State of Assam vs Tulsi Singh

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 14 of 1962

Decision Date: 1 March 1962

Coram: B.P. Sinha, K. Subba Rao, N. Rajagopala Ayyangar, J.R. Mudholkar, Venkatarama Aiyar

In this matter the parties were the State of Assam as petitioner and Tulsi Singh as respondent, and the judgment was delivered on 1 March 1962 by a bench of the Supreme Court of India consisting of Justice B P Sinha, Justice K Subba Rao, Justice N Rajagopala Ayyangar and Justice J R Mudholkar. The case involved the application of the Northern India Ferries Act 1878, specifically sections 4, 8 and 12 together with rule 19, and also raised issues under section 35 of the Indian Evidence Act 1872. The factual backdrop concerned the settlement of a ferry, designated as the ferry at N, by auction in accordance with the statutory scheme. Section 4 of the Northern India Ferries Act declared the ferry at N to be a public ferry, and rule 19, framed under section 12, required that any sale of such a ferry be conducted by auction to the highest bidder. The rule further mandated that the officer conducting the sale could accept a bid only after obtaining the approval of the Chief Engineer, who was required to ensure that the officer had duly considered all the factors enumerated in rule 19. The ferry was indeed put up for auction and the bids received were recorded. The second respondent submitted the lowest bid, whereas the first respondent tendered the highest bid. Despite the higher bid, the officer conducting the sale rejected the first respondent’s bid immediately, without forming an independent opinion on the suitability of the first respondent as required by rule 19, on the ground that the first respondent’s name appeared in a “Special List”. This “Special List” had been prepared and maintained by the Government of Assam and contained the names of persons suspected or confirmed to be connected with smuggling activities, with the purpose of preventing such persons from obtaining any permit or licence, in accordance with the Government’s prohibition policy. The first respondent subsequently applied to the Chief Engineer requesting acceptance of his bid and allocation of the ferry, but the application was denied. He then filed a petition before the High Court of Assam under Article 226 of the Constitution. The High Court set aside the settlement in favour of the second respondent, holding that the settlement violated section 8 of the Act and rule 19, and declared that the first respondent, being the highest bidder, was entitled to the settlement of the ferry. The State of Assam appealed the High Court’s order by special leave to the Supreme Court. The principal question framed for consideration was whether an officer conducting a ferry sale could reject a bidder’s offer solely because the bidder’s name appeared in the Special List, and whether the High Court was entitled to decide a matter that the Act had entrusted to executive authorities. The Supreme Court held that the discretion conferred on the officer conducting the sale under section 8 of the Northern India Ferries Act, read with rule 19, was indeed wide but it was not unrestricted.

The Court explained that an officer who is vested with discretion to accept a bid must base his decision on material that is before him and that is relevant to his consideration. If, after reviewing such material, the officer voluntarily chooses not to accept the highest bid, that choice is within his lawful discretion and cannot be set aside by a judicial review. Conversely, the Court held that where the officer rejects a bid without any material on record to justify that rejection, his action violates Rule 19 and therefore cannot be sustained. The Court further observed that the “Special List” kept by the Government of Assam, which contains names of persons suspected or found to be involved in smuggling, does not qualify as a document admissible under Section 35 of the Indian Evidence Act. While the list may be useful to the Criminal Intelligence Department for investigative purposes, the Court considered it unsafe to rely on such a list when determining the civil rights of an individual. Additionally, the Court stated that even if an order issued by the authorities does not conform strictly to the law, it remains the duty of the appropriate executive authorities to address the matter, and the High Court does not have the power to substitute its own judgment for functions that are entrusted to the executive. In reaching this conclusion, the Court followed the precedent set in Verappa Pillai v. Raman & Raman Ltd., [1952] S.C.R. 583.

The judgment was issued in a civil appellate jurisdiction concerning Civil Appeal No. 14 of 1962, which was filed by special leave against the judgment and decree dated 11 July 1961 rendered by the Assam High Court in Civil Rule No. 64 of 1961. The appellants were represented by counsel, while the respondent did not appear before the Court. The judgment was delivered on 1 March 1962 by Justice Venkatarama Aiyar. The Court identified the central issue for determination as whether the settlement made by the Executive Engineer of Golaghat, State of Assam, of the ferry at Neperpatty in favor of the second respondent, Phuka Chandra Gohain, on 23 January 1961, complied with the provisions of the Northern India Ferries Act, 1878 (hereinafter “the Act”) and the rules made thereunder. The Court proceeded to refer to the relevant statutory provisions. Under Section 4 of the Act, the State Government may, from time to time, declare which ferries shall be deemed public ferries. Section 8 of the Act provides that the tolls of any public ferry may be let by public auction for a term not exceeding five years with the Commissioner’s approval, or by public auction or otherwise with prior sanction of the State Government. The lessee is required to obey the rules made under the Act for the management and control of the ferry and may be required by the officer who has immediate superintendence of the ferry, or by the public body under Section 7 or 7A, to furnish security for good conduct and timely payment of rent as deemed appropriate. When the tolls are offered for public auction, the officer or the designated body, or the officer conducting the sale on their behalf, may, for reasons recorded in writing, refuse to accept the highest bid, accept any other bid, or withdraw the tolls from auction.

