TaxTMI 
TaxTMI 
2017 (1) TMI 1774
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....against the appellants with regard to rejection of bid relating to the commercial tower situated in Sector 29, Urban Estate, Gurgaon, in area admeasuring 9.527 acres. The bid submitted by the plaintiff was the highest of Rs. 11,17,50,000/-. The reserve price was Rs. 106.65 crores. The main terms and conditions of the auction were as under : (i) 10% of the bid amount to be tendered on the spot at fall of hammer. (ii) 15% of the bid money to be deposited within 30 days from the date of issuance of allotment letter. (iii) 75% of the amount to be paid within 60 days from issuance of allotment letter as one time interest free payment or with interest in the manner prescribed. (iv) The Presiding Officer (Administrative Officer) reserved the right to withdraw any property from the auction or reject any bid without assigning any reason. 3. It is further averred in the plaint that the auction held on 24.5.2004 was presided over by the Administrator, Haryana Urban Development Authority (for short 'HUDA'). Reserve price had been approved by Chief Administrator, HUDA. Though the reserved price for the other sites were approved by the Administrator. In the plaint it was further averred....
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....f further prayed for an injunction restraining defendants from re-auctioning the suit property and from creating any third party interest of any nature in respect of the suit property. 5. The defendant HUDA in its written statement raised preliminary objection that the civil court has no jurisdiction to entertain the present suit in view of section 15(2) of Haryana Urban Development Authority Act, 1977 (hereinafter referred to as 'the Act'). It was also submitted that the suit was not maintainable in the present form, that the plaintiff has no cause of action to file the suit and has not come to court with clean hands, suit is liable to be rejected under Order 7 Rule 11 of the C.P.C., plaintiff is liable to pay ad valorem court fee on the sale consideration of Rs. 111.75 crores of the commercial site in question, the suit is barred under section 41(h) of the Specific Relief Act. The plaintiff has not availed the remedy of arbitration as per the rules, regulations and bye-laws of HUDA. There is no concluded contract between the parties. Plaintiff has accepted the terms and conditions of the auction in which it was mentioned that the competent authority is entitled to accept or rejec....
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....to as 'the Regulations of 1978'), the authority to accept or reject a bid was vested with Chief Administrator, HUDA and delegation of power to Chief Administrator can only be made by the State Government vide notification as per section 51(4) of the Act. No notification has been placed on record to prove that the power of Chief Administrator has been delegated to Administrator, HUDA. The report on the basis of which bid had been rejected was not placed on record. The trial court held that the plaintiff is entitled to mandatory injunction for issuance of formal letter of acceptance of bid. The trial court further held that the suit is maintainable. The payment of court fee by the plaintiff was adequate as the suit was not for specific performance of contract. The trial court further directed the defendants to issue formal letter of allotment on completion of requisite formalities within two months. 8. On first appeal being preferred in the court of District Judge, Gurgaon the same was allowed vide judgment and decree dated 29.11.2010. The suit was dismissed by the first appellate court. The first appellate court has opined that the power of Chief Administrator has been delegated to....
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....as competent authority to take a final decision on the bid. No notification has been issued by the State Government under section 51(4) of the Act. The suit has been held to be maintainable. It has been rightly valued and adequate court fee has been paid. 10. The judgment and decree of High Court has been questioned by filing the appeal in this Court. An application has also been filed on behalf of the appellant to take additional documents on record. HUDA for the first time has filed notification dated 13.9.1989 issued by it under section 51 of the Act, delegating the functions in favour of various officers indicating that the power has been delegated to the Administrator to accept the auction bids for commercial/residential/industrial sites. Apart from that, a judgment of Division Bench of the High Court of Punjab & Haryana in CWP No.12753/2010 - Jitender Singh v. Haryana Urban Development Authority has been placed on record in which the impugned decision of the High Court in the present appeal has been held to be not laying down a good law and has been overruled. 11. It was urged by Shri Shyam Divan, learned senior counsel appearing on behalf of the appellant that Administrato....
