
counsel was recorded as being present. The fact that the Appellate Court was
wrong in affirming the decision of the learned Single Judge would not make the
decision less binding. [See: State of West Bengal vs. Hemant Kumar Bhattacharjee AIR 1966 SC 1061; Gorie Gouri
Naidu vs. Thandrothu Bodemma AIR 1997 SC 808, 809] The counsel for Jagriti has
referred us to several decisions viz. Gopal Upadhyaya and Ors. vs. Union of India and Ors.
1986 (Supp) SCC 501, Ambica Quarry Works vs. State of Gujarat & Ors. (1987)
1 SCC 213, Deena Alias Deen Dayal & Ors. vs. Union of India & Ors. etc.etc. (1983) 4 SCC SCC 207. 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.
circumstances, the appeals are allowed without any order as to costs.