In this case the Court recorded that the officer or body responsible for a public ferry, or the officer conducting the sale on his or its behalf, may, for reasons set out in writing, decline to accept the offer of the highest bidder, may choose to accept a lower bid, or may withdraw the tolls from auction. Rule 19, framed under section 12 of the Act, provides that a sale shall normally be by auction to the highest bidder, but that the officer conducting the sale may, for sufficient reason recorded in writing, refuse to accept the highest offer or any other bid. In exercising this discretion the officer must consider, among other factors, whether the bidder is a native or domiciled person or an outsider; whether the bidder possesses experience in the ferry business; and whether the bidder owns landed property in his own name within the district or State, can speak the regional language, is financially sound and of good conduct. The ferry at Neparpatty had been declared a public ferry under section 4 of the Act. On 23 January 1961 the Executive Engineer of Colaghat placed the lease of that ferry for the year 1961‑62 up for public auction pursuant to section 8 of the Act. At that auction the first respondent, Tulsi Singh, submitted a bid of Rs 4,200; Indra Deo Singh offered Rs 4,050; and the second respondent, Phukan Chandra Gobain, bid Rs 3,000. The Executive Engineer then issued an order stating that the lease was “sold to Shri Phukan Chandra Gohain at Rs 3,000 only as the two other highest bidders fall in special List.” Under Rule 19(a) the acceptance of any bid by the conducting officer required the approval of the Chief Engineer, and Rule 19(b) mandated that the Chief Engineer ensure that the officer had taken into account all the factors enumerated in Rule 19. The Chief Engineer approved the Executive Engineer’s decision of 23 January 1961, thereby confirming the sale to the second respondent. Subsequently, on 6 February 1961 the first respondent applied to the Chief Engineer seeking acceptance of his higher bid and settlement of the ferry on his behalf. The Chief Engineer rejected this application by order dated 7 April 1961. Displeased, the first respondent filed a writ petition under Article 226 of the Constitution in the High Court of Assam on 9 May 1961, challenging the Executive Engineer’s order of 23 January 1961 that had settled the lease in favour of the second respondent. He contended that the order contravened the provisions of the Act and the Rules and prayed that the lease be awarded to him as the highest bidder. The learned judges of the High Court accepted his contention, set aside the settlement in favour of the second respondent on the ground that it violated section 8 of the Act and Rule 19, and declared that the first respondent was entitled to the lease under Rule 19 as the highest bidder. The present appeal, granted by special leave, challenges that judgment.

The authority to settle public ferries originated in section eight of the Act and in the Rules made under that provision, and consequently the power had to be exercised in strict conformity with those statutory requirements. Rule nineteen prescribed that, as a general rule, the sale of a ferry should be conducted by public auction and that the ferry should be awarded to the highest bidder. In the present case, the first respondent had submitted the highest bid, and therefore, according to the ordinary operation of Rule nineteen, the ferry ought to have been settled in his favour. Section eight, however, contained a qualification that permitted the officer conducting the sale to refuse the highest offer, provided that the refusal was recorded in writing and that the officer accepted another bid for reasons that were duly noted. The discretion conferred by this clause was described as wide, but it was nevertheless limited; it was not an unbounded or absolute power. Rule nineteen further required the officer, at the time of accepting any bid, to consider certain enumerated factors, and under sub‑paragraph (b) of that rule the Chief Engineer was required to be satisfied that the conducting officer had taken those factors into account when he made his acceptance.

