Nitin Jamdar, C.J.

1. The Petitioner has filed this Public Interest Litigation challenging the award of tenders by the Irrigation Department of the Government of Kerala, primarily on the ground that the grant of tenders has resulted in substantial loss to the State exchequer.

2. We have heard learned counsel for the parties. Two learned Special Government Pleaders have appeared, one for the Finance Department of the State, and the second for the Irrigation and Water Resources departments of the State.

3. The State of Kerala took cognisance of the fact that the storage capacity of the majority of the reservoirs in the State has reduced over the years on account of sedimentation and constituted a committee to prepare draft Standard Operating Procedures (SOP) for desiltation of the reservoirs in Kerala. The Committee prepared the draft Standard Operating Procedure (SOP), which was duly published. The draft SOP dealt with the estimation of quantities of components in the deposited sediments, the technology to be employed, environmental concerns, and the method for calling tenders for the work. In the case of outright sale of sediments, bids were to be accepted above the value of the component materials, as determined by the prevailing Local Market Rate of the Public Works Department.

4. On 6 August 2024, the Superintending Engineer, Irrigation Department, Central Circle, Ernakulam, issued three Notices Inviting Tenders, marked as Exts. P2, P3 and P4.Ext.P2 tender was for Desiltation – Upstream of Pattambi Check Dam. The location of the work was at Palakkad and the estimated cost of the work is Rs. 12,44,49,384/-. Ext.P3 tender was for Desiltation – Upstream of Koottakkadavu Regulator in Anakkara Panchayath, Palakkad District. The location of the work was at Palakkad and the estimated cost of the work is Rs. 12,72,14,926/-. Ext.P4 tender was for Desiltation – Upstream of Cheruthuruthy Check Dam in Shornoor Municipality, Palakkad District. The location of the work was at Palakkad and the estimated cost of the work is Rs. 15,53,12,832/-.

5. A complaint was submitted to the Chief Secretary stating that the highest rate quoted in the tender was ₹2,151.66 per mS, which is ₹423.24 less than the prevailing local market rate for 1 mS of sand in Palakkad District. The complaint further alleges that this disparity would result in an estimated loss of approximately ₹15,46,55,011.30 to the State exchequer. Contending that the Government is losing a substantial source of revenue at a time when it is already facing serious financial constraints, the Petitioner asserts that the matter needs to be looked into. However, no cognizance was taken of the complaint. The Respondent State authorities proceeded to award the tender to Respondent No. 6. Hence, the present Public Interest Litigation has been filed.

6. According to the Petitioner, the Local Market Rate for sand in Palakkad District is Rs. 2,475/mS. The Petitioner relied upon the relevant pages of the Local Market Rates (basic rate for Palakkad) from the official website of the State Government. According to the Petitioner, the price of Rs. 2,475/mS pertains to Zone IV-quality sand, and the Local Market Rate has never fixed pricing for Zone II-quality sand.

7. An affidavit was filed on 13 March 2025 by the Respondent No.6- tenderer seeking to justify the award of the tender in favour of Respondent No. 6. Thereafter, a counter-affidavit was filed by the Superintending Engineer on 24 March 2025, stating that the base rate had been fixed taking the Local Market Rate as ₹2,575/mS, as against ₹2,475/mS alleged by the Petitioner. While fixing the base rate at ₹2,083.55/mS, the mandatory sieving charges of ₹310.27/mS were deducted. Accordingly, it was contended that there was no loss to the Government exchequer. Therefore, according to the stand of the Superintending Engineer—Respondent No. 5—though the tender amount was below the Local Market Rate, this was due to the deduction of sieving charges, which, as per the Superintending Engineer, were mandatory.

