TaxTMI 
TaxTMI 
2017 (1) TMI 1774
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....for declaration with consequential relief as 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 sit....
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.... allotment including delivery of possession and sanction of site plan. Plaintiff 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 whi....
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....Development (Disposal of Land and Buildings) Regulations, 1978 (hereinafter referred 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....
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....ave been issued in favour of the plaintiff. In view of Regulation 6(2) the Chief Administrator was 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 urge....
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....nder section 51(1) whereas delegation was required under section 51(4). In re : Maintainability of suit 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 consequentia....
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....he same manner as provided in sub-regulations (6) and (7) of Regulation 5. (4) The general terms and conditions of the auction 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 thi....
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....f." (emphasis supplied). This Court has held that in the absence of a concluded contract which takes place by issuance of allotment letter, suit could not be said to be maintainable 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....
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....a siteis not sold even after three attemptsat a price higher than the reserve price the administrators may revise the price downwards upto maximum of 10% of the reserve price. 18. It is apparent that there had been delegation of power by HUDA to the 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 revenu....
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.... -do- C-10 Corner 7820.80 14.84 Cr. 15.51 Cr. -do- 6. 55-56 -do- -- 3850.00 6.72 Cr. 7.15 Cr. - do- 7. 29 Multiplex -- 2700.00 4.69 Cr. 5.07 Cr. -do- Bid sheets for the above mentioned sites as received from your office are returned herewith. Sd/- Administrator HUDA, Gurgaon" 19. The Administrator had also mentioned in his letter that there was delegation of power to him. The letter from the 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 d....
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.... In re : Legality of rejection of bid : 24. Coming to the question whether the Administrator had rejected the bid in an illegal or arbitrary manner, the learned counsel for the plaintiff has submitted that the bid had been rejected by an unreasoned order, as such it was an arbitrary rejection. Learned counsel has drawn our attention to the communication dated 24.9.2004 which has been communicated by the Estate Officer to the plaintiff in which it has been mentioned that the bid has not been 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 t....
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.... consideration the higher prices fetched at Panipat, Panchkula and Faridabad, it was decided to reject the seven bids. Thus, there was due application of mind. 26. In our opinion when it is apparent from the communication that the reports were considered and what was contained in the report was very much pleaded in the written statement, mere non-production of report was not of any significance in the instant case. We are satisfied that the rejection of the bid by the Administrator was absolutely proper and 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 th....
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....ntract when the public auction had not culminated to its logical end before confirmation of the bid, no right accrued to the highest bidder. This Court has laid down as under : "4. Apart from that the High Court overlooked the conditions of auction which had been notified and on basis of which the aforesaid public auction was held. Condition No. 3 clearly said that after the auction of the plot was over, the highest bidder had to remit 1/10 of the amount of the highest bid and the balance of the premium amount was to 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 perso....
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....round, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations. x x x x x 29. The Authority has the right not to accept the highest bid and even to prefer a tender other than the highest bidder, if there exist good and sufficient reasons, such as, the highest bid not representing the market price but there cannot be any doubt that the 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 bec....
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....nd equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji AIR 1952 SC 16 : "Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of 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 orde....