G.Sakthivel vs The Managing Director on 28 March, 2018
Madras High Court
G.Sakthivel vs The Managing Director on 28 March, 2018
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 28.03.2018
Reserved on : 13.03.2018
Delivered on : 28.03.2018
CORAM
THE HONOURABLE MR.JUSTICE V.BHARATHIDASAN
WP (MD) Nos.1515 of 2018 to 1518 of 2018,
1899 to 1940 of 2018
and
WMP(MD)Nos.2068 to 2193, 1599 to 1606
and 4836 & 4837 of 2018
In W.P(MD)No.1515 of 2018
G.Sakthivel
Vs.
1.The Managing Director,
Tamil Nadu State Marketing Corporation,
(TASMAC), CMDA Complex,
Egmore, Chennai ? 600 008.
2.The Senior Regional Manager,
Tamil Nadu State Marketing Corporation,
(TASMAC),
Old Collector Office Road,
Trichy.
3.The District Collector,
Collectorate,
Trichy District,
Trichy.
4.The District Manager,
Tamil Nadu State Marketing Corporation,
… Petitioner
(TASMAC), Thuvakudi,
Trichy District. … Respondents
Petition filed under Article 226 Constitution of India to issue a writ of Certiorari calling for the records of the impugned tender rectified notification issued by the fourth respondent herein Na.Ka.No.777/2017/CV-3 dated 10.01.2018 published in Thinathanthi, Tamil Newspaper, Trichy edition dated 11.01.2018 more particularly regarding condition No.6(v) (No Objection Certificate) and payment of GST for the bid amount in condition No.6(vii)(A)(1) of the tender notification and
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G.Sakthivel vs The Managing Director on 28 March, 2018
quash the same as illegal.
!For Petitioner : Mr.V.Meenakshi Sundaram
^For R1, R2 & R4 : Mr.K.Chellapandian
Additional Advocate General
assisted by Mrs.J.Padmavathi Devi
Special Government Pleader
For R3 : Mr.K.Chellapandian
Additional Advocate General
assisted by Mr.B.Jameel Arasu
and Mr.H.Arumugam
:COMMON ORDER
These writ petitions have been filed challenging the tender notification dated 10.01.2018 issued by the fourth respondent for granting licence to collect empty bottles and selling eatables in the bar run by the TASMAC, insofar as the condition relates to production of No Objection Certificate from the bar premises owner after completion of tender process and also payment of GST for the bid amount.
- Since the issues involved in all the writ petitions are one and the same, these writ petitions are disposed of by way of this common order.
- The grievance of the petitioners is that as per the impugned notification, production of No Objection Certificate from the owner of the bar premises, after completion of tender process, is arbitrary and the respondents should insist for production of No Objection Certificate at the time of submitting tender document itself and the respondents cannot demand GST for the bid amount.
- The petitioners are the licensees to sell eatables and collect empty bottles in the bars attached to the TASMAC shops mentioned in the petitions. The first respondent TASMAC engaged in retail vending of Indian made foreign spirits in shops and bars for the whole State of Tamil Nadu. The consumers are permitted to consume liquor in the bar attached in the shop, and in order to facilitate them, snacks have also been sold in the bar. The bar licence has been granted through tender ? cum ? public auction, and the upset price is fixed at 3% of the total sale value of the liquor in the TASMAC shop. Apart from that, in the tender notification, a specific condition has been made that a no objection certificate from the owner of the building where the bar is located, has to be submitted by the successful bidder and the successful bidder, has to pay 99% of the licence amount to the State Government with GST and other taxes. Earlier, challenging the above condition, a writ petition has been filed in WP(MD)Nos.21402 to 21405 of 2017. The issue raised in the said writ petitions is that demanding of GST and the No Objection Certificate from the landlord as the post tender stage is not valid and production of No Objection Certificate from the landlord should be a pre-condition and as a basic document to be submitted along with tender application. During the course of argument, it was submitted by the respondent TASMAC that they are going to reduce the minimum upset price as 3% of 80% of sale value of liquor in TASMAC shop, and propose to issue a new tender notification. Based on the above submission, the writ petitions were disposed of by this Court by the
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G.Sakthivel vs The Managing Director on 28 March, 2018
order dated 21.12.2017 and the issue relating to the payment of GST on 99% licence amount payable to the Government and submission of No Objection Certificate from the landlord were not adjudicated, and decided in the said writ petitions. Thereafter, the TASMAC has issued the present tender notification on 10.01.2018, wherein, except reducing the minimum upset price as 3% of 80% of sale value, no other condition is modified. Now, fresh tender notification has been issued by the fourth respondent imposing a condition that the highest bidder licence should be granted only after production of No Objection Certificate from the bar premises owner and also payment of GST for the bid amount. Challenging the same, these writ petitions have been filed.