The appellant submitted that when the conducting officer possessed material on which he could legitimately refuse the highest bid, and he exercised his discretion to do so, the resulting decision was not open to judicial review. The Court agreed with that proposition. Yet the appellant also argued that where the officer had no material upon which to rely under Rule nineteen, the situation was not one of discretionary exercise but rather a case of lacking the authority to settle the lease at all. The order dated 23 January 1961, which rejected the first respondent’s highest bid, offered a single ground for doing so: the respondent’s name appeared on a “special list.” The affidavit filed by the Chief Engineer disclosed that, pursuant to the prohibition policy prevailing in the State of Assam, the Government and its officers had prepared lists of persons who were either suspected of or confirmed to be involved in smuggling activities. The affidavit further stated that the Government’s policy was to refrain from granting taxi permits, stage‑carrier permits, fisheries licences, ferries and similar authorisations to individuals who were listed as suspected or confirmed opium smugglers. The list referred to in the Executive Engineer’s order was, therefore, the same “special list” mentioned in the affidavit.

The appellant contended that if a person were actually a smuggler, he would not be of good conduct, and the rejection of his bid would be justified under sub‑paragraph (iii) of Rule nineteen. The appellant’s contention was deemed logically sound: the authorities would be exercising their discretion appropriately by refusing to award a ferry to a smuggler, because placing such a person in charge of a ferry could facilitate the evasion of prohibition laws, and that consideration falls squarely within the ambit of the relevant factor under Rule nineteen(iii). However, the appellant’s difficulty lay in the absence of any material that could substantiate a finding that the first respondent was a smuggler. The records indicated that the first respondent had been prosecuted under section four of the Assam Ganja and Bhang Prohibition Act, but that proceeding had concluded in his discharge without a conviction. Consequently, there was no documented evidence establishing that the respondent was a smuggler, raising the question of whether the “special list” could serve as a sufficient basis for rejecting the highest bid under the statutory framework.

The earlier criminal proceeding concluded with a discharge, and it was argued that although the evidence might have been insufficient to secure a conviction under the Act, it could have been sufficient for the authorities to act under Rule 19. The Court observed that such a possibility existed, but it did not apply to the present facts. It was noted that the Executive Engineer had not formed an independent opinion about the first respondent after examining the materials; instead he merely located the respondent’s name in the confidential “special list” and rejected the bid without any additional assessment. The critical question therefore was whether, based solely on the entry in that list, an order rejecting the highest bid could be justified under Rule 19. The Court held that the “special list” could not be treated as a document admissible under section 35 of the Evidence Act, because it was designated as confidential and no information was disclosed regarding how the list was prepared, what sources were used, or what procedure the Government officers followed in compiling it. While such lists may assist the Criminal Intelligence Department, the Court emphasized that relying exclusively on them to determine a person’s civil rights would be unsafe. Consequently, if the “special list” is excluded as a material upon which an opinion may be formed, there is no other basis on which the conducting Officer could lawfully reject the offer of the highest bidder under Rule 19. Accordingly, the Court agreed with the High Court’s finding that the rejection of the highest bid was not in accordance with section 8 or Rule 19. The logical consequence of this conclusion was that the authorities exercising powers under the Act must re‑examine the matter and render a decision consistent with law. However, the learned judge further observed that, under Rule 19, the offer of the first respondent, being the highest, should be accepted. The appellant argued that even assuming the Executive Engineer’s order dated 23 January 1961 was unlawful, the proper course was for the appropriate authorities to revisit the settlement, and that the Court should not substitute its own decision for that entrusted to the executive under the Act. The Court concurred with this submission. The decision then turned to the precedent of Verappa Pillai v. Raman & Raman Ltd., where the issue concerned the grant of permits under the Motor Vehicles Act. In that case, the authorities had issued permits to Verappa Pillai, which were challenged by a rival applicant, M/s Raman & Raman Ltd., in an article 226 petition. The Madras High Court held that the rival applicant’s title should prevail, set aside the original order, and direct the issuance of permits to the applicant. On appeal, this Court held that such a directive overstepped the High Court’s jurisdiction.

In this case the Court held that the order issued by the High Court had been made beyond the powers and jurisdiction that the High Court possessed. Accordingly the Court found that the part of the High Court’s order which declared that the rights to the lease would belong to the highest bidder was legally erroneous. The Court explained that by attempting to set aside the administrative decision and to award the lease to the highest bidder, the High Court had intruded into a matter that was entrusted to the executive authorities under the statute governing such leases. The Court further observed that the lease in question covered only the financial year 1961‑62 and that this period was soon to come to an end. Because the lease would shortly expire, the Court concluded that there was no necessity to direct the appropriate authorities to undertake a fresh consideration or a new allocation of the lease. In other words, the imminent expiry of the lease removed any practical need for the Court to intervene in the administrative process. Accordingly, the Court determined that there was no basis for granting any further relief to the appellant and therefore dismissed the appeal. The order of dismissal was thus confirmed. The judgment also cited the earlier authority identified as (1) [1921] S.C.R. 583.