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....it in absence of concluded contract : 13. Firstly, we examine the question whether there being no concluded contract in the absence of acceptance of bid and issuance of allotment letter, the suit could be said to be maintainable for the declaratory relief and mandatory injunction sought by the plaintiff. The plaintiff has prayed for a declaration that rejection of the bid was illegal. Merely by that, plaintiff could not have become entitled for consequential mandatory injunction for issuance of formal letter of allotment. Court while exercising judicial review could not have accepted the bid. The bid had never been accepted by concerned authorities. It was not a case of cancellation of bid after being accepted. Thus even assuming as per plaintiff's case that the Administrator was not equipped with the power and the Chief Administrator had the power to accept or refuse the bid, there had been no decision by the Chief Administrator. Thus, merely by declaration that rejection of the bid by the Administrator was illegal, the plaintiff could not have become entitled to consequential relief of issuance of allotment letter. Thus the suit, in the form it was filed, was not maintainable f....
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.... shall be such as may be framed by the Chief Administrator from time to tome and announced to the public before auction on the spot." 15. We are fortified in our view by a decision of this Court in Uttar Pradesh Avas Evam Vikas Parishad & Ors. v. Om Prakash Sharma (2013) 5 SCC 182, the questions arose for its consideration that : whether there is any vested right upon the plaintiff/bidder until the bid is accepted by the competent authority in relation to the property in question? Merely because the plaintiff is the highest bidder by depositing 20% of the bid amount without there being approval of the same by the competent authority and it amounts to a concluded contract in relation to the plot in question; and whether the plaintiff could have maintained the suit in the absence of a concluded contract ? Considering the aforesaid questions, this Court has discussed the matter thus : "30. In support of the said proposition, the learned Senior Counsel for the defendant, Mr Rakesh Dwivedi has also placed reliance upon another decision of this Court in State of U.P. v. Vijay Bahadur Singh (1982) 2 SCC 365. The learned Senior Counsel has rightly placed reliance upon the judgment of th....
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....ble as there is no vested right in the plaintiff without approval of the bid by the competent authority. Thus, in the wake of aforesaid decision, in the absence of a concluded contract, the suit could not have been decreed for mandatory injunction. It amounted to enforcing of contract in the absence thereof. 16. In the light of the aforesaid discussion, it is evident that in the absence of a concluded contract, i.e. in the absence of allotment letter and acceptance of highest bid, the suit by the plaintiff was wholly misconceived. Even if non-acceptance of the bid was by an incompetent authority, the court had no power to accept the bid and to direct the allotment letter to be issued. Merely on granting the declaration which was sought that rejection was illegal and arbitrary and by incompetent authority, further relief of mandatory injunction could not have been granted, on the basis of findings recorded, to issue the allotment letter, as it would then become necessary to forward the bid to competent authority - Chief Administrator - for its acceptance, if at all it was required. In re : Competency of Administrator to accept/reject bid : 17. The plaintiff has come to the Court....
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....Administrator with respect to the power to accept the auction bids for commercial/residential/industrial sites provided the highest bid is more than the reserve price and minimum of three bids have been received. The Administrator has also the power if the site is not sold in 3 attempts, to revise the price downwards up to a maximum of 10% of the reserve price. Thus plaintiff has not come to the court with clean hands and has suppressed for the reasons best known to it, the aforesaid order of HUDA by which delegation of power has been made. The fact that there was delegation of power is also crystal clear from the communication exchanged between the Administrator and the Chief Administrator. As the Administrator was reluctant to accept the bid, as was the case in the case of fixation of reserve price also, the Administrator considering the huge property, said that the auction involved prime and big commercial sites, huge revenue is involved and such a big auction has been carried out for the first time in the State of Haryana, therefore, all the record pertaining to the auction was sent to the Chief Administrator for scrutiny and approval at the level of Chief Administrator, HUDA, ....
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....he Chief Administrator also indicated that the Administrator was armed with the power. That apart, when we see the terms and condition No.4 of the tender notice, subject to which auction was held, provided thus : "4. The presiding officer reserves the right to withdraw any property from the auction or reject any bid without assigning any reason." 20. Admittedly, the Presiding Officer was the Administrator, HUDA. Thus, as per the terms of the auction also, the Administrator was having the power to accept or reject the bid. That the bid was more than the reserve price and there were more than 3 bidders, is not disputed. Thus, in our opinion, the Administrator had the power to reject the bid as per the delegation made to him on 13.9.1989. 21. The learned counsel representing the plaintiff-respondent vehemently contended that there was no delegation of power under section 51(4) and it was the State Government only who could have delegated the power of the Chief Administrator as found by the High Court. As delegation had been made by HUDA under section 51(1) of the Act of 1977, it was incumbent upon the plaintiff to question it and assail the same. However, the plaintiff had feigned....
