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Issues: (i) whether the State Government and the Housing Board were justified in cancelling the auction of commercial plots and whether the highest bidder had any enforceable right to compel confirmation of the bid; (ii) whether the High Court ought to have interfered under Article 226 of the Constitution of India in a commercial auction matter; (iii) whether contempt proceedings could be sustained when the representation had been considered and rejected.
Issue (i): Whether the State Government and the Housing Board were justified in cancelling the auction of commercial plots and whether the highest bidder had any enforceable right to compel confirmation of the bid.
Analysis: The State Government had acted after receiving material indicating irregularities in the auction and had issued directions under Section 60 of the Rajasthan Housing Board Act, 1970. That provision empowered the Government to issue directions to the Board as were necessary or expedient for carrying out the purposes of the Act, and the Board was bound to comply. The auction notice itself reserved the final authority of acceptance to the Chairman, so the mere fact that the respondent was the highest bidder did not create a vested right to confirmation. Until acceptance of the bid, the auction could be cancelled, particularly when the action was taken to protect public revenue and the fairness of the process.
Conclusion: The cancellation of the auction was valid and the respondent had no enforceable right to insist on confirmation of the bid.
Issue (ii): Whether the High Court ought to have interfered under Article 226 of the Constitution of India in a commercial auction matter.
Analysis: Judicial review in matters of auction and contract award is confined to the legality of the decision-making process and not the merits of the commercial decision itself. The governing principles emphasise restraint, fairness, absence of arbitrariness, and protection of public interest. The material before the Government showed that similar plots had earlier fetched a much higher price, and the decision to disapprove the auction and hold a fresh one was taken to safeguard public revenue. In such circumstances, the High Court could not substitute its own view or direct issuance of a demand note that would amount to confirmation of the auction.
Conclusion: The High Court should not have interfered, and its interference was legally unsustainable.
Issue (iii): Whether contempt proceedings could be sustained when the representation had been considered and rejected.
Analysis: The record showed that notice had been issued to the respondent, a personal hearing had been afforded, and the representation had thereafter been rejected. In that situation, there was no basis for holding that the earlier order had not been complied with in letter and spirit, and the contempt proceedings were not warranted.
Conclusion: The contempt proceedings were not maintainable on the facts.
Final Conclusion: The decision reaffirms that in a public auction conducted by a statutory body, confirmation of the highest bid is subject to acceptance, and judicial review will not be used to override a bona fide administrative decision taken in public interest to protect revenue and ensure fairness.
Ratio Decidendi: Where the auction terms reserve final acceptance of the bid to the competent authority, the highest bidder acquires no vested right until acceptance, and a court exercising judicial review will interfere only with the legality of the decision-making process, not to compel confirmation of a bid in a commercial transaction taken over by public interest considerations.
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