8. When the petition came up on board on 29 May 2025, we noted the aspect of the deduction of sieving charges and directed the Chief Engineer, Water Resources Department, to file an affidavit specifying under which document, policy manual, or circular the sieving charges are required to be mandatorily deducted. Pursuant to the order dated 29 May 2025, Respondent No. 3, the Chief Engineer, filed an affidavit on 11 June 2025, in which the following was stated regarding the sieving charges:

                  “It is submitted that the rate for washing and sieving as far as Palakkad is concerned was fixed on 310.27/m3 and the same was deducted from the preliminary value taking into account the percentage of sand in the sediments excavated. The preliminary rate of sand of Rs.2083.55/m3 was arrived at based on the LMR rate of Rs.2575/m3 taking into account the soil analysis made by KERI, Peechi on the test samples and the percentage of sand in the sediments. The 6th respondent quoted Rs.2111.66/m3 for works under Ext.P2 and P3 and Rs.2151.66/m3 for the works under Ext.P4. Hence it is submitted that the tenders under Ext.P2 to P4 were issued considering the percentage of sand in the sediments and fixing the preliminary base rate based on the LMR and after deducting the sieving charges. Since the 6th respondent has quoted the rate above the base rate fixed by the Department, it is submitted that there is no loss to the State Government while tendering the works under Ext.P2 to P4.”

                  The issue regarding the policy document on sieving charges was not addressed to in the counter. Therefore when the petition came up on board on 13 June 2025 following order was passed:

                  “Heard Mr. Jawahar Jose, learned counsel for the petitioner, Mr. Amal Darshan, learned counsel for the Respondent No.6, and Mr. P.I, Davis, learned Senior Government Pleader.

                  2. As to our query raised in order dated 29 May 2025, all that has been placed before us is that the sieving charges have been deducted by following a proper methodology. Our attention is drawn towards Annexure R3(h), wherein certain calculations are stated to be carried out. Our attention is also drawn to the draft Standard Operating Procedure for desiltation of the reservoirs in Kerala. More particularly, the note appended to clause (xii) states that the Department will work out the cost of the entire process of separation and the packing stage.

                  3. The learned Government Pleader contends that as per the scientific report received, sediments which have to be extracted as per the tender, contained sand, namely, 92.5% (Pattambi Check Dam), 92.5% (Koottakadavu Regulator), and 96.2% (Cheruthuruthy Check Dam). Therefore, the local market rate in its entirety is not applied and thereafter, sieving charges were deducted.

                  4. For the grant of tender for removal of sediments, including sand, and also to generate revenue for the State and public exchequer, any deduction from the Revenue must give clarity. We find no guidance in the draft SOP as to how “sieving charges” have to be calculated, or whether it can be deducted from the amounts that have to be paid by the tenderers/public exchequer. Unless these guidelines are included in the SOP, the calculations may be presumed to be arbitrary, subject to change based on the opinion of the officer. Despite directing the Chief Engineer to place the policies/guidelines in this regard, nothing has been placed before us. The following factual position will demonstrate the extent of loss to the Public Exchequer. The LMR rate for the sand in Palakkad District is Rs.2575/m3 and the Department fixed the sieving charges as Rs.310.27/ m3 and reduced the same from the LMR rate and awarded the contract. The quantity of sand for desiltation in Pattambi Check Dam is 104062.500 m3. If the LMR rate is used, the total amount will come to Rs.26,79,60,937.50/. The same if calculated less sieving charges, the amount would be Rs.21,68,19,421.875/, which would show that there would be a reduction of Rs. 5,11,41,515.625/. As far as the Koottakkadavu Regulator is concerned, the quantity is 106375 m3, and applying LMR rate, the amount will be Rs.27,39,15,625/-, and if sieving charges are applied, the amount will be Rs.22,16,37,631.25/-. Thereby, a reduction is Rs.5,22,77,993.75/-. In respect of Cheruthuruthy Check Dam, the quantity is 129870 m3 and if LMR is applied, the amount will come to Rs.33,44,15,250/-. If the amount is less sieving charges, the same will be Rs.27,05,90,638.50/-. Thereby, a reduction of Rs.6,38,24,611.50/-. Thus, the difference in amount between the rates fixed by LMR and those by reducing the sieving charges would be Rs.16,72,44,120.875/-.