- The learned counsel appearing for the petitioner submitted that production of No Objection Certificate from the bar premises owner, after awarding tender is arbitrary. The above condition was a subject matter earlier in WA(MD)Nos.1492 and 1493 of 2011 and this Court has held that if the owner of the premises has an objection in selling eatables in the bar, after selection of successful bidder by the TASMAC, certainly, would have an impact on the lease given to TASMAC to run the shop attached to the bar. It is further submitted that the tenderers need not enclose the No Objection Certificate, obtained from the bar premises owner along with the bar tender documents, which is totally in violation of the orders passed by this Court. It is further contended that obtaining No Objection Certificate from the bar premises owner as a pre-requisite document with tender documents will make the bidder fully prepared to run the business immediately on declaring him as a successful bidder, and it is necessary that all the intending tenderers have to submit No Objection Certificate from the landlord along with tender documents.
- The learned Additional Advocate General appearing for the respondents submitted that as per Rule 2(d) of the Tamil Nadu Liquor Retail Vending (In Shops and Bars) Rules, 2003 (hereinafter called as ‘the Rules’), bar has been defined as a place located within the shop or adjoining the shop used for consumption of liquor. Hence, bar should be located either in the TASMAC retail vending shop or adjoining to the retail vending shop. In such circumstances, insisting of production of No Objection Certificate, as a pre- tender condition, then there is a likelihood of monopoly in competition, which also leads to the owner of the building to decide the licensee, and it will lead to unhealthy competition, ultimately cause revenue loss to the Corporation. Now the competition is wide open and if the persons who want to participate in the tender are free to participate in the tender without any restrictions. It is further submitted that the respondent Corporation being the Tender Inviting Authority is at liberty to impose any condition, unless the above condition is proved mala fide, arbitrary and it was tailor-made to suit any person, the petitioner has no right to challenge the same.
- I have considered the rival submissions made on either side and perused the entire records carefully.
- A perusal of the impugned tender notification, it is seen that tenders are called for for a limited purpose of granting licence to collect empty bottles and eatables in the bar run by the TASMAC and not to grant licence to run the bar.
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G.Sakthivel vs The Managing Director on 28 March, 2018
- Before considering the merits of the case, let us consider the relevant provisions of the of the Tamil Nadu Prohibition Act, (in short, ‘the Act’) and also the Tamil Nadu Liquor Retail Vending (In Shops and Bars) Rules, 2003 (in short, ‘the Rules’).
- Section 17-C(1) of the Act permits the State Government to grant privilege of selling Indian- made foreign spirits and foreign liquor by retail. As per section 17-C(1-A)(a), the Tamil Nadu State Marketing Corporation, which is a Corporation, controlled by the State Government, shall have the exclusive privilege of supplying Indian-made foreign spirits and foreign liquor by wholesale, for the whole of the State of Tamil Nadu and no other person shall be entitled to any privilege of supplying Indian-made foreign spirits and foreign liquor by wholesale.
- As per Section 17(1-B)(a), the TASMAC alone have exclusive privilege of selling, Indian-made foreign spirits for the whole of the State of Tamil Nadu and no other person shall be entitled to any privilege of selling Indian-made foreign spirits in retail. Section 17(1-B)(c)(ii) permits the TASMAC to carry on business either directly or through Co-operative Societies appointed by the Corporation as agent to act on its behalf and on such terms and conditions, the Corporation may specify. Thereafter, in exercise of the powers conferred by Section 17-C of the Act, Rules have been framed for retail vending of liquor (in shops and bars) Rules, 2003.