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....een accepted, hence earnest money had been refunded. However, this communication of the decision reflects only the return of the cheque pursuant to the decision of the Administrator. The order passed by the Administrator is apparent from the communication of the Administrator made to Estate Officer, HUDA on 21.9.2004 which has been extracted above. It is apparent from the rejection order that the reports submitted were considered and decision was taken not to accept the bids with respect to auction of seven properties. It was not a case of singular rejection of the bid made by the plaintiff alone. Six other bids were also not accepted. The reason for rejection has been made clear in para 15 of the written statement filed by HUDA. The relevant portion is extracted hereunder : "The action of not accepting the bid is very much sustainable in the eyes of law as the prices fetched by the auction was not in consonance with the prices fetched in other urban estates like Faridabad and Panchkula for similar kind of property. The bid prices received for the above said site was also not on the rising trend as per the prevalent market prices of the similar property in Gurgaon. The judicial v....
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....d justified and was beyond the pale of judicial scrutiny. The Administrator had the right to reject the bids and he had rejected it on sufficient ground, duly considering the materials on record as is apparent from the communication dated 21.9.2004. In the interest of the public, revenue of the State and in the interest of HUDA the huge property was saved from being plundered. 27. This Court in the case of State of Uttar Pradesh & Ors. v. Vijay Bahadur Singh & Ors. (1982) 2 SCC 365 has laid down that there is no obligation to accept the highest bid. The Government is entitled even to change its policy from time to time according to the demands of the time. It was observed thus : "3. It appears to us that the High Court had clearly misdirected itself. The Conditions of Auction made it perfectly clear that the Government was under no obligation to accept the highest bid and that no rights accrued to the bidder merely because his bid happened to be the highest. Under Condition 10 it was expressly provided that the acceptance of bid at the time of auction was entirely provisional and was subject to ratification by the competent authority, namely, the State Government. Therefore, the....
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....be remitted to the trust office within thirty days "from the date of the letter informing confirmation of the auction bid in the name of the person concerned". Admittedly, no such confirmation letter was issued to the respondent. Conditions Nos. 5, 6 and 7 are relevant: "5. The acceptance of the highest bid shall depend on the Board of Trustees. 6. The Trust shall reserve to itself the right to reject the highest or any bid. 7. The person making the highest bid shall have no right to take back his bid. The decision of the Chairman of the Board of Trustees regarding acceptance or rejection of the bid shall be binding on the said person. Before taking the decision as above and informing the same to the individual concerned, if the said individual takes back his bid, the entire amount remitted as deposit towards the amount of bid shall be forfeited by the Trust." From a bare reference to the aforesaid conditions, it is apparent and explicit that even if the public auction had been completed and the respondent was the highest bidder, no right had accrued to him till the confirmation letter had been issued to him. The conditions of the auction clearly conceived and contemplated ....
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....Authority's action in accepting or refusing the bid must be free from arbitrariness or favouritism." 30. Reliance has been placed on behalf of the respondent on a decision of this Court in M/s. Star Enterprises & Ors. v. City and Industrial Development Corporation of Maharashtra Ltd. & Ors. (1990) 3 SCC 280. The relied upon portion is extracted hereunder : "10. In recent times, judicial review of administrative action has become expansive and is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. State activity too is becoming fast pervasive. As the State has descended into the commercial field and giant public sector undertakings have grown up, the stake of the public exchequer is also large justifying larger social audit, judicial control and review by opening of the public gaze; these necessitate recording of reasons for executive actions including cases of rejection of highest offers. That very often involves large stakes and availability of reasons for actions on the record assures credibility to the action; disciplines public conduct and improves the culture of accountability. Looking for reasons....
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.... explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. Orders are not like old wine becoming better as they grow older." There is no dispute from the aforesaid proposition. However, in the instant case reasons have been mentioned in the rejection order and the nature of reports has also been sufficiently explained. Thus the rejection of seven different bids in the auction reflects that there was due application of mind by the concerned authority and rejection could not be said to be illegal, arbitrary or sans of reason. 33. We are constrained to observe in the instant case that with respect to reserve price also, there was a hitch to fix and approve it right from the word go. It was a case of auction of big commercial tower having a huge area of 9.527 acres. Only the reserve price of the same was forwarded for fixation to the Chief Administrator, where....