                  5. Let the file with this query raised by the court be placed before the Secretary, Finance Department, State of Kerala, who can look into it as the matter involves the Revenue of the State. We reiterate all the directions in the order dated 29 May 2025 to the Chief Engineer, Water Resources Department.

                  6. Post on 20 June 2025.”

9. Despite our directions to the Finance Secretary to examine the issue, a counter-affidavit was filed not by the Finance Secretary, but by the Additional Chief Secretary of the Water Resources Department. The affidavit stated that the Department had received a relatively favourable rate and that, to obtain usable sand comparable to that available in the market, sieving charges for processing and cleaning the sand were inevitable. It further asserted that only such sand could be sold at market rates and that a high-level committee had decided to accept the financial bid. However, no guidelines were placed on record regarding how the sieving charges should be calculated, in the absence of which there may be scope for arbitrary discretion in deducting the sieving charges.

10. On 28 October 2025, the Finance Secretary filed an affidavit, wherein, it is stated as under:

                  “It is submitted that there is non compliance of the mandatory stipulation of Government vide G.O. (MS) No. 79/2017/WRD dated  26/09/2017, directing CE to ensure that the LMR justification for the tendered work shall be ready before opening the tender has occurred in this case which is a serious lapse on the part of CE.

                  It is further submitted that the practice prevailed earlier while collecting river sand which was used for construction purpose was merely to collect from the rivers and to transport and sell to potential buyers without much sieving. Hence the admissibility of the sieving charges from river sand dredged from these rivers also needs to be reviewed.

                  It is also submitted that the SOP approved by Government vide G.O.(MS) No. 79/2017/WRD dated 26/09/2017, was issued for desilting Dams and reservoirs. Since the same SOP is applied to ion the case of rivers and dams the admissibility of the approval of tenders may also be reviewed.

                  CTE has examined the tender approval proposals in File NO. 3017666/B3/7/2025/Fin dated 16/01/2025 had made the following observations.

                  1.       Chief Engineer shall confirm that the HI for all 3 works are reasonable compared to the LMR.

                  2.       The works will be executed strictly as per the SOP approved by the Government.

                  The HLEC meeting overruled the observations and objections of CTE and the contract is awarded. Therefore, it is humbly submitted that the Finance Department is of the opinion that the tender may either be cancelled or fresh tenders may be invited duly modifying the SOP to avoid all possible loss to the public exchequer.”

                  Thus, according to the Finance Secretary, there were irregularities, and the tender may be cancelled or fresh tenders may be invited, duly modifying the SOP, to avoid any possible loss to the public exchequer. This stand is reiterated before us by the Special Government pleader representing the Finance Department.

11. Therefore, what emerges before us is that the tender was issued below the Local Market Rate, with the Local Market Rate effectively reduced through the application of sieving charge deductions. No specific guidelines or policy have been placed before us regarding the manner in which sieving charges can be deducted. Granting unguided discretion to the authority could result in a substantial loss to the public exchequer; in the present case, according to the Petitioner, to the tune of approximately ₹15 crores. The directions issued from time to time to place the relevant details on record were not fully complied with by the Irrigation Department and the Water Resources Department. It was only after the Finance Department had examined the issue of a potential loss to the public exchequer that various relevant details were subsequently placed on record by the Finance Department. Accordingly, we are of the view that the intervention of the Chief Secretary is necessary, not only to examine this specific tender, but also to review the methodology by which tenders are issued, so as to remove all possible loopholes and lacunae that may result in undue loss to the public exchequer.

12. Accordingly, we direct that the files of the proceedings, including all papers and affidavits filed in the present petition, be placed before the Chief Secretary of the Government of Kerala. The Chief Secretary will take the necessary decisions regarding the issues raised by the Finance Department concerning the tender awarded to Respondent No. 6 and also determine whether any changes or corrections are required in the Standard Operating Procedure for issuing tenders, particularly with respect to the concept of sieving charges and other deductions. The file be placed before the Chief Secretary of the State within two weeks. The Chief Secretary will take the appropriate steps within four weeks thereafter.

13. The writ petition is disposed of in the above terms.