- Rule 2(d) of the Tamil Nadu Liquor Retail Vending (In shops and Bars) Rules, 2003, defines bar, which reads as follows:
?bar? means a place located within the shop or adjoining the shop used for consumption therein of liquor.
- As per Rule 3(1) of the said Rules, the Corporation shall make an application to the Commissioner of Prohibition and Excise for the grant of licence for the retail vending of liquor in shops and bars for the whole of the State of Tamil Nadu and after receipt of the application, the Commissioner shall issue licence under Rule 4 of the said Rules in the name of the Corporation. After obtaining licence, the Corporation shall issue an authorisation in Form-II in respect of each shop where the business of retail vending of IMFS is to be carried on either directly by the Corporation or through the Cooperative Societies as agents of the Corporation.
- In view of the said provisions, privilege of selling IMFS in State of Tamil Nadu is exclusively given to TASMAC and the TASMAC alone can sell IMFS in shops and bars either by themselves or through Cooperative Societies as an agent to the TASMAC. Thereafter, the said Rule was amended and Rule 9A has been introduced and by virtue of the above Rule, privilege to run the bar can be granted to private parties by tender.
- Rule 9A of the Rules reads as follows:
9A.Grant of privileges to run the bar.- The privilege of running bars may be granted to private parties by tender. The Board of the Corporation may decide the upset price and other terms and conditions of tender, from time to time, with the prior approval of the Commissioner of Prohibition
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G.Sakthivel vs The Managing Director on 28 March, 2018
and Excise. The Corporation, as agency shall collect the tender amount from the successful tenderers and remit the same to the Government on or before 25th of the following month and the Corporation may retain 1% of the amount so collected as agency commission.?
- Even though by virtue of the amendment to the Rules in the form of Rule 9-A of the Rules, TASMAC is permitted to grant privilege to run the bar to third parties, now that privilege to run the bar was not granted to third parties. But the fourth respondent has only called for tenders for granting licence to collect empty bottles and selling eatables in the bar run by them. As the TASMAC is a licensee to run the bar, it is the duty of the TASMAC to enter into the lease agreement with the owner of the bar premises.
- Earlier, the first respondent herein issued a Circular regarding imposing certain conditions for granting licence to run the bar. The relevant portion of the impugned Circular dated 22.07.2014 reads as follows:
?1.The tender applicants need not enclose the No Objection Certificate, obtained from the bar premises owner, along with the bar tender documents.
- The Tender Inviting Authority should evaluate the tender only based on price bids received from the bidders subject to compliance of other terms and conditions of the tender.
- After evaluation of the price bids and selection of the highest bidder (H1), the Tender Inviting Authority should intimate, within 24 hours, the successful bidder (H1) about the selection subject to submission of the following within seven days by the successful bidder.-
- the rental agreement between the bar premises owner and the successful bidder,
- single demand draft for the scrutiny deposits; and
- single demand draft for the current month bar amount. (4)The rental agreement between the bar premises owner and the successful bidder must contain, inter-alia, the following clause-
?The lessor unconditionally permits the lessee to undertake the premises of running the bar including collecting empty bottles and selling of eatables during the period of lease agreement.?
(5)If the successful bidder (H1) fails to furnish the rental agreement entered into with the bar premises owner within seven days, the Tender Inviting Authority may request the next highest bidder (H2) to match the offer/bid price of the highest bidder (H1) and only upon acceptance of the same award the contract to H2 bidder provided that H2 bidder furnish the rental agreement that he has entered into with the bar premises owner.
6.If bidder fails to furnish the rental agreement to the Tender Inviting Authority, then the bidders will perpetually be banned/blacklisted to participate in subsequent tenders of TASMAC in addition to forfeiture of the Earnest Money Deposits of the bidders.?
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- As per the above circular issued by the first respondent dated 22.07.2014 it is the person who runs the bar should enter into the lease agreement with the bar premises owner, with the condition in the lease agreement that the lessor unconditionally permits the lessee to undertake the business of running the bar including collecting empty bottles and selling eatables in the bar. Hence, even if a No Objection Certificate for collecting bottles and selling eatables is required from the bar premises owner, it is only the lessee namely the TASMAC alone should get No Objection Certificate from the bar premises owner, and the TASMAC cannot insist upon the person who got licence for collecting bottles and selling eatables to get No Objection Certificate and there is no necessity for the person who is collecting empty bottles and selling eatables to approach the bar premises owner and get No Objection Certificate, as they are licensee only under the TASMAC, not under the bar premises owner and the TASMAC engaging their services for collecting bottles and selling eatables in the bar run by TASMAC.
- The learned counsel appearing for the petitioners has relied upon the Judgment rendered by the Division Bench of this Court in W.A(MD)Nos.1492 and 1493 of 2011, wherein the Division Bench of this Court has held that for collection of empty bottles and for selling eatables in the bar, the applicant must necessarily have permission of the land owner for permitting third parties to enter into the premises to sell eatables. The relevant portion of the above Judgment reads as follows:
?11. ….As already noted in the preceding paragraph, given the fact that ?bar? as defined under Rule
2(d) means a place located within the shop or adjoining the shop used for consumption of liquor and the tender is for collection of empty bottles and for selling eatables therein, the applicant must necessarily have the permission of the land owner to locate the shop therein to sell eatables of at least, the appellant should come forward with the plea that they are entitled to permit the applicant to do business in eatables….:
Further, the Division Bench has held that if the owner of the premises has an objection in selling eatables in the bar after the tenderer is selected by the TASMAC, certainly, this would have an impact on the lease given to TASMAC to run the shop attached with the bar. Hence, out of sheer business necessity, the notification issued for collecting empty bottles and selling eatables in the bar has to go along with the lease conditions given to TASMAC and not de hors the licence granted.
- The Division Bench has only stated that for selling eatables and collect empty bottles, No Objection Certificate from the bar premises owner is necessary. Now, the question is, who is to get No Objection Certificate.
- As per the Circular referred to above, it is the duty of the licensee who run the bar to enter into the lease agreement with the bar premises owner along with the condition that the bar premises owner should permit the persons to collect the empty bottles and to sell eatables.
- Getting No Objection Certificate and also entering into a lease agreement with the bar premises owner will arise only in the event of the privilege for running bar is granted to third parties. When the fourth respondent is retaining the privilege of running the bar and only permitting some third parties to enter into the bar for the purpose of collecting empty bottles and selling eatables, as per
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the above said Circular, it is only the TASMAC, being the lessee should get permission and they cannot insist upon the tenderers to get No Objection Certificate. In the above circumstances, imposing such a condition is wholly arbitrary and unwarranted. Therefore, I have no hesitation to set aside the condition imposed by the fourth respondent, insisting upon the tenderers to get No Objection Certificate from the bar premises owner.
- It is made clear that in the event of the privilege of running bar is granted to any third parties as per Rule 9-A of the Rules, then, it is always open to the respondents to insist upon such a condition, now for granting licence for collection of empty bottles and selling eatables, TASMAC cannot insist upon the tenderers to get No Objection Certificate from the landlord.
- So far as the next contention of the petitioners that the respondents cannot collect GST at 99% of the bid amount is concerned, even though no elaborate argument has been advanced relating to payment of GST on the bid amount, it is made clear that as per prevailing rules and regulations, if the petitioners are liable to pay GST and other taxes, they cannot evade the liability. If the tenderers have no liability to pay the taxes, it is open to them to approach the third respondent and submit their explanation quoting relevant Rules. Hence, the above condition cannot be set aside.
- In the result, these writ petitions are partly allowed. The tender condition, insisting the tenderer for the production of No Objection Certificate from the bar premises owner is set aside. No costs. Consequently, WMP(MD)Nos.2068 to 2193, 1599 to 1606 and 4836 & 4837 of 2018 are closed.
To
- Tamil Nadu State Marketing Corporation, (TASMAC), CMDA Complex, Egmore, Chennai ? 600 008.
- The Senior Regional Manager, Tamil Nadu State Marketing Corporation, (TASMAC), Old Collector Office Road, Trichy.
- The District Collector, Collectorate, Trichy District, Trichy.
- The District Manager, Tamil Nadu State Marketing Corporation, (TASMAC), Thuvakudi, Trichy District